UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
(Second Amended)
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no.0-29006
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HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
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(FORMERLY HEALTH CARE CENTERS OF AMERICA, INC.)
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(Name of Small Business Issuer in Its Charter)
Nevada 62-1210877
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 North Arlington (ste. 22F)
Reno, Nevada 89501
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(Address of Principal Executive Officer) (Zip Code)
(702) 786-1461
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(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
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(Title of Class)
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DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: None
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TABLE OF CONTENTS
Item Page
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PART I
Item 1 Description of Business 3
Item 2 Management's Plan of Operation 26
Item 3 Description of Property 31
Item 4 Security Ownership of Certain Beneficial
Owners and Management 38
Item 5 Directors, Executive Officers,
Promoters and Control Persons 41
Item 6 Executive Compensation 45
Item 7 Certain Relationships and Related Transactions 32
Item 8 Description of Securities 48
PART II
Item 1 Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters 51
Item 2 Legal Proceedings 52
Item 3 Changes in and Disagreements with
Accountants 58
Item 4 Recent Sales of Unregistered Securities 59
Item 5 Indemnification of Officers and Directors 62
PART F/S
Financial Statements 64
PART III
Item 1 Index to Exhibits 86
Item 2 Description of Exhibits 89
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PART I
Item 1. Description of Business.
Much of the discussion contained in this Item 1 is "forward looking",
as that term is identified in, or contemplated by, Section 27A of the Securities
Act and Section 21E of the Exchange Act. Actual results may materially differ
from projections. Information concerning factors that could cause actual results
to differ materially is set forth in this Item 1 and in Items 2 and 3 below. For
a complete understanding of such factors, this entire document, including the
financial statements and their accompanying notes, should be read in its
entirety.
Historical Overview of the Company
Hexagon Consolidated Companies of America, Inc., a Nevada corporation
(the "Company"), was incorporated in Montana in October 1967. The Company's
executive offices are located at 100 North Arlington (suite 22F), Reno, Nevada.
Originally known as Cadgie Taylor Co., the Company merged with Carleton
Enterprises, Ltd., a Nevada corporation, in 1984. Later that year, it changed
its name to SCN, Ltd., and effected a share exchange with Star-Com Network,
Inc., another Nevada cor poration. In 1985, the Company filed for bankruptcy
under Chap ter 11 of the United States Bankruptcy Code. In September 1993, the
bankruptcy proceedings were dismissed.
Upon emerging from such bankruptcy proceedings, the Company changed its
name to Health Care Centers of America, Inc., re flecting its intention to
develop a network of multi-disciplinary health care centers. A plan was
formulated whereby the Company would acquire health care practices in exchange
for shares of the Company's stock, the value of such shares to be supported by
other assets acquired for stock. Pursuant to such plan, the Company has acquired
or agreed to acquire assets in mining, real estate, entertainment, education,
and health care.
Many of the stock exchange agreements into which the Company entered
for such acquisitions provided that the other party to the agreement had the
right to annul or void the agreement if a registration statement registering the
Company's stock under Section 12(g) of the Securities Exchange Act of 1934 (the
"Ex change Act") did not become effective within a specified period of time (in
most cases 18 months following the date of the agree ment). Many of such
agreements or oral understandings supple menting such agreements also provided
that the assets, liabili ties, and income of the target entities would not inure
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to the benefit of the Company until the Company's Exchange Act registration
became effective.
In December 1996, the Company filed a registration statement under
Section 12(g) of the Exchange Act which became effective February 4, 1997. With
certain exceptions hereinafter discussed, the time limitations for such
registration have been waived, and such acquisitions are deemed to have become
effective.
While the Company planned and continues to plan to go into health care,
at the present time most of its assets and activi ties relate to other
industries, primarily mining/processing of precious metals and entertainment.
On July 7, 1999 the Board of Directors of the Company unanimosly adopted a
resolution to change the name the Company from Health Care Centers of America,
Inc. to Hexagon Consolidated Companies of America, Inc. to better reflect the
diversification of the Company's business.On August 31,1999 the approprpriate
anedmendment to the Articles of Incorporation were filed with the office of the
Nevada Secretary of State.
The Company is in the development stage and has not had any revenues
during the last five years, during which there has been a subtantial expenditure
of funds. The Company's future success is dependent on its ability to obtain
funding for processing its precious metals concentrate. The Company anticipates
obtaining such funding by exploiting the commercial value, by sale or otherwise,
directly or through joint ventures, of some of its ore concentrates, its
television time credits, its medical waste disposal units, and/or its
contractual interests in certain real estate (see Part I, Item 2 "Plan of
Operations"). The Company has no contracts for such commercialization, and its
real estate is the subject of litigation with former owners; accordingly, there
can be no assurance that the Company will be successful in selling or
commercializing any such assets (see Part II, Item 2 "Legal Proceedings").
As of September 30,1999, the Company did not have any em ployees, its
business being managed by its officers and direc tors.
Current Business (including lines of business
acquired subsequent to December 31, 1996)
A. Precious Metals Concentrate, Mining and Processing
1. Description of the business
The Company owns a substantial deposit of ore concentrate located
approximately 40 miles from Prescott, Arizona, which management believes, on the
basis of assays by an independent consultant, is substantially in excess of
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500,000 tons. Tests by an independent firm including a registered assayer and
analytical chemist indicate that such concentrate contains commercial quan
tities of precious metals and rare earths. (See Part I, Item 3 "Description of
Property".)
Through its wholly owned subsidiary, Peeples Mining Co. ("Peeples
Mining"), the Company also owns mineral rights in Arizona, California and
Nevada.
Peeples Mining has recently commenced processing the Com pany's
concentrate. The development of its other mining proper ties will begin as soon
as financing permits. It is intended that Peeples Mining will process such
concentrate to the next stage of concentration known as dore bars. Dore bars are
pro duced by liquefying the concentrate and pouring the solution into a mold; as
the material cools, the metals separate, with the heaviest falling to the
bottom. Dore bars can be sold for a higher price than concentrate.
Peeples Mining does not presently have the equipment for producing dore
bars. Management is currently studying alterna tive refining methods to
determine the appropriate machinery and equipment to buy, but the Company may
require financing for such purchase. The Company does not anticipate obtaining
the equip ment necessary to refine its concentrate or dore bars into bul lion;
rather it intends to produce and sell dore bars to smelters which have such
equipment.
Peeples Mining has certain facilities and equipment for
leaching,testing,extracting free milling gold and melting the free milling gold
into "common gold bars", but new equipment will be required to process the
concentrated ores from the Company's properties into dore' bars. After the
concentrated ore is processed into dore' bars, Peeples will begin concentrating
head ore. Peeples Mining is capable of processing approximately 25 tons of head
ore per hour from its Arizona property, bringing it to a first stage of
concentration. As is being done with the concemtrated ore inventory,free milling
gold will be removed, and the remaining concentrate will be further concentrated
and/or separated by a mechanical process. This concentrated ore will then be
refined into dore' bars.
The Company (or its subsidiary, Peeples Mining) also has mineral rights
in lands in Arizona and Nevada, and subsequent to December 31, 1996, acquired an
additional mining property in California. (See Part I, Item 3 "Description of
Property".)
Peeples Mining LLC ("Peeples LLC"), which was organized in 1981 as an
Arizona limited liability company, was acquired by the Company in 1994. Peeples
LLC was actively engaged in mining activities from 1988 to 1994. The Company
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also acquired F&H Mining, Inc., a Nevada corporation ("F&H Mining") in 1994. F&H
Mining was organized in 1984, and was active working the property at Mesquite,
Nevada, until 1991. In February 1997, the assets of Peeples LLC and F&H Mining
were transferred to Peeples Mining, a newly formed Nevada corporation of which
the Company is the sole stockholder.
On April 30, 1998, Peeples Mining entered into a joint venture
agreement with Hidden Splendor Smelting Co., a Nevada corporation (herinafter
"HSS"),for the purpose of processing approximately 500,000 tons of the Peeples
Mining concentrated ore inventory located near Skull Valley, Arizona.The
agreement pro vides that HSS has the right to acquire a twenty percent (20%)
interest in the net revenues realized as a result of the sale of the processed
inventory.In return, HSS shall provide, among other things, the proper permits
for processing (including smelting operations, etc.) of the ore inventory,
assistance with the processing operations and the necessary machinery,
equipment, laboratory facilities and structures for the initial period of the
processing operations. The term of the agreement is eight (8) years from the
effective date (ie. form April 30, 1998) and for so long as it takes to process
and sell the inventory.
On behalf of the Company and as a showing of good faith, Mr. Maurice
W. Furlong, Chairman and President, personally transferred 1,000,000 shares of
common stock on June 28, 1999 to HSS. As of this date,HSS has procucured the
appropriate permits, however, no processing activity has taken place.
Peeples Mining does not presently have any employees.
For a futher discussion, see Item 2, "Management's Discus sion and
Analysis or Plan of Operation", below.
2. Terms of Acquisition
The Company entered into the agreement to acquire all the issued and
outstanding stock of F&H Mining in March 1994. At that time, F&H Mining was a
corporation organized under the laws of the Island of Nevis. Under the
agreement, the Company agreed to acquire all of F&H Mining's issued and
outstanding stock in exchange for 12,000,000 (12,000 after given effect of
reverse split) shares of the Company's stock. Maurice Furlong, the Company's
president, had been a consultant to F&H. Mr Furlong's son, Craig Furlong was
president of F&H. Consummation of the acquisition of F&H Mining was contingent
on effectiveness of the Company's Exchange Act registration statement, which was
origi nally filed in December of 1996.
In June 1994, the Company entered into the agreement to acquire all the
interests in Peeples LLC. Under the agreement, the Company issued 20,000,000
(20,000 after given effect of reverse split) shares of the Company's stock to
the members of Peeples LLC, and through Peeples LLC acquired the mineral rights
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to 377.11 acres near Prescott, Arizona pursuant to a mineral lease with the
State of Arizona.The lease expires on May 1,2003. The In August 1995, the
Company issued an additional 100,000,000 (100,000 after given effect of reverse
split) shares to Zarzion, Ltd., for ore concentrate which Zarzion, Ltd. had
purchased from Peeples LLC. Consummation of the acquisition of Peeples LLC was
contingent on effectiveness of the Company's Exchange Act regis tration
statement.Company's ore concentrate, however, is owned outright, free and clear
of any contingencies.
In August 1996, the Company agreed with the former members of Peeples
LLC and the former shareholders of F&H Mining that any income realized from the
operations of F&H and Peeples was not to inure to the benefit of the Company
until such time as its Ex change Act registration became effective. In fact,
there were no revenues between the time the acquisition agreements were entered
into and the time the Company's Exchange Act registration became effective in
February 1997. Provisions in the acquisition agree ments for F&H and Peeples
granting the former stockholders of those companies the right to annul the sale
of such companies under certain circumstances, including the Company's failure
to complete a secondary offering of its securities within a pre scribed time
frame, have lapsed.
In February 1997, the Company acquired 17 lode claims on 340 acres of
land in California. (See Part I, Item 3 "Description of Property".) The Company
believes it will be eligible to apply for title to such property following a
period of exploitation. These claims were acquired from Zarzion, Ltd. (see Part
I, Item 7 "Certain Relationships and Related Transactions") in exchange for
375,000,000 (375,000 after given effect of reverse split)shares of the Company's
common stock.
3. Risks attendant on mining and processing minerals
The value of the Company's concentrate depends on the amount of metals
contained in such ore, and on the cost and difficulty of refining. While the
Company believes that there are signifi cant quantities of precious metals in
such concentrate, the market price of such metals and the cost of extraction and
refin ing are yet to be determined. Management is of the opinion that the cost
of extraction and mining should not exceed 50% of the value if indicated
quantities of precious metals are present in its concentrate.
Analyzing samples gathered by itself with direct current plasma ("DCP")
equipment which measures each element present, Metallurgical Research & Assay
Laboratory (Henderson, Nevada), a firm including Donald Jordan, a registered
assayer and analytical chemist, estimated the value of precious metals in the
Company's ore concentrate to be in excess of $3 billion. Such analysis reflects
Mr. Jordan's independent judgment, and is not a repre sentation of management.
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His samplings were taken without super vision, and there can be no assurance
that his samplings are representative of the entire inventory, nor can there be
any assurance that his estimates of the cost of processing such ores are or will
be accurate when effected. Mr. Jordan's valuation was based on the price of
metals in March 1997; the price of gold has declined since that time, and there
can be no assurance that such decline or future declines will not have a
materially ad verse affect on the value of the metals believed to be contained
in such ore.
No assurances can be given that a desirable level of recov ery will be
realized from Peeples Mining's ore. Estimates may require revision based on
actual production experience. Market price fluctuations of precious metals, as
well as increased production costs or reduced recovery rates, may drastically
affect the value of the Company's ore reserves, and may render reserves
containing relatively low grades of mineralization uneconomic to exploit.
Exploration and mining activities are highly speculative in nature,
involve many risks, and are frequently nonproductive. There can be no assurance
that the Company's mining activities will be successful. In the event minerals
are recoverable, it may take a number of years from the initial phases until pro
duction is possible, during which time the economic feasibility of production
may change. As pertains to all the Company's mining interests, substantial
expenditures may be required to establish proven and probable ore reserves
through drilling, to determine metallurgical processes to extract the metals
from the ore, and in the case of new properties, to construct mining and
processing facilities. As a result of these uncertainties, no assurance can be
given that the Company will be able successfully to exploit its mineral
properties.
The business of mining and processing precious metals is subject to a
number of significant hazards, including environmen tal hazards, thefts and
other losses, industrial accidents, and labor disputes. Mining is also subject
to the risks of encoun tering unusual or unexpected geological formations,
cave-ins, flooding, rock falls, periodic interruptions due to inclement or
hazardous weather conditions, and other acts of God. Such risks could result in
damage to or destruction of mining properties or production facilities, personal
injury or death, environmental damage, delays in mining, monetary losses, and
possible legal liability. The Company will obtain insurance against risks that
are typical in the operation of its business and in amounts which management
believes to be reasonable, but no assurance can be given that such insurance
will continue to be available, that it will be available at economically
acceptable premiums, or that it will be adequate to cover any liability.
There can be no assurance that the test results obtained by the Company
for certain of its properties by independent assayers will prove to be accurate
for the entire property.
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4. Regulation of mining and mineral processing
The Company's exploration, mining, and refining activities will be
subject to extensive state and federal laws and regula tions governing
prospecting, developing, production, export, taxes, labor standards,
occupational health, waste disposal, pro tection and remediation of the
environment, protection of endan gered and protected species, mine safety, toxic
substances, and other matters. Mining is subject to potential risks and liabili
ties associated with pollution of the environment and the dis posal of waste
products occurring as a result of mineral explora tion, production, and
processing. The Company may in the future be subject to clean-up liability under
the Comprehensive Environ mental Response, Compensation and Liability Act of
1980 and comparable state laws which establish clean-up liability for the
release of hazardous and toxic substances for property owners and operators. In
the context of environmental permitting, including the approval of reclamation
plans, the Company must comply with applicable standards, laws, and regulations,
which may entail greater or lesser costs and delays depending on the nature of
the activity to be permitted and how stringently the regulations are implemented
by the permitting authority. It is possible that costs and delays associated
with compliance with such laws, regulations and permits could become such that
the Company would not proceed with the operation or development of a mine or
other project, or inauguration of a processing facility.
Amendments to current laws and relations governing opera tions and
activities of mining companies and companies processing metals or more stringent
implementation thereof are actively considered from time to time and could have
an adverse impact on the Company and its operations.
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B. Entertainment
1. Description of the Business
In April 1995, the Company entered into an agreement to acquire all the
outstanding stock of Nashville Music Consultants, Inc. ("NMC"), a Tennessee
corporation organized in 1993, and such acquisition became effective in February
1997.In June 1996 NMC changed its name to Nashville Music Group,Inc.("NMG"). NMG
en gages in screening, advising, developing, publishing, and manag ing singers
and songwriters. Revenues come from consulting fees, registration fees, tuition,
publishing royalties, and management commissions.The original agreement to
acquire NMG concerned only publishing activities. Since the date of the
agreement and since the effective date of the Company's registration statement,
NMG has expanded its operations not intended to be part of the origi nal
agreement with NMG. to include other areas. On September 1, 1998 the Company and
NMG agreed to amend the agreement so that it conformed to the intent of the
parties. As a result of this agreement, a new Nevada corporation will be formed
and named "Music Alley, Inc" ("MAI"). The effective date of the amendment to the
stock exchange agreement with NMG was July 1, 1997. This entity will be a wholly
owned subsidiary of the Company, the assets of which are the publishing rights
to approximately 400 songs, of which approximately 200 have recorded as
demonstration tapes. MAI and NMG have no further connection. The Company
believes that NMG may continue to operate in areas other than country music
publishing, however, repeated commnication attempts with the president of NMG,
Mr. Alcy Baggott,have been unsucessfull. MAI is to receive referrals from NMG of
songwriters who are considered to have outstanding potential. These individu als
are to be offered a contract with MAI. However, due to the lack of communication
with NMG, the probability of such referrals actually happening is highly
uncertain.
The management of MAI shall be conducted by the offi cers of HCCA. Mr.
Baggott, the president of NMG, was to have continued in the same capacity with
MAI. However,it is the Compa nies' position that he has constructively abandoned
that posi tion in that he has failed to communicate with the Company after
repeated requests by management.Therefore, the Company shall assume this
responsibility.
On August 2nd, 1984 and November 1, 1984, the Company,under its
predecessor name of SCN, Ltd. entered into an agreement with Jey Productions,
Inc.("JEY"), a Nevada corporation and Bullett Productions, Inc. ("BULLETT"), a
Tennessee corporation, respec tively, to purchase certain "master recordings"
("Masters").These Masters contained approximately 10 songs per album.
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The Masters contain recodings of songs by various artists and encompass
music genre from country and western,jazz, popular, gospel, dixie,rock and roll
and classical. The songs involved were recorded in the 1950's through the
1980's. The original artist contract for the songs of the various artists and
the original Masters are in the possession of the Company.
In 1985, the Masters were the subject of a license agreement with the
record specialty division of Columbia Broadcast Systems, Inc. ("CBS"). The
Company is to receive a royalty payment from the marketing of these songs.
Other entities have copies of these Masters and have either licensed or
sold them for use by others. This has been done without the Companies authority.
As a result, CBS has not paid any royalties and is holding them in an escrow
account until it has been determined to whom they shall be paid.
On May 20, 1996 the Company entered into an agreement with Artists
Limited, L.L.C. ("Artists") for the purpose of seeking the collection of any and
all past due royalties. The term of the agreement is 5 years from the date it
was signed (ie.,5 years from May 20, 1996). The agreement provides that Artists
shall receive an amount equal to 40% of all monies collected on behalf on the
Company and Artists would not be liable for any costs incurred in the collection
of monies for the Company. A subse quent oral amendment to the agreement
provided that Artists would receive 55% of the amount collected and would be
responsible for all costs incurred in the collection process.
Artists is currently gathering data from the Company to support the
claim for the unpaid royalties. They have also en tered into preliminary
negotiations for collection of the royalties. However, the complexities involved
in the process, including, but not limited to, the dispute as to ownership of
the Masters, the time that has passed and establishing ownership of the Masters
through the appropriate chain of title. Therefore, there can be no assurances
that the Company will ever be successfull in obtaining any royalties, whether
they be past or present.
2. Terms of Acquisition
The Company entered into the agreement to acquire NMC in April 1995.
Under the agreement, the Company agreed to acquire all the issued and
outstanding shares of NMG's stock in exchange for 4,000,000 (4,000 after given
effect of reverse split) shares of the Company's stock. Consummation of the
transaction was contingent on effectiveness of the Company's Exchange Act regis
tration statement, so that the acquisition was not consummated until February
1997.
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Pursuant to the acquisition agreement, 51% of the outstanding stock of
NMG is to be placed in a voting trust with Ally Cat Music, Inc., a company
wholly owned by Mr. Baggott, for a term of 10 years, renewable for 10 years, and
the Company is enjoined from interference with Ally Cat Music, Inc.'s management
of NMC. The Company also agreed to use its best efforts to provide $500,000 of
financing for NMC.This obligation was fulfilled on behalf of the Company by its
president and chairman, Maurice W. Furlong. Also under the agreement, the
Company is entitled to an annual "management fee" in an amount equal to 9% of
NMC's gross revenues. Since the effective date of the the stock exchange
agreement and the above referenced amedment to the stock exchange agreement the
Company has received no management fee.
The agreement provides that the transaction may be canceled if the
Company's stock ceases to be "listed or traded on the NASDAQ Stock Exchange."
The effect of this condition is not clear, since the Company's shares have never
been listed on NASDAQ, but it is not impossible that such condition could some
day be invoked to disassociate NMC from the Company. The agree ment also
indicates that NMC's stockholders can void the agree ment if the transaction
turns out not to be a tax free transac tion under federal tax laws. While the
Company has not obtained an opinion of counsel with respect to this matter,
management believes that the exchange of shares is indeed a tax free trans
action under the Internal Revenue Code.
The amendment to the agreement provides that MAI shall be incorporated
as a wholly owned subsidiary of the Company. MAI currently has approximately 400
songs NMG represented and warrented that its publishing division owns, free and
clear, approximately 400 songs, 200 of which have been recorded as demonstration
tapes.
The Company has yet to receive confimation that the above has been
accomplished. Therefore, the Company shall form a wholly owned subsidiary under
the laws of the State of Nevada to be named Music Alley, Inc. This subsidiary
shall hold title to the above referenced songs.
Neither Mr. Baggott nor NMG has yet to transfer or assign the
songwriter or artist contracts to the Company. In light of Mr.Baggott's previous
lack of cooperation, there can be no guarantee that he will comply with the
agreement, as amended. Should he continue to fail to comply with the amended
agreement, the Company may be required to seek legal action to assure NMG's
compliance.
On August 2, 1984, the Company (under its predessor name of SCN, LTD.)
entered into an agreement with JEY to purchase certain Masters in consideration
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of 400 shares of the capital stock of the Company (then SCN, Ltd.). In addition,
the Company agreed to pay JEY a royalty of 1 cent per song for each song sold,
whether in an album, single, tape, video or other form of production.
As discussed above, the Company has received no royalties from the sale
or licensing of any song in the Maters. Further more, JEY no longer exists as a
corporate entity and the Company has received no notification of any successor
entity. In the event that the Company is successfull in collecting royalties or
selling any songs,it may be obligated to pay a royalty per the agreement.
On November 1, 1984, the Company (under its predessor name of SCN,
Ltd.) entered into an agreement with BULLETT to purchase certain Masters in
consideration of 700 shares of capital satock of the Company (then SCN, Ltd.).
In addition, the Company agreed to pay BULLETT a royalty of 1 cent per song for
sold, whether in an album, single, tape, video, or other form of production.
As discussed above, the Company has received no royalties from the sale
or licensing of any songs which were the subject of this agreement.Furthermore,
BULLETT no longer exists as a corporate entity and the Company has received no
notification of any successor entity. In the event that the Company is
successful in collecting royalties or selling any songs, it may be obligated to
pay a royalty per the agreement.
3. Competition and Regulation
Management is keenly aware of other entities offering similar services
and the competition in the music publishing industry is quite intense. There can
be no assurance that MAI's strategy of providing songs to various record
producers and artisits will withstand competition from more established enti
ties. Also, there can be no assurance that Company will ever be able to collect
royalties relating to the Masters. Or that the Company will ever be able to
license or sell the Masters in the future.
Federal and state laws relating to intellectual property have an extensive
impact upon the song writing, music publication, and music recording segments of
the entertainment industry. The industry is such that it is highly susceptible
to the unautho rized reproduction of previously published material. The Com
pany's ability to protect itself from the unauthorized reproduc tion of works
generated by its songwriters, along with its abil ity to protect its publishing
rights, will be influenced by federal and state copyright, trademark, and
service mark laws.
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C. Medical Waste Decontamination Units
1. Description of Business
The Company owns 24 medical waste decontamination units manufactured by
a Japanese manufacturer which owns a patent on the units' fume scrubber. Known
as MedAway-1, each unit is designed to decontaminate and physically alter up to
five cubic feet of medical waste, such as bags, blood lines, syringes, sharps,
petri dishes, curettes, and similar items of waste gener ated by hospitals and
doctors' offices. The units use a dry heat process, including a patented
combination of resistance and "far infrared" quartz heating elements, with a
proprietary condenser filtration system that obviates the need for external
venting. The units are mobile and self contained. No special wiring,
ventilating, or plumbing is needed, nor are building permits required. The units
heat the waste load to a temperature at which most viruses are rendered inactive
within five minutes. After treatment, waste is considered non-infectious. As the
waste load is heated in the unit, the plastics melt, encapsulat ing the sharps
and reducing volume by a factor of as much as ten. The units operate silently
without shredding, grinding, compact ing, steaming or chemically treating the
waste, and are approved by Underwriters Laboratory ("UL").
The Company intends to lease its units, through MedAway International,
Inc.,a newly created Nevada corporation, which is a wholly owned susidiary of
the Company,("MedAway Nevada") to hospitals, clinics, doctors' offices, and
nursing homes. Between 1993 and acquisition of such units by the Company, four
similar units were sold by the company from which the Company purchased its
units, MedAway International Inc.,a Delaware corporation,("MedAway Delaware")
and management believes such units are operating satisfactorily. MedAway
Delaware has no affiliation with the Company nor its wholly owned subsidiary,
MedAway Nevada. Management is in the process of formulating a marketing plan and
securing liability insurance, but no units have been leased to date.
The Company intends to contract with third-parties to main tain and
repair the units. The Company does not yet have any employees in MedAway Nevada.
2. Terms of Acquisition
The Company acquired its units together with other assets of MedAway
Delaware, in June 1996, in exchange for $2,000,000 worth of the Company's common
stock, which management determined to be 2,066,115 (2,067 after given effect of
reverse split) shares at the time of the transaction. All of such shares have
been issued to MedAway Delaware stockholders.
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Among MedAway Delaware's assets was the exclusive right to market and
distribute such units in North America, the Caribbean, and Taiwan. Assignment of
such right to the Company, however, requires the manufacturer's consent, which
will be requested at such time as the Company has the financial resources to put
into effect a full-scale marketing plan. The manufacturer's consent is not
required for leasing the 24 units the Company acquired from MedAway Delaware.
3. Competition
Competition for MedAway-1 units currently comes principally from
incineration and chemical processing, over which management believes the
MedAway-1 unit has significant advantages. Inciner ation requires cumbersome
equipment and permitting, while chemi cal treatment requires additional disposal
arrangements for the residue after treatment. Other systems for treating medical
waste are generally more costly. Many utilize grinders and shredders, some treat
infected materials with toxic chemicals, and other systems require special power
and external venting of emissions. Venting emissions generally involves state
and/or federal environmental compliance and permitting issues. In addition, such
alternative methods generally generate an end product, disposal of which creates
its own environmental compli ance issues.
If the Company fails to obtain the manufacturer's consent to acquiring
MedAway Delaware's distribution rights, however, the manufacturer may be able to
sell its units in the United States in competition with the Company, directly or
through another distributor. There can be no assurance, moreover, that competi
tors with a stronger financial base than that of the Company will not develop
alternative processes for the decontamination of medical waste.
4. Regulation
The treatment and disposal of medical waste is subject to federal,
state and local regulation, as is the disposal of fumes and other residue
created in the treatment of such waste. Ap proximately 10 states do not have
mandatory legal requirements for such equipment; of the approximately 40 states
which do, the Company believes that its units comply with requirements in at
least 26.
There is a possibility, however, that new regulations may be adopted at
the state or federal level, as by amendments to the Medical Waste Tracking Act,
which would restrict the disposal of materials such as the end product which
remains after treatment in the MedAway-1 units. Such regulations could have a
negative impact on the market for such units.
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D. Television Advertising
1. Description of the Business
The Company owns 20 television time credit certificates issued by
American Independent Network, Inc. ("AIN"). Each certificate represents that AIN
will provide the bearer commer cial air time valued at $5,000,000, calculated at
going rates, on AIN's national television network, subject to time availability
or agreement on a time plan. At the time the bearer chooses to use the air time,
a cash fee of 4% of the value of the air time to be used must be paid to AIN.
Such certificates contain no restrictions as to transfer ability,
assignment or sale. The Company does not intend to engage in the business of
marketing television advertising time as such, but it may from time to time
market and sell a portion of the advertising time from these television time
credit certif icates, as well as utilize such time for its own enterprises. In
due course, management plans to use such commercial air time in its marketing of
health care facilities described below. The Company's ability to use or sell
such certificates has yet to be established, however, and until such value is
established, the Company has determined not to ascribe any value to them.
The Company does not have any employees specifically respon sible for
this line of business, and does not anticipate employ ing any in the immediate
future.
2. Terms of Acquisition
The Company's television time credit certificates were originally
assets of ELF Works, Ltd., a Nevada corporation ("ELF") which the Company
acquired in June 1996. Following such acquisition, the television time credit
certificates (which had been acquired by ELF directly from AIN in exchange for
stock in ELF) were reissued by AIN in the Company's name. Under the terms of the
agreement, the Company issued ELF's stockholders 40,000,000 (40,000 after given
effect of reverse split) shares of the Company's common stock in exchange for
all ELF's outstanding stock. The Company also received a right of first refusal
with respect to any sale of the shares issued by it to ELF's stockholders; for a
period of five years, the Company has the right to match any offer for the
purchase of such shares.Inasmuch as ELF had no significant assets other than its
AIN certificates,which are currently in the name of the Company, the Company may
dissolve ELF.
3. Competition; Other Factors
To the extent that the Company decides to sell rather than use the
television time credit certificates, management perceives that competition in
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the national television market is intense. There can be no assurance that the
Company could successfully market and sell such certificates in the event it
determines to do so. The value of such certificates may also be affected by
AIN's financial ability to successfully continue its operations.
Planned Business
E. Health Care Centers
1. Description of Business
One of the Company's objectives is to build a network of
multi-disciplinary health care centers to provide a combination of primary and
alternative health care to the general public. The Company intends to provide
the services of general practice medical doctors, chiropractors, physical
therapists, and other health care providers under one roof, creating a "one
stop" source for a variety of medical services.
Management believes that today's changing environment for health care
delivery will place a premium on consolidation of various types of health care
providers into larger entities, and that consolidation and group practice
constitute the most desir able environment for medical services in the 1990's
and into the next century. Management further believes that consolidation should
benefit health care providers by providing standard fees for services
nationwide, volume buying to hold down costs, cen tralized billing and
purchasing operations, group insurance coverage, a national marketing program,
and an integrated network of professionals.
The Company has no employees at present.
To commence its program, the Company intends to acquire individual
medical, chiropractic, dental, and other practices, with a view to establishing
a system with common procedures and marketing. While the Company will seek to
acquire the profes sional corporations which operate such practices, in states
where such ownership is not permitted, the Company will seek to enter into
management contracts. It will then initiate the integration and educational
processes necessary to develop a comprehensive health care delivery system. As
soon as possible, the Company will seek to relocate such practices into
multi-disciplinary health care centers managed by the Company. Management's
current plans contemplate that development of its multi-disciplinary health care
centers will commence within two years. This delay reflects the complexity of
the project and the diversity of the health care areas which the Company seeks
to bring together. Ultimately, it plans to create a national network of such
multi- disciplinary centers. There can be no assurance, however, that the
project can be accomplished in any specific time period, or that, if
accomplished, such centers will be successful.
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To ensure and facilitate continuing education for its pro fessional
staff, the Company will seek to affiliate its health care centers with
recognized medical schools, chiropractic schools, and universities. It will also
seek to expand income for its health care staff by providing opportunities to
obtain additional certification in related fields, as for example by
recredentialling chiropractors as licensed physical therapists. The Company's
plans have yet to be implemented, however, and will require substantial funds,
availability of which will depend on the Company's success with concentrating
and marketing its pre cious metals. There can be no assurance that management
will be successful in inaugurating its health care program, or that, if
inaugurated, such program will be successful.
2. Rescinded Agreements for Health Care Practices
In 1993 and 1994, the Company entered into agreements for the acquisition
of 16 chiropractic practices in exchange for shares of the Company's common
stock. A total of 3,447,683 (3,448 after given effect of reverse split) shares
were issued to sixteen doctors for such practices, but all such exchanges have
been rescinded. 1,901,963 (1,902 after given effect of reverse split) of such
shares have been cancelled, and management expects the remaining 1,545,720
(1,546 after given effect of reverse split) shares will be returned. None of
such acquisitions having been consummated, the Company has not realized any
revenues with respect to such practices.
Such rescissions were the result of discussions of the legal and
procedural complications of such acquisitions, it being agreed that consummation
of such acquisitions should be deferred until a thorough study is made of legal
and regulatory require ments, and orderly arrangements can be made to comply
with state laws and regulations. The Company is presently analyzing appli cable
laws and regulations with a view to developing a strategy and business plan for
this line of business. Many of the indi viduals party to such agreements have
assured management of their continued interest in affiliation with the Company.
To the extent permitted by state, federal and local laws and
regulations, it is contemplated that the acquisitions will be structured as
exchanges of the Company's stock for stock of the professional corporation
owning each practice, with each practice becoming a wholly owned subsidiary of
the Company. In other states, the Company will seek to enter into agreements to
pur chase assets and manage the practices in exchange for an annual fee and, if
permitted, a share of profits.
3. Competition in Health Care Industry
The market for health care services is highly competitive. In addition
to competition from other national, regional, and local health care centers, the
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Company will be obliged to compete with hospitals, private clinics, physician
groups, outpatient clinics, and home health care agencies. Several health care
companies and other physician groups provide services like those to be provided
by the Company, including companies and groups with established operating
histories and significantly greater cash resources than the Company's. To the
extent that reform measures proposed by the federal government make prepaid
medical care an attractive market and provide incentives to form regional
delivery systems, the Company may encounter increased competi tion.
Management believes the primary competitive factors in health care
services are quality of treatment, reliability of service, the ability to
schedule patients and report examination results on a timely basis, the ability
to comply with the re quirements of regulatory authorities and third-party
payers such as Medicare and private insurance companies, and the ability to
attract and retain qualified licensed professionals. The Com pany's success will
depend, in part, on its ability to compete effectively with respect to each of
these factors through proper planning of staffing services, training of staff
members in their respective disciplines, quality assurance programs, proper
super vision of its staff members, and coordination of treatment plans with
patients, patients' families, and the facilities' staff. Management believes its
proposed program for recredentialling its staff members will assist the Company
in attracting and employing qualified personnel.
Many of the health care providers against which the Company will
compete, however, are substantially larger and better capi talized, and have
substantial records of profitable business operations. In addition, many of
these competitors have substantially greater financial, marketing, human and
other resources than the Company, which may give them competitive advantages in,
among other things, the recruitment of licensed professionals, equipment
acquisitions, and responding quickly to increased demand for rehabilitation and
other services. No assurance can be given that the Company will be able to
compete effectively against these other health care providers.
4. Regulation of Health Care Providers
The health care industry is subject to extensive regulation by federal,
state, and local governments. The various levels of regulatory oversight will
affect the Company's health care busi ness by controlling its growth, requiring
licensure and/or cer tification of its facilities, regulating the use of its
proper ties, and controlling reimbursements to the Company for services
provided. These laws include fraud and abuse provisions in the Medicare and
Medicaid statutes, which prohibit solicitation, payment, receipt, or offering of
any direct or indirect remunera tion for the referral of Medicare or Medicaid
covered services, and laws that impose significant penalties for false or
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improper billings for physician services. These laws also impose restric tions
on physician referrals for designated health services to entities with which
they have financial relationships. Violation of these laws can result in
substantial civil or criminal penal ties for individuals or entities, including
large civil money penalties and exclusion from participation in the Medicare and
Medicaid programs.
In some states, ownership of physicians' practices by pub licly held
corporations is prohibited. Management believes, however, that the Company's
acquisition of health care practices and operations can be structured in such a
way as to comply with existing laws in most states in which it is interested in
con ducting such business, or that alternative arrangements can be entered into.
Moreover, the laws of most states prohibit physi cians from splitting fees with
non-physicians and prohibit non-physician entities from practicing medicine.
These laws and their interpretation vary from state to state, and are enforced
by the courts and regulatory authorities with broad discretion.
There can be no assurance, however, that review of the Company's
business by courts or regulatory authorities will not result in a determination
that could adversely affect the Com pany's proposed operations, or that the
health care regulatory environment will not change so as to restrict the
Company's proposed operations or future expansion.
Through the Medicare program, the federal government has implemented a
resource-based relative value scale ("RBRVS") payment methodology for physician
services. RBRVS is a fee schedule that, except for certain geographical and
other adjust ments, pays similarly situated physicians the same amount for the
same services. The RBRVS is adjusted each year and is subject to increase or
decrease at the discretion of Congress. RBRVS-types of payment systems have also
been adopted by certain private third-party payers and may become a predominant
payment methodol ogy. Increased dissemination of such programs could reduce
payments by private third-party payers and could indirectly reduce the Company's
operating margins to the extent that costs of providing management services
related to such procedures could not be proportionately reduced.
F. Education and Learning Centers
1. Description of the Business
In March 1994, the Company agreed to acquire three learning centers
from William Jackson in exchange for 1,200,000(1,200 after given effect of
reverse split) shares of the Company's common stock. Two of such centers,
located in Toronto, were owned and operated by two Ontario corporations
operating under the name "Academy for Mathematics and Science"; the third center
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was to be opened in the United States. The centers offered remedial courses in
mathematics, science, and English to children in grades two through twelve.
In February 1997, the Company and Mr. Jackson determined to rescind the
acquisition of the two centers in Toronto, and Mr. Jackson returned the 800,000
(8,000 after given effect of reverse split) shares issued for these two centers.
It was contemplated that Mr. Jackson and his wife, Jacqueline Jordan, would open
a center in Reno, Nevada, which would offer remedial courses in mathematics,
science, and English to children in grades two through 12, and pre-college and
university level courses, with future expansion into computer and internet
courses. A deposit had been made on office space in Reno, Nevada, and it was
contem plated that Mrs. Jordan would move to the United States to orga nize and
manage such center.
However, Mr. Jackson and Mrs. Jordan altered their plans and have not moved
to the United States. In exchange for 400,000 (4,000 after given effect of
reverse split) of the original 1,200,000 (1,200 after given effect of reverse
split) issued to Mr. Jackson (as stated above, 800,000 (8,000 after given effect
of reverse split) shares have been returned by Mr. Jackson) the Company has the
proprietary rights and intersts in and to all of the teaching materials,
business plan, operational plan and related materials used by Mr. Jackson and
Mrs. Jordan in the successful operation of their two Toronto learning centers.
When revenues from other operations are avaiable, the Company plans on
conducting a search for an experienced and successful individual from the
private or public education sec tor. This individual shall open and operate the
first learning center in Reno, Nevada.
2. Risk Factors
Commercial learning centers are a relatively new industry, for which
reason there is not yet significant competition. It is anticipated that
increased competition will develop in this field; other organizations providing
such services already exist. Operation of private schools is frequently the
subject of state and local regulation in the United States, including Nevada.
There can be no assurance that the Company will be successful in establishing
any learning centers, or that, if it does, such centers will result in
profitable operations.
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G. Health Care Education, Research and Development
1. Description of Mexican Joint Venture
In 1994, the Company entered into a joint venture agreement with
Immobiliara y Fraccinoadora del 1 Nueva Viscaya, S.A. de C.V. and Oscar Neninger
G. (INMOB) for the development of approx imately 11,625 acres in Sonora, Mexico,
for a research and development, educational, and recreational center. Such
venture is presently dormant for lack of financing, liens recently at tached to
such property, and inability to determine the avail ability or feasibility of
developing sewer, water and similar connections.
2. Terms of Company's Interest.
Consummation of the agreement is contingent on the Company's ability to
raise financing for project development; if success ful, the Company would
receive a two-thirds interest. The Com pany has expended approximately $215,000
in furthering the pro ject, which monies were borrowed from The R.K. Company
("R.K. Company"), a stockholder of the Company. The Company is examin ing its
options in light of the fact that financing has not materialized, developments
affecting the joint venture's title to the property, and the amount of monies
which would be required to effect the first stage of such development, estimated
to be approximately $80,000,000. The Company has not yet entered into
discussions with any financial institutions or other sources for financing this
project. In June 1997, R.K. Company filed a lawsuit for repayment of its loan.
No assurance can be given that the title will in fact be conveyed as
contemplated by the agreement, or that the Company will be able to obtain
financing for development of the project. Nor can there be any assurance that,
if developed, the project would be completed, and if completed, would be
successful.
H. Contracts to Acquire Real Estate
1. Description of the Contracts
In 1994, the Company entered into agreements with two real estate
holding companies then beneficially owned by Robert R. Krilich, Sr., The Senior
Group ("Senior Group") and The Rainbow Group ("Rainbow Group"), to acquire a
diversified portfolio of properties including commercial, residential,
industrial, recre ational, and other real estate. (See Part I, Item 3
"Description of Property".) Subsequently, Senior Group and Rainbow Group merged
into The R&S Group ("R&S Group"), all of whose beneficial interests are owned by
the Company and controlled by Mr. Furlong as the Company's president. R&S Group
is a common law business organization, as were Senior Group and Rainbow Group.
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Subsequently, disputes have arisen with respect to such contracts and
the merger of Rainbow and Senior Groups into R&S Group, and none of such
properties have yet been delivered into the possession or control of the
Company. Such disputes are presently the subject of litigation between the
Company and Mr. Krilich and his affiliates; the Company has filed an action to
quiet title in the name of its affiliate, R&S Group, to impose a trust on income
from the subject properties, for conversion, and for punitive damages, and Mr.
Krilich has filed an action for breach of contract, fraud, entitlement to
additional consider ation, and/or rescission (see Part I, Item 3 "Legal Proceed
ings"). There can be no assurance that the Company will ever acquire title to
such real estate, or avoid potential liability for additional compensation.
Some of the properties acquired or to be acquired from Rainbow and
Senior Groups are income producing, but because of the disputes relating to such
contracts, such acquisitions have not been consummated, and the Company has not
received any income on account of such properties. Most of the properties to be
acquired from Senior and Rainbow Groups will require the expendi ture of
considerable funds for development. At such time as it acquires title to such
properties, the Company will seek to generate funds for developing such
properties by selling some or all of those properties which are not income
producing; it will also consider the sale of income producing properties. (See
Part I, Item 2 "Management's Plan of Operation".)
Notwithstanding the Company has yet to consummate the con tract to
acquire such property, in August 1996, R&S Group entered into a partnership
agreement to develop a hotel on 1.5 acres of land near Route I-95 in Dania,
Florida. Under such agreement, the Company would have a 50% interest in the
proposed develop ment; the remaining 50% would be owned by Fairdan Suites, Inc.,
which would also manage the hotel for a fee equal to 5% of gross revenues.
Fairdan was to be responsible for arranging the fi nancing. The Company's
interest is subject to transfer of the property in accordance with the terms of
the stock exchange agreements with Rainbow Group and Senior Group. The property
is one of those subject to the lawsuits filed by the Company and Mr. Krilich,
and there can be no assurance that clear title to the property can be obtained
(see Part II, Item 2 "Legal Proceed ings"). Nor can there be any assurance that,
if clear title is obtained, Fairdan Suites, Inc., will be successful in
obtaining financing for the project, or that such development, if effected, will
be successful. Such projects are subject to many variables, including but not
limited to ordinances, regulations, building codes, availability of labor and
materials, availability and terms of financing, and marketability of the
development. One year after a hotel opens on the property, the parties'
interests become subject to a "buy-sell" agreement, pursuant to which either
party must sell its interest at the price offered by the other, or purchase the
other's interest at such price.
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The Company may seek to acquire additional real estate for stock, where
management believes such property combines attrac tive income with desirable
capitalization rates or can be useful in establishing its planned health care
centers.
The Company does not presently employ anyone in its real estate
division.
2. Terms of Acquisition Contracts
The agreements with Senior Group and Rainbow Group provided for the
Company to acquire 100% ownership of such entities, each of which is a common
law business organization, in exchange for 62,374,363 (62,375 after given effect
of reverse split) shares and 68,479,611 (68,480 after given effect of reverse
split) shares, respectively, of the Company's common stock. All of such shares
were assigned to R.K. Company, a common law business organization which the
Company believes is beneficially owned and/or controlled by Mr. Krilich. The
market price of the Com pany's common stock was agreed to be $2.50 per share as
of June 27, 1994, and it was agreed that 50% of the shares to be issued should
equal the value of the various properties. As additional consideration,
25,000,000 (25,000 after given effect of reverse split)shares in options were
issued to Rainbow Group and 25,000,000 (25,000 after given effect of reverse
split) shares in options were issued to Senior Group, in each case exercisable
through June 2004. Half are exercisable at $1.00 per share; the remainder are
exercisable at the trading price at the close of business on the day before
exercise, but in no event less than 110% of the trading price on June 28, 1994.
All such options were assigned to R.K. Company and have not yet been exercised.
It was also agreed that, if the market price of the Com pany's shares
declined, the sellers would be entitled to such additional shares as necessary
to make up the difference. While the agreement is difficult to interpret and is
subject to the various disputes described elsewhere in this report, Senior Group
and Rainbow Group have received additional shares amounting to 11,439,300 and
28,909,688, respectively, making a total of 171,202,962 shares issued for such
properties. If adjusted to reflect current prices of the Company's stock, the
sellers could be entitled to a significant number of additional shares. It is
the Company's belief that the sellers made material misrepresen tations as to
the value of properties to be acquired from or through Senior and Rainbow
Groups, that as a result such proper ties were significantly overvalued, and
that the agreement is so unclear that it is impossible to determine what, if
any, addi tional shares would be required. Such contentions are included in the
claims set out in the Company's lawsuit against Mr. Krilich, the former
beneficial owner, and his affiliates, arising out of the contract(s) with Senior
and Rainbow Groups (see Part II, Item 2 "Legal Proceedings"). Should the courts
disagree with the Company's contentions, the Company's stockholders could incur
significant dilution of their investment.
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In June 1994, the Company agreed with the former owners of the Senior
and Rainbow Groups that the beneficial interest to the income and expenses of
these properties would not inure to Com pany's benefit until such time as its
Exchange Act registration became effective. It is the Company's contention that
in the meantime, the former owners were to pay all carrying costs of the
properties, including interest and taxes, and that the stock issued for such
properties is subject to a constructive trust. Notwithstanding that the
Company's Exchange Act registration became effective in February 1997, the
sellers have yet to pro vide the Company with any income from such properties or
any accounting for such income.
The Company has since determined that with respect to many of such
properties, material misrepresentations were made as to value, lack of
government permits, liens, inability to deliver marketable title, and/or similar
issues. Therefore, the sellers' rights to additional shares of the Company's
stock, and the outcome of related issues cannot be determined at this time, but
it is not impossible that the contracts could be found void, in which case the
Company would not acquire such properties and shares issued in connection with
such agreements would be cancel led and returned to the Company. Alternatively,
the Company could be found liable for a substantial amount of additional shares.
(See Part II, Item 2 "Legal Proceedings".)
3. Competition
In the event such contracts are consummated, the Company will be
competing with numerous other real estate companies and individuals with respect
to the sale of such properties, the acquisition of other real estate, financing
the development of its real estate, and finding suitable tenants or buyers.
Compe tition among private and institutional purchasers, both domestic and
foreign, for real property investments has increased substan tially in recent
years. Increases in demand have resulted in gradual increases in prices paid for
real estate, and consequent ly higher fixed costs. With lending restrictions
becoming tighter, success in this industry continues to narrow to entities with
greater equity positions and professional management teams. There can be no
assurance that the Company will be successful in obtaining suitable properties
or that if investments are made, the Company's objectives will be realized.
4. Regulation
The real estate development industry is subject to regula tion by
federal, state and local governments in numerous ways, including laws and
regulations addressing zoning, land use, and environmental issues. The various
levels of regulatory oversight could adversely affect the Company's real estate
activities.
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Item 2. Management's Discussion and Analysis
or Plan of Operation
The discussion contained in this Item 2 is "forward looking" as that
term is identified in, or contemplated by, Section 27A of the Securities Act and
Section 21E of the Exchange Act. Actual results may materially differ from
projections. Factors that could cause results to differ materially are described
throughout this report.
Plan of Operation
The Company's plan of operation for the immediate future is to focus on
processing its precious metals concentrated ore inventory, for which from
$1,000,000 to $5,000,000 will be re quired. The Company will seek to generate
such funds by realiz ing the commercial value, directly, through joint ventures,
or by sale, of its ore concentrate, its television time credits, its medical
waste disposal units, and/or its contractual or other, if any, interests in
certain real estate. With one exception here inafter described (see Part I, Item
3 "Description of Property"), the Company has no contracts for such sale or
commercialization, and its real estate is the subject of litigation with former
owners; accordingly, there can be no assurance that the Company will be
successful in selling or commercializing any such assets. The Company will also
be required to devote substantial time and resources to prosecution of its
claims against Mr. Krilich and his affiliates, and to defend against the claims
filed by them (see Part II, Item 2 "Legal Proceedings").
If needed, the Company may seek to raise funds through a private
offering of securities to an institutional buyer or through a registered broker
dealer. Up to $5,000,000 would be used to fund equipment and operations for
minerals processing and mining; if less is required for this purpose, up to
$1,000,000 would be used for the planning and organizational stages of the
Company's health care segment, and if its contracts to acquire real estate are
consummated, up to $1,000,000 would be used for development of the Company's
real estate. A portion of such proceeds would be used for working capital for
marketing the Company's MedAway-1 leases, and to provide funding for other
business segments of the Company. At such time as cash flow from one or more of
these activities permits, the Company will seek to develop its health care line
of business.
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1. Mineral Processing Operations
The Company has commenced processing its existing inventory of ore
concentrates as a matter of first priority.The Company is extracting the "free
gold" contained in the ore concentrate. The extracted "free gold" is to be
melted into a "common gold bar" in a furnace and sold to a precious metals
refinery. The revenues otained as a result of these sales will be used to meet
the overhead expenses of the mining operations as well as general corporate
expenses. As a result of exracting the "free gold", the Company is also able to
further concentrate the remaining pre cious metals ore. It is believed that by
further concentrating the ore, the value per ton will increase and the overhead
costs of futher processing the ore will be reduced. Independent assays
commissioned by the Company have indicated the the concentrated ore inventory
contains gold, precious metals of the "platinum group" and various rare earths.
This stage of processing is being operated at the mill site, which is at the
same Arizona location as the concentrated ore inventory.
The next stage of operations is to deliver the futher concentrated ore
to a smelter for processing into dore' bars. These bars contain a mixture of
precious metals. The dore' bars will be then sold to a refiner until such time
the Company begins its own smelting operations. The Company is exploring new,
alter native technologies for which equipment is more expensive, but which is
proprietary, and may therefore require the negotiation of a joint venture
arrangement. However, the Company will first attempt to negotiate the purchase
of the equipment. To initiate its own smelting of the ore inventory into dore'
bars the Company will require significant funding. Over the next three years the
Company requires from $1,000,000 to $3,000,000 for equipment and an other
$2,000,000 for working capital. It is completed that the source of these funds
will come from the sale of the dore' bars, whether they be smelted by a third
party or by the Company.
At such time as the Company's planned facilities for smelting dore
bars are operational, it is expected that revenues from this source will
generate sufficient cash flow for the continued operation and expansion of the
Company's minerals div ision as well as for the needs of its other business
segments. Such plans may be impacted by numerous contingencies, including but
not limited to the accuracy of the various assays obtained by the Company, the
actual quality and quantity of precious metals in such concentrates, the
Company's ability to process such concentrates for a reasonable price and market
its product, the Company's ability to generate funds through the sale of real
estate or its television time credit certificates and/or a pri vate placement
offering, the outcome of its negotiations or litigation with Mr. Krilich and his
affiliates, and state and federal regulation of the various operations
contemplated by the Company.
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2. Entertainment Division
At the same time, the Company plans to continue development of any
music publishing activities of Nashville Music consultant's, Inc (NMC) [now
Nashville Music Group, Inc.(NMG)].The Company's agreement for acquisition of NMC
became effective February 4, 1997, and from that time until the amended stock
exchange agreement, the Company is entitled to a management fee equal to 9% of
NMC's gross revenues.
The original stock exchange agreement was amended on September 1,1998,
effective as of July 1,1997. The terms of the amended stock exchange agreement
provide that the Company shall shall receive all of the songs in the publishing
division of NMG.
The publishing division was represented as owning 400 songs, 200 of which
had been recored as demonstration tapes. The Company does not have physical
possesion of these songs and recordings,nor does it have assignments of the
artists contracts or copyrights. If Mr. Baggott or NMG fail to comply with the
agreement, legal action may be required to assure compliance with the agreement,
as amended.
Pursuant to the original agreement with NMG, the Company was committed to
arrange $500,000 of financing for NMG's development. As acknowledeged and agreed
to in the amendement to the exchange agreement, that obligation was fulfilled by
the President and Chairman of the Company,Maurice W. Furlong.
The Company also plans to market it interests in the music publishing
catalog acquired from Jey and Bullett. However,as discussed above, the final
determination of the ownership of the master recordings may come as a result of
the descion of a court of competent jurisdiction. The Company, through its
agreement with Artists shall comtinue to pursue a final determination of such
ownership and shall pursue the colection of any royalties that may be due.
However, the Company's plans may be impacted by several contingencies,
including but not limited to the ability to ac quire the rights to the above
referenced publishing catalogs,the ability to collect any past due royalties,
continued demand for the type of music contained in the catalog, its ability to
locate and identify talented and marketable country music writers, artists and
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record producers,its ability to market the song catalogs and its ability to
maintain cash flows to support these business activities.
3. MedAway Units
The Company was previously engaged in marketing leases for its 24
MedAway-1 medical waste decontamination units to a hospi tal chain. However, the
marketing efforts were not successful. The Company intends to continue its
efforts to market leases to hospitals, nursing homes, government entities and
related busi nesses as working capital becomes available. If such leases do not
materialize, the Company will seek to contract with one or more marketing
representatives, and may seek to launch a market ing campaign. When leased, each
machine is expected to generate income sufficient to sustain operations for this
segment of the Company's business.In the alternative, the Company will seek to
sell these units. The Company also plans to seek approval for assignment of the
MedAway distribution agreement, or a new dis tribution agreement with the
manufacturer as soon as the Com pany's financial resources appear sufficient to
support expanded marketing.
4. Learning Centers
The Company had intended to open a learning center in Reno, Nevada, in
the fall of 1997. Approximately $50,000 is deemed necessary to commence
operations, which funds were to be provided by William Jackson and his wife
Jacqueline Jordan. The Company's plan to start-up the learning center in Reno
was dependent on Mrs. Jordan's moving to the United States, and on the funding
committed by Mr. Jackson. Mr. Jackson's and Mrs. Jordan's plans to provide the
funding and move to the United States have not materialized. Therefore, the
Company shall move forward with plans to begin the learning center operation in
Reno, Nevada. The Company's ability to successfully operate such a laerning
center is impacted by, but not limited to, its ability to apply Mr. Jackson's
and Mrs. Jordan' business strategy to the United States, and the ability to
successfully compete with similar learning centers established in the United
States.
The Company owns the proprietary rights to the materials used by Mr.
Jackson and Mrs. Jordan in the successfull operation of their previous learning
centers in Canada. the Company will recruit an established educator and
administrator. The Company will also be required to do extensive legal research
regarding the statutory and regulatory requirements to operate this type of
business in the various states.
5. Health Care Centers
The Company continues to plan a national chain of health care centers.
Development of this business, however, will require significant investment,
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including costs associated with background research, professional fees,
licensing, and organiza tional activities. It is hoped and anticipated that the
Com pany's mineral and real estate sectors will provide funds for the
organization of this line of business. The Company anticipates that the planning
and organizational phase may be completed in mid-1999, at which time the Company
will commence marketing of its health care management and affiliation
arrangements.
Such plans may be impacted by several contingencies, includ ing but not
limited to the Company's ability to locate health care providers willing to
participate with the Company; consumer acceptance of and demand for the health
care centers contemplated by the Company; the Company's ability to generate
funds through commercialization of its precious metals concentrate, commercial
ization of its television time credit certificates and/or inter ests in real
estate, and/or lease of its MedAway-1 units; and state and federal regulation of
the industry. When enough affil iates of various disciplines in one area have
entered into con tracts with the Company, the Company plans to combine such prac
tices into multi-disciplinary health care centers. The goal will be to provide
primary and alternative health care at "one stop" health care facilities. It is
expected that funding for the multi-disciplinary health care centers will be
obtained through traditional financing arrangements, supplemented by funds from
the Company's mining and other operations.
The Company intends to defer further commitments to the joint venture
in Mexico in light of unforeseen problems with the joint venture arrangements
and title to the real estate in Mex ico. As time and funds permit, the Company
will explore the resolution of such problems and the availability of financing
for the project.
6. Real Estate
It is the Company's intent to pursue acquisition of the real estate
with respect to which it entered into contracts with and issued shares to The
Rainbow ("Rainbow") and The Senior ("Se nior") Groups through litigation and
settlement negotiations. If successful, the Company will sell at least some of
such real estate, particularly those properties which require long term
development effort and/or significant financing.
The Company's ability to sell or otherwise realize income from the
properties contracted for from Rainbow or Senior will depend on the outcome of
such litigation, and could also be adversely affected by certain court orders
affecting Mr. Krilich and his properties. The Company has filed a lawsuit with
respect to such properties with a view to perfecting its rights, and is
contesting a lawsuit filed by Mr. Krilich for rescission of the contracts
relating to such properties. (See Part II, Item 2 "Legal Proceedings".)
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At this time, no assurance can be given that the Company will ever
consummate the acquisition of such properties or real ize income therefrom.
7. Other Considerations
To effectively manage the properties which it has acquired or agreed to
acquire, the Company will be obliged to perform numerous and extensive
administrative functions. Upon completion of the litigation with Mr. Krilich, it
will be necessary for the Company to significantly expand its employee base. In
addition, it will be necessary for the Company to invest in the purchase of
computer and other equipment necessary to monitor the operations of its various
lines of business.
During the next 12 months, the Company will require signifi cant
additional funds to effect its plans. As indicated above, the Company is seeking
to generate funds by realizing the commer cial value, by sale or otherwise,
directly, through joint ven tures, or by sale, of some of its ore concentrate,
its television time credits, its medical waste disposal units, and/or its con
tractual interests in certain real estate, and/or a private placement offering.
The ability of the Company to impliment its plans is largely dependent of its
ability to obtain sufficient financing. Absent such financing, the Company may
be unable to put its plans into immediate effect. Inasmuch as it is asset based
with minimal operations, delay in obtaining such financing is not deemed to pose
a significant threat to the Company's viability.
Item 3. Description of Property
A. Precious Metal Concentrates and Mineral Rights
The Company owns a substantial deposit of ore concentrate located
approximately 40 miles from Prescott, Arizona, which according to an independent
metallurgist/assayer, contains sub stantially in excess of 500,000 tons. Tests
by Metallurgical Research & Assay Laboratory of Henderson, Nevada, another inde
pendent firm including a registered assayer and analytical chem ist, indicates
that such concentrate contains commercial quanti ties of precious metals,
including gold, platinum, iridium, and osmium. Sample tests (using a process
known as "DCP") indicate as much as one ounce of gold, three ounces of platinum,
and 19 ounces of osmium, among other precious and rare earths, in each ton of
concentrate. The Company owns the concentrate outright; it also has the mineral
rights to 17 claims located on the sur rounding 340 acres pursuant to a mineral
lease which expires in 2001. Gold in the form of nuggets was extracted from the
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property's surface by high grading (the extraction of free gold from the
surface) from the 1970s to 1994, when the property rights were acquired by
Peeples LLC. The Company's concentrate consists of the tailings from such high
grading operations which were placed in a pit. Lease payments are less than
$10,000 per year.
Through Peeples Mining, its wholly owned subsidiary, the Company also
owns seven 20-acre lode mining claims near Mesquite, in Clark County, Nevada.
This property was acquired by F&H Mining in 1987, and in February 1997, F&H
Mining was combined into Peeples Mining. Three composite samples from the top
three feet tested by Metallurgical Research & Assay Laboratory indicate
commercial quantities of precious metals, including gold, plati num, iridium,
and osmium in approximately 1,050,000 tons of head ore. Maintenance of the
mineral lease rights requires annual assessment work on the claims, for which
approximately $500 per year is currently expended.
In February 1997, the Company acquired 17 lode claims, including all
mineral rights, on 360 acres of land in San Bernardino County, California,
approximately 30 miles from Barstow, California. Such property includes a 600
foot deep shaft which operated from approximately 1920 until the late 1930s,
when operations were suspended on account of shortages incident to World War II.
Although not presently operating, the property was mined by high grading over
the past 20 years. Only about one acre has been exploited by such operations.
B. Contracts to Acquire Real Estate
The Company has contracts with The Rainbow Group ("Rainbow") and The
Senior Group (Senior),now The R&S Group ("R&S") calling for acquisition of
certain properties described below. None of such acquisitions have been
consummated, however, and Mr. Krilich, the former owner the certificates of
beneficial interest in Rainbow and Senior, has filed an action against the
Company to rescind such contracts, for breach of certain provisions in the
contracts including entitlement to additional consideration, and for fraud. (See
Part II, Item 2 "Legal Proceedings".)
Deeds to most of the Oakbrook Terrace property have been recorded in
the name of R&S Group, which is owned by the Company, but not all of the
property contracted for has been conveyed. However, in July of 1997 (after the
recording of deeds to R&S), Mr. Krilich caused deeds to the Oakbrook Terrace
property to be recorded in the name of an entity or entities which the believes
are controlled by him and which purport to convey title to this entity or
entities. To accomplish this, Mr. Krilich had signed a deed(s) as an agent of
Senior. However, in Novemeber 1995 Senior had ceased to exist, in that Senior
and Rainbow were combined into R&S. The Company owns all of the certificates of
beneficial interest of R&S and Mr. Furlong, as president of the Company, is the
trustee and sole director. It is the Company's position that the July 1997 deed
signed by Mr. Krilich has no legal effect (See part II, Item 2 "Legal
Proceedings").
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Deeds to the Tennessee properties have been recorded in the names of Senior
and Rainbow (now R&S), but Mr. Krilich has caused deeds to the same properties
to be recorded purportedly conveying the properties to R.K. Company, which the
Company believes is beneficially owned and/or controlled by him. The Company has
filed lawsuits seeking conveyance of all the properties to it free and clear of
any of any other interests or encumbrances, and seeking to set aside the
conveyance to R.K. Company of the Ten nessee properties. (See Part II, Item 2
"Legal Proceedings".) There can be no assurance, however, that the Company will
ever effectively acquire such real estate. In the meantime, the Company is
attempting to sell whatever interest it may have in certain of such real estate.
The Company could encounter other problems in consummating the
acquisition of some of the properties subject to its con tracts with Rainbow and
Senior. In addition to the various law suits between the Company and Mr.
Krilich, in September 1995, the U.S. District Court for the Northern District of
Illinois entered an order enjoining Mr. Krilich and others from transferring,
disposing of, or otherwise dealing with any property owned or controlled by Mr.
Krilich in any way which would affect its value, without posting security in the
amount of $20,000,000. (See Part II, Item 2 "Legal Proceedings".) It is the
Company's position that its agreements with Rainbow and Senior were exe cuted
before such order was entered, and that the Company had no information of any
proceedings which could restrict its rights to acquire and deal with such
properties. The effect of the order on conveyance of the properties subject to
the Company's con tracts with Rainbow and Senior cannot yet be determined, but
management believes that this issue will be resolved in the near future, by
court proceedings if necessary.
It had been agreed that, pending effectiveness of the Com pany's
Exchange Act registration statement, the sellers would keep all income from the
properties and pay all taxes and costs relating to maintenance of the
properties; consequently, the Company would not be entitled to any income from
such properties until February 1997, when its Exchange Act registration in fact
became effective. The Company is seeking an accounting and payment from Mr.
Krilich for all rents from such properties subsequent to February 4, 1997.
A number of other disputes have arisen with respect to the obligations
of the sellers, both of whom were controlled by Mr. Krilich at the time, under
these agreements. (See Part II, Item 2 "Legal Proceedings".) It is contemplated
that such disputes will be settled in connection with the above referenced
litiga tion. Because of such disputes and litigation, the Company does not have
reliable or current information with respect to acreage, size, rents, occupancy,
lease terms, or insurance.
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The Company's contracts call for conveyance of the following
properties, all of which are subject of the lawsuits described in this report
(see Part II, Item 2 "Legal Proceedings"):
a. 26 rental town houses, a tennis court, and swim ming pool, all
part of a development known as Royce Renaissance, in Oakbrook
Terrace, Illinois.
b. A three story office building, a restaurant/cater
ing/banquet facility, a single story building for merly used
as a model building for potential apartments, and
approximately three acres of va cant land, all part of the
Royce Renaissance de velopment in Oakbrook Terrace, Illinois.
The buildings require build-out and are presently unoccupied
except for one half of the third floor, which is occupied by
Mr. Krilich and/or certain affiliated companies. It was
intended that this space would be occupied by the Company, but
build-out was never completed.
c. A leasehold interest, believed to have six years remaining, in
a property located in Northbrook, Illinois, currently leased
to a motel known as The Sybris Inn ("Inn"). The Inn,
consisting of 38 specialty cottages, is believed to be leased
to an operator for more than $40,000 per month. Lease payments
are currently being made to Royce Realty, an entity believed
to be owned or controlled by Mr. Krilich.
d. A 100% interest in the Lakemoor Country Club in the village of
Lakemoor, Illinois, including the surrounding 155 acres,
clubhouse, lakes, restau rant lease, etc. The Company is not
aware of operations, if any, at the golf course.
e. The Company owns 100% of the beneficial interest in Deer Park
Trust, which in turn owns a 45% in terest in a shopping center
located in Palatine, Illinois.The trustee of Deer Park Trust
is an attorney whom the Company believes is and has been an
attorney for Robert R. Krilich, Sr. The shop ping center has
been generating revenues and the Company has made several
demands on the trustee for an accounting and for his
resignation based on a conflict of interest. Neither demands
have been met.
f. A site of approximately 6,200 square feet located in a strip
mall in Schiller Park, Illinois, which includes leases for a
Denny's Restaurant and a MaCleen's car wash.Rents are being
collected by Royce Realty, a company controlled by Mr.
Krilich.
g. 12 acres of undeveloped land zoned commercial, near Stirling
Road and Route I-95, in Dania, Florida. A portion of this
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property is subject to a joint development agreement between
The R&S Group and Fairdan Suites, Inc., for development of a
hotel (see Part I, Item 1 "Description of Busi ness"), but the
pending litigation may not permit the project to move forward.
h. A 73% interest in the land containing the golf course and club
building for Country Lakes Country Club in Naperville,
Illinois. Food and beverage operations are believed to be
leased to a third party. Subsequent to execution of the
Company's contract, the property was found to be possibly
subject to forfeiture in proceedings against Mr. Krilich.
However, to date there has been no at tempt to seize the
property. The Company's posi tion is that the closing on this
property took place prior to the entry of any proceed ings
insituted against Mr. Krilich. (see Part II, Item 2 "Legal
Proceedings").
i. A water and sewage disposal facility at Lakemoor, Illinois,
which was to serve the Lakemoor Country Club and a 500 unit
apartment complex. The Company has learned that contrary to
Mr. Krilich's representaions, the necessary permits were
either not issued or expired, and is the subject of injunction
proceedings filed by the Illinois Environmental Protection
Agency. (See Part II, Item 2 "Legal Proceedings".)
j. A restaurant site approximately 6,200 square feet) located at
Lawrence Avenue and River Road, Schiller Park, Illinois.
k. Approximately 419 acres of vacant land in Galatin,
Tennessee.Certain parcels are suitable for subdi vision into
single-family building lots.Additional parcels are suitable
development of a golf course, clubhouse, marina, apartments
and a hotel.
l. Oakbrook Terrace Utility Service, servicing the Royce
Renaissance Center and a 17 story office building known as
Lincoln Centre.
m. Approximately 58 acres of undeveloped land zoned commercial on
Dickerson Road, in Nashville, Ten nessee.
n. A 50% interest in a parcel of land just off Route 70 near
Bellevue, Tennessee, and approximately 24 acres of land
adjoining the above parcel. In addi tion and adjacent to the
above is approximately 1500 acres suitable for development
with single family homes and a small commercial site adjoining
such parcel. Notwithstanding the Company's con tract, this
property was recently recorded by Mr. Krilich in the name of
The R.K. Company,an entity which the Company believes is
controlled by Mr. Krilich. In February 1997, five acres of the
29 acres was sold by Mr. Krilich to a third party for
$174,000.
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The Company did not obtain appraisals of such properties; in some cases
letters from third party real estate professionals as to the value of the
properties to be acquired were supplied by Mr. Krilich; in other cases
representations of Mr. Krilich were relied upon. In some cases, the exchange
price was based on anticipated income from the property following development.
The Company believes that, in most cases, material misrep resentations
were made as to value and/or other facts about such properties, and that in many
cases, clear title cannot be ob tained. As part of the pending litigation, the
Company will attempt to adjust the number of shares issued or to be issued to
the fair market value of each property, but there can be no assurance that the
courts will find in favor of the Company. (See Part II, Item 2 "Legal
Proceedings".)
The shopping center in Pallatine, Illinois, is managed by the joint
venture partner; in most other cases where management is required, properties
are currently managed by Royce Realty and Management Corp. whose sole
stockholder is believed to be The R.K. Company, a stockholder of the Company, or
Mr. Krilich, also a stockholder of the Company. (See Part I, Item 7 "Certain
Relationships and Related Transactions"). Pursuant to a court order, Royce
Realty and Management Corp. monthly reports the income and expenses relating to
the proerties which are subject to the exchange agreements (See Part II, Item 2
"Legal Proceed ings"). In the event the acquisitions are consummated, the Com
pany plans to sell some properties and perhaps develop some properties as
financing permits. Other properties may be leased to others with a requirement
that the property be developed. In addition, the Company would terminate any
interest or involvement of Royce Realty and Management Corp. in any of the
properties and establish a new management team to manage its properties. C.
Offices
The Company's executive offices are located in suite 22F, 100 North
Arlington, Reno, Nevada, where it occupies two offices and a store room provided
by the Company's president, Mr. Fur long. Mr. Furlong also provides an office in
his house at 1030 Arabian Drive, Loxahatchee, Florida. Mr. Pietrzak provides an
office for the Company at 289 S. President Street, Carol Stream, Illinois.
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D. Other Property
The Company combined F&H Mining Corp., Ltd., a Canadian corporation,
and Peeples Mining Co., LLC, an Arizona limited liability company into Peeples
Mining Company, a Nevada corporation and a wholly owned subsidiary of the
Company. Through this subsidiary, the Company owns certain mining equipment,
including washer and concentrating equipment, loaders, a bull dozer, and trucks,
which the Company values at approximately $410,000 and certain equipment for
leaching and testing head ores, valued at approximately $86,000.
As part of its agreement with Senior Group in June 1994, the Company
acquired a 50% interest in Rainbow Air Corporation, which the Company believes
owns a 63 foot Sunseeker boat, a 50% inter est in a Hawker aircraft, and a 50%
interest in a 110 foot Christenson motor yacht named R Rendezvous, located in
Ft. Laud erdale, Florida. The Company also owns directly a 50% interest in the R
Rendezvous. The Company's interest in this yacht is an aggregated 75%.
Management currently plans to use the R Rendez vous for charter cruises and for
promotional purposes. The Company is in the process of reevaluating the exchange
agreement transactions to ensure that the number of shares issued accu rately
reflect the intent of the parties. Such properties are also the subject of the
legal proceedings between Mr. Krilich and the Company, in which the Company is
seeking, among other relief, a court mandated reevaluation of the transactions
with Mr. Krilich (See Part II, Item 2, "Legal Proceedings").
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Item 4. Security Ownership of Certain
Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to the
beneficial ownership of each person who is known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock as of October 11,
1999.
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(1) (2) (3) (4)
Title Name and Address Amount and Nature
of of Beneficial of Beneficial Percent
Class Owner Ownership (1),(2) of Class(2)
----- ----- ----------------- --------
Common Maurice W. Furlong Sr. 14,333,320 21.78%
Stock 100 North Arlington
(ste. 22F)
Reno, NV 89501
Common Robin Ogden 3,500,000 5.32%
9595 E. Thunderbird
#2006
Scotsdale, AZ 89260
Common The Depository Trust 47,468,837 72.15%
Company (Cede & Co.)
P.O. Box 20
Bowling Green Station
New York, NY 10004
Convertible Mind & Body Associates 99,000,000 73.33%
Preferred 100 North Arlington
(ste. 22F)
Reno, NV 89501
Convertible
Preferred CCMT Family Trust 30,000,000 22.22%
3106 Trueno
Henderson, NV 89104
- -------------------------------------
1 Unless otherwise noted, the security ownership disclosed in this table
is of record and beneficial.
2 Under Rule 13-d under the Exchange Act, shares not outstanding but
subject to options, warrants, rights, or conversion privileges pursuant
to which such shares may be acquired in the next 60 days are deemed to
be outstanding for the purpose of computing the percentage of
outstanding shares owned by the persons having such rights, but are not
deemed outstanding for the purpose of computing the percentage for any
other person.
3 Includes 33,320 shares in the name of Zarzion, Ltd. as to which Mr.
Furlong has voting control pursuant to a voting trust agreement with
Zarzion, Ltd., dated April 21, 1997. Such agreement expires in February
2007. The convertible preferred shares owned by Mind & Body Associates
are beneficially owned by Maurice W. Furlong. Mr. Furlong is the
president and sole shareholder of Mind & Body Associates.
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Security Ownership of Management
The following table sets forth certain information with respect to the
beneficial ownership of each officer and director, and of all directors and
executive officers as a group as of July 31, 1997.
(1) (2) (3) (4)
Title Name and Address Amount and Nature
of of Beneficial of Beneficial Percent
Class Owner Ownership (1),(2) of Class(2)
----- ----- ----------------- --------
Common Maurice W. Furlong 14,333,320(3) 21.78%
Stock 100 North Arlington
(ste. 22F)
Reno, NV 89501
Common Michael J. Pietrzak 2,001,500 .03%
Stock 100 North Arlington
(ste. 22F)
Reno, NV 89501
Common Alexander H. Walker III 2,001,500 .03%
Stock 57 West 200 South (no. 400)
Salt Lake City, UT 84101
All officers and directors 18,487,820(3) 28.1%
as a group (three persons)
Convertible Mind & Body Assoc. 99,000,000 73.33%
Preferred 100 North Arlington
(ste.22F)
Reno, NV 89501
Convertible Michael J. Pietrzak 5,000,000 2.50%
Preferred 100 North Arlington
(ste.22F)
Reno, NV 89501
Convertible Alexander H. Walker III 250,000 .002%
Preferred 57 West 200 South (#400)
Salt Lake City, UT 84101
All officers and directors 104,250,000 77.13%
as a group (three persons)
1 Unless otherwise noted, the security ownership disclosed in this table
is of record and beneficial.
2 In accordance with Rule 13-d under the Exchange Act, shares not
outstanding but subject to options, warrants, rights, or conversion
privileges pursuant to which such shares may be acquired in the next 60
days are deemed to be outstanding for the purpose of computing the
percentage of outstanding shares owned by the persons having such
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rights, but are not deemed outstanding for the purpose of computing the
percent age for any other person.
3 Includes 33,320 shares owned by Zarzion, Ltd, as to which Mr. Furlong
has voting rights. Does not include 42,910 shares registered in the
name of Rainbow Group and 73,814 shares registered in the name of
Senior Group, now combined into R&S Group, which have been assigned to
R.K. Company but not yet transferred on the books of the Company. Mr.
Fur long controls R&S Group on behalf of the Company, which is its
beneficial owner. the 99,000,000 shares of convertible preferred shares
owned by Mind & Body Associates are beneficially owned by Maurice W.
Furlong. Mr. Furlong is the president and sole shareholder of Mind &
Body Associates.
In April 1997, Zarzion, Ltd., entered into a voting trust agreement with
Mr. Furlong, pursuant to which Mr. Furlong is entitled to vote the 33,320 shares
of the Company's stock regis tered in Zarzion's name until February 2007. Such
agreement was entered into between Zarzion and Mr. Furlong individually, and had
no relationship to the purchase of Zarzion, Ltd.'s California mining property
which took place in February 1997. Zarzion, Ltd. is a Bahamian corporation
organized under the laws of Nevis, and is owned and managed by individuals
unrelated to the Company.
Item 5. Directors, Executive Officers, Promoters and Control
Persons
Directors and Executive officers
As of September 30, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows. Directors are elected at its annual
meeting of stockhold ers and hold office until their successors are elected and
quali fied. The Company's officers are appointed annually by the Board of
Directors and serve at the pleasure of the Board.
Term as
Director
Name Age Positions Held Expires
- ---- --- -------------- -------
Maurice W.Furlong, 51 Chairman,Chief Executive
Officer andPresident 2003
Michael J. Pietrzak, 50 Director, Secretary 2003
Alexander H. Walker,III, 38 Director 2003
Maurice W. Furlong, 51, has been the Company's President, Chief
Executive Officer, and Chairman since November 1984. Mr. Furlong was also the
founder of and a consultant to F&H Mining. From 1981 to 1984, he was a business
consultant to R.F. Scientific, Inc. Mr. Furlong has been active in business
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development and capitalization for a number of public companies, including compa
nies involved in satellite communications, music recording, motion picture
production and distribution, and chiropractic medicine. He was founder of The
American Music News, a nationally distributed music news publication of which he
served as president from 1979 through 1985. Also from 1979 through 1983, Mr.
Furlong was a sales and marketing consultant for Koala Record Co., a record
company in Hendersonville, Tennessee. From 1976 through 1979, he was presi dent
of Hunter's International Manufacturing Co., a manufacturer and wholesaler of
sporting goods. From 1968 through 1976, he was the owner of Furlong Contract
Construction Co., a general contrac tor in residential construction in Winan,
Michigan. Mr. Furlong is the subject of several court proceedings and cease and
desist orders relating to the sale of securities. (See "Certain Legal
Proceedings Involving Directors and Officers" below.)
Michael J. Pietrzak, 50, has been a Director and Secretary of the
Company since November 1996. Mr. Pietrzak is an attorney licensed in the State
of Illinois with a background in business law, and has provided legal and
business guidance to corporate and other business entities on a variety of
issues, including real estate, health care, mining, entertainment, environmental
matters, finance, international business organization, and banking. He has also
counseled clients with respect to litigation, mergers and acquisitions, general
issues relating to corporations and other types of business entities, employment
issues, state and federal regulations, copyrights and trademarks, marketing, and
advertising. He currently works full time for the Company.
Alexander H. Walker, III, 38, has been a Director of the Company since
November 1996. From 1987 through 1993, Mr. Walker practiced law with the firm of
Van Wagoner & Stevens, in Salt Lake City, Utah. Since 1993, he has practiced in
his own firm and as a sole practitioner, focusing primarily on business and
securities litigation. Mr. Walker also has performed securities transactional
and general corporate/business work for clients in a variety of industries,
including home health care, demolition blasting, dry cleaning, golf course
construction and operations, auto parts sales, and dental implant sales and
fabricating.
None of the Company's Directors are directors of other reporting
companies.
There are no family relationships between the directors, executive
officers or with any person under consideration for nomination as a director or
appointment as an executive officer of the Company.
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Significant Employees and Consultants
The Company currently has no employees except for certain officers and
directors. Although certain individuals, including Mr. Furlong and Mr. Pietrzak,
have devoted substantial time and energy to the Company's operations, these
individuals have not been compensated by the Company.However,in recognition of
the substan tial time and energy put forth by Messrs. Furlong and Pietrzak on
behalf of the Company, the Board of Directors has agreed to enter into
employment contracts with these individuals.
The effective date of the agreements is that date on which
substantially all of Messrs. Furlong and Pietrzak time and efforts were devoted
to the business of the Company. The amount of compensattion shall be in
accordance with industry standards for as aplied to Companies similar in assest
size, diversity of operations and complexity of issues. Niether Mr. Furlong nor
Mr. Pietrzak shall receive any compensation until such time that the Company
generates revenues.
In November 1996, Messrs. Pietrzak and Walker and a former Director,
Ms. Barbara L. Krilich received stock from the Company as an incentive to
becoming directors (no services being required), and each has received some
compensation, including professional fees, from certain third parties who will
not be reimbursed by the Company. By Board of Director resolution on December
22, 1997,the award of stock was voided and held for naught. Mr. Pietrzak,Mr.
Walker and Ms. Krilich returned the stock to the Company.
The Company is not a party to any collective bargaining agreement.
In January 1996, the Company entered into an agreement with Mr.
Krilich, pursuant to which Mr. Krilich was to provide advice and consulting
services with respect to management and organization of the Company, its
financial policies, real estate development and financing arrangements, and
other matters arising out of the Company's business. The Company agreed to pay
Krilich on a per- project basis, each project to be chosen and assigned by the
Company. The agreement is for a 10-year period with automatic renewal periods of
10 years each, which renewals are at the option of the consultant. The fee to be
paid to Mr. Krilich has yet to be determined, but it was agreed that he would
not be entitled to any payment until seven months after the effective date of
the Com pany's Exchange Act registration. In light of the disputes which have
arisen between Mr. Krilich and the Company and its management, it is unlikely
that the Company will call on Mr. Krilich's ser vices. As a precautionary
measure, the Company has sent written notice to Mr. Krilich stating he has no
authority to act on the Company's behalf for any purpose.
43
<PAGE>
Certain Legal Proceedings Involving Directors and Officers
In December 1994, the Securities Commissioner for South Carolina
entered an Order to Cease and Desist from Selling Unregis tered Securities and
Notice of Right to Hearing in an administra tive proceeding before the South
Carolina Securities Division against the Company, Maurice Furlong, Craig
Furlong, and James Troester. At the time in question, Messrs. Furlong, Furlong,
and Troester were officers of the Company. Such order contained allegations of
sales of unregistered securities, sales of securi ties by unregistered agents,
and fraud in the sale of securities. The order denied the availability of
exemptions from registration requirements under South Carolina law with respect
to certain transactions involving the sale of the Company's stock in South
Carolina; ordered the respondents to cease and desist from issuing, offering,
and selling securities issued by the Company to persons in South Carolina until
the respondents became licensed broker-dealers or agents; and prohibited
respondents from making any offer or sale of any security to any entity or
person in South Carolina by means of false or fraudulent sales practices.
In March 1994, in an action brought by the Tennessee Securi ties
Division, the Commissioner of Commerce and Insurance for Tennessee entered an
Order to Cease and Desist whereby the Company, its predecessor, SCN Ltd, and
Maurice Furlong, James Troester, and certain others were ordered to cease and
desist from (i) the further offer or sale of stock subscriptions of the Company
from, to or into the State of Tennessee until such time as such securi ties are
effectively registered with the Tennessee Securities Division; (ii) conduct as a
broker/dealer in Tennessee until such time as such person are effectively
registered with the Tennessee Securities Division; (iii) advertising stock
subscriptions; (iv) making any untrue statement of a material fact or failing to
state a material fact necessary in order to make the statements made, in the
light of circumstances in which they are made, not misleading; and (v) aiding,
abetting, or helping any of the respondents in any of such violations.
In 1988, the U.S. District Court for the Middle District of Tennessee
entered a Final Judgment of Final Injunction against the Company and its then
officers and directors (including Messrs. Furlong, Furlong, and Troester)
enjoining the them from, among other things, offering or selling common stock of
SCN Ltd. unless and until a registration statement has been filed with the
Securi ties and Exchange Commission as to such securities and from employ ing
any device scheme or artifice to defraud in connection with the sale of SCN
common stock.
None of the Company's Directors or executive officers have, in the past
five years, been (i) involved in any bankruptcy pro ceedings or (ii) subject to
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criminal proceedings or convicted of a criminal act, and, except as indicated
above, none of the Company's Directors or executive officers have, in the past
five years, been (iii) subject to any order, judgment, or decree entered by any
Court for violating any laws relating to business securities or banking
activities; or (iv) subject to any order for violation of federal or state
securities laws or commodities laws.
Item 6. Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company during the years ended December 31, 1996, 1995 and 1994 to the Company's
Chief Executive Officer and other officers and Directors whose compensation
exceeded $100,000 in any one year.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------------------------------------------
(a) (b) (c) (e) (f) (g) (h) (i)
Other Restricted Options/ All
Annual Stock SARs LTIP other
Name/Principal Position Year Salary Comp. Awards (#) payouts comp.
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Maurice Furlong/
CEO, and Chairman 1999 -0- -0- -0- -0- -0- -0-
1998 -0- -0- -*- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
1995 -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0-
Michael J. Pietrzak/ 1999 -0- -0- -0- -0- -0- -0-
Secretary 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
</TABLE>
* See discussion below.
There were no options granted in the last fiscal year to any of the Company's
officers or Directors.
<PAGE>
45
Compensation of Directors
Members of the Board of Directors do not receive cash compen sation for
their services as Directors, except that, as an incentive to their becoming
members of the board, 750,000 shares were issued to three new members in
November 1996. In addition, Directors are not presently reimbursed for expenses
incurred in attending Board meetings.
On November 1, 1996, Mr. Pietrzak, Ms. Krilich, and Mr. Walker were
each awarded 250,000 shares of the Company's common stock as compensation for
becoming directors.On December 22, 1997 this award was voided and held for
naught. Mr. Piertzak, Ms. Krilich and Mr. Walker have since then returned these
shares to the Company.
In recognition of the fact that the Company's continued operations
were due largely to the efforts of Maurice Furlong, and the fact that Mr.
Furlong basically had not been compensated for his services, in October of 1998,
the Company issued 200,000,000 shares of its preferred stock to Mr. Furlong.
In 1999, Mr. Furlong compensated Michael Pietrzak for his services to
the Company by transferring 5,000,000 shares of Company's preferred stock to Mr.
Pietrzak. Such shares came from Mr. Furlong's personal holdings and this
transaction did not involve the issuance of shares by the Company. Item 7.
Certain Relationships and Related Transactions
In 1999, Mr. Furlong compensated Alexander Walker III for his services
to the Company by transferring 250,000 shares of Company's preferred stock to
Mr. Walker. Such shares came from Mr. Furlong's personal holdings and this
transaction did not involve the issuance of shares by the Company. Further, in
1999, Mr. Furlong compensated Alexander H. Walker III for his services to the
Company by transferring 2,000,000 shares of Company's common stock to Mr.
Walker. Such shares came from Mr. Furlong's personal holdings and this
transaction did not involve the issuance of shares by the Company.
Certain individuals interested in the Company's success have
contributed and continue to contribute time, office space, and travel,
telephone, compensation to independent consultants and professionals, and other
expenses, without compensation.
The following information is presented to provide continuity of the
information disclosed in this registration statement, even though it may not be
required by Regulation S-K or Regulation SB "Certain Relationships and Related
Parties".
In March 1994, the Company agreed to acquire all the outstanding stock
of F&H Mining in exchange for stock of the Company (see Part I, Item 1
"Description of Business"). At the time of such agreement, members of the family
of Maurice Furlong, the Company's President and Chairman, owned stock in F&H,
and Mr. Furlong's son, Craig Furlong, was F&H's president. In connection with
such transaction, Maurice Furlong received 12,000,000 (1,200 after given effect
of reverse split) shares of the Company's common stock for the sole purpose of
distributing same to the shareholders of F&H pursuant to the stock exchange
agreement. Such transaction cannot be deemed to have been negotiated at arms
length. In the opinion of the Company's manage ment, the terms of such agreement
were as favorable to the Company as would be available from any third party.
Barbara L. Krilich, who served as the Company's Treasurer and a
Director from November 1996 through April 1997, is the daughter of Robert R.
Krilich, Sr. In November 1997, Ms. Krilich received 250,000 (25,000 after given
effect of reverse split) shares of the Company's common stock without any
obligation to perform future services, as an incentive to becoming a member of
the Company's board of directors, she has since that time returned those 250,000
(25,000 after given effect of reverse split) shares to the Company. While Ms.
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<PAGE>
Krilich was not a director or officer at the time the Company entered into the
agreements for purchase of the Senior Group and Rainbow Group properties, or at
the time the Company entered into the consulting contract with her father, her
relationship to Mr. Krilich created a conflict of interest by virtue of the
Company's pending disputes relating to the acquisition of such real estate and
the disposition to be made of Mr. Krilich's consulting contract. Because of such
conflicts, Ms. Krilich resigned from the Board of Directors and as an officer of
the Company on May 5, 1997.
In November 1995, the Company borrowed $462,809 from Mr. Krilich's
affiliate, R.K. Company. Such loan is represented by two notes which were due in
May 1996, with interest at 10%. Approxi mately $195,000 of such notes was used
as down payment on a contract to purchase a mining property which was
subsequently cancelled. In March 1997, the Company repaid R.K. Company such
$195,000. Payment of the balance due on these notes is overdue, and is accruing
interest at the rate of 18% per annum.
At the time the Company entered into its initial agreements with Senior
Group and Rainbow Group for the acquisition of real estate in exchange for
shares of the Company's common stock, Robert R. Krilich, Sr., was the beneficial
owner and controlling person of such entities, but he was not at that time an
officer, director, or significant stockholder of the Company.
At the time the Company entered into the agreement with Mr. Krilich for
consulting services, Mr. Krilich was the owner of a substantial portion of the
Company's outstanding common stock. Such agreement was made in the context of
negotiations on acquisition of the Company's real estate, and should not be
considered indepen dently.
Most of the properties to be acquired by the Company pursuant to the
Stock Exchange Agreements with Senior Group and Rainbow Group are currently
managed by Royce Realty, an Illinois corporation which has been in the business
of managing real estate since the mid-1960's. It is the Company's understanding
that R.K. Company and/or Mr. Krilich, major shareholders of the Company, may be
the controlling shareholder(s) of Royce Realty, and that Mr. Krilich is the
benefi cial owner of and/or controls R.K. Company. The arrangements with Royce
Realty were entered into by Senior and Rainbow Groups before the Company
controlled them or either of them. The Company's Illinois lawsuit includes a
demand for termination of Royce Realty's and Mr. Krilich's interest in and
control of the properties assigned to R&S Group. (See Part II, Item 2 "Legal
Proceedings".)
Mr. Pietrzak, a Director of the Company and its Secretary, also
provides legal services to the Company. In November 1997, Mr. Pietrzak received
250,000 (25,000 after given effect of reverse split) shares of the Company's
common stock without any obligation to perform future services, as an incentive
to becoming a member of the Company's Board of Directors, he has since that time
returned that stock to the Company. From 1992 to 1996, Mr. Pietrzak also served
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<PAGE>
as counsel to Royce Realty and to various other business organizations owned or
controlled by Mr. Krilich, including Senior Group and Rainbow Group. In November
1996, Mr. Pietrzak severed all relationships with Mr. Krilich and his
organizations, and fully devoted his attention, efforts and time to the Company.
Such previous relationships could create a conflict of interest with respect to
the disputes between the Company and Mr. Krilich.
Mr. Walker, a Director of the Company, also provides legal services to
the Company. In November 1997, Mr. Walker received 250,000 (25,000 after given
effect of reverse split) shares of the Company's common stock without any
obligation to perform future services, as an incentive to becoming a member of
the Company's Board of Directors, he has since that time returned that stock to
the Company.
In March 1994, the Company entered into agreements to acquire all the
issued and outstanding stock of Academy for Mathematics and Science, which owned
two learning centers in Toronto, Ontario. The centers were operated by Ms.
Jacqueline Jordan, the wife of Mr. William Jackson, a consultant to the Company;
a third center was planned to be opened in the United States. 1,200,000 (1,200
after given effect of reverse split) shares were issued for these transactions,
400,000 (400 after given effect of reverse split) shares being allocated for
each. Consummation of these transactions was contingent on a number of events
and subject to a number of conditions subsequent. In January 1997, it was
mutually agreed that the Company should not acquire the two learning centers in
Toronto. Mr. Jackson has returned the 800,000 (800 after given effect of reverse
split) shares received for these centers, and has agreed to commit $50,000
towards the establishment of a new center in Reno, Nevada, under the name
"Learning Centers of America". (See Part I, Item 1 "Description of Business".)
At the time the Company issued 375,000,000 (375,000 after given effect
of reverse split) shares of its stock to Zarzion, Ltd., in exchange for its 17
lode claims in California, Zarzion, Ltd., was the owner of approximately
87,737,143 (87,738 after given effect of reverse split) shares orapproximately
21% of the Company's then issued and outstanding shares. Notwithstanding this
interest, the Company believes the terms of such acquisition were as favorable
as would have been obtainable from any third party. As of October 11, 1999
Zarzion only owns 33,320 shares of the Company's issued and outstanding stock.
Item 8. Description of Securities.
The Company's articles of incorporation currently provide that the
Company is authorized to issue 1,100,000,000 shares of capital stock, consisting
of 900,000,000 shares of common stock, par value $.001 per shares, and
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<PAGE>
200,000,000 shares of convertible preferred stock, par value $.001 per share. As
of December 8, 1999, 67,787,788 shares of common stock were outstand ing and
135,050,000 shares of preferred stock were outstanding.
On August 28, 1997, the Board of Directors unanimously adopted a
resolution authorizing the officers of the Company to effectuate a reverse stock
split of the Company's common stock. The officers were given authority to use
their discretion as to the timing of and the number of current shares to be
exchanged in the reverse stock split. The officers exercised the authority given
by the Board of Directors and effective June 30, 1998 a 1 for 1,000 shares,
reverse stock split took place. There were no fractional shares issued and any
stock holder with less than 1 share after the reverse split, was given 1 full
share. On the date of the reverse stock split there were 871,068,000 shares
outstanding which were reduced to 871,098 after the reverse split.
Common Stock
Each holder of record of the Company's common stock is entitled to one
vote per share in the election of the Company's directors and all other matters
submitted to the Company's stockholders for a vote. Holders of the Company's
common stock are also entitled to share ratably in all dividends when, as, and
if declared by the Company's Board of Directors from funds legally available
therefor, and to share ratably in all assets available for distribution to the
Company's stockholders upon liquidation or dissolution, subject in both cases to
any preference that may be applicable to any outstanding preferred stock. There
are no preemptive rights to subscribe to any of the Company's securities, and no
conversion rights or sinking fund provisions applicable to the common stock.
49
<PAGE>
Neither the Company's articles of incorporation nor its bylaws provide
for cumulative voting. Accordingly, persons who own or control a majority of the
shares outstanding may elect all of the Company's directors, and persons owning
less than a majority could be foreclosed from electing any.
Preferred Stock
The Company is authorized to issue preferred stock from time to time,
in one or more classes or series, each class or series to have such voting
rights, designations, preferences, and relative rights as may be fixed by the
board of directors. The consent or approval of the Company's stockholders is not
required. The preferred stock may rank senior to the common stock with respect
to dividends, distribu tions in liquidation or dissolution, or both, and may
have extraordi nary or limited voting rights. In October 1998, 200,000,000
shares of convertible preferred stock were issued to Maurice W. Furlong. As of
December 8, 1999, 135,050,000 shares were outstanding.
On December 7, 1999, the Board of Directors unanimously passed a
resolution granting voting rights to the holders of convertible preferred stock.
Each share of convertible preferred stock has four votes as compared to one vote
for each share of common stock. Therefore, the holders of shares of preferred
stock have four votes as compared to the holders of common stock who have one
vote.
50
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder Matters
The Company's stock is currently traded over the counter. Quotations
are carried on the National Association of Securities Dealers, Inc.'s "Bulletin
Board" under the symbol "HCCA".
The following table sets forth the range of high and low bid prices for
the Company's common stock for the indicated periods as reported by NASDAQ's
Bulletin Board research service. Such quota tions reflect inter-dealer prices
without retail markup, markdown or commission, and may not necessarily represent
actual transactions:
High Bid Low Bid
-------- -------
1999 Quarter ended September 30 $ 0.108 $ 0.02
Quarter ended June 30 0.35 0.0313
Quarter ended March 31 0.15 0.0625
1998 Quarter ended December 31 $ 0.05 0.0625
Quarter ended September 30 1.25 0.125
Quarter ended June 30 0.055 0.007
Quarter ended March 31 0.025 0.0015
1997 Quarter ended December 31 $ 0.0275 $ 0.001
Quarter ended September 30 0.07 0.015
Quarter ended June 30 .105 $ .021
Quarter ended March 31 .47 .10
1996
Quarter ended December 31 $ .60 $ .17
Quarter ended September 30 1.50 .50
Quarter ended June 30 2.10 .50
Quarter ended March 31 2.00 1.25
Holders
The approximate number of record holders of the Company's common stock
as of October 11,199 was 1,396. The record holders on the Company's convertible
preferred stock of December 8, 1999 were 4.
Dividends
The Company has never paid cash dividends on its common stock and does
not intend to do so in the foreseeable future. The Company currently intends to
retain any earnings for the operation and expansion of its business.
51
<PAGE>
Item 2. Legal Proceedings
A. Mar-Pro Transaction
In September 1996, the Company brought an action against Mar-Pro
Services, Ltd., an Irish corporation ("MarPro"), Asset Resource Management, and
Robin Rood IV, in the Second Judicial District Court, Washoe County, Nevada, to
rescind the purchase of certain ore concen trates by the Company.
In March and August of 1995, the Registrant entered into two agreements
for the purchase of a total of 150 tons of ore materials represented to be
highly concentrated. 41,749,500 (41,750 after given effect of reverse split)
shares were issued for this ore, whose value was represented to be in excess of
$100,000,000. The first agreement, dated March 15, 1995, was with Mr. Rood doing
business as Asset Resource Management; under that agreement, the Company pur
chased what was represented to be 80 tons of concentrated ore material with a
value of approximately $55,000,000; the second agreement was with Asset Resource
Management and Mar-Pro, pursuant to which the Company purchased what was
represented to be an additional 70 tons, with a value in excess of $45,000,000.
The concentrate was delivered by Mar-Pro and is stored in sealed and numbered
containers at warehouses in Las Vegas, Nevada, and Long Beach, California.
The Company's suit alleges that the concentrate delivered by Mar-Pro
and Asset Resource Management did not assay at the value represented by Mar-Pro
and Mr. Rood, but on the contrary has no value at all. In October 1996, the
Company obtained a preliminary injunction enjoining the transfer of the
Company's stock issued in connection with such transactions. The Company has
cancelled the 41,749,500 (41,750 after given effect of reverse split) shares
issued in connection with such transactions, and such shares are no longer
listed as outstanding in the Company's books and records.
B. Actions between the Company and Robert R. Krilich, Sr. and
Affiliates
As pointed out above (see Part I, Item 3 "Description of Property"),
the Company asserts that its right to the properties and income from the
properties subject of its contract(s) with Senior Group and Rainbow Group (now
R&S Group) has now vested, but the persons controlling such properties have
filed an action to rescind the Company's agreements relating to such real
estate, and continue to retain the revenues from such properties. While deeds
have been delivered made out to Rainbow Group and/or Senior Group (now R&S
Group), such deeds have not, with the exception of deeds to certain properties
in Tennessee and Oakbrook Terrace, Illinois, been recorded because of the
pending litigation and because of court orders against Mr. Krilich. In
connection with the pending litigation, the Company intends to seek an
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<PAGE>
adjustment of the number of shares due Mr. Krilich and his affiliates where it
appears that the property was grossly overvalued or clear title cannot be
obtained, including shares previously issued as well as shares allegedly due on
account of declines in the market price for the Company's stock.
In April 1997, the Company (through its wholly owned division, R&S
Group) and Maurice Furlong, individually and as a director/trustee of R&S Group,
filed a law suit in the Circuit Court of DuPage County, Illinois, against Royce
Realty, Mr. Krilich, R.K. Company, Senior Group, Rainbow Group, and others. Such
action seeks a declaration that R&S Group is the sole owner of any all real and
personal property owned by Rainbow Group and Senior Group, a constructive trust
on the rents and income obtained from the properties assigned to R&S Group, an
accounting for such rents, delivery of the proper deeds, bills of sale, and
documents of title to the personal and real property assigned to R&S Group, and
punitive damages. The Company also filed actions in Tennessee to quiet title to
those properties located in Tennessee; such action is now pending in the U.S.
District Court for the Middle District of Tennessee.
In June 1997, Mr. Krilich, R.K. Company, and Royce Realty filed a law
suit in the Circuit Court of DuPage County, Illinois, for relief and damages
against the Company, Mr. Furlong, Mr. Pietrzak, James Troester, and R&S Group.
Such action alleges breach of the Company's obligations (i) to issue all the
stock required to be issued under the Company's contracts with Rainbow and
Senior Groups, (ii) failure to issue additional stock to Rainbow and Senior
Groups to make up for the subsequent decline in the market price for the
Company's stock, (iii) failure to finance construction at Renaissance Center at
Oakbrook Terrace, (iv) failure to pay Rainbow Air's opera ting expenses, (v)
failure to finance construction and operations at certain properties (Lakemoor
Country Club and Renaissance Center) transferred by Rainbow Group, (vi) failure
to finance property in Aspen Colorado, and (vii) failure to remove transfer
restrictions from plaintiff's stock. Plaintiffs demand rescission of the
contracts with Senior and Rainbow Groups. Plaintiffs further allege fraud on the
basis that the defendants never intended to perform their obligations under the
contracts sued on, misrepresented who would control R&S Group following merger
of the Senior and Rainbow Groups, and alleges that Mr. Pietrzak received
compensation from the Company at the same time he was being compensated by Mr.
Krilich. Plaintiffs seek findings that defendants are in default of the
contracts with Rainbow and Senior Groups, rescission of such contracts and
conveyance of the beneficial interests in Rainbow and Senior Groups to Mr.
Krilich, an injunction against Mr. Pietrzak from performing services for any
other person in matters involving Mr. Krilich. While admitting that certain
payments to which plaintiffs might be entitled have yet to be made, defendants
deny any wrongdoing and aver that the contracts are binding, subject to set-offs
for misrepresentations made by the sellers and seller's inability to deliver
certain titles. Mr. Pietrzak avers that Mr. Krilich was aware that his services
were to document agreements which had been negotiated by the parties, and that
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<PAGE>
Mr. Krilich was fully aware that Mr. Pietrzak was working for the Company as
well as himself and at various times had directed Mr. Pietrzak to perform
services involving both parties.
R.K. Company's action also alleges indebtedness on the part of the
Company in the amount of $3,100,000 and the value of 58,000,000 shares of its
common stock as of September 29, 1995, plus "vexatious interest". The Company
denies any such indebtedness, for the reason that the third persons party to
such contracts refused to perform, for which reason they were valueless. R.K.
Company's action also alleges indebtedness on the part of the Company in the
amount of $1,000,000 and the value of 40,000,000 shares of its common stock as
of September 29, 1995, plus interest. The Company denies any such indebtedness,
for the reason that the third persons party to such contracts refused to
perform, for which reason they were valueless. R.K. Company's action also
alleges indebtedness on the part of the Company for the value of 17,187,500
shares of the Company's stock as of July 13, 1996, plus $1,000,000 exemplary
damages, for cancellation of 17,187,500 shares issued to Mar-Pro and assigned to
R.K. Company. Such shares were cancelled as a set off of certain indebtedness to
the Company on the part of Mar-Pro. See "Mar-Pro Transaction", Subsection A
above.
R.K. Company also alleges indebtedness on the part of the Company in
the amount of $771,474 on account of various unpaid loans and notes. Mr.
Krilich's action also alleges indebtedness on the part of the Company in the
amount of $8,351 on account of certain advances made by him in connection with
the proposed project in Mexico. It is the Company's position that the parties
were to absorb their own expenses, and that it never agreed to pay those of Mr.
Krilich. Mr. Krilich's action also alleges indebtedness on the part of the
Company and Mr. Furlong in the amount of $153,560 on account of a purported
agreement by them to service the debt on certain real estate pursuant to a
letter of intent for purchase of such property, which agreement the Company and
Mr. Furlong deny. Mr. Krilich and Royce Realty also allege indebtedness on the
part of the Company in the amount of $60,538 for various secretarial, security,
and other services. All of such allegations are denied by the Company.
Mr. Krilich's action also alleges indebtedness on the part of Mr.
Furlong in the amount of $42,350 on account of various unpaid loans and notes,
$10,000 for certain stock paid for but not deliv ered, and $48,790 for unpaid
rent. Mr. Furlong denies such indebted ness, alleging that all such payments
were for services relating to the real estate for which Mr. Krilich was
responsible pending transfer to the Company, and that no rent was payable
inasmuch as Mr. Furlong had fully paid such rent through such time as Mr.
Krilich transferred the property to the Company. Mr. Krilich's action also
alleges indebtedness on the part of Mr. Furlong for the value of 50,000,000
shares of the Company's stock as of June 1996, plus $1,000,000 exemplary
damages, for shares delivered to Mr. Furlong for use as security for a loan
unrelated to Company business from a third party; Mr. Furlong denies that such
shares were loaned and rather reflected Mr. Krilich's contribution to stock to
be transferred to others. See "Mar-Pro Transaction", Subsection A above.
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<PAGE>
In June 1997, Rainbow Air Corporation ("Rainbow Air"), an affiliate of
Mr. Krilich, filed a law suit in the Circuit Court of DuPage County, Illinois,
against the Company and Mr. Furlong for $3,712,091 on account of a yacht charter
agreement. The Company denies that any payments remain due to Rainbow Air, it
being management's belief that Rainbow Air is 50% owned by the Company, and that
all payments due have been made in the form of shares of the Company's stock as
contemplated by the parties' agreement. (See Part I, Item 3 "Description of
Property".)
In August 1997, Robert R. Krilich, Roseann Loesch and Gregory Loesch
(Mr. Krilich's daughter and son-in-law), on behalf of themselves and all other
similarly situated stockholders of the Company, filed an action in the Circuit
Court of DuPage County, Illinois, against the Company and certain of its
officers and directors. The action alleges that the Company's acquisition of
Peeples Mining, F&H Mining and the mining claims near San Bernardino,
California, were void due to alleged interests of Mr. Furlong in such properties
at the time of acquisition. Mr. Furlong denies the allegations of such
complaint, pointing out that the Company's board was at all times aware of any
interests he may have had in the properties being acquired. Mr. Furlong further
denies any interest in the San Bernardino property at any time. The action also
alleges that the value of the 375,000,000 shares issued for the San Bernardino
mining interests exceed the value of those interests. The Company has
independent third party data which supports the Company's position that the
value of the San Bernardino mining interests exceed the value of the shares
issued. The Company further maintains that this transaction was fair to the
Company and that voiding the transaction would not be in the best interest of
the Company's stockholders. Mr. Furlong and the Company are vigourously
defending this action.
Management cannot predict the outcome of these actions, nor what effect
they might have on the Company, its operating results or financial condition.
Management doubts that an adverse decision with respect to the real estate would
result in a judgment for money damages against the Company, and believes that in
the event the contracts with Rainbow and Senior Groups were held to be
terminated for lack of performance or otherwise, the Company would lose its
rights to such real estate described herein, but by the same token would likely
be entitled to cancel the shares issued to Mr. Krilich and/or his affiliates in
exchange for such properties. The Company believes it has valid defenses to the
other claims of Mr. Krilich, R.K. Company, and Rainbow Air, but there can be no
assurance that such defenses can be documented, and the Company might be found
liable on one or more of such notes or claims for monies loaned.
55
<PAGE>
These lawsuits have been consolidated into one case, before one judge
and have set for trial begining on October 6,2000.
C. Third-Party Proceedings Involving Robert R. Krilich, Sr.
It is management's understanding that Robert R. Krilich, Sr., a
shareholder of the Company, owns or controls all or a majority interest,
directly or indirectly, in R.K. Company, which is the owner of more than 5% of
the Company's issued and outstanding shares.
Mr. Krilich has been named a defendant in at least the actions listed
below. Several of such actions involve parcels of real property which are the
subject of agreements between the Company and Senior Group and/or Rainbow Group,
and such actions could affect the Company's ability to consummate the
acquisition of such properties and utilize them in its business.
Further, the Company believes that it may be the target of claims that
the Company is no more than a vehicle for the transfer of real estate by Mr.
Krilich. It is possible, therefore, that plaintiffs in these actions may claim
that the Company is the alter ego of Mr. Krilich, or that Mr. Krilich has used
the Company to hide or shelter assets. It is the Company's opinion that such
claims would be groundless. Nevertheless, to the extent that the Company must
defend itself in any action based on such claims, or to the extent such actions
involve real property the Company has agreed to acquire, the following actions
may have a negative effect on the Company's operations. However, the management
cannot predict or determine the expected impact to the Company's operating
results and financial condition.
1. Environmental Proceedings, Oakbrook Terrace Property
In August of 1992, the United States filed a complaint in the U.S.
District Court, Northern District of Illinois, against Mr. Krilich and other
entities which the government claimed were closely held by him. The complaint
alleged that defendants had discharged fill material into woodlands on two
Chicago area construction sites without permits in violation of the Clean Water
Act. The parties entered into a consent decree which, among other things,
provided for a remediation plan which would bring the property in question into
compliance with federal law. In April 1996, the United States brought an action
alleging violation of such consent decree, seeking sanctions for violation of
the decree and enforcement of its remedi ation provisions. The action involves
the Company's property in Oakbrook Terrace, Illinois, and Sullivan Lake property
in Lakemoor, Illinois, identified in Part I, Item 3-"Description of Property",
above, and could have a negative effect on the Company's ability to operate,
sell, or otherwise utilize such property. Such litigation is believed to be
still pending. Management cannot predict nor determine the expected impact on
the Company's operating results and financial condition.
56
<PAGE>
2. Environmental Proceedings, Lakemoor Utilities
In September 1996, the Illinois Environmental Protection Agency filed
an action in the Circuit Court, Lake County, Illinois, against Mr. Krilich,
Royce Realty, and Parkway Bank & Trust, to enjoin operation of the waste water
treatment facility operated by defen dants, and to impose monetary fines and
penalties. The complaint alleged that the defendants did not have the necessary
operating permits for the facility, such permits having expired. The action
involves the water and utility services located in Lakemoor, Illinois, one of
the properties subject of the Company's contract with Rainbow Group (see Part I,
Item 3 "Description of Property"), and could have a negative effect on the
Company's ability to operate or sell the facility, especially to the extent the
State continues to enjoin operations at the facility. However,management cannot
predict or determine the expected impact on the Company's operating results and
financial condition.
3. Misstatements, Financing
In February 1995, Mr. Krilich was indicted by a Federal grand jury in
Chicago, Illinois, on multiple counts including, among others, making false
statements to a financial institution in violation of 18 U.S.C.ss. 1014. The
indictment also contains "RICO" allegations, and sought the forfeiture of
currency and real property. Following a jury trial in September 1995, Mr.
Krilich was convicted on all counts, and the Country Lakes Country Club golf
course in Naperville, Illinois, was found to be forfeitable to the United
States. The Country Lakes Country Club golf course is one of the properties
subject to the Company's agreement with Rainbow Group (see Part I, Item 3
"Description of Property"). Forfeiture would have a negative impact upon the
Company's ability to consummate such exchange agreement with Rainbow Group.
There has been no attempt to enforce any forfeiture. Management cannot predict
or determine the expected impact to the Company's operating results and
financial condition.
D. Threatened Legal Proceedings
Management understands that since September 1995, there has been a
Federal grand jury investigation in the Northern District of Illinois involving
the Company. The Company has not been put on notice by prosecutors of the exact
nature of the investigation because, as the Company has been informed, such
proceedings are secret. Accordingly, the Company is unaware of the exact date
when the proceedings began, the principal parties named in the proceed ings, the
facts underlying the proceedings, or the relief which may be sought as a result
of the proceedings.
57
<PAGE>
The Company and its officers have been subpoenaed and have testified in
connection with the investigation. In August 1997, a subpoena was issued for
Peeples LLC's records. The Company believes that the investigation may involve
the exchange of the Company's securities for the assets of Peeples LLC. It may
possibly relate, however, to the Company's relationship with Mr. Krilich,
perhaps seeking to establish that the Company is participating in a scheme to
hide Mr. Krilich's assets from government seizure, and may try to attach or
encumber the assets acquired from him, Senior Group and Rainbow Group. The
Company has no direct information about such proceedings, however, and its
belief as to the focus thereof is entirely speculative. Any action alleging
violations of law or seeking to attach or encumber the Company's assets could
have a negative impact on the Company's operations. The Company and its
subsidiaries are cooperating with such investigations to the best of their
abilities.
The Company believes that any claim that it has violated any laws or
that it is liable for any claims against Mr. Krilich would be without basis and
would be unsuccessful. However, management cannot predict nor determine the
expected impact to the Company's operating results and financial condition.
Item 3. Changes In and Disagreements With
Accountants and Financial Disclosure
In 1995, the Company retained an accountant in Nashville, Tennessee,
Roy Sinkovich, to perform the audit for the year ended December 31, 1995. In
those financial statements, management reported certain acquisitions subject of
agreements containing various conditions prior to consummation of the
transactions. As a result of the contingency status of the contracts, the
circumstances of which are described above (see Part I, Item 1 "Description of
Business"), management adjusted its financial statements to reflect its
understanding as to how such contracts should be treated, and the audit was
withdrawn by the former auditor. There were no unresolved matters of
significance or disagreements between management and such independent
accountant.
During 1996, the Company moved its principal office to Reno, Nevada. As
a result, the Company's Board of Directors determined to retain an accounting
firm nearer the Company's new principal office. The accounting firm of W. Dale
McGhie in Reno, Nevada, was retained to perform the audit of the Company for the
periods ending December 31, 1994, 1995, and 1996.
58
<PAGE>
Item 4. Recent Sales of Unregistered Securities
During the three years prior to December 31, 1996, the Company issued
and sold the following unregistered shares of its commons stock:
In January 1994, the Company issued 31,960,000 (31,960 after given
effect of of reverse split) shares of common stock, of which 27,000,000 (27,000
after given effect of reverse split) were issued to Maurice W. Furlong, and
3,960,000 (3,960 after given effect of reverse split) shares were issued to
James M. Troester for reorgani zation costs and services. The remaining
1,000,000 (1,000 after given effect of reverse split) shares were issued to
Nevada Agency & Trust Co., the Company's transfer agent, to extinguish
indebtedness. All such transactions were exempt from registration under the
Securities Act of 1994 (the "Securities Act") by virtue of Section 4(2) thereof.
In May 1994, the Company issued 1,200,000 (1,200 after given effect of
reverse split) shares to William Jackson in connection with the acquisition of
three learning centers. 800,000 (800 after given effect of reverse split) shares
have been returned in connection with recision of the acquisition of two of such
centers. (See Part I, Item 1 "Description of Business".) Such transaction was
exempt from registration under the Securities Act by virtue of Section 4(2)
thereof.
In May 1994, the Company issued 12,000,000 (12,000 after given effect
of reverse split) shares to Mr. Furlong in connection with the acquisition of
F&H Mining. These shares were distributed by Mr. Furlong to the shareholders of
F&H Mining in accordance with the stock exchange agreement. (See Part I, Item 1
"Description of Business".) Such transaction was exempt from registration under
the Securities Act by virtue of Section 4(2) thereof.
In May 1994, the Company issued 3,447,683 (3,448 after given effect of
reverse split) shares to six doctors in connection with the acquisition of
certain chiropractic clinics. The issuance of 1,591,963 (1,592 after given
effect of reverse split) shares to one of such doctors was subsequently
cancelled by mutual agreement, leaving a total of 1,855,720 (1,856 after given
effect of reverse split) shares. Such transactions were exempt from registration
under the Securities Act by virtue of Section 4(2) thereof. These transactions
are being rescinded, and such shares have been cancel led.
In July 1994, the Company issued 51,479,611 (51,480 after given effect
of reverse split) shares to Rainbow Group and 6,374,363 (6,375 after given
effect of reverse split) to Senior Group in connection with the acquisition of
59
<PAGE>
such entities and or their real estate, subject to certain conditions
subsequent. 3,281,613 (3,282 after given effect of reverse split) were
subsequently returned. Such transactions were exempt from registration under the
Securities Act by virtue of Section 4(2) thereof. These transactions are the
subject of dispute. (See Part II, Item 2 "Legal Proceedings".)
In September 1994, the Company issued 8,000,000 (8,000 after given
effect of reverse split) shares to Zarzion, Ltd. and 12,000,000 (12,000 after
given effect of reverse split) shares to the three "stockholders" of Peeples LLC
in connection with the acquisition of Peeples LLC. (See Part I, Item 1
"Description of Business".) Such transactions were exempt from registration
under the Securities Act by virtue of Section 4(2) thereof.
In September 1994, the Company issued 3,000,000 (3,000 after given
effect of reverse split) shares to R.K. Company, 11,439,300 (11,440 after given
effect of reverse split) shares to Senior Group, and 25,909,688 (25,910 after
given effect of reverse split) to Rainbow Group, pursuant to price adjustment
requirements contained in its agreements with Rainbow and Senior Groups for the
acquisition of such entities and/or their real estate. Such transactions were
exempt from registration under the Securities Act by virtue of Section 4(2)
thereof. These transactions are the subject of dispute. (See Part II, Item 2
"Legal Proceedings".)
In February 1995, the Company issued 5,000,000 (5,000 after given
effect of reverse split) shares to an individual as a finder's fee in connection
with the proposed acquisition of real estate in Tennessee. Such transaction was
exempt from registration under the Securities Act by virtue of Section 4(2)
thereof.
In February 1995, the Company issued 22,000,000 (22,000 after given
effect of reverse split) shares of Common Stock to R.K. Company, at the
direction of Senior Group and Rainbow Group, in connection with the proposed
acquisition of property in Nashville, Tennessee, and an interest in the yacht R
Rendezvous described above. Such transaction was exempt from registration under
the Securities Act by virtue of Section 4(2) thereof. This transaction is the
subject of dispute. (See Part II, Item 2 "Legal Proceedings".)
In August 1995, the Company issued 4,000,000 (4,000 after given effect
of reverse split) shares to the stockholders of NMC, a closely held company, in
connection with the acquisition of NMC. (See Part I, Item 1 Description of
Business".) Such transaction was exempt from registration under the Securities
Act by virtue of Section 4(2) thereof.
In August 1995, the Company issued 41,749,500 (41,750 after given
effect of reverse split) shares to Mar-Pro in connection with the acquisition of
certain ore concentrates. Subsequently the Company filed an action against
Mar-Pro in connection with such transaction, and cancelled such shares. (See
Part II, Item 2 "Legal Proceedings".) Such transaction was exempt from
registration under the Securities Act by virtue of Section 4(2) thereof.
60
<PAGE>
In August 1995, the Company issued an additional 100,000,000 (100,000
after given effect of reverse split)shares to Zarzion, Ltd., in connection with
its acquisition of ore concentrates located in Arizona. (See Part I, Item 1
"Description of Business".) Such transaction was exempt from registration under
the Securities Act by virtue of Section 4(2) thereof.
In August 1995, the Company issued 17,000,000 (17,000 after given
effect of reverse split) shares to Rainbow Group and 56,000,000 (56,000 after
given effect of reverse split)shares to Senior Group in connection with the
acquisition of certain real estate pursuant to their prior agreements. Such
transactions were exempt from registra tion under the Securities Act by virtue
of Section 4(2) thereof. These transactions are the subject of dispute. (See
Part II, Item 2 "Legal Proceedings".)
In September 1995, the Company issued 275,000 (275 after given effect
of reverse split) shares to four individuals for legal services to R.K. Company
in connection with the Company's proposed acquisition of a property known as
Springer Mine, which acquisition was subsequently cancelled. Such transactions
were exempt from registration under the Securities Act by virtue of Section 4(2)
thereof. It is the Company's position that such transactions will have to be
reconciled with R.K. Company. (See Part II, Item 2 "Legal Proceedings".)
In February 1996, the Company issued 309,551 (310 after given effect of
reverse split) shares to two individuals in connection with the Company's
efforts to develop its health care segment. Such transactions were exempt from
registration under the Securities Act by virtue of Section 4(2) thereof. Such
transactions have subse quently been rescinded.
In May and June 1996, the Company issued a total of 98,000,000 (98,000
after given effect of reverse split)shares to R.K. Company in connection with
the Company's agreement to acquire Springer Mine. Such transaction was exempt
from registration under the Securities Act by virtue of Section 4(2) thereof.
The owners of Springer mine would not permit assignment of such contract from
R.K. Company, and the acquisition was cancelled. The issuance of 58,000,000
(58,000 after given effect of reverse split) shares had been cancelled by the
Company. Subsequent to this cancellation, it was brought to the Company's
attention that R.K. Company had assigned these shares to a third party, without
the Company's knowledge. The 58,000 shares were reinstated on July 23, 1998. All
of the shares issued to R.K. Company in May and June 1996 are the subject of
reconciliation between the Company and R.K. Company. (See Part II, Item 2 "Legal
Proceedings".)
In June 1996, the Company issued 2,066,115 (2,067 after given effect of
reverse split) shares to the stockholders of MedAway, a closely held company, in
connection with the acquisition of all MedAway's assets. (See Part I, Item 1
"Description of Business".) Such transaction was exempt from registration under
the Securities Act by virtue of Section 4(2) thereof.
61
<PAGE>
In July 1996, the Company issued 40,000,000 (40,000 after given effect
of reverse split) shares to the stockholders of ELF, a closely held company, in
connection with the acquisition of ELF's television credit certificates. (See
Part I, Item 1 "Description of Business".) Such transaction was exempt from
registration under the Securities Act by virtue of Section 4(2) thereof.
In November 1996, the Company issued 750,000 (750 after given effect of
reverse split) shares to three individuals as an inducement to become directors
of the Company. These individuals returned all of the shares to the Company on
June 9, 1998. (See Part I, Item 6 "Executive Compensation".) Such transaction
was exempt from registration under the Securities Act by virtue of Section 4(2)
thereof.
In February 1997, the Company issued 375,000,000 (375,000 after given
effect of reverse split) shares to Zarzion, Ltd., a closely held company, in
connection with the acquisition of 17 lode claims in northern California (see
Part I, Item 1 "Description of Business").
Such transaction was exempt from registration under the Securities Act by virtue
of Section 4(2) thereof.
On October 2, 1997, the Board of Directors authorized the immediate
issuance of all of the Company's 200,000,000 shares of conertible preferred
stock to the Chairman and President, Maurice W. Furlong.The use of the stock is
for reimbursement of officer, director and Company expenses and for operations.
Mr. Furlong was given complete descretion regarding the conversion of these
shares to common shares. From October 15, 1998 to September 30, 1999 47,125,000
shares have been converted and 152,875,000 of convertible preferred stock is
outstanding.
Item 5. Indemnification of Directors and Officers
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, or agent of any corporation, partnership, joint venture,
trust, or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided that the indemnitee undertakes to repay
any such advances if it is later determined that such person was not entitled to
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<PAGE>
be indemnified by the Company. On August 28, 1977, the Board of Directors
unanimously adopted a resolution providing for the legal defense and
indemnification of current and former directors and officers of the Company.
In so far as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and control ling persons
of the Company pursuant to the foregoing provisions or otherwise, the Company
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in such act, and is
therefore unenforce able.
63
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PART F/S
Financial Statements
The following financial statements are filed with this Form 10- SB:
Page
----
Accountant's Report 66
Amended Financial Statements of Health Care Centers of America and
Subsidiary
Balance Sheet 67
Statement of Operations 69
Statement of Changes in Stockholders' Equity 70
Statement of Cash Flows 74
Notes to Financial Statements 75
Accountant's Report on Supplemental Schedules 84
Supplemental Schedules
Schedule A Property, Plant and Equipment 85
Schedule B Accumulated Depreciation of
Property, Plant and Equipment 86
64
<PAGE>
<PAGE>
10-SB
File No. 0-29006
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND
DECEMBER 31, 1998, 1997 AND 1996
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
TABLE OF CONTENTS
ACCOUNTANT'S REPORTS
on Financial Statements
on Supplemental Schedules
FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Supplemental Schedules
65
<PAGE>
W. DALE Mcghie Town & Country Plaza
CERTIFIED PUBLIC ACCOUNTANT 1539 Vassar St. Reno, Nevada 89502
Tel: 702-323-7744
Fax: 702-323-8288
To the Board of Directors
Hexagon Consolidated Companies of America, Inc.
ACCOUNTANT'S AUDIT REPORT
I have audited the accompanying consolidated balance sheets of Hexagon
Consolidated Companies of America, Inc. (formerly Health Care Centers of
America, Inc.) (a development stage company) as of September 30, 1999, December
31, 1998 1997 and 1996, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the nine months and years
then ended, and from June 29, 1993 (date of reorganization) through September
30, 1999. These consolidated financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial consolidated statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the consolidated financial statements referred to above present
fairly in all material respects the financial position of Hexagon Consolidated
Companies of America, Inc. as of September 30, 1999, December 31, 1998, 1997,
and 1996 and the results of their operations, changes in stockholders' equity
and their cash flows for the nine months and years then ended in conformity with
generally accepted accounting principals.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, as discussed in Note 4 to the
financial statement. A majority of the Company's assets consist of mineral
inventories and mineral properties with a carrying value of $269,424,722.
Recovery of the Company's mineral inventories is dependent upon the extraction
and recovery of mineral ore in an economical fashion. The financial statements
do not include any adjustments that might result in a negative outcome as a
result of this uncertainty.
/s/W. Dale McGhie
- ------------------
W. Dale McGhie
Reno, Nevada
November 14, 1999
66
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
( A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998,
1997 AND 1996
<CAPTION>
ASSETS
September 30,
1999 1998 1997 1996
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash (Note 1) $ - $ 374 $ 470 $ 196,214
Prepaid expenses - - - 1,500
----------------- ---------------- ---------------- ----------------
Total current assets - 374 470 197,714
----------------- ---------------- ---------------- ----------------
PROPERTY, PLANT and EQUIPMENT (Note 1)
Equipment held for rent 555,185 555,185 555,185 555,185
Equipment 527,867 527,867 525,418 24,935
Furniture and fixtures 13,951 13,951 12,307 6,249
----------------- ---------------- ---------------- ----------------
1,097,003 1,097,003 1,092,910 586,369
Less accumulated depreciation 50,009 27,974 19,433 11,355
----------------- ---------------- ---------------- ----------------
Net property, plant and equipment 1,046,994 1,069,029 1,073,477 575,014
----------------- ---------------- ---------------- ----------------
MINERAL INVENTORIES (Note 5)
Purchased mineral inventory 200,000,000 200,000,000 200,000,000 200,000,000
Acquisition costs 69,375,000 69,375,000 69,375,000 -
Development costs 49,722 - - -
----------------- ---------------- ---------------- ----------------
269,424,722 269,375,000 269,375,000 200,000,000
----------------- ---------------- ---------------- ----------------
OTHER ASSETS
Investment in future acquisitions (Note 3,12) - - - 49,016,330
Notes receivable (Note 6) - - - 260,000
Interest receivable - - - 6,600
Organizational costs, net
of amortization (Note 1) - - - 47,422
----------------- ---------------- ---------------- ----------------
Total other assets - - - 49,330,352
----------------- ---------------- ---------------- ----------------
Total assets $ 270,471,716 $ 270,444,403 $ 270,448,947 $250,103,080
================= ================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements
67
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
1999 1998 1997 1996
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 112,551 $ 58,525 $ 82,281 $ 28,206
Shareholder advance - - - 4,400
Accrued expenses 215,815 179,318 130,523 74,922
Notes payable - shareholder (Note 7) 267,373 267,373 267,373 462,809
----------------- ---------------- ---------------- ----------------
Total current liabilities 595,739 505,216 480,177 570,337
----------------- ---------------- ---------------- ----------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value;
900,000,000 shares authorized; issued
and outstanding; 48,010,182
shares on September 30, 1999, 1,385,182
shares, 885,182 shares and 510,182
shares on December 31, 1998,
1997 and 1996, respectively 48,010 1,385 885 510
Convertible preferred stock, $0.001
par value; 200,000,000 shares
authorized; issued and outstanding;
152,875,000 shares on September
30, 1999; 199,500,000 shares and
200,000,000 shares on December 31,
1998 and 1997, respectively 152,875 199,500 200,000 -
Paid in capital 320,594,674 320,377,131 319,884,007 263,840,731
Retained deficit (Note 1) - - - (13,702,162)
Deficit accumulated during the
development stage (50,919,582) (50,638,829) (50,116,122) (606,336)
----------------- ---------------- ---------------- ----------------
Total stockholders' equity 269,875,977 269,939,187 269,968,770 249,532,743
----------------- ---------------- ---------------- ----------------
Total liabilities and stockholders' equity $ 270,471,716 $ 270,444,403 $ 270,448,947 $250,103,080
================= ================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements
68
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999,
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
AND THE PERIOD FROM JUNE 29, 1993 THROUGH SEPTEMBER 30, 1999
<CAPTION>
Nine months June 29, 1993
ended Through
September 30, December 31, December 31, December 31, September
1999 1998 1997 1996 30, 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
EXPENDITURES
Depreciation and amortization 4,317 8,541 8,078 13,660 44,429
Dues and subscriptions 84 -- 1,010 4,627 9,591
Organizational costs -- -- 47,422 -- 47,422
Professional fees 134,765 281,183 206,689 119,545 798,995
Postage and courier service 354 1,114 5,975 16,500 26,869
Management fee -- -- 200,000 -- 200,000
Marketing and promotion 1,000 -- 970 1,367 34,453
Travel and entertainment 22,708 27,200 55,391 60,894 228,602
Telephone 26,372 37,819 50,698 35,761 157,902
Other office expenses 11,631 58,195 31,072 26,473 135,658
Program development -- -- 4,000 750 41,710
Rent 7,026 11,859 8,080 4,220 33,392
Imputed wages 36,000 48,000 48,000 30,000 165,172
------------ ------------ ------------ ------------ ------------
Total expenses from operations 244,257 473,911 667,385 313,797 1,924,195
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES)
Interest income -- -- -- 8,822 12,036
Bad debt expense -- -- (266,600) (266,600)
Interest expense (36,496) (48,796) (55,601) (69,447) (220,623)
------------ ------------ ------------ ------------ ----------
Total other income (expense) (36,496) (48,796) (322,201) (60,625) (475,187)
------------ ------------ ------------ ------------ ----------
Net loss before
Federal income taxes (280,753) (522,707) (989,586) (374,422) (2,399,382)
------------ ------------ ------------
Federal income taxes (Note 1) -- -- -- -- --
------------ ------------ ------------ ------------ ----------
Net loss before
extraordinary item (280,753) (522,707) (989,586) (374,422) (2,399,382)
------------
EXTRAORDINARY ITEM
Impairment of investments (Note 3) -- -- 48,520,200 -- 48,520,200
------------ ------------ ------------ ------------ ----------
Total extraordinary item -- -- 48,520,200 -- 48,520,200
------------ ------------ ------------ ------------ ----------
Net loss $ (280,753) $ (522,707) $(49,509,786) $ (374,422) $ (50,919,582)
============ ============ ============ ============ =============
Net loss per share before
extraordinary item (Note 1) $ (0.0125) $ (0.5174) $ (1.1589) $ (0.8137)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
69
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH DECEMBER 31, 1998
<CAPTION>
Deficit
Accumulated
during the
Common Stock Preferred Stock Additional Retained Development
Stock Amount Stock Amount paid in capital Deficit Stage
----- ------ ----- ------ --------------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 29, 1993 12,038,500 $ 240,770 - $- $ 13,461,391 $ (13,702,162) $ -
January 4, 1994, reverse stock split
one share of new stock
for three shares
of old stock and change
par value from
$.02 to $.001 (8,025,667) (236,757) 236,757
June 30, 1998, reverse
stock split - one
share of new stock
for 1,000 shares of
old stock (4,008,820) (4,009) 4,009
Issuance of fractional shares 446
On June 29, 1993, Issued
Common stock to current
shareholders for loss
of prior stock 600 -
Issued shares of common stock to
Masterhouse Ltd. (a related party)
for 3500 master recording value
unknown 1,500 2 (2)
Net loss through December 31, 1993 (819)
-------------------------------------------------------------------------------------
Balance December 31, 1993 6,559 6 - - 13,702,155 (13,702,162) (819)
In January and May 1994, Issued
common stock for services valued
at par 31,960 32 31,928
In May 1994, record retroactive adjustment
in connection with the acquisition of
ElfWorks, Ltd., pooling of interest 40,000 40 39,960
(Note 2)
In May 1994, Issued common stock, held in
trust capacity, valued at estimatd
cost of learning center (Note 2) 400 - 50,000
In May 1994, Issued common stock for
a mining company, valued at current
replacement cost of equipment 12,000 12 86,118
(see Note 2)
</TABLE>
...continued
The accompanying notes are an integral part of these financial statements
70
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH DECEMBER 31, 1998
<CAPTION>
Deficit
Accumulated
during the
Common Stock Preferred Stock Additional Retained Development
Stock Amount Stock Amount paid in capital Deficit Stage
----- ------ ----- ------ --------------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
In July and September 1994, Issued common
stock, held in trust capacity, in
exchange for real estate valued
atfair market value 94,921 $ 95 - $ - $ 22,942,267 $ - $ -
In September 1994, Issued shares for a
mining co., valued replacement cost
of equipment, (Note 2) 20,000 20 409,980
Capital contributed by shareholders - - 126,768
Net loss through December 31, 1994 (135,695)
---------------------------------------------------------------------------------------
Balance December 31, 1994 205,840 205 - - 37,389,176 (13,702,162) (136,514)
In February 1995, Issued common stock
for services, recorded at par value 5,000 5 4,995
In February and August 1995, Issued common
stock, held in trust capacity, in
exchange for real estate valued at
fair market value 95,000 95 22,961,276
In August 1995, Issued common stock in
for a music Co. valued at a discounted
stock price 4,000 4 2,499,996
In August 1995, Issued common stock for
inventory of precious metal ore,
valued at a discounted stock price
(Note 5) 100,000 100 199,999,900
In September 1995, Issued common stock
in exchange for services performed in
conjunction with the real estate
transactions, valued at fair market value 275 1 66,466
Capital contributed by shareholders - - 45,575
Net loss through December 31, 1995 (95,400)
---------------------------------------------------------------------------
Balance December 31, 1995 410,115 410 - - 262,967,384 (13,702,162) (231,914)
</TABLE>
...continued
The accompanying notes are an integral part of these financial statements
71
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH DECEMBER 31, 1998
<CAPTION>
Deficit
Accumulated
during the
Common Stock Preferred Stock Additional Retained Development
Stock Amount Stock Amount paid in capital Deficit Stage
----- ------ ----- ------ --------------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
In June 1996, Issued common stock for
a mining interest, transaction not
consummated, stock to be recovered,
valued at zero (Note 9) 98,000 $ 98 - $ - (98) $ - $ -
In June 1996, Issued common stock
in exchange for equipment (Note 1) 2,067 2 555,183
Imputed value of services provided by
Officers and/or Directors (Note 10) - - 34,970
Capital contributed by shareholders - - 283,292
Net loss through December 31, 1996 (374,422)
---------------------------------------------------------------------------------------
Balance December 31, 1996 510,182 510 - - 263,840,731 (13,702,162) (606,336)
InFebruary 1997, Issued shares of
common stock in
exchange for a Mining
Interest valued at a discounted
stock price (Note 2) 375,000 375 - - 69,374,625
Quasi-reorganization, 1997 (Note 1) (13,702,162) 13,702,162
In October 1997, authorized and
issued convertible preferred stock
for services and expenses, valued
at par (Note 1) 200,000,000 200,000
Imputed value of services provided by
Officers and/or Directors (Note 13) - - 51,960
Capital contributed by shareholders - - 318,853
Net loss through December 31, 1997 (49,509,786)
--------------------------------------------------------------------------------------
Balance December 31,1997 885,182 $ 885 200,000,000 $ 200,000 $319,884,007 $ - $(50,116,122)
In October 1998, converted preferred
stock to common stock 500,000 500 (500,000) (500)
Imputed value of services provided by
Officers and/or Directors (Note 13) - - 52,080
Capital contributed by shareholders - - 441,044
Net loss through December 31, 1998 (522,707)
--------------------------------------------------------------------------------------
Balance at December 31, 1998 1,385,182 $ 1,385 199,500,000 $ 199,500 $320,377,131 $ - $ (50,638,829)
</TABLE>
The accompanying notes are an integral part of these financial statements
72
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH SEPTEMBER 30, 1999
<CAPTION>
Deficit
Accumulated
during the
Common Stock Preferred Stock Additional Retained Development
Stock Amount Stock Amount paid in Capital Deficit Stage
----- ------ ----- ------ --------------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
In January through September 1999,
converted preferred stock to
common stock 46,625,000 $ 46,625 (46,625,000) $ (46,625) $ - $ - $ -
Imputed value of services
provided by
Officers and/or Directors (Note 13) - - 39,060
Capital contributed by shareholders - - 178,483
Net loss through September 30, 1999 (280,753)
----------------------------------------------------------------------------------------------
Balance at September 30, 1999 48,010,182 $ 48,010 152,875,000 $ 152,875 $320,594,674 $ - $ (50,919,582)
========== ======== =========== =========== ============ ==== =============
</TABLE>
The accompanying notes are an integral part of these financial statements
73
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999, THE YEARS ENDED
DECEMBER 31, 1998, 1997 AND 1996 AND FROM JUNE 29, 1993 THROUGH
SEPTEMBER 30, 1999
<CAPTION>
Nine months June 29, 1993
ended Through
September 30, December 31, December 31, December 31, September
1999 1998 1997 1996 30, 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (280,753) $ (522,707) $ (49,509,786) $ (374,422) $ (50,919,582)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 4,317 8,541 8,078 13,660 44,429
Services paid in stock -- -- -- -- 36,960
Imputed value of services provided by --
Officers and Directors (Note 13) 39,060 52,080 51,960 34,970 178,070
Impairment of assets (Note 3) -- -- 48,520,200 -- 48,520,200
Preferred stock issued for services -- -- 200,000 -- 200,000
Organizational costs -- -- 47,422 -- 27,862
Net (Increase) Decrease in:
Prepaid expenses -- -- 1,500 (1,500) --
Notes receivable -- -- 260,000 -- --
Interest receivable -- -- 6,600 (4,950) --
Deposits -- -- -- 191,564 --
Net Increase (Decrease) in:
Accounts payable 54,026 (23,756) 54,075 (3,254) 112,550
Accrued expenses 36,497 48,795 55,601 69,448 215,815
------------ ------------ ------------ ------------ ------------
Net Cash Used by Operating Activities (146,853) (437,047) (304,350) (74,484) (1,583,696)
------------ ------------ ------------ ------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures -- (1,644) (6,058) (4,570) (13,951)
Purchase of equipment -- (2,449) (4,353) (8,889) (31,737)
Cost of developing mineral properties (32,004) -- -- -- (32,004)
------------ ------------ ------------ ------------ ------------
Net Cash Used by Investing Activities (32,004) (4,093) (10,411) (13,459) (77,692)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by shareholders 178,483 441,044 318,853 283,292 1,394,014
Payment on shareholder loan -- -- (195,436) -- (195,436)
Borrowings (Note 7) -- -- (4,400) -- 462,810
------------ ------------ ------------ ------------ ------------
Net Cash Provided by Financing Activities 178,483 441,044 119,017 283,292 1,661,388
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) in Cash (374) (96) (195,744) 195,349 --
------------
Cash at the beginning of period 374 470 196,214 865 --
------------ ------------ ------------ ------------ ------------
Cash at the end of period $ -- $ 374 $ 470 $ 196,214 $ --
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
74
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION:
Hexagon Consolidated Companies of America, Inc. a Nevada Corporation
headquartered in Reno, Nevada was incorporated under the name Carleton
Enterprises, Ltd. On November 13, 1984 the Company changed it's name to SCN,
Ltd. On December 15, 1986, an involuntary petition for reorganization, under
Chapter 11 of the U.S. Bankruptcy Code, was filed against SCN, Ltd. In December
1988, the Company became debtor in possession of its assets under a voluntary
proceeding. The Company was dormant until September 31, 1993 at which time the
bankruptcy was ordered dismissed. On November 19, 1993 the Company again changed
its name to Health Care Centers of America, Inc. On July 7, 1999, the Company
changed its name to Hexagon Consolidated Companies of America, Inc. (HCCA). The
Company is a development stage enterprise as defined by FASB No. 7. "Accounting
and Reporting by Development Stage Enterprises".
On June 30, 1998, the Company authorized a reverse stock split. One new share
was issued for 1,000 old shares. The par value remained the same at $.001 per
share. These financial statements have been retroactively restated for this
change in capital stock.
In January 1997, the Company voted to eliminate the previous retained deficit
through a quasi-reorganization. This resulted in the elimination of the deficit
in retained earnings of $13,702,162. It had no effect on assets or liabilities.
On October 2, 1997, the Company authorized and issued 200,000,000 shares of the
Company's preferred stock for services and expenditures valued at $200,000.
NATURE OF BUSINESS:
Currently the Company is focused on the development, management and exploitation
of three primary industry segments. The first is the development of mining
interests and exploitation of existing inventories of ore concentrate. The
second is the management and development of a wide range of real estate
interests. The third is to continue its previous entertainment activity of
marketing master recordings and recording new master recordings.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of its wholly owned
subsidiaries, MedAway, International, Inc., Music Alley, Inc. and Peeples Mining
Company. All significant inter-company transactions have been eliminated.
MINERAL PROPERTIES:
Acquisition costs of mineral properties, rights and options together with direct
exploration and development expenditures thereon are deferred in the accounts to
be written off when production is attained or disposition occurs.
Such expenditures are accumulated and amortized using the units of production
method based upon the estimated proven mineral reserves in each cost center as
determined by independent assayers, or charged to income if any cost center is
determined to be unsuccessful.
75
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
If results from exploration warrant the abandonment of certain mineral
properties included in a group and retention of the remainder, all acquisition ,
exploration and development expenditures relating to the entire group are deemed
to represent those expenditures relating to the mineral properties and
consequently no adjustment is made in the accounts in respect of mineral
properties abandoned.
Administrative expenditures are charged to income in the year they are incurred.
ORGANIZATIONAL COSTS:
The Company has adopted Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-Up Activities" issued in April 1998 by the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants.
Pursuant to SOP 98-5, organizational costs are expensed as incurred instead of
being capitalized and amortized.
FINANCIAL INSTRUMENTS:
At September 30, 1999, December 31, 1998,1997 and 1996, the fair value of the
Company's notes payable and notes receivable are evaluated each year to
determine if their value has been impaired (Note 6 and 7).
PROPERTY, PLANT AND EQUIPMENT:
Equipment and furniture are stated at cost. Depreciation is computed using the
straight-line method over a period of five to ten years.
Equipment also includes 24 Medaway-1 infectious waste treatment units, an
on-site machine to process medical waste. The Company plans to lease these
machines to hospitals. The machines were purchased in June 1996 through an
exchange of 2,066,015 shares of the Company's common stock. The transaction was
valued at the seller's cost of $555,185, or $23,133 per unit. This equipment is
not being depreciated because it has not yet been placed in service.
CASH AND CASH EQUIVALENTS:
The company considers all short-term deposits with a maturity of three months or
less to be cash equivalent.
FEDERAL INCOME TAX:
Due to an operating loss, since reorganization, there is no provision for
federal income tax.
USE OF ESTIMATES:
The preparation of financial statements in conformity with general accepted
accounting principals requires management to make estimates and assumptions that
affects certain reported amounts and disclosures. Accordingly, actual results
could differ from these estimates.
LOSS PER COMMON SHARE:
Weighted average shares outstanding used in the loss per common share
calculation were 22,471,295 for September 30, 1999; 1,010,183 for December 31,
1998; 853,932 for December 31, 1997; and 460,149 for December 31, 1996.
76
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
NOTE 2 - ACQUISITION OF SUBSIDIARIES
1. On June 26, 1996, the Company issued 40,000 shares (after given effect to
reverse split (see Note 1)).of its common stock in exchange for all the
outstanding common stock of ElfWorks, Ltd. The business combination has
been accounted for as a pooling of interest and, accordingly, the Company's
consolidated financial statements have been given retroactive effect to
include the accounts and operations of ElfWorks, Ltd. for all periods prior
to the acquisition. ElfWorks, Ltd. had not commenced operations and had no
activity since inception, except for organizational costs of $40,000.
Therefore, the combined corporations will show no effect on the profit and
loss from ElfWorks Ltd. operations.
This combination was accounted as a pooling of interest after satisfying
the twelve criteria referenced under APB 16, as follows: 1) each company is
autonomous, 2) each company is inpendent, 3) the combination was effected
in a single transaction, 4) common stock was issued for all the common
stock of ElfWorks, Ltd., 5) the equity interest of common stock of each
company was unchanged, 6) the combining companies reacquired a normal
number of shares, 7) the ratio interest of individual stockholders was
unchanged, 8) voting rights are exercisable, 9) the combination was
resolved at the consummation date of June 26, 1996, 10) ElfWorks, Ltd.
agreed not retire common stock to effect the combination, 11) there is no
intent to dispose of a significant part of the assets of ElfWorks, Ltd.,
and 12) no financial arrangements have been made for the benefit of former
stockholders.
Advertising credits (trade due bills) were acquired through the acquisition
of ElfWorks, Ltd. Such credits are recorded at the predecessor's cost of
zero. With reference to Staff Accounting Bulletin No. 48 Topic 5-G
(9/27/82), when a company acquires assets from shareholders in exchange for
stock prior to registration of the company, such asset should generally be
recorded at the cost to the shareholder. The credits are an irrevocable
promise (trade due bill) to provide the holder with network programming
time and commercial advertising time. According to AIN's current rate card,
the Company could broadcast a 1/2 hour program 5 days a week at prime time
for more than 4 years, throughout the networks 161 stations. The
certificates are transferable and negotiable.
2. The Company's recent registration of their common stock under the Exchange
Act has been declared effective on February 4, 1997. Consummation of the
following stock exchange agreements have been declared effective:
o Effective February 4, 1997, the Company consummated the purchase of
Nashville Music Consultants, Inc, (NMC) a Tennessee Corporation
headquartered in Nashville, Tennessee. On April 21, 1995, the Company
entered into a stock exchange agreement with NMC whereby 4,000 shares
(after given effect to reverse split (see Note 1)) of the Company's common
stock valued by using the stock price on the date of the agreement
discounted 50% for restricted stock issued, was exchanged for all the
issued and outstanding shares of NMC. The subject matter of the stock
exchange agreement with NMC concerned only the music publishing operation
of NMC. On September 1, 1998, NMC (now Nashville Music Group (NMG)) and the
Company entered into an amendment to the stock exchange agreement, which
was effective as of April 21, 1995. The reason for the amendment was to
conform operations to the intent of the initial stock exchange. NMC had
expanded its operations into areas beyond music publishing. As a result of
the amendment, the publishing division of NMC, Music Alley, Inc., was
transferred to the Company. Since the amendment to the agreement, HCCA
received various rights to the publishing operation. Since receiving these
rights, there has been no activity and Music Alley, Inc. has been dormant.
The remaining value has been reserved as impairment of assets. The
uncertainty of obtaining this information is so great, it is felt that the
value may have been impaired to an unknown extent. Therefore, it has been
fully reserved against until such time that the appropriate information is
obtained.
77
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
o Effective February 4, 1997, the Company acquired F & H Mining, Inc. (F&H),
an international business corporation, and Peeples Mining LLC (Peeples
LLC), an Arizona limited liability company, accounted for as a purchase.
Both F&H and Peeples LLC are primarily engaged in the mining of precious
metals. On March 25, 1994, the Company entered into a stock exchange
agreement with F&H, whereby 12,000 shares (after given effect to reverse
split (see Note 1)) of the Company's common stock was exchanged for all the
issued and outstanding shares of F&H valued current replacement cost of
equipment purchased of $86,130. On June 18, 1994, the Company entered into
a stock exchange agreement with Peeples LLC, whereby 20,000 shares (after
given effect to reverse split (see Note 1)) of the Company's common stock
was exchanged for all the issued and outstanding shares of Peeples LLC also
valued at current replacement cost of the equipment purchased of $410,000.
Both companies were dormant and had no operations for several years.
o On February 4, 1997, the Company formed Peeples Mining Company, a Nevada
Corporation, and a wholly owned subsidiary of the Company. The assets of
Peeples LLC and F&H were consolidated into the new corporation as well as
the inventory of concentrated precious metals ore acquired from Zarzion,
Ltd. As a result, Peeples Mining Company now has mining interests in
Arizona, Nevada and California. The Arizona operation includes a mineral
lease of state land on 377.11 acres. The Nevada property includes 7 claims
on 140 acres. The production facility and lab equipment owned by Peeples
Mining Company is located at the Arizona mill site operation. Assay reports
obtained by professionals in the industry indicate the expected value of
the above to be in excess of the stock value on the date of these
agreements discounted by 50% for restriction.
o On February 6, 1997, 375,000 shares (after given effect to reverse split
(see Note 1)) of common stock was issued to Zarzion, Ltd., for the purchase
of 17 mining claims covering a 340-acre site in San Bernardino County,
California. The shares were valued at $69,375,000, the stock price on the
date of the agreement discounted by 50% for restriction. Assay reports
obtained by an independent assayer indicate a value in excess of this
value. There has been no activity on this property for several years.
3. The following stock exchange agreements have not yet been consummated:
o In March, 1994, the Company entered into a stock exchange agreement with
Mr. William Jackson, thereafter amended, whereby 400 shares (given effect
of reverse split (see Note 1)) of the Company's stock was exchanged for the
future operations of a learning center in Reno, Nevada. The stock was
valued at $50,000, the estimated cost to commence operations for the Reno
facility. Consummation of the transaction is dependent on completion of the
learning center, which is unknown at this time. The Company has directed
its stock transfer agent to issue a "stop transfer" order regarding the
stock previously transferred with respect to this transaction. Therefore,
this acquisition has been deemed to be impaired (see Note 3).
o The Company has entered into two stock exchange agreements to acquire real
estate from The Rainbow Group and The Senior Group. The subject matter of
these agreements is currently in litigation in the Circuit Courts of Cook
and DuPage Counties, Illinois and the Federal District Court for Middle
Tennessee, Nashville, Tennessee. The Company has directed its transfer
agent to issue a "stop transfer" order concerning all stock that had been
issued in exchange for the real estate. Also, it is the Company's position
that all such stock is being held by the recipient in a trust capacity for
the benefit of both parties. Due to this litigation, the Company is unable
to obtain necessary and required financial information. The uncertainty of
obtaining this information is so great, it felt that the value may have
been impaired to an unknown extent. Therefore, it has been fully reserved
against until such time that the appropriate information is obtained.
Furthermore, the final determination of the consummation of these
transactions shall be determined by the above referenced courts.
78
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
As a good faith measure, the Company issued stock upon the signing of the
various stock exchange agreements. In the event that any of the agreements
are not ultimately consummated, the Company shall pursue the return of the
stock issued or the fair market value of such stock.
NOTE - 3 CONTRACTS FOR ACQUISITION
The Company has identified and entered into stock exchange agreements with
entities in the mining, real estate, entertainment and education industries.
These agreements provided that the other party to the agreement would have the
right to annul or void the agreement if a registration statement registering the
Company's common stock under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is not declared effective within a specified period of
time. This right has lapsed inasmuch as the Company's recent registration of its
common stock under the Exchange Act was declared effective on February 4, 1997.
All of such contracts became effective as of that date, with the exception of
the Company's contracts for the acquisition of the real estate, which are the
subject of litigation and have not been consummated. The uncertainty of
obtaining the required financial information and of the consummation of the
transactions, it is felt that the value may have been impaired to an unknown
extent. Therefore, it has been fully reserved against until such time that the
transactions are consummated.
As shown below, the criteria used to value the stock exchange transactions vary
by agreement. For the purposes of these financial statements, the value was
calculated using the lower of the following: 1) the market value estimated by
cash flow/income, if available, or 2) the value of the stock on the date of the
agreement discounted 50% for restriction. The calculated value of each probable
exchange agreement was booked to Investment in Future Acquisition (Asset)
resulting in a total value recorded of $49,016,330 at December 31, 1996 (see
below). Exchange agreements entered into but now determined to be "not probable"
have been reversed out of the financial statements until further negotiated and
consummated. Such contracts included abandoned contracts for the acquisition of
health care practices and an adjustment of shares for the learning centers and
assets deemed to have been impaired (see Note 2).
Stock exchanged for the specific assets have been valued as follows:
<TABLE>
<CAPTION>
Value
Description of Assets to be acquired by the Company Assigned Ref.
- --------------------------------------------------- -------- ----
<S> <C> <C>
o A future learning center to be located in Reno, Nevada $ 50,000 (a)
o A mining interest in 7 claims on 140 acres, located in Nevada 86,130 (b)
o A mineral lease on 377.11 acres, located in Arizona 410,000 (b)
o The acquisition of Nashville Music Co., located in Nashville, TN 2,500,000 (c)
o 26 town homes plus surrounding amenities 3,863,130 (d)
o Office Building, restaurant/banquet facility and vacant land 6,669,930 (d)
o A motel located in Northbrook, Illinois, with 38 luxury suites 2,700,000 (e)
o A country club located in the Village of Lakemore, Illinois 359,758 (f)
o An interest in a golf course and country club in Naperville, Illinois 2,684,779 (d)
o A water and utility service located in Oakbrook Terrace, IL 408,000 (f)
o A restaurant site located in Shiller Park, Illinois 620,789 (f)
o An interest in a shopping center in Palatine, Illinois 6,689,596 (f)
o An interest in two leases and land located Shiller Park, IL 1,207,207 (g)
o 12-acre commercial parcel located in Dania, Florida 1,618,103 (f)
o An interest in a Yacht located in Ft. Lauderdale, Florida 688,608 (h)
o A Large land development in Gallatin, TN referred to as "Foxland" 16,000,000 (i)
o 24 acres of residential vacant land near Bellevue, Tennessee 800,400 (j)
o 56-acre parcel located on Dickerson Road in Nashville, TN 1,659,900 (d)
------------
Total value for Stock Exchanged and held in Trust Capacity
December 31, 1996 49,016,330
Less: Impairment of investments (Note 2) (48,520,200)
Capitalization of mining equipment (Note 2) (496,130)
------------
Value at September 30, 1997 $ 0
============
</TABLE>
79
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
The above investments, excluding the mining interests, are under litigation to
determine legal ownership.
Ref:
(a)- Valued at the estimated cost to commence operations for the Reno facility.
(b)- Valued at replacement cost of equipment purchased.
(c)- Value determined by using the stock price on the date of the agreement
discounted 50% for restriction, and compared to a valuation model
projecting earnings for the company.
(d)- Value based on tax assessors current Fair Cash Value.
(e)- Valued at market value determined by independent appraisers and
consultants.
(f)- Value obtained from financial statement schedules indicating cost basis of
property.
(g)- Value determined by calculating the annual lease income times approximately
6 years.
(h)- Value calculated based on the estimated annual net income discounted at
10%.
(i)- Value based on a current contract offer price.
(j)- Valued at the current market value of a lot recently sold adjacent the
property.
As a good faith measure, stock was issued upon signing the agreements. It is the
Company's position that the stock certificates issued in transactions which have
yet to be consummated are being held by the recipient in a trust capacity for
the benefit of both parties, and will be forfeited and canceled if the agreement
is annulled or void. The Company has no control over any of the entities
included in these potential acquisitions and will not have any control until
such time as the acquisition is complete.
NOTE 4 - GOING CONCERN
As discussed in Note 1, the company has been in the development stage since June
29, 1993. A major portion of its assets includes mineral inventories valued at
$200,049,727, and mining claims located in San Bernardino County, California
valued at $69,375,000. Realization of a major portion of these assets is
dependent upon the company's ability to successfully liquidate the mineral
inventory. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. These factors raise concern about
the company's ability to continue as a going concern. It is management's
intention to raise additional capital through a) leasing of the MedAway machines
(Note 1), b) sale of some or all of the ore inventory (Note 5), c) sale of some
of the advertising trade credits (Note 2), and d) a private placement of
securities.
NOTE 5 - MINERAL INVENTORIES Mineral properties include:
a) an inventory of concentrated precious metals ore located on land leased
from the State of Arizona through the year 2003. Recent assay reports
commissioned by the Company indicate there is a combination of precious
metals, rare earth and common elements. These concentrates were purchased
in exchange for 100,000 shares (after given effect of reverse split (see
Note 1)) of the Company's common stock. Such stock was valued at
$200,000,000, based on the stock price on the date of the agreement
discounted by 50% due to restrictions on transferability, applicable to
such stock. A subsequent independent valuation indicated a fair-market
value in excess of the recorded amount.
b) the San Bernardino, California site consists of the purchase of 17 mining
claims covering a 340-acre site. These claims were purchased in exchange
for 375,000 shares (after given effect of reverse split (see Note 1)) of
the Company's common stock. The shares were valued at $69,375,000, the
stock price on the date of the agreement discounted by 50% for restriction.
Assay reports obtained by an independent assayer indicate a value in excess
of this value. There has been no activity on this property for several
years.
80
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
c) On April 30, 1998, the Company entered into a joint venture agreement with
Hidden Splendor Smelting Company (HSS) to share in the profits for
processing mineral inventories. HSS will be granted the exclusive right to
earn an undivided 20% interest in the net revenues received as a result of
the sale of processed inventory. HSS shall provide proper permits for the
processing, equipment , laboratory facilities and structures for the
initial period of the processing operations. The term of the agreement is
eight years from the effective date of the agreement.
<TABLE>
<CAPTION>
NOTE 6 - NOTES RECEIVABLE:
September 30, December 31,
1997 1996
-------------- ------------
<S> <C> <C>
A note from INMOB (a Mexican corporation) dated November 6, 1995, payable
November 5, 1996, with no interest. This was advanced for the purpose of
evaluating a project in Mexico, and, if consummated, entitles the Company to a
66-2/3% interest in the project, as it is management's intent is to converted
their interest into the investment. This interest is for
assisting the joint venture in obtaining all financing arrangements. $ 0 $215,000
A note from M. Philip and T. Carnes dated August 25, 1995, payable August 25,
1996 with interest at 11% per annum,
secured by an assignment of interest in an unrelated law suit. 0 45,000
-------------- -------------
Total Notes Receivable $ 0 $260,000
============== =============
Both notes are delinquent as of the date of this report. Management is unsure of
whether these notes are collectable. Therefore, they have been reversed out of
the financial statements until such time that the sums owed are collected.
NOTE 7 - NOTES PAYABLE:
September 30, December 31,
1997 1996
------------- ------------
A note payable to R.K. Company, dated November 17, 1995, payable $43,367 per
month with interest at 10% per annum through May 17,1996,
18% thereafter, unsecured . $ 52,373 $247,809
A note payable to R. K. Company, dated November 17,1995,
payable $37,624 per month with interest at 10% per annum
through May 17 1996, 18% thereafter, unsecured. 215,000 215,000
-------------- ------------
Total Notes Payable $267,373 $462,809
============= ============
</TABLE>
In March 1997, a payment of $195,436 was made on the note payable to R.K.
Company, a related party (see Note 13 and 14). Both notes are delinquent and a
demand for payment has been made on both notes. A final determination of the
enforceability of these notes is subject to the outcome of the litigation
reported above (see Note 2). Should the courts determine that these notes are
not enforceable, the Company will pursue recovery of the $195,436 payment made
in March, 1997.
81
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
NOTE 8 - INCOME TAXES
At December 31, 1993 the Company had a net operating loss carry forward for
federal income tax purposes which will be limited because of change in ownership
since 1993. Post 1993 net operating losses carry forward of approximately
$500,000 is available to provide future tax benefits:
Expiration Date Operating Losses
--------------- ----------------
2008 $800
2009 101,000
2010 90,000
2011 308,200
NOTE 9 - CAPITAL STOCK
On December 28, 1993 the Company amended its articles of incorporation's to
increase the authorized capitalization from 80,000,000 shares common stock to
900,000,000 shares of common stock and changed the par value of its common stock
from $0.02 per share to $0.001 per share. In January 1994, the Company declared
a one for three reverse stock split. In June 1998, the Company declared a one
for one thousand reverse stock split.
NOTE 10 - CONTINGENCIES
The company is subject to disputes, various claims and legal proceedings
primarily relating to its contracts to acquire real estate and on account of
various transactions affiliated with the owner of the real estate. Consummation
of the agreements have not yet occurred, and such contracts are the subject of
litigation, the outcome of which cannot presently be predicted to be favorable
or unfavorable to the Company. Should the outcome of the real estate litigation
be unfavorable to the Company, the outstanding shares will be recovered and the
remaining unrecoverable shares will be pursued.
In 1996, the company entered into a contract for the acquisition of an interest
in a mining operation but the transaction was not consummated. The Company
issued 98,000 shares (after given effect of reverse split (see Note 1)) for the
interest in the mining operation. The company is attempting to reacquire those
shares, but, at this time, management is unable to determine if collectability
is probable.
Stock options for an aggregate of 50,000 shares (after given effect of reverse
split (see Note 1)) were issued to The Rainbow Group and The Senior Group
(25,000 each). Such options must be exercised within 10 years from the option
grant date of June 28, 1994. The first 25,000 shares are reserved at an exercise
price of $1,000 per share. The next 25,000 may be exercised at a price per share
equal to the last trading price at the close of business for the day immediately
preceding the day on which the option is exercised. In no event can the price be
less than 110% of the trading price on June 28, 1994. The holder of these
options is the same individual who holds the 98,000 shares discussed above.
NOTE 11- FINANCIAL INFORMATION FOR BUSINESSES ACQUIRED OR TO BE ACQUIRED o
Effective February 4, 1997, F&H Mining Company, Inc. (F&H) and Peeples
Mining, L.L.C. (Peeples LLC) were acquired by the Company through the
exchange for common stock of the company. These acquisitions were accounted
for under the purchase method.
o Effective February 4, 1997, Nashville Music Consultants, Inc. (NMC) was
acquired by the Company through the exchange for common stock of the
Company. On August 20, 1998, the Company entered into an Amendment To Stock
Exchange Agreement, which related back to the same date as the original
stock exchange agreement. The original stock exchange agreement provided
for the acquisition of only the music publishing operations of NMC. NMC
(now known as Nashville Music Group, Inc. (NMG) has failed to provide the
Company with current financial information relating to the music
publishing. The uncertainty of obtaining this information is so great, it
82
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
is felt that the value may have been impaired to an unknown extent.
Therefore, it has been fully reserved against until such time the
appropriate information is obtained.
o The combined assets of F&H and Peeples LLC were $496,130 as of February 4,
1997. There have been no operations in either company for several years.
o The company has entered into two agreements to acquire certain real estate
from Rainbow Group and Senior Group. Consummation of the agreements has not
yet occurred, and contracts are the subject of litigation, the outcome
cannot presently be predicted. Financial statements and/or pro forma
information will be furnished after the level of probability can be
determined or consummation of the acquisition(s) occurs, whichever comes
first.
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash services and acquisitions are listed below, including common stock
where applicable. Stated at value prior to reverse stock split.
Date Exchanged for: No. of Shares Value Assigned
------ -------------- ------------- -------------
1 1/94 Services 31,960,000 $ 31,960
2 5/94 A Future Learning Center 400,000 50,000
3 5/94 Mining Interest 12,000,000 86,130
4 7/94 Real Estate Properties 54,572,361 13,190,066
5 9/94 Real Estate Properties 40,348,988 9,752,296
6 9/94 Mining Interest 20,000,000 410,000
------------ ---------------
Total 1994 159,281,349 23,520,452
------------ ---------------
7 2/95 Services 5,000,000 5,000
8 2/95 Real Estate Properties 22,000,000 5,317,370
9 8/95 Music Company 4,000,000 2,500,000
10. 8/95 Real Estate Properties 73,000,000 17,644,001
11. 8/95 Mineral Inventory (Note 5) 100,000,000 200,000,000
12. 9/95 Services 275,000 66,467
------------ ---------------
Total 1995 204,275,000 225,532,838
------------ ---------------
13. 6/96 Mining Interest 40,000,000 --
14. 6/96 Medical Decontamination
Machines 2,066,115 555,185
15. 7/96 Acquisition of
ElfWorks, Inc. 40,000,000 40,000
16. 1996 Services (Note 12) -- 34,970
------------ ---------------
Total 1996 82,066,115 630,155
------------ ---------------
17 2/97 Mining Interest (Note 2) 375,000,000 69,375,000
18 1997 Services (Note 12) -- 39,060
------------ ---------------
Total 1997 375,000,000 69,414,060
------------ ---------------
TOTAL 1994 - 1997 820,622,464 $319,097,495
============ ===============
To reflect reverse stock split: 820,622
19. 1998 Services (Note 13) -- 52,090
TOTAL 1994 - 1998 820,622 $319,162,495
============ ===============
83
<PAGE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(Formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998, 1997 AND 1996
NOTE 13 - RELATED PARTY TRANSACTIONS
o Inventories consisting of ore concentrates located in Arizona were
purchased from Zarzion Ltd. In exchange for shares of the Company's common
stock (see Note 5).
o October 2, 1997, 200,000,000 shares of preferred stock were issued for
services and expenditures. The transaction was booked at the Company's par
value of preferred stock.
o Services contributed by officers and reimbursements forfeited were expensed
to "Imputed Wages" at an hourly rate proportionate to the services
performed. Contributed office occupancy provided by M. Furlong, the
Company's president and CEO, was expensed to rent at an average of $340 a
month.
o Mining claims located in San Bernardino County, California were purchased
from Zarzion Ltd. In exchange for shares of the Company's stock (see Note
2).
o In April 1997, Maurice Furlong, CEO, President and major shareholder,
obtained voting control of all common stock of the company held by Zarzion
Ltd.
<PAGE>
DALE MCGHIE Town & Country Plaza
CERTIFIED PUBLIC ACCOUNTANT 1539 Vassar St. Reno, Nevada 89502
Tel: 702-323-7744
Fax: 702-323-8288
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
and Shareholders of
Hexagon Consolidated Companies of America, Inc.
I have audited the consolidated balance sheets of Hexagon Consolidated Companies
of America, Inc. (formerly Health Care Centers of America, Inc.) (a development
stage company) as of September 30, 1999, December 31, 1998, 1997 and 1996, and
the related statements of operations, stockholders' equity, and cash flows for
the nine months and years then ended, and have issued my opinion thereon dated
November 14, 1999. My examination also comprehended Supplemental Schedules A and
B of Hexagon Consolidated Companies of America, Inc. (formerly Health Care
Centers of America, Inc.) (a development stage company). In my opinion,
Schedules A and B, when considered in relation to the basic financial
statements, present fairly in all material respects the information shown
therein.
/s/ W. Dale McGhie
- ------------------
W. Dale McGhie, CPA
Reno, Nevada
November 14, 1999
84
<PAGE>
<TABLE>
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
(formerly HEALTH CARE CENTERS OF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
SCHEDULE A - PROPERTY, PLANT AND EQUIPMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
Other Charges
Balance at Additions Reclassifications Balance at
Classification Beginning of Year at Cost Retirements add (deduct) End of Year
---------------------- ----------------------------------- ------------------------------- ------------
<S> <C> <C> <C> <C> <C>
September 30, 1999
Furniture and fixtures $ 13,951 $ - $ - $ - $ 13,951
Equipment 31,737 - - - 31,737
Equipment - mining 496,130 - - - 496,130
Equipent - other* 555,185 - - - 555,185
------------------- -------------- ------------- ----------------- ------------
Total $ 1,097,003 $ - $ - $ - $1,097,003
=================== ============== ============= ================= ============
December 31, 1998:
Furniture and fixtures $ 12,307 $ 1,644 $ - $ - $ 13,951
Equipment 29,288 2,449 - - 31,737
Equipment - mining 496,130 - - - 496,130
Equipment - other * 555,185 - - - 555,185
------------------- -------------- ------------- ----------------- ------------
Total $ 1,092,910 $ 4,093 $ - $ - $1,097,003
=================== ============== ============= ================= ============
December 31, 1997:
Furniture and fixtures $ 6,249 $ 6,058 $ - $ - $ 12,307
Equipment 24,935 4,353 - - 29,288
Equipment - mining - - - 496,130 496,130
Equipment - other * 555,185 - - - 555,185
------------------- -------------- ------------- ----------------- ------------
Total $ 586,369 $ 10,411 $ - $ 496,130 $1,092,910
=================== ============== ============= ================= ============
December 31, 1996:
Furniture and fixtures $ 1,679 $ 4,570 $ - $ - $ 6,249
Equipment 16,046 8,889 - - 24,935
Equipment - other * - 555,185 - - 555,185
------------------- -------------- ------------- ----------------- ------------
Total $ 17,725 $ 568,644 $ - $ - $ 586,369
=================== ============== ============= ================= ============
</TABLE>
* Equipment is not depreciated at this time because not placed in service yet.
85
<PAGE>
<TABLE>
HEXAGON CONCOLIDATED COMPANIES OF AMERICA, INC.
(formerly HEALTH CARE CENTERSOF AMERICA, INC.)
(A DEVELOPMENT STAGE COMPANY)
SCHEDULE B - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
Additions Other Charges
Balance at Charges to Costs Reclassifications Balance at
Classification Beginning of Year and Expenses Retirements add (deduct) End of Year
---------------------- ------------------- ----------------- ------------------------------ ------------
<S> <C> <C> <C> <C> <C>
September 30, 1999:
Furniture and fixtures $ 6,392 $ 1,873 $ - $ - $ 8,265
Equipment 21,582 2,444 - - 24,026
Equipment - mining - 17,718 - - 17,718
Equipment - other * - - - - -
------------------- ----------------- ------------ ----------------- ------------
Total $ 27,974 $ 22,035 $ - $ - $ 50,009
=================== ================= ============ ================= ============
December 31, 1998:
Furniture and fixtures $ 3,931 $ 2,461 $ - $ - $ 6,392
Equipment 15,502 6,080 - - 21,582
Equipment - mining - - - - -
Equipment - other * - - - - -
------------------- ----------------- ------------ ----------------- ------------
Total $ 19,433 $ 8,541 $ - $ - $ 27,974
=================== ================= ============ ================= ============
December 31, 1997:
Furniture and fixtures $ 1,522 $ 2,409 $ - $ - $ 3,931
Equipment 9,833 5,669 - - 15,502
Equipment - mining - - - - -
Equipment - other * - - - - -
------------------- ----------------- ------------ ----------------- ------------
Total $ 11,355 $ 8,078 $ - $ - $ 19,433
=================== ================= ============ ================= ============
December 31, 1996:
Furniture and fixtures $ 758 $ 764 $ - $ - $ 1,522
Equipment 6,297 3,536 - - 9,833
Equipment - other * - - - - -
------------------- ----------------- ------------ ----------------- ------------
Total $ 7,055 $ 4,300 $ - $ - $ 11,355
=================== ================= ============ ================= ============
</TABLE>
* Equipment is not depreciated at this time because not placed in service yet.
PART III
Item 1. Index to Exhibits
Exhibit
no.
(2) Articles of Incorporation and Amendments thereto
(a) Articles of Incorporation of Carleton Enterprises, Inc. filed
April 1984
(i) Agreement of Merger merging Cadgie Taylor Co. into
Carleton Enterprises, Ltd., filed May 24, 1984
(ii) Amendment to Articles of Incorporation filed Novem-
ber 18, 1984, inter alia changing name to SCN, Ltd.
(iii) Certificate of Amendment of Articles of Incorporation
filed December 10, 1993, changing name to Health Care
Centers of America, Inc.
(iv) Amendment to Articles of Incorporation filed January
4, 1994
(v) Amendment to Articles of Incorporation filed March
31, 1995
(vi) Amendment to Articles of Incorporation filed June
23,1998 authorizing 1 for 1,000 reverse stock split
(vii) Amendment to Articles of Incorporation filed August
31, 1999 changing name to Hexagon Consolidated
Companies of America, Inc.
(viii) Certificate of Existence With Status In Good
Standing issued by the Nevada Secretary of State on
October 26,1999
(b) Bylaws
(3) Instruments Defining Rights of Security Holders.
(a) Specimen stock certificate for common stock
(5) Voting Trust Agreement.
(a) Voting trust agreement dated June 18, 1994, between the
"stockholders" of Peeples Mining, LLC, and Maurice Furlong
(b) Voting trust agreement dated April 22, 1995, between
stockholders of Nashville Music Consultants, Inc., and Maurice
Furlong
(c) Voting trust agreement dated April 21, 1997, between Zarzion
Ltd. and Maurice Furlong (filed with Registrant First Amended
Form 10-SB filed August 26,1997 and incorporated by reference)
86
<PAGE>
(6) Material Contracts
(i) Transfer Agent and Registrar Agreement between Reg istrant and
Nevada Agency & Trust Co., dated June 28, 1993
(ii) Stock Exchange Agreement dated March 25, 1994, be tween
Registrant and F&H Mining Co., Inc.
(iii) Stock Exchange Agreement dated June 18, 1994, between
Registrant and Peeples Mining LLC
87
<PAGE>
(iv) Agreement for acquisition of gold concentrate dated March 15,
1995, between Registrant and Robert Rood, IV, and Restated
Agreement between Registrant and Mar-Pro Services, Ltd.
(v) Stock Exchange Agreement dated April 21, 1995, and addenda
between Registrant and Nashville Music Con sultants, Inc. and
Reincorporation Agreement and Amendment to Stock Exchange
Agreement dated Septem ber 1, 1998
(vi) Joint venture agreement dated May 31, 1995, among Registrant,
Immobiliara y Fraccinoadora del 1 Nueva Viscaya, S.A. de C.V.
and Oscar Neninger G., and Robert R. Krilich, Sr.)
vii) Amended and restated Stock Exchange Agreement dated June 5,
1995, between Registrant and Senior Group
(viii) Amended and Restated Stock Exchange Agreement dated June 5,
1995, between Registrant and Rainbow Group
(ix) Consulting services agreement dated January 10, 1996, between
Registrant and Robert R. Krilich, Sr.
(x) Asset purchase agreement dated June 12, 1996, be tween
Registrant and MedAway International, Inc. and relative
documentation
(xi) Stock Exchange Agreement dated June 26, 1996, and amendment
dated November 8, 1996, between Registrant and ELF Works, Ltd.
(xii) Partnership Agreement between dated August 30, 1996, between
R&S Group and Fairdan Suites, Inc.
(xiii) Sales agreement dated February 6, 1997, between Zarzion, Ltd.
and the Registrant and copy of corporate resolution
authoriizing purchase
(xiv) Purchase agreement dated November 1,1984 between Bullett
Productions, Inc. and the Registrant
(xv) Purchase agreement dated August 2,1984 between Jey
Productions, Inc. and the Registrant
(xvi) Rentention agreement dated May 20th,1996 between Artists
Limited, L.L.C. and the Registrant
(xvii) Joint venture agreement dated April 30,1998 between Hidden
Splendor Smelting Co. and the Registrant
(xviii) Organizational documents of The R&S Group dated November
5,1995
(7) Material Foreign Patents.
None.
(10) Consent of experts and counsel
(i) Consent of Metallurgical Research & Assay Laboratory
(ii) Consent of Dale McGhie, certified public accountant
(12) Additional Exhibits.
(a) Letter dated November 11, 1996, from Roy Sinkovich on change
in certifying accountant
(b) Letter from Registrant dated November 29, 1996, on change in
accounting treatment of certain acquisitions
(c) Letter from Research & Assay Laboratory dated June 25, 1997
indicating economic feasibility of processing Peoples [sic]
black sands and with value based on 3/21/97 precious metals
prices
88
<PAGE>
(d) Assays no. 2220, 2221 and 2222, dated February 6, 1996, and
letter relating thereto dated February 9, 1996, relating to
properties belonging to F&H Mining in the vicinity of
Mesquite, Nevada
(e) Transmittal aletter dated June 13, 1997, assays no. 2972A-B-C
dated June 12, 1997 and letter relating thereto dated June 28,
1997, relating to approximately 500,000 tons of ore
concentrate belonging to Peeples Mine, located in the vicinity
of Skull Valley, Arizona
(f) Articles of incorporation of Peeples Mining Company, a wholly
owned subsidiary of the Registrant, filed February 4, 1997 and
Certificate Of Existence With Status In Good Standing issed by
the Nevada Secretary of State on October 14,1999 (g) Articles
of incorporation of MedAway International, Inc., a wholly
owned subsidiary of the Registrant, filed on September 11,
1996 and Certificate Of Existence Of Existence With Status In
Good Standing issued by the Nevada Secretary of State on
October 14,1999
Item 2. Exhibits
[Attached, pages through]
89
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
HEALTH CARE CENTERS OF AMERICA, INC.
(Registrant)
By: /s/ MAURICE W. FURLONG
----------------------------
Maurice W. Furlong, President
Date: December 1, 1999
----------------
90
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
APR 13, 1984
ARTICLES OF INCORPORATION
OF
CARLETON ENTERPRISES, LTD.
W.M. SWACKHAMER-SECRETARY OF STATE
/s/W.M. Swackhamer
- ------------------
No. 2341-84
-------
We, the undersigned, have voluntarily associated ourselves
together for the purpose of forming a corporation under the laws of the
State of Nevada relating to private corporations, and to that end do hereby
adopt articles of incorporation as follows:
ARTICLE ONE. [NAME]. The name of the corporation is.
CARLETON ENTERPRISES, LTD.
ARTICLE TWO. [LOCATION]. The address of the corporation's
principal office is Suite 1400, One East First Street, in the City of Reno,
County of Washoe, State of Nevada. The initial agent for service of process at
that address is NATCO.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation
is organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. [OMNIBUS]. To have and to exercise all the powers now or
hereafter conferred by the laces of the State of Nevada upon
corporations organized pursuant to the laws under which the
corporation is organized and any and all acts amendatory thereof
and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry
on its business or any branch thereof in any state or territory of
the United States or in any foreign country in conformity with the
laws of such state, territory, or foreign country, and to have and
maintain in any state, territory, or foreign country a business
office, plant, store or other facility.
III.[PURPOSES TO BE CONSTRUED AS POWERS]. The purposes
specified herein shall be construed both as purposes and powers
and shall be in no wise limited or restricted by reference to, or
<PAGE>
inference from, the terms of any other clause in this or any other
article, but the purposes and powers specified in each of the
clauses herein shall be regarded as independent purposes and
powers, and the enumeration of specific purposes and powers shall
not be construed to limit or restrict in .any manner the meaning
of general terms or of the general powers of the corporation; nor
shall the expression of one thing be deemed to exclude another,
although it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have
authority to issue an aggregate of TWENTY MILLION (20,000,000) shares, par value
TWO CENTS ($.02) per share, for a total capitalization of $400,000.
The holders of shares of capital stock of the corporation shall
not be entitled to pre-emptive or preferential rights to subscribe to any
unissued stock or any other securities which the corporation may now or
hereafter be authorized to issue.
The corporation's capital stock may be issued and sold from time
to time for such consideration as may be fixed by the Board of Directors,
provided that the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of not less than three (3) persons. The names.
and addresses of the first Board of Directors are:
NAME AND ADDRESS ADDRESS
---------------- -------
Alexander H. Walker III 600 Kennecott Building
Salt Lake City, Utah 84133
Timotha Ann Kent 600 Kennecott Building
Salt Lake City, Utah 84133
Amanda E. Walker 600 Kennecott Building
Salt Lake City, Utah 84133
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the
corporation, after the amount of the subscription price or par value has been
paid in, shall not be subject to pay debts of the corporation, and no paid up
stock and no stock issued as fully paid up shall ever be assessable or assessed.
<PAGE>
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the
incorporator of the corporation is as follows:
NAME ADDRESS
- ---- -------
Alexander H. Walker, Jr. 600 Kennecott Building
Salt Lake City, Utah 84133
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence o
tie corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS). The initial By-Laws of the corporation
shall adopted by its Board of Directors. The power to alter, amend, or repeal
the By-Laws, or to adopt new By-Laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-Laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders
shall a held at such place within or without the State of Nevada as may be
provided by the By-Laws of the corporation. Special meetings of the stockholders
may be called by the President or any other executive officer of the
corporation, the Board of Directors, or any member thereof, or by the record
holder or holders of at least ten percent (l0%) of all shares entitled to vote
at the meeting. Any action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS. OF CORPORATION]. No contract or other
transaction between .the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a part to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
<PAGE>
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto
fixed his signature at Salt Lake City, Utah, this 28th day of March, 1984.
/s/Alexander H. Walker, Jr.
---------------------------
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 28th day of March, 1984 before me, the undersigned, a
Notary Public, personally appeared ALEXANDER H. WALKER, JR., known to me to be
the person described in and who executed the foregoing instrument, and who
acknowledged to me that he executed the same freely and voluntarily and for the
uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year, in this certificate first above written. ,
/s/Rhonda Marquardt
-------------------
Notary Public
Residing Salt Lake City, Utah
My Commission Expires:
April 4, 1987
-------------------
<PAGE>
STATE OF NEVADA
DEPARTMENT OF
STATE
I hereby certify that this is a true and complete copy of
the document as filed In this office.
DATED: APR 3, 1984
/s/W.M. D. SWACKHAMER
----------------------
Secretary of State
M E R G E R A G R E E M E N T
between
CARLETON ENTERPRISES, LTD.
and
CADGIE TAYLOR C0.
WITNESS the terms of the Merger Agreement by and between:
CARLETON ENTERPRISES. LTD. a Nevada Corporation,
hereinafter referred to as "Carleton". and
CADGIE TAYLOR CO.,
a Montana Corporation, hereinafter
referred to as "Cadgie".
RECITALS
--------
1. Identity of Parties. Carleton was incorporated in accordance with
the laws of the State of Nevada on April 3, 1984, with a capitalization of
20,000,000 shares of Capital Stock, par value $0.02 per share. which Capital
Stock is non-assessable. There are outstanding as of this date 50,000 shares of
Capital Stock. Cadgie was organized in accordance with the laws of the State of
Montana and has an authorized capitalization of 2,500,000 shares of Common Stock
with a par value of $0.02 per share. of which there are issued and outstanding
722,500 shares.
2. Assumption of Assets Subject to Liabilities. Carletrrn. a
Nevada Corporation. when this Merger Agreement shall become effective, as is
<PAGE>
hereinafter provided, shall assume all of the assets and all of the liabilities
standing on the books and records of Cadgie, a Montana corporation. As a result
thereof, Cadgie shall no longer be engaged in business, having then merged into
Carleton.
3. Requirements to Nevada Law. Carleton is a Nevada corporation.
Pursuant to the laws of the State of Nevada, a majority of the directors of
Carleton may enter into a Merger Agreement setting forth the terms and
conditions of the proposed merger, including a statement of the capitalization,
the number of shares of Capital Stock of the surviving corporation. Carleton, a
statement of the manner of conversion of the shares and assets of the retiring
corporation, Cadgie, a statement as to whether a new corporation is to be
formed, a statement of the method of carrying the terms of the agreement into
effect, and such other details as may be deemed necessary to disclose all
matters effective in a merger. The laws of the State of Nevada further provide
that notice of a proposed merger shall be given by mail to the last known
address of each stockholder, not less than ten days prior to such tweeting. Such
notice shall contain the time and place of tweeting, the laws of the State of
Nevada provide further that notice of a proposed merger may be waived by the
stockholders. By the further terms of the laws of the State of Nevada it it
specified that if a majority of the outstanding stock of the Nevada corporation,
<PAGE>
Carleton, shall be vested in favor of the merger, the agreement shall be
declared adopted. The vote thereon shall be certified on the agreement by the
President or Vice President and by the Secretary or Assistant Secretary of the
Nevada corporation. Carleton. The agreement shall be signed and acknowledged by
the President or Vice President and by the Secretary or Assistant Secretary of
the Nevada corporation. Carleton, and the seal of such corporation shall be
affixed thereto whereupon the same shall be filed in the Office of the Secretary
of State of Nevada. "pon the recordation in the Office of the Secretary of State
of Nevada the merger shall, insofar as Nevada law is concerned, be deemed to be
consummated with the same result as respects assets and liabilities as is
specified under Montana law.
4. Requirements of Montana Law. Upon completion of the various
steps necessary to place this Merger Agreement into effect, the same shall
become effective. The action contemplated hereby is deemed under Montana law to
be a merger. In connection with a merger, Montana law requires that the Board of
Directory of the Montana Cadgie, shall by resolution approve and adopt the Plan
of Merger. The Plan of Merger shall specify the of the corporations proposing to
merge. The name of the surviving corporation, the terms and conditions of the
merger, manner and basis of converting the shares of the corporation, Cadgie,
into shares of the corporation, Carleton, a statement of any changes in the
Articles of Incorporation of the surviving corporation, Carleton. to the extent
that they are the result of such merger, end such other provisions with respect
<PAGE>
to the merger as are deemed necessary or desirable shall also be specified in
the Plan of Merger. The statutes of the State of Montana further require that
the Board of Directors of Cadgie by resolution direct that the Plan of Merger be
submitted to a vote of a meeting of the shareholders of Cadgie, that written or
printed notice shall be given to each stockholder of record no less than thirty
days prior to such meeting, and that such notice shall state the purpose of the
meeting, as well as the place. day and hour thereof, and shall be delivered
either personally or by deposit in the United States mail, properly addressed,
postage prepaid. Montana law further requires that a copy of or a summary of a
Plan of Merger shall be included or enclosed with such notice. The laws of the
State of Montana further specify that the Plan of Merger shall be deemed to have
been approved upon receiving the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Cadgie, end such laws specify that upon
such approval. Articles of Merger shall be executed in duplicate by the
President or Vice President and by the Secretary or Assistant Secretary of
Cadgie, and shall be verified by one of such officers. Such Articles of Merger
shall record or set forth the Plan of Merger, the number of shares outstanding
with respect to each corporation, and the number of stares voted for and against
the Plan of Merger. It is further required that such duplicate originals be
delivered to the Sscretary of State of Montana, and upon the subsequent issuance
<PAGE>
of a Certificate of Merger by the Secretary of State, the corporations party to
the merger shall become a single corporation, the separate existence of the
merged corporation, Cadgie, shall cease, and the surviving corporation.
Carleton. shall have all the rights, privileges, immunities, powers, properties
and assets and shall be subject to the duties, liabilities, debts and
obligations of both corporations. It is the intention of the parties to this
agreement that upon the issuance of a Certificate of Merger by the Secretaries
of State of Montana and Nevada and the final compliance of the laws of the
States of Montana and Nevada, this Merger Agreement shall become effective.
NOW, THEREFORE, AND IN THE CONSIDERATION OF THE FOREGOING RECITALS, AND THE
MUTUAL COVENANTS HEREINAFTER SET FORTH. CARLETON AND CADGIE DESIRE TO MERGE, AS
THAT TERM IS USED IN THE LAWS OF THE STATES OF MONTANA AND NEVADA. DO HEREBY,
ACTING THROUGH A MAJORITY OF THE BOARD OF DIRECTORS OF EACH SUCH CORPORATION,
AGREE TO MERGE AS FOLLOWS:
5. Statement Under Nevada Law. The terms and conditions of the
proposed merger of Cadgie into Carleton shall be as follows:
(a) The Articles of Incorporation of Carleton, which
set on file with the Secretary of State of Nevada,shall be the Articles of
Incorporation of the surviving corporation.
<PAGE>
(b) The manner of converting shares of Coamon Stock of
Cadgie will be on a basis of one share of Cadgie being converted into one share
of Carleton.
6. Statement Under Montana Law. The Flan of Merger of Cadgie into Carleton shall
be as follows:
(a) The names of the corporations proposing to merge
are Carleton, a Nevada corporation, and Cadgie, a Montana corporation, Cadgie
proposes to merge into Carleton and Carleton is hereby designated as the
surviving corporation.
(b) The shares of Common Stock of Cadgie shall be
converted into Common Stock of Carleton on a basis of one share of Cadgie for
one share of Carleton, the surviving corporation, on the effective date of this
Merger Agreement.
(c) The assets of Cadgie. upon this Merger Agreement
becoming finally effective. will become the assets of Carleton.
(d) The surviving corporation, Carleton, hereby
agrees that it tray be served with process in the State of Montana in any
proceeding for the enforcement of any obligation of Cadgie and in any proceeding
for the enforcement of the rights of a dissenting shareholder of Cadgie against
the surviving corporation. Carleton. The surviving corporation. Carleton, hereby
appoints the Secretary of State of Montana as its agent to accept service of
<PAGE>
process in any such proceeding. and agrees to promptly pay to the dissenting
shareholders of Cadgie the amount, if any, to which they are entitled under the
provisions of the Montana Business Corporation Act with respect to the rights of
dissenting shareholders.
7. Agreement to Merge. The parties hereby agree that Cadgie shall
be merged into Carleton and they do hereby further specifically agree in order
to accomplish such results as follows:
(a) Each of the parties hereto shall prepare and
cause to be mailed such notices as may be required or be desirable
pursuant to the laws of the States of Nevada and Montana. And in
addition. they shall see to the mailing to the stockholders of the
parties of all information which may be reasonably necessary or
desirable in order to permit such stockholders to reach an intelligent
and informed decision with respect to the proposed merger. The expense
of all such notices. reports and information and of the mailing of the
same shall be borne by the party with respect to which the material is
prepared or to whose stockholders the material is submitted. as the
case may be, save only that neither party shall be charged by the other
for the costs of preparing any reports or documents heretofore
published and available and deemed desirable for such distribution.
<PAGE>
(b) Each of the parties hereto shall proceed with
all due diligence. but strictly in cooperation with the other. to
secure the approval of, the merger Agreement by the requisite vote of
the stockholders of the parties and shall thereafter nee to they
filing of all required notices and undertakings of every kind and
character. pursuant to the laws of the States of Nevada and Montana.
(c) Upon the issuance of a Certificate of Merger
from the State of Montana, this Merger Agreement shall become effective
wherein Carleton shall take over the assets and assume the liabilities
of Cwdgie, and the stockholders of Cadgie shall surrender their stock
certificates in exchange for Cosanon Stock of Carleton with one share
of Cadgie being exchanged for one share of Carleton.
8. Expenses and Fees. Carleton shall discharge all expenses in
connection with calling and convening a special stockholders' meeting to ratify
the Merger Agreement. Cadgie shall discharge all expenses in connection with
calling and convening a special stockholders' meeting to ratify the Merger
Agreement. This agreement contemplates an audit, inventory and veriftnation of
the assets and liabilities of each of the corporations at the discretion of each
corporation. The expense of the audit, inventory or verification shall be
discharged by the corporation electing to conduct the audit, inventory or
verification.
<PAGE>
9. Conditions Precedent to Effectiveness. Notwithstanding any other
terms and conditions hereof, this Merger Agreement shall become effective only
if the requirements of the laws of the States of Montana and Nevada, precedent
to effectiveness, have been formally complied with.
10. Directors and Officers.
(a) On the effective date of the merger, the Board
of Directors of Carleton, the surviving corporation, shall consist of
three directors. The terms of office of such members of the Board of
Directors shall be until the first annual meeting of the stockholders
of Carleton, the surviving corporation, after the effective date of the
merger and until their successors shall be elected and shall have
qualified. The respective names and addresses of such directors are
as follows:
Alexander H. Walker III
600 Kennecott Building
Salt Lake City, Utah 84133
Timotha Ann Kent
600 Kennecott Building
Salt Lake City, Utah 84133
Amanda Evelyn Walker
600 Kennecott Building
Salt Lake City. Utah 84133
(b) Upon the effective date of the merger, there
shall be three officers of Carleton who are presently holding these
positions. These officers, each of whom shall hold office until a
successor shall have been duly elected or appointed and shall have
<PAGE>
qualified, or until his earlier death, resignation or removal, and
their respective offices and addresses ere As follows:
Alexander H, Walker III President
600 Kennecott Building
Salt Lake City, Utah 84133
Timotha Ann Kent Vice President
600 Kennecott Building
Salt Lake City, Utah 84133
Amanda Evelyn Walker Secretary and Treasurer
600 Rennecott Building
Salt Lake City, Utah 84133
11. Dissenting Shareholders. Carleton, as the surviving
corporation, will comply with the provisions of the Nevada Revised Statutes and
the Montana Business Corporation Act, with the appraisal of and payment for
stock of stockholders objecting to the merger. The surviving corporation,
Carleton, agrees that the payments for such stock and the cost of all
proceedings in connection with all matters necessary to be performed in
connection therewith will be at the expense of Carleton.
12. Abandonment of Merger. Anything herein to the contrary
notwithstanding, this merger may be terminated and the merger provided herein
abandoned at any time prior to the effective date of the merger, whether before
or after such action of the stockholders, pursuant to resolution adopted by the
Board of Directors of either Carleton or Cadgie. In the event of the termination
or abandonment of this Agreement of Merger, the same shall become wholly void
<PAGE>
and of no effect and there shall be no liability on the pert of either Carleton
or Cadgie or their respective boards of Directors or the stockholders.
13. Execution. This Agreement of Merger may be executed in any
number of counterparts, all of which together shall constitute one original
Agreement of Merger.
IN WITNESS WHEREOF. Carleton and Cadgie caused this instrument
to be executed by their duly authorised officers in each case by authority of
the majority of the Board of Directors of each corporation, and have caused
their seals to be hereto affixed and a majority of the Board of Directors of
each corporation have executed this agreement as of the day and year set forth
below.
DATED this 4th day of April, 1984.
CARLETON ENTERPRISES, LTD.
ATTEST:.
/s/Alexander H. Walker 111
---------------------------
Alexander H. Walker 111
President
/s/Amanda Evelyn Walker
- -----------------------
Amanda Evelyn Walker
Secretary
A Majority fo the Board of
Directors:
/s/Alexander H. Walker 111
--------------------------
/s/Timotha Ann Kent
-------------------
/s/Amanda Evelyn Walker
-----------------------
<PAGE>
STATE OF UTAH )
: ss.
COUNT! OF SALT LAKE )
The undersigned, a Notary Public,does hereby certify that on
this 6th day of April, 1984, personally appeared before me Alexander N. Walker
III, who being by me first duly sworn, declared that he is the President of
CARLETON ENTERPRISES, LTD., a Nevada corporations: and Amanda Evelyn Walker, who
being by me first duly sworn, declared that she is the Secretary of CARLETON
ENTERPRISES. LTD., a Nevada corporations that they signed the foregoing document
as President and Secretary of the corporation, and that the statements therein
contained are true.
IN WITNESS WHEREOF I have set my hand and seal this 4th day of
April, 1984.
/s/Rhonda Marquardt
-------------------
Notary Public
Residing in Salt Lake County
My Commission Expires
April 4, 1987
---------------------
CADGIE TAYLOR C0.
ATTEST
/s/ Alexander H. Walker /s/ C. A. Walker
- ----------------------- ----------------
Alexander H. Walker, Jr. C. A. Walker
Secretary President
A Majority fo the Board of
Directors:
/s/Alexander H. Walker 111
--------------------------
/s/Timotha Ann Kent
-------------------
/s/Amanda Evelyn Walker
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The undersigned, a Notary Public, does hereby certify that on
this 4th day of April, 1984, personally appeared before roe C. A. Walker, who
being by me first duly sworn, declared that she is the President of CADDIE
TAYLOR CO., a Montana corporations and Alexander H. Walker. Jr., who being by me
first duly sworn, declared that he is the Secretary of CADDIE TAYLOR CO., a
Montana corporation; that they signed the foregoing document as President and
Secretary of the corporation, and that the statements therein contained are
true.
IN WITNESS WHEREOF I have set my hand and seal this 4th day of
April, 1984.
My Commission Expires: /s/Rhonda Marquardt
April 4, 1987 -------------------
- ---------------------- Notary Public
Residing in Salt Lake County
<PAGE>
AGREEMENT OR MERGER
MERGING
CADGIE TAYLOR CO.
(A MONTANA CORPORATION)
INTO
CARLETON ENTERPRISES. LTD.
(A NEVADA CORPORATION)
FILED AT THE REQUEST OF:
NATCO
SUITE 01400
ONE EAST FIRST STREET
RENO, NEVADA 89501
FILING DATE: MAY 24, 1984
FILING FEE: $ 50.00
FILE NUMBER: 2341-84
<PAGE>
AGREEMENT OR MERGER
MERGING
CADGIE TAYLOR CO.
(A MONTANA CORPORATION)
INTO
CARLETON ENTERPRISES. LTD.
(A NEVADA CORPORATION)
FILED AT THE REQUEST OF:
NATCO
SUITE 01400
ONE EAST FIRST STREET
RENO, NEVADA 89501
FILING DATE: MAY 24, 1984
FILING FEE: $ 50.00
FILE NUMBER: 2341-84
AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
CARLETON ENTERPRISES, LTD.
*****
Pursuant to the provisions of Section 78.385 of Live
Nevada Revised Statutes, Carleton Enterprises, Ltd. adopts
the following amendments to its Articles of Incorporation:
1. The undersigned hereby certify that. on the day of
November, 1984, a Special Meeting of the Board of Directors
was duly held and convened at which there was present: a
quorum of the Board of Directors acting throughout: all
proceedings, and at which time the following resolution was
duly adopted by the Board of Directors
BE IT RESOLVED: That the Secretary of the
corporation, Amanda E. Walker is hereby ordered and
directed to obtain the written consent of
stockholders owning at least a majority of the voting
power of the outstanding stock or tile corporation
for the following puxposes:
a. To amend Article One to provide that the name of
the corporation shall be changed from Carleton
Enterprises, Ltd. to SCN, Ltd.
b. To amend Article Four to restate the
capitalization to increase the authorized number
of common shares from 20,000,000. shares to
80,000,000 shares with the par value of each
share remaining at $0.02 per share,
<PAGE>
with all. other rights of the stockholders to
remain such as to provide that each share of
stock shall remain nonassessable and the
stockholders shall not have pre-emptive rights to
acquire additional stock.
2. Pursuant: to the provisions of Section 78.320 of the Nevada
Revised Statutes, a majority of the stockholders holding 598,750 shares of the
973,500 shares outstanding of Carleton Enterprises, Ltd. gave their written
consent to the adoption of the amendment to Articles One and Four of the
Articles of Incorporation as follows:
ARTICLE ONE. [NAME]. The name of the corporation
shall be: SCN, LTD.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall
have the authority to issue an aggregate of EIGHTY MILLION SHARES (80,000,000)
of capital stock with each share having a par value of TWO CENTS ($0.02) per
share. All stock when issued shall be fully paid and non assessable. No holder
of shares of capital stock of the corporation shall be entitled, as such, to
any pre-emptive or preferential rights to subscribe to any unissued stock or
any other securities which the corporation may now or hereafter be authorized
to issue. Each share of capital stock shall be entitled to one vote at
stockholders' meetings, either in person or try proxy. Cumulative voting for
the election of directors and all other matters brought before stockholders'
meetings, whether they be annual or special, shall not be permitted.
<PAGE>
IN WITNESS WHEREOF, the undersigned hereunto affix their signatures this
13th day of November, 1984.
CARLETON ENTERPRISES, LTD.
By: /s/Alexander H. Walker 111
--------------------------
President
By: /s/Amanda Evelyn Walker
-----------------------
Amanda E. Walker
STATE OF NEVADA )
: ss.
COUNTY OF WASHOE )
On this 13th day of November, 1984, before me, the
undersigned, a Notary Public in and for the State of Nevada, personally appeared
Alexander H. Walker III, the duly elected President, and Amanda E. Walker, the
duly elected Secretary of Carleton Enterprises, Ltd., known to me to be the
persons described in and who executed the foregoing Amendment to the Articles of
Incorporation and who acknowledged to me that they executed the same freely and
voluntarily on behalf of and in their capacities as the President-and Secretary,
respectively, of Carleton Enterprises, Ltd. I have hereun to set my hand and
affixed my official seal the day and year first above written.
/s/Rose Marie Powles
--------------------
Notary Public
Residing in Reno Nevada
My Commission Expires:
Aug. 22, 1988
- -------------
[State of Nevada not included]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(after Issuance of Stock) Filed by:
CAROL KEMPER
112 LONG HOLLOW PL., #200
GOODLETTSVILLE, TN 37077
SCN, Ltd.
- --------------------------------------------------------------------------------
Name of Corporation
We the undersigned Maurice Furlong and
- --------------------------------------------------------------------------------
President or Vice President
Carol Garrett Kemper of SCN, Ltd.
- --------------------------------------------------------------------------------
Secretary a Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 19th day of November , 1993 adopted a resolution to amend the
original Articles as follows:
Corporation name is hereby amended to read as follows:
-----------------
FILED
Health Care Centers of America, Inc.
THE OFFICE Office Of The
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 10 1993
No. 2341-84
-------
The number of shares of the corporation
outstanding and entitled to vote on an amendment to the Articles of
Incorporation is 18 M; that the said change(s) and amendment have
been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
* 18,338,500 shares /s/Maurice Fulong
-----------------
Maurice Furlong
President or Vice President
/s/Carol Garrett Kemper
-----------------------
Carol Garret Kemper
Asssistant Secretary
State of Tenn.
--------------
}ss.
County of Davidson
------------------
On 12-3-93 personally appeared before me, a Notary Public Carol
Garrett Kemper/Maurice Furlong who acknowledged that they executed
the above Instrument.
/s/ illegible
---------------------
5-22-94
RECEIVED
2:20
DEC 07 1993
[NOTARY STAMP OR SEAL NOT INCLUDED]
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
HEALTHCARE CENTERS OF AMERICA, INC.
Pursuant to the provisions of the Nevada Revised
Statutes, HEALTH CARE CENTERS Or AMERICA, INC.a Nevada corporation,
adopts the following amendments to its. Articles of Incorporation:
1. The undersigned hereby certifies that on the
28th day of December, 1993, a Special Meeting of the Board of
Directors of Health Care Centers of America, Inc. was duly held and
convened at which there was present a quorum of the Board of
Directors acting throughout all proceedings, and at which time the
following resolutions were unanimously adopted by the Board of
Directors:
BE IT RESOLVED: That James M. Troester, Secretary
of the corporation, is hereby ordered and directed
to obtain the written consent of stockholders
owning at least a majority of the voting power of
the outstanding stock of the corporation for the
following purposes:
(a) To amend Article Four of the Articles of
Incorporation to increase the authorized
capitalization from 80,000,000 common shares
to NINE HUNDREED MILLION (900,000,000)
Common Shares, and to change the par value
from $0.02 per share to ONE MILL ($0.001)
per share, and to provide for a reverse
split of the corporation's stock of three
(3) of the present outstanding shares being
surrendered in exchange for one (1) share of
the newly authorized $0.001 par value common
stock.
<PAGE>
(b) To amend Article Twelve to provice that
Directors shall not have personal
responsibility for corpoate obligations,
except for intentional misconduct.
2. Pursuant to the provisions of the Nevada
Revised Statutes, a majority of the stoclkholdors holding 12,836,950
of the 18,338,500 shares outstanding of Health Care Centers of
America, Inc.. gave their written consent to the adoption of the
AAmmendment to Article Four of the Articles of Incorporation as
follows:
ARTICLE FOUR: (CAPITAL STOCK) The corporation shall
have authority to NINE HUNDRED MILLION (900,000,000)
shares of Common stock, par value ONE MIL ($0.001) per
share. All stock when issued shall be fully paid and
non-assessable. No holder of shares of Capital Stock of
the corporation shall be entitled as such to any
pre-emptive or preferential rights to subscribe to any
unissued stock, or any other securities which the
corporation may now or hereafter be authorized to issue.
Each share of Capital Stock shall be entitled to one (1)
vote at stockholders meetings, either in person or by
Proxy. Cumulative voting for the election of directors
and all other matters brought before stockholders'
meetings, whether they be annual or special, shall not
be permitted.
ARTICLE TWELVE. (LIABILITY OF DIRECTORS AND OFFICERS). No
director or officer shall have any personal liability to the corportaiton or its
stockholders for damages for breach of fiduciary duty as a director or officer,
except that this Article Twelve shall not eliminate or limit the liability of a
<PAGE>
director of officer for (i) acts or omissions which involve intentional
misconduct, fraud or a knowing violation fo law, or (ii) the payment of
dividends in violation of the Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned being the President and Secretary of health
Care Centers of America, Inc., a Nevada corporation, hereunto affix thier
signatures this 28th day of December, 1993.
HEALTH CARE CENTERS OF AMERICA
INC.
BY: /s/ Maurice Furlong
-------------------
Maurice Furlong
President
BY: /s/ James M. Troester
---------------------
Secretary
<PAGE>
STATE OF UTAH }
: ss.
COUNTY OF SALT LAKE }
On the 28th of December, 1993, before me, the undersigned, a Notary Public
in and for the State of Utah, personally apppeared MAURICE FURLONG, President
and JAMES M. TROESTER, Secretary, of HEALTH CARE CENTERS OF AMERICA, INC.M, a
Nevada corproation, known to me to be the persons described in and who executed
the foregoing instrument, and who acknowledged to me that they executed the same
freely and voluntarily, in behalf of Health Care Centers of America, Inc. for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/illegible
----------------------
[NOTARY PUBLIC SEAL NOT INCLUDED]
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF
THE
STATE OF NEVADA
MAR 3 1, 1995
No. 2341-84
/s/Dean Heller
--------------
DEAN HELLER SECRETARY OF STATE
AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
HEALTH CARE CENTERS OF AMERICA, INC
******
Pursuant to the provision of the Nevada Revised Statutes. HEALTH CARE
CENTERS OF AMERICA. INC, a Nevada corporation, adopts the following amendments
to its Articles of Incorporation
1. The undersigned hereby certifies that on the 31 it day of March, 1995, a
Special Meeting of the Board of Directors Care Centers of America, 1nc. was
duly. held and.. convened at which there was present a quorum of the Board of
Directors acting throughout all proceedings, and at which time the following
resolutions were unanimously adopted by the Board of Directors.
BE IT RESOLVED: That James M. Troester. Secretary of the corporation, is
hereby ordered and directed to obtain the written consent of stockholders owning
at least a majority of the voting power of the outstanding stock of the
corporation for the following purposes:
(a) To amend Article Four of the Articles of incorporation to increase the
authorized capitalization from NINE HUNDRED MILLION (900,000,000) Common
Shares, to ONE BILLION ONE HUNDRED MILLION (1,100,000,000) shares of Capital
Stock, with the, par value remaining at ONE MILL ($0.001) per share. The
Capita! Stock shall be divided into two classes: NINE HUNDRED MILLION
(900,000,000) shares of Common and TWO HUNDRED MILLION (200,000,000)
sharesof Convertible Preferred Stock.
2. Pursuant to the provisions of the Nevada Revised Statutes, a majority of
the stockholders holding 108,492,624 of the 199,923,478 shares outstanding of
Health Care Centers of America, Inc. gave their written consent to the adoption
of the Amendment to the Articles incorporation as follows.
<PAGE>
ARTICLE FOUR CAPITAL STOCK] The corporation shall have authority to
issue an aggregate of ONE BILLION ONE HUNDRED MILLION (1,100,000,000) shares of
Capita! Stock. Par Valve $0.001 per share, divided into two (2) classes of stock
as follows:
1. [COMMON STOCK] NINE HUNDRED MILLION (900,000,000)
shares of oommon stock; pr vakm ONE MILL (S0.001) per share. This class shall
have the exclusive right to elect Directors.
2. [CONVERTIBLE PREFERRED STOCK) TWO HUNDRED
MILLION(200,OO0,000) shares of Convertible Preferred Stock, par value ONE MILL
(S0.001) per share-This class will not possess voting rights to elect directors,
but will have preferential rights to be granted by tba Board of Directors.
All capital stock when issued shad be fully paid and
nonassessable. No holder of shares of capital stock of the corporation shall be
entitled as such to any pre-emptive or preferential rights to subcribe to any
unissued stock, or any other securities which the corporation nay now or
hereafter be authorized to issue.
The corporation's capital stock may be issued and
sold from time to time for such consideration as may be fixed by the Board of
Directors, provided that the consideration so fixed is not less than par value.
Holders or the corporation's Common Stock shall not
possess cumulative voting rights at any shareholders meetings called for the
purpose of electing a Board of Directors or on other matters brought before the
stockholders meetings, whether such stockholders meetings be special or annual
<PAGE>
IN WITNESS WHEREOF, the undersigned being the
President and Secretary of Health Care Centers of America, Inc., a Nevada
corporation hereunto affix their signatures this 31st day of March,1995.
HEALTH CARL CENTERS OF AMERICA, INC.
By: /s/Maurice Furloug
------------------
Maurice Furlong
President
By: /s/James M. Troester
--------------------
James M. Trester
Secretary
STATE OF ILLINOIS )
. ss.
COUNTY OF DUPAGE )
On the 31st day of March,.1995, before me, the
undersigned. a Notary Public in and for the State of Illinois, personally
appeared MAURICE FURLONG, President and JAMES M. TROESTER. Secretary, of HEALTH
CARE CENTERS OF AMERICA, INC., a Nevada corporation known to me to be the
persons described in and who executed the foregoing instrument, and who
acknowledged to me that they executed the same freely and voluntarily, in behalf
of and in their capacities as President and Secretary; respectively of HEALTH
CARE CENTERS OF AMERICA, INC. For the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal the day and year first above written.
/s/Kim M. Plencner
------------------
Kim M. Plencner
Notary Public
Residing in State of Illinois
My Commission Expires 06/28/98
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE THE
STATE OF NEVADA
CERTIFICATE OF CHANGE IN NUMBER OF
OUTSTANDING SHARES OF COMMON STOCK
OF
HEALTHCARE CENTERS OF AMERICA, INC.
a Nevada corporation
1.
Healthcare Centers of America, Inc. (the"Corporation") has one (1) class and
series of common stock.
2. The current cumber of authorized shares of the common stock of the
Corporation is NINE HUNDRED MILLION (900,000,000), par value ONE MIL ($0.001)
per share.
3. By this certificate the Corporation shall cause itas authorized common par
Value to remain at ONE MIL. ($0.001) PER share and the authorized common shares
to remain at NINE HUNDRED MILLION (900,000,000).
4. By this certificate the Corporation shall effect a 1 forr 1000 (1:1000)
reverse stock split of its common stock requiring the s urrender of one thousand
(1,000) shares of the presently issued and outstanding common stock of the
Corporation in exchange for (1) share of the restated authorized common stocmk
of the Corporation.
5. Any portential fractional shares created by the reverse stock split reflected
herein shall be rounded up to the next whole share. Therefore, any stockholder
entitled to a fractional share of the Corporation's common stock as a result of
the reverse stock split shall receive one (1) whole share of the Corporation's
common stock instead of said fractional share of stock. This shall be done to
prevent the issuance of any fractional shares. No maney or scrip will be paid to
stockholders otherwise entitled to a fraction of a share.
6. Any stockholer who is the registered owner of nine hundred ninety-nine (999)
shares of less of the Corporation's common stock as listed with the transfer
<PAGE>
agent on the effective date shall automatically receive one (1) share.
7. Pursuant to Nevada Revised Statues 78.207, no stosckholder action and/or
approval was required or oaobrained to authorize the reverse stock split
relected herein. Instead, pursuant to Nevada Revised Statutes 78.207, said stock
split was authorized by a resolution duly adopted by the board of directors of
the Corporation
8. The reverse stock split and change in par value reflected herein shall become
effective June 30, 1998 at 5:00 p.m. Eastern Standard Time.
BY: /s/Marice Furlong BY: /s/Michael Pietrzak
----------------- -------------------
Maurice Furlong Michael Pietrzak
President Secretary
Healthcare Centers of America, Inc. Healthcare Centers of America, Inc.
STATE OF NEVADA
COUNTY OF WASHOE
This instrument was acknowledged before me on June 17,1998 by MAURICE FURLONG AS
as President of Healthcare Centers of America, Inc.
/s/Mark Miller
- --------------
Notary Public
STATE OF NEVADA
COUNTY OF WASHOE
[Notary Seal Graphic not include]
MARK MILLER
NOTARY PUBLIC-STATE OF NEVADA
MY APPINTMENT EXPIRES OCT 7, 1998
This instrument was acknowledged before me on June 17,1998 by MICHAEL PIETRZAK
AS as Secretary of Healthcare Centers of America, Inc.
/s/Mark Miller
- --------------
Notary Public
Notary Seal Graphic not include]
MARK MILLER
NOTARY PUBLIC-STATE OF NEVADA
MY APPINTMENT EXPIRES OCT 7, 1998
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 31 1999
No. C2341-84
--------
/s/Dean HELLER
--------------
DEAN HELLER, SECRETARY OF STATE
AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
HEALTH CARE CENTERS OF AMERICA, INC.
Pursuant to the provisions of the Nevada Revised Statutes, HEALTH CARE
CENTERS OF AMERICA, INC., a Nevada corporation, adopts the following amendment
to its Articles of Incorporation:
The undersigned hereby certify that on July 7, 1999, a Special Meeting
of the Board of Directors of Health Care Centers of America, Inc. was duly held
and convened at which there was present a quorum of the Board of Directors
acting throughout all proceedings, and at which time the following resolution
was unanimously adopted by the Board of Directors:
BE IT RESOLVED: That the officers of the corporation are hereby ordered
and directed to obtain the written consent of stockholders or controlling at
least a majority of the voting power of the outstanding stock of the corporation
for the purpose of amending Article One of the Articles of Incorporation to
change the name of the corporation from HEALTH CARE CENTERS OF AMERICA, INC. to
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
BE IT FURTHER RESOLVED: That the officers of the corporation are
further ordered and directed to do that which is necessary to accomplish the
change of name, including, but not limited to filing the appropriate documents
to acquire a new Cusip number and to comply with any other statutes, rules or
regulations.
Pursuant to the provisions of the Nevada Revised Statutes, a majority
of the stockholders holding 24,604,714 of the 38,153,788 shares outstanding of
HEALTH CARE CENTERS OF AMERICA, INC. gave their written consent to the adoption
of tr Amendment to the Articles of Incorporation as follows:
ARTICLE FOUR. [NAME] The name of the corporation is:
-------------
HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.
IN WITNESS WHEREOF, the President and Secretary of the corporation
have affixed their signatures on the date appearing next to their signatures.
HEALTH CARE CENTERS 0F AMERICA, INC.
BY: /s/Maurice W. Furlong DATE: 8/27/99
---------------------
Maurice W. Furlong; President
BY: /s/Michael J. Pietrzak DATE: 8/27/99
----------------------
Michael J. Peitrzak,Secretary
STATE OF NEVADA }.
--------------
}:as.
COUNTY OF WASHOE }.
--------------
On August 27, 1999, Maurice W. Furlong appeared before me personally and
acknowledged to me that he freely and voluntarily executed the foregoing
document for the purposes stated therein.
/s/Margaret A. Oliver
- ---------------------
Notary Public
[State of Nevada Notary Seal]
[Graphic of Seal not included]
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
1, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, HEXAGON CONSOLIDATED COMPANIES OF AMERICA, INC.,
as a corporation duly organized under the laws of Nevada and existing under and
by virtue of the laws of the State of Nevada since April 3, 1984, and is in good
standing in this state.
IN WITNESS WHEREOF, I have hereunto set my hand
[Graphic of Seal and affixed the Great Seal of State, at my office, in
not included] Carson City, Nevada, on October 26, 1999.
/s/Dean Heller
--------------------
Secretary of States
By /s/Joann E. Pruitt
- ---------------------
Certification Clerk
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
CARLETON ENTERPRISES, LTD.
******
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the
transaction of the business of the corporation is hereby fixed and located at
Suite 1400, One East First Street is Reno, Nevada 89501, being the offices of
NATCO. The board of directors is hereby granted full power and authority to
change said principal office from one location to another in the County of
Washoe, State of Nevada.
Section 2. OTHER OFFICES. Branch. or subordinate offices may at any
time be established by the board, of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and
all other meetings of shareholders shall be held 'either at the principal office
or at any other place within or without the State of Nevada. which may be
designated either by the board of directors, pursuant to authority hereinafter
granted to said board; or by the written consent of all shareholders entitled to
<PAGE>
vote thereat, given either before or after the meeting and filed with the
Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders
shall be held on the fourth Wednesday of May each year, at the hour of 2:00
o'clock p.m. of said day commencing with the year 1985, provided, however, that
should said day fall upon a legal holiday then any such annual meeting of
shareholders shall be held at the same time and place on the next day thereafter
ensuing which is not a legal holiday.
Written notice of each annual meeting signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate, shall be given
to each shareholder entitled to vote thereat, either personally or by mail or
other means of written communication, charges prepaid, addressed to such
shareholder at his address appearing on the books of the corporation or given by
him to the corporation for the purpose of notice. If a shareholder gives no
address, notice shall be deemed to have been given to him, if sent by mail or
other means of written communication addressed to the place where the principal
office of the corporation is situated, or if published at least once in some
newspaper of general circulation in the county in which said office is located.
All such notices shall be sent to each shareholder. entitled thereto not less
<PAGE>
than ten (10) nor more than sixty (60) days before each annual meeting, and
shall specify the place, the day and the hour of such meeting, and shall also
state the purpose or, purposes for which the meeting is called.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes whatsoever, may be called at any time by the
president or by the board.of directors, or by one or more shareholders holding
not less than 10% of the voting power of the corporation. Except in special
cases where other express provision is made by statute, notice of such special
meetings shall he given in the same manner as for annual meetings of
shareholders. Notices of any special meeting shall specify in addition to the
place, day and hour of such meeting, the purpose or purposes for which the
meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholder's
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or
special, is adjourned for thirty (30) days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. Save as aforesaid,
it shall not be necessary to give any notice of an adjournment or of the
<PAGE>
business to be transacted at an adjourned meeting, other than by announcement at
the meeting at which such adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to
vote has been absent from any meeting of shareholders, whether annual or
special., an entry in the, minutes to the effect that notice has been duly given
shall. be conclusive and incontrovertible evidence that due notice of such
meeting was given to such shareholders, as required by law and the By-Laws of
the corporation.
Section 6. VOTING. At all annual and special meetings of
stockholders entitled to vote thereat, every holder of stock issued to a bona
fide purchaser of the same, represented by the holders thereof, either in person
or by proxy in writing, shall have one vote for each share of stock so held anti
represented at such meetings, unless the Articles of Incorporation of the
company shall otherwise provide, in which event the voting rights, powers and
privileges prescribed in the said Articles of Incorporation shall prevail.
Voting for directors and, upon demand of any stockholder, upon any question at
any meeting shall be by ballot.
Section 7. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to, vote at any meeting shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called, or held meeting at which a quorum is present may continue to do
<PAGE>
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. .
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the shareholders' entitled to vote, not present in person
or by proxy, sign a written Waiver of Notice, or a consent to the holding of
such meeting, or an approval of the minutes-thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of this meeting.
Section 9. PROXIES. Every person entitled to vote or execute
consents shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation: provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
ARTICLE III
Section 1. POWERS. Subject to the limitations of I the Articles of
Incorporation or the By-Laws, and the provisions of the Nevada Revised Statutes
<PAGE>
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the By-Laws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice.
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the directors shall have the following powers, to wit:
First - To select and remove all the other officers, agents
and employees of the corporation, prescribe such powers and duties for them as
may not be inconsistent with law, with the Articles of Incorporation or the
By-Laws, fix their compensation, and require from them security for faithful
service.
Second - To conduct, manage and control the affairs and
business of the corporation, and to make such rules and regulations therefor not
inconsistent with law, with the Articles of Incorporation or the By-Laws, as
they may deem best.
Third - To change the" principal office for the transaction
of the business of the corporation from one location to another within the same
county as provided in Article I., Section I, hereof; to fix and locate from time
to time one or more subsidiary offices of the corporation within or without the
State of Nevada, as provided in Article ,1, Section 2, hereof; to designate any
<PAGE>
place within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such, certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at a11 times comply with
the provisions of law.
Fourth - To authorize the issue of shares of stock of the
corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered, debts or
securities cancelled, or tangible or intangible property actually received, or
in the case of shares issued as a dividend, against amounts transferred from
surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the
purposes of the corporation, and to cause to be executed and delivered therefor,
in the corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations oar other evidences of debt and securities '
therefor.
Sixth - To appoint an executive committee and other
committees and to delegate to the executive committee any of the powers and
authority of the board in management of the affairs of the corporation, except
the power to declare dividends and to adopt, amend or repeal By-Laws. The
executive committee shall be composed of one or more directors.
<PAGE>
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized
number of directors of the corporation shall be three (3) and no more than
fifteen (15).
Section 3. ELECTION AND TERM of OFFICE. The directors shall be
elected at each annual meeting of shareholders, but if any such annual meeting
is not held, or the directors are not elected thereat, the directors may be
elected at any special meeting of shareholders. All directors shall hold office
until their respective successors, are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director, and each director so elected shall hold office
until his successor is elected at an annual or a special meeting of the
shareholders.
A vacancy or vacancies in the board of Director shall
he deemed to exist in case of the death, resignation or. removal of any
director, or if the authorized number of directors. be increased, or if the
shareholders fail at any annual or special meeting of shareholders at which any
director or directors are elected to elect the full authorized number of
directors to be voted for at that meeting. The shareholders may elect a
director or directors at any time to fill any vacancy or vacancies not filled by
<PAGE>
the directors. If the board of directors accept the resignation of a director
tendered to take effect at a future time, the board or the shareholders shall
have the power to elect a successor to take office when the resignation is to
become affective.
No reduction of the authorized number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of
Director shall be held at any place within or without the State which has been
designated from time to time by resolution of the board or by written consent of
all members of the board. In the absence of such designation regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each
annual meeting of shareholders, the board oI directors shall hold a regular
meeting for the purpose of organization, election of officers, And the
transaction of other business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the
board of directors shall be held without call on the fourth Wednesday of each
month at the hour of 3:00 o'clock p.m. of said day; provided, however, should
said day fall upon a legal holiday, then said meeting shall be held at the
<PAGE>
same time on the next day thereafter ensuing which is not a legal holiday.
Notice of all such regular meetings of the board of directors is hereby
dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of
directors for any purpose or, purposes shall be called at any time by the
president, or, if he is absent or unable or refuses to act, by any vice
president or by any two directors.
Written notice of the time and place of special
meetings shall be delivered personally to the directors or sent to each director
by mail or other form of written communication, charges prepaid, addressed to
him at his address as it is shown upon the records of the corporation, or if it
is not shown on such records or is not readily ascertainable, at the place in
which the meetings of the directors are regularly held. In case such notice is
mailed or telegraphed, it shall be deposited in the United States mail or
delivered to the telegraph company in the place in which the principal office
of the corporation is located at least forty-eight (48) hours prior to the time
of the holding of the meeting. In case such notice is delivered as above
provided, it shall be so delivered at least-twenty-four (24) hours prior to the
time of the holding of the meeting. Such mailing, telegraphing or delivery as
above provided shall be due, legal and personal notice to such director.
<PAGE>
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place
of holding an adjourned meeting need not be given to absent directors, if the
time and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been
absent from any special meeting of the board of directors, an entry in the
minutes to the effect that notice has been duly given shall be conclusive and
incontrovertible evidence that due notice of such special meeting was given to
such director, as required by law and the By-Laws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of
the board of directors, however called and noticed or wherever held, shall be
as valid as though had a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
directors not present sign a written waiver of notice or a consent to holding
such meeting or an approval of the minutes thereof. A11 such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of
directors shall be necessary to constitute a quorum for the transaction of
business, except to adjourn as hereinafter provided. Every act or decision done
or made by a majority of the directors present at a meeting duly held at which a
quorum is present, shall be regarded as the act, of the board of directors,
unless a greater number be required by law or by the Articles of Incorporation.
<PAGE>
Section 13. ADJOURNMENT. A quorum of the directors may adjourn
any directors meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any 1
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Director shall not receive any
stated salary for their services as directors, but by resolution of the board, a
fixed fee, with or without expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a
president, a secretary, and a treasurer. The corporation may also have at the
discretion of the board of directors, a chairman of the board, one or more vice
presidents, one or more assistant secretaries, one or more assistant treasurers,
and such other officers as may I be appointed in accordance with the provisions
of Section 3 of this Article. Officers other than president and chairman of the
board need not be directors. Any person may hold two or more offices.
<PAGE>
Section 2. ELECTION. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article, shall be chosen annually by the board ,of
directors, and each shall hold his office until he shall resign or shall be
removed or otherwise disqualified to serve, or his successor shall be elected
and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may
appoint such other officers as the business of the corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the By-Laws or as the board of directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed,
either with or without cause, by a majority of the directors at the time in
office, at any regular or special meeting of the board.
Any officer may resign at any time by giving written
notice to the board of directors or to the president, or to the secretary of the
corporation. Any such, resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
<PAGE>
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the By-Laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE HOARD. The chairman of the board, if
there shall be such an officer, shall, if present, preside at all meetings of
the board of directors, and exercise and perform such other powers and duties as
may be from time to time assigned to him by the board of directors or prescribed
by the By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the board, if
there be such an officer, the president shall be the chief executive officer of
the corporation and shall, subject to the control of the board of directors,
have general supervision, direction and control of the business and officers of
the corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management u8ually vested in the office of
president of a corporation, and shall have such other powers and duties an may
be prescribed by the board of directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
<PAGE>
directors, or if not ranked, the vice president designated.by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for then respectively by the
board of directors or the By-Laws.
Section 9. SECRETARY. The secretary shall keep, or cause to be
kept, a book of minutes at the principal office or such other places the board
of directors may order, of all meetings of directors and shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and, the proceedings thereof.
The secretary shall keep, or cause to be kept, at the
principal office, a share register, or a duplicate share register, showing the
names of the shareholders and their addresses: the number and classes of share
held by each; the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given,
notice of all the meetings of the shareholders and of the board of directors
required by the By-Laws or by law to be given, and he shall keep the seal of the
<PAGE>
corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or the By-Laws.
Section 10. TREASURER. The treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses; capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all, of his transactions as treasurer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the By-Laws.
<PAGE>
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of
directors may fix a time, in the future, not exceeding fifteen (15) days
preceding the date of any meeting of shareholders, and not exceeding thirty (30)
days preceding the date fixed for the payment of any dividend ox distribution,
or for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or exchange
of shares, and in such case only shareholders of record on the date so fixed
shall be entitled to notice of, and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The board of directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register
or duplicate share register. the books of account, and minutes of proceedings of
the shareholders and, directors shall be open to inspection upon the written
demand, of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
<PAGE>
shareholder, or as the holder of a voting trust certificate, and shall be ,
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders meeting. Such inspection may be made in
person or by an agent or attorney. and shall include the right to make extracts.
Demand of inspection other than at a shareholders meeting shall be made in
writing upon the president, secretary or assistant secretary of the corporation.
Section 3. CHECKS, DRAFTS. ETC. All checks, drafts or other
orders for payment of money, notes or other evidences of indebtedness, issued in
the name of or payable to the corporation, shall be signed or endorsed by such
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the
corporation shall cause to be sent to the shareholders not later than one
hundred twenty (120) days after the close of the fiscal or calendar year an
annual report.
Section 5. CONTRACT, ETC., H0W EXECUTED. The board of directors,
except as in the By-Laws otherwise provided, may authorize any officer or
officers, agent or agents, to enter into any contract, deed or lease or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the board of, directors, no officer, agent or employee shall have
<PAGE>
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit to render it liable for any purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the president or a vice president and the secretary or an assistant
secretary, or be authenticated by facsimiles of the signature of the president
and secretary or by a facsimile of the signature of the president and the
written signature of the secretary or an assistant secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk.
Certificates for shares may be issued prior to full
payment under such restrictions and for such purposes as the board of directors
or the By-Laws may provide; provided, however, that any such certificate so
issued prior to full payment shall state the amount remaining unpaid and the
terms of payment thereof.
Section 7. REPRESENTATIONS OF SHARES OF SHARES CORPORATIONS. The
president or any vice-president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
<PAGE>
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in
its principal office for the transaction of business the original or a copy of
the By-Laws as amended, or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders at all.
reasonable times during office hours.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New By-Laws may be adopted or
these By-Laws may be amended or repealed by the vote. of shareholders entitled
to exercise a majority of the voting power of the corporation or by the written
assent of, such shareholders.
Section 2. POWER OF DIRECTORS. Subject to tile right of
shareholders as provided in Section 1 of this Article V1 to adopt, amend or
repeal. By-Laws, By-Laws other than a By-Law or amendment thereof changing the
authorized number of directors may be adopted, amended or repealed by the board
of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF
MEETING. 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,
<PAGE>
if a written consent thereto is signed by all the members of tile board or of
such committee. Such written consent shall be filed with the minutes of
proceedings of the board or committee.
illegible
-------------
Secretary
[GRAPHIC OMITTED]
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
HEXAGON
CONSOLIDATED
COMPANIES OF AMERICZ, INC.
AUTHORIZED COMMON STOCK: 900,000,000 SHARES
PAR VALUE: $.001
THIS CERTIFIES THAT
SPECIMEN
IS THE RECORD HOLDER OF
ICUSIP N0. 428266 10 0
Shares of HEXAGON CONSOLIDATED COMPANIES OF AMERICA,
INC. Common Stock transferable on the Books of the Corporation in person or by
duly authorized attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness tthe facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated:
----------------------
President
----------------------
Secretary
[Nevada Seal not included]
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
Countersigned Registered:
NEVADA AGENCY ANDTRUST COMPANY
SO WEST LIBERTY STREET, SUITE 880 By_____________________
RENO, NEVADA 89501 Authorized Signature
VOTING TRUST AGREEMENT
This Voting Trust Agreement is made this 18 day of June, 1994, between the
Stockholders of Peeples Mining LLC, and the parties whose name are subscribed
hereto being stockholders of HCCA, Inc., all of which Stockholders are called
"Subscribers" and Alvin A Schbarach,hereinafter called "Trustee".
RECITALS
With a view towards the continuity of capable and competent management of HCCA,
Inc., which is in the interest of all stockholders of the corporation, the
Subscribers hereto are desirous of creating a Trust as described herein.
For the above reason and in consideration of the agreements herein and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto provide and agree as follows:
1. [TRANSFER TO TRUSTEE]: Subscribers shall forthwith endorse in blank
and assign and deliver to the Trustee the Stock Certificates for
shares owned by them repectively and shall do all things necessary to
effect the transfer of their stock to the Trustee on the books of the
transfer agent for Peeples Mining, LLC.
2. [TRUSTEE TO HOLD SUBJECT AGREEMENT]: The Trustee shall hold the shares
of stock so transferred to him for the common benefit of the
Subscribers under the terms and conditions hereinafter set forth.
3. [NEW CERTIFICATE TO TRUSTEE]: The Trustee shall surrender to the
transfer agent of Peeples Mining for cancellation all Stock
Certificates which shall be assigned and delivered to him as
hereinbefore provided and in his stead shall obtain a new stock
certificate issued to him as Trustee under this agreement.
<PAGE>
[GRAPHIC OMITTED]
4. [TRUSTEE'S CERTIFICATE]: The Trustee shall issue to each of the;
Subscribers a Trust Certificate fear the number of shares. represented
by the certificates of stock transferred by the Subscriber to the
Trustee. Each Trust Certificate shall state that it is issued
pursuant to the terms of this agreement and shall set forth the nature
and proportional amount of the beneficial interest thereunder of the
person to whom it is issued and registered and shall be assigned in
the same manner as Stock Certificates on the books to he kept by the
transfer agent.
5. [LISTS AND RECORDS]: The transfer agent shall keep a list of the
shares of stock transferred to the Trustee. The transfer agent shall
also keep a record of all Trust Certificates issued or transferred on
its books which records shall contain the names and addressees of the
Trust Certificate holders and the number of shares represented by each
such Trust Certificate. This list of Trust Certificates and the
records pertaining thereto shall be open at all reasonable times for
the inspection of the Trust Certificate holders. Upon the transfer on
the books of the Trustee of any Trust Certificate, the transferee
shall succeed to all of the rights and obligations, hereunder of the
transferor.
6. [TRUSTEE TO VOTE STOCK]: It shall be the duty of the Trustee, Alvin A.
Schlabbach, to vote all stock as in his judgement may be for the best
interests of the stockholders of Peeples Mining. This authority
includes, but is not limited to voting at all meetings of the
stockholders for the election of directors and on any other matter or
question which may be brought before any stockholders' meetings on
behalf of any stockholder as if such stockholder were personally
present.
7. [DIVIDENDS]: The Trustee shall collect and receive all dividends that
may accrue upon the shares of stock subject to this Trust and shall
promptly pay over the proportionate amount due to each Trust
Certificate holder in proportion to the number (if shares respectively
represented by their Trust Certificates.
<PAGE>
8. [TRUSTEE'S INDEMNITY]: The Trustee shall serve without fee and without
expense. The Trustee shall be entitled to be fully indemnified out of
the dividends coming into his hands against all costs, charges,
expenses and other liabilities properly incurred by him in the
exercise of any power conferred upon him by these presents.
9. [TERMINATION OF TRUST]: In the event of the death of the Trustee,
Alvin Schlarch, or his refusing or being unable to act, this Trust
shall be terminated.
10. [DURATION]: The Trust created hereby shall continue for period of ten
(10) years from date hereof, and shall be renewable for an additional
like term.
IN WITNESS WHEREOF, the parties hereto have respectively signed this Voting
Trust Agreement on this the 18 day of June , 1994.
Subscribers
Health Care
Of America, Inc.
Trustee:
Alvin Schlaback
----------------
Voting Trust Agreement
This Voting Trust Agreement is made this 24 day of April, 1995, between the
Shareholders of Nashville Music Consultants, Inc. and the parties whose names
are subscribed hereto being shareholders of HCCA, Inc., all of which
Shareholders are called "Subscribers" and Ally Cat Music, Inc., A Tennessee
Corporation, hereinafter called the "Trustee".
With a view towards the continuity of capable and competent management of
HCCA, Inc., and it's subsidiaries, which is in the interest of all stockholders
of the Corporation, the Subscribers hereto are desirous of creating a Trust as
described herein.
For the above reason, and, in consideration of the Agreements herein, and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto provide and agree as follows:
1. [TRANSFER TO TRUSTEE]: Subscribers shall forthwith endorse in blank and
assign and deliver to the Trustee the Stock Certificates for 51% of the shares
of Nashville Music Consultants, Inc. owned by HCCA, Inc. and shall do all things
necessary to effect the transfer of the said shares to the Trustee on the books
of the transfer agent for Nashville Music Consultants, Inc.
2. [TRUSTEE TO HOLD SUBJECT AGREEMENT]: The Trustee shall hold the shares of
stock so transferred to him for the common benefit of the Subscribers under the
terms and conditions hereinafter set forth.
3. [NEW CERTIFICATE TO TRUSTEE]: The Trustee shall surrender to the transfer
agent of Nashville Music Consultants, Inc., for cancellation, all Share
Certificates which shall be assigned and delivered to him as hereinbefore
provided and in his stead shall obtain a new Share Certificate issued to him as
Trustee under this Agreement.
<PAGE>
i
4. [TRUSTEE'S CERTIFICATE]: The Trustee shall issue to each of the Subscribers a
Trust Certificate for the number of shares represented by the certificates of
stock transferred by the Subscriber to the Trustee. Each Trust Certificate shall
state that it is issued pursuant to the terms of this Agreement and shall set
forth the nature and proportional amount of the beneficial interest thereunder
of the person to whom it is issued and registered and shall be assigned in the
same manner as Stock Certificates on the books to be kept by the transfer agent.
5. [LISTS AND RECORDS): The Transfer Agent shall keep a list of the shares of
stock transferred to the Trustee. The Transfer Agent shall also keep a record of
all Trust Certificates issued or transferred on it's books which records shall
contain the names and addresses of the Trust Certificate holders and the number
of shares represented by each such Trust Certificate. This list of Trust
Certificates and the records pertaining thereto shall be open at all reasonable
times for the inspection of the Trust Certificate holders. Upon the transfer, on
the books of the Trustee of any Trust Certificate, the transferee shall succeed
to all of the rights and obligations hereunder of the transferor.
6. [TRUSTEE TO VOTE STOCK]: It shall be the duty of the Trustee to vote all
shares of stock issued to the Trustee as, in the Trustee's best judgment, may be
for the best interests of the shareholders' of Nashville Music Consultants, Inc.
This authority includes, but is not limited to, voting at all meetings of tile
shareholders for the election of Directors and on any other matter or question
which may be brought before any shareholders' meetings on behalf of any
shareholder as if such shareholder were personally present.
7. [DIVIDENDS] The Trustee shall collect and receive all dividends that may
accrue upon the shares of stock subject to this Trust and shall promptly pay
over the proportionate amount due to each Trust Certificate holder in proportion
to the number of shares respectively represented by their Trust Certificate.
[GRAPHIC OMITTED]
<PAGE>
8. [TRUSTEE'S INDEMNITY]: The Trustee shall serve without fee and without
expense. The Trustee shall be entitled to be fully indemnified out of the
dividends coming into his hands against all costs, charges, expenses and other
liabilities properly incurred by him in the exercise of any power conferred upon
him by these presents.
9. [DURATION]: The Trust created hereby shall continue for a period of ten (10)
years from the date hereof, and shall be renewable for an additional term of ten
(10) years at the option of the Trustee.
1N WITNESS WHEREOF, the parties hereto have respectively signed this Voting
Trust Agreement on the the 22nd day of April, 1995.
/s/Maurice Furlong
- ------------------
Healthcare Centers of America, Inc. (Buyer)
Maurice Furlong, CEO and President
April 22, 1995
- --------------
Date
TRANSFER AGENT AND REGISTRAR AGREEMENT
--------------------------------------
* * * * *
THIS AGREEMENT made and entered into as of this 28th day of June, 1993,
by and between:
NEVADA AGENCY AND TRUST COMPANY, 50 West Liberty, Suite 880, Reno,
Nevada, 89501, hereinafter called "Transfer Agent", and
SCN, LTD., 3107 Trueno Drive, Henderson, Nevada 89014, hereinafter
called "Company".
NOW THEREFORE, for valuable consideration and mutual promises herein
contained, the parties hereto agree as follows, to wit:
1. [APPOINTMENT OF TRANSFER AGENT] The Company hereby appoints Transfer
Agent as the transfer agent and registrar for the Company's stock, commencing as
of this 28th day of June, 1993.
2. [COMPANY'S DUTY] The Company agrees to deliver to Transfer Agent a
complete up-to-date stockholder list showing the name of the individual
stockholder, current address, the number of shares, and the certificate numbers.
It is understood and agreed that the Transfer Agent is not responsible for any
omissions or errors in the transfer or registration of stock certificates that
may have occurred prior to the execution of this Agreement, whether on the part
of the Company itself or its previous transfer agent or agents. The Company
hereby agrees to indemnify Transfer Agent in this regard for all claims made.
3. [STOCK CERTIFICATES] The Company agrees to provide an adequate
number of stock certificates to handle the Company's transfers on a current
basis. Upon receipt of the Transfer Agent's request, the company agrees to
furnish additional stock certificates as Transfer Agent deems necessary
considering the volume of transfers. The stock certificates shall be supplied
aat the Company's cost. The Transfer Agent agrees to order stock certificates
from its printer upon request of the Company.
4. [TRANSFER AGENT DUTIES] Transfer Agent agrees to handle the
Company's transfers, record the same, and maintain a stock ledger, together
with a file containing all correspondence relating to said transfers, which
<PAGE>
records shall be kept confidential and be available to the Company and its Board
of Directors or to any person specifically authorized by the Board of Directors
to review the records ~which shall be made available by Transfer Agent during
the regular business hours.
5. [TRANSFER AGENT REGISTRATION] Transfer Agent warrants that it is
registered as a transfer agent with the Securities and Exchange Commission.
under the Securities Exchange Act of 1934 as amended. Transfer Agent agrees that
it will keep its registration in effect and will file all required reports when
due.
6. [STOCKHOLDER LISTS] From time to time as necessary for Company
stockholder meetings, the Transfer Agent will certifv and make available the
current active stockholder list for Company purposes. It is agreed that a
reasonable charge for supplying such list will be made by Transfer Agent to the
Company. It is further agreed that in the event the Transfer Agent received a
request or a demand from a stockholder, or the attorney or agent for a
stockholder, for a list of stockholders, the Transfer Agent will serve written
notice of such request by certified mail to the Company. The Company will have
forty-eight (48) hours to respond in writing to the Transfer Agent. If the
Company orders the Transfer Agent to withhold delivery of a list of stockholders
as requested, the Transfer Agent agrees to follow the orders of the Company. The
Company will then follow the procedure set forth in the Uniform Commercial Code
to restrain the Transfer Agent from making delivery of a stockholder list:
7. [TRANSFER FEE] Transfer Agent agrees to assess and collect from the
person requesting a transfer and/or' the transferor, a fee of Ten and No/100
Dollars ($10.00) for each stock certificate issued, except original issues of
stock certificates, which fees shall be paid by the Company. ,This fee may be
decreased or increased at any time by the Transfer Agent. This fee shall be the
property of the Transfer Agent. In the event the Company requires irregular
stock certificates to be issued, then the parties shall mutually agree to such
additional fee.
8. [ANNUAL FEE] The Company agrees to pay the Transfer Agent an annual
fee of One Thousand Dollars ($1,000.00,). This fee reimburses the Transfer;
Agent for the expense and time required to respond to the,written and oral
inquiries from brokers and the investing public. The first Annual Fee is due on
the 1st day of January, 1993.
9. [TERMINATION] This agreement may be terminated by either party
giving written notice of such termination to the other party at least ninety
<PAGE>
(90) days before the effective date. The Transfer Agent shall return all of tile
transfer records to the Company and its duties and obligations as Transfer Agent
shall cease at that time. The Transfer Agent will be paid a termination fee of
$1.00 per registered stockholder of the company at the time written termination
notice is served.
10. [COMPANY STATUS] The Company will promptly advise the Transfer
Agent of any changes or amendments to the Articles of Incorporation, any
significant changes in corporate status, changes in officers, etc., and of all
changes in filing status with Securities and Exchange Commission, or any state
entity, and to hold the Transfer Agent harmless from its failure to do so.
11. [INDEMNIFICATION OF TRANSFER AGENT] The Companv agrees to indemnify
and hold harmless the Transfer Agent of, and from any and all loss, liability or
damage, including reasonable attorneys' fees and expenses, arising out of, or
resulting from the assertion against the Transfer Agent of any claims, debts or
obligations in connection with any of the Transfer Agent's duties as set forth
in this Agreement, and specifically it is understood that the Transfer Agent
shall have the right to apply to independent counsel at the Company's expense in
following the Company's directions, and orders. The Company will not be liable
for any. willful misconduct or default on the part of the Transfer Agent. The
Company will be liable for the Transfer Agent's responsibility to third parties
when the Transfer Agent and Registrar is acting in accordance with normal
business procedures.
12. [COUNTERPARTS] This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be original, but
all such counterparts shall constitute one and the same instrument.
13. [NOTICES] Anv notice under this Agreement shall be deemed to have
been sufficiently given if sent by registered or certified mail, postage
prepaid, address as follows:
To the Company:
SCN, LTD
3107 Trueno Drive
Henderson, Nevada 89014
To the Transfer Agent:
NEVADA AGENCY AND TRUST COMPANY 50 West Liberty Street, Suite 880
Reno, Nevada 89501
<PAGE>
14. [MERGER CLAUSE] This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated orallv,
and no attempted change, termination or waiver of any of the provisions hereof
shall be binding unless in writing and signed by the parties hereto and in
accordance with 9 above.
15. [GOVERNING LAW] This Agreement shall be governed by and construed
in accordance with the laws of the Stage of Nevada. '
THIS AGREEMENT has been executed by the parties hereto as of the day
and year first above written, by duly authorized officer or officers of said
parties and the same will be binding upon the assigns and successors in interest
of the parties hereto.
NEVADA AGENCY AND TRUST COMPANY
Transfer Agent and Registrar
By: /s/Cecil Ann Walker
-------------------
Cecil Ann Walker
President
SCN, LTD.
By: /s/Maurice Furlong
-------------------
Maurice Furlong
President
STOCK EXCHANGE AGREEMENT
------------------------
AGREEMENT made this 25th day of March ,1994, by and between F & H
Mining Corp. Limited, a Canadian Corporation, The Promenade 1
Promenade Circle, # 314-3rd Level, Thornhill, Ontario L4J4P8
(hereinafter "Stockholders"), and Health Care Centers of America,
Inc., a Nevada corporation (hereinafter "HCCA") in consideration of
the mutual promises and undertakings of the parties.
WITNESSETH:
-----------
WHEREAS, the Stockholders are the holders of all of the currently
issued and outstanding shares of the common stock, par value of $
1.00 (hereinafter referred to as "Stockholders' Corporation"); and
WHEREAS, the authorized capital stock of HCCA consists of
900,000,000 shares of capital stock, par value $0.02 per share, of
which approximately 38 Million shares are currently issued and
outstanding; and
WHEREAS, HCCA and the Stockholders agree that it would be to their
mutual benefit for HCCA to acquire all of the outstanding stock of
Stockholders in Stockholders' Corporation from the stockholders in
exchange for shares of HCCA stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as
follows:
1. REPRESENTATINS AND WARRANTIES OF STOCKHOLDERS. Stockholders,
jointly and severally, hereby represent and warrant to HCCA that:
(a) Stockholders collectively own on the date
hereof, and on the Closing Date hereinafter provided will
own, free and clear of all liens, charges and encumbrances,
all of the issued and outstanding shares of common stock of (
Stockholders' Corporation.
<PAGE>
(b) Stockholders' Corporation is a corporation
duly organized and validly existing and in good standing
under the laws of the Province of Ontario is duly qualified
to transact business as a foreign corporation and is in good
standing in the State of N/A , has all corporate power to
engage in the business in which it is presently engaged, and
has an authorized capital stock consisting of 1, 000 shares
of par value common stock, of which there are validly issued
and outstanding Stockholders fully paid and non-assessable.
(c) Stockholders have initialed and furnished to
HCCA copies of the balance sheet of Stockholders' Corporation
as of the period ended 12-31-94 together with related
statements of income and expense for the period then ended
prepared by Stockholders. Said balance sheet and related
statements accurately set forth the financial condition of
Stockholders as of 3-25-94, said date, and of the results of
operations for the period involved, prepared in conformity
with generally accepted accounting principles consistently
applied. If not previously furnished to HCCA, Stockholders
will have initialled and furnished to HCCA, upon request,
copies of income and expense statements and related balance
sheets and financial records for additional past years as may
be deemed necessary by HCCA, and shall provide access to any
records of Stockholders' Corporation deemed necessary for
verification of information requested by or furnished to
HCCA.
(d) Stockholders' Corporation has good and
marketable title to all.of its property assets (except
property and assets disposed of since such date in the usual
and ordinary course of business), subject to no mortgages,
pledges, liens or other encumbrance except as disclosed in
such balance sheet or in Exhibit "A" annexed hereto and made
a part hereof.
(e) As of 3/25/1994 date Stockholders' Corporation
has no obligation, liabilities or commitments,
[GRAPHIC OMITTED]
<PAGE>
contingent or otherwise, of a material nature which were not
provided for, except as set forth in such balance sheet or in
Exhibit "A".
(f) Since the date of the aforementioned balance
sheet, there has been no change in the nature of the business
of Stockholders' Corporation nor in its financial condition
or property, other than changes in the usual and ordinary
course of business, none of which has been materially
adverse, and Stockholders' Corporation has incurred no
obligations or liabilities or made any commitments other than
in the usual and ordinary course of business or as disclosed
in Exhibit "A".
(g) "Stockholders is not a party to any employment
contract with any officer, director, or stockholder, or to
any lease, agreement or other commitment not in the usual and
ordinary course of business, or to any operation, insurance,
profit-sharing or bonus plan, except as disclosed in Exhibit
"A".
(h) Neither Stockholders nor Stockholders'
Corporation are defendants (or plaintiff, against whom a
counterclaim has been asserted) in any litigation, pending or
threatened; nor has any material claim been made or asserted
against Stockholders or Stockholders' Corporation; and there
are no proceedings threatened or pending before any federal,
state or municipal government, or any department, board, body
or agency thereof, involving Stotkholders or Stockholders'
Corporation except as disclosed in Exhibit "A".
(i) Stockholders or Stockholders' Corporation is
not in default under any agreement to which it is a party nor
in the payment of any of its obligations.
(j) Between the date of the balance sheet referred
to in subparagraph "c" hereof and the Closing, Stockholders'
Corporation will not have (i) paid or declared any dividends
<PAGE>
on or made any distributions in respect of, or issued,
purchased or redeemed, any of the outstanding shares of its
common stock, or (ii) made or authorized any changes in its
Certificate of Incorporation or in any amendment thereto or
in its By-Laws, or (iii) made any commitments or
disbursements or incurred any obligations or liabilities or a
substantial nature and which are not in the usual and
ordinary course of business or (iv) mortgaged or pledged or
subjected to any lien, charge or other encumbrance any of
their assets, tangible or intangible, except in the usual and
ordinary course of its business, or (v) sold, leased or
transferred or contracted to sell, lease or transfer any
assets, tangible or intangible, or entered into any other
transactions, except in the usual and ordinary course of
business, or (vi) made any loan or advance to any stockholder
of "Stockholders" or to any other person, firm, or
corporation except in the usual and ordinary course of
business, or (vii) made any material change in any existing
employment agreement or increased the compensation payable or
made any arrangement for the payment of any bonus to any
officer, employee or agent, except as set forth in Exhibit
"A" hereof.
(k) This Agreement has been duly executed by
Stockholders, and the execution and performance of this
Agreement will not violate, or result in a breach of, or
constitute a default in, any agreement, instrument, judgment,
order or decree to which either of them or Stockholders or
Stockholders Corporation is a party or to which either of
them or Stockholders Corporation is subject nor will such
execution and performance constitute a violation of or
conflict with any fiduciary to which either of them or
Stockholders' Corporation is subject.
(l) Stockholders Corporation has timely filed or
timely filed necessary extensions with the appropriate
governmental authorities, all tax and other returns required
to be filed by it, and such returns are true and complete and
all taxes shown thereon to be due have been paid. All
material federal, state, local, county, franchise, sales,
<PAGE>
use, excise and other taxes assessed or due have been duly
paid, and no reserves for unpaid taxes have been set up or
required on the basis of the facts and in accordance with
generally accepted accounting principles.
(m) Stockholders Corporation is not in default
with respect to any order, writ, injunction, or decree of any
court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, and there are no actions, suits, claims,
proceedings or investigations pending or, to the knowledge of
"Stockholders" threatened against or affecting "Stockholders"
at law or in equity, or before or by any federal, state,
municipal or other governmental court, department,
commission, board, bureau, agency or instrumentality,
domestic or foreign. "Stockholders" has complied in all
material respects with all laves, regulations and orders
applicable to its business.
(n) No representation or warranty in this section,
nor statement in any document, certificate or schedule
furnished or to be furnished pursuant to this Agreement by
the Stockholders or Stockholders' Corporation, or in
connection with the transactions contemplated hereby,
contains or contained any untrue statement of a material
fact, nor does or will omit to state a material fact
necessary to make any statement of fact contained herein or
therein not misleading. Stockholders' Corporation has
maintained, and will until the Closing, maintain, in full
force and effect adequate policies of insurance, including
malpractice insurance, with coverage sufficient to meet the
normal requirements of its business. Malpractice Insurance
must be maintained at all times during the duration of this
agreement, as applicable, by the health care physician. Any
representation, duty, agreement, or warranty contained herein
by or relating to Stockholders' Corporation shall be deemed
to be a representation, duty, agreement, or warranty of
Stockholders, and Stockholders shall cause Stockholders'
Corporation to fully comply with the terms of this Stock
Exchange Agreement as it applied to Stockholders'
Corporation.
<PAGE>
12. REPRESENTATIONS AND WARRANTIES OF HCCA. HCCA represents and
warrants to Stockholders that:
(a) HCCA is a corporation duly organized and validly existing and
in good standing under the laws of the State of Nevada; HCCA is qualified
to transact business in any other state and has an authorized
capitalization of 900,000,000 shares of which there are issued and
outstanding 38 Million shares of capital stock, par value $0.001 per
share.
(b) HCCA has delivered to Stockholders its financial statements
for the three years, prepared by W. Dale McGhie, Certified Public
Accountant. These financial statements accurately set forth the financial
condition of the HCCA as of the dates specified, and the results of
operations for the fiscal years involved, prepared in conformity with
generally accepted accounting principles consistently applied.
(c) HCCA has good and marketable title to all of its property and
assets (except property and assets disposed of since such date in the
usual and ordinary course of business, subject to no mortgages, pledges,
liens or other encumbrances except as disclosed in such balance sheet or
in Exhibit "B" annexed hereto and made a part hereof.
(d) As of December 8, 1993, HCCA has no obligations, liabilities
or commitments, contingent or otherwise, of a material nature which were
not provided=for, except as set forth in such balance sheet or in Exhibit
"B".
(e) Since the date of the aforementioned balance sheet, there has
been no change in the nature of the business of HCCA nor in its financial
condition or property, other than changes in the usual and ordinary course
of business, none of which has been materially adverse, and HCCA has
incurred no obligations or liabilities or made any commitments other than
in the usual and ordinary course of business except as disclosed in
Exhibit "B".
<PAGE>
(f) HCCA is not a party to any employment contract with any
officer, director, or stockholder, or to any lease, agreement or other
commitment not in the usual and ordinary course of business, nor to any
pension, insurance, profit-sharing or bonus plan, except as disclosed in
Exhibit "B".
(g) HCCA is neither a defendant, nor a plaintiff against whom a
counterclaim has been asserted in any litigation, pending or threatened,
nor has any material claim been made or asserted against HCCA nor are
there any proceedings threatened or pending before any federal, state or
municipal government, or any department, board, body or agency thereof,
involving HCCA except as disclosed in Exhibit "B".
(h) HCCA is not in default under any agreement to which it is a
party nor in the payment of any of its obligations.
(i) Between the date of the balance sheet referred to in
subparagraph "b" hereof and the Closing, HCCA will not have (i) paid or
declared any dividends on its capital stock, (ii) made or authorized any
changes in its Articles of Incorporation or in any amendment thereto or in
its By-Laws, or (iii) made any commitments or disbursements or incurred
any obligations or liabilities or a substantial nature and which are not
in the usual and ordinary course of business, or (iv) mortgaged or pledged
or subjected to any lien, charge or other encumbrance any of their assets,
tangible or intangible, except in the usual and ordinary course of its
business, or (v) sold, leased, or transferred or contracted to sell, lease
or transfer any assets, tangible or intangible, or entered into any other
transactions, except in the usual and ordinary course of business, and
except as set forth in Exhibit "B" hereof.
(j) This Agreement has been duly executed by HCCA and the
execution and performance of this Agreement will not violate, or result in
a breach of, or constitute a default in, any agreement, instrument,
<PAGE>
judgment, order or decree to which it is a party or to which it is subject
nor will such execution and performance constitute a violation of or
conflict with any fiduciary duty to which it is subject.
(k) HCCA will file with the appropriate governmental authorities,
all tax and other returns required to be filed by it, such returns are
true and complete and all taxes shown thereon to be due have been paid.
All materials, federal, state, local, county, franchise, sales, use,
excise and other taxes assessed or due have been duly paid and no reserves
for unpaid taxes have been set up or are required on the basis of the
facts and in accordance with generally accepted accounting principles.
(l) HCCA is not in default with respect to any other, writ,
injunction, or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, and there are no actions, suits, claims, proceedings or
investigations pending or, to the knowledge of HCCA threatened against or
affecting HCCA at law or in equity, or before or by any federal, state,
municipal or other governmental court, department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
(n) The issued and outstanding shares of HCCA have been admitted
to trading in the over-the-counter market.
3. DATE AND TIME OF CLOSING. The closing shall be held on April 21.
1994 immediately following the resolution by the Board of Directors of
HCCA as set forth in Paragraph 5 of this Agreement, at the offices of HCCA
- Nevada or at such other time and place as may be mutually agreed upon
between the parties in writing (hereinafter "the Closing").
<PAGE>
4. EXCHANGE OF SHIRES OF STOCK. The mode of carrying into effect the
exchange provided for in this Agreement shall be as follows:
(a) At or prior to the Closing, the Articles of Incorporation
of HCCA shall be amended as set forth in Paragraph 5(b) below.
(b) At the Closing, each share of Stockholders' stock then
issued and outstanding shall be exchanged for 12, 000,000 shares
of HCCA stock (as hereinafter defined). Each holder of outstanding
shares of Stockholders' Corporation stock, upon delivery to HCCA
of one or more duly endorsed stock certificates, shall be entitled
to receive one or more stock certificates for tile full number of
shares of HCCA stock into which the Stockholders' stock so
delivered shall have been exchanged as aforesaid, based on the
exchnage ratio set forth above.
(c) Fractional shares shall not be issued. In lieu thereof,
the number of shares of HCCA stock to be issued upon such exchange
shall be rounded up or down to the nearest full share.
(d) All shares of HCCA stock to be issued as set forth above
shall be fully paid and non-assessable and shall be issued in full
satisfaction of all rights pertaining to the shares of stock
exchanged therefore.
5. RESOLUTIONS BY BOARD OF DIRECTORS OF HCCA.
Prior to closing, the Board of Directors of HCCA will enter a
resolution approving the exchange between HCCA and Shareholders'
Corporation.
(a) HCCA shall have received an opinion from counsel to the
Stockholders or Stockholders' Corporation, to the following
effect:
<PAGE>
(1) That Stockholders is a "C" corporation duly
organized, validly existing, and in good standing under the
laws of the State of Nevada and has the corporate power to
own properties and carry on its business as it is now being
conducted;
(2) That the outstanding shares of stock have been
duly and validly issued and are fully paid and
non-assessable;
(3) That this Agreement has been duly executed and
delivered by the Stockholders and is legally and validly
binding upon them in accordance with its terms;
(4) That the execution and delivery of this
agreement, the consummation of the transactions herein
contemplated and in compliance with the terms and provisions
of this Agreement on the part of the Stockholders will not
breach any statute or any regulation nor conflict with or
result in a breach of the Articles of Incorporation or
By-Laws of Stockholders' Corporation or any of the terms,
conditions or provisions of any agreement or instrument known
to said counsel to which either of the Stockholders or
Stockholders' Corporation is a party or is bound;
(5) That there are no options, agreements or
commitments of any kind, relating to the common stock of
Stockholders' Corporation to which it is a party other than
as disclosed in the financial statements furnished to HCCA by
the Stockholders;
(6) That, to the best of its knowledge, there is no
litigation, proceedings, claim or governmental investigation
pending or threatened against or relating to, Stockholders,
Stockholders' Corporation or its properties or business;
<PAGE>
(7) That, upon transfer of the shares of
Stockholders stock in accordance with the terms of this
Agreement, HCCA will have title to such stock free of any
liens, encumbrances, claims or other limitations thereon,
except for restrictions imposed by federal or state security
laws and regulations.
(b) The Stockholders shall have delivered to HCCA a Certificate
issued by the appropriate governmental authority evidencing the
good standing of Stockholders' Corporation as of the date not more
than SEVEN (7) days prior to the Closing as a domestic corporation
under the laws of the State of Nevada.
7. INDEMNITIES
(a) The Stockholders shall deliver to HCCA at the Closing an
indemnity agreement (in the form of Exhibit "C" attached hereto)
pursuant to which they shall agree to indemnify and hold harmless
HCCA and/or and its successors and assigns, of and from any and
all loss, liability or damage, including reasonable attorney's
fees and expenses, arising out of or resulting from the assertion
against HCCA of any claims, debts or obligations, fixed,contingent
or otherwise, including federal, state and local tax obligations
attributable to periods prior to this date, except to the extent
reserved against in there aforementioned balance sheet. HCCA shall
give the Stockholders prompt notice of the assertion of any such
claim, and HCCA shall afford the Stockholders an opportunity to
participate with counsel of their own choosing, at their own
expense, in the defense or other contest thereof. In connection
therewith, HCCA shall afford the Stockholders access to such books
and records of HCCA as may be reasonably required.
(b) HCCA shall deliver to the Stockholders at the Closing an
indemnity agreement (in the form of Exhibit "D" attached hereto)
pursuant to which HCCA will agree to indemnify and hold harmless
the Stockholders, and their respective heirs, administrators and
assigns, of and from any and all loss,
<PAGE>
liability or damage, including reasonable attorney's fees and
expenses, arising out of the breach of any of the representations
and warranties of HCCA contained in this Agreement.
8.ACCESS TO RECORDS. During the period between the date of this
Agreement and the Closing, HCCA and the Stockholders shall each
afford representatives of the other party free access to HCCA's
and Stockholders' offices, plants, records, files, books of
account and tax returns, under such circumstances as will not
unreasonably interfere with the normal operations of such
companies.
9. TERMINATION AND ABANDONMENT. HCCA acknowledges that
the Stockholders have the absolute power and authority to annul
their sale to HCCA if HCCA stock is not trading on the NASDAQ
Daily Quotation Sheets. In addition,, the Stockholders may annul
the sale in twenty-four (24) months if HCCA fails to complete its
planned secondary stock offering. This sale may be annulled by
either party hereto, if any action or proceeding before any court
or governmental body or agency shall have been instituted or
threatened to restrain or prohibit the consummation of this
Agreement.
10.NOTICES. Any notice under this Agreement shall be deemed to have
been sufficiently 312 given if sent by registered or certified
mail postage prepaid, addressed as follows:
If to the Stockholders, to
The Promenade, 1 Promenade Cr.
#314 - 3rd Level
Thornhill. Ontario L4J4P8
If to HCCA, to
Health, Care Centers of America, Inc.
112 Long Hollow Pike, Suite 200
Goodlettsville, Tennessee 37072
<PAGE>
or to any other address which may hereafter be designated by either
party by notice given in like manner. All notices shall be deemed to
have been given as of the date of receipt.
11.FURTHER ASSURANCES. Each party hereto hereby agrees to take any
further action necessary or expeditious to carry out the
provisions of this Agreement.
12.COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be
an original, but all such counterparts shall constitute one and
the same instrument.
13.MERGER CLAUSE. This Agreement supersedes all prior agreements and
understandings between the- parties and may not be changed or
terminated orally, and no attempted change, termination or waiver
of any of the provisions hereof shall be binding unless in writing
and signed by the parties hereto.
14.GOVERNING LAW. This Agreement shall be governed by and construed
according to the election of HCCA, the laws of the State of
Nevada, or of any State in which either the closing occurs or the
Stockholders' Corporation transacts it primary business.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
HCCA:
Health Care enters of America, Inc.
By:
Title: President
STOCKHOLDERS:
STOCK EXCHANGE AGREEMENT
AGREEMENT made this 18 day of June, 1994, by and between Peeples Mining Co., LLC
(hereinafter "Stockholders"), and Health Care Centers of America, Inc., a Nevada
corporation (hereinafter "HCCA") in consideration of the mutual promises and
undertakings of the parties.
WITNESSETH:
-----------
WHEREAS, the Stockholders are the holders of all of the currently issued and
outstanding shares of the common stock, par value of One Dollar (hereinafter
referred to as "Stockholders' Corporation"); and
WHEREAS, the authorized capital stock of HCCA consists of 900,000,000 shares of
capital stock, par value $0.001 per share, of which approximately 52,000,000
shares are currently issued and outstanding; and
WHEREAS, HCCA and the Stockholders agree that it would be to their mutual
benefit for HCCA to acquire all of the outstanding stock of Stockholders in
Stockholders' Corporation from the Stockholders in exchange for shares of HCCA
stock.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto hereby agree ac follows:
1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS: Stockholders, jointly and
severally, hereby represent and warrant to HCCA that:
(a) Stockholders collectively own on the date hereof, and on the Closing Date
hereinafter provided, will own, free and clear of all liens, charges and
encumbrances, all of the issued and outstanding shares of common stock of
Stockholders' Corporation.
<PAGE>
(b) Stockholders' Corporation is a corporation duly organized and validly
existing and in good standing under the laws of the State of Arizona is duly
qualified to transact business as a foreign corporation and is in good standing
in the State of Arizona, has all corporate power to engage in the business in
which it is presently engaged, and has an authorized capital stock consisting of
shares of par value common stock, of which there are validly issued and
outstanding Shares fully paid and non-assessable.
(C) Stockholders have initialed and furnished to HCCA copies of the balance
sheet of Stockholders' Corporation as of the period ended June 30, 1994 together
with related statements of income and expense for the period then ended prepared
by Stockholders. Said balance sheet and related statements accurately set forth
the financial condition of Stockholders as of said date, and of the results of
operations for the period involved, prepared in conformity with generally
accepted accounting principles consistently applied. If not previously furnished
to HCCA, Stockholders will have initialed and furnished to HCCA, upon request,
copies of income and expense statements and related balance sheets and financial
records for additional past years as may be deemed necessary by HCCA, and shall
provide access to any records of Stockholders' Corporation deemed necessary for
verification of information requested by or furnished to HCCA.
(d) Stockholders' Corporation has good and marketable title to all of its
property and assets (except property and assets disposed of since such date in
the usual and ordinary course of business), subject to no mortgages, pledges,
liens or other encumbrances except as disclosed in such balance sheet or in
Exhibit "A" annexed hereto and made a part hereof.
(e) As of June 30, 1994 (date), Stockholders' Corporation has no obligations,
liabilities or commitments, contingent or otherwise, of a material nature which
were not provided for, except as set forth in such balance sheet or in Exhibit
"A".
<PAGE>
(f) Since the date of the aforementioned balance sheet, there has been no change
in the nature of the business of Stockholders' Corporation nor in its financial
condition property, other than changes in the usual and ordinary course of
business, none of which has been materially adverse, and Stockholders'
Corporation has incurred no obligations or liabilities or made any commitments
other than in the usual and ordinary course of business or as disclosed in
Exhibit "A".
(g) Peeples Mining is not a party to any employment contract with any officer,
director, or stockholder, or to any lease, agreement or other commitment not in
the usual and ordinary course of business, or to any operation, insurance,
profit-sharing or bonus plan, except as disclosed in Exhibit "A" .
(h) Neither Stockholders nor Stockholders' Corporation are defendants (or
plaintiff, against whom a counterclaim has been asserted) in any litigation,
pending or threatened; nor has any material claim been made or asserted against
Stockholders or Stockholders' Corporation; and there are no proceedings
threatened or pending before any federal, state or municipal government, or any
department, board, body or agency thereof, involving stockholders or
Stockholders' Corporation except as disclosed in Exhibit "A".
(i) Stockholders or Stockholders' Corporation is not in default under any
agreement to which it is a party nor in the payment of any of its obligations.
(j) Between the date of the balance sheet referred to in subparagraph "c" hereof
and the Closing, Stockholders' Corporation will not have (i) paid or declared
any dividends on or made any distributions in respect of, or issued, purchased
or redeemed, any of the outstanding shares of its common stock, or (ii) made or
authorized any changes in its Certificate of Incorporation or in any amendment
thereto or in its By-Laws, or (iii) made any commitments or disbursements or
incurred any obligations or liabilities or substantial nature and which are not
in the usual and ordinary course of business or (iv) mortgaged or pledged or
subjected to any lien, charge or other encumbrance any of their assets, tangible
or intangible, except in the usual and ordinary course of its business, or (v)
[GRAPHIC OMITTED]
<PAGE>
sold, leased or transferred or contracted to sell, lease or transfer any assets,
tangible or intangible, or entered into any other transactions, except in the
usual and ordinary course of business, or (vi) made any loan or advance to any
stockholder of Peeples Mining or to any other person, firm, or corporation
except in the usual and ordinary course of business, or (vii) made any material
change in any existing employment agreement or increased the compensation
payable or made any arrangement for the payment of any bonus to any officer,
employee or agent, except as set forth in Exhibit "A" hereof.
(k) This Agreement has been duly executed by Stockholders, and the execution and
performance of this Agreement will not violate, or result in a breach of, or
constitute a default in, any agreement, instrument, judgment, order or decree to
which either of them or Stockholders or Stockholders' Corporation is a party or
to which either of them or Stockholders' Corporation is subject nor will such
execution and performance constitute a violation of or conflict with any
fiduciary to which either of them or Stockholders' Corporation is subject.
(l) Stockholders' Corporation has timely filed or timely filed necessary
extensions with the appropriate governmental authorities all tax and other
returns required to be filed by it, and such returns are true and complete and
all taxes shown thereon to be due have been paid. All material federal, state,
local, county, franchise, sales, use, excise and other taxes, assessed or due
have been duly paid, and no reserves for unpaid taxes have been set up or
required on the basis of the facts and in accordance with generally accepted
accounting principles.
(m) Stockholders' Corporation is not in default with respect to any order, writ,
injunction, or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
and there are no actions, suits, claims, proceedings or investigations pending
or, to the knowledge of Alvin A. Schlabach threatened against or affecting
4
[GRAPHIC OMITTED]
<PAGE>
Peeples Mining at law or in equity, or before or by any federal, state,
municipal or other governmental court, department, commission, board, bureau,
agency or instrumentality, domestic or foreign. Peeples Mining, LLC has complied
in all material respects with all laws, regulations and orders applicable to its
business.
(n) No representation or warranty in this section, nor statement in any
document, certificate or schedule furnished or to be furnished pursuant to this
Agreement by the Stockholders or Stockholders' Corporation, or in connection
with the transactions contemplated hereby, contains or contained any untrue
statement of a material fact, nor does or will omit to state a material fact
necessary to make any statement of fact contained herein or therein not
misleading. Stockholders' Corporation has maintained, and will until the
Closing, maintain, in full force and effect adequate policies of insurance,
including malpractice insurance, with coverage sufficient to meet the normal
requirements of its business. Malpractice insurance must be maintained at all
times during the duration of this agreement, as applicable, by the health care
physician. Any representation, duty, agreement, or warranty contained herein by
or relating to Stockholders' Corporation shall be deemed to be a representation,
duty, agreement, or warranty of Stockholders, and ,Stockholders shall cause
Stockholders' Corporation to fully comply with the terms of this Stock Exchange
Agreement as it applied to Stockholders' Corporation.
2. REPRESENTATIONS AND WARRANTIES OF HCCA. HCCA represents and warrants to
Stockholders that:
(a) HCCA is a corporation duly organized and validly existing and
in good standing under the laws of the State of Nevada; HCCA is
qualified to transact business in any other state and has an authorized
capitalization of 900,000,000 shares of which there
are issued and outstanding 52,000,000 shares of capital stock, par
value $0.001 per share.
(b) HCCA has delivered to Stockholders its financial statements
for the three years, prepared by W. Dale McGhie, Certified Public
Accountant. These financial statements accurately set forth the
financial condition of HCCA as of the dates specified, and the results
of operations for the fiscal years involved, prepared in conformity
with generally accepted accounting principles consistently applied.
<PAGE>
(c) HCCA has good and marketable title to,. all of its property
and assets (except property and assets disposed of since such date in
the usual and ordinary course of business), subject to no mortgages,
pledges, liens or other encumbrances except as disclosed in such balance
sheet or in Exhibit "B" annexed hereto and made a part hereof.
(d) As of June 30, 1994, HCCA has no obligations, liabilities or
commitments, contingent or otherwise, of a material nature which were
not provided for, except as set forth in such balance sheet or in
Exhibit "B".
(e) Since the date of the aforementioned balance sheet, there has
been no change in the nature of the business of HCCA nor in its
financial condition or property, other than changes in the usual and
ordinary course of business, none of which has been materially adverse,
and HCCA has incurred no obligations or liabilities or made any
commitments other than in the usual and ordinary course of business
except as disclosed in Exhibit "B" .
(f) HCCA is not a party to any employment contract with any
officer, director, or stockholder, or to any lease, agreement or other
commitment not in the usual and ordinary course of business, nor to any
pension, insurance, profit-sharing or bonus plan, except as disclosed in
Exhibit "B".
(g) HCCA is neither a defendant, nor a plaintiff against whom a
counterclaim has been asserted in any litigation, pending or threatened,
nor has any material claim been made or asserted against HCCA nor are
there any proceedings threatened or pending before any federal, state or
municipal government, or any department, board, body or r agency
thereof, involving HCCA except as disclosed in Exhibit "B".
(h HCCA is not in default under any agreement to which it is a
party nor in the payment of any of its obligations.
<PAGE>
(i) Between the date of the balance sheet referred to in subparagraph
"b" hereof and the Closing, HCCA will not have (i) paid or
declared any dividends on its capital stock, (ii) made or
authorized any changes in its Articles of Incorporation or in any
amendment thereto or in its By-Laws, or (iii) made any
comm9itments or disbursements or incurred any obligations or
liabilities of a substantial nature and which are not in the usual
and ordinary course of business, or (iv) mortgaged or pledged or
subjected to any lien, charge or other . Encumberance any of their
assets, tangible or intangible, except in the usual; and ordinary
course of its business, or (v) sold, leased, or transferred or
contracted to sell lease or transfer any assets, tangible or
intangible, or entered into any other transactions, except in the
usual and ordinary course of business, and except as set forth in
Exhibit "B" hereof.
(j) This Agreement has been duly executed by HCCA and the execution
and performance of this Agreement will not violate, or result in a
breach of, or. constitute a default in, any agreement, instrument,
judgment, order or decree to which it is a party or to which it is
subject nor will such execution and performance constitute a
violation of or conflict with any fiduciary duty to which it is
subject.
(k)HCCA will file with the appropriate governmental authorities, all
tax and other returns required to be filed by it, such returns are
true and complete and all taxes shown thereon to be due have been
paid. All material, federal, state, local, county, franchise,
sales, use, excise and other taxes assessed or due have been duly
paid and no reserves for unpaid taxes have been set up or are
required on the basis of the facts and in accordance with
generally accepted accounting principles.
(1) HCCA is not in default with respect to any other writ, injunction,
or decree of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, and there are no actions, suits, claims,
proceedings or investigations pending or, to the knowledge of HCCA
threatened against or affecting HCCA at law or in equity, or
before or by any federal, state, municipal or other -lovernmental
court, department, rnmmission, board, bureau, agency or
instrumentality, [GRAPHIC OMITTED] domestic or foreign.
<PAGE>
(m) The issued and outstanding shares of HCCA have been admitted to
trading in the over-the-counter market.
3. DATEAND TIME OF CLOSING. The closing shall be held on June 30, 1994
immediately following the resolution by the Board of Directors of
HCCA, Inc. as net forth in Paragraph 5 of this Agreement, at the
offices of HCCA, Inc. or at such other time and place as may be
mutually agreed upon between the parties in writing (hereinafter "the
Closing").
4. EXCHANGE OF SHARES OF STOCK. The mode of carrying into effect the
exchange provided for in this Agreement shall be as follows:
(a) At or prior to the Closing, the Articles of Incorporation of HCCA
shall be amended as set forth in Paragraph 5(b) below.
(b) At the Closing, each share of Stockholders' stock then issued and
outstanding shall be exchanged for Twenty Million shares of HCCA
stock (as hereinafter defined). Each holder of outstanding shares
of Stockholders' Corporation stock, upon delivery to HCCA of one
or more duly endorsed stock certificates, shall be entitled to
receive one or more stock certificates for the full number of
shares of HCCA stock into which the Stockholders' stock so
delivered shall have been exchanged as aforesaid, based on the
exchange ratio set forth above.
(c) Fractional shares shall not be issued. In lieu thereof, the number
of shares of HCCA stock to be issued upon such exchange shall be
rounded up or down to the nearest full share.
(d) All shares of HCCA stock to be issued as set forth above shall be
fully paid and non-assessable and shall be issued in full
satisfaction of all rights pertaining to the shares of stock
exchanged therefore.
<PAGE>
(e) HCCA's stock closing price, as of this date, is $ 4.00 per share.
5. RESOLUTIONS BY BOARD OF DIRECTORS OF HCCA. Prior to closing, the Board
of Directors of HCCA will enter a resolution approving the exchange
between HCCA and Shareholders' Corporation.
(a) HCCA shall have received an opinion from counsel to the
Stockholders or Stockholders' Corporation, to the following
effect:
(f) That Stockholders Corporation is a "C" corporation duly organized,
validly existing, and in good standing under the laws of the State
of Arizona and has the corporate power to own properties and carry
on its business as it is now being conducted;
(2) That the outstanding shares of stock have been duly and validly issued and
are fully paid and non-assessable;
(3) That this Agreement has been duly executed and delivered by the Stockholders
and is legally and validly binding upon them in accordance with its terms;
(4) That the executiun and delivery of this agreement, the consummation of the
transactions herein contemplated and in compliance with the terms and provisions
of this Agreement on the part of the Stockholders will not breach any statute or
any regulation nor conflict with or result in a breach of the Articles of
Incorporation or By-Laws of Stockholders' Corporation or any of the terms,
conditions or provisions of any agreement or instrument known to said counsel to
which either of the Stockholders or Stockholders' Corporation is a party or is
bound;
<PAGE>
(5) That there are no options, agreements or commitments of any kind, relating
to the common stock of Stockholders' Corporation to which it is a party other
than as disclosed in the financial statements furnished to HCCA by the
Stockholders;
(6) That, to the best of its knowledge, there is no litigation, proceedings,
claim or governmental investigation pending or threatened against or relating to
Stockholders, Stockholders' Corporation or its properties or business;
(7) That, upon transfer of the shares of Stockholders stock in accordance with
the terms of this Agreement, HCCA will have title to such stock free of any
liens, encumbrances, claims or other limitations thereon, except for
restrictions imposed by federal or state security laws and regulations.
(b) The Stockholders shall deliver to HCCA a Certificate issued by the
appropriate governmental authority evidencing the good standing of Stpckholders'
Corporation. 7. INDEMNITIES. (a) The Stockholders shall deliver to HCCA at the
Closing an indemnity agreement in the form of Exhibit "C" attached hereto
pursuant to which they shall agree to indemnify and hold harmless HCCA and/or
its successors and asigns, of and from any and all loss, liability or damage,
including reasonable attorney's fees and expenses, arising out of or resulting
from the assertion against HCCA of any claims, debts or obligations, fixed,
contingent or otherwise, including federal, state and local tax obligations
attributable to periods prior to this date, except to the extent reserved
against in there aforementioned balance sheet. HCCA shall give the Stockholders
prompt notice of the asertion of any such claim, and HCCA shall afford the
Stockholders an opportunity to participate with counsel of thier own choosing,
at their own expense, in the defense or other contest thereof. In connection
wherewith, HCCA shall afford the Stockholders aaccess to such books and records
of HCCA as may be reequired. (b) HCCA shall deliver to the Stockholders at the
Closing an indemnity agreement (in the form of Exhibit "D" attached hereto)
<PAGE>
pursuant to which HCCA will agree to indemnify and hold harmless the
Stockholders, and their respective heirs, administrators and assigns, of and
from any and all loss, liability or damage, including reasonable attorney's fees
and expenses, arising out of the breach of any of the representations and
warranties of HCCA contained in this Agreement.
8. ACCESS TO RECORDS. During the period between the date of this Agreement and
the Closing, HCCA and the Stockholders shall each afford representatives of the
other party free access to HCCA's and Stockholders' offices,plants, records,
files, books of account and tax returns, under such circumstances as will not
unreasonably interfere with the normal operations of such companies. 9.
TERMINATION AND ABANDONMENT. HCCA acknowledges that the Stockholders have the
absolute power and authority to annul their sale to HCCA if HCCA stock is not
trading on the NASDAQ Daily Quotation Sheets. In addition, the Stockholders may
annul the sale in eighteen (18) months if HCCA fails to complete its planned
secondary stock offering. This sale may be annulled by either party hereto, if
any action or proceeding before any court or governmental body or agency shall
have been instituted or threatened o restrain or prohibit the consummation of
this Agreement.
SPIN-OFF CLAUSE. If HCCA, is adjudicated a bankrupt, or voluntarily
files for bankruptcy, or makes any assignment for the benefit of the creditors,
Stockholders may terminate this agreement, effective as of the date of notice of
the termination.
10. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail postage prepaid,
addressed as follows: If to the Stockholders, to Alvin A. Schlabach 2241 St. Rt
<PAGE>
93 Baltic, Ohio 43804 If to HCCA, to Health Care Centers of America, Inc. 112
Long Hollow Pike, Suite 200 Goodlettsville, Tennessee 37072 or to any other
address which may hereafter be designated by either party by notice given in
like manner. All notices shall be deemed to have been given as of the date of
receipt.
11. FURTHER ASSURANCES. Each party hereto hereby agrees to take any further
action necessary or expeditious to carry out the provisions of this Agreement.
12. \ COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall constitute one and the same instrument. 13.
MERGER CLAUSE. This Agreement supersedes all prior agreements and understandings
between the parties and may not be changed or terminated orally, and no
attempted change, termination or waiver of any of the provisions hereof shall be
binding unless in writing and signed by the parties hereto.
14. GOVERNING LAW. This Agreement shall be governed by and construed, according
to the election of HCCA, the laws of the State of Nevada, or of any State in
which either the closing occurs or the Stockholders' Corporation transacts it
primary business.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
HCCA:
Health Care Centers of America, Inc.
By: Maurice Furlong
Title: President
Stockholder(s):Peeples Mining, LLCAlvin Schlabach, Manager
EXHIBIT S
MAR-PRO SERVICES, LTD.
STOCK EXCHANGE AGREEMENT
AND
CORPORATE RESOLUTION
CANCELLING SHARES
AND
COURT ORDER ENJOINING TRANSFER
<PAGE>
AGREEMENT BETWEEN
ROBERT ROOD IV
AND
HEALTH CARE CENTERS OF AMERICA, INC.
SUBJ: ACQUISITION OF GOLD CONCENTRATE
This AGREEMENT made this 15th day of March 1995, by and between Robert Rood IV,
d.b.a., Asset Resource Management (hereinafter referred to as "ARM"), and Health
Care Centers of America (hereinafter referred to as "HCCA").
WHEREAS, both parties desire and agree to the following:
WHEREAS, as ARM represents and warrants that it has the full and unencumbered
title to certain gold concentrates (as represented by the attached Horizon
Technology, L.L.C. Corporate Resolution, dated November 16, 1994); and,
WHEREAS, ARM desires to sell its entire rights, title, and interest to the above
mentioned eighty (80) tons of gold concentrate to HCCA in exchange for 144
Restricted Stock in HCCA. The HCCA Stock shall be valued at Two and 501100
Dollars ($2.50) per Share, and upon delivery by ARM, the total certified gold
content of all eighty (80) tons of concentrate, HCCA will deliver the total
number of Shares needed valued at Two and 50/100 Dollars ($2.50) to ARM with its
total stated value equaling the total recoverable value of the gold concentrate;
and, as of this date, the approximate value is Fifty-Five Million Dollars
($55,000,000). ARM shall deliver a Certified Assay, registered with the State of
Nevada, to HCCA in exchange for HCCA Stock.
WHEREAS, ARM represents that it has full authority to sell or dispose of the
concentrates in any manner it so chooses.
<PAGE>
WHEREAS, inasmuch as this AGREEMENT is irrevocable, ARM gives its full consent
to HCCA to use the concentrates as it deems necessary to accomplish its
financing needs.
WHEREAS, ARM agrees to not market or dispose of the stock in any way that would
cause HCCA's market price to falter or lose value, unless agreed to by the two
major stockholders of HCCA.
WHEREAS, both parties agree to leave the eighty (80) tons of gold concentrate in
the bonded warehouse and will not tamper with it or break the seals on any drum
of material.
This AGREEMENT shall be binding upon and inure to the benefit of the parties
hereto signed, their respective heirs, agents, successors and assigns. By
signature hereon, agreed to on this 15 th day of March 1995 by:
/s/Maurice Furlong
Maurice Furlong, President
Health Care Centers of America, Inc.
(HCCA)
/s/Robert Rood
Robert Rood IV, d.b.a.,
Asset Resource Management
(ARM)
Witnesseth:
/s/(signature illegible)
Witnesseth:
/s/(signature illegible)
<PAGE>
BILL OF SALE
As Agent for Asset Resource Management, I, Robert Rood IV hereby do sell all
rights, title and interest to the eighty (80) tons of gold concentrate, as
represented by Horizons Technology, L.L.C. "Transfer of Assets", dated December
19, 1994, attached hereto and made a part of this Bill of Sale. This sale to
Health Care Centers of America is made in exchange for Common 144 Restricted
Stock in Health Care Centers of America, Inc. The exact number of Shares will be
determined when Asset Resource Management delivers a certified assay value of
the eighty (80) tons of concentrate being transferred to HCCA. The Stock value
is hereby fixed at Two and 501100 Dollars ($2.50) per Share. ARM will fix the
selling price at the recoverable value of the gold concentrate.
This sale, by signature hereto is consummated this 16th day of March 1995.
AGREED ACCEPTED:
/s/Robert Rood /s/ Maurice Furlong
Robert Rood IV; Agent Maurice Furlong, President
Asset Resource Management HCCA
<PAGE>
RESTATED AGREEMENT
OF THE BILL OF SALE ADDENDUM
BETWEEN HCCA,Inc (Buyer) AND
MAR-PRO SERVICES AND ASSET RESOURCE MANAGEMENT, INC.
Subject: Additional Gold Concentrate
HCCA, Inc. desires to acquire 140 additional barrels of gold concentrate (70
additional tons) with identical values or higher to the original 160 barrels
listed on the Bill of Sale between HCCA, Inc. and Asset Resource Management
dated March 16th, 1995. Asset Resource Management agrees to deliver the
additional barrels as soon as possible and accept the 144 restricted common
voting stock of HCCA, Inc. as payment in full, the stock value is hereby set at
$2.50 per share.
An adjustment will be made by 25% to correct to 25% overpayment of initial stock
delivery on second payment. If required MAR-PRO Services Limited will provide
insurance or a bond of the value hereinstated. One hundred (100) tons will be
delivered to a bonded warehouse on Wednesday, August 16th, 1995. Fifty (50) tons
have already been delivered to Metro Trade Services warehouse in Long Beach,
California.
The assay of the gold concentrate must be satisfactory to HCCA's auditor, and
the gold values on each ton must be at least equivalent to the values shown on
the first 100 barrels received by HCCA in Metro Trade Services warehouse in Long
Beach, California. Rob Rood agrees to provide all documents required by HCCA's
auditor relative to the total purchase of 150 tons of gold concentrate. If the
gold values prove to be less than represented, an adjustment in the number of
shares paid will be made.
Agreed and Accepted this 15th of August, 1995 /s/Robert Rood Robert Rood IV
Agent for Asset Resource Management & MAR-PRO Services, LTD.
Agreed and Accepted
this 15th August, 1995
/s/Maurice Furlong
Maurice Furlong
President
Health Care Centers of America; Inc.
/s/(signature illegible)
Witness
/s/(signature illegible)
Witness
<PAGE>
RESOLUTION OF THE BOARD OF DIRECTORS OF
HEALTH CARE CENTERS OF AMERICA, INC. (hcca)
In Accordance with a Special Meeting of the
Board of Directors held pursuant to a Waiver of Notice
A Special Meeting of the Board of Directors of HCCA was held on September
20, 1996 in Reno, Nevada, a majority of the Directors were present and
constituted a quorum. The Special Meetinf was held in conformity with a Waiver
of Norice.
HCCA previously entered into a contract for the puurchase of certain
precious metal concentrate from Robert Rood IV, Mar-Pro Services, Ltd. and/or
Asset Resource Management. Upon delivery of a portion of the precioyus metal
concentrate, it was further assayed by HCCA. The results of the assay indicated
that the concentrate kdelivered has no substantial value and the value of same
hasd bveen materially misrepresented by Robert Rood IV, Mar-Pro Services, Ltd.
and/or Asset Resource Management. HCCA had issued to Mar-Pro a total ofo
o41,479,500 shares aand certificate #2148 for 24,562,000 shares).
Be it resolved; that the President of HCCA shall emloy the necessaary legal
counsel to pursue the appropriate action against Robert Rood IV, Mar-Pro
Services, Ltd. and Asset Resource Management for the relief deemed necessary and
in the best interests of HCCA.
BE IT FURTHER RESOLVED; that the transfer agent for HCCA. The Nevada Agency
and Trust Company (NATCO) is hereby direicted to cancel certificate #2117 in the
amount of 17,187,5009 shares and certificate #2`48 in the amount of 24,562,000
shares are to be canceled. Said shares are hereby canceled and the stock is
returned to the Treasury.
/s/Maurice Furlong
Maurice W. Furlong, Chairman of the Board
Dated: September 20, 1996
<PAGE>
Case No. CU96-06332
Dept No. 3
IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA
IN AND FOR THE COUNTY OF WASHOE
HCCA, Inc.,
a Nevada-Corporation;
Plaintiff,
ORDER RE:
PLAINTIFF'S EX-PARTE
vs. MOTION FOR A TEMPORARY
NEVADA AGENCY AND TRUST COMPANY, RESTRAINING ORDER
a Nevada Corporation; ROBERT AND APPLICATION FOR PRE-
ROOD, IV; ASSET RESOURCE LIMINARY INJUNCTION.
MANAGEMENT CO.; MAR-PRO SERVICES,
LIMITED; and, RED, WHITE and
BLUE CORPORATIONS;
A, B, and C PARTNERSHIPS, X, Y,
and Z ASSOCIATIONS; and, DOES I-X,
Defendants
After careful review of the PLAINTIFF'S EX-PARTE MOTION FOR TEMPORARY
RESTRAINING ORDER AND APPLICATION FOR PRELIMINARY INJUNCTION and all of the
pleadings on file herein and good cause appearing therefrom;
This Court finds that immediate and irreparable harm will be caused to
plaintiff HCCA, if the Mar-Pro certificates, as defined in Paragraphs 16 of
complaint on file herein, are allowed to be transferred, in that plaintiff HCCA
will have issued the shares of ownership, but will not have received the benefit
it bargained for. Further, once these shares are issued in the name of National
Finanacial Services Corp., plaintiff HCCA will not be able to control their
resale.
<PAGE>
This court further finds that every reasonable effort was made to notify
all defendants, and, in fact, all defendants have been notified, albeit without
adequate time to formally object. Finally, this court finds that the risk of
harm to a7.1 defendants is minimal, in that the certificates being enjoined form
adequate security for all parties and the plaintiffs, and each of them, are only
seeking to maintain the status quo until a full hearing on the merits can be
given.
WHEREFORE this Court does order:
1. That Defendant NEVADA AGENCY AND TRUST COMPANY is hereby enjoined from
transferring the Mar-Pro Shares for fifteen (15) days from the date of this
ORDER or until a hearing on the merits can be had;
2 . That plaintiff HCCA shall post a $10,000 bond/check as security for any
costs and damages as may be incurred or suffered by any defendant.
<PAGE>
3. That plaintiff HCCA motion for a Preliminary Injunction will come on for
hearing before this court on the 10th day of October 1996, at 1:30 pm
DATED this 30 day of September, 1996 , at the hour of 9 am
/s/Deborah W. Qosh
Deborah W. Qosh
District Judge
By:
J.T. Cardinalli, Esq.
96 Winter Street
Reno, Nevada 89503
(702) 322 7422
Attorney for plaintiffs
3
STOCK EXCHANGE AGREEMENT
AGREEMENT made this 21st day of April, 1995, by and between Nashville Music
Consultants (hereinafter "Stockholders"), and Health Care Centers of America,
Inc., a Nevada corporation (hereinafter "HCCA") in consideration of the mutual
promises and undertakings of the parties.
WITNESSETH:
WHEREAS, the Stockholders are the holders of all of the currently issued and
outstanding shares of the common stock, par value of (hereinafter referred to as
"Stockholders' Corporation"); and
WHEREAS, the authorized capital stock of HCCA consists of 900,000.000 shares of
capital stock, par value $0.01 per share, of which approximately 160 million
shares are currently issued and outstanding, and
WHEREAS, HCCA and the Stockholders agree that it would be to their mutual
benefit for HCCA to acquire all of the outstanding stock of Stockholders in
Stockholders' Corporation from the Stockholders in exchange for shares of HCCA
stock.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS: Stockholders, jointly and
severally, hereby represent and warrant to HCCA that:
(a) Stockholders collectively own on the date hereof, and on the
Closing Date hereinafter provided, will own, free and clear of all liens,
charges and encumbrances, all of the issued and outstanding shares of common
stock of Stockholders' Corporation.
(B) Stockholders' Corporation is a corporation duly organized and
validly existing and
<PAGE>
(B) Stockholders' Corporation is a corporation duly organized and
validly existing and
in good standing under the laws of the State of Tennessee, is duly qualified to
transact business as a foreign corporation and is in good standing in the State
of N/A, has all corporate power to engage in the business in which it is
presently engaged, and has an authorized capital stock consisting of
____________ shares of par value common stock, of which there are validly issued
and outstanding __________Stockholders fully paid and non-assessable.
(C) Stockholders have initialed and furnished to HCCA copies of the
balance sheet of Stockholders' Corporation as of the period ended March 31,
1995, together with related statements of income and expense for the period then
ended prepared by Stockholders. Said balance sheet and related statements
accurately set forth the financial condition of Stockholders as of said date,
and of the results of operations for the period involved, prepared in conformity
with generally accepted accounting principles consistently applied. If not
previously furnished HCCA, stockholders will have initialed and furnished to
HCCA, upon request, copies of income and expense statements and related balance
sheets and financial records for additional past years as may be deemed
necessary by HCCA, and shall provide access to any records of Stockholders'
Corporation deemed necessary for verification of information requested by or
furnished to HCCA.
(d) Stockholders' Corporation has good and marketable title to all of
its property and assets (except property and assets disposed of since such date
in the usual and ordinary course of business), subject to no mortgages, pledges,
liens or other encumbrances except as disclosed in such balance sheet or in
Exhibit "A" annexed hereto and made a part hereof.
(e) As of 3/31/95 (date), Stockholders' Corporation has no obligations,
liabilities or commitments, contingent or otherwise, of a material nature which
were not provided for, except as set forth in such balance sheet or in Exhibit
"A".
(f) Since the date of the aforementioned balance sheet, there has been
no change
<PAGE>
(f) Since the date of the aforementioned balance sheet, there has been
no change
in the nature of the business of Stockholders' Corporation nor in its financial
condition or property, other than changes in the usual and ordinary course of
business, none of which has been materially adverse, and Stockholders'
Corporation has incurred no obligations or liabilities or made any commitments
other than in the usual and ordinary course of business or as disclosed in
Exhibit "A".
(g) Nashville Music Consultants is not a party to any employment
contract with any officer, director, or stockholder, or to any lease, agreement
or other commitment not in the usual and ordinary course of business, or to any
operation, insurance, profit-sharing or bonus plan, except as disclosed in
Exhibit "A".
(h) Neither Stockholders nor Stockholders' Corporation are defendants
(or plaintiff, against whom a counterclaim has been asserted (in any litigation,
pending or threatened; nor has any material claim been made or asserted against
Stockholders or Stockholders' Corporation; and there are no proceedings
threatened or pending before any federal, state or municipal government, or any
department, board, body or agency thereof, involving Stockholders or
Stockholders' corporation except as disclosed in Exhibit "A".
(I) Stockholders or Stockholders' Corporation is not in default under
any agreement to which it is a party nor in the payment of any of its
obligations.
(j) Between the date of the balance sheet referred to in subparagraph
"c" hereof and the Closing, Stockholders' Corporation will not have (I) paid or
declared any dividends on or made any distributions in respect of, or issued,
purchased or redeemed , any of the outstanding shares of its common stock, or
(ii) made or authorized any changes in its Certificate of Incorporation or in
any amendment thereto or in its By-Laws, or (iii) made any commitments or
disbursements or incurred any obligations or liabilities of a substantial nature
and which are not in the usual and ordinary course of business or (iv) mortgaged
or pledged or subjected to any lien, charge or other encumbrance any of their
assets, tangible or intangible, except in the usual and ordinary course of its
business, or (v) sold, leased or transferred or contracted to sell, lease or
transfer any assets,
<PAGE>
tangible or intangible, or entered into any other transactions, except in the
usual and ordinary course of business, or (vi) made any loan or advance to any
stockholder of Nashville Music Consultants or to any other person, firm, or
corporation except in the usual and ordinary course of business, or (vii) made
any material change in any existing employment agreement for the payment of any
bonus to any officer, employee or agent, except as set forth in Exhibit "A"
hereof.
(k) This Agreement has been duly executed by Stockholders, and the
execution and performance of this Agreement will not violate, or result in a
breach of, or constitute a default in, any agreement, instrument, judgment,
order or decree to which either of them or Stockholders or Stockholders'
Corporation is a party or to which either of them or Stockholders' Corporation
is subject nor will such execution and performance constitute a violation of or
conflict with any fiduciary to which either of them or Stockholders' Corporation
is subject.
(l) Stockholders' Corporation has timely filed or timely filed
necessary extensions with the appropriate governmental authorities all tax and
other returns required to be filed by it, and such returns are true and complete
and all taxes shown thereon to be due have been paid. All material federal,
state, local, county, franchise, sales, use, excise and other taxes assessed or
due have been duly paid, and no reserves for unpaid taxes have been set up or
required on the basis of the facts and in accordance with generally accepted
accounting principles.
(m) Stockholders' Corporation is not in default with respect to an
order, writ, injunction, or decree of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, and there are no actions, suits, claims, proceedings or
investigations pending or, to the knowledge of Stockholders threatened against
or affecting Stockholders at law or in equity, or before or by any federal,
<PAGE>
state, municipal or other governmental court, department, commission, board,
bureau, agency or instrumentality, domestic or foreign. Stockholders has
complied in all material respects with all laws, regulations and orders
applicable to its business.
(n) No representation or warranty in this section, nor statement in any
document, certificate or schedule furnished or to be furnished pursuant to this
Agreement by the Stockholders or Stockholders' Corporation, or in connection
with the transactions contemplated hereby, contains or contained any untrue
statement of a material fact, nor does or will omit to state a material fact
necessary to make any statement of fact contained herein or therein not
misleading. Stockholders' Corporation has maintained and will until Closing,
maintain, in full force and effect adequate policies of insurance, including
malpractice insurance, with coverage sufficient to meet the normal requirements
of its business. Malpractice insurance must be maintained at all times during
the duration of this agreement, as applicable, by the health care physician. Any
representation, duty, agreement, or warranty contained herein by or relating to
Stockholders' Corporation shall be deemed to be a representation, duty,
agreement, or warranty of Stockholders, and Stockholders shall cause
Stockholders' Corporation to fully comply with the terms of this Stock Exchange
Agreement as it applied to Stockholders' Corporation.
2. REPRESENTATIONS AND WARRANTIES OF HCCA. HCCA represents and warrants to
Stockholders that:
(a) HCCA is a corporation duly organized and validly existing and in
good standing under the laws of the State of Nevada; HCCA is qualified to
transact business in any other state and has an authorized capitalization of
900,000,000 shares of which there are issued and outstanding 160 million shares
of capital stock, par value $0.001 per share.
(b) HCCA has delivered to Stockholders its financial statements for the
three years, prepared by W. Dale McGhie, Certified Public Accountant. These
financial statements accurately set forth the financial condition of HCCA as of
the dates specified, and the results of operations for the fiscal years
involved, prepared in conformity with generally accepted accounting principles
consistently applied.
<PAGE>
(C) HCCA has good and marketable title to all of it s property and
assets (except property and assets disposed of since such date in the usual and
ordinary course of business), subject to no mortgages, pledges, liens or other
encumbrances except as disclosed in such balance sheet or in Exhibit "B" annexed
hereto and made a part hereof.
(d) As of March 31, 1995, HCCA has no obligations, liabilities, or
commitments, contingent or otherwise, of a material nature which were not
provided for, except as set forth in such balance sheet or in Exhibit "B".
(e) Since the date of the aforementioned balance sheet, there has been
no change in the nature of the business of HCCA nor in its financial condition
or property, other than changes in the usual and ordinary course of business,
none of which has been materially adverse, and HCCA has incurred no obligations
or liabilities or made any commitments other than in the usual and ordinary
course of business except as disclosed in Exhibit "B".
(f) HCCA is not a party to any employment contract with any officer,
director, or stockholder, or to any lease, agreement or other commitment not in
the usual and ordinary course of business, nor to any pension, insurance,
profit-sharing or bonus plan, except as disclosed in Exhibit "B".
(g) HCCA is neither a defendant, nor a plaintiff against whom a
counterclaim has been asserted in any litigation, pending or threatened, nor has
any material claim been made or asserted against HCCA nor are there any
proceedings threatened or pending before any federal, state or municipal
government, or any department, board, body or agency thereof, involving HCCA
except as disclosed in Exhibit "B".
(h) HCCA is not in default under any agreement to which it is a party
nor in the payment of any of its obligations.
<PAGE>
(I) Between the date of the balance sheet referred to in subparagraph
"b" hereof and the Closing, HCCA will not have (I)paid or declared any dividends
on its capital stock, (ii) made or authorized any changes in its Articles of
Incorporation or in any amendment thereto or in its By-Laws, or (iii) made any
commitments or disbursements or incurred any obligations or liabilities of a
substantial natural and which are not in the usual and ordinary course of
business, or (iv) mortgaged or pledged or subjected to any lien, charge or other
encumbrance any of their assets, tangible or intangible, except in the usual and
ordinary course of its business, or (v) sold, leased, or transferred or
contracted to sell, lease or transfer any assets, tangible or intangible, or
entered into any other transactions, except in the usual and ordinary course of
business, and except as set forth in Exhibit "B" hereof.
(j) This Agreement has been duly executed by HCCA and the execution and
performance of this Agreement will not violate, or result in a breach of, or
constitute a default in, any agreement, instrument, judgment, order or decree to
which it is party or to which it is subject nor will such execution and
performance constitute a violation of or conflict with any fiduciary duty to
which it is subject.
(k) HCCA will file with the appropriate governmental authorities all
tax and other returns required to be filed by it, such returns are true and
complete and all taxes shown thereon to be due have been paid. All material,
federal, state, local, county, franchise, sales, use, excise and other taxes
assessed or due have been duly paid and no reserves for unpaid taxes have been
set up or are required on the basis of the facts and in accordance with
generally accepted accounting principles.
(l) HCCA is not in default with respect to any other writ, injunction,
or decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and there are
no actions, suits, claims, proceedings, or investigations pending or, to the
knowledge of HCCA threatened against or affecting HCCA at law or in equity, or
before or by any federal, state, municipal or other governmental court,
department, commission, board bureau, agency or instrumentality domestic or
foreign.
<PAGE>
(m) The issued and outstanding shares of HCCA have been admitted to
trading in the over-the-counter market.
3. DATE AND TIME OF CLOSING. The closing shall be held on April 22, 1995
immediately following the resolution by the Board of Directors of HCCA as set
forth in Paragraph 5 of this Agreement, at the offices of HCCA, 510 Renaissance,
Oakbrook Terr., IL 60181 or at such other time and place as may be mutually
agreed upon between the parties in writing (hereinafter "the Closing").
4. EXCHANGE OF SHARES OF STOCK. The mode of carrying into effect the exchange
provided for in this Agreement shall be as follows:
(a) At or prior to the Closing, the Articles of Incorporation of HCCA
shall be amended as set forth in Paragraph 5(b) below.
(b) At the Closing, each share of Stockholder's stock then issued and
outstanding shall be exchanged for 4,000,000 shares of HCCA stock (as
hereinafter defined). Each holder of outstanding shares of Stockholder's
Corporation stock, upon delivery to HCCA of one or more duly endorsed stock
certificates, shall be entitled to receive one or more stock certificates for
the full number of shares of HCCA stock into which the Stockholders' stock so
delivered shall have been exchanged as aforesaid, based on the exchange ratio
set forth above.
(C) Fractional shares shall not be issued. In lieu thereof, the number
of shares to be issued upon such exchange shall be rounded up or down to the
nearest full share.
(d) All shares of HCCA stock to be issued as set forth above shall be
fully paid and non-assessable and shall be issued in full satisfaction of all
rights pertaining to the shares of stock exchanged therefore.
<PAGE>
(e) HCCA's stock closing price, as of this date, is $1.00 per share.
5. RESOLUTIONS BY BOARD OF DIRECTORS OF HCCA. Prior to closing, the Board of
Directors of HCCA will enter a resolution approving the exchange between HCCA
and Shareholders' Corporation.
a) HCCA shall have received an opinion from counsel to the Stockholders or
Stockholders' Corporation, to the following effect:
(1) That Stockholders Corporation is a "C" corporation duly organized,
validly existing, and in good standing under the laws of the State of Tennessee
and has the corporate power to own properties and carry on its business as it is
now being conducted;
(2) That the outstanding shares of stock have been duly and validly
issued and are fully paid and non-assessable;
(3) That this Agreement has been duly executed and delivered by the
stockholders and is legally and validly binding upon them in accordance with its
terms;
(4) That the execution and delivery of this agreement, the consummation
of the transactions herein contemplated and in compliance with the terms and
provisions of this Agreement on the part of the Stockholders will not breach any
statute or any regulation nor conflict with or result in a breach of the
Articles of Incorporation or By-Laws of Stockholders' Corporation or any of the
terms, conditions or provisions of any agreement or instrument known to said
counsel to which either of the Stockholders or Stockholders' Corporation is a
party or is bound;
(5) That there are no options, agreements or commitments of any kind,
relating to the commons stock of Stockholders' Corporation to which it is a
party other than as disclosed in the financial statements furnished to HCCA by
the Stockholders;
<PAGE>
(6) That, to the best of its knowledge, there is no litigation,
proceedings, claim or governmental investigation pending or threatened against
or relating to Stockholders, Stockholders' corporation or its properties or
business;
(7) That, upon transfer of the shares of Stockholders stock in
accordance with the terms of this Agreement, HCCA will have title to such stock
free of any liens encumbrances, claims or other limitations thereon, except for
restrictions imposed by federal or state security laws and regulations.
(b) The Stockholders shall deliver to HCCA a Certificate issued by the
appropriate governmental authority evidencing the good standing of Stockholders'
Corporation.
7. INDEMNITIES.
(a) The Stockholders shall deliver to HCCA at the Closing an indemnity
agreement (in the form of Exhibit "C" attached hereto) pursuant to which they
shall agree to indemnify and hold harmless HCCA and/or its successors and
assigns, of and from any and all loss, liability or damage, including reasonable
attorney's fees and expenses, arising out of or resulting from the assertion
against HCCA of any claims, debts or obligations, fixed, contingent or
otherwise, including federal, state and local tax obligations attributable to
periods prior to this date, except to the extent reserved against in their
aforementioned balance sheet. HCCA shall give the Stockholders prompt notice of
the assertion of any such claim, and HCCA shall afford the Stockholders an
opportunity to participate with counsel of their own choosing, at their own
expense, in the defense or other contest thereof. In connection therewith, HCCA
shall afford the Stockholders access to such books and records of HCCA as may be
reasonably required.
(b) HCCA shall deliver to the Stockholders at the Closing an indemnity
agreement (in the form of Exhibit "D" attached hereto) pursuant to which HCCA
will agree to indemnify and hold harmless the Stockholders, and their respective
heirs, administrators and assigns, of and from any
<PAGE>
heirs, administrators and assigns, of and from any and all loss, liability or
damage, including reasonable attorney's fees and expenses, arising out of the
breach of any of the representations and warranties of HCCA contained in this
Agreement.
8. ACCESS TO RECORDS. During the period between the date of this Agreement and
the Closing, HCCA and the Stockholders shall each afford representatives of the
other party free access to HCCA's and the Stockholders' offices, plants,
records, files, books of account and tax returns, under such circumstances as
will not unreasonably interfere with the normal operations of such companies.
9. TERMINATION AND ABANDONMENT. HCCA acknowledges that the Stockholders have the
absolute power and authority to annul their sale to HCCA if HCCA stock is not
trading on the NASDAQ Daily Quotation Sheets. In addition, the Stockholders may
annual the sale in eighteen (18) months if HCCA fails to complete its planned
secondary stock offering. This sale may be annulled by either party hereto, if
any action or proceeding before any court or governmental body or agency shall
have been instituted or threatened to restrain or prohibit the consummation of
this Agreement.
SPIN-OFF CLAUSE. If HCCA, is adjudicated a bankrupt, or voluntarily files
for bankruptcy, or makes any assignment for the benefit of the creditors,
Stockholders may terminate this agreement, effective as of the date of notice of
the termination.
10. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail postage prepaid,
addresses as follows:
If to the Stockholders, to
Nashville Music Consultants
1102 18th Ave S
Nashville TN 57212
<PAGE>
If to HCCA, to
Health Care Centers of America, Inc.
510 Renaissance Blvd.
Oakbrook Terr IL 60181
or to any other address which may hereafter be designated by either party by
notice given in like manner. All notices shall be deemed to have n given as of
the date of receipt.
11. FURTHER ASSURANCES. Each party hereto hereby agrees to take any further
action necessary or expeditious to carry out the provisions of this Agreement.
12. COUNTERPARTS. This agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all such
counterparts shall constitute one and the same instrument.
13. MERGER CLAUSE. This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated orally,
and no attempted change, termination or waiver of any of the provisions hereof
shall be binding unless in writing and signed by the parties hereto.
14. GOVERNING LAW. This Agreement shall be governed by and construed, according
to the election of HCCA, the laws of the State of Nevada, or of any State in
which either the closing occurs or the Stockholders' corporation transacts its
primary business.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first above written.
HCCA:
Health Care Centers of America, Inc.
By: /s/ Maurice Furlong
Maurice Furlong
Title: President
Stockholder(s):
/s/ Alcy Baggott, President
Alcy Baggott, President
Nashville Music Consultants, Inc.
REINCORPORATION AGREEMENT
AND
AMENDMENT TO STOCK EXCHANGE AGREEMENT
This Amendment made this 1st day of September, 1998, by and between Nashville
Music Consultants, Inc. (NMC) (also known as Nashville Music Group, Inc. (NMG)
and health Care Centers of America, Inc. (HCCA) in consideration of the mutual
promises and undertakings of the parties and for other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged.
WITNESSETH:
WHEREAS, NMC and HCCA entered into a Stock Exchange Agreement (Agreement) on
April 21, 1995; and
WHEREAS, NMC has since changed its corporate name to Nashville Music Group, Inc.
(NMG); and
WHEREAS, at the time of this Agreement, the only business activity of NMC was
that in the area of publishing songs for the country music market; and
WHEREAS, since the date of the Agreement, NMC/NMG has diversified its business
activities to areas in which it was not intended the HCCA would have any
interest; and
WHEREAS, the song publishing activity of NMC/NMG has become a separate division
with NMG; and
WHEREAS, since the date of the Agreement, Alcy Baggott has funded the overall
operations of NMC/NMG in the approximate amount of $400,000; and
WHEREAS, since the date of the Agreement, Maurice W. Furlong, on behalf of HCCA,
has funded the publishing division of NMC/NMG in the approximate amount of
$500,000; and
WHEREAS, the parties wish to amend the Agreement to conform to the Intent of the
parties; and
WHEREAS, NMG represents and warrants that its publishing division currently
owns, free and clear, approximately 400 songs, of which approximately 200 have
been recorded as demonstration tapes.
NOW, THEREFORE, in consideration of the promises of the parties and or other
good and valuable consideration, the sufficiency and receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. NMG has incorporated a subsidiary under the laws of the State of Tennessee as
a separate entity named "MUSIC ALLY, INC." (MAI). It is intended by the parties
that the transfer of MAI stock in exchange for HCCA stock under the Agreement
and this Amendment, shall qualify as a tax
free acquisition under Section 368(s)(1)(8) of the Internal Revenue Code.
2. NMG agrees to transfer the publishing division of NMG to MAI. NMG agrees to
transfer the stock of MAI to HCCA in order to meet its obligation as set out in
the Agreement.
3. All of the stock would thereafter be owned by HCCA making MAI a wholly owned
subsidiary of HCCA.
4. The president of MAI shall by Alcy Baggott. Maurice W. Furlong shall be a
member of the board of directors of MAI.
5. HCCA hereby relinquishes any right, title or interest it may have in any of
the operations of NMG as a result of the Agreement which are not directly
related to the publishing activities of NMG and MAI.
6. The effectiveness of this amendment shall be the date of July 1, 1997.
7. The remaining portions of the Agreement not affected by this amendment shall
continue in full force and effect.
Health Care Centers of America, Inc.
By: /s/ Maurice WE. Furlong
Maurice W. Furlong, president and CEO
Nashville Music Group, Inc.
By: /s/ Alcy Baggott, President & CEO
Alcy Baggott, President and CEO
STATE OF NEVADA
DEPARTMENT OF STATE
CERTIFICATE OF REINSTATEMENT
I, CHERYL A. LAU, the duly elected Secretary of State of the State of Nevada, do
hereby certify that SCN, LTD., a corporation formed under the laws of the State
of NEVADA having paid all filing fees, licenses, penalties and costs, in
accordance witht he provisions of Section 78.180.NRS, as amended, for the years
and in the amoiunts as follows:
1990-91 LIST OF OFFICERS AND PENALTY $100.00
1991-92 LIST OF OFFICERS AND PENALTY $100.00
1992-93 LIST OF OFFICERS AND PENALTY $100.00
1993-94 LIST OF OFFICERS AND PENALTY $100.00
REINSTATEMENT FEE $ 50.00
and otherwise complied with the provisions of said section, the said corporation
has been reinstated, and that by virtue of such reinstatement it is authorized
to transact its business in the same manner as if the aforesaid filing fees,
licenses, penalties and costs had been paid when due.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal
of State, at my office, in Carson City, Nevada, this 29TH day of JUNE, A.D.,
1993
/s/ Cheryl A. Lau
Secretary of State
[Great Seal
of the State
of Nevada]
JOINT VENTURE AGREEMENT
This Agreement made and entered into this 31st day of May, 1995, among
INMOBILIARA Y FRACCIONADORA DE LA NUEVA VIZCAYA, S.A. DE C.V., HERMOSILLO,
SONORA, MEXICO (INMOB), HEALTH CARE CENTERS OF AMERICA, INC., (HCCA) and ROBERT
R. KRILICH, SR. (RRK) or his nominee; both OAKBROOK TERRACE, ILLINOIS, USA
WITNESSETH
WHEREAS, INMOB Is the owner of certain property located in Hermosillo
Municipality, Mexico as described on Exhibit A hereto attached, as sometimes
referred to as GRAN KINO, and
WHEREAS, RRK has extensive mufti-facetted experience in development,
finance and operation of various real estate VENTURES, developments and projects
and, said knowledge and experience is unique and crucial to the success of the
Intent of the parties to this VENTURE; and;
WHEREAS, HCCA and INMOB (VENTURERS) desire to enter into a Joint VENTURE
(VENTURE) for the development of the property described on Exhibit A on the
terms hereinafter set forth and
WHEREAS, to ensure suceess of the VENTURE, the VENTURERS deem it in their
mutual best Interest to engage the service of RK as an independent consultant
with the power, authority and responsibilities herein after set forth.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants, promises, and
obligations, the sufficiency and receipt of which is hereby acknowledged it is
hereby agreed:
1. INMOB for its contribution to the VENTURE shall convey the property
described on Exhibit A, of which INMOB hereby represents itself to be the true
and lawful owner, said property shall be conveyed to the VENTURE free and clear
of all claims, easements and other restrictions. Evidence of title satisfactory
to HCCA shall be furnished by INMOB.
A. In consideration of such conveyance, INMOB shall be paid
(a) the sum of One Hundred Million United States Dollars
($100,000,000) USD which is to be paid as set forth in paragraph
six (6) hereof;
(b) at one-third (1/3) interest in the VENTURE hereby created; and
(c) INMOB shall be granted an option to purchase certain shares of
HCCA stock a hereinafter set forth.
2. HCCA shall provide to the VENTURE
(a) HCCA shaft use its best efforts to obtain and put in place and
to continue foras long as feasible the financing arrangements
hereinafter described HCCA shall receive an interest of 66-2/3%
<PAGE>
of the Joint VENTURE for such services, provided, however, that it
is understood by the parties that HCCA, without the consent of
INMOB, but keeping it properly informed, may transfer up to
33-113% of the total Interest In the VENTURE (up to 50% of Its
Interest) to such bank, financing institution or other entity that
shall assist the VENTURE in the attainment of the financing,
construction, and management of the project. Regardless of the
foregoing, any transfer by HCCA of its interest in accordance with
this paragraph shall be preceded by written notice to INMOB and
HCCA shall provide reasonable information to INMOB regarding said,
transfer, if any.
3. RRK shall provide the VENTURE his personal skills, knowledge, direction
and consultation regarding all phases of the project as contemplated between the
parties. To include, but in no way intended to be limited by, assistance in the
procurement of the financing, direction of the development of the project, all
daily operational decision making regarding the VENTURE, etc.. The parties
further acknowledge and agree that RRK's involvement in this VENTURE is crucial
and indispensable to the success of the business of the VENTURE and RRK shall
therefore have broad powers to develop manage and operate same. Said powers
shall be more clearly defined in the following paragraphs however, the parties
hereto agree that any power or authority not specifically withheld from RRK is
deemed to have been bestowed upon him.
<PAGE>
For and as compensation for his service, RRK shall be compensated in an
amount equal to that which Is generally paid to an Individual or entity which
undertakes a project of the complexity and magnitude of the one herein involved.
4. It Is the object of the VENTURE to generate funds for the initial
payment to INMOB hereinabove set forth and for the development of the real
estate, through an Investment program to be established and to be continued on
an' ongoing basis as long as is feasible at a bank or other financial
Institution selected by HCCA and through other available financing. To this end,
a letter of credit shall be obtained by HCCA within thirty (30) days of the date
of this Agreement, to be secured by a first lien on the property contributed by
INMOB, such letter of credit to be a minimum of Two Hundred Million USD
($200;000,000). It shall not be necessary for INMOB, RRK or HCCA to assume
personal liability for the letter of credit. The letter of credit shall be used
to obtain an advance of funds from a bank selected by RRK, which funds will be
used to establish a Trading Program (TP) at said bank. The documents
establishing the TP shall expressly state that the principal of the funds shall
never be placed at risk or, to the extent that such funds are placed at risk,
all risk will be borne by the bank operating said program, and that said bank
never call upon the issuer of the letter of credit for payment thereunder.
Investments to be made with the funds deposited in such account shall be for the
primary purpose of developing INMOB property and under the complete discretion
4
<PAGE>
of RRK and the VENTURERS hereby agree that no claim whatever shall be made
against RRK for any losses in connection with such trading account, except such
losses as shall be caused as the result of the fraud of RRK, it being the sense
hereof that RRK shall not be liable for negligence in the administration of such
account or in the selection of investments.
If the letter of credit is not obtained within thirty (30) days of the date
of signing this Agreement, the VENTURE shall be considered terminated unless
INMOB decides to extend said time period within which to secure the
aforementioned letter of credit. The parties further agree, that INMOB hereby
given its consent to an automatic extension of seven (7) banking days after the
expiration of the time period within which the letter of credit was t0 be
obtained.
5. It shall be a condition of INMOB's obligation to convey the real estate
herein described that a commitment for issuance of a bankable letter of credit
in the amount of at least Two Hundred Million Dollars USD ($200,000,000) be
obtained within thirty (30) days from the date hereof. If such commitment Is not
obtained, or the time for its obtaining not extended by agreement of both
parties, this VENTURE shall thereupon terminate without liability of each party
to the other.
6. The VENTURERS acknowledge that the requirements of the TP direct that
seventy percent (70%) of the proceeds from any element of the TP Investment must
be applied first to the project including, but not limited to, the payment of
the purchase price for the land and subsequent development of the project; and
5
<PAGE>
it must be verified that same has been applied to the project. The remaining
thirty (30) percent of each particular aspect or payout from the TP can be
distributed. The VENTURERS further acknowledge that only fifty (50%) percent of
the funds to be used for the TP are permitted by the bank directing the TP to be
used for purposes of collateral in the program. It is estimated that the
earnings to be generated from the first (1st) TP shall be approximately Fifteen
Million Dollars USD ($15,000,000) per week and that said program shall last for
approximately twenty two (22) weeks. The first (1st) earnings from the above
referenced (TP) shall be disbursed and paid as follows:
(a) An amount equal to seventy percent (70%) shall be at all times
used specifically for the development of this project.
(b) An amount equal to thirty percent (30%) of the net earnings
per week for said twenty-two (22) weeks up to a total amount of
One Hundred Million Dollars USD ($100,000,000) shall be paid to
INMOB.
(c) From the funds identified in (b) above, paid to INMOB, six
percent (6%) of same shall be distributed as follows: amount equal
to two percent (2%) to Royce Realty and Management Corporation,
two percent (2%) to Crown Development, Ltd. and two percent (2%)
to American Group and Companies, Inc. (hereinafter RCA Group). Up
to a total amount of Six Million Dollars USD ($6,0 00,000).
(d) After the above disbursements have been made and from the
thirty percent (30 %) of the net earnings per week, an amount to
total approximately Two Hundred Million Dollars USD ($200,000,000)
<PAGE>
or an amount as otherwise determined by RRK, which total amount
will be equal to the amount of the letter of credit, shall be
deposited into a separate account, segregated from all other
accounts, and shall be identified as the Reserve Fund. The purpose
of this fund Is for the payment of any liens placed on the
property as a result of the use of said property or to release RRK
from any personal liability that he has had to assume on behalf of
the VENTURE for purposes of the VENTURE, Including but not limited
to the pledge and/or mortgage of said land and the personal
guarantee of RRK for collateral purposes to obtain the
aforementioned letter of credit. (e) After the above funds have
been paid, the remaining funds generated as a result of TP shall
be distributed as follows:
i. At all times, not less than Seventy percent (70%) shall be
paid to the VENTURE for the express purpose of the development
of the project on the property contributed to the VENTURE by
INMOB.
ii. Thirty percent (30%) to the VENTURERS as follows:
Sixty-six and two-thirds percent (66-2/3%) of said thirty
percent (30%)to HCCA; of said amount HCCA shall transfer fifty
percent (50%), or a net of thirty three and a third percent .
(33-1/3%) of the total, to The R K Company, a common law
business organization, (R.K.C.) with the right of further
assignment; and thirty three and one third (33-13) percent to
INMOB.
<PAGE>
(e) The funds generated from the TP shall be deposited immediately
Into the appropriate bank account in accordance with the above
referenced percentages. Said deposits shall be made directly from
the bank managing the TP Into specific accounts. The seventy
percent (70%) of the funds to be used In the development of the
GRAN KING property shall be deposited Into an account opened In
the name of the VENTURE and shall be identified as the Development
Account. The power of signature on said account shall be vested In
RRK and monies in said account shall be used exclusively and
specifically for the development of GRAN KING. RRK expressly has
the authority and discretion to establish said bank account with
any banking institution he deems appropriate, including, but not
limited to, the locations, jurisdiction and banking laws governing
said account. Further, two (2) additional bank accounts shall be
opened and shall be used specifically for the receipt of the
remaining thirty percent (30%) of the accumulation of the net
profits from the Trading Program and shall be distributed in the
following manner:
i. Ten percent (10%) of said funds to an account in the name
of INMOB and:
<PAGE>
ii. Twenty percent (20%) of said fund to an account In the
name of HCCA or as further directed In writing;
7. INMOB shall make available and assign to the VENTURE promptly upon the
execution hereof current evidence of title to the property (which evidence of
title shall be in the form of an attorney's opinion or other not interested
third party In accordance with the customs and business procedures in Mexico), a
survey, serial photographs, governmental permits, including documents filed in
connection with application therefor, and all studies regarding the location,
description, composition, contours (topographic and oceanographic), uses,
feasibility, marketing, engineering, and development now in the possession of
INMOB.
INMOB in consideration of the aforesaid One Hundred Million Dollars USD
($100,000,000) and those items identified in paragraph 1(A) shall further convey
title to the VENTURE all title to all personal property located on land
Including but not limited to all mineral rights, water rights, equipment, al)
permits, applications to permits, leasehold or other agreements, evidence, third
party interest in the property yr any other information deemed by the VENTURE to
be necessary.
8. HCCA agrees, to induce INMOB to enter into this agreement, that lNMOB
shall have an option to purchase up to seven million five hundred thousand
(7,500,000) shares of HCCA stock at 60% of the asking price at closing of the
market at the time notice of exercise of the option is given. Said option shall
<PAGE>
continue for a period of two(2) years after conveyance of the real estate by
INMOB. The notice of exercise of the option shall be accompanied by a full
payment of the purchase price. The shares purchased hereunder shall be preferred
shares with the rights, obligations, privileges and restrictions, if any, as set
forth by HCCA.
9. HCCA and INMOB, hereby irrevocably give RRK discretion and the companion
authority in connection with the development of the Project, and other items
Incidental to the development of the Project, including all such uses thereof as
may be permitted by law or permitted after due application is made therefor, by
way of example and not by way of limitation, RRK shall have the power to:
arrange for Interim and long term financing for the construction of improvements
on the land and to pledge or mortgage the VENTURE'S assets as security
therefore; to establish accounts with banks or other financial institution
regardless of country of origin or location of same; contract for architects,
consultants, engineers and construction services; coordinate all accounting and
clerical functions of the VENTURE, and employ such accountants, lawyers,
brokers, land planners, landscape architects, and other management, service or
other personnel as may be in his judgment necessary; coordinate and supervise
the work of contractors; coordinate all management and operational functions;
and keep in force such Insurance coverage for public liability, fire and
casualty, and any and all other insurance required or necessary or appropriate
business of the VENTURE in such amounts and of such types as he shall determine;
10
<PAGE>
contract for services of any kind or nature, and incur expenses of any kind or
nature incident to the other powers and authority granted to RRK; perform any
and all acts he deems necessary, appropriate and desirable for the protection
and preservation of VENTURE property, Its assets or business, and as required to
advance the business of the VENTURE.
RRK may, from time to time, provide the VENTURERS with a status report on
the progress of the development of the property in accordance with the project
plans.
10. The VENTURERS' rights and obligation shall be governed by the Illinois
Uniform Partnership Act, provided, however, that In the event of a conflict
between the Act and the terms and provisions hereof, the terms and provisions
hereof shall govern. A VENTURER'S interest in the VENTURE shall be personal
property for all purposes. All real and other property owned by the VENTURE
shall be deemed owned by the VENTURE as an entity and no VENTURER, individually,
shall have any ownership of such property.
11. RRK shall at all times have the express authority and explicit power
and authorization to arrange for short term, interim and/or long term financing
for the purpose of the construction of improvements and development of the of
the project as, in his discretion and judgment is necessary for the project. RRK
then also have the express authority and explicit powers relating to all aspects
of the subject matter of this agreement to engage in such activity as he deems
appropriate.
a) The only purposes of the VENTURE are:
i. To acquire, own, develop, and operate the Gran Kino property as an
investment for the production of income and profit or for any other
business purpose;
<PAGE>
ii. to engage in the investment program herelnabove described including,
but not limited to providing any documentation, signature, ate. as
required by any bank or any other financial Institution Involved in the
TP's previously described.
iii. to assist HCCA in any lawful manner, In the furtherance of its
corporate activities, including but not limited to the research,
development, educational advancement or other items directly or
incidentally related to the operations of HCCA.
iv. to engage in such other activities as are reasonably incidental to
the foregoing with respect to the Property.
b) The VENTURERS are not end shall not be deemed to be Partners or
VENTURERS with each other for any other purposes or with respect to any other
activities or business or other property except as herein provided. Also, except
as specifically provided in this Agreement, including not limited by, those
specific and general power granted to RRK, neither VENTURER acting alone, shall
have any authority to bind or act for, or assume any obligations or
responsibility on behalf of, the other VENTURER or the VENTURE. This agreement
shall not be deemed to create a general partnership between the VENTURERS with
respect to any activities whatsoever other than activities within the scope and
business purposes of the VENTURE.
12
<PAGE>
c) The principal place of business of the VENTURE shall be located at such
place as HCCA shall from time to time determine.
d) Except as specifically provided herein, nothing in this Agreement shall
be deemed to restrict in any way the freedom of any VENTURER to conduct any
other business or activity whatsoever, without any accountability or liability
to the VENTURE or any other VENTURER, even Is such business or activity competes
with the business of the VENTURE or of any other VENTURER.
e) Forthwith upon the execution and delivery of the Agreement, the VENTURE
and the VENTURERS shall execute and file, record and/or obtain all licenses,
permits, certificates and authorizations required in connection with the
formation and lawful existence of the VENTURE as a joint VENTURE under the laws
of the states in which it does business, including, but not limited to, making
application for and obtaining an Assumed Name Certificate M the State of
Illinois.
f) The fiscal year ("Fiscal Year") of the VENTURE shall commence on the f
day of January and end on the last day of December of each year.
g) The VENTURE shall commence on the date hereof and continue until
December 31, 2050, unless sooner terminated In accordance with the terms and
provisions of this Agreement or by operation of law.
h) INMO has represented and hereby warrants that it has certain special
expertise and has developed certain important business relationships with
particular entities and individuals who are citizens of Mexico.
<PAGE>
i) INMOB further warrants that It either possesses or shall, without delay
possess all the necessary and required permits national, state, territorial,
local or other governmental authority regarding the subject matter of this
agreement. To the extent that any permits and or authorizations etc. have been
granted or are in place, the costs of same shall be that of INMOB. INMOB has
induced HCCA to enter into this agreement In part based on INMOB's ability to
confidently and successfully negotiate with those entities In the Country of
Mexico who shall grant the necessary permits, licenses or who will otherwise
provide for compliance with those laws of the country of Mexico required to
ensure the success of the project. In the event the representations and or
warranties of INMOB are not accurate and correct, then any claim for payment,
funds to be paid, damages, penalties, fines or liens shall be and hereby are the
possibility of INM08. The payment of same shall first come from any monies owing
INMOB pursuant to this agreement and if none, from INMOB directly.
j) INMOB further represents that it shall provide proof, acceptable to HCCA
and/or RRK that the project contemplative of the parties herin is permitted
under the law in the Country of Mexico and all State, local or other rules
regulations etc, of the Country of Mexico. All documents provided for in this
agreement shall be provided by INMOB in its original form in the Spanish
language accompanied by an exact English translation of said document.
<PAGE>
12. If the VENTURE shall require funds to carry on its business, which
funds are not otherwise available, the holders of the majority interest In the
VENTURE may agree that all members of the VENTURE shall deposit proportionately
their share of the total amount determined to be necessary. If any VENTURER
fells to deposit his shares of such contribution within the fixed therefor, the
other partner may a) advance said sums, which advance shall bear interest at a
rate equal to 5% in excess of the rate published as the prime rate of interest
In the Wall Street Journal, or b) declare such noncontributing party In default
and proceed to liquidate the VENTURE.
13. Distributions shall be subject to the approval of ell VENTURERS, No
distribution shall be made at any time when a VENTURER has made an advance
pursuant to Paragraph 11 hereof, unless said advance Is repaid prior to such
distribution.
14. Upon liquidation, after payment of debts and liabilities, the expenses
of liquidation and the establishment of any reasonable reserves, the assets of
the VENTURE shall be distributed In the following order of priority:
i) FIRST:To the party, If any, which has made excess advances pursuant
to Section 12 hereof In the amount of his unpaid advances plus advances
made for the defaulting party with Interest on both amounts at prime
plus 5% per annum of the entire amount,
ii) Second: The balance of the assets, if any, shall be distributed to
the parties, pro rate, in accordance with their then respective
ownership percentage interests.
<PAGE>
15. Except as otherwise provided herein, nether party may sail, assign or
otherwise dispose of, or mortgage, hypothecate or otherwise encumber or permit
to be encumbered, without the written consent of the other, its VENTURE
Percentage Interest, or any portion thereof. Any attempt so to transfer or
encumber such Interest, or portion thereof, shall be null and void.
Notwithstanding the foregoing, either party may transfer its interest to a
corporation controlling it or which it controls. Control shall mean direct stock
ownership of more then 60/0.
16. If at any time after December 31, 1995, either Party receives a bona
fide written offer (the Offer"), who is not a Party and who is not controlling,
controlled by or under common control with or otherwise affiliated with a Party,
such Party (the "Demanding Party's shall deliver a copy of such offer to the
other Party (the "Optionee Party"). If the Demanding Party desires to accept
such offer, he may also send a written demand that the Optlonee make the
election provided in this Section.
Upon delivery of such copy and such demand, the Optionee Party shall elect
either (i) to join in a sale of the Property to the Offeror for the price and on
the temps and conditions set forth therein, in which event both Parties shall
accept the Offer and consummate the transaction contemplated thereby, or (ii) to
purchase the interest of the other Party for the appro a portion of the price
and on the terms and conditions get forth in the Offer. If the Optionee Party
does not give notice of its election before expiration of thirty (30) days after
<PAGE>
such demand by the Demanding Party, the Optionee Party shall be deemed to have
elected to sell the property or its interest therein pursuant to clause (i) of
the preceding sentence. For purposes of this Section, an offer shall not be
deemed a bona fide written offer if such offer (x) provides for a date of
closing of such purchase which is earlier than ninety (90) days after, or later
than one hundred twenty (120) days after, the date of delivery of the aforesaid
copy and demand to. the Optionee Party; (y) provides for total earnest money of
less then 5% of the purchase price; (_) provides for interest less than the then
current requirement to avoid Imputed interest. If the Optionee Party, having
given notice of election to purchase the interest of the Demanding Party fails
to do so, the Demanding Party may have an action for damages against the
Optionee Party in the amount of 25% of what the Demanding Party would .receive
or have on option to purchase the interest of the Optionee Party at a sum
25(degree)!0 less than the Optionee Party's then Interest in the property, the
overall property being valued as set forth in the offer. If the Demanding Party
elects to purchase the Optionee Party's interest, he must glue notice within 30
days after this Optionee Party's default and complete the purchase for cash
within 80 days after giving such notice. It shell be a condition of any sale
that the terms thereof provide for complete release of the Party who does not
remain an owner by virtue of the transaction and that the purchaser agrees to be
bound by this agreement.
17. After December 31, 1997 either Party may cause termination of the
VENTURE by acquisition of the Interest of the other or disposal of his interest
in the Property pursuant to the provisions hereofl Either Party (hereafter
"Offeror") may make or cause to be made an offer to purchase to the other Party
<PAGE>
(hereafter "Offeree") setting forth the price at which he Is desirous of
purchasing the other Party's interest in the Property. Such notice shall also
specify the terms of such purchase. Within one hundred (100) days after date of
the Offer, the Offeree shall advise of Offeror as to whether the Offeree accepts
the Offer or whether the Offeree selects to acquire the interest of the Ofieror
in the Property on the same terms and conditions adjusted according to the
percentage to be bought or sold. Failure of the Offerers to respond within the
period above set forth shall conclusively be determined to be an acceptance of
the Offer. Closing on the safe of such interest shall be had within one hundred
and fifty (150) days after the date of the offer, or if Offeree does not act,
within sixty (60) days after the one hundred (100) day period Offeree had in
which to elect. Any Purchase Offer under this paragraph must be for cash, but
may be subject to any existing mortgage. In the event that a party becoming
bound pursuant to the provisions hereof to purchase the interest of the other,
fails as complete such purchase, the other may elect one of the following
consequences fA) the defaulting party shall thenceforth have a five (5%) less
ownership Interest to this Property and the other party shall succeed to such
five (5%) interest, or b) the non-defaulting party may purchase the interest of
the defaulting party may purchase the interest of the defaulting party at a
price 25% less than the price at which the hsae was to be made. Such election
shall be evidenced by notice in writing within 30 days and if the purchase
method is elected, the purchase shall be closed within sixty (60) days
thereafter. The selling partner has the right to require that the purchaser
shall cooperate in a tax free exchange.
t
AMENDED AND RESTATED EXCHANGE AGREEMENT
DATED JUNE 5, 1995 BY AND BETWEEN THE SENIOR GROUP,
A COMMON LAW CONTRACTUAL BUSINESS ORGANIZATION,
(COMPANY) AND HEALTH CARE CENTERS OF AMERICA, INC. (HCCA)
AGREEMENT made this 5th day of June, 1995, by and between The Senior Group, (a
common law contractual business organization) of 1000 Royce Boulevard, Oakbrook
Terrace, DuPage County, Illinois 60181, The Senior Group, Gibraltar, at
Francisco Masias 545, San Isidro, Lima, Peru, by its agent, North American Trust
Company, Ltd., (hereinafter called "the Company"), and Health Care Centers of
America, Inc., a Nevada corporation and Maurice Furlong, individually
(hereinafter collectively referred to as "HCCA"). In consideration of the mutual
promises and undertakings of the parties, and for other good and valuable
consideration, the receipt and sufficiently of which is hereby acknowledged, the
parties hereby state and agree as follows.
WITNESSETH:
WHEREAS, the Company is the holder of certain properties listed in the attached
Schedule "A", annexed hereto and made a part hereof; and
WHEREAS, the authorized capital stock of HCCA consists of 900,000,000 shares of
capital stock, par value $0.001 per share, of which approximately 162,000,000
shares are currently issued and outstanding; and,
WHEREAS, HCCA and the Company agree that it would be to their mutual benefit for
HCCA to acquire all of the certificates of the beneficial interest of the
Company in exchange for shares of HCCA stock; and,
WHEREAS, the Company and HCCA executed a certain Exchange Agreement; and,
WHEREAS, certain changes have been made from time to time to said agreement,
including, but not limited to, those amendments as reflected in an Amended
Exchange Agreement dated June 28, 1994; and a certain transfer of interest to
The Senior Group (Gibraltar) dated July 15, 1994; and,
WHEREAS, HCCA and the Company wish to restate the material terms agreements and
amendments thereto, as of this date.
FURTHERMORE, This agreement is subject to the terms of a certain Escrow
Agreement dated June 28, 1994 which is incorporated herein by reference and is
made a part hereof, a copy of which is attached as Schedule "E".
NOW, THEREFORE, in consideration of mutual promises and of the mutual covenants
and obligations contained herein, and for such other good and valuable
Initials EBW
1
<PAGE>
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE Company. The Trustees) of the Company,
jointly and severally, hereby represent and warrant to HCCA that:
(a) The Company is validly existing and is duly qualified to transact
business and has the power to engage in the business in which it is
presently engaged.
(b) The Trustees) or his agents agrees to continue the operation of the
Company using his best efforts to carry on the business under accepted
business practices and generally accepted accounting principals.
(c) The Company has good and marketable title to all of its property and
assets (except property and assets disposed of since such date in the usual
and ordinary course of business).
(d) The Company is not a party to any employment contract with any officer,
director, or certificate of beneficial interest holder, or to any lease,
agreement or other commitment not in the usual and ordinary course of
business, or to any operation, insurance, profit-sharing or bonus plan,
except as disclosed in Exhibit
(e) This Agreement has been duly executed by the Trustees) of the Company,
and the execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in, any agreement,
instrument, judgment, order or decree to which either of them is a party or
to which either of them is subject nor will such execution and performance
constitute a violation of or conflict with any fiduciary to which either of
them is subject.
(f) The Company has timely filed or timely filed necessary extensions with
the appropriate governmental authorities all tax and other returns required
to be filed by it, and such returns are true and complete aid all taxas
shown thereon to be due have been paid. All material federal, state, local,
county, franchise, sales, . use, excise and other taxes assessed or due
have been duly paid, and no reserves for unpaid taxes have been set up or
required on the basis of the facts and in accordance with generally
accepted accounting principles.
(g) No representation or warranty in this section, nor statement in any
document, certificate or schedule furnished or to be furnished pursuant to
this Agreement by the Trustees) of the Company, or in connection with the
transactions contemplated hereby, contains or contained any untrue
statement of a material fact, nor does or will omit to state a material
fact necessary to make any statement of fact contained herein or therein
not misleading. The Company has maintained, and will until the Closing,
<PAGE>
maintain, in full force and effect adequate policies of insurance with
coverage sufficient to meet the normal requirements of its business. Any
representation, duty, agreement, or warranty contained herein by or
relating to the Company shall be deemed to be a representation, duty,
agreement, or warranty of the Trustees) and the Trustees) shall cause the
Company to fully comply with the terms of this Exchange Agreement as it
applied to the Company.
2. REPRESENTATIONS AND WARRANTIES OF HCCA. HCCA represents and warrants to the
Company that:
(a) HCCA is a corporation duly organized and validly existing and in good
standing, under the laws of the State of Nevada; HCCA is qualified to
transact business in any ether state and has an authorized capitalization
of 900,000,000 shares of which there are issued and
outstanding___________________shares of capital stock, par value $0.001 per
share.
(b) HCCA has delivered to the Trustees) its financial statements for the
three years, prepared by W. Dale McGhie, Certified Public Accountant. These
financial statements accurately set forth the financial condition of HCCA
as of the dates specified, and the results of operations for the fiscal
years involved, prepared in conformity with generally accepted accounting
principles consistently applied.
(c) HCCA has good and marketable title to all of its property and assets
(except property and assets disposed of since such date in the usual and
ordinary course of business), subject to no mortgages, pledges, liens or
other encumbrances except as disclosed in such balance sheet or in Schedule
"B" annexed hereto and made a part hereof.
(d) As of June 28, 1994, HCCA has no obligations, liabilities or
commitments, contingent or otherwise, of a material nature which were not
provided for, except as set forth in such balance sheet or in Schedule "B".
(e) Since the date of the aforementioned balance sheet, there has been no
change in the nature of the business of HCCA nor in its financial condition
or property, other than changes in the usual and ordinary course of
business, none (line illegible) liabilities or made any commitments other
than in the usual and ordinary course of business except as disclosed in
Schedule "B".
(f) HCCA is not a party to any employment contract with any officer,
director, or stockholder, or to any lease, agreement or other commitment
not in the usual and ordinary course of business, nor to any pension,
insurance, profit-sharing or bonus plan, except as disclosed in Schedule
"B".
<PAGE>
(g) HCCA is neither a defendant, nor a plaintiff against whom a
counterclaim has been asserted in any litigation, pending or threatened,
nor has any material claim been made or asserted against HCCA nor are there
any proceedings threatened or pending before any federal, state or
municipal government, or any department, board, body or agency thereof,
involving HCCA except as disclosed in Schedule
(h) HCCA is not in default under any agreement to which it is a party nor
in the payment of any of its obligations.
(i) Between the date of the balance sheet referred to in subparagraph "b"
hereof and the Closing, HCCA will not have (i) paid or declared any
dividends on its capital stock, (ii) made or authorized any changes in its
Articles of Incorporation or in any amendment thereto or in its By-Laws, or
(iii) made any commitments or disbursements or incurred any obligations or
liabilities of a substantial nature and which are not in the usual and
ordinary course of business, or (iv) mortgaged or pledged or subjected to
any lien, charge or other encumbrance any of their assets, tangible or
intangible, except in the usual and ordinary course of its business; or (v)
sold, leased, or transferred or contracted to sell, lease or transfer any
assets, tangible or intangible, or entered into any other transactions,
except in the usual and ordinary course of business, and except as set
forth in Schedule "B" hereof.
(j) This Agreement has been duly executed by HCCA and the execution and
performance of this Agreement will not violate, or result in a breach of,
or constitute a default in, any agreement, instrument, judgment, order or
decree to which it is a party or to which it is subject nor wilt such
execution and performance constitute a violation of or conflict with any
fiduciary duty to which it is subject.
(k) HCCA will file with the appropriate governmental authorities, all
information, documents, or other material required by the Securities and
Exchange Act of 1934, as amended, and by the Security and Exchange
Commission and all relevant state agencies, and all tax and other returns
required to be filed by it, such returns are true and complete and all
taxes shown thereon to be due have (line illegible) and other taxes
assessed or due have been duly paid and no reserves for unpaid taxes have
been set up or are required on the basis of the facts and in accordance
with generally accepted accounting principles.
(l) HCCA is not in default with respect to any other writ, injunction, or
decree of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and there
are no actions. suits, claims, proceedings, or investigations pending or,
<PAGE>
to the knowledge of HCCA threatened against or affecting HCCA at law or in
equity, or before or by any state, municipal or other governmental court,
department, commission, board, bureau, agency or instrumentality, domestic
or foreign. Further, HCCA has complied and will continue to comply with all
provisions of the Securities and Exchange Act of 1934, as amended, and all
state securities laws, and with all regulations, rules, and promulgations
of the Securities and Exchange ' Commission and all relevant state
entities.
(m) The issued and outstanding shares of HCCA have been admitted to trading
in the over-the-counter market.
(n) HCCA warrants and certifies that it has done due diligence in regards
to this transaction and that it has requested and been given by the Company
full and complete disclosure and information including but not limited to
all information and disclosures concerning mortgages, pledges, liens, and
all other encumbrances against the assets listed in Schedule "A"; all
litigation pending or threatened against the Company in any federal, state,
or municipal court or government agency or any board or body thereof; all
other legal documents directly or indirectly effecting the assets in
Schedule "A"; and finally HCCA further warrants and certifies that it is
satisfied that the Company has truthfully complied with all requests for
due diligence information and has left no matter effecting the operation of
the Company undisclosed to HCCA or its agents.
(o) The HCCA shares to be transferred under this agreement will not be
restricted shares at the time of closing.
3. DATE AND TIME OF CLOSING. The closing has been held on June 28, 1994
immediately following the resolution by the Board of Directors of HCCA as set
forth in Paragraph 5 of this Agreement,in Ft. Lauderdale, Florida or at such
other time and place as may be mutually agreed upon between the parties in
writing (hereinafter "the Closing").
4. EXCHANGE OF CERTIFICATES OF BENEFICIAL INTEREST FOR STOCK.
(a) At the Closing, one hundred percent (100%) of the certificates of
beneficial interest being one hundred (100) units of the Company and fifty
percent (50%) of the stock of Rainbow Air Corporation, shall be exchanged
for six million, three hundred and seventy-four thousand, three hundred and
sixty-three (6,374,363) shares of HCCA stock (as hereinafter defined).
During the full term of this agreement and the aforementioned Escrow
Agreement, the Company shall have the right to sell, pledge, assign,
hypothecate, collateralize, gift, devise, or bequest said shards in whole
or in part, at the sole discretion of the Company and its duly appointed
Trustee(s). Further, HCCA agrees in consideration of the transfer of sari
`,
<PAGE>
Rainbow Air stock, that HCCh assumes fifty percent (50%) of the
responsibilities and liabilities for all operating expenses of Rainbow Air
Corporation, and hereby gives the Company the right of set off for said
expenses against all income due HCCA as a result of its stock ownership in
Rainbow Air Corporation. If HCCA does not have sufficient funds or assets
to pay for the full amount of set off, then said deficiencies can be set
off from any other agreements existing between HCCA and the Company or its
successors or assigns.
(c) Fractional shares shall not be issued. In lieu thereof, the number of
shares of HCCA stock to be issued upon such exchange shall be rounded up or
down to the nearest full share.
(d) All shares of HCCA stock to be issued as set forth above shall be fully
paid and non-assessable and shall be issued in full satisfaction of all
rights pertaining to the assets exchanged therefore.
(e) HCCA's stock closing price, as of June 27, 1994, was $2.50 per share.
Regardless of anything to the contrary, during the term of this agreement,
including the Escrow Agreement in Exhibit "E", the total value of fifty
percent (50%) of the shares of the HCCA stock herein involved shall equal
the total agreed upon value of the items listed on Schedule "A". If at any
time, said value of stock falls below the above, HCCA shall transfer
additional shares of HCCA stock to make up the difference in value. If HCCA
fails to transfer same within five.(5) days, said failure will be construed
as a default and at the option of the Company, this agreement shall be
immediately terminated. During the five (5) day period, the highest price
per share will be used to calculate any shortfall.
(f) Parties further agree that HCCA shall provide for special offerings of
HCCA stock, when requested to do so by the Company, in an amount requested
by the Company, including but not limited to, an amount necessary to
complete the construction and operation of the following properties:
(1) Royce banquet hall and office building, Oakbrook Terrace,
Illinois; (2) any other properties subject to the terms of this
agreement, that may,' in the sole discretion of the Trustee(s), need
expansion or improvements
(g) If the special stock offerings required in this agreement are not
provided by HCCA same is construed as a default and the Company may
immediately terminate this agreement. In the alternative, HCCA shall
transfer to the Company sufficient unrestricted shares of HCCA stock for
use by the Company as collateral to secure the relevant financing. The
Company shall be reimbursed by HCCA for all interest paid, loan charges,
etc. related to said borrowing.
5. RESOLUTIONS BY BOARD OF DIRECTORS HCCA. The Board of Directors of HCCA has
heretofore entered a resolution approving the exchange between HCCA and the
<PAGE>
Company including the provisions of this Amended and Restated Exchange
Agreement, and shall supply the Trustees) of the Company with a certified copy
of the resolution ratifying this agreement. Said copy will be supplied within
ten (10) days of the signing of this agreement.
(a) HCCA shall have received an opinion from counsel to the Company, to the
following effect:
(1) That the Company is a validly existing entity, and has the power
to own properties and carry on its business as it is now being
conducted;
(2) That this Agreement has been duly executed and delivered by the
Trustee(s), on behalf of the Company, and is legally and validly
binding upon them in accordance with its terms;
(3) That the execution and delivery of this agreement, the
consummation of the transactions herein contemplated and in
compliance with the terms and provisions of this Agreement on the
part of the Trustees) will not breach any statute or any regulation
nor conflict with or result in a breach of the contract creating the
Company or any of the terms, conditions or provisions of any
agreement or instrument known to said counsel to which either of the
Trustees) or the Company is a party or is bound;
(5) That there are no options, agreements or commitments of any
kind, relating to the assets of the Company to which it is a party
other than as disclosed in the financial statements or projections
furnished to HCCA 6y the Company;
(6) That, upon transfer of the certificates of beneficial interest
of the Company, in accordance with the terms of this Agreement, HCCA
will have title to such certificates free of any liens,
encumbrances, claims or other limitations thereon, except for
restrictions imposed by federal or state security laws and
regulations.
6. INDEMNITIES.
(in the form of Schedule "C" attached hereto) pursuant to which they shall
agree to indemnify and hold harmless HCCA and/or its successors and
assigns, of and from any and all loss, liability or damage, including
reasonable attorney's fees and expenses, arising out of or resulting from
the assertion against HCCA of any claims, debts or obligations, fixed,
contingent or otherwise, including federal, state and local tax obligations
attributable to periods prior to this date, except to the extent reserved
against in the aforementioned balance sheet. HCCA shall give the Company
prompt notice of the assertion of any such claim, and HCCA shall afford
<PAGE>
the Company an opportunity to participate with counsel of their own
choosing, at their own expense, in the defense or other contest thereof. In
connection therewith, HCCA shall afford the Company and its Trustees)
access to such books and records of HCCA as may be reasonably required.
(b) HCCA has delivered to the Trustees) at the Closing an indemnify
agreement (in the form of Schedule "D" attached hereto) pursuant to which
HCCA will agree to indemnify and hold harmless the Company and its
Trustee(s), and their respective heirs, administrators and assigns, of and
from any and all loss, liability or damage, including reasonable attorney's
fees and expenses, arising out of the breach of any of the representations
and warranties of HCCA contained in this Agreement.
7. ACCESS TO RECORDS. During the period between the date of this Agreement and
the Closing and from time to time during the existence of this Agreement, HCCA
and the Trustees) shall each afford representatives of the other party free
access to HCCA's and the Company's offices, plants, records, files, books of
account and tax returns, under such circumstances as will not unreasonably
interfere with the normal operations of such companies.
9. SPIN-OFF CLAUSE. If HCCA, is adjudicated a bankrupt, or voluntarily files for
bankruptcy, or is! subject to an involuntary filing for bankruptcy, or makes any
assignment for the benefit of the creditors, the Company and/or its Trustees)
may terminate this agreement, effective as of the date of notice of the
termination.
10. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail postage prepaid,
addressed as follows:
If to the Company, to
The Senior Group
1000 Royce Boulevard
Oakbrook Terrace, Illinois 60181
If to HCCA, to
Health Care Centers of America, Inc.
<PAGE>
510 Renaissance Boulevard
Oakbrook Terrace IL 60181
or to any other address which may hereafter be designated by either party by
notice given in like mapner. All notices shall be deemed to have. been given as
of the date of receipt.
11. FURTHER ASSURANCES. Each party hereto hereby agrees to take any further
action necessary or expeditious to carry out the provisions of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all such
counterparts shall constitute one and the same instrument.
13. MERGER CLAUSE. This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated orally,
and no attempted change, termination or waiver of any of the provisions hereof
shall be binding unless in writing and signed by the parties hereto.
This Amended and Restated Exchange Agreement is intended to incorporate all the
parties prior agreements, whether oral or written, as amended, with respect to
the subject matter hereof and supersedes all of the parties prior agreements
which agreements are hereby deemed to be merged into this agreement as of this
date.
14. GOVERNING LAW. This Agreement shall be governed by and construed, according
to the election of HCCA, the laws of the State of Nevada, or of any State in
which either the closing occurs or the Company transacts it primary business.
15. NO RECORDING OF AGREEMENT. The parties agree that this Agreement, nor any
memorandum, shall be recorded or filed or otherwise made available unless
legally required to do so or unless the parties have otherwise agreed in
writing.
16. OPTION CLAUSE - PROPERTY ACQUISITION. The parties hereby acknowledge that
HCCA exercises its option to obtain all property listed on Schedule "A" - Option
Property. The parties acknowledge that the shares of HCCA stock assigned to each
(line illegible) owing to the Company this date. The parties intention is that
HCCA shall transfer said shares in accordance with Schedule "E" Escrow
Agreement. However, HCCA shall have until June 30, 1996 to complete the transfer
of said shares as referred to in this paragraph.
The parties acknowledge that HCCA has defaulted regarding the acquisition of a
certain parcel of land containing approximately seventeen (17) acres on
Dickerson Road, Bellevue, Tennessee, commonly known as "former Sam's Club Sight"
and by agreement,
<PAGE>
shall transfer to the Company, the amount of Twelve Million, Nine Hundred
Thousand (12,900,000) shares of HCCA stock, in complete fulfillment of its
obligation regarding same.
17. STOCK OPTION. HCCA agrees to reserve Fifty Million (50,000,000) Shares of
HCCA stock to be used for incentive stock options to be exercised within ten
(10) years of the date of this Agreement by the following optionees' in the
amount of twenty five million (25,000,000) per optionee.
1. The Senior Group, its successors and/or assigns at the following exercise of
option price:
For the first 12,500,000 shares reserved for the benefit of this optionee,
$1.00 per share. For the next 12,500,000, the price per share shall be equal to
the last trading price at the close of business for the day immediately
preceding the day on which the option is exercised. In no event shall the price
per share be less than , which represents a price per share equal to 110% of the
trading price as of the date of the grant of this option.
2. Maurice Furlong, his successors and/or assigns at the following exercise of
option price:
For the first 12,500,000, shares reserved for the benefit of this optionee,
$1.00 per share. For the next 12,500,000 the price per share be equal to the
last trading price at the close of business for the date immediately preceding
the day on which option is exercised. In no event shall price per share be less
than , which represents a price per share equal to 110% of the trading price as
of the date of the grant of this option.
18. CONFIRMATION OF VALUATION, PAYMENT AND RECEIPT OF ASSETS. HCCA and the
Company hereby confirm that, except for any contrary provision provided herein,
all shares of stock have been transferred in accordance with the agreement and
understanding between the parties. The parties further acknowledge 'Lhaf all
values assigned to the various properties are values as agreed upon between the
parties.
1N WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first above written.
HCCA:
Health Care Centers of America, Inc. Maurice Furlong, Individually
By:/s/Maurice Furlong
Title:President /s/ maurice Furlong
<PAGE>
The Senior Group:
By /s/Edward Bartoli
Edward Bartoli
Title: Trustee/Director "and Agent, North American Trust Co., Ltd."
Initials EBW Page 11
<PAGE>
The Senior Group
Schedule "A"
Royce Renaissance office space - 3rd floor, East portion (representing
285,250 shares)
Lease for current office space at 1000 Royce Blvd., Oakbrook Terrace, IL .
(representing 7500 shares) .
Amount due for the boat charter over the next few months, in addition to
the cash requirement, all on account (representing 200,000 shares)
50% interest in the "R Rendezvous" Yacht
Townhouse Unit
OPTION PROPERTY
Property Shares
Foxland, TN
Marina 5,600,000
Condominium building site 4,000,000
Commercial and Hotel site 3,100,000
Apartment site and Clubhouse 9,300,000
Foxland Hall Mansion 1,000,000
Golf Course and Restaurant 3,500,000 plus Two Million, Three
Hundred thousand dollars
(2,300,000) cash
Bellevue, TN
Fifty percent (50(degree)I(degree))
interest in the commercial
property on Highway 70 3,000,000
29 acres of vacant land far single
family homes 1,500,000
Attached commercial site 500,000
Dickerson Road. TN
(line illegible) 25,300,000
Initials EBW page 12
<PAGE>
HCCA logo
July 2, 1994
Messrs. Edward Bartoli and Mr. Michael Vallone
clo Heritage Assurance Group
11022 Southwest Highway
Palos Hills, IL 60465
RE; RAINBOW GROUP, THE SENIOR GROUP EXCHANGE AGREEMENTS, THE RAINBOW GROUP and
THE SENIOR GROUP and HEALTH CARE CENTERS OF AMERICA, INC.
Dear Messrs Bartoli and Vallone:
This is to confirm the understanding between, The Rainbow Group and The Senior
Group and HCCA that the terms of the Escrow Agreements, attached as Schedule E,
to the Exchange Agreements are hereby cancelled as of this date, except that, no
distribution shall be made to HCCA until it has successfully filed its Form 10
Registration Statement with the U.S. Securities and Exchange Commission.
Sincerely,
/s/Maurice W. Furlong
---------------------
Maurice W. Furlong
President
ACKNOWLEDGED AND AGREED TO;
/s/Edward Bartoli
Edward Bartoli
/s/Michael Vallone
Michael Vallone
cc: Michael Vallone
MWF;sce/7l2/49
HEALTH CARE CENTERS OF AMERICA, INC.
1000 Royce Blvd. o 3rd Floor o Oakbrook Terrace. IL 60181
Office: (708) 261-9450 - Fax: (615) 859-2389
<PAGE>
HCCA Logo
Senior Group
Rainbow Group
c/o 1000 Royce Blvd.
Oakbrook Terrace, IL 60181
June 30, 1994
IT IS HEREBY AGREED that all transfer and exchange of Assets and Shares
of HCCA stock have been accomplished in accordance with the respective Exchange
Agreements.
FURTHER, HCCA shall have no rights to any income as a result of the
fulfillment of the Exchange Agreements until such time that HCCA has
successfully filed its Form 10 Registration Statement with the U.S.
Securities and Exchange Commission.
AT THAT TIME, HCCA shall receive all income and benefits from said
property, less any management fee to Royce Realty and Management Corporation
(Royce) in accordance with the Management Agreement between HCCA and Royce.
/s/Maurice Furlong
Maurice Furlong
President, HCCA
/s/Michael Vallone
Michael Vallone, Trustee/Director
/s/Michael Vallone
Michael Vallone Trustee/Director
Rainbow Group
HEALTH CARE CENTERS OF AMERICA, INC.
1000 Royce Blvd. 3rd Floor Oakbrook Terrace, IL 60181
Office: (708) 261-9450 o Fax: (615) 859-2389
EXHIBIT F
THE R&S GROUP
AGREEMENT
<PAGE>
I
Common Law Business Organization
THIS COMMON LAW CONTRACT IN THE FORMAT OF AN IRREVOCABLE DECLARATION OF
TRUST AUTHORIZES ITS
DIRECTORS TO OPERATE UNDER THE NAME OF
The R&S Group
(referred to as the company)
Dated November 5, 1995
THIS AGREEMENT, CONVEYANCE, and ACCEPTANCE is made
and entered into at the time and on the date appearing in the
acknowledgment hereto attached, by and between
Edward Bartoli
who drafted the Common Law Business Organization DOCUMENTS as
THE CREATOR HEREOF and THE OFFEROR HEREIN
and
Rainbow Group and Senior Group
as the INVESTORS AND OFFEREE HEREIN
and
Maurice Furlong, President of Health Care Centers of America, Inc.
ACCEPTOR hereof who shall compose the
Board of Directors and Executive Officers for conducting
said business.
<PAGE>
The Creator hereby constitutes and appoints the above designated
Director, to be, in fact, Director of the Company hereby created and
established. The Investors for and in consideration of the objects and purposes
herein set forth, the cash sum of Ten Dollars in hand paid and other
considerations of value, the receipt of which is hereby acknowledged, does
hereby agree to sell, assign, convey, and deliver unto said Director, who are to
hold legal title in fee simple and in joint tenancy and not as tenants in
common, to collectively act by virtue of this covenant as a Board of Directors
under the name herein designated - certain properties, business projects,
operations underway or contemplated, dealing in equities, formulae, entities,
patents, copyrights, business good-will, or other business desired to be engaged
in by said Directors.
The Company name and other things of value constitute a Contract,
including tights in reversion or remainder wherever situate, and other things of
value, and having its principal place of business at:
1000 Royce Boulevard
Oakbrook Terrace, DuPage County, Illinois 60181
The above named Director, for himself/herself and his/her successors,
do hereby agree to accept properties real and personal to be conveyed and
acknowledge acceptance of and delivery of all of the property speafied, together
with all the terms of the contract herein set forth agree to conserve and
improve the Company, to invest and reinvest the funds of said Company in such
manner as to increase the financial rating of the Company during the period of
outstanding liabilities of the various properties and enterprises in commerce
for gain, exercise their best judgment and discretion, in accordance with The
Company AIGnutes, making distributions of portions of the proceeds and income as
in their discretion, and according to the minutes, should be made, make complete
periodic reports of business transactions and upon final liquidation, distribute
the assets to the Beneficiaries as their interests may appear and in all other
respects administer said Company in good faith, strictly in conformity hereto.
Directors shall not be less than one in number, but may be increased for
practical reasons beneficial to the Company. The Director herein mentioned by
name, or his/her successors elected to fill vacancies, shall hold office, have
and exercise collectively the exclusive management and control of the Company
property and business affairs;
PROVIDED, HOWEVER, that a Director may resign or be removed from office by a
Resolution of unanimous concurrence of the remaining Directors when, in their
opinion, said Director shall have been
<PAGE>
guilty of fraud, malfeasance in office, gross neglect of duty, or for cause by
the mandate of a court of competent jurisdiction and
PROVIDED FURTHER, that in the event of death, removal from office, or
resignation, the Directors shall appoint or elect a successor by the unanimous
concurrence of the remaining Directors. Should the entire Board of Directors
become vacant, persons named in the minutes of The R&S Group as successor
Directors) are hereby appointed to that position, otherwise a Court of Equity
may appoint one Director, who, in turn, shall appoint the additional Directors.
Should objection be filed to appointment of additional Directors, the same shall
be spread upon the Minutes. Any such objection shall deprive the candidate from
accepting the Directorship.
The signing and acknowledging of this Agreement by the hereinabove appointed
Director, or the signing and acknowledging of appropriate Minutes by Directors
subsequently elected or appointed, shall constitute their acceptance of The RCS
Group and the Company properly, assets, and emoluments thereof shall immediately
vest in the new Director or Directors without any further act or conveyance.
DIRECTORS' MEETINGS: By a regular act, Directors may provide for meetings at
stated intervals without l~ notice, and special meetings may be called at any
time by two or more Directors upon three days' written ' notice, which may be
waived. At any regular or special meeting, a MAJORITY of the Directors shall
constitute a quorum for conducting business, PROVIDED, affirmative action may be
taken only upon a MAJORITY vote of all Directors, whether present or absent
except that at special meetings called for a special purpose the MAJORITY
present may affirmatively act in emergency matters.
POWERS OF DIRECTORS: Directors may do anything any individual may legally do in
any state or country, subject to the restrictions herein noted. They shall
continue in business, conserve the property, commercialize the resources, extend
any established line of business in industry or investment, as herein especially
noted, at their discretion, for the benefit of The R&S Group, such as viz: buy,
sell, or lease real estate for the surface or mineral rights, buy or sell
mortgages, securities, bonds, notes, leases of all kinds, contracts or credits
of any form, patents, trademarks, or copyrights, buy, sell or conduct mail-order
business, or branches thereof, operate stores, shops, factories, warehouses, or
other trading establishments or places of business of any kind, construct, buy,
sell, lease, or rent suitable buildings or other places of business, advertise
different articles or business projects, borrow money for any business project,
pledging the Company property for the payment thereof, hypothecate assets,
<PAGE>
property, or both, of the Company in business projects, own stock in, or entire
charters of corporations, or other such properties, companies, or associations
as they may deem advantageous.
A Minute of Resolutions of the Board of Directors authorizing what they
determine to do or have done shall be evidence that such an act is within their
power. Anyone lending or paying money to the Directors shall not be obliged to
see the application thereof. All funds paid into the treasury are and become a
part of the ASSETS of The R&S Group.
ADMINISTRATION: The Directors shall regard this instrument as their sufficient
guide, supplemented from time to time by their resolutions (said resolution to
be ratified ALWAYS by a MAJORITY of the Directors then in office and
participating in the issuing meeting) covering contingencies as they arise and
are recorded in the Minutes of their meetings, which are the By-laws, rules, and
regulations of The R&S Group.
OFFICERS AND MANAGEMENT: The Directors may in their discretion elect among their
number an Executive Director, Secretary Director, and Treasurer Director, or any
other officers they may deem expedient for proper functioning. Directors may
hold two or more offices simultaneously, their duties being such as are usual or
are prescribed. They may employ agents, executives, or other employees, or
designate third persons to hold funds for specific purposes.
EXPENDITURES: The Directors shall fix and pay compensation of all officers,
employees, or agents in their discretion, and may pay themselves such reasonable
compensation for their services as may be determined by a MAJORITY of the Board
of Directors.
CONSTRUCTION: The Directors, officers, agents, or employees possess only such
authority as awarded them herein. Authority is understood and meant to be
similar to that awarded an Executor of an estate wherein the testator directs
(illustration): "That my Executor is directed to handle the estate in the manner
he thinks to be to the best interest, limited by the terms hereof, without the
necessity of resort to the court for permission or approval of any transaction,
intending herein to leave open for the court the question of conscientious
dealing of my Executor only."
DIRECTORS' DECLARATION OF PURPOSE: Directors shall be to accept rights, title,
and interest in and to real and personal properties, whether tangible or
intangible, of the Investors HERETO, to be the assets of The R&S Group. Included
therein is the exclusive use of his lifetime services and ALL of his EARNED
REMUNERATION ACCRUING THEREFROM, from any current source whatsoever, so that
Robert R. Krilich, Sr. can maximize his lifetime efforts through the utilization
<PAGE>
of his Constitutional Rights TO EXECUTE A PRIVATE CONTRACT for the protection of
his family and the preservation and growth of his assets for future generations.
THE DIRECTORS by their resolution of purpose may perform and function for any
purpose on behalf of any individual, group, or combination of individuals,
severally or collectively.
In such instances the powers and authority of the Directors shall be defined and
limited to the general purposes set forth by the Contract and the Directors'
Declaration of Purpose.
The Company shall have authority to provide itself with operating funds through
commercial loans, directly secured by assets or income of The R&S Group,
provided such authority is possessed, in writing, from the Board of Directors of
The R&S Group.
Notice is hereby given to all persons, companies or corporations extending
credit to, contracting with, or having claims against The R&S Group, that they
must look only to the funds and property of the Company for payment or for
settlement of any debt, tort, damage, judgment or decree, or for any
indebtedness which may become payable hereunder, that the Directors are NOT
personally liable when dealing with the Company properties or matters.
LIABILITIES: The Directors shall, in the capacity of Directors and not
individually, assume or incur only such liability as may attach to said Company
property assets. This Director liability shall not in any manner jeopardize
their individual or personal holdings and for any losses they should suffer for
any reason through services, they shall be reimbursed from Company PROPERTY to
the same extent as would non-interested persons.
DOCUMENTS: It is expressly declared that a Common Law Business Organization, and
not a partnership, is hereby created and that neither the Directors, officers,
or certificate holders, present or future, have or possess any beneficial
interest in the property or assets of said Company, nor shall they be personally
liable hereunder. as partners or otherwise that no Director shall be liable for
the act or omission of a CoDirector, or any other person, whatsoever, whether
employed by such Director or not, or for anything other than his own, personal
breach of Contrail. It is further expressly intended that the Directors and
Certificate of Beneficial Interest holders are not associated together in the
pursuit of the business purposes hereof in any way. The Directors alone have the
duty to carry out the business purposes of this contract. The Certificate
holders have only a right to receive distributions, in the nature of a royalty,
and not a dividend, when and if the Directors in their sole discretion make such
distributions.
<PAGE>
CERTIFICATES OF BENEFICIAL INTEREST: The Beneficial Interests, as a convenience,
for distribution are divided into One Hundred (100) Units, substantially in the
certificate form hereto attached. They are non-assessable, non-taxable (under
the provisions of Section 1001 of Internal Revenue Code), nonnegotiable,
non-transferable (excel back to the Company) and the lawful possessor thereof
shall be construed the true and lawful owner thereof. The lawful owner may, if
he so desires, cause his Beneficial Certificate to be registered with the
Secretary of the Directors. The Certificates of Beneficial Interest are to
expressly state that the holder of the Certificate expressly agrees that the
holder does not have any right, title, or legal interest in the assets of the
Company, in law or in equity, nor voice in the management or control of the
Company and that moreover, upon the death, insolvency, or dissolution of the
holder hereof, the Certificates (and all rights thereunder) shall be absolutely
NULL AND VOID. However, all or part of the Units represented by the Certificate
may be transferred before death, insolvency, or dissolution of the holder, but
only upon the prior approval of the Directors, and in accordance with the
provisions of this Contract Creating This Entity.
SPENDTHRIFT: The Directors are not to recognize any transfer, encumbering,
mortgage, pledge, hypothecation, order, or assignment of any Beneficiary by way
of anticipation of any part of the income or principal hereof, and the income
and principal of the Company shall not be subject in any manner to transfer by
operation of law, unless otherwise herein provided, and shall be exempt from the
claims of creditors and other claimants and from orders, decrees, levies,
attachments, garnishments and executions, and other legal or equitable process
of proceedings to the fullest extent permissible by law. Each Beneficiary is
expressly prohibited from any of the above:
DEATH - INSOLVENCY - BANKRUPTCY: The death, insolvency, or bankruptcy of any
certificate holder, or the transfer of his certificate by gift, devise, or
descent, shall not operate as a dissolution of The R&S Group, or in any manner
affect the Company or its operation or mode of business. Ownership of a
Beneficial Certificate shall not entitle the holder to any legal title in or to
the Company property, nor any undivided interest therein, nor in the management
thereof nor shall the death of a holder entitle his heirs or legal
representatives to demand any partition or division of the property of the
Company, nor any special accounting but said successor may succeed to the same
distributional interest upon the surrender of the certificate as held by the
deceased for the purpose of reissue to the then lawful holder or owner.
DURATION -CLOSURE: This Company shall continue for a period of twenty-five years
from date, unless the Directors shall unanimously determine upon an earlier
date. The Directors may at their discretion, because of threatened depreciation
in values, or other good and sufficient reason necessary to protect or conserve
Company assets, liquidate the assets, distribute, and close the Company at any
<PAGE>
earlier date determined by them. The assets of the Company shall be
proportionately and in a pro rata manner distributed to the Beneficiaries. In
the event this instrument has been recorded with the Registrar of Deeds, they
shall then file with said Recorder a notice that the Company shall terminate and
cease and thereupon, the Directors shall automatically be discharged hereunder,
PROVIDED, their administration and distribution has been made in accordance with
the terms and provisions of the Contract Creating This Entity. Otherwise, a
court of equity may be invoked to review and correct any tort or error.
RENEWAL: At the expiration of this Agreement the then Directors, if they so
desire and believe that said Company should not be closed, may renew this
Agreement for a like or shorter period. A Resolution of said renewal shall be
entered upon the Minutes and also recorded in the Recorder's Office (in the
event this Agreement has been recorded) at least 120 days prior to the
expiration hereof. Public notice shall be made in a county newspaper of general
circulation not less than 60 days prior to the expiration hereof.
RESTRICTIONS: Nothing herein contained shall be construed to authorize the
Company to issue Certificates of Beneficial Interest in excess of the number
herein provided, nor for a nominal value at variance with the provisions hereof.
PURPORT: The purport of this contract is to convey property to Directors, to
constitute the assets of the company, held by the Directors, in joint tenancy
for the duration hereof, and to provide for a prudent and economical
administration to BEGIN AT ONCE and not to be deferred until after the death of
any creator, settler, or maker, as occurs when such Trust Estates are created by
Last Will and Testament. The creators, and/or makers of this covenant prefer
that the Directors act solely within their constitutional rights as based upon
their common law contract rights and immunities vouchsafed to citizens of the
United States of America and defined in Article N, Section 2, PROVIDING, that
"Citizens of each state shall be entitled to all privileges and immunities of
citizens in the several states," and Article VI, Section 2, PROVIDING that "The
Constitution of the United States and the laws made in pursuance thereof shall
be the supreme law of the land" and the 14th Amendment thereof, PROVIDING, that
"No state shall make or enforce any taw which shall abridge the privileges or
immunities of citizens of the United States." This contract is intended to
create a Common Law Business Organization with the following business purposes,
including but not limited to, the protection of property and assets, insulation
of personal or business liability, simplified distribution of property and
assets, to increase profit structure, to become more competitive in the market
place, to obtain more privacy in buying and selling properties or businesses,
and to raise capital resources.
Nothing herein contained shall be construed as an intent to evade or contravene
any Federal or State Law, nor to delegate to Directors any special power
belonging exclusively to franchise of incorporation.
<PAGE>
The intent of the Investors in The R&S Group is to transfer to it certain real
and personal properties and in so doing he conveys all right, title and interest
therein.
By creating this legal entity, the parties to this agreement have exercised
their Constitutional Rights to create and execute a private contrail to agree in
a meeting of the minds and for an adequate consideration to create a Common Law
Business Organization for the business purposes set out herein.
IN WITNESS WHEREOF the Creator hereof and Investors hereto and the Acceptors
hereof, for themselves, their heirs, successors, and assigns, have hereunto set
their hands and seals in take of the conveyance, delivery, and acceptance of
property, assets, or other things of value, and the obligations and duties as
herein assumed as Directors of said Company and assent to all stipulations
herein as imposed and expressed.
/s/ Edward Bartoli
- ------------------(SEAL)
Edward Bartoli, Creator
/s/Robert Krilich -----------------(SEAL)
Robert R. Krilich, Sr., Director of the Abuello Company, which is the Director
of The Rainbow Group and The Senior Group, Investors
<PAGE>
Director of The R&S Group
Dated November 5, 1995
/s/Maurice Furlong
Maurice Furlong, President of healthg Care Centers of America, Inc., Director
Witness/s/ Cynthia M. Vrachan
----------------------
Cynthia M. Vrachan
State of Illinois
County of DuPage
Before me, the undersigned authority, on this day personally appeared the above
named Maurice Furlong known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he/she executed the same
for purposes and consideration therein stated.
Given under my hand and seal this 7th dayof November 1995
My commission expires-/ /19
NOTARY PUBLIC /s/ Kim M. Plencner
Kim M. Plencner
SEAL:
OFFICIAL SEAL
KIM M PLENCNER
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES:09/28/98
<PAGE>
NOTARY
Amendment to the Contract Creating
The R&S Group
I, Edward Bartoli, Creator of a certain Contract executed on November 5,1995, in
order to clarify the intent of the Creator in making said Contract DO HEREBY
AMEND SAID DECLARATION TO INCLUDE THE FOLLOWING:
The contract creating The R&S Group is expressly IRREVOCABLE, and may not be
altered or amended in any respect unless specif>cally authorized by the Contract
instrument, and may not be terminated except thro distributions permitted the
Contract instrument.
/s/Edward Bartoli
Edward Bartoli, Creator
State of Illinois
County of Dupage
Before me, the undersigned authority, on this day personally appeared the above
named, Edward Bartoli known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for
purposes and consideration therein stated.
Given under my hand and seal this 5th day of November, 1995
My commission expires_____________________
NOTARY PUBLIC /s/Kim M. Plencner
-------------------
Kim Plencner
SEAL
OFFICIAL SEAL
KIM M PLENCNER
NOTARY PUBLIC. STATE OF ILLINOIS
MY COMMISSION EXPIRES:09/28/98
<PAGE>
The R&S Group
Minutes of First Meeting
November 5, 1995
At this, the FIRST MEETING of the BOARD OF Directors of The R&S Group,
held at the office of the Company at Oakbrook Terrace, State of Illinois. All
Directors being present, by unanimous accord the following was affirmed and
ratified, viz:
1. That, pursuant to the request and declaration of Edward Bartoli, on this
date, a Contract Creating This Entity creating The R&S Group, (A Common Law
Business Organization) was duly executed, acknowledging Maurice Furlong,
President of Health Care Centers of America, Inc., it's Director, and the above
named person by their signature evidenced the acceptance of the duties,
obligations and faithful performance of said Company.
2. That pursuant to the Creators request, the Director shall, at the earliest
possible date, cause the Contract Creating This Entity to be duly recorded with
the recorder, DuPage County, City of Oakbrook Terrace, State of Illinois, if the
Directors, in their sole discretion, deem it necessary to do so.
3. That pursuant to the tax laws governing Common Law Business Organizations,
the Directors herein shall C', immediately apply for The R&S Group's EMPLOYER
IDENTIFICATION NUMBER using the FORM SS-4 and following the instructions.
4. Edward Bartoli CREATED THIS Common Law Business Organization FOR the purpose
of offering the Certificates of Beneficial Interest to the Investors in
consideration of the investors conveying all of their rights, title and interest
in real and personal properties herein conveyed.
B. Due to National and International economic conditions with attendant
accelerated inflationary trends, the preservation of the Investors's assets to
maintain the Investor's security could best be provided by The R&S Group holding
the Investors's assets.
C. To clearly DEMONSTRATE and IMPLEMENT in a practical and meaningful way for
the benefit of the Investors, the following BUSINESS PURPOSES, including but not
limited to: o the protection of property and assets o insulation of personal or
business liability o simplified distribution of property and assets o to
<PAGE>
increase profit structure o to become more competitive in the market place o to
obtain more privacy in buying and selling properties or businesses, and o to
raise capital resources.
5. That, on this date, Rainbow Group and Senior Group accepted the offer of
Edward Bartoli, to convey certain real and personal properties of Rainbow Group
and Senior Group, listed on the Schedule A attched hereto, in accordance with
applicable law and the Contract, for and in exchange for One Hundred (100) Units
of Beneficial Interest being ALL of the Beneficial Interest of The R8S Group;
6. That, predicated on the legal and actual conveyance of the herein before
listed properties. Minute 5, Maurice Furlong, President of Health Care Centers
of America, Inc., the Director of The R&S Group hereby accept the Investors's
real and personal properties to invest in this Common Law Business Organization
on this date. Furthermore, in consideration of the acceptance of the herein
before stated OFFER, the Director of The R&S Group will issue fifty units 150)
of the Beneficial Interest of The R&S Group, being fifty percent (50%) of the
Units, to Rainbow Group at the same time and on the same date that the legal and
actual conveyance is officially made. And the Director of The R&S Group hereby
attest that the aforementioned conveyance of Rainbow Group's properties, Minute
5, will be a fair exchange for value received and as such will be tax free as an
equal exchange. Said conveyances will NOT be consummated by gift so that these
properties will have been conveyed for a consideration of money and/or moneys
worth prior to death, and cannot, therefore in any way be construed as having
been transferred in CONTEMPLATION OF DEATH. When these conveyances have been
consummated, Rainbow Group will have divested its ownership, right, titre, and
interest in FEE SIMPLE to the above named properties and will hold ONLY A
CERTIFICATE OF BENEFICIAL INTEREST in the income of The R&S Group that the
Director may resolve to distribute at such time as it may be beneficial for The
R&S Group to distribute in the Director's complete discretion.
Furthermore, in consideration of the acceptance of the herein before stated
OFFER, the Director of The R&S Group will issue fifty units (50) of the
Beneficial Interest of The R8S Group, being fifty percent (50(degree)x) of the
Units, to Senior Group at the same time and on the same date that the legal and
actual conveyance is officially made. And the Director of The R&S Group hereby
attest that the aforementioned conveyance of Senior Group's properties, Minute
5, will be a fair exchange for value received and as such will be tax free as an
equal exchange. Said conveyances will NOT be consummated by gift so that these
properties will have been conveyed for a consideration of money and/or moneys
worth prior to death, and cannot, therefore in any way be construed as having
been transferred in CONTEMPLATION OF DEATH. When these conveyances have been
consummated, Senior Group will have divested its ownership, right, title, and
<PAGE>
interest in FEE SIMPLE to the above named properties and will hold ONLY A
CERTIFICATE OF BENEFICIAL INTEREST in the income of The R&S Group that the
Director may resolve to distribute at such time as it may be beneficial for The
R&S Group to distribute in the Director's complete discretion.
The execution of The R&S Group, assures by the CONTRACT under which it is
established, the properties (Minute 5) are not subject to Probate.
7. That, the Directors may hold and conduct meetings at such times and at such
places as best suit their convenience and will serve the best interest of The
R&S Group.
8. That, at such meetings where ALL official business will be conducted, a
MAJORITY of the Directors shall be present and participating in the meeting.
9. That, affirmative actions shall require the approval of the MAJORITY of the
Board of Directors.
10. That, Directors objecting to ANY Minute for ANY reason should also sign, but
after their names write in the word, "Dissent" and the Minute number.
11. That, ALL primary directional Minutes shall be approved as evidenced by the
signature of a MAJORITY of the Board of Directors.
12. That, the Annual Meeting of the Board of Director; will be held on fifteenth
(15th) day of January and on the same day of each succeeding year, at a time and
at such location as may be most convenient for a MAJORITY of the Board of
Directors.
13. That, the fiscal year of The R&S Group will be the calendar year, and that
if it ever becomes necessary it the best interest of The R&S Group, a MAJORITY
of the Board of Directors may change the fiscal year.
14. That, ANY and ALL inquiries of whatsoever nature from whatever source that
MAY BE directed to ANY of the Directors, either individually or collectively, BE
committed to writing by the INQUIRER and submitted to the Board of Directors for
processing at the next scheduled meeting of the Board of Directors.
<PAGE>
15. That, The R&S Group, being a PRIVATE ORGANIZATION created by CONTRACT,
places such private and fiduciary responsibilities on its Directors and/or
agents that any Company duties, tasks, or functions assigned by the Directors to
Directors and/or agents in the service of The R&S Group CAN IN NO WAY be
construed as the practice of law.
16. That, ALL Minutes of The R&S Group are inviolable. That is to say, that The
R&S Group's minutes are to remain ABSOLUTELY PRIVATE and they are NOT to be
loaned, borrowed, read, or disclosed by ANYONE. Moreover, ALL MINUTES are beyond
the purview of ANY person, other than the Directors.
17. The Directors for the Company have all the power necessary to carry out
their duties and their books and records are NOT subject to review or subpoena
Duces Te Cum.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made and seconded and ca ' , the meeting
adjourned.
/s/Maurice Furlong
Maurice Furlong,President of Health Care Centers of America, Inc., Director
<PAGE>
The Rainbow Group
(a common law business organization)
Minutes of Meeting
Held on November 10, 1995
At a MEETING of the Board of Director of The Rainbow Group, held at its
offfices, and a majority of Directors being present, by unanimous accord the
following was affirmed and ratified, viz:
___. That, on this date. THE DIRECTOR OF The Rainbow Group offered its assets
to The R&S Group (a common law business organization) for and in exchange
for fifty (50) Units of Beneficial Interest being fifty percent (50%) of
the Beneficial Interest of The R&S Group.
___. That, also on this date the Director of The R8S Group accepted the offer
of The Rainbow Group. Further, the Director of The Rainbow Group hereby
attests that the aforementioned conveyance of The Rainbow Group
properties, will be a fair exchange. When these conveyances have been
consummated The Rainbow Group will have divested itself of ownership,
right, title, and interest in FEE SIMPLE to its properties and will hold
ONLY A CERTIFICATE OF BENEFICIAL INTEREST in the income of Th R8S Group
that the Oiredors may resolve to distribute at such time as it may be
beneficial for The R&S Group to distribute in their absolute discretion.
___. That, also on this date the Director of The Rainbow Group transfered its
properties to The R&S Group in exchange for fifty (50) Units of
Beneficial Interest being fifty percent (SO%) of the Beneficial Interest
of The R&S Group. Said transfer was accomplished by Bill of Sale, and the
transfers will be formally completed in a timely manner.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made, seconded and carried, the meeting
adjourned.
/s/ Robert R. Krilich
- ---------------------
Robert R. Krilich, Sr., Director of The Abuello Company, Ltd., incorporated
under the International Companies Act, 1990 (No 9 of 1990) Wection 14(3), in the
country of Belize, Central America
COPY
<PAGE>
Ths Senior Group
(a common law business
organization)
Minutes of Meeting
Held on November 10, 1995
At a MEETING of the Board of Directors of The Senior Group, held at its offices,
and a majority of Directors being present, by unanimous accord the following was
affirmed and ratified, viz:
___. That, on this date, THE DIRECTOR OF The Senior Group offered its assets
to The RIBS Group (a common law business organization) for and in
exchange for fifty (50) Units of Beneficial Interest being fifty percent
(50%) of the Beneficial Interest of The R&S Group.
___. That, also on this date the Director of The R&S Group accepted the offer
of The Senior Group. Further, the Director of The Senior Group hereby
attests that the aforementioned conveyance of The Senior Group
properties, will be a fair exchange. When these conveyances have been
consummated The Senior Group will have divested itself of ownership,
right, title, and interest in FEE SIMPLE to its properties and null hold
ONLY A CERTIFICATE OF BENEFICIAL INTEREST in the income of The R8S Group
that the Directors may resolve to distribute at such time as it may be
beneficial for The R&S Group to distribute in their absolute discretion.
___. That, also on this date the Director of The Senior Group transfered its
properties to The R&S Group in exchange for fifty (50) Units of
Beneficial Interest being fifty percent (50%) of the Beneficial Interest
of The R&S Group. Said transfer was accomplished by Bill of State, and
the transfers will be formally completed in a timely manner.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made, seconded and carried, the meeting
adjourned.
/s/Robert R. Krilich 11-10-98
- -----------------------------
Robert R. Krilich, Sr., Director of The Abuello Company, Ltd., incorporated
under the International Companies Act 1990 (No. 9 of 1990), Section 14(3), in
the country of Belize, Central America
COPY
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. One Units of Beneficial Interest: Fifty (50)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Rainbow Group of Oakbrook
Terrace, Illinois is the owner of 50 Units of Beneficial Interest, said Units
being non-assessable and non-taxable as described in the Articles of the
contract which exempt both Directors and Beneficiaries from personal liability
for debts or obligations, contractual or tortious, beyond The Company assets.
This Certificate conveys no legal or equitable interest of any kind in The
Company assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract.
IN WITNESS WHEREOF The Director has signed this equity interest certificate as
authorized this November 10,1995.
/s/Maurice Furlong
- ------------------
Maurice Furlong ,Director
Endorsement For Transfer
I, Robert R. Krilich, Sr., Director of The Abuelio Company, which is the
Director of Rainbow Group hereby give, grant, endow, assign, transfer unto The
R&S G p These Units of Beneficial Interest represented by this certificate No.
One as recorded by the Secretary of The R&S Group.
Dated 11-5~5 Signed:/s/Robert R. Krilich
- ------------ --------------------
Robert K. Krilich
In the presence of: /s/Cynthia Vrachan
------------------
Cynthia Vrachan
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. Two Units of Beneficial Interest: fifty (50)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Senior Group of Oakbrook
Terrace, Illinois is the owner of 50 Units of Beneficial Interest, said Units
being non-assessable and non-taxable as described in the Articles of the
contract which exempt both Directors and Beneficiaries from personal liability
for debts or obligations, contractual or tortious, beyond The Company assets.
This Certificate conveys no legal or equitable interest of any kind in The
Company assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract
IN WITNESS WHEREOF The Director has signed this equity interest certificate as
authorized this November 10,1995.
/s/Maurice Furlong
Maurice Furlong, Director
================================================================================
Endorsement For Transfer
I, Robert R. Krilich, Sr., Director of The Abuello Company, which is the
Director of Senior Group hereby give, grant, endow, assign, transfer unto The
R&S Group These Units of Beneficial Interest represented by this certificate No.
Two as recorded by the Secretary of The R&S Group.
Dated 11-5-95 Signed /s/ Robert R. Krilich
- -------- ---------------------
Robert R. Krilich
In the presence of: /s/ Cynthia Vrachan
-------------------
Cynthia Vrachan
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. Three Units of Beneficial Interest One Hundred (100)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Health Care Centers of
Amexica, Inc. is the owner of 100 Units of Beneficial Interest, said Units being
non-assessable and non-taxable as described in the Articles of the contract
which exempt both Directors and Beneficiaries from personal liability for debts
or obligations, contractual or torlious, beyond The Company assets. This
Certificate conveys no legal or equitable interest of any kind in The Company
assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract.
IN WITNESS WHERE OF The Directors have signed this equity interest certificate
as authorized this 15th day of November, 1995
/s/Maurice Furlong
- ------------------
Maurice Furlong, Director
================================================================================
Endorsement For Transfer
I,________________________________________ hereby give, grant, endow, assign,
transfer unto ______________________________These Units of Beneficial Interest
represented by this certificate No._________________________as recorded by the
Secretary of ____________________________________________________________. Dated
the_______ day of __________________________,19___________.
Signed:___________________ In the presence
of:____________________________________ ________________________________
BUSINESS CONSULTANT AGREEMENT
This agreement dated January 10, 1996 is made between Health Care
Centers of America, Inc. (HCCA) a Nevada Corporation referred to as the
"Company", and Robert R. Krilich, Sr., an individual and/or assigns, referred to
as the "Consultant". For good and valuable consideration the sufficiency and
receipt of which is hereby acknowledged, the parties agree in accordance with
the following terms.
1. Consultation Services. The Company hereby employs the
Consultant to perform the following services in accordance with the terms and
conditions set forth in this agreement:
The Consultant will consult with the officers and employees
of the Company concerning matters relating to the management and organization of
the Company, its financial policies, real estate development, real estate
acquisitions, venture capital, project and other financing, and generally any
matter arising out of the business affairs of the Company. The consultation
shall include advice regarding control, supervision, hiring and discharge of
independent contractors, sources and type of funding, real estate development
projects and generally any matter rising out of the business affairs of the
Company.
2. Term of Agreement. This agreement will begin in accordance with
the terms in the lst sentence of Paragraph 5 below and will continue for a ten
(10) year period with four (4) automatic renewal periods of ten (10) years each,
which renewals are at the option of the consultant.
3. Time Devoted by Consultant. It is anticipated that the
Consultant will devote a majority of his time in fulfilling his obligations
under this contract. The particular amount of time may vary from day to day or
week to week.
4. Place Where Services Will Be Rendered. The Consultant will
perform most services in accordance with this contract at any place deemed
necessary by the Consultant in the furtherance of his obligations under this
agreement. In addition, the Consultant will perform services on the telephone
and at such other places as designated by the Company or deemed necessary bu the
Consultant to perform these services in accordance with this agreement.
5. Payment of Consultant. The Company will pay the consultant on a
per project or per assignment basis. The fee to be paid to the Consultant in
accordance with same shall be determined in advance. Payment is to be made in
the fork of U.S. Dollars or shares of stock in the Company as determined by the
Consultant in his sole discretion. Regardless of the foregoing, the Consultant
shall have no right to any payment, in any form until a date which is seven (7)
months after the Company has been registered with the Securities and Exchange
Commission.
6. Independent Contractor. Both the Company and the Consultant
agree that the Consultant will act as an independent Contractor in the
performance of its duties under this contract. Accordingly, the Consultant shall
be responsible for payment of all taxes including Federal, State and local taxes
<PAGE>
arising out of the Consultant's activities in accordance with this contract,
including by way of illustration but not limitation, Federal and State Income
tax, Social Security tax, Unemployment Insurance taxes, and any other taxes or
business license fees as required.
7. Confidential Information. The Company and the Consultant agree
that any information received by either party during any furtherance of the
obligations in accordance with this contract, which concerns the personal,
financial or other affairs of the Company or of the consultant shall be treated
by the other party. In full confidence and shall not be revealed to any other
persons, firms or organizations whether civil or governmental.
8. Employment of Others. The Company may from time to time request
that the Consultant arrange for the services of others. All costs to the
Consultant for those services will be paid by the company but in no event shall
the Consultant employ others witho7ut the prior authorization of the Company.
9. Signatures. Both the Company and the Consultant agree to the
above contract.
Company:
Health Care Centers if America, Inc., Consultant:
/s/Maurice Furlong /s/Robert R. Krilich
- ------------------ --------------------
Maurice Furlong, President Robert R. Krilich, Sr.
EXHIBIT (6)(x)
MedAway International, Inc.
4020 Galt Ocean Drive, Suite 1401, Ft. Lauderdale FL 33308
June 12, 1996
Via Hand Delivery
Mr. Maurice Furlong, Chairman
health Care Centers of America, Inc.
1000 Royce Blvd.
Third Floor
Oakbrook Terrace, IL 60181
RE: Health Care Centers of America, Inc. ("HCCA") - Agreement to Purchase
all of the assets of MedAway International, Inc., a Delaware
corporation ("MedAway")
Dear Mr. Furlong:
This letter, when signed by you in the space provided below, will
constitute a binding agreement between HCCA and MedAway to consummate the
transaction described below:
1. Asset Purchase. On the Closing Date (defined below), HCCA shall purchase from
MedAway, and medAway shall sell to HCCA, all of MedAway's assets (including but
not limited to all MedAway machines, trademarks, state permits etc.) free and
clear of all liens, claims and encumbrances ("MedAway Assets").
2. Purchase Price. In exchange for the MedAway Assets, HCCA shall deliver to
MedAway on the Closing Date: Class A Common Stock of HCCA stock ("HCCA Stock")
with a market value of no less than Two Million U.S. Dollars ($2,000,000.00)
based on the closing price for such stock on the "pink sheets" on the date
immediately preceding the Closing Date; provided, however, that in no event
shall HCCA deliver to MedAway less than two million shaers of HCCA stock
regardless of whether the value thereof exceeds Two Million U.S. ollars. HCCA
represents and warrants to MedAway that: (i) all of the HCCA Stock will be duly
authorized, validly issued, fully paid, non-assessable and free and clear of all
liens, claims and encumbrances; (ii) all of the HCCA Stock has not been duly
registered with the United States Securities and Exchange Commission; and (iii)
upon expiration of the two (2) year holding period to which the HCCA Stock shall
be subject immediately following the Closing Date, all of the HCCA Stock shall
be freely tradeable in whichever market HCCA's capital stock is then currently
trading or HCCA shall, at its own expense, take such steps as may be necessary
to ensure compliance with the foregoing.
[letter truncated]
<PAGE>
MedAway
International
CONSENT OF THE SHAREHOLDERS AND BOARD OF DIRECTORS
IN LIEU OF MEETING
The undersigned, being directors and holders of a majority of the
issued and outstanding capital stock of MedAway International Inc., a Delaware
corporation (hereinafter called the "Corporation"), do hereby consent, pursuant
to the General Corporation Law of the State of Delaware, to the taking of the
following actions:
RESOLVED, that the Corporation shall be authorized to sell all of the
Corporation's assets to Health Care Centers of America, Inc. ("HCCA") in
exchange for (ii) the greater of two million (2,000,000) shares of HCCA's
capital stock; or (ii) such number of HCCA' shares of capital stock as shall
have a market value of no less than Two Million U.S. Dollars ($2,000,000) as
determined by reference to the closing price for such stock on the "pink sheets"
on the day immediately preceding the closing of the transaction.
RESOLVED, that certain of the HCCA capital stock to be received by the
corporation in exchange for its assets in connection with the transaction
described above shall be issued directly to those parties and in such amounts as
set forth in Exhibit A attached hereto in satisfaction of certain outstanding
indebtedness of the Corporation.
RESOLVED, that the Corporation's officers and directors be, and hereby
are, authorized and directed to take all necessary and appropriate actions to
effect the foregoing.
DATED effective as of June 12, 1996.
DIRECTORS SHAREHOLDERS
/s/ Alan A. Arruda /s/ Alan A. Arruda
ALAN A. ARRUDA ALAN A. ARRUDA
/s/ R. D. Hoffman (unsigned)
R.D. HOFFMAN ANTHONY DAWSON-ELLIS
<PAGE>
+MedAway
International [letterhead]
Mr. Maurice Furlong, Chairman
Health Care Centers of America, inc.
100 Royce Blvd.
Third Floor
Oakbrook Terrace, IL 60181 June 13th., 1996
Dear Maurice,
It was a pleasure meeting you yesterday with Edward>
Your plans for the future growth of HCCA are very impressive, and I am delighted
to be a new shareholder.
With regards to our agreement yesterday I thank you for your assurance to
Edweard, Dooley and myself that the HCCA stock used to purchase all of MedAway's
assets will be registered in the next few weeks at no cost to us.
As per our discussion, I am enclosing the information you require:
1.) List of Machines
2.) State Approvals
3.) Registered Trade Mark
4.) Financial Report by Van Kasper
5.) Goddard Letter
6.) Gibraltar Report
7.) Report for O.S.H.A.
8.) Brochures
The resolution for the sale of all of MedAway's assets along with the list for
the distribution of the stock will follow shortly.
Finally, I would just like to repeat that I am very happy to be associated with
you in HCCA.
Sincerely,
ALAN A. ARRUDA, President
/s/ Alan A. Arruda
Encls.
MedAway International, Inc.
4020 Galt Ocean Drive, Suite 1401, Ft. Lauderdale FL 33308
(305) 545-4998 FAX (305) 565-1174
MedAway
International
VIA HAND DELIVERY
Mr. Maurice Furlong
health Care Centers of America, Inc.
1000 Royce Blvd.
Oakbrook Terrace, Il 60181
Re: Health Care Centers of America, Inc. ("HCCA") - Letter Agreement ("Letter
Agreement") between MedAway International, Inc. a Delaware corporation
("MedAway") whereby HCCA agreed to purchase all of the assets of MedAway
Dear Maurice,
It was a pleasure meeting with you yesterday and executing the Letter Agreement.
Further to our meeting, I am writing to confirm our discussion wherein you
agreed that all of the HCCA stock delivered to MedAway pursuant to the Letter
Agreement will be duly registered at HCCA's sole cost and expense, with the
United States Securities and Exchange Commission within the next few months.
Kindly acknowledge the foregoing by executing this letter in the space provided
below. I look foward to working with you to promptly finalize this matter.
Very truly yours, MEDAWAY
INTERNATIONAL, INC.
/s/ Alan A. Arruda, President
ALAN A. ARRUDA, PRESIDENT
ACCEPTED AND AGREED TO
THIS 21 DAY OF JUNE, 1996
HEALTH CARE CENTERS OF AMERICA, INC.
/s/ Maurice Furlong
MAURICE FURLONG, CHAIRMAN
MedAway International, Inc.
4020 Galt Ocean Drive, Suite 1401, Ft. Lauderdale, FL 33308
HCCA [letterhead]
October 26, 1996
Mr. Alan Arruda
Pesident
MedAway International, Inc.
4020 Galt Ocean Drive, Suite 1401
Fort Lauderdale, FL 33308
Re: Health Care Centers of America, Inc. (HCCA) Purchase of the Assets of
MedAway International, Inc. (MedAway) Amendment
Dear Mr. Arruda:
The purpose of this letter is to amend the purchase agreement entered into on
June 12, 1996 between HCCA and MedAway. The amendment is for the purpose of
conforming the written purchase agreement to the understanding between the
parties.
For good and valuable consideration, the sufficiency and receipt of which is
hereby acknowledged, the parties agree as follows:
1. Assets Extended in Purchase -- The assets purchased by HCCA do not include
any current litigation involving MedAway nor any clauses in action possessed by
MedAway as of June 12, 1996. Any recovery of any money judgment by medAway is
the sole property of MedAway, to which HCCA has no claim interest nor rights.
Any expenses related to same remain the obligations of MedAway. MedAway further
agrees to indemnify, defend and hold harmless HCCA from any expenses, costs
judgments, adverse findings or other obligations that would be charged against
HCCA as a result of said litigation.
2. Facsimile Signatures -- Any facsimile transmissions containing the signatures
and/or initials of the parties will be cnsidered the same as originals.
Please signify your acceptance of this agreement by offering your signature
below and returning same via facsimile. Thank you.
Sincerely, Agreed to and accepted the
/s/ Maurice W. Furlong 31 of October, 1996
Maurice W. Furlong MedAway International, Inc.
President /s/ Alan Arruda, President - MedAway Int.
Alan Arruda, President
HEALTH CARE CENTERS OF AMERICA, INC.
2400 East Las Olas Blvd.
Suite 310, Fort Lauderdale, Florida 33301
Phone: 954-958-9925
Fax: 954-958-9856
<PAGE>
FILED
in the Office of the
Secretary of State of the
STATE OF NEVADA
Sep 11, 1996
No. C19128-96
Articles of Incorporation
(Pursuant to NRS 78)
STATE OF NEVADA
Secretary of State
(For filing office) /s/ Dean Hiller
Dean Hiller, Secretary of State
1. NAME OF CORPORATION: Medaway International, Inc.
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
where process may be served) Name of Resident Agent: Craig Furlong Street
Address: 962 Perez Place Las Vegas Nevada 89191
3. SHARES: (number of shares the corporation is authorized to issue) Number of
Shares with par value Par value Number of shares without par value 10,000
4. GOVERNING BOARD: shall be as (check one) X Directors Trustees The first
BOARD OF DIRECTORS shall consist of 2 members and the names and addresses are as
follows (attach additional pages if necessary):
Maurice W. Furlong 60 Bay Colony, Ft. Lauderdale, FL 33301
Name Address City/State/Zip
Michael J. Pietrzak 1000 Royce Blvd., Oakbrook Terrace, IL 60181
Name Address City/State/Zip
5. PURPOSE (optional--see reverse side) The purpose of the corporation shall be:
- --
6. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to NRS
78.037 or any other information you deem appropriate. If any of the additional
information is contradictory to the form it cannot be filed and will be returned
to you for correction. Number of pages attached 7. SIGNATURES OF INCORPORATORS:
The names and addresses of each of the incorporators signing the aritcles:
(Signatures must be notarized.) (Attach additional pages if there are more than
two incorporators) Michael J. Pietrzak 1000 Royce Blvd., Oakbrook Terrace, IL
60181 /s/ Michael J. Pietrzak State of Illinois County of DuPage
This instrument was acknowledged before me on
August 15, 1996 by
as Incorporator of Medaway International, Inc.
/s/ Kim M. Plencner [Notary Seal, State of Illinois]
<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, Craig Furlong hereby accept appointment as Resident Agent for the above named
corporation
/s/ [signature illegible] August 15, 1996
Signature of Resident Agent Date
<PAGE>
ANNUAL LIST OF OFFICERS, DIRECTORS AND AGENTS OF:
MEDAWAY INTERNATIONAL, INC.
19128-1996
FOR THE PERIOD SEP 1999 TO 2000, DUE BY SEP 30, 1999.
The Corporation's duly appointed resident agent in the
State of Nevada upon whom process can be served is: RA# 19177
NEVADA AGECY & TRUST COMPANY
50 W LIBERTY ST STE 880
RENO NV 89501
[instructions for completing form]
<TABLE>
<CAPTION>
FILING FEE: $85.00 PENALTY: $15.00
<S> <C> <C> <C>
Name Title Street Address City/State/Zip
Maurice W. Furlong President 100 N Arlington Ste 22F Reno NV 89501
Michael J. Pietrzak Secretary 100 N Arlington Ste 22F Reno NV 89501
Treasurer
Maurice W. Furlong Director100 N Arlington Ste 22F Reno NV 89501
Michael J. Pietrzak Director100 N Arlington Ste 22F Reno NV 89501
</TABLE>
I hereby certify this annual list
/s/ Michael J. Pietrzak Date: 9/9/99
<PAGE>
CERTIFICATE STATE OF NEVADA - SECRETARY OF STATE FILE NUMBER
MEDAWAY INTERNATIONAL, INC. 19128-1996
FOR THE PERIOD SEP 1999 TO 2000. DUE BY SEP 30, 1999.
[Stamp --
NEVADA AGENCY & TRUST COMPANY C A FILED
50 W LIBERTY ST STE 880 SEP 15 1999
RENO NV 89501 Dean Heller
Secretary of State]
The Secretary of State of Nevada does hereby certify that the above Corporation,
after having paid the annual fee of $50.00 for filing in this office a list of
its officers and directors and designation of resident agent for the above
filing period, together with penalty in the sum of , and having also filed the
aforesaid list as required by Nevada Revised Statutes Sections 78.150-78.165 and
80.110-80.140, as amended, is hereby authorized to transact and conduct business
within this state for the aforesaid period.
THIS CERTIFICATE BECOMES A RECEIPT UPON BEING
VALIDATED BY THE OFFICE OF SECRETARY OF STATE /s/ Dean Heller
Secretary of State
[Great Seal of the State of Nevada superimposed]
<PAGE>
SECRETARY OF STATE
[Great Seal of the State of Nevada]
STATE OF NEVADA
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, MEDAWAY INTERNATIONAL, INC., as a corporation
organized under the laws of Nevada and existing under and by virtue of the laws
of the State of Nevada since September 11, 1996, and is in good standing in this
state.
IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the Great
Seal of State, at my office, in
carson
City, Nevada, on October 14, 1999.
/s/ Dean Heller
Secretary of State
By
/s/ [signature illegible]
Certification Clerk
<PAGE>
ANNUAL LIST OF OFFICERS, DIRECTORS AND AGENTS OF:
MEDAWAY INTERNATIONAL, INC.
19128-1996
FOR THE PERIOD SEP 1999 TO 2000, DUE BY SEP 30, 1999.
The Corporation's duly appointed resident agent in the
State of Nevada upon whom process can be served is: RA# 19177
NEVADA AGECY & TRUST COMPANY
50 W LIBERTY ST STE 880
RENO NV 89501
[instructions for completing form]
FILING FEE: $85.00 PENALTY: $15.00
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Title Street Address City/State/Zip
Maurice W. Furlong President 100 N Arlington Ste 22F Reno NV 89501
Michael J. Pietrzak Secretary 100 N Arlington Ste 22F Reno NV 89501
Treasurer
Maurice W. Furlong Director100 N Arlington Ste 22F Reno NV 89501
Michael J. Pietrzak Director100 N Arlington Ste 22F Reno NV 89501
</TABLE>
I hereby certify this annual list
/s/ Michael J. Pietrzak Date: 9/9/99
<PAGE>
CERTIFICATE STATE OF NEVADA - SECRETARY OF STATE FILE NUMBER
MEDAWAY INTERNATIONAL, INC. 19128-1996
FOR THE PERIOD SEP 1999 TO 2000. DUE BY SEP 30, 1999.
[Stamp --
NEVADA AGENCY & TRUST COMPANY C A FILED
50 W LIBERTY ST STE 880 SEP 15 1999
RENO NV 89501 Dean Heller
Secretary of State]
The Secretary of State of Nevada does hereby certify that the above Corporation,
after having paid the annual fee of $50.00 for filing in this office a list of
its officers and directors and designation of resident agent for the above
filing period, together with penalty in the sum of , and having also filed the
aforesaid list as required by Nevada Revised Statutes Sections 78.150-78.165 and
80.110-80.140, as amended, is hereby authorized to transact and conduct business
within this state for the aforesaid period.
THIS CERTIFICATE BECOMES A RECEIPT UPON BEING
VALIDATED BY THE OFFICE OF SECRETARY OF STATE /s/ Dean Heller
Secretary of State
[Great Seal of the State of Nevada superimposed]
<PAGE>
SECRETARY OF STATE
[Great Seal of the State of Nevada]
STATE OF NEVADA
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, MEDAWAY INTERNATIONAL, INC., as a corporation
organized under the laws of Nevada and existing under and by virtue of the laws
of the State of Nevada since September 11, 1996, and is in good standing in this
state.
IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the Great
Seal of State, at my office, in
carson
City, Nevada, on October 14, 1999.
/s/ Dean Heller
Secretary of State
By
/s/ [signature illegible]
Certification Clerk
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT made and effective as of the 7th day of April 1993
between MEDICAL MARKETING INTERNATIONAL INC. (hereinafter referred to as
("MedMark"), a corporation organized and existing under the laws of the State of
Delaware, having its principal place of usiness at 2-11 Granada Crescent, White
Plains, New York 10603, and IMSEC Corporation (hereinafter referred to as the
"IMSEC"), a corporation organized and existing under the laws of Japan, having
its principal place of business at 50 Teigaibuchi, Ohashibe, Kumiyama-Cho,
Kuze-Gun, Kyoto Prefecture, Japan. For purposes of this Agreement, "IMSEC"
refers to IMSEC as stated above and "IMSEC USA" refers to IMSEC's authorized
agent in the United States, having an address as stated in paragraph 24.
1. APPOINTMENT. IMSEC hereby appoints MedMark its exclusive distributor
in North America, the Caribbean and Taiwan, for its present dry-heat
decontamination product line, including any additions or improvements to that
product line (hereinafter referred to collectively as the "Products"). IMSEC
acknowledges and agrees that the Products shall be marketed by MedMark under
MedMark's "MedAway" registered trademark.
2. ACCEPTANCE OF APPOINTMENT. MEDMARK hereby accepts the appointment
described in Section I and agrees to use its best efforts to promote and sell
the Products in its assigned geographic territory.
3. TERM OF AGREEMENT. This Agreement shall commence on the date first
above written and shall terminate one (1) year from said date. The Agreement may
be renewed for subsdquent one (1) year periods by mutual agreement of the
parties. Either party desiring to renew the contract shall give notice to the
other at least three (3) months prior to termination. Renewal shall not be
effective unless agreed to by both parties in writing>
4. PRICE (a) The unit price to MedMark for IMSEC's current model
(exclusive of filters, which are not part of the system), is US $23,250.00, if
units ordered on a single purchase ordewr are less than five (5) and is US
$22,750.00 if units ordered on a single purchase order are six (6) or more and
is F.O.B. IMSEC's dock United States port of entry, and is fixed for the term of
this Agreement. (b) IMSEC acknowledges and agrees that prices to MedMark for the
Products include all shipping costs to US port of entry, customs duties, imposts
or surcharges, which may not or hereafter be imposed by national, federal, state
or local authorities by reason of the sale by IMSEC of Products to MedMark.
IMSEC shall pay all such taxes, duties, imposts or surcharges other than income
taxes imposed on MedMark by any governmental authority.
<PAGE>
5. TERMS OF PAYMENT. With respect to the first ten (10) units, MedMark
shall pay one half of the purchase price per unit to IMSEC USA, on behalf of
IMSEC Japan upon placement of the order and acceptance of the order by IMSEC
USA, thirty (30) days prior to shipment and shall provide to IMSEC USA on behalf
of IMSEC a letter of credit for the balance due, payable upon IMSEC's
presentation of Final Quality Test Results Inspection Certificate in the form
attached hereto as Exhibit A and a certificate of customer sign-off and
acceptance of the unit in the form attached hereto as Exhibit B. For all units
ordered after the first ten (10), payment shall be on the following terms: upon
placement of the order and acceptance of the order by IMSEC USA, MedMark shall
pay one half of the purchase price, thirty (30) days prior to shipment and shall
provided to IMSEC USA on behalf of IMSEC a letter of credit for the balance due,
payable upon ZIMSEC's confirmation of shipment and presentation of Final Quality
Test Results and Inspection Certificate in the form attached hereto as Exhibit
A; provided that in the event that both the certificates attached hereto as
Exhibits A & B are not provded for any of the first ten (1) units ordered, trhen
the payment terms for the first ten (10) units, as hereabove provided shall be
extended until such certificates shall be provided for an aggregate of ten (10)
units.
6. SHIPMENT. IMSEC agreesd to ship all units within sixty (60) days of
acceptance of the order, unless a longer shipment date is requested by MedMark.
IMSEC shall promptly notify MedMark of all scheduled shipments to MedMark prior
to units being delivered to a common carrier. Should MedMark specify shipment
other than by boat, then MedMark shall pay the difference betweeen the shipment
by boat and the requested shipment cost from port of exit to port of entry.
7. RISK OF LOSS. IMSEC shall bear all risk of loss or damage for any
unit(s) until delivered to a common carrier for delivery to MedMark at IMSEC's
US port of entry. Thereafter MedMark shall bear all risk of loss or damage for
any unit(s) until delivery to MedMark. MedMark shall accept all shipments upon
arrival at their destination and the parties shall cooperate to provide each
other with any data required to file claims with or against the carrier or
insurer for any losses, shortages or damage of any kind. Title shall pass to
MedMark only upon payment in full for Products.
8. WARRANTY. IMSEC warrants all units to be free of defects in
materials and workmanship for a period of one (1) year subject to normal use.
9. DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN IMSEC'S WARRANTY, IMSEC
MAKES NO WARRANTY OF ANY KIND WITH RESPECT TO THE PRODUCTS, AND EXCLUDES ALL
OTHER WARRANTIES (INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE), WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, AND IMSEC SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
<PAGE>
10. WARRANTY PARTS. IMSEC agrees to provide to IMSEC USA spare parts in
sufficient quantities to permit IMSEC USA to provide warranty service during the
warranty period for the Products in accordance with paragraph 8.
11. NON-WARRANTY PARTS. MedMark shall purchase spare parts from IMSEC
at the List price less a discount to be identified by IMSEC by line item, unless
MedMark can buy comemrcially available parts for less, in which case MedMark
shall not be obligated to purchase such parts from IMSEC. IMSEC agrees to
provide to MedMark the names of suppliers of all commercially available parts.
IMSEC shall continue to make spare parts available to MedMark on such terms
after any termination of this Agreement (whether by reason of non-renewal or
otherwise) for a period of four (4) years after termination of this Agreement.
12. WARRANTY SERVICE. IMSEC, through IMSEC USA, shall be responsible
for the installation, warranty labor and material of all units placed at
end-user sites by Medmark or any of MedMark's distributors, within its
designated Territory, for a period of one year from the date the unit is first
installed by IMSEC USA and accepted by a customer. ISSEC USA shall respond to
requests for warranty service from customers within 24 hours by phone and agrees
to have a service repairman on site within 48 hours of the customer's initial
phone request with sufficient parts to execute normal repairs.
13. PRODUCT IDENTIFICATION. Each Product sold by Medmark shall bear
such markings on the back panel, including trademarks, name plates or other
indications of source of origin of the Products as may be place thereon by IMSEC
and medmark shall not alter, obscure, remove, conceal or otherwise interfvere
with any such markings without the prior written consent of IMSEC. IMSEC shall
place logos and identification on the system front panel as directed by MedMark
to include the Medmark name and the MedMark "MedAway (TM) 1" trademark.
14. TECHNICAL SPECIFICATIONS AND ACCEPTANCE. Prior to releasing each
unit to a common carrier for delivery, IMSEC shall inspect all units shipped to
MedMark, to determine conformance to the specifications annexed to this
Agreement as Exhibit "A" and shall perform the final quality test protocol set
forth therein. IMSEC will furnish MedMark, via Fax or overnight air, upon
notification of shipment a Certificate of Inspection for specifications and
Final Quality Test Results for each unit of the Product delivered to a common
carrier for shipment to MedMark. The certificate of inspection for
specifications and Final Quality Test Protocol referred to in Exhibit "A"
constitute the acceptance criteria.
<PAGE>
15. PRODUCT STANDARDS. All Products delivered under the terms of this
Agreement shall comply with the standards for such Products as have been set by
the appropriate governing authorities. The Products shall also comply with all
appropriate sections of applicable industrial standards and codes. Medmark shall
provide IMSEC with all appropriate controlling standards and regulations as
promulgated by those authorities having jurisdiction over such matters. IMSEC
USA will determine if IMSEC will share in teting costs for states approvals.
16. PERFORMANCE CRITERIA. In the event that Medmark fails to purchase
from IMSEC for sale to customers minimum of twenty-five (25) current units
during the first 8 months and twenty-five (25) current units during the
remaining 4 months of this Agreement, IMSEC shall have the right, upon thirty
(30) days written notice to terminate this agreement, or to convert this
agreement to a nonexclusive agreement, at IMSEC's sole discretion. In the event
that an approved or enhanced product is made available during the term of this
Agreement, sales of such units shall be deemed sales of the current unit for
purposes of this section.
17. PERFORMANCE EXCUSED. Whenever either party shall be prevented from
or delayed in carrying out any obligation of such party hereunder (other than
for the payment of money) by reason of any act of God, war, riot, accident,
strike, lock-out, injunction, boycott, inability to obtain power, raw materials
or transportation facilities, breakage of machinery, national defense
rquirements, or any other cause beyond the control of such party, the
performance of such obligation by such party shall be excused to the extent of
such prevention or delay.
18. TERMINATION OF AGREEMENT. Either party may terminate this Agreement
on thirty (30) days written notice upon the breach of a material obligation
hereunder by the other party, and the failure of such other party to cure such
breach within such 30 day period after receipt of notice. Either party may
ternminate this Agreement immediately upon written notice of any one the
following occurrences (a) an assignment by the other party of all or a
substantial part of its assets for the benefit of creditors; (b) the insolvency
of the other party; (c) the institution of voluntary or involuntary proceedings
by or against the other party in bankruptcy or under insolvency laws or for
receivership or for dissolution of the other party. Each party agrees to advise
the other immediately in writing with sufficient particularity of the occurrence
of any event specified in this section. In addition, IMSEC shall be entitled to
terminate this Agreement immediately upon written notice in the event MedMark
assigns or attempts to assign its rights under this Agreement in violation of
paragraph 25 hereof.
<PAGE>
19. OBLIGATIONS UPON TERMINATION. (a) Upon the effecitve date of
termination of this Agreement, MedMark shall come to use stationary or other
printed matter identifying it as an IMSEC authorized distributor, shall remove
signs from the exterior and interior of its building so identifying it, shall
take all necessary steps to change its listing in telephone directories and to
do all other acts necessary to remove any identification as an IMSEC authorized
distributor and shall cease and refrain from any use or identification of any
kind of IMSEC's patents, trademarks, trade names, or other proprietary
information or rights of IMSEC relating to the Products or otherwise, or any
mark or work so nearly resembling such trademark or trade name as to be likely
to deceive or cause confusion with respect to any of its goods or advertising or
otherwise; provided that the foregoing shall not be construed to restrict
MedMark in the continued use of the MedAway (TM) name and mark after
termination. (b) If, after the effective date of termination, IMSEC elects to
accept orders from Medmark or otherwise transacts business with Medmark related
to the sale of the Products, all such transactions will be governed by the same
terms that this Agreement provides to far as those terms are applicable, but no
such acceptance of orders or transaction of business shall be construed as a
renewal of this Agreement or as a waiver of termination.
20. DISTRIBUTOR IS NOT AN AGENT. This Agreement does not create the
relationship of principal and agent between IMSEC and MedMark and under no
circumstances is either party to be considered the agent of the other. MedMark
has no authority either to bind IMSEC to any obligation or to represent IMSEC in
any circumstances, and MedMark shall not bind or represent IMSEC.
21. CONFIDENTIALITY. The parties each shall, during the term of this
Agreement, keep confidential and not disclose, divulge, or distribute to any
third party this Agreement, any proprietary information and rights or trade
secrets, or confidential information regarding the Products divulged or made
known to such party by the other party, except where such disclosure is
necessary in order for such disclosing party to perform its duties hereunder.
For purposes hereof, "confidential information" shall be deemed to refer only to
such written information which is marked "confidential" prior to disclosure to
the other party and which is not at the time of such disclosure already known to
such other party or is then or therafter in the public domain.
22. RELATIONSHIP OF THE PARTIES. Each party hereto is an independent
contractor. Neither party shall act as the representative or legal agent of the
other and neither party shall assume or create any obligation, express or
implied, in the name of or on behalf of the other.
<PAGE>
23. COMPLIANCE WITH LAWS. MedMark shall comply with all statutes, laws
and regulations of national, federal, state and local authorities of the united
States or of any country which statutes, laws and regulations are applicable to
MedMark's business and to the performance by it of its obligations pursuant to
this Agreement, and shall not take any action the effect of which, to MedMark's
knowledge, may cause IMSEC to be in violation of any such statute, law or
regulation, and to the extent known to MedMark shall promptly notify IMSEC of
any such statute, law or regulation relating to the form or specifications of
any product or any packaging, invoicing or shipping documents required to be
provided with respect to any shipment of Products, and or of any change to any
such statute, law or regulation.
24. NOTICES. All notices given, pursuant to this agreement shall be in
writing in the English language and shall be considered given if sent by telex
or fax transmission or if sent by commercial overnight carrier with written
verification of receipt, or by registered air mail, return receipt requested,
addressed if to MedMark to it at the address of MedMark stated in the opening
paragraph of this Agreement, and if to IMSEC, to its agent IMSEC USA, 236 Bridal
Path, North Andover, Massachusetts 01845-2012 provided, however, that by ;notice
as specified in this paragraph either party may specify a different address for
receiving notice under this Agreement. Any notice so sent shll be deemed given
ten (10) days after mailing, if sent postage prepaid by registered air mail,
return receipt requested, or on the date of dispatch, if sent by telex, or fax,
charge prepaid.
25. ASSIGNMENT. MedMark may not assign its rights under this Agreement
in whole or in part without the prior written consent of IMSEC, which consent
shall not be unreasonably withheld; provided that the foregoing shall not
restrict Medmark from an assignment to an entity controlled by, or under common
control with, medMark or its principal stockholders. Any attempted assignment or
delegation in violation of the foregoing shall be void.
26. INDEMNIFICATION. MedMark hereby agrees to indemnify and save IMSEC
harmless from and against any and all losses, claims, suits demands, actions and
liabilities of any kind or nature solely to the extent the same arise out of
otherwise rlate to any act or omission by MedMark in the sale, promotion and
distribution of the Products. The foregoing shall not obligate Medmark to
indemnify IMSEC in respect of any loss, etc., arising out of or relating to the
performance or non-performance of any Product or any defect in material or
workmanship of any Product and the foregoing indemnity shall not apply to any
settlement of any such claim, action or proceeding if such settlement is entered
into without the wirtten consent of medMark. Each party hereto shall give the
other prompt notice of any claim, or commencement of any action or proceeding
which may give rise to any claim for indemnification pursuant to the foregoing.
Medmark, at it selection, may assume the defense of any such action or
proceeding including the employment of counsel selected by medmark (who shall be
reasonably satisfactory to IMSEC).
<PAGE>
27. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement of and between the parties with respect to the
subject matter hereof and supersedes all prior representations and agreements.
It shall not be varied, amended or modified by any oral agreement or
representation or otherwise than by an instrument in writing of subsequent date
hereto duly executed by the parties.
28. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the laws of the State of New York applicable to agreements
executed and to be formed in such state.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed by the following persons who are duly authorized, as of the
effective date hereinabove set forth.
IMSEC CORPORATION MEDICAL MARKETING
INTERNATIONAL, INC.
By: /s/ Jsuyooshi Ikeda By: /s/ A.P. Agnichi
Title: President Title: President
Date: April 7, 1993 Date: April 7, 1993
<PAGE>
1154/0417 [seal] UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
Assistant Secretary and Commissioner
of Patents and Trademarks
Washington, D.C.
JUNE 14, 1994
NO5B
TO: L. JANA SIGARS, ESQ.
HOLTZMAN, KRINZMAN, EQUELS,
SIGARS & FURIA
2601 S. BAYSHORE DRIVE, SUITE 600
MIAMI, FL 33133
UNITED STATES PATENT AND TRADEMARK OFFICE
NOTICE OF RECORDATION OF ASSIGNMENT DOCUMENT
THE ENCLOSED DOCUMENT HAS BEEN RECORDED BY THE ASSIGNMENT BRANCH OF THE U.S.
PATENT AND TRADEMARK OFFICE. A COMPLETE MICROFILM COPY IS AVAILABLE AT THE U.S.
PATENT AND TRADEMARK OFFICE ON THE REEL AND FRAME NUMBER REFERENCED BELOW.
PLEASE REVIEW ALL INFORMATION CONTAINED ON THIS NOTICE. THE INFORMATION
CONTAINED ON THIS RECORDATION NOTICE REFLECTS THE DATA PRESENT IN THE TRADEMARK
ASSIGNMENT PROCESSING SYSTEM. IF YOU SHOULD FIND ANY ERRORS OR QUESTIONS
CONCERNING THIS NOTICE, YOU MAY CONTACT THE EMPLOYEE WHOSE NAME APPEARS ON THIS
NOTICE AT 703-308-9723. PLEASE SEND REQUEST FOR CORRECTION TO: U.S. PATENT AND
TRADEMARK OFFICE, ASSIGNMENT BRANCH, NORTH TOWER BUILDING, SUITE 10C35,
WASHINGTON, D.C. 20231.
ASSIGNOR:
BUSINESS DEVELOPMENT RESOURCES, INC. DOC DATE: 03/11/1994
CITIZENSHIP: NEW YORK
ENTITY: CORPORATION
ASSIGNEE:
MEDICAL MARKETING INTERNATIONAL, INC.
4020 GALT OCEAN DRIVE CITIZENSHIP: DELAWARE
FT. LAUDERDALE, FL 33308
ENTITY: CORPORATION
BRIEF:
ASSIGNS THE INTEREST AND THE GOODWILL
NO. OF PAGES: 003
REEL/FRAME: 1154/0417 DATE RECORDED: 05/10/19--
APPLICATION NUMBER: 74-239338 FILING DATE: 01/22/1994
REGISTRATION NUMBER: 1816389 REGISTRATION DATE: 01/11/1994
MARK: MEDAWAY
DRAWING TYPE: WORDS, LETTERS, OR NUMBERS IN TYPED FORM
<PAGE>
Int. Cl.: 10
Prior U.S. Cl.: 44
Reg. No. 1,816,389
United States Patent and Trademark Office Registered Jan. 11, 1994
TRADEMARK
PRINCIPAL REGISTER
MEDAWAY
Business Development Resources, Inc. Used by Hospitals and Medical Lab
(New York Corporation) Oratories, In Class 10 (U.S. Cl. 44)
1-11 Granada Crescent First Use 9-9-1992; In Commerce
9-9-1992
3N 74-239,338, FILED 1-22-1992
FOR: Ovens For Dry Heat Decontami-
nation of Regulated Medical Waste Tina Pompey, Examining Attorney
<PAGE>
The United States of America
[seal]
No. 1816389
CERTIFICATE OF REGISTRATION
This is to certify that the records of the Patent and Trademark Office
show that an application was filed in said Office for registration of the Mark
shown herein, a copy of said Mark and pertinent data from the Application being
annexed hereto and made a part hereof,
And there having been due compliance with the requirements of the law
and with the regulations presecribed by the Commissioner of Patents and
Trademarks,
Upon examination, it appeared that the applicant was entitled to have
said Mark registered under the Trademark Act of 1946, as amended, and the said
mark has been duly registered this day in the patent and Trademark office on the
PRINCIPAL REGISTER
to the registrant named herein.
This registration shall remain in force for TEN years unless sooner
terminated as provided by law.
In Testimony
Whereof I have
hereunto set my
hand and caused
the seal of the
Patent and
Trademark Office
to be affixed this
eleventh day of
January 1994.
[seal]
/s/ Bruce Lehman
Commissioner of Patents and Trademarks
Schedule A
Health Care Centers of America, Inc.
STOCK EXCHANGE AGREEMENT
Names and Addresses of Stockholders
The person whose names and address appear below constitute the
holders of outstanding stock of the Stockholders' Corporation. Each such person
has subscribed to the Stock Exchange Agreement by executing the Signature Sheet
attached hereto warranting that he or she is the owner of the number of shares
of the Company set forth beside his or her name, that he or she has good title
to such shares, and that he or she transfers such shares to HCCA in exchange for
that number of HCCA shares indicated in the third column:
number and type of shares of HCCA shares to
Stockholders' Corporation be received
name and address transferred to HCCA by Stockholder
- ---------------- ------------------- --------------
Ilonka Harezi 3,196,552 common 23,175,000
Rural Route 1, Box 21 1,000,000 preferred 1,000,000
St. Francisville, IL 62460
By executing the Signature Page and Accession Agreement attached hereto, Ilonka
Harezi, the Company's controlling.Stockholder, agrees to the terms set forth in
Section 12 ("Right of First Refusal") and 13 (Hypothecation").
<PAGE>
STOCK EXCHANGE AGREEMENT Acquisition of ELF Works,
Ltd.
by Health Care Centers of America, Inc.
THIS AGREEMENT made this 26th day of June, 1996, by and between
Health Care Centers of America, Inc. ("HCCA"), a Nevada corporation with offices
at 1000 Royce Boulevard (suite 300-A), Oakbrook Terrace, IL 60181, and ELF
Works, Ltd. ("ELF"), Nevada corporation located c/o Donald Stiffer, 1620 Granite
Drive, Reno, Nevada 89509, and those stockholders identified on Schedule A (the
"Stockholders"), including, but not limited to, Ilonka Harezi, Rural Route 1,
Box 21, St. Francisville, IL 62460, and American Independent Network, Inc., 6125
Airport Freeway (ste. 200) Fort Worth, TX 76117 (the "ELF's Controlling
Stockholders"):
Whereas, the authorized capital stock of ELF consists of
11,000,000 shares of preferred stock, par value $.01 per share, of which
11,000,000 are currently issued and outstanding and 4,000,000 shares of common
stock, par value $.01 per share, of which 4,000,000 are currently issued and
outstanding;
WHEREAS, the authorized capital stock of HCCA consists of
9,000,000 shares of capital stock, par value $.001 per share, of which
approximately 395,000,000 are currently issued and outstanding; and
WHEREAS, HCCA and Stockholders agree that it would be to their
mutual benefit for HCCA to acquire all of the outstanding stock of ELF in
exchange for shares of HCCA stock; and
WHEREAS, ELF owns, free and clear of any liabilities, $100,000,000
(One Hundred Million U.S. Dollars) of programming and commercial spot time on
the American Independent Network, Inc. ("A.I.N."), a cable television network,
at A.I.N. rate card rates for time spots selected by ELF (the "CATV Time
Credits"), a copy of same being attached as Schedule B; and
WHEREAS, said CATV Time Credits are without restriction and may be
used, sold, assigned, and transferred without restriction and without limitation
as to time or any other limitations, by or at the direction of ELF or its
assignees; and
WHEREAS, this Agreement is intended to replace and supersede any
and all previous agreements or writings between HCCA and ELF;
NOW, THEREFORE, for good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the parties agree as
follows: e
1. Exchange of Shares. (a) HCCA agrees to acquire 95% of ELF's
outstanding shares of stock (the "ELF Shares"), in exchange for 40,000,000
(Forty Million) shares of HCCA's authorized but unissued common stock (par value
$.001 per share) (the "HCCA Shares").
(b) All HCCA Shares issued as pursuant to this Agreement shall be
fully paid and non-assessable and shall be issued in full satisfaction of all
rights pertaining to the shares of stock exchanged therefor.
<PAGE>
2. Closing. Upon execution of this Agreement, the Stockholders
shall deliver a signed copy of this Agreement to HCCA together with certificates
for all the ELF Shares.
3.Representations and Warranties of ELF. In consideration of $1.00
and other good and valuable consideration, receipt of which is hereby
acknowledged, ELF hereby represents and warrants as follows:
(a) ELF is the exclusive owner of the CATV Time Credits, free and
clear of any liens or encumbrances
(b) The CATV Time Credits are in an amount of $100,000,000 (One
Hundred Million U.S. Dollars); and such CATV Time Credits are without restric
tion and may be used, sold, assigned, transferred without restriction and
without limitation as to time or any other limitations, by or at the direction
of ELF or its assignee.
(c) There are 4,000,000 (Four Million) Shares of ELF's common
stock outstanding and $11,000,000 of preferred stock convertible , all of which
are owned beneficially and of record by the Stockholders as indicated on
Schedule A. There are no other Shares of stock of any kind or description issued
or outstanding. Except as indicated in this paragraph (c) of Section 3, there
are no existing options, warrants, calls, commitments or other agreements to
which ELF a party which would require, and there are no convertible securities
of ELF outstanding which upon conversion would require, the issuance of any
additional shares of capital stock or other securities convertible into shares
of ELF's capital stock.
(d) ELF is duly incorporated and in good standing under the laws
of Nevada.
(e) Except for the agreement with A.I.N. for the CATV Time
Credits, ELF has no contracts with any person, corporate or otherwise, including
employment agreements, contracts to purchase goods or equipment, maintenance
agreements, guarantees, or other agreements or any nature whatsoever.
(f) ELF has no indebtedness to any bank, individual, or other
entity, and none of its assets are subject of any lien or attachment.
(g) ELF has no subsidiaries.
(h) ELF does not own or lease any real estate.
(i) ELF's officers and directors are as set forth on Schedule C.
(j) ELF's financial statements (the "ELF Financial Statements")
are attached as Schedule D. The balance sheet and related statements accurately
set forth the financial condition of ELF as of said date, and of the results of
operations for the period involved, prepared in conformity with generally
accepted accounting principals consistently applied.
(k) ELF is not a defendant (or plaintiff, against whom a
counterclaim has been asserted) in any litigation, pending or threatened; nor
has any material claim been made or asserted against ELF or Stockholders; and
there are no proceedings threatened or pending before any federal, state, or
municipal government, or any department, board, body or agency thereof,
involving ELF or Stockholders except as discussed fully on Schedule E.
(1) ELF has good and marketable title to (1) the CATV Time
Credits, and (2) except for property and assets disposed of since the date of
<PAGE>
the balance sheetincluded in the ELF Financial Statements in the usual and
ordinary course of business, all of its other property and assets, subject to no
mortgages, pledges, liens or other encumbrances except as disclosed in such
balance sheet or in Schedule D attached hereto.
(m) As of the date hereof, ELF has no obligations, liabilities or
commitments, contingent or otherwise, or a material nature which were not
provided for, except as set forth in the balance sheet included in the ELF
Financial Statements or in Schedule D.
(n) ELF is not in default under any agreement to which it is a
party nor in the payment of any of its obligations.
(o) Between the date of the balance sheet included in the ELF
Financial Statements and the closing, ELF will not have (i) paid or declared any
dividends on or made any distributions in respect of, or issued, purchased or
redeemed, any of the outstanding shares of its common stock, or (ii) made or
authorized any changes in its Certificate of Incorporation or in any amendment
to its bylaws, or (iii) made any commitments or disbursements or incurred any
obligations or liabilities of a substantial nature which are not in the usual
and ordinary course of business, or (iv) mortgaged or pledged or subjected to
any lien, charge or other encumbrance of its assets, tangible or intangible,
except in the usual and ordinary course of its business, or (v) sold, leased, or
transferred or contracted to sell lease, or transfer any assets, tangible or
intangible, or entered into any other transactions, except in the usual and
ordinary course of business, or (vi) made any loan or advance to any stockholder
of ELF or to any other person, firm, or corporation except in the usual and
ordinary course of business, or (vii) entered into or made any material change
in any existing employment agreement.
(p) ELF has timely filed (or timely filed necessary extensions)
with the appropriate governmental authorities all tax and other returns required
to be filed by it, and such returns are true and complete, and all taxes shown
thereon to be due have been paid. All material federal, state, local, county,
franchise, sales, use, excise, and other taxes assessed or due have been duly
paid, and no reserves for unpaid taxes have been set up or required on the basis
of the facts and in accordance ' with generally accepted accounting principles.
(q) ELF is not subject of any order, writ, injunction, or decree
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, and there are no actions,
suits, claims, proceedings or investigations pending or to the knowledge of its
president, threatened against or affecting ELF, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. '
(r) The Shares, when delivered to HCCA in accordance with the
terms hereof, will be fully paid, validly issued and nonassessable, and will
have the right to vote proportionate to the number of shares outstanding.
(s) ELF has delivered to HCCA complete and correct copies of its
Articles of Incorporation and Bylaws (or equivalent documents), together with
all amendments thereto.
(t) This Agreement has been duly and validly authorized and
approved by all necessary corporate action and, assuming execution and delivery
by HCCA and the Stockholders, this Agreement constitutes ELF's legal, valid and
binding obligation
<PAGE>
enforceable against it in accordance with its terms, and the execution and
performance of this Agreement will not violate, or result in a breach of, or
constitute a default in, any agreement, instrument, judgment, order or decree to
which ELF is a party, or to which it is subject, nor will such execution and
performance constitute a violation of or conflict with any fiduciary obligation
to which it is subject.
4. Representations and Warranties of Selling Stockholders.
Stockholders represent and warrant to HCCA as follows:
(a) Stockholders own and will deliver all the outstanding shares
of ELF (the "ELF Shares"), beneficially and of record, free and clear of any
lien, trust, encumbrance, or other claim by any other person, and such Shares
are fully paid and non assessable, and entitled to vote on all matters presented
for a stockholder vote.
(b) All representations and warranties of ELF set forth in Section
3 above, are true and correct, including but not limited to ELF's representation
that it is the sole owner of the CATV Time Credits, which are without
restriction and may be used, sold, assigned, transferred without restriction and
without limitation as to time or any other limitations, and such credits may be
transferred to and used by HCCA.
(c) This Agreement has been duly executed by the Stockholders, and
the execution and performance of this Agreement will not violate, or result in a
breach of, or constitute a default in, any agreement, instrument, judgment,
order or decree to which they or either of them is a party, or to which they or
either of them is subject, nor will such execution and performance constitute a
violation of or conflict with any fiduciary obligation to which they or either
of them is subject.
(d) ELF is not indebted to any of the Stockholders for any debt
whatsoever, including unpaid salary, bonuses, or rent.
(e) Stockholders have had the opportunity to ask questions and
receive answers concerning the terms and conditions of the exchange and to
obtain any additional information she required to verify the accuracy of the
information furnished.
(f) Stockholders are acquiring the HCCA Shares for their own
account for investment purposes only, and not with a view to the sale or
disposition thereof.
5. Representations and Warranties of HCCA. HCCA represents and
warrants to the Stockholders that:
(a) HCCA is a corporation duly organized and validly existing and
in good standing under the laws of the State of Nevada, and is qualified to
transact business in any other state in which the conduct of its business so
requires.
(b) HCCA has an authorized capitalization of 900,000,000 shares of
common stock and 200,000,000 share of preferred stock, of which approximately
395,000,000 shares of common stock have been issued and are outstanding. There
are no shares of preferred stock issued or outstanding.
(c) HCCA has delivered to Stockholders its balance sheet as of
December 31, 1995, prepared by Roy Sinkovitch, CPA. These financial statements
and the accompanying footnotes are a fair representation of management's belief
as to valuations of HCCA's assets, but such balance sheet will be subject to
<PAGE>
audit by new accountants being retained, and there can be no assurance that such
audit will not result in revised valuations for HCCA's properties.
(d) Except for property and assets disposed of since the date of
such balance sheet in the usual and ordinary course of business, and except for
properties subject to the condition that HCCA's stock be registered under the
Securities Act of 1934, HCCA has good and marketable title to all of its
property and assets, subject to no mortgages, pledges, liens or other
encumbrances except as disclosed in such balance sheet or in Schedule F attached
hereto.
(e) As of the date hereof, HCCA has no obligations, liabilities or
commitments, contingent or otherwise, of a material nature which were not
provided for, except as set forth in the balance sheet referred to in item (c)
above or in Schedule E.
(f) HCCA is not subject of any order, writ, injunction, or decree
of any court or federal, state, municipal or other governmental department,
commission, board, bureau agency or instrumentality, and there are no actions,
suits, claims, proceedings or investigations pending or to the knowledge of its
president, threatened against or affecting HCCA at law, or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau agency or instrumentality, domestic or foreign.
(g) It is planned that the acquisition and operation of
mufti-disciplinary health care practices providing "one stop health care", will
be HCCA's primary business, but HCCA's current assets consist of gold
concentrate and gold mining properties in Arizona and Nevada, a license to
manufacture and market a medical waste disposal system, a musicians' consulting
company, contracts for the acquisition of real estate, two remedial learning
centers in Toronto, and other assets unrelated to health care. HCCA is currently
a development stage company and has not had any revenues to date.
(h) Some of HCCA's shares are quoted on NASDAQ's "Bulletin Board"
under the symbol "HCCA".
6. Documents to Be Exchanged. (a) Prior to July 24, 1996,
Stockholders shall deliver the following documents to HCCA:
(i) A certificate issued by the appropriate governmental authority
evidencing that ELF is in good standing; and
(ii) An opinion of counsel for Stockholders and ELF confirming
that:
(A) ELF is duly organized, validly existing, and in good
standing under the laws of the state of Nevada, and has the
corporate power to own its properties and carry on its business as
now being conducted; ( B) The outstanding shares of ELF's common
stock have been duly authorized and validly issued, and are
non-assessable;
(C) The Agreement has been duly executed and delivered by the
Stockholders and ELF and is legally and validly binding upon them
in accordance with its terms;
(D) The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and
compliance with the terms and provisions of this Agreement by ELF
and the Stockholders will not breach any statute or any regulation
or conflict with or result in a breach of ELF's Articles of
Incorporation or bylaws, or any of the terms, conditions, or
<PAGE>
provisions of any agreement or instrument known to said counsel to
which ELF or the Stockholders is a party or is bound;
(E) There are no options, agreements, or commitments of any
kind relating to the issuance of common stock approved by ELF's
board of directors or, to such counsel's best knowledge and
belief, otherwise binding on ELF, and to his best knowledge and
belief, Stockholders are not a party to any agreement giving
anyone an option or other right to purchase shares of ELF's common
stock;
(F) To the best of his knowledge, there is no litigation,
proceedings, claim or governmental investigation pending or
threatened against of relating to ELF, its properties or business;
and
(G) Upon transfer of the ELF Shares in accordance with this
Agreement, HCCA will have title to such stock free of any liens,
encumbrances, claims or other limitations thereon, except for
restrictions imposed by federal or state securities laws and
regulations; and
(iii) Resignations of all ELF's officers and directors.
(b) Prior to July 24, 1996, HCCA shall deliver the following
documents to Stockholders a copy of a resolution of its board of directors
approving the exchange of stock contemplated hereby.
7. Indemnities. (a) Stockholders agree to indemnify HCCA, its
successors and assigns ("HCCA") and hold HCCA harmless from any and all loss,
liability, or damage, including reasonable attorney's fees and expenses, arising
out of or resulting from the assertion against HCCA of any claims, debts or
obligations, fixed, contingent or otherwise, including federal, state, and local
tax obligations attributable to periods prior to this date, except to the extent
reserved against in the balance sheet included in the ELF Financial Statements.
HCCA shall give Stock holders prompt notice of the assertion of any such claim,
and HCCA shall afford Stockholders an opportunity to participate with counsel of
their own choosing, at their own expense in the defense or other contest
thereof. In connection therewith, HCCA shall afford Stockholders access to such
books and records of ELF and HCCA as may be reasonably required.
(b) HCCA agrees to indemnify Stockholders, their heirs and assigns
and hold them harmless from any and all loss, liability, or damage, including
reasonable attorney's fees and expenses, arising out of the breach of any of
HCCA's representations and warranties contained in this Agreement.
8. Finders. The parties each represent to the other that no finder
or agent has been retained in connection with the transaction contemplated by
this Agreement.
9. Access to Records; Cooperation. (a) During the period between
the date of this Agreement and the Closing, HCCA, Stockholders and ELF shall
each afford representatives of the other party free access to HCCA's, ELF's, and
A.I.N.'s offices, records, minutes of meetings, files, books of account, and tax
returns, under such circumstances as will not unreasonably interfere with the
normal operations of ELF and HCCA.
<PAGE>
(b) ELF and the Stockholders agree to assist HCCA in such ways as
HCCA may reasonably request to realize the value represented by the CATV Time
Credits which are ELF's principle asset.
10. Board and Stockholder Approvals. The parties further recognize
that this and all subsequent agreements regarding this transaction are subject
to the approval of the boards of directors of HCCA and ELF. The parties hereby
certify that on or before July 24, 1996, each party shall provide the other with
a certified copy of the resolution of the Board of Directors of the respective
parties to this Agreement.
11. Transferability. The Stockholders recognize that the HCCA
Shares to be transferred to them have not been registered under the Securities
Act of 1933 (the "Securities Act") or the securities laws of any state, and will
bear customary legends to the effect that they may not be transferred without an
opinion of counsel satisfactory to HCCA that such transfer is consistent with
applicable securities laws.
12. Right of First Refusal. It is understood and agreed that, for
a period of five years, HCCA shall have a right of first refusal with respect to
the HCCA Shares to be issued ELF's Controlling Stockholders. In the event an ELF
Controlling Stockholder shall receive a bona fide offer from a ready, willing,
and able buyer to purchase such Stockholder's HCCA Shares during such period,
then such Stockholder shall first notify HCCA in writing of such offer and his
or her desire to sell, stating the name of such offeror, the price at which such
Shares are to be sold, and the terms of payment, and HCCA shall have twenty (20)
days in which to offer to purchase such Shares or any of them at the same price
and on the same terms, or if the market price of such shares is less, then at
the market price which would be applicable to such shares (discounted by 30% if
unregistered), closing on such purchase to be made in sixty (60) days. In the
event HCCA shall decline to pur chase such Shares, the Stockholder shall have
ninety (90) days in which to effect such transaction to the named offeror at the
stated price or higher, after which it shall be required to again give HCCA
notice and a right of first refusal.
13. Hypothecation. ELF's Controlling Stockholders agree that, for
a period of two years following this Agreement, they may not and neither of them
may hypothecate its or her shares of HCCA's stock without giving HCCA two weeks
prior written notice of such transaction.
14. Notices. (a) Any notice or delivery to HCCA required or
permitted by this Agreement shall be deemed to have been sufficiently given if
sent by registered or certified mail, postage prepaid, addressed to
Health Care Centers of America, Inc.
1000 Royce Boulevard (ste 300-A)
Oakbrook Terrace, IL 60181
(b) Any notice or delivery to ELF required or permitted by this
Agreement shall be deemed to have been sufficiently given if sent by registered
or certified mail, postage prepaid, addressed to
<PAGE>
Mrs. Ilonka Harezi
Rural Route 1, Box 21
St. Francisville, IL 62460
(c) Any notice or delivery to the Stockholders required or
permitted by this Agreement shall be deemed to have been sufficiently given if
sent by registered or certified mail, postage prepaid, addressed to each of the
Stockholders at their addresses as set forth on Appendix A.
(d) Notice shall also be effective if sent by registered or
certified mail, postage prepaid, addressed to such other address of which the
recipient may have notified the sender in writing. All notices shall be deemed
given as of the date of receipt.
14. Further Assurances. Each party hereto agrees to take any
further action necessary or expeditious to carry out the provisions of this
Agreement.
15. Supersession. This Agreement supersedes all prior agreements
and understandings between the parties and may not be changed or terminated
orally, and no attempted change, termination or waiver of any of the provisions
hereof shall be binding unless in writing signed by the parties hereto.
16. Arbitration. Any controversy or dispute arising out of or in
connection with this Agreement, its interpretation, performance, or termination
which the parties are unable to resolve within 90 days after written notice by
one party to the other of the existence of such controversy or dispute, shall be
submitted to arbitration in accordance with the rules of the American
Arbitration Association. Such arbitration shall take place in Chicago, Illinois,
before three arbitrators appointed by the American Arbitration Association. The
arbitrator shall render a written decision with the reasons therefor within
three months from the date the arbitration is concluded.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
WITNESS the hands of the undersigned officers of the parties
hereto, duly authorized thereunto, as of the day and year aforesaid.
ELF Works, LTD.
by /s/Courtland Reeves by:/s/Ilonka Harezi
------------------- ----------------
Courtland Reeves, Secretary Ilonka Harezi, President
Attest: HEALTH CARE CENTERS
OF AMERICA, INC.
by /s/James Troester by by /s/Maurice W. Furlong
-------------------- ---------------------
James Troester, Secretary Maurice W. Furlong, CEO/President
<PAGE>
Health Care Centers of America, Inc.
STOCK EXCHANGE AGREEMENT
INDEX to SCHEDULES
Schedule
- --------
A Names and Addresses of Stockholders
B Copy of CATV Trade Credit from A.I.N. C ELF's Officers and Directors D ELF's
Financial Statements E ELF Disclosures not Included in ELF Financial Statements
F HCCA Disclosures not Included in HCCA Financial Statements G Signature Page
and Accession Agreement
<PAGE>
Schedule A
Health Care Centers of America, Inc.
STOCK EXCHANGE AGREEMENT
Names and Addresses of Stockholders
The person whose names and address appear below constitute the
holders of outstanding stock of the Stockholders' Corporation. Each such person
has subscribed to the Stock Exchange Agreement by executing the Signature Sheet
attached hereto warranting that he or she is the owner of the number of shares
of the Company set forth beside his or her name, that he or she has good title
to such shares, and that he or she transfers such shares to HCCA in exchange for
that number of HCCA shares indicated in the third column:
number and type of shares of HCCAs shares to be
Stockholders' Corporation received
name and addres transferred to HCCA by Stockholder
- --------------- ------------------- --------------
American Independent 10,000,000 preferred 10,000,000
Network, Inc.
6125 Airport Freeway
(ste. 200)
Fort Worth, TX 76117
By executing the Signature Page and Accession Agreement attached hereto,
American Independent Network, Inc., agrees to the terms set forth in Section 12
("Right of First Refusal") and 13 (Hypothecation").
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name ELF Cert # HCCA Shares Ratio ELF Shares
Eldon Byrd C-2 10,000 0.0003448 1,379
t3utlon Goldberg C-3 5,000 0.0001724 690
John Powers C-4 15,000 0.0005172 2,069
Margaret Sanders C-5 15,000 0.0005172 2,069
Michelle Byrd C-46 15,000 0.0005172 2,069
Jeff Byrd C-6 5,000 0.0001724 690
Robert Quaid C-7 20,000 0.0006897 2,758
William Venturi C-8 20,000 0.0006897 2,759
Wendell Dixon C-9 80.000 0.0027586 11.034
Roger Sonnabend C-10 10,000 0.0003448 1,379
Joan Sonnabend C-11 15,000 0.0005172 2,069
Ted Rozema C-12 20,000 0.0006897 2,759
Sash Spencer C-13 25,000 0.0008621 3.448
Chris Hegarty C-14 15,000 0 0005172 2,068
Valerie Hunt C-15 15,000 0.0005172 2,069
Omni Asset Management Trust C-39 1,600,000 0.0551724 220,690
Susann Beeson C-16 300,000 0.0103448 41,379
Donald R. Stiffter C-1 150,000 0.0051724 20,690
Michael & Leslie Avery C-17 40,000 0.0013793 5,517
Bryan Reeves C-18 1,000,000 0.0344828 137,931
Katherine Reeves C-19 1.000,000 0.0344828 137.931
FranCeska Schofield C-20 1,000,000 0 0344828 137.931
Albert Freedman C-21 15,000 0 0005172 2,069
Charles Reeves C-22 10,000 0.0003448 1,379
Sid Phillips C-24 15,000 0.0005172 2,069
Gina Rotstein C-25 20.000 0.0006897 2,759
Ed Skilling C-26 20,000 0 0006897 2,759
Rink Palan C-28 20.000 0 0006897 2, 759
Glen Rein C-29 10.000 0 0003448 1,379
Chrystyne Jackson C-30 10.000 0.0003448 1,379
Callie Rogers C-31 10,000 0.0003448 1,379
Shelby Eugene Jackson C-32 15,000 0.0005172 2,069
Robert Leach C-33 10.000 0.0003448 1,379
Marilyn Miller C-34 15,000 0.0005172 2,069
Craig Halbert Beeson C-37 100,000 0.0034483 13,793
Jay H8m11lOn Beeson C-38 100,000 0.0034483 13,793
F. Martin McDermott C-41 30.000 0.0010345 4,138
Uri Geller C-42 15,000 0.0005172 2,069
Richard W. Beeson C-43 10,000 0.0003448 1,379
Bernie Bohigas C-44 20,000 0.0006897 2,759
Steve Haipern C-45 5,000 0.0001724 690
Ilonka Harezi C-40 23,175,000 0.7991379 3,196,55
Sub Total 29,000,000, 1,000,000 4,000,000
ELF Works 10,000,000
Mojave Media P-44-1 7 .200.000 7,200.000
Omni Asset Management
Trust P-44-2 1.400.000 1,400,000
Jack Wilemon P-44-3 1,000.000 1,000,000
Jack Cheldin P-44-4 400,000 400.000
Ilonka Harezi P-4 1.000,000 1.000,000
Total 40,000,000 15,000,000
</TABLE>
<PAGE>
HCCA
November 8,1996
Ms. 11onka Harezi
ELFWORKS. Ltd.
Rural Route 1, Box 21
St. Francisville, IL, 62460
Re: Stock Exchange Agreement ELFWORKS, Ltd (ELF)/
Health Care Centers of America, Inc. (HCCA) - Amendment
Via Facsimile: 9618) 948-2650
Dear Ilonka:
As we have discussed, the June 26, 1996 Stock Exchange Agreement (Agreement)
between ELF and HCCA indicates that HCCA agreed to acquire 95% of ELF's
outstanding shares. In reality, HCCA acquired all (100%) of ELF's outstanding
shares. Therefore, we need to amend the written agreement to reflect the factual
reality of the transaction as indicated below.
For good and valuable consideration, the sufficiency and receipt of which is
hereby acknowledged, the parties agree as follows:
1. Paragraph 1(a) of the Agreement is amended to read:
(a) HCCA agrees to acquire 100% of ELF's outstanding shares of stock ("ELF
shares")
2. Added to the Agreement is the following:
(18) Facsimile Transmission: A facsimile transmission, including signature
thereon, shall be treated for all purposes as an original .
Please sign this letter and return it to me via facsimile to (702) 786-0972.
Thank you.
Sincerely Agreed and Accepted this 8th day of November, 1996
/s/Maurice Furlong By /s/Ilonka Harezi
- ------------------ ----------------
Maurice W. Furlong Ilonka Harezi, President, ELFWORKS, Ltd.
President
HEALTH CARE CENTERS OF AMERICA, INC.
510 Renaissance Drive
Oakbrook Terrace, IL 60181
PARTNERSHIP AGREEMENT
---------------------
OF
--
RSTP HOTEL LTD.
---------------
BY THIS PARTNERSHIP AGREEMENT(the "Agreement") made and entered into
effective as of the _ day of August, 19966 by and Fairdan Suites, Inc.
(here-in-after "FSI") 77 North Hibiscus Drive, Miami Beach, Florida 33139, and
The R&S Group, (here-in-after "R&S") a common law business associations, with
offices at 1000 Royce Boulevard, Oakbrook Terrace, Illinois 60181, all of whom
do hereby agree to the following terms and conditions
Section 1.
Definitions.
------------
As used herein the following terms shall have the meanings set forth
below:
"Act" means the Securities Act of 1933 and/or the Securities Exchange
Act of 1934, as now or hereafter amended.
"Affiliate" means when used with reference to any specified Person: (i) any
person directly or indirectly controlling, controlled by or under common control
with the specified Person (ii) any Person directly or indirectly owning,
controlling or holding with power to vote ten (10%) percent or more of the
outstanding voting securities of the specified Person, and (iii) any officer,
director, Partner, of the specified Person, and (iv) if the specified Person is
an officer, director or Partner, any company or firm for which the specified
Person acts in any such capacity
"Annual Business Plan" memos any plan approved by the Partners
pursuant to Section 6.03 hereof.
"Capital Account", as to any Partner, means the capital account
maintained for such Partner in accordance with the provisions of Section 5,04.
"Cash Flow" means, with respect to any fiscal period, all cash
receipts from operations, without deduction for depreciation, but after
deducting cash funds used to pay all other expenses, debt payments, capital
improvements and replacements, and includes proceeds from refinancing
"Agreement" means the Partnership Agreement of RSTP HOTEL LIMITED
PARTNERSHIP, a limited partnership duly filed and amended, as herein required,
in accordance with (and in all respects sufficient in form and substance under)
the laws of the State.
"Code" means the Internal Revenue Code of 1996, as now or hereafter
amended.
<PAGE>
"Distributable Cash" means, 'with respect to any fiscal period, Cash Flow
less any Amounts Set aside for the restoration, increase or creation of reserves
in accounts deemed sufficient by the Managing Partner for working capital, debt
service, replacements, renewals, or other costs or
"Hotel Purchase Agreement" means the Land Purchase Contract attached hereto
as Exhibit A
"Interest" means, as the requires, the interest of Partner in the Limited
Partnership, including the rights and obligations of such Partner under the
Limited Partnership Act and this Agreement.
"Managing Partner" means FSI or any other Person who becomes its successor.
"Partners" shall infer, collectively, to the Managing Partner and the
Partner. Reference to a "Partner" shall be to any one of the Partners.
"Limited Partnership" means the Limited Partnership subject to this
Agreement and the Certificate.
"Limited Partnership Act" means the Florida Uniform Partnership , as now or
hereafter amended.
"Option " means the Option to purchase the Second Hotel Site, attached
hereto as Exhibit B.
Person means any neural person, corporation, association or other legal
entity.
"Primary Hotel " means the first hotel to be developed, located in Dania,
Florida on real property, the legal description of which is attached hereto as
Exhibit "C".
"Primary Hotel Site' means the land on which the Primary hotel is to be
developed, located in Dania, Florida, legal description of which is attached
hereto as Exhibit "C".
"Second Hotel" means the second hotel to be developed, located in Dania;
Florida on real property, the legal description of which is attached hereto as
Exhibit "D".
"Second Hotel Site" means the land on which the Second Hotel is to be
developed, located its Dania, Florida, legal description of which is attached
hereto as Exhibit "D".
"State? means the State Florida.
"Transfer" means any sale, assignment, pledge, encumbrance, disposition or
outer transfer (or the sufferance of any of the foregoing to occur, whether
voluntarily or involuntarily, or by operation of law or otherwise.)
"Withdrawal." when used with reference to a Partner, shall occur upon (i)
the Transfer of such Partners Interest, (but not any assignment by a Partner of
its beneficial interest in airy fees or distributions due or which become due
<PAGE>
to such Partner under this Agreement), provided however that R&S may assign its
interest to a successor, related, or affiliated entity, and a any such transfer
by R&S shall not constitute a withdrawal as defined herein or (ii) the
dissolution, liquidation or bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be did to occur when such Partner is
voluntarily adjudicated a bankrupt or insolvent, or seeks, consents to or does
not contest the appointment of a receiver or trustee for itself or for all or
any part of its property, or files a petition seeking relief under the
bankruptcy, arrangement, reorganization or other debtor relief laws of the
United States or any state or in any other competent jurisdiction, or makes a
general assignment for the benefit of creditors, or admits in writing an
inability to pay his or its debts as they may mature, or a petition is filed
against such Partner seeking relief under the bankruptcy, arrangement,
reorganization or other debtor relief laws of the United States or any competent
jurisdiction, or a court of competent jurisdictions enters an order, judgment or
decree appointing, without the consent of such Partner, a receiver or trustee
for it or for all or any material part of its property, and such petition shall
not be dismissed or such order, judgment or decree shall not be discharged or
stayed within a Period of ninety (90) days after its entry. ?Withdrawn? means
the taking or suffering of any action. constituting a Withdrawal. "Withdrawn?
means having taken or suffered any action constituting a Withdrawal.
"Withdrawal" shall not include a permitted pledge oar encumbrance of a Partner's
interest in the Limited Partnership as collateral security for any loans made to
the Limited Partnership, directly or indirectly, by the pledgee.
Section 2.
Continuation: Name; Principal Office
------------------------------------
2.01 Continuation
- -----------------
Upon the admission of the Partners into the Limited Partnership, the
Partners shall continue the Limited Partnership as a Limited Partnership
pursuant to the provisions of the Limited Partnership Act and other applicable
laws of the State. The Partners shall promptly amend the Certificate and such
other documents in such public offices in the State as shall be required under
the law of the State to give effect to the provisions of this Agreement and to
preserve the character of the Limited Partnership as a Limited Partnership.
2.02 Name.
- ----------
The Limited Partnership shall be conducted under the name RSTP HOTEL
LTD. or such other name as the Partners shad hereafter designate by amendment.
2.03 Principal Office.
- ----------------------
The principal office of the Limited Partnership shall be located at 77
North Hibiscus Drive, Miami Beach, Florida 33139.
<PAGE>
Section 3.
The purposes of the Limited Partnership are (i) to purchase the land
described in Exhibit C hereto and made a part hereof pursuant to the Hotel Land
Purchase Agreement (ii) to develop the Primary Hotel, and Second Hotel, if
feasible, on the portion of the land described in Exhibit D hereto, and (iii) in
connection therewith to obtain all necessary government and regulatory
approvals, franchises and other activities as may be necessary or advisable in
connection with the development, management and disposition of the Primary and
Second Hotel.
Section 4.
Term
----
The term of the Limited Partnership shall continue until December 31, 2016,
unless sooner terminated in accordance with the provisions of Section 15 hereof
or as otherwise provided bylaw.
Section 5.
Partners; Interests in the Limited Partnership:
-----------------------------------------------
5.01 Partners
- -------------
The names and addresses of the Partners of the Limited Partnership are:
FSI
77 North Hibiscus Drive
Miami Beach, Florida 33139
The R&S Group
C/o Health Care Centers of America, Inc.
1000 Royce Boulevard
Third Floor
Oakbrook Terrace, Illinois 60181
5.2 Capital Contributions of the Partners.
- ------------------------------------------
PARTNER CAPITAL CONTRIBUTION
Each Partner shall contribute $5,000.00 to the capital of the
Partnership. R&S Group shall also contribute the necessary cross parking and
other easements necessary to develop the Sites as hotels in lieu of unity of
title.
5.3 Other Obligations of the Partners
- -------------------------------------
<PAGE>
A. In addition to the capital contn'butioa afore mentioned, FST shall contribute
its efforts and know how to determine the feasibility of a IoW or hoWs at the
site and the appe;araace, size and location thereof, and use its best efforts a)
to obtain a franchise agreement with Marriott Hotels on terms acceptable to bath
partners; b} drain financing guilftcient far the development and construction of
tile hotel and for the irtfrastruct9tre necessary to bring sewer, water, other
ut, ingress arid egress, to tbc site: G) retain, and ads payment to, engineers
to prepare necessary plans and specifications for the ronstructiart of the
required infrastructure; d) retain, and advance payment to, an architect to
prepare drawings as shall be needed initially to obtain a franchise and
financing, and if successful, to prepare drawings for the construc:tian of the
hotel; e) retain,, ,with the approve! of the other Farmer, a consrucxioa
contractor and err into a construction contract far the erection of the hotc3,
which approval will not be unreasonably witbhdd: #) retain an isrterior
designer, if necessary, for design of the interior of the hotel; axed S) acquire
the necessary 1fctrniture, fixtures and oquipnm and laadscsping for the hotel,
8. The obligations ofR 8c S in addition to the capital conttibution above set
Earth, shall be: a) to cause the title bolder to the Hotel Sites to cnta onto
cad perform a contract of sale of the hotel ate or sites to the l:.irrdted
Partnership, which contract shall be ire the form attached hereto a5 Exhibit A;
b) cause the title holder to sul~ecx the primary hotel site to the lien ofa
first mortgage to obtain the funds required to construct the necessary
infrastructure for the hotel site acid to construct; furnish and equip the
hotel, pursuant to plans and sins to be agrood upon by both Partners; and c) to
provide all necessary casements on the Krilich plat.
5.04 Loans by the Partners.
- ---------------------------
In addition to the above specific; advances , FSI shall loan or cause to be
loaned to the Limited Partnership such sums as the Partners deem appropriate and
necessary for the conduct of the Limited Pat2uarship's business. Loans made bar
FSI shelf be due upon the closing of the Purchase Agreecne>2t for the Hotel
Land. Upon full payment of the Land Purchase Agrt. no fUrtler advances shall be
required. Either Partner tray ads say funds required at 2'%6 over LIBOR
5.05Franchise and Mortgage Obligations.
- ---------------------------------------
In the event that within seven (7) months after the date hereof, a)
FSI does not obtain, a franchise a,natt for the prisraary hotel site with
hrlarriott International Inc. or such alternate franchise aSrecmerrt as shall be
agreeable to boot parts, which agreement shall not be unreasonably withheld, or
b) the Partnerstrip does not obtain a comnxittttent for financing of the
Priknary Rote! Site sufficient to pay all development expenses and tile cost of
erection of such hotel arid fixrniishang and fixtures thereof, this Partnership
shall terminate cad neither party sha11 bane any further obligation to the
other, except that R&8 shall repay PSI expanses as provided is Section 5.6
below, provided, however, that if FSI shalt undertake to advance any necessary
short fell, this agreement shall not termi,aaae. It is agreed that R&S will have
the right of approval of the temts and conditions of the mortgage, which
approval shall not be unreasonably withheld.
5.5 Development Expenses
- ------------------------
<PAGE>
The parties acknowledge that R&S is, or has power of attorney to act
on behalf of, the owner of property of which the hotel site forms a part known
generally as the property described on the Krilich plats, copies of which plats
are attached hereto as Exhibits and R & S and FSI agree that it is to be the
obligation of each site on the plats to bear total infastructure costs
proportionally on a per square foot basis. It is antcipated that development of
the infastructure necessary for the hotel site itself will result in expenditure
of funds for improvements beneficial to the entire property. It is therefore
agreed that upon completion of the infrastructure for the entire site, a
determination shall be made of the appropriate share of the hotel site of such
infrastructure costs and, to the extent that the hotel site, through this
partnership, has paid funds in excess of the proprotionate share of this
partnership, said funds shall be repaid to the partnership . To the extent that
said funds were advanced by FSI and have not been repaid, the partnership shall
promptly repay FSI. To the extent that said funds were included in the
development and construction mortgage on the hotel sites the mortgage shall be
prepaid to the extent of such amount. The repayment required herein shall be
made at the earliest of the following: a) sale or lease of the first non hotel
lot located on the overall site; b) closing of the purchase agreement of the
Second Hotel Site; or c) five years after completion of the total development
work, excluding the placing of the final lift of asphalt on the streets in and
abutting the site where such streets are the responsibility of the developer.
The cost will be included in the overall determination of cost to be apportioned
shall include all on-site work, such off-site work as is necessary to bring
utilities to the site, all engineering costs, all impact costs, costs of all
permits, and plats of subdivision, if necessary, the improvement of all streets
required to be improved whether located on-site, off-site, or partially on-site,
and interest to the hotel partnersbip on the non botel portion of the cost. To
the extent that any street or utility work is performed off-site, the
partnership will use its best efforts to obtain an agreement for recapture of
such costs upon development of other property benefited by the improvements for
herein. R&S shall reimburse FSl for its loan to the Partnership for the
engineering expenses if the plans are approved and the Partnership does not
obtain financing or franchising acceptable to both Partners.
5.07 Capital Accounts
- ---------------------
A capital account shall be maintained for each Partner in accordance
with federal income tax accounting principals. The capital account of each
Partner shall be increased by (i) the amount of any cash and the fair market
value of any property contributed to the Limited Partnership by such Partner
(net of liability secured by such contributed property that the Limited
Partnership is considered to assume or take subject to); (ii) the amount of
Limited Partnership income and gain or items thereof allocated to such Partner;
and (iii) such Partner's prorate share (determined in the same manner as such
Partner's share of income gains, losses, deductions and credits) of any other
account received by the Limited Partnership during such year which is exempt
from federal income tax. The capital account of each Partner shall be reduced by
(i) the amount of money distributed to the Partner by the United Partnership;
(ii) the fair market value of property distributed by the Limited Partnership to
the Partner (net of liabilities secured by such distributed property that the
Partner is considered to assume or take subject to): (iii) the amount of Limited
Partnership losses and deductions or item thereof allocated to the Partner, (iv)
such Partners prorate share (determined in the same manner as such Partner's
share of income, gains, losses, deductions or credits) of any other expenditures
of the Limited Partnership which are reflected in the capital accounts.
<PAGE>
Section 6
Rights and Duties ofthe Managing Partner
----------------------------------------
6.01 Management of Limited Partnership Business.
- ------------------------------------------------
The Managing Partner shall be responsible for the management and control of
the Limited Partnership's business and shall devote so much of its time and
attention to the Limited Partnership as is reasonably necessary and advisable to
manage the affairs of the Limited Partnership. The FSI, or an affiliate of the
FSI shall manage the Primary Hotel, and Second Hotel if built, for a management
fee of five (5%) percent of gross hotel revenues pursuant to the Management
Agreement attached hereto as Exhibit E.
6.02 Specific Rights and Powers
- -------------------------------
Among the rights and powers which the Managing Partner shall have are, by
way of illustration, but not by way of limitation, provided that such exercise
is reasonably consistent with the then applicable Annual Business Plan, the
following.
(i) to purchase, lease, exchange, trade or sell Limited Partnership
property at such price, rental or amount for cash, security or other property,
with the consent of the Limited Partner;
(ii) to execute and deliver, on behalf of the Limited Partenership all
documents as may be required to be executed and delivered as behalf of the
Limited Partnership in connection with the operation of the Primary Hotel and
Second Hotel;
(iii)subject to approval of R&S, to pay fees relating to the arrangement for any
financing,
(iv) subject to the approval of RCS, to borrow money for Limited Partnership
purposes and to refinance or modify any loan to the Limited Partnership,
provided, however, that R&S hereby agrees to subordinate the Primary Hotel Site
to a construction mortgage and permanent financing in the amount of 80% of the
total cost of the Primary Hotel, including 100% of the development costs,
working capital, and a reserve for contingencies;
(v) to invest funds of the Limited Partnership, including funds as reserves, in
certificates of deposit, interest bearing time deposits in state or national
banks. United States Government securities, bank repurchase agreements, bankers'
acceptances or money market funds.
(vi) to acquire, enter into, and pay for, any contract of insurance which it
reasonably deems necessary and proper for the protection of the Limited
Partnership, for the conservation of the assets of the Limited Partnership, or
for any purpose beneficialto the Limited Partnership, or the Partners,
including, without limitation, insurance for the purpose of enabling the Limited
Partnership to satisfy its obligation to indemnify the Partners under Section
6.04 hereof;
(vii) to bring or defend, pay, collect, or arbitrate, resort to legal action, or
otherwise adjust claimsor demands of, or against, the Limited Partnership;
<PAGE>
(viii) tp establish reasonable reserve funds to provide for future requirements
of the Limited Partnership;
(ix) to perform or cause to be performed all of the Limited Partnership's
obligations under any agreement to which the Limited Partnership is a party,
(x) to loan, or cause to be loaned, funds to the Limited Partnership; and
(xi) to maintain the Limited Partnership's account records of all Partners, as
well as the books of account of the Limited Partnership
6.03 Annual Business Plan.
- --------------------------
No later than thirty 130) days prior to the end of the then current
Fiscal Year, the Managing Partner shall prepare a business plan (the "Annual
Business Plan") for the next Fiscal Year. No material changes or departures for
any item in an approved Annual Business Plan shall be made by the Managaing
Partner without the prior approval of all Partners. Each Annual Business Plan
shall include the following:
(a) A narrative description of any activities proposed to be undertaken: (b) A
projected annual income statement (accrual basis) on a quarter-by-quarter basis;
(c) A projected balance sheet as of the end of the period; (d) A schedule of
projected operating cash flow (including itemized operating revenues; Project
costs, and Project expenses) for such Fiscal Year on a quarter-by-quarter basis,
including a schedule of projected operating deficits, if any; (e) A marketing
plan indicating the portions of the Project that the Managing Partner recommends
be made available for lease and the proposed terms and conditions relating
thereto; (f) A description of any proposed construction and capital
expenditures, including projected dates for commencement and completion ofthe
forgoing; (g) A development schedule identifying the projected development
periods as well as the times for completion of the various stages of thee
Project and the costs attributable to each such stage; (h) A description of the
proposed investment of any funds of the Partnership which are (or are expected
to become) available for investment (i) A description, including the identity of
the recipient (if known) and the amount and purpose, of all fees and other
payments proposed or expected to be paid for professional services and, if a fee
or payment exceeds $10,000.00, for other services rendered to the Partmership by
third parties; and (j) A detailed. description of such other information, plans,
maps, contracts, agreements, or other matters necessary in order to inform the
Partners of all matters relevant to the development, operation, management, and
sale of thee Project or any portion thereof.
<PAGE>
6.04 Implementation of Plan by the Managing Partner
- ---------------------------------------------------
The Managing Partner shall, subject to the limitations contained
herein and the availability of operating revenues and other cash flow (as long
as the Managing Partner has used reasonable efforts to maximize the same),
implement the then applicable Annual Business Plan. The Managing Partner shall
promptly advise and inform the Partners of any transaction, notice, event, or
proposal directly relating to the management and operation of the Project which
does or could significantly affect, either adversely or favorably, the Project
or the Partnership or cause a significant deviation from the Annual Business
Plan.
6.05 Other Business Ventures
- ----------------------------
Any Partner or any officer, director, employee, shareholder or other person
holding a legal or beneficial interest in any entity which is a Partner, may
engage in, or possess as interest in, other business ventures of every nature
and description, independently or with other, including, but not limited to,
acquisition, ownership, operation and sale of hotels or motels, other commercial
real estate, and neither the Limited Partnership nor the Partners shall have any
right by virtue of this Agreement or the relationship created thereby in or to
such independent ventures or to the income or profits derived therefrom.
Nether Robert Krilich, R&S Group, or any Affliate, shall develop, or sell
for development, as a hotel or motel, any portion of the Krilich Plat, during
the Option period for the Second Hotel Site. If the Partnership does not
exercise its Option to purchase and develop the Second Hotel Site as a hotel,
and does not develop two hyundred rooms in the agregate between the Primary and
Second Hotel Site, Robert Krltich, R&S Group, or an Affiliate may develop, or
sell for development, as a Hotel with no more than one hundred and fifty rooms,
a portion of the Krilich Plaat. The no additional Motels shall be developed on
the Krilich Plat without the consent of FSI, so long as FS1 is a Partner in the
Partnership,
Neither Partner, Michael Thomas or Robert Krilich or an Affiliate or any
entity in which they directly or indirectly, hold an interest, may own or manage
a hotel within two miles of the Prlnrary Hotel Site without the consent of the
other Partner, accept as set forth above, during the period that the Partner is
a Partner in this Limited Partnership. FSI ownership an management of the
Comfort Inn and Hampton Inn & Suites (and their successor hotels, if any) are
expressly excluded from this prohibition.
Section 7.
Property Management Expenses
----------------------------
7.01 Management.
- ----------------
The Managing Partner shall be responsible for the management of the
day-to-day operations of the Limited Partnership. The Managing Partner may
employ other parties, including Affiliates, to assist it in the performance of
such obligations, provided that the amounts paid to any affiliated parties shall
be no greater than the amount customarily charged in arms-length transactions by
others rendering similar services at comparable facilities.
<PAGE>
7.02 Expenses.
- --------------
Except as otherwise provided herein, the Limited Partnership shall pay all
expenses of its operations (which expenses either may be billed directly to the
Limited Partnership or reimbursed to the Partners or their Affiliates) which may
include, but are not limited to:
(i) all costs of borrowed money and taxes applicable to the Limited Partnership;
(ii) all costs for goods and materials, whether purchased by the Limited
Partnership directly or by the Partners on behalf of the Limited Partnership;
(iii) legal, audit, accounting and other professional fees;
(iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers and services, leasing agents, consultants, real estate brokers,
insurance brokers and others;
(v) expenses of organizing, revising, amending, converting, modifying or
terminating the Limited Partnerhip;
(vi) expenses in connection with distributions made by the Limited Partnership
to, and communications and bookkeeping work necessary in maintaining relations
with, Limited Partners, including the cost of printing and mailing to such
persons notices and reports of matters pertaining to the Limited Partnership;
(vii) costs of any accounting, statistical or bookkeeping eqwuipment necessary
for the maintainance of books arid records of the Limited Partnership;
(viii) costs incurred in connection with any litigation in which the Limited
Partnership is involved, as well as in the examination, investigation or other
proceedings conducted against the Limited Partnership by any regulatory agency,
including legal and accounting fees incurred in connection therewith; and
(ix) costs of any computer services or equipment or of services of personnel
uses for or by the Limited Partnership.
Section 8.
Allocations.
------------
8.01 General Rule.
Income, gain, loss, depreciation, deduction or credit of the Limited Partnership
shall be allocated fifty (50%) percent to each Partner, in accordance with tax
accounting principles applied in a consistent manner.
<PAGE>
8.02 Allocation on Sale or Disposition.
Gain or loss on the sale or other disposition of Limited Parlnasbip property
shall be allocated fifty (50%) percent to each Partner.
Section 9.
Distributions.
--------------
9.01 Cash Flow Distributions.
Except as provided in Section 9.02, distributions of Distributable Cash,
except proceeds of refinancing, shall be as follows:
(a) First, interest on the Hotel Land Purchase Agreernent will be paid ;
(b) Second, an amount equal to 20% of the net profits of the Partnership,
equally to each Partner;
(c) Third, 70% of the remaining Distributable cash will then be distributed to
the Seller of the Hotel Land and reduce the amount owing on the Hotel Land
Purchase Agreement;
(d) Fourth , the remaining 30% of the Distributable Cash will then be
distributed to FSI to the extent of advances made by FSI to the Partnership;
and;
(e)Fifth, to the extent the 30% distributable to FS1 in repayment of advances
exceeds the advances made by FS1, such excess shall be distributed fifty (50%)
percent to each Partner.
(f) It is agreed that until payment has been made for the land, reserves of the
hotel company shall not exceed 2% of gross income the first year, 3% the second
year, 3% the third year, and 4% the fourth year.
EXAMPLE:
For exaple, assume the outstanding amount on the Hotel Purchase Agreement
was $1,300,000.00, the FS1 had advanced $50,000.00, and the gross income of the
Partnership was $2,000,000 for the first year. The anticipated net operating
income would then be 8,000,000.00, reduced by the construction mortgage payments
of an assumed $400,000.00. which would constitute the net partnership income,
which would be reduced by the capital improvement reserve in the amount of
$40,000.00, leaving Distributable Cash in the amount of $360.000.00. Interest
would then be paid on the outatand%ng purchase price of $1,300,000.00 in the
amount of $75,000.00. Next, the R&S Group and FSI would each be distributed
$20,000.00 (20% of net partnership income, divided equally), leaving
$245,000.00, which would then be distributed 70% to the Land Owner in the amount
of $171,500.00 in reduction of the purchase price (reducing the outstanding
Purchase Price to $1.047,500.00 end 30% to the FSI to the extent of its advances
(in this example $73,500.00 would be available for distribution to the FSI, but
<PAGE>
the advances were only $50,000.00 thus $50,000.00 would be distributed to the
FSI, leaving $23,500,00 to be distributed equally, $11,750.00 each to R&S Crioup
and the FSI.
9.02 Liquidating Distributions.
- -------------------------------
The net cash proceeds of a sale, exchange or otber disposition of all or
substantially all of the Limited Partnership's assets constituting a dissolution
of the Limited Partnership shall be applied as fcAows:
(i) to payment of debts and liabilities of the Limited Partnership and
the expenses of liquidation;
(ii) to the payment of the balance of the Land Contract and the payment of
Advances proportionately;
(iii) to the setting up of such reserves as the person required by law to wind
up the Limited Partnership's affairs may reasonably deem necessary for any
contingent liabilities or obligations of the Limited Partnership, the balance of
such reserves, if any, to be distributed as hereinafter provided: and
(iv) then, the balance to the Partners equally in accordance with the positive
balances of the Capital Accounts, as adjusted for any gains or losses resulting
from such liquidating sale, exchange or other disposition as required by
Paragraphs 5.02 and 8.02.
Section 10.
Restrictions on disposition of Interests.
-----------------------------------------
10.01 Generally
- ---------------
Other than a transfer to an Affiliate, except as otherwise expressly
provided in this Section 10, a Partner shall not Transfer all or any part of
such Partner's Interest, or any rights therein, to any other Person, whether or
not a Partner, unless the Transfer is effected in compliance with the following
conditions:
(a) the Transfer shall be set forth in a written instrument in form and
substance acceptable to legal counsel for the Limited Partnership, which
provides for the payment by the parties to the Transfer of all reasonable
expensese inccured by the Limited Partnership in connection with the transfer,
including but not limited to the cost of obtaining opinions of legal counsel;
(b) the written consent of the remaining Partners.
10.2 Transfer of Decedent's Interest,
- -------------------------------------
The Interest of a Partner who has died shall be assigned, at the request of
the decedent's duly qualified personal representative. subject to the
restrictions set forth in Section 10.03, to the person entitled to distribution
of the decedent's Interest under the terms of the decedent's wi1l or, if the
decedent died without a will, under the applicable intestacy statute, upon (i)
full compliance with all of the conditions set forth in Section 10.06, other
than clause (ii) thereof, (ii) delivery to the Managing Partner by the personal
representatives of waivers, release and other documents required by applicable
law, and (iii) if requested by the Managing Partner, delivery to the Managing
<PAGE>
Partner of an opinion of counsel acceptable to the Partners to the effect that
such person is the proper beneficiary of the decedent's Interest, supported by
such assurances and documentation as the Managing Partner may, in its
discretion, require. Such represenattive shall not become a Partner without the
written consent of the other Partner.
10.03 Prohibited Transfer.
- --------------------------
Any purported Transfer of an Interest otherwise than in accordance with
this Section 10 shall be of no effect as between the Limited Partnership and the
purported transferee anl shall be unenforceable as against the Limited
Partnership and the Partners. The Partners shall not be charged with actual or
constructive notice of any such Transfer and the Partners are expressly
prohibited from making allocations and distributions under this Agreement in
accordance with any such purported Transfer.
10.4 Buy and Sell Agreement
- ---------------------------
The Partners shall have the rights of purchase and sale provided by this Section
10.4, to be exercised by delivering a notice (an "Election Notice"). The Partner
giving Election Notices as provided herein is referred to as the "Electing
Partner," and the Partner receiving the Election Notice is referred to as the
"Notice Partner.".
(a )Invocation of Buy-Sell Procedure. Commencing one year after the Primary
Hotel opens for business either Partner may, at any time, invoke the Buy-Sell
Procedure. This buy-sell procedure may be invoiced by the giving of a single
written Election Notice to the other Partner. Such Election Notice, to be valid,
shall state an amount (the "Stated Amount") to be used as the aggregate Gross
Asset Value of the Partnership Property in computing the Net Equity of the
Partnership's Interest, shall be given to the Notice Partner, accompanied by an
Earnest Money Deposit in the amount of $5% of the Net Equity to he held in a
joint direction interest bearing account by Escrow Agent, which shall be
Attorneys Title Insurance Fund, Inc.,
(b) Effect of Election Notice; Buy-Sell Price. An Election Notice shall
constitute an irrevocable offer by the Electing Partner either to (1) purhase
all, but not less than all, of the Interests of the Notice Partner. or (2) sell
all, but not less than all, of the Interests to the Notice Partner. The price at
which the Interest of any Partner is purchased and sold under this Section 10.4
(the "Buy-Sell Price" of such Interest) is the Net Equity thereof; determined as
of the Election Day ( the date of the Notice Election), as set forth in the
Election Notice.
(c) Notice Partner's Election to Purchase or Sell. For a period (the
"Election Period") ending at 11:59 P.M. (local time at the Partnership's
principal place of business) on the one hundred and eightieth day following the
Election Day, the Notice Partner shall have the right to elect to purchase the
Interest of the Electing Partner by giving Notice in writing to the Electing
Partner, accompanied by an Earnest Money Deposit in the amount of 5% of the Net
Equity, to be held in an interest bearing account by Escrow Agent, prior to the
termination of the Election Period. If the Notice Partner properly elects to be
the Purchasing Partner, the Electing Partner's Earnest Money Deposit, and
interest thereon, shall be released to him by the Escrow Agent forthwith. If the
13
<PAGE>
Notice Partner does not timely elect to purchase the Interest of the Electing
Partner, the Notice Partner shall become a "Selling Partner" and still be
obligated to sell its Interest to the Purchasing Patner.
(d) Terms of Purchase; Closing. The Closing of the purchase and sale of the
Selling Partner's interest shall occur on a date and time mutally agreeable to
the Purchasing Partner and the Selling partner, which shall not be later than
10:00 A.M. (local time at the place of the closing) on the first Business Day
occurring on or after the ninetieth day following the last day of the Election
Period, and at such place as is mutually agreeable to the Purehasing Partner and
the Selling Partner, or upon the failure to agree, at the principal place of
business of the Partnership or the Purchasing Partner's lender, provided said
Lender's. office is in Broward or Dade County, Florida. At the closing the
Purching Partner shall pay to the Selling Partner, by cash or other immediately
available finds, the Buy-Sell Price for which such Purchasing Partner is liable,
and the Selling Partner shall deliver to each Purrhasing Partner good title,
free and clear of any liens, claims, encumbrances, security interests, or
options (other than those created by this Agreement), to the Selling Partner's
Interest thus purchased. At the closing the Partners shall execute such
documents and instruments of conveyance as may be necessary or appropriate to
effectuate the transactions contemplated hereby, including, without lien, the
Transfer of the Interest of the Selling Partner to the Purchasing Partner and
the assumption by each Purchasing Partner of each Selling Partner's obligations
with respect to the Selling Partner's Interest transferred to ,such Purchasing
Partner. The reasonable costs of such Transfer and closing, including, without
limitation, filing fees, shall be divided equally between the Selling Partner
and the Purchasing Partner. Each Partner shall pay its own attorneys' fees. If
the Purchasing Partner defaults on the Purchase of Selling Partner's Interest,
the Earnest Money, including interest thereon, shall be released to the Selling
Partner. If the Selling Partner defaults on its obligations to sell its Interest
to the Purchasing Partner, the Purchasing Partner slall be entitled to specific
performance and injunctive relief without posting a bond therfor.
(e) If the Electing Partner is the R&S Group, such election shall not accelerate
the due date of thee Hotel Land Purchase Agreement. If FS1 becomes the
purchasing Partner, then the amount outstanding on the Land Purchase Agreement
Shall accelerate and become due on the date of payment for the Selling Partner's
Interest. If the Purchasing Partner is the R&S Group, the R&S Group shall cause
FS1 to be removed as Guarantor of any or all mortgages, leases or other
financing arrangements concerning the Partnership as a condition of the election
on or before time time of Closing.
10.05 Indemnification.
- ----------------------
Each Partner shall, to the full extent permittied by law, indemnify and
hold harmless the Limited Partnership, and every remaining Partner who was or is
a party or is threatened to be made a party to any threatened, pending or
oompleted action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason or arising from any actual or alleged misrepresentation
or misstatement of fact or omission to state any fact made (or omitted to be
made) by such Partner in connection with any transfer of all or any part of his
interest or the admission of a substitute Partner to the Limited Partnerrship,
against all liabilities, losses, costs, damages and expenses such as shall have
been actually and reasonably incurred in connection with such action; suit or
proceeding and such as shall have been actually and reasonably incurred in
enforcing this indemnity.
14
<PAGE>
10.06 Requirements for Substitution
- -----------------------------------
No transferee of the whole or any portion o_f a Partner's Interest shall
become a substitute Partner in place of his transferor unless all of the
following conditions are satisfied:
(i)The written consent of the remaining Partners to the substitution, which may
be withheld without cause is given;
(iii) the duly executed and acknowledged written instrument of transfer which
has been filed with the Limited Partnership sets forth the intention of the
transferor that the transferee become a substitute Partner"
(iii) the transferor and transferee execute and acknowledge such other
instruments as the remaining Partners may deem necessary or desirable to effect
such admission; including the written acceptance and adoption by the transferee
of the provisions of this Agreement; and
(iv) all other requirements set forth herein to the making of any Transfer of
all or any part of an Interest, including without limitation those set forth in
Sections 10.01 and 10.02 have been satisfied.
I0-07 Amendment to Certificate.
- ----------------------------------
The Managing Partner is required to amend the Certificate of Limited
Partnership annually as reqwuired. Until the Certificate of Limited Partnership
is so amended, an assignee shall not become a substitute Partner.
10.08 Partner's Bankruptcy, Insolvency, etc.
- --------------------------------------------
Upon the bankruptcy,insolvency, dissolution or other cessation to exist as
a 1ega1 entity of a Partner which is not an individual, the authorized
representative of such shall have all the rights and obligations of such Partner
and such power as such entity possessed to Transfer its Interest in the Limited
Partnership and to join with such transferee in making application to substitute
such transferee as a Partner. Such representative shall not become a Partner
without the consent of the remaining Partner.
10.09 Void Transfers.
- ---------------------
Any Transfer of an Interest, or any part thereof in contravention of any of
the provisions of this Ageement shall be null and void and shall not bind the
Limited Partnership or the Partners.
10.10 Vote of Psartners
- -----------------------
In the event a vote of the Partners shall be taken pursuant to this
Agreement for any reason, a Partner shall be taken any Interest properly
transferred by him in respect of which the transferee has not become a
sugbstutute Partner.
15
<PAGE>
Section 11
Books, Records,Accounting and Reports
-------------------------------------
11.01 Availability.
- -------------------
At alt times during the existence of the Limited Partnership, the Managing
Partner shall keep or cause to be kept full and true books of account in
accordance with the accounting method followed by the Limited Partnership for
Federal income tax purposes
Such books of accounts, together with a copy of this Agreement and any
amendments thereto shall be maintained at the principal place of business of the
Limited Partnership. Any Partner or his or its duly authorized representative
shall have the rigbt at any time to inspect and copy from such books and
documents during normal business hours upon reasonable notice.
11.02 Reports
- -------------
(a) The Managing Partner shall have prepared at least once annually, at the
expense of the Limited Partnership, documents containing:
(i) Form 1065 and Internal Revenue Service Form K-1 or similar form as may be
required by the Internal Revenue Service stating the Partner's allocation of
income, gains, losses, deductions or credits for the Fiscal Year.
(ii) a statement of net cash flow;
(iii) annual reviewed financial statements consisting of balance sheet,
statements of income and expense, changes in Partners' capital and changes in
financial position, provided , however, that the Managing Partner shall cause to
be prepared a certified financial statement for the year in which the
construction of the hotel is completed; provided further that the Managing
Partner will obtain a certified financial statement, at the Limited Partner's
expense (unless the certified financial statement reveals a verified discrepancy
in gross revenues or gross expenses of more that 2% unconnected to the
Management Company's report, in which event the cost of the certified financial
statement shall be borne by thee Managing Partner), if so requested;
Discrepancies arising from accounting procedures shall not be considered a
deviation.
(iv) such outer information as is necessary for the preparation by the Partners
of their federal, state and local or other tax returns. Docuuamts prepared
pursuant to subsection (i), (ii) and (iii) hereof will be distributed as soon as
practicable after the close of each Fiscal Year; and
(v) The Managing Partner shall provide quarterly profit and loss statements to
the Partners.
(b) The Managing Partner, at the expense of the Limited Partnership, will cause
to be prepared and timely filled with appropriate federal and state regulatory
and administrative bodies, all reports required to be filed with such entities
under the current applicable laws, rules and regulations. Such reports will be
prepared on the accounting or reporting basis required any such regulatory
bodies. Each Partner will be provided with a copy of any such report without
16
<PAGE>
expense to him. The Managing Partner will cause all tax and information returns
for the Limited Partnership to be prepared and timely filed with the appropriate
authorities.
Section 12
Bank Accounts
-------------
All funds of the Limited Partnership are to be deposited in the Limited
Partnership's name in such bank account or accounts as may be designated by the
Managing Partner and shall be withdrawn on the signature of a Managing Partner,
or such other Person or Persons as the Managing Partner may authorize,, subject
to the approval of R&S, which approval shall not be unreasonably withheld.
Section 13
Meetings, Amendments
--------------------
13.01 Meetings.
- ---------------
(a) A Partner may at any time call a meeting of the Partners upon ten days
written notice or call for a vote of the Partners without a meeting for any
purpose authorized under the Limited Partnership Act or this Agreement. If no
meeting has been called a Partner shall notify all Partners of the Matter or
matters to be voted upon and the date upon which the votes will be counted. Any
LLimited Partnership meeting or the date upon which such votes, without a
meeting, will be counted shall be no less than ten (10) nor more than sixty (6O)
days following mailing of the notice thereof by the noticing Partner. All
expenses of the voting and such notification shall be borne by the Limited
Partnership. The Managing Partner shall preside over any such meeting.
(b) Each Partner shall be entitled to cast one vote at the meeting in the
following manner
(i) at a meeting, in person, by written proxy or by a signed writing directing
the manner in which such Partner desires that his vote be cast, which writing
must be received by the Managing Partner prior to such meeting: or
(ii) without a meeting by a signed writing directing the manner in which such
Partner desires that his vote be cast, which writing must be received by the
Managing Partner prior to the date upon which the votes of Partners are to be
counted.
Only the votes of Partners of records on the date that the Partner gives the
Partners notice of the vote, whether at a meeting or otherwise, shall be
counted. The laws, rules and regulations of the State pertaining to the validity
and use of corporate proxies shall govern the validity and use of proxies given
by the Partners.
(c) No Partner shall have the right or power to:
17
<PAGE>
(i) withdraw or reduce its contribution to the capital of the Limited
Partnership except as a result of the dissolution of the Limited Partnership or
as otherwise provided by law or this Agreement;
(ii) cause the dissolution and termination of the Limited Partnership by court
decree or otherwise, except as set forth in this Agreement
13.02 Amendments.
(a) The Partners shall submit to the Partners the text of any proposed amendment
to this Agreement and any Statement by the proposer thereof and any Statement by
the proposer thereof relating thereto. The Partners may include in any
submission the Partners' views as to the proposed amendment. Subject to the
provisions of Section 10.02 hereof, any such proposed amendment shall be adopted
if, within ninety (90) days after the submission thereof to the Partners,
Partners owning seventy-five (75)% percent or more of the Units shall have
consented thereto, provided such amendment is not for the purpose of the
reduction of the rights or interests, or enlargement of the obligations, of the
Partners and, provided, however, that this subparagraph shall not be applicable
with respect to the addition or substitution of Partners of the reduction of
Capital Accounts upon the return of capital to the Partners. The effective date
of an amendment pursuant to this Section 15.02 shall be the date of which the
required consents shall have been given. Any proposed amendment which is not
adopted may be resubmitted, by not more than once every six (6) months.
Section 14.
14.01 Death, Insanity, Bankruptcy, Withdrawal or Expulsion of the General
- --------------------------------------------------------------------------------
Partner
- -------
In the event of the death, insanity, bankruptcy, withdrawal or expulsion of
the General Partner, the Partnership shall terminate unless the Limited Partner
elects to apoint a new General Partner.
14.02 Events Causing Dissolution
- --------------------------------
The Limited Partnership shall be dissolbed upon the occurrence of any of
the following events:
(i) The written consent or affirmative vote to dissolve the Limited Partnership
by Partners owning more that (50%) percent of the Interests;
(ii) The disposition of all or substantially all of the Limited Partnership's
assets;
(iii) The expiration of the Limited Partnership term pursuant to Section 4
hereof; and
(iv) The happening of any other event causing the dissolution of the Limited
Partnership under the laws of the State.
18
<PAGE>
14.03 Liquidation of Assets and Application of Proceeds
- -------------------------------------------------------
(a) Upon the dissolution of the Limited Partnership, the Managing Partner (or
such other person required by law to wind up the Limited Partnership;s
affairs)shall liquidate and reduce to cash the Limited Partnership Assets as
promptly as is consistent with obtaining the fair value thereof in accordance
with the provisions of Section 9.02 hereof. In connection with any such winding
up and liquidation, the books and records of the Limited Partnarship shall be
closed as of the date of dissolution, and a report shall promptly be furnished
to all Partners.
(b) For purposes of this Section 14.03 to the extent that depreciation or
amortization deductions takern by a Partner shall cause a deficit in such
Partner's capital amount, such deficit to the extent of the amount of any
depreciation or amortization so taken shall not be deemed an assest of the
Limited Partnership or the personal liability of such Partner.
Section 15.
Miscellaneous.
--------------
15-01 Notices
- -------------
Except as otherwise provided herein, all notices, demands, requests,
consents, or other communications required or permitted to be given or made
under this Agreement shall be in writing (including telex, telefax and
telegraphic communication) and shall be (as elected by the party giving notice)
either mailed by first class, certified mail, return receipt requested, hand
delivered, or by overnight Carrier to the party to whom such communication is
addressed. Notice shall be effective (i) on the date delivered if by personal
delivery, (ii) on the date telecommunicated if by telegraph or by telefax with
confirmed answer back and (iv) on the date upon which the return receipt is
signed or delivery is refused or the notice is designated by the postal
authorities as not deliverable, as the case may be, if by mail. Such
communications shall he addressed to the address set forth in this Agreement or
any other address of which prior written notice has been given to the Managing
Partner.
15.02 Serverability.
- --------------------
Each provision hereof is intended to be severable and the invalidity or
illegality of any portion of this Agreement shall not effect the validity or
legality of the remainder hereof,
15.03 Captions.
- ---------------
Paragraph captions contained in this Agreementt are inserted only as a
matter of convenience and for reference and in no way deface, limit or extend or
describe the scope of this Agreement or the intent of any provision hereof
<PAGE>
15.04 Person and Gender.
- ------------------------
The masculine gender shall include the feminine and neuter genders, the
singular shall include the plural.
15.05 Binding Agrement
- ----------------------
Subject to the restrictions on assignment herein contained, and provisions
of this Agreement shall be binding upon, and inure to the benefit of the
successors, assigns, personal representatives, estates, hers and legatees of the
respective Partners.
15.06 Applicable Law.
- ---------------------
Notwithstanding the place where this Agreement may be executed by any of
thee parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of this state. To the extent
permitted by governing law, this Agreement shall control over provisions of the
Limited Partnership Act which are inconsistent with the provisions of this
Agreement..
15.07 Entire Agreement
- ----------------------
This Agreement constitutes the entire agreement of the parties hereto with
respect to the matters set forth herein and supersedes any prior understanding
or agreement, oral or written, with respect thereto.
15.08 Agreement in Counterparts
- -------------------------------
This Agreement may be executed in several counterparts and all so executed
shall constitute aon Agreement, binding on all the parties hereto,
notwithstanding that all the parties are not signatories to the original or thee
same counterpart.
IN WITNESS WHEREOF, the parties hereto have entered into and sworn to this
Agreement as of the date first above written.
WITNESS
_________________ Fairdan Suites, Inc.,
a Florida corporation
_________________ by /s/Lola Thomas
--------------
Lota Thomas,
President
_________________ The R&S Group
_________________ by_________________
<PAGE>
Subject to the restrictions on assignment herein contained, and provisions
of this Agreement shall be binding upon, and inure to the benefit of, the
successors, assigns, personal representatives, estates, heirs and legatees of
the respective Partners.
15.06 Applicable Law. .
- --------------------------------------------------------------------
Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of this State. To the extent
permitted by governing law, this Agreement shall control over provisions of the
Limiter Partnership Act which are inconsistent with the provisions of this
Agreement.
15-07 Entire Agreement.
- ----------------------
This Agreement constitutes the entire agreement of the parties hereto with
respect to the matters set forth herein and supersedes any prior understanding
or agreement, oral or written, with respect thereto.
15-08 Agreement in Counterparts.
- -------------------------------
This Agreement may be executed in several counterparats and all so executed
shall constitute on Agreement, binding on all the parties hereto,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have entered into and sworn to this
Agreement as of the date first above written.
WITNESS
______________ TG Group
______________ by_____________________
______________ The R&S Group
______________ by /s/Maurice Furlong
------------------
Maurice Furlong
Director
ZARZION LTD SALE TO
HEALTH CARE CENTERS OF AMERICA, INC.
OF CERTAIN LODE CLAIMS
SALE OF LODE MINE:
- ------------------
Agreement made February 6, 1997, between Zarzion, Ltd, a
corporation organized under the laws of the country of the Bahamas in accordance
with the International Business Corporation Act, doing business at 2nd floor,
Citibank Building, East Mall Drive, P.O. Box F42544, Freeport, Bahamas, here
referred to as seller, and Health Care Centers of America, Inc., a corporation
organized under the laws of the State of Nevada, doing business at 100 North
Arlington Street, Suite 22F, Reno, NV 89501, here referred to as buyer.
The parties agree as follows:
SECTION ONE
IDENTIFICATION OF MINE: PURCHASE PRICE
Seller shall set to buyer, and buyer shall buy from seller, on the
terms and conditions specified in this agreement, real property consisting of
mines and mining around, together with the improvements on the real property and
the appurtenances to it, if any in San Bernandino County, California,
particularly described as follows:
The price for the above-specified real property shall be three
hundred seventy five million (375,000,000) shares and shall be issued within
three (3) days of this agreement For purpose of this agreement, the parties
agree that the value of the shares of stock of HCCA herein involved shall be two
dollars ($2.00) per share, which buyer shall pay to seller at the times and in
the amounts set forth in this agreement, and subject to the terms, covenants,
and conditions contained in this agreement.
SECTION TWO
TIME FOR PAYMENT
The buyer shall tender to the seller assignment(s) of all if in
interest in and to all claims and other interest in the subject matter of the
agreement. Said assignment(s) shall be in a form acceptable to the buyer.
1
<PAGE>
SECTION THREE
LABOR AND MATERIALS
Buyer shall pay for all labor done on or in the property and for
all materials furnished, as well as for equipment of all kinds placed on the
property. '
Buyer shall indemnify seller and the property to be conveyed
against any and all claims or liens for labor, materials, or equipment.
Immediately on commencement of any work by buyer, buyer shall
notify seller of the commencement, and seller shall have the right to post on
the property and to record notices of nonresponsibility for labor or materials
furnished.
SECTION FOUR
TAXES
Buyer shall at all times during the term of this agreement, pay
before delinquency all state and county taxes levied against the property and
against any personal property, tools, equipment and the like placed on the
property by buyer.
SECTION FIVE
LIABILITY FOR DAMAGES
Buyer shall indemnify seller against all liability and claims for
damages for any injury or injuries, including death, to any person or persons or
property of any kind, form any cause or causes, while in, on or in any way
connected with the property. Buyer shall indemnify seller against all
liabilities, charges and expenses, including attorney fees and costs, on account
of or by reason of the injury or injuries, including death, or any loss of
damage growing out of the same.
SECTION SIX
COMPLIANCE WITH LAWS
Buyer shall at all times during the term of this agreement,
conform with all applicable laws of California and the United States in the
operation of the property, and ensure compliance with all safety laws and
regulations for the protection of any and all employees engaged in mining
operations.
SECTION SEVEN
NOTICES
The addresses of the respective parties for the purpose of all
notices required by this agreement are as listed above.
Any change of address shall be immediately furnished by each party
to the other.
<PAGE>
Mailing to a party at the address for the party specified above,
or to an address furnished by a party to the other in the event of a change of
address, be registered mail (return receipt requested) of any and all notices
required shall constitute service of the notice and shall be conclusive evidence
of the mailing.
SECTION EIGHT
EFFECT OF AGREEMENT
This agreement and all its terms, covenants and conditions shall
be binding on the parties, their successors and assigns.
Time is of the essence of this agreement.
In witness whereof, the parties have executed this agreement at
Reno, Nevada, the day and year first above written.
SELLER: Zarzion, Ltd Health Care Centers of America, Inc.
By:/s/Carole Aronson By:/s/ Maurice Furlong
----------------- -------------------
Carob Aronson Maurice Furlong
Tile: Director - President President
3
Attest:/s/ Michael Pietzak
-------------------
Michael Pietzak
Secretary
<PAGE>
CORPORATE RESOLUTION
HEALTH CARE CENTERS OF AMERICA, INC.
On February 6, 1997 a Special Meeting of the Board of Directors of Health Care
Centers of America, Inc. (HCCA) was held pursuant to a Waiver of Notice, at 1:00
pm in Reno, Nevada. All of the members being present and constituting a quorum.
A general discussion was conducted regarding the acquistion of certain mining
lode claims from Zarzion. Ltd. The board reviewed the lode claims, the certified
assay reports, proofs of annual labor reports and other data. After review and
further discussion it was decided that the acquisition of these lode claims was
very beneficial to the company. Thereafter, the following resolution was
adopted.
BE IT RESOLVED, that the company is hereby directed to acquire certain lode
claims from Zarzion, Ltd. in payment for same, the company shall immediately
issue to Zarzion, Ltd. Three hundred seventy five million (375,000,000) shares
of section 144 restricted common stock.
BE IT FURTHER RESOLVED, that the officers of the company shall do that which is
necessary to complete the transaction.
/s/Maurice W. Furlong
---------------------
Maurice W. Furlong, Chairman
/s/Michael J. Petrzak
------------------
Michael J. Pietrzak, Secretary
/s/ Barbara L. Krilich
----------------------
Barbara L Krilich, Treasurer
/s/Alexander H. Walker
----------------------
Alexander H. Walker III
CERTIFICATION
THE UNDERSIGNED HEREBY CERTIFIES
THAT THIS DOCUMENT IS A TRUE
AND EXACT COPY OF THE ORIGINAL
SIGNATURE: (signature illegible)
TITLE:
EXHIBIT 6(xiv)
PURCHASE AGREEMENT
THIS AGREEMENT dated as of the 1st day of Nov., 1984, by and between
BULLETT PRODUCTIONS, INC., a Tenn. Corporation with offices at 175 South Mill
Street, Jonesboro, Georgia 30236, hereinafter called BULLETT, and Starcom
Network Ltd., a Nevada corporation with offices at 1994 Gallatin Road, North,
Suite 206, Madison, Tennessee 37115, hereinafter called SCN.
W I T N E S S E T H
A. That Bullett owns certain Master Recordings and it desires to sell
the Said Masters and SCN desires to purchase the same, and,
B. The Masters being sold with this conveyance are shown on Exhibit "A"
attached hereto and made a part hereof;
NOW, THEREFORE, it is agreed as follows:
1. Definitions.
a. "Master Recordings" or "Masters" shall mean the recordings,
a list of which, both as to artist and title, is set forth in Exhibit "A"
attached hereto.
b. Title papers shall mean the paper titles wherein the
Masters were conveyed to Bullett including the "Paper Trail".
c. "Record(s)" shall mean disc records, tapes and eight-track
cartridges, movies, video cartridges, cassettes and other configuration now
known or hereafter discovered or utilized for the reproduction of sound, alone
or in conjunction with visual reproductions manufactured from the Master
Recording from time to time.
2. Sale of Master Recordings.
Simultaneously, with execution of this agreement, Bullett is selling to
SCN and SCN is purchasing from Bullett, all of Bullett's right, title and
interest in an to the Masters and the performances contained therein for the
consideration of - 700- shares of capital stock of SCN, and further, SCN shall
pay Bullett a royalty of (.01) one cent per song for each song sold, whether in
an album, single, tape video or other form of production.
3. Conveyance of Rights.
a. Upon payment of SCN of the full purchase price as set out
here, it shall be and become the sole owner, absolutely and forever, and without
any limitation or restriction whatever, of the entire right, title and interest
in and to each of the Master Recordings as such right, title and interest were
acquired by Bullett by title papers, including the paper trail.
b. Concurrent with the execution hereof, Bullett has delivered
to SCN all tape recordings, masters and other parts or reproductions of the
Masters presently in Bullett's possession together with each and every contract,
summary of contract and/or other documentation pertaining to the Master
Recordings and the ownership rights therein. There are non-exclusive leases
outstanding on these Masters but they do not effect the title or rights of
Bullett to distribute, sell, lease, or otherwise to deal in the Masters. These
leases are contained in Exhibit "A".
c. To the extent set forth in Exhibit A, and the Bill of Sale
to Bullett shall include, but shall not be limited to:
(I) the sole, exclusive and perpetual right
throughout the world to To manufacture,
advertise, sell and otherwise deal in
records derived from or embodying the
contents of the Masters and to License or
assign to others SCN's right to do so;
(ii) the perpetual right throughout the world to
use and publish and to permit others to use
and publish the names, likenesses,
photographs and biographical material of all
persons whose performances are embodies in
the Master Recording in connection with the
sale and exploitation of Records derived
from the Masters;
(iii) the right to release Records throughout
the world derived from the Masters under
such trade names or trade marks as from time
to time SCN may determine.
(iv) the exclusive and perpetual ownership of the
Master Recordings and all performances
embodies thereon together with the absolute
right to dispose of and deal in and with the
same upon such conditions as SCN shall
determine;
(v) the right to publicly perform or to permit
the public performance of Records derived
from the Master Recordings by any means
whatsoever, whether now or hereafter know.
(vi) the right to edit, excerpt, alter or change
the Masters in any manner whatsoever.
Notwithstanding the provisions of this subparagraph (c), the rights
granted herein are subject to the provisions of any and all agreements among
recording artists, producers and prior owners of the Master Recordings.
<PAGE>
4. Warranties and representations of BULLETT.
Bullett hereby warrants and represents to SCN that:
(a) It is the sole and exclusive owner of the rights
granted to it under and by several Bills of Sale and all documents related
thereto;
(b) Bullett has the full power and authority to sell its
interest in the Master Recordings;
Bullett has not heretofore conveyed or granted to any
third party any right, title or interest in and to the Masters except, however
those license relationships created by virtue of the non-exclusive leases
referred to above, copies of which have been made available to SCN.
5. Limitation on Rights of SCN.
None except as stated herein.
6. Warranties and Representations of SCN.
SCN hereby warrants and represents to Bullett that:
(a) SCN has the full power and authority to enter into this
Agreement and to perform the obligations imposed upon it herein.
7. Royalty Payments to Artists.
SCN shall be responsible for and shall pay all royalties to
artists and other third parties.
8. Attorney in Fact.
SCN hereby irrevocable designates Bullett as its
attorney-in-fact to enforce, on behalf of both SCN and Bullett or either of
them, the following:
(a) Obligations imposed by the lease agreements referred to in
Exhibit "A" attached hereto, or any attack on the title to the masters.
9. Indemnification by Bullett.
Bullett hereby agrees to indemnify and hold harmless SCN of
and from any claim, cause of action, judgment or expense which may be imposed
upon either SCN or Bullett or both of them, as a result of litigation or other
proceedings initiated by anyone with respect to matters and occurrences which
happened prior to the date of this Bill of Sale.
10. General Indemnity.
Each party shall indemnify, save and hold the other harmless
from loss or damage (including legal expenses and reasonable attorneys' fees)
arising out of or connected with any failure by the indemnifying party to
fulfill its obligations under this agreement, or any claim by a third person
which is inconsistent with any of the warranties, representations or agreements
made by the indemnifying party herein which has resulted in a judgment against
the other party or which has been settled with the indemnifying party's consent
(which will not be unreasonably withheld). The indemnifying party will reimburse
the other party on demand for any payments made by the latter at any time after
the date hereof in respect of any liability or claim to which the foregoing
indemnity relates. Each party will notify the other of any such claims and the
indemnifying party shall have the right, at its expense, to participate in the
defense thereof.
11. Notices.
All notices hereunder shall be in writing and shall be given
by registered or certified mail at the respective addresses hereinabove set
forth, or such other address or addresses as may abe designated by either party
such notice shall be deemed given when received by a part of ten (10) days after
mailing whichever is the earlier date.
12. Entire Understanding.
This agreement contains the entire understanding of the
parties relating to the subject matter hereof and cannot be changed or
terminated except by an instrument signed by an officer of each party. A waiver
by either party of any term or condition of this agreement in any instance shall
not be deemed or construed as a waiver of such term or condition for the future,
or of any subsequent breach thereof. All remedies, rights, undertakings,
obligations, and agreements contained in this agreement shall be cumulative and
none of them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement of either party.
13. Jurisdiction and Venue.
This Agreement sets forth the entire understanding between the
parties with respect to the subject matter hereof, and no modification,
amendment, waiver, termination or discharge of this Agreement or any provision
thereof shall be binding upon either party unless confirmed by a written
instrument executed by an authorized officer of the party to be bound. No waiver
of any provision of or default under this Agreement shall affect the rights of
either party thereafter to enforce such provision or to exercise any right or
remedy in the event of any other default, whether or not similar. This Agreement
has been entered into in the State of Georgia. The validity, interpretation and
legal effect of this Agreement shall be governed by the laws of the State of
Georgia applicable to contracts entered into and performed entirely within the
State of Georgia, with respect to the determination of any claim, dispute or
disagreement which may arise out of the interpretation, performance or breach
hereof.
14. Warranties and Representations Survive Closing.
All warranties and representations made by the parties hereto
shall survive the closing of this transaction.
15. Responsibilities of Parties.
This Agreement shall inure to the benefit of and be binding on
the successors and assigns of both parties.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEALS ON
THE DATE ABOVE RECITED.
BULLETT
By: [signature illegible]
SCN
By: /s/ Maurice Furlong, Pres.
ACCEPTANCE
We the undersigned being officers of SCN certify that
we have this date taken physical
possession of 1111 Master Recordings [handwritten and initialed, approx albums]
and have counted and verified them against the list in Exhibit "A" attached to
the within Bill of Sale and they are held by us in a proper vault.
By: /s/ Maurice Furlong
President
By: [signature illegible]
Secretary
EXHIBIT 6(xv)
PURCHASE AGREEMENT
THIS AGREEMENT dated as of the 2nd day of August, 1984, by and between
JEY PRODUCTIONS, INC., a nEVADA cORPORATION WITH offices at 175 south Mill
Street, Jonesboro, Georgia 30236, hereinafter called JEY, and Starcom Network
Ltd., a Nevada corporation with offices at 1994 Gallatin Road, North, Suite 206,
Madison, Tennessee 37115, hereinafter called SCN.
W I T N E S S E T H
A. Heretofore, by virtue of a certain Bill of Sale, JEY acquired title
to the Master Recordings formerly known as part of the "Springboard Catalog". A
list of the Master Recordings to pass with this purchase is more particularly
set forth and described in Exhibit A attached hereto.
B. JEY desires to sell the Master Recordings set out in Exhibit A to
SCN in accordance with the terms, conditions and provisions hereof.
NOW, THEREFORE, it is agreed as follows:
1. Definitions.
a. "Master Recordings" or "Masters shall mean the recordings,
a list of which, both as to artist and title, is set forth in Exhibit "A"
attached hereto.
b. "Springboard" shall mean Springboard Internations, Inc.,
and its affiliates who were prior owners of the Master Recordings.
c. "Springboard papers" shall mean the following documents:
(I) Judgment of Reclamation dated July 28, 1980;
(ii) Amended Judgment of Reclamation dated August 20,
1980;
(iii) Assignment dated June 19, 1980, from Springboard's
trustee in bankruptcy to NMC Corp., International
Fastener Research Corp. (Springboard Associates);
(iv) Bill of Sale dated August 13, 1980, from NMC Corp.,
International Fastener Research Corp. And Springboard
Associates to Columbia Special- Products (CBS).
(v) "Certain Bill of Sale", shall mean a Bill of Sale
from CBS, Inc. To JEY Productions along with
supporting documents and paper trails, all attached
hereto.
c. "Record(s)" shall mean disc records, tapes and
eight-track cartridges, movies, video cartridges, cassettes and other
configuration now known or hereafter discovered or utilized for the reproduction
of sound, alone or in conjunction with visual reproductions manufactored from
the Master Recordings from time to time.
2. Sale of Master Recordings.
Simultaneously, with execution of this agreement, JEY is selling to SCN
and SCN is purchasing from JEY, all of JEY's right, title and interest in and to
the Master Recordings and the performances contained therein for the
consideration of - 400- shares of capital stock of SCN, and further, SCN shall
pay JEY a royalty of (.01) one cent per song for each song sold, whether in an
album, single, tape video or other form of production. The Value of the Masters
if $2,000,000.00, being Jey's acquisition costs.
3. Conveyance of Rights.
a. Upon payment of SCN of the full purchase price as set out
here, it shall be and become the sole owner, absolutely and forever, and without
any limitation or restriction whatever, of JEY'S entire right, title and
interest in and to each of the Master Recordings (listed in Exhibit A attached)
as such right, title and interest were acquired by JEY as successor to
Springboard from, through and by virtue of the Springboard papers.
b. Concurrent with the execution hereof, JEY has delivered to
SCN all tape recordings, masters and other parts or reproductions of the Masters
presently in JEY'S possession together with each and every contract, summary of
contract and/or other documentation pertaining to the Master Recordings and the
ownership rights therein. There are non-exclusive leases outstanding on these
Masters but they do not effect the title or rights of JEY to distribute, sell,
lease, or otherwise to deal in the Masters. A sample lease is contained in
Exhibit "A".
c. To the extent set forth in Exhibit A, and the Bill of Sale
to Bullett shall include, but shall not be limited to:
(i) The sole, exclusive and perpetual right
throughout the world to To manufacture,
advertise, sell and otherwise deal in
records derived from or embodying the
contents of the Masters and to license or
assign to others SCN's right to do so;
(ii) the perpetual right throughout the world to
use and publish and to permit others to use
and publish the names, likenesses,
photographs and biographical material of all
persons whose performances are embodies in
the Master Recording in connection with the
sale and exploitation of Records derived
from the Masters;
(iii) the right to release Records throughout
the world derived from the Masters under
such trade names or trade marks as from time
to time SCN may determine.
(iv) the exclusive and perpetual ownership of the
Master Recordings and all performances
embodies thereon together with the absolute
right to dispose of and deal in and with the
same upon such conditions as SCN shall
determine;
(v) the right to publicly perform or to permit
the public performance of Records derived
from the Master Recordings by any means
whatsoever, whether now or hereafter known.
(vi) the right to edit, excerpt, alter or change
the Masters in any manner whatsoever.
Notwithstanding the provisions of theis subparagraph (c), the rights
granted herein are subject to the provisions of any and all agreements amont
recording artists, producers and prior owners of the Master Recordings.
(d) Anything in this agreement to the contrary
notwithstanding, it is expressly understood that the sale and purchase
contemplated hereby does not include any rights in and to the names
"Springboard", "Musicor", "Scepter" or any other names heretofore associated
with labels through which records derived from the Masters have been
distributed, it being expressly understood that JEY does not currently have any
proprietary rights in and to any such labels, and that the transaction
contemplated hereby is not intended to include any such proprietary interests.
4. Warranties and Representations of JEY.
JEY hereby warrants and represents to SCN that:
(a) it is the sole and exclusive owner of the rights granted
to it under and by virtue of the CBS Bill of Sale and all documents related
thereto;
(b) JEY has the full power and authority to sell its interest
in the Master Recordings;
(c) JEY has not heretofore conveyed or granted to any third
party any right, title or interest in and to the Masters except, however those
license relationships created by virtue of the documents listed in Exhibit B
attached hereto, copies of which have been made available to SCN.
5. Limitation on Rights of SCN.
None except as stated in Exhibit A.
6. Warranties and Representations of SCN.
SCN hereby warrants and represents to JEY that:
(a) SCN has the full power and authority to enter into this
Agreement and to perform the obligations imposed upon it herein.
7. Royalty Payments to Artists.
SCN shall be responsible for and shall pay all
royalties to artists and other third parties.
<PAGE>
8. Attorney in Fact.
SCN hereby irrevocable designates JEY as its
attorney-in-fact to enforce, on behalf of both SCN and JEY or either of them,
the following:
(a) Obligations imposed by the lease agreements referred to in
Exhibit "A" attached hereto, or any attack on the title to the masters.
9. Indemnification by JEY.
JEY hereby agrees to indemnify and hold harmless SCN of
and from any claim, cause of action, judgment or expense which may be imposed
upon either JEY or Bullett or both of them, as a result of litigation or other
proceedings initiated by anyone with respect to matters and occurrences which
happened prior to the date of this Bill of Sale.
10. General Indemnity.
Each party shall indemnify, save and hold the other
harmless from loss or damage (including legal expenses and reasonable attorneys'
fees) arising out of or connected with any failure by the indenmifying party to
fulfill its obligations under this agreement, or any claim by a third person
which is inconsistent with any of the warranties, respresentations or agreements
made by the indemnifying party herein which has resulted in a judgment against
the other party or which has been settled with the indemnifying party's consent
(which will not be unreasonably withheld). The indemnifying party will reimburse
the other party on demand for any payments made by the latter at any time after
the date hereof in respect of any liability or claim to which the foregoing
indemnity relates. Each party will notify the other of any such claims and the
indemnifying party shall have the right, at its expense, to participate in the
defense thereof.
11. Notices.
All notices hereunder shall be in writing and shall be
given by registerd or certified mail at the respective addresses hereinabove set
forth, or such other address or addresses as may abe designated by either party
such notice shall be deemed given when received by a party or ten (10) days
after mailing whichever is the earlier date.
12. Entire Understanding.
This agreement contains the entire understanding of the
parties relating to the subject matter hereof and cannot be changed or
terminated except by an insstrument signed by an officer of each party. A waiver
by either party of any term or condition of this agreement in any instance shall
not be deemed or construed as a waiver of such term or condition for the future,
or of any subsequent breach thereof. All remedies, rights, undertakings,
obligations, and agreements contained in this agreement shall be cumulative and
none of them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement of either party.
<PAGE>
13. Jurisdiction and Venue.
This Agreement sets forth the entire udnerstanding between
the parties with respect to the subject matter hereof, and no modification,
amendment, waiver, termination or discharge of this Agreement or any provision
thereof shall be binding upon either party unless confirmed by a written
instrument executed by an authorized officer of the party to be bound. No waiver
of any provision of or default under this Agreement shall affect the rights of
either party thereafter to enforce such provision or to exercise any right or
remedy in the event of any other default, whether or not similar. This Agreement
has been entered into in the State of Georgia. The validity, interpretation and
legal effect of this Agreement shall be governed by the laws of the State of
Georgia applicable to contracts entered into and performed entirely within the
State of Georgia, with respect to the determination of any claim, dispute or
disagreement which may arise out of the interpretation, performance or breach
hereof.
14. Warranties and Representations Survive Closing.
All warranties and representations made by the parties
hereto shall survive the closing of this transaction.
15. Responsibilities of Parties.
This Agreement shall inure to the benefit of and be
binding on the successors and assigns of both parties.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEALS ON
THE DATE ABOVE RECITED.
JEY
By: [signature illegible]
SCN
By: /s/ Maurice Furlong, Pres.
ACCEPTANCE
We the undersigned being officers of SCN certify that
we have this date taken physical
possession of Master Recordings [handwritten and initialed, approx albums] and
have counted and verified them agains the list in Exhibit "A" attached to the
within Bill of Sale and they are held by us in a proper vault.
By: /s/ Maurice Furlong
President
By: [signature illegible]
Secretary
ARTISTS LIMITED, L.L.C.
ARTISTS & WRITERS ROYALTY COLLECTION FOR THE WORLD
1350 West Hwy89A, Sedona, Arizona 88336
void (520) 282-1828/ Fax (520) 2824815
RETENTION AGREEMENT
THIS RETENTION AGREEMENT ("Agreement") made and entered as of the 20th day of
1996, by and between ARTISTS LIMITED, L.L.C. , a limited liability company
formed under the laws of the State of Arizona, with its principal offices
located at 1350 West Highway 89A, Sedona, Arizona, hereinafter "Artists
Limited", and HCCA, Inc., a company of Nevada, currently residing at 1000 Royce
Blvd., (City) Oakbrook Terrace in (State or Province and ZIP ) Illinois 60181,
(Country) USA, hereinafter "Artist".
WITNESSETH:
WHEREAS, Artists Limited is engaged in the business of collecting royalties and
other movies due and owing to entertainers, recording artists, songwriters,
composers, lyricists, publishers and others engaged in the entertainment
industry and signs Retention Agreements with such persons to act as agent for
the collection of royalties and other movies due and owing,
WHEREAS, third parties have exploited and/or are presently exploiting sound
recordings embodying the performances of Artist and have failed to account for
and pay royalties or outer movies earned by Artist, and,
WHEREAS Artist is desirous of employing the services of Artists Limited for the
purpose of collecting said royalties or other movies,
NOW, THEREFORE, in consideration of certain premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby specifically
acknowledged, the Parties hereto agree as follows:
1. Artist hereby appoints Artists Limited as Artist's exclusive agent for
the collection of royalties or other movies due and owing to Artist as a
result of the exploitation of sound recordings and other instrumentalities
embodying the performances) of Artist, the replication of Artist's image
and/or likeness, the unauthorized publication of Artist's composition or
such similar breach of Artist's recording contract, other contract, or
right, title and interest in his or her intellectual property as are
contemplated wider this Retention Agreement.
2. Artist does hereby appoint Artist Limited as his or her Attorney-ln-Fact
to enter into negotiations and/or to contract for the collection of
royalties or other movies due and/or owing Artist for the exploitation of
sound recordings embodying Artist's performance(s) or such similar breaches
<PAGE>
of Artist's rights, title and interest in his or her intellectual property
as are contemplated under this Retention Agreement. Said appointment as
Attorney-In-Fact shall be irrevocable and is coupled with :m interest
during the term hereof. Artists Limited shall not institute legal action
against or execute a contract with any third party owing royalties or other
monies to Artist without first obtaining Artist's written authorization,
which shall not be unreasonably withheld.
3. Artists Limited shall use its best efforts on Artist's behalf to collect
any and all royalties or other monies due and/or owing to the Artist.
Artists Limited shall use its business judgment in determining whether suit
should be instituted to collect such royalties or other movies. Any
decision by Artists Limited not to institute legal proceedings shall not be
deemed a breech of this Agreement or any duty or obligation owed to the
Artist.
4. Artist shall cooperate with Artists Limited and provide any and all
reasonable assistance necessary to enable Artists Limited to collect said
royalties or other monies on Artist's behalf. Such cooperation shall
include, but not be limited to, making him or her self available W Artists
Limited, its staff and advisors, execution of documents and/or agreements,
providing all background information supporting Artist's claim, and giving
testimony in any legal action both by deposition or Court appearance.
5. Artist represents and warrants that he or she has the right to enter
into this Agreement and that the rights granted Artists Limited herein will
not infringe or violate the rights granted to any other person or entity.
Artist shall Indemnify and hold Artists Limited harmless from any cost,
expense, suit, or other action resulting from a breach of any
representation or warranty given herein.
6. Artists Limited shall Indemnify and hold Artist harmless from any cost,
expense, suit, or other action resulting from its activities hereunder.
from its activities hereunder.
7. Artist agrees that he or she shall pay to Artists Limited an amount
equal to forty (40%) percent of all monies collected by Artists Limited or
through the efforts of Artists Limited on the Artist's behalf. Artist shall
not be responsible for any costs or expenses incurred by Artists Limited in
the collection of monies owed to Artist. Artists Limited shall disburse to
Artist by cheque his or her share of any final settlement within thirty
(30) days after said funds have been deposited into Artists limited bank
account. Said cheque will be directed to the address of Artist fuss written
above unless otherwise indicated by Artist in the space provided below.
(a) Notwithstanding anything to the contrary contained herein, the
right of Artists Limited to receive the foregoing percentage of monies
collected shall survive the expiration of the term hereof and shrill
continue far so long as monies shall continue to be collected if such
collection was initiated during said term.
8. Artist shall have the right at his or her sole expense to audit the
books and records of Artists Limited during its usual and ordinary business
hours upon not less than thirty (30) days written notice served upon
Artists Limited at its principal place of business by first class mail
return receipt requested. In the event the final results of any audit
indicate an error is Artist's favor in excess of five (5) percent of the
net funds collected, Artists Limited shall bear the cost of such audit.
9. The Term of this Agreement shall be five (5) years from the date of the
execution thereof.
10. This Agreement shall be governed by the laws of The State of Arizona is
respect to contracts entered into and performed wholly within the State of
Arizona. The sole and exclusive venue of any such suit brought to enforce
any provision of this Agreement shall be any Court of competent
jurisdiction in the County of Maricopa, State of Arizona.
11. In the event either Artist or Artists Limited brings suit for the
enforcement of any provision of this Retention Agreement, the prevailing
Party shall be entitled to a reimbursement by the losing Party of its
actual costs and attorney': fees.
12. This Agreement may not be assigned by either Party hereto without the
express written consent of the other Party.
<PAGE>
13. This Agreement contains the entire understanding of the Parties and may
not be altered, amended or modified except by a writing signed by each of
the Parties.
14. This Agreement shall be binding upon the Parties hereto, their heirs,
personal representatives, successors, and assigns.
15. Artist acknowledges that he or she has sought or has had the
opportunity to seek the advice of Counsel in respect to the provisions of
this Agreement and that he or she has entered into 'this Retention
Agreement voluntarily.
16. This Agreement tray be executed in one or more counterparts, all of
which shall be deemed an original for all purposes.
17. Any failure by Artists Limited to insist upon strict adherence to any
terms) of this Retention Agreement on any occasion shall not be considered
a waiver or deprive Artists Limited of the right thereafter to insist upon
strict adherence to any term of this agreement.
18. This Retention Agreement shall become binding upon and enforceable
against Artists Limited only after acceptance and execution by John D.
LaMonte, the managing member of Artists Limited, L.L.C. whether or not
contract negotiations are conducted by John D. LaMonte or his authorized
agent.
Executed this 20th day of May, 1996
at Oakbrook Terrace,
State of IL 60181, Country USA by the parties below,
INTENDING TO BE LEGALLY BOUND
Artists Limited, L.L.C.
By: /s/James M. Troester
--------------------
James M. Troester
Title: Exec. V.P. HCCA, Inc.
Health Care Centers of America, Inc.
And,
By:
Artist
Business correspondence address of Artist if not same as above:
JOINT VENTURE AGREEMENT
THIS AGREEMENT is made effective as of the 30th of April, 1998, by and
between PEEPLES MINING CO., a Nevada corporation, a wholly owned subsidiary of
Health Care Centers of America, Inc., [hereinafter designated "PMC"], and HIDDEN
SPLENDOR SMELTING CO, a Nevada corporation, [hereinafter designated as "HSS"].
The parties shall collectively be referred to as "Participants".
RECITALS
A. PMC presently owns well in excess of 500,000 tons of ore inventory
[including various precious metals and rare earths] situated in Skull Valley,
Arizona.
B. The Participants are desirous of processing approximately 500,000
tons of the aforereferenced ore inventory [hereinafter designated as "the
inventory"] located in Skull Valley, Arizona.
C. PMC and HSS have agreed to a joint venture [JV] whereby HSS has the
right to acquire a twenty percent (20%) interest in the net revenues realized as
a result of the sale of the processed inventory.
D. PMC and HSS now wish to formalize the Agreement which will govern
the parties' respective rights and obligations to the JV and provide for the
processing of the inventory in accordance with the terms of this Agreement
<PAGE>
E. The name of the JV shall be Peeples Splendor JV.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, PMC and HSS agree as follows:
ARTICLE I
REPRESENTATIONS. WARRANTIES. AND COVENANTS
------------------------------------------
1.1 CAPACITY OF PARTIES. Each of the parties represents and warrants
as follows:
(a) that it is a corporation duly organized and in good standing
in its jurisdiction of formation and that it is qualified to do business and is
in good standing in those jurisdictions where necessary in order to carry out
the purposes of this Agreement; (b) that it has the capacity to enter into and
perform this Agreement and all transactions contemplated herein and that all
corporate and other actions required to authorize it to enter into and perform
this Agreement have been properly taken; (c) that it will not breach any other
agreement or arrangement by entering into or performing this Agreement; and, (d)
that this Agreement has been duly executed and delivered by it and is valid and
binding upon it in accordance with its terms.
1.2 TITLE OF ASSETS. PMC and HSS make the following representations and
warranties to each other as of the Effective Date hereof.
(a) To the best of its knowledge and belief, PMC represents that
with respect to the subject inventory:
i) PMC is in exclusive possession and ownership of the
subject inventory;
<PAGE>
ii) the subject inventory is free and clear of all defects,
liens, and encumbrances, created by, through, or under
PMC.
(b) To the best of its knowledge and belief, HSS represents
that with respect to the inventory:
(i) that HSS has satisfied itself that PMC owns the entire
and undivided title and interest in and to same;
(ii) that PMC has supplied HSS with assay reports, which assay
reports were prepared by an independent registered
assayer;
1.3 INDEMNITY. The Participants agree to comply with valid
and applicable local, state, and federal laws and regulations governing its
operations hereunder.
Each Participant agrees to indemnify and save the other
Participant harmless from any and all actions, claims, or liability for injury
to or death of persons, for damage to property or for conditions resulting from
either of the Participant's acts or omissions, together with any and all costs,
expenses, and fees, including attorneys' fees incurred by the other Participant
incidental thereto.
Each Participant hereby agrees to indemnify and hold the
other Participant harmless from any and all losses, claims, liabilities, and
causes of action regarding any environmental liability or adverse environmental
condition which may arise from or exist with respect to the inventory and which
results from any occurrence on the processing property for which such
environmental liability or adverse environmental condition is determined to
exist subsequent to the Effective Date hereof.
1.4 DISCLOSURES. Each of the parties represents and warrants
that it is unaware of any material facts or circumstances which have not been
<PAGE>
disclosed in this Agreement and which should be disclosed to the other parties
in order to prevent the representations in this Article I from being materially
misleading.
1.5 ACKNOWLEDGEMENT OF PUBLIC COMPANY STATUS. PMC andHSS
hereby acknowledge that PMC is a one hundred percent (100%) owned subsidiary of
Health Care Centers of America, Inc. (HCCA). HCCA is a publicly traded stock,
which is subject to the rules and regulations of the United States Securities
and Exchange Commission (SEC). HSS agrees to fully cooperate with the
accountants, attorneys and agents of PMC/HCCA in order to assure complete
compliance with all SEC rules, regulations, administrative orders, etc. Further,
HSS agrees to fully cooperate with PMC/HCCA regarding compliance with any state
statutes, regulations, rules, etc. governing the operation of PMC/HCCA and the
JV created by this Agreement.
ARTICLE II
----------
GRANT OF RIGHTS
---------------
2.1 GRANT OF RIGHTS. PMC hereby grants to HSS the exclusive
right, pursuant to the teens of this Agreement, to earn an undivided twenty
percent (20%) interest in the net revenues received as a result of the sale of
the processed inventory. In return, PISS shall provide, among other things, the
proper permits for the processing [including smelting operations, etc.]of the
ore inventory, assistance with the processing operations and the necessary
machinery, equipment, laboratory facilities and structures for the initial
period of the processing operations.The "initial period" for purposes of this
Agreement is hereby defined as nine (9) months from the Effective Date of the
Agreement.
<PAGE>
2.2 PMC'S RIGHTS DURING THE TENURE OF THE AGREEMENT. PMC
shall have the unrestricted right to sample all material relative to the
processing of the inventory, as long as said sampling does not unduly interfere
with the processing of the inventory, including but not limited to, the
following:
(a) Sampling each and every load at the pit site;
(b) Sampling each and every load delivered to the processing
site;
(c) Sampling from the attendant lease site;
(d) Sampling from the end product created after the ore has
been processed. Any and all other samplings may be taken as may be desired by
PMC or required by PMC accountants or by Securities and Exchange Commission
(SEC) regulations, etc. PMC shall, at all times, have the right to have its
representatives and/or agents at any and all stages of the processing of the
inventory and the sale of the end product.
ARTICLE III
-----------
PURPOSES AND TERM
-----------------
3.1 PURPOSES. The JV is created for the following purposes and for no
others, and shall serve as the exclusive means by which the Participants, or
either of them, accomplish such purposes:
(a) to engage in the processing of the inventory as
previously described herein;
(b) to engage in the marketing of the inventory in the
manner and to the extent described herein; and,
(c) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing and any other activity expressly provided for
herein.
<PAGE>
3.2 TERM. The term of this Agreement shall be eight (8) years from the
Effective Date and for so long as it takes to process and sell the inventory
which is the subject matter of this Agreement, unless the Agreement is earlier
terminated as herein provided.
ARTICLE IV
----------
RELATIONSHIP OF THE PARTICIPANTS
--------------------------------
4.1 PARTNERSHIP. Nothing contained in this Agreement shall be deemed to
constitute either Participant, the partner of the other, nor, except as
otherwise herein expressly provided, to constitute either Participant the agent
or legal representative of the other, nor to create any fiduciary relationship
between them. It is not the intention of the Participants to create, nor shall
this Agreement be construed to create, any mining, commercial, or other
partnership. Neither Participant shall have any authority to act for or to
assume any obligation or responsibility on behalf of the other Participant,
except as otherwise expressly provided herein. The rights, duties, obligations,
and liabilities of the Participants shall be several and not joint or
collective. Each Participant shall be responsible only for its obligations as
herein set out and shall be liable only for its share of the costs and expenses
as provided herein, it being the express purpose and intention of the
Participants that their ownership of assets and the rights acquired hereunder
shall be as expressed in this Agreement. Each Participant shall indemnify,
defend, and hold harmless the other Participant, its directors, officers,
employees, agents, and attorneys from and against any and all losses, claims,
damages, and liabilities arising out of any act or any assumption of liability
by the indemnifying Participant, or any of its directors, officers, employees,
agents, and attorneys done or undertaken, or apparently done or undertaken, on
behalf of the other Participant, except pursuant to the authority expressly
gamed herein or as otherwise agreed in writing between the Participants.
<PAGE>
4.2 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from other business activities, whether or not competitive
with the JV, without consulting the other.
4.3 TERMINATION. In the event of any default by either of the
Participants in the performance of its obligations hereunder, the non-defaulting
party shall give the defaulting party written notice specifying the default. If
the default is not cured within forty-five (45) days after the defaulting party
has received the notice, or if the defaulting party has not within that time
begun action to cure the default and does not thereafter diligently prosecute
such action to completion, the non-defaulting party may terminate this venture
by delivering to the defualting party written notice of such termination.
4.4 CONTINUING OBLIGATIONS. On termination of this Agreement, the
Participants shall remain liable for continuing obligations hereunder until
final settlement of all accounts and for any liability, whether it accrues
before or after termination.
4.5 RIGHT TO DATA AFTER TERMINATION. After termination of this
Agreement, each Participant shall be entitled to copies of all information
acquired hereunder before the effective date of termination not previously
furnished to it.
ARTICLE V
INTERESTS OF PARTICIPANTS
5.1 PARTICIPATING,INTERESTS. The Participants shall have the following
participating interests in the JV (subject to the terms of Paragraph 6.2):
PMC - 80%
HSS - 20%
<PAGE>
5.2 OBLIGATIONS OF PARTICIPATING INTERESTS, The obligations of the
Participating Interests are as follows:
(a) HSS shall satisfy all attendant expenses during the initial
refining, smelting, and processing of the subject inventory, inclusive of the
provision of all equipment necessary for same. PMC shall, to the extent it
exists, provide for the use of any equipment already owned by PMC and readily
available.
PMC shall satisfy all attendant expenses relative to its sampling
of the inventory.
(b) HSS shall maintain accurate and current records of all
information related to the processing of the inventory; these records shall
include, but not be limited to: transportation costs, processing costs, cost of
equipment and machinery, the amount of inventory processed per each calendar
month during the effectiveness of this Agreement, and those items as otherwise
provided for in this Agreement, etc. Upon five (5) days notice from PMC of its
request for the above records, HSS shall provide same.
(c) Regardless of anything to the contrary, HSS shall provide
unaudited quarterly financial reports to PMC within forty- five (45) days of the
end of each calendar quarter relating to the operation of the JV.
(d) In addition to the above, HSS shall, at the end of each
calendar year, provide PMC's independent auditors with all financial or other
information reasonably required by PMC's independent certified public
accountants so that they can conduct and prepare an independent audit.
(e) HSS shall provide any additional financial and other
information as is reasonably required by PMC's auditors (whether they be agents
of PMC or independent auditors) so that PMC will be able to comply with all SEC
<PAGE>
reporting requirements and those reporting requirements required by any state
having jurisdiction over the parties or subject matter of this agreement. HSS
shall fully cooperate with PMC, its agents or independent auditors in the
acquisition of this information.
ARTICLE VI
----------
DISTRIBUTIONS
-------------
6.1 NET REVENUE. For the purposes of this Agreement, "net revenue"
for any period means the amount of money received from the sale of the processed
inventory produced by the venture after deductions for all processing related
expenses. Except for expenses incurred during the initial period of the
processing operations [which expenses are the sole responsibility of HSS], the
expenses related to the processing of the ore inventory and the sale of the
finished product shall be paid by the JV from revenues generated by the JV. Said
expenses shall be deducted from the gross revenues generated by the JV, the net
revenues shall be distributed in accordance with the terms of this Agreement.
With respect to any mill tailings or other residue remaining after
processing of the inventory, which is owned by PMC and is the subject matter of
this agreement , it is hereby agreed that they shall remain the property of the
JV and shall be reprocessed so long as it is economically viable for the JV,
which viability shall be determined by the agreement of the parties. If the
parties do not agree as to the economic viability of further processing of the
tailings or other residue, then same shall be the sole property of PMC, free of
all interests of HSS.
6.2 DISTRIBUTIONS DURING AGREEMENT, PERIOD. The net revenues shall
be distributed as following during the Agreement period:
<PAGE>
(a) Eighty percent (80%) of the net revenues shall be accorded to
and paid to PMC.
(b) The remaining twenty percent (20%) of the net revenues shall
be accorded to and paid to HSS.
ARTICLE VII
-----------
MARKETING OF PRODUCTION
-----------------------
7.1 PMC shall have responsibility for the sale and marketing of
all products generated from the processing of the inventory in accordance with
the provisions of this Agreement, including without limitation, the following:
(a) PMC shall sell and market, on behalf of the Participants, the
products. And, for that purpose shall have general authority over the day-to-day
affairs of the sale and marketing.
(b) PMC shall manage and administer all such contracts, including
keeping good relations with customers, provide customers with various
information and notifications related to the product, furnish, upon request,
certificates of origin and generally follow the requirements and the concepts
that are set forth in the existing and future sales contracts.
(c) PMC shall ascertain that the sales, the sales contracts, the
transport and delivery of products comply with the various laws and regulations
of the state and countries where the product is delivered.
(d) PMC shall handle and supervise the transport of products
either by air, railway or trucking, or any other means. The JV shall provide
appropriate insurance coverage.
<PAGE>
(e) PMC, on behalf of and in the name of the JV, shall invoice
customers for the product delivered and obtain payment of it from customers and
take any measure to obtain such payment.
(f) PMC shall procure from experts and consultants such special
marketing, financial, legal, and other professional services as may be necessary
or desirable in connection with the smelting, sale, and marketing of the
products.
(g) PMC shall rent, purchase, or acquire, such machinery,
equipment, material, supplies, and other facilities as PMC may deem advisable or
necessary for the sale and marketing of the products.
(h) PMC shall keep and maintain books of accounts and such other
records pertaining to the sale and the marketing of the products. PMC shall
provide HSS access to said books and records.
(i) PMC, through the JV, shall be responsible for crediting the
accounts of each of the Participants, less the appropriate processing, marketing
and sales expenses, in proportion to their respective participating interests
with all amounts received in payment of any sales of products.
(j) PMC, through the JV, shall tender to HSS, in accordance with
HSS's instructions, HSS's portion of the distribution of the net revenues by the
thirtieth (30th) of each month. Said proportionate distribution shall be from
the revenues received during the immediately preceding month from sales of the
finished product of the processed inventory.
11
<PAGE>
ARTICLE VIII
------------
TRANSFER OF INTEREST
--------------------
8.1 The rights of either party hereunder may not be assigned, in
whole or in part.
ARTICLE IX
----------
DISPUTES
--------
9.1 If any dispute or conflict, whether contractual or not in
nature, arises out of or in connection with the JV, this Agreement, or any
exhibit or the breach, termination, validity, performance, or interpretation
thereof, either Participant may give notice to the other Participant to convene
a meeting to resolve the dispute. The Participants shall meet within forty-five
(45) days from the date of the notice convening the meeting and shall use their
best efforts to achieve a negotiated settlement to the dispute.
9.2 The Participants to a dispute may, but need not, refer a
dispute to the court for purposes of attempting a conciliation or mediation
thereof, m which event the rules and practices of the Court relating to
conciliation or mediation shall apply.
9.3 Nothing in this Article IX shall prevent the Participants to a
dispute from applying to a court of competent jurisdiction for the appropriate
remedy to any dispute.
ARTICLE X
---------
GENERAL PROVISIONS,
-------------------
10.1 NOTICES. Any notice, payment, or other communication
hereunder shall be given in writing and delivered by hand, by registered air
mail, by telegram, by telex, or telefax, or by overnight courier. Any such
notice shall be given to each of the Participants at their following addresses:
If the notice is to PMC, to:
12
<PAGE>
Peeples Mining Co.
100 N. Arlington Ave. Suite 22F
Reno, NV 89501
Attention: Maurice W. Furlong
Telephone: 702-786-1461
Fax: 702-786-0972
If the notice is to, HHS, to:
Hidden Splendor Smelting Co.
50 W. Liberty St. Suite 880
Reno, NV 89501
Attention: Cecil Ann Walker
Telephone: 702-322-0626
Fax: 702-322-5623
Or to any other addresses that any Participant may at any time
designate by written notice to the other Participant.
All notices shall be effective and shall be deemed delivered (i)
if by hand, on the date of delivery if delivered during normal business hours,
and, if not delivered during normal business hours, on the next business day
following delivery, (ii) if by electronic communication, on the next business
day following receipt of the electronic communication, and (iii) if solely by
mail, on the next business day after actual receipt.
10.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power,
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
10.3 MODIFICATION. No modification of this Agreement shall be
valid unless made in writing and duly executed by the Participants.
<PAGE>
10.4 FORCE MAJEURE. Except for the obligation to make payments
when due hereunder, the obligations of a Participant shall be suspended to the
extent and for the period that performance is prevented by any cause, whether
foreseeable or unforeseeable, beyond its reasonable control, including, without
limitation, labor disputes (unless employee demands are reasonable or within the
power of the participant to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit, or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state, or local environmental
standards; acts of war or conditions arising out of or attributable to war,
whether declared or undeclared; riot, civil strife insurrection or rebellion;
fire, explosion, earthquake, storm, flood, sink holes, drought, or other adverse
weather i condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents, breakdown of
equipment, machinery or facilities; or any other cause whether similar or
dissimilar to the foregoing. The affected Participant shall promptly give notice
to the other Participant of the I suspension of performance, stating therein the
nature of the suspension, the reasons therefor, and i the expected duration
thereof.
10.5 GOVERNING LAW: LANGUAGE. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Nevada.
<PAGE>
10.6 HEADINGS. The headings inserted in this Agreement are
inserted only for convenience and in no way define, limit, or describe the scope
or intent of this Agreement or affect its terms and provisions.
10.7 NO IMPLIED COVENANTS. There are no implied covenants
contained in this Agreement other than those of good faith and fair dealing.
10.8 MONETARY AMOUNTS. All monetary amounts expressed in this
Agreement shall mean U.S. dollars, unless otherwise expressly provided.
10.9 INTERPRETATION. In the event that a court of competent
jurisdiction determines that any teen, part, or provision of this Agreement in
unenforceable, illegal, or in conflict with any laws to which this Agreement is
subject, the parties intent that the court reform that term, part of provision
within the limits permissible under the law in such manner as to approximate
most closely the intent of the parties to this Agreement; provided that, if the
court cannot make such reformation, then that term, part, or provision shall be
considered severed from this Agreement. The remaining I portions of this
Agreement shall not be affected, and this Agreement shall be construed and
enforced as if it did not contain that term, part, or provision.
10.10 FURTHER ASSURANCES. Each of the Participants shall take from
time to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
10.11 ENTIRE AGREEMENT: SUCCESSORS. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of the respective
<PAGE>
successors of the Participants. In the event of any conflict between this
Agreement and any exhibit attached hereto, the terms of this Agreement shall be
controlling.
10.12 COUNTERPARTS. This Agreement may be executed in one or more
original counterparts, all of which shall constitute one and the same
instrument. (sic) is not, in PMC's sole discretion, sufficient, then this
agreement shall be null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: PEEPLES MINING CO., a Nevada
Corporation, a wholly owned subsidiary of
Health Care Centers of America, Inc.
By By /s/Maurice Furlong
- ------------------ ------------------
MICHAEL J. PIETRZAK Maurice Furlong
Title Secretary Title President
ATTEST: HIDDEN SPLENDOR SMELTING CO.
a Nevada Corporation.
By By /s/ Cecil Lynn Walker
------------------------ ---------------------
Cecil Lynn Walker
Title: Secretary Title: President
EXHIBIT F
THE R&S GROUP
AGREEMENT
<PAGE>
Common Law Business Organization
THIS COMMON LAW CONTRACT IN THE FORMAT OF AN IRREVOCABLE DECLARATION OF
TRUST AUTHORIZES ITS
DIRECTORS TO OPERATE UNDER THE NAME OF
The R&S Group
(referred to as the company)
Dated November 5, 1995
THIS AGREEMENT, CONVEYANCE, and ACCEPTANCE is made
and entered into at the time and on the date appearing in the
acknowledgment hereto attached, by and between
Edward Bartoli
who drafted the Common Law Business Organization DOCUMENTS as
THE CREATOR HEREOF and THE OFFEROR HEREIN
and
Rainbow Group and Senior Group
as the INVESTORS AND OFFEREE HEREIN
and
Maurice Furlong, President of Health Care Centers of America, Inc.
ACCEPTOR hereof who shall compose the
Board of Directors and Executive Officers for conducting
said business.
<PAGE>
The Creator hereby constitutes and appoints the above designated
Director, to be, in fact, Director of the Company hereby created and
established. The Investors for and in consideration of the objects and purposes
herein set forth, the cash sum of Ten Dollars in hand paid and other
considerations of value, the receipt of which is hereby acknowledged, does
hereby agree to sell, assign, convey, and deliver unto said Director, who are to
hold legal title in fee simple and in joint tenancy and not as tenants in
common, to collectively act by virtue of this covenant as a Board of Directors
under the name herein designated - certain properties, business projects,
operations underway or contemplated, dealing in equities, formulae, entities,
patents, copyrights, business good-will, or other business desired to be engaged
in by said Directors.
The Company name and other things of value constitute a Contract,
including tights in reversion or remainder wherever situate, and other things of
value, and having its principal place of business at:
1000 Royce Boulevard
Oakbrook Terrace, DuPage County, Illinois 60181
The above named Director, for himself/herself and his/her successors,
do hereby agree to accept properties real and personal to be conveyed and
acknowledge acceptance of and delivery of all of the property speafied, together
with all the terms of the contract herein set forth agree to conserve and
improve the Company, to invest and reinvest the funds of said Company in such
manner as to increase the financial rating of the Company during the period of
outstanding liabilities of the various properties and enterprises in commerce
for gain, exercise their best judgment and discretion, in accordance with The
Company AIGnutes, making distributions of portions of the proceeds and income as
in their discretion, and according to the minutes, should be made, make complete
periodic reports of business transactions and upon final liquidation, distribute
the assets to the Beneficiaries as their interests may appear and in all other
respects administer said Company in good faith, strictly in conformity hereto.
Directors shall not be less than one in number, but may be increased for
practical reasons beneficial to the Company. The Director herein mentioned by
name, or his/her successors elected to fill vacancies, shall hold office, have
and exercise collectively the exclusive management and control of the Company
property and business affairs;
PROVIDED, HOWEVER, that a Director may resign or be removed from office by a
Resolution of unanimous concurrence of the remaining Directors when, in their
<PAGE>
opinion, said Director shall have been guilty of fraud, malfeasance in office,
gross neglect of duty, or for cause by the mandate of a court of competent
jurisdiction and
PROVIDED FURTHER, that in the event of death, removal from office, or
resignation, the Directors shall appoint or elect a successor by the unanimous
concurrence of the remaining Directors. Should the entire Board of Directors
become vacant, persons named in the minutes of The R&S Group as successor
Directors) are hereby appointed to that position, otherwise a Court of Equity
may appoint one Director, who, in turn, shall appoint the additional Directors.
Should objection be filed to appointment of additional Directors, the same shall
be spread upon the Minutes. Any such objection shall deprive the candidate from
accepting the Directorship.
The signing and acknowledging of this Agreement by the hereinabove appointed
Director, or the signing and acknowledging of appropriate Minutes by Directors
subsequently elected or appointed, shall constitute their acceptance of The RCS
Group and the Company properly, assets, and emoluments thereof shall immediately
vest in the new Director or Directors without any further act or conveyance.
DIRECTORS' MEETINGS: By a regular act, Directors may provide for meetings at
stated intervals without l~ notice, and special meetings may be called at any
time by two or more Directors upon three days' written ' notice, which may be
waived. At any regular or special meeting, a MAJORITY of the Directors shall
constitute a quorum for conducting business, PROVIDED, affirmative action may be
taken only upon a MAJORITY vote of all Directors, whether present or absent
except that at special meetings called for a special purpose the MAJORITY
present may affirmatively act in emergency matters.
POWERS OF DIRECTORS: Directors may do anything any individual may legally do in
any state or country, subject to the restrictions herein noted. They shall
continue in business, conserve the property, commercialize the resources, extend
any established line of business in industry or investment, as herein especially
noted, at their discretion, for the benefit of The R&S Group, such as viz: buy,
sell, or lease real estate for the surface or mineral rights, buy or sell
mortgages, securities, bonds, notes, leases of all kinds, contracts or credits
of any form, patents, trademarks, or copyrights, buy, sell or conduct mail-order
business, or branches thereof, operate stores, shops, factories, warehouses, or
other trading establishments or places of business of any kind, construct, buy,
sell, lease, or rent suitable buildings or other places of business, advertise
different articles or business projects, borrow money for any business project,
pledging the Company property for the payment thereof, hypothecate assets,
<PAGE>
property, or both, of the Company in business projects, own stock in, or entire
charters of corporations, or other such properties, companies, or associations
as they may deem advantageous.
A Minute of Resolutions of the Board of Directors authorizing what they
determine to do or have done shall be evidence that such an act is within their
power. Anyone lending or paying money to the Directors shall not be obliged to
see the application thereof. All funds paid into the treasury are and become a
part of the ASSETS of The R&S Group.
ADMINISTRATION: The Directors shall regard this instrument as their sufficient
guide, supplemented from time to time by their resolutions (said resolution to
be ratified ALWAYS by a MAJORITY of the Directors then in office and
participating in the issuing meeting) covering contingencies as they arise and
are recorded in the Minutes of their meetings, which are the By-laws, rules, and
regulations of The R&S Group.
OFFICERS AND MANAGEMENT: The Directors may in their discretion elect among their
number an Executive Director, Secretary Director, and Treasurer Director, or any
other officers they may deem expedient for proper functioning. Directors may
hold two or more offices simultaneously, their duties being such as are usual or
are prescribed. They may employ agents, executives, or other employees, or
designate third persons to hold funds for specific purposes.
EXPENDITURES: The Directors shall fix and pay compensation of all officers,
employees, or agents in their discretion, and may pay themselves such reasonable
compensation for their services as may be determined by a MAJORITY of the Board
of Directors.
CONSTRUCTION: The Directors, officers, agents, or employees possess only such
authority as awarded them herein. Authority is understood and meant to be
similar to that awarded an Executor of an estate wherein the testator directs
(illustration): "That my Executor is directed to handle the estate in the manner
he thinks to be to the best interest, limited by the terms hereof, without the
necessity of resort to the court for permission or approval of any transaction,
intending herein to leave open for the court the question of conscientious
dealing of my Executor only."
DIRECTORS' DECLARATION OF PURPOSE: Directors shall be to accept rights, title,
and interest in and to real and personal properties, whether tangible or
intangible, of the Investors HERETO, to be the assets of The R&S Group. Included
therein is the exclusive use of his lifetime services and ALL of his EARNED
REMUNERATION ACCRUING THEREFROM, from any current source whatsoever, so that
Robert R. Krilich, Sr. can maximize his lifetime efforts through the utilization
<PAGE>
of his Constitutional Rights TO EXECUTE A PRIVATE CONTRACT for the protection of
his family and the preservation and growth of his assets for future generations.
THE DIRECTORS by their resolution of purpose may perform and function for any
purpose on behalf of any individual, group, or combination of individuals,
severally or collectively.
In such instances the powers and authority of the Directors shall be defined and
limited to the general purposes set forth by the Contract and the Directors'
Declaration of Purpose.
The Company shall have authority to provide itself with operating funds through
commercial loans, directly secured by assets or income of The R&S Group,
provided such authority is possessed, in writing, from the Board of Directors of
The R&S Group.
Notice is hereby given to all persons, companies or corporations extending
credit to, contracting with, or having claims against The R&S Group, that they
must look only to the funds and property of the Company for payment or for
settlement of any debt, tort, damage, judgment or decree, or for any
indebtedness which may become payable hereunder, that the Directors are NOT
personally liable when dealing with the Company properties or matters.
LIABILITIES: The Directors shall, in the capacity of Directors and not
individually, assume or incur only such liability as may attach to said Company
property assets. This Director liability shall not in any manner jeopardize
their individual or personal holdings and for any losses they should suffer for
any reason through services, they shall be reimbursed from Company PROPERTY to
the same extent as would non-interested persons.
DOCUMENTS: It is expressly declared that a Common Law Business Organization, and
not a partnership, is hereby created and that neither the Directors, officers,
or certificate holders, present or future, have or possess any beneficial
interest in the property or assets of said Company, nor shall they be personally
liable hereunder. as partners or otherwise that no Director shall be liable for
the act or omission of a CoDirector, or any other person, whatsoever, whether
employed by such Director or not, or for anything other than his own, personal
breach of Contrail. It is further expressly intended that the Directors and
Certificate of Beneficial Interest holders are not associated together in the
pursuit of the business purposes hereof in any way. The Directors alone have the
duty to carry out the business purposes of this contract. The Certificate
holders have only a right to receive distributions, in the nature of a royalty,
and not a dividend, when and if the Directors in their sole discretion make such
distributions.
<PAGE>
CERTIFICATES OF BENEFICIAL INTEREST: The Beneficial Interests, as a convenience,
for distribution are divided into One Hundred (100) Units, substantially in the
certificate form hereto attached. They are non-assessable, non-taxable (under
the provisions of Section 1001 of Internal Revenue Code), nonnegotiable,
non-transferable (excel back to the Company) and the lawful possessor thereof
shall be construed the true and lawful owner thereof. The lawful owner may, if
he so desires, cause his Beneficial Certificate to be registered with the
Secretary of the Directors. The Certificates of Beneficial Interest are to
expressly state that the holder of the Certificate expressly agrees that the
holder does not have any right, title, or legal interest in the assets of the
Company, in law or in equity, nor voice in the management or control of the
Company and that moreover, upon the death, insolvency, or dissolution of the
holder hereof, the Certificates (and all rights thereunder) shall be absolutely
NULL AND VOID. However, all or part of the Units represented by the Certificate
may be transferred before death, insolvency, or dissolution of the holder, but
only upon the prior approval of the Directors, and in accordance with the
provisions of this Contract Creating This Entity.
SPENDTHRIFT: The Directors are not to recognize any transfer, encumbering,
mortgage, pledge, hypothecation, order, or assignment of any Beneficiary by way
of anticipation of any part of the income or principal hereof, and the income
and principal of the Company shall not be subject in any manner to transfer by
operation of law, unless otherwise herein provided, and shall be exempt from the
claims of creditors and other claimants and from orders, decrees, levies,
attachments, garnishments and executions, and other legal or equitable process
of proceedings to the fullest extent permissible by law. Each Beneficiary is
expressly prohibited from any of the above:
DEATH - INSOLVENCY - BANKRUPTCY: The death, insolvency, or bankruptcy of any
certificate holder, or the transfer of his certificate by gift, devise, or
descent, shall not operate as a dissolution of The R&S Group, or in any manner
affect the Company or its operation or mode of business. Ownership of a
Beneficial Certificate shall not entitle the holder to any legal title in or to
the Company property, nor any undivided interest therein, nor in the management
thereof nor shall the death of a holder entitle his heirs or legal
representatives to demand any partition or division of the property of the
Company, nor any special accounting but said successor may succeed to the same
distributional interest upon the surrender of the certificate as held by the
deceased for the purpose of reissue to the then lawful holder or owner.
DURATION -CLOSURE: This Company shall continue for a period of twenty-five years
from date, unless the Directors shall unanimously determine upon an earlier
date. The Directors may at their discretion, because of threatened depreciation
in values, or other good and sufficient reason necessary to protect or conserve
<PAGE>
Company assets, liquidate the assets, distribute, and close the Company at any
earlier date determined by them. The assets of the Company shall be
proportionately and in a pro rata manner distributed to the Beneficiaries. In
the event this instrument has been recorded with the Registrar of Deeds, they
shall then file with said Recorder a notice that the Company shall terminate and
cease and thereupon, the Directors shall automatically be discharged hereunder,
PROVIDED, their administration and distribution has been made in accordance with
the terms and provisions of the Contract Creating This Entity. Otherwise, a
court of equity may be invoked to review and correct any tort or error.
RENEWAL: At the expiration of this Agreement the then Directors, if they so
desire and believe that said Company should not be closed, may renew this
Agreement for a like or shorter period. A Resolution of said renewal shall be
entered upon the Minutes and also recorded in the Recorder's Office (in the
event this Agreement has been recorded) at least 120 days prior to the
expiration hereof. Public notice shall be made in a county newspaper of general
circulation not less than 60 days prior to the expiration hereof.
RESTRICTIONS: Nothing herein contained shall be construed to authorize the
Company to issue Certificates of Beneficial Interest in excess of the number
herein provided, nor for a nominal value at variance with the provisions hereof.
PURPORT: The purport of this contract is to convey property to Directors, to
constitute the assets of the company, held by the Directors, in joint tenancy
for the duration hereof, and to provide for a prudent and economical
administration to BEGIN AT ONCE and not to be deferred until after the death of
any creator, settler, or maker, as occurs when such Trust Estates are created by
Last Will and Testament. The creators, and/or makers of this covenant prefer
that the Directors act solely within their constitutional rights as based upon
their common law contract rights and immunities vouchsafed to citizens of the
United States of America and defined in Article N, Section 2, PROVIDING, that
"Citizens of each state shall be entitled to all privileges and immunities of
citizens in the several states," and Article VI, Section 2, PROVIDING that "The
Constitution of the United States and the laws made in pursuance thereof shall
be the supreme law of the land" and the 14th Amendment thereof, PROVIDING, that
"No state shall make or enforce any taw which shall abridge the privileges or
immunities of citizens of the United States." This contract is intended to
create a Common Law Business Organization with the following business purposes,
including but not limited to, the protection of property and assets, insulation
of personal or business liability, simplified distribution of property and
assets, to increase profit structure, to become more competitive in the market
place, to obtain more privacy in buying and selling properties or businesses,
and to raise capital resources.
Nothing herein contained shall be construed as an intent to evade or contravene
any Federal or State Law, nor to delegate to Directors any special power
<PAGE>
belonging exclusively to franchise of incorporation. The intent of the Investors
in The R&S Group is to transfer to it certain real and personal properties and
in so doing he conveys all right, title and interest therein.
By creating this legal entity, the parties to this agreement have exercised
their Constitutional Rights to create and execute a private contrail to agree in
a meeting of the minds and for an adequate consideration to create a Common Law
Business Organization for the business purposes set out herein.
IN WITNESS WHEREOF the Creator hereof and Investors hereto and the Acceptors
hereof, for themselves, their heirs, successors, and assigns, have hereunto set
their hands and seals in take of the conveyance, delivery, and acceptance of
property, assets, or other things of value, and the obligations and duties as
herein assumed as Directors of said Company and assent to all stipulations
herein as imposed and expressed.
/s/ Edward Bartoli
- ------------------(SEAL)
Edward Bartoli, Creator
/s/Robert Krilich -----------------(SEAL)
Robert R. Krilich, Sr., Director of the Abuello Company, which is the Director
of The Rainbow Group and The Senior Group, Investors
<PAGE>
Director of The R&S Group
Dated November 5, 1995
/s/Maurice Furlong
Maurice Furlong, President of healthg Care Centers of America, Inc., Director
Witness/s/ Cynthia M. Vrachan
----------------------
Cynthia M. Vrachan
State of Illinois
County of DuPage
Before me, the undersigned authority, on this day personally appeared the above
named Maurice Furlong known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he/she executed the same
for purposes and consideration therein stated.
Given under my hand and seal this 7th dayof November 1995
My commission expires-/ /19
NOTARY PUBLIC /s/ Kim M. Plencner
Kim M. Plencner
SEAL:
OFFICIAL SEAL
KIM M PLENCNER
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES:09/28/98
<PAGE>
NOTARY
Amendment to the Contract Creating
The R&S Group
I, Edward Bartoli, Creator of a certain Contract executed on November 5,1995, in
order to clarify the intent of the Creator in making said Contract DO HEREBY
AMEND SAID DECLARATION TO INCLUDE THE FOLLOWING:
The contract creating The R&S Group is expressly IRREVOCABLE, and may not be
altered or amended in any respect unless specif>cally authorized by the Contract
instrument, and may not be terminated except thro distributions permitted the
Contract instrument.
/s/Edward Bartoli
Edward Bartoli, Creator
State of Illinois
County of Dupage
Before me, the undersigned authority, on this day personally appeared the above
named, Edward Bartoli known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for
purposes and consideration therein stated.
Given under my hand and seal this 5th day of November, 1995
My commission expires_____________________
NOTARY PUBLIC /s/Kim M. Plencner
-------------------
Kim Plencner
SEAL
OFFICIAL SEAL
KIM M PLENCNER
NOTARY PUBLIC. STATE OF ILLINOIS
MY COMMISSION EXPIRES:09/28/98
<PAGE>
The R&S Group
Minutes of First Meeting
November 5, 1995
At this, the FIRST MEETING of the BOARD OF Directors of The R&S Group,
held at the office of the Company at Oakbrook Terrace, State of Illinois. All
Directors being present, by unanimous accord the following was affirmed and
ratified, viz:
1. That, pursuant to the request and declaration of Edward Bartoli, on this
date, a Contract Creating This Entity creating The R&S Group, (A Common Law
Business Organization) was duly executed, acknowledging Maurice Furlong,
President of Health Care Centers of America, Inc., it's Director, and the above
named person by their signature evidenced the acceptance of the duties,
obligations and faithful performance of said Company.
2. That pursuant to the Creators request, the Director shall, at the earliest
possible date, cause the Contract Creating This Entity to be duly recorded with
the recorder, DuPage County, City of Oakbrook Terrace, State of Illinois, if the
Directors, in their sole discretion, deem it necessary to do so.
3. That pursuant to the tax laws governing Common Law Business Organizations,
the Directors herein shall C', immediately apply for The R&S Group's EMPLOYER
IDENTIFICATION NUMBER using the FORM SS-4 and following the instructions.
4. Edward Bartoli CREATED THIS Common Law Business Organization FOR the purpose
of offering the Certificates of Beneficial Interest to the Investors in
consideration of the investors conveying all of their rights, title and interest
in real and personal properties herein conveyed.
B. Due to National and International economic conditions with attendant
accelerated inflationary trends, the preservation of the Investors's assets to
maintain the Investor's security could best be provided by The R&S Group holding
the Investors's assets.
C. To clearly DEMONSTRATE and IMPLEMENT in a practical and meaningful way for
the benefit of the Investors, the following BUSINESS PURPOSES, including but not
limited to: o the protection of property and assets o insulation of personal or
business liability o simplified distribution of property and assets o to
increase profit structure
<PAGE>
o to become more competitive in the market place
o to obtain more privacy in buying and selling properties or businesses, and o
to raise capital resources.
5. That, on this date, Rainbow Group and Senior Group accepted the offer of
Edward Bartoli, to convey certain real and personal properties of Rainbow Group
and Senior Group, listed on the Schedule A attched hereto, in accordance with
applicable law and the Contract, for and in exchange for One Hundred (100) Units
of Beneficial Interest being ALL of the Beneficial Interest of The R8S Group;
6. That, predicated on the legal and actual conveyance of the herein before
listed properties. Minute 5, Maurice Furlong, President of Health Care Centers
of America, Inc., the Director of The R&S Group hereby accept the Investors's
real and personal properties to invest in this Common Law Business Organization
on this date. Furthermore, in consideration of the acceptance of the herein
before stated OFFER, the Director of The R&S Group will issue fifty units 150)
of the Beneficial Interest of The R&S Group, being fifty percent (50%) of the
Units, to Rainbow Group at the same time and on the same date that the legal and
actual conveyance is officially made. And the Director of The R&S Group hereby
attest that the aforementioned conveyance of Rainbow Group's properties, Minute
5, will be a fair exchange for value received and as such will be tax free as an
equal exchange. Said conveyances will NOT be consummated by gift so that these
properties will have been conveyed for a consideration of money and/or moneys
worth prior to death, and cannot, therefore in any way be construed as having
been transferred in CONTEMPLATION OF DEATH. When these conveyances have been
consummated, Rainbow Group will have divested its ownership, right, titre, and
interest in FEE SIMPLE to the above named properties and will hold ONLY A
CERTIFICATE OF BENEFICIAL INTEREST in the income of The R&S Group that the
Director may resolve to distribute at such time as it may be beneficial for The
R&S Group to distribute in the Director's complete discretion.
Furthermore, in consideration of the acceptance of the herein before stated
OFFER, the Director of The R&S Group will issue fifty units (50) of the
Beneficial Interest of The R8S Group, being fifty percent (50(degree)x) of the
Units, to Senior Group at the same time and on the same date that the legal and
actual conveyance is officially made. And the Director of The R&S Group hereby
attest that the aforementioned conveyance of Senior Group's properties, Minute
5, will be a fair exchange for value received and as such will be tax free as an
equal exchange. Said conveyances will NOT be consummated by gift so that these
properties will have been conveyed for a consideration of money and/or moneys
worth prior to death, and cannot, therefore in any way be construed as having
been transferred in CONTEMPLATION OF DEATH. When these conveyances have been
consummated, Senior Group will have divested its ownership, right, title, and
<PAGE>
interest in FEE SIMPLE to the above named properties and will hold ONLY A
CERTIFICATE OF BENEFICIAL INTEREST in the income of The R&S Group that the
Director may resolve to distribute at such time as it may be beneficial for The
R&S Group to distribute in the Director's complete discretion.
The execution of The R&S Group, assures by the CONTRACT under which it is
established, the properties (Minute 5) are not subject to Probate.
7. That, the Directors may hold and conduct meetings at such times and at such
places as best suit their convenience and will serve the best interest of The
R&S Group.
8. That, at such meetings where ALL official business will be conducted, a
MAJORITY of the Directors shall be present and participating in the meeting.
9. That, affirmative actions shall require the approval of the MAJORITY of the
Board of Directors.
10. That, Directors objecting to ANY Minute for ANY reason should also sign, but
after their names write in the word, "Dissent" and the Minute number.
11. That, ALL primary directional Minutes shall be approved as evidenced by the
signature of a MAJORITY of the Board of Directors.
12. That, the Annual Meeting of the Board of Director; will be held on fifteenth
(15th) day of January and on the same day of each succeeding year, at a time and
at such location as may be most convenient for a MAJORITY of the Board of
Directors.
13. That, the fiscal year of The R&S Group will be the calendar year, and that
if it ever becomes necessary it the best interest of The R&S Group, a MAJORITY
of the Board of Directors may change the fiscal year.
14. That, ANY and ALL inquiries of whatsoever nature from whatever source that
MAY BE directed to ANY of the Directors, either individually or collectively, BE
committed to writing by the INQUIRER and submitted to the Board of Directors for
processing at the next scheduled meeting of the Board of Directors.
<PAGE>
15. That, The R&S Group, being a PRIVATE ORGANIZATION created by CONTRACT,
places such private and fiduciary responsibilities on its Directors and/or
agents that any Company duties, tasks, or functions assigned by the Directors to
Directors and/or agents in the service of The R&S Group CAN IN NO WAY be
construed as the practice of law.
16. That, ALL Minutes of The R&S Group are inviolable. That is to say, that The
R&S Group's minutes are to remain ABSOLUTELY PRIVATE and they are NOT to be
loaned, borrowed, read, or disclosed by ANYONE. Moreover, ALL MINUTES are beyond
the purview of ANY person, other than the Directors.
17. The Directors for the Company have all the power necessary to carry out
their duties and their books and records are NOT subject to review or subpoena
Duces Te Cum.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made and seconded and ca ' , the meeting
adjourned.
/s/Maurice Furlong
Maurice Furlong,President of Health Care Centers of America, Inc., Director
<PAGE>
The Rainbow Group
(a common law business organization)
Minutes of Meeting
Held on November 10, 1995
At a MEETING of the Board of Director of The Rainbow Group, held at its
offfices, and a majority of Directors being present, by unanimous accord the
following was affirmed and ratified, viz:
___. That, on this date. THE DIRECTOR OF The Rainbow Group offered its assets
to The R&S Group (a common law business organization) for and in exchange
for fifty (50) Units of Beneficial Interest being fifty percent (50%) of
the Beneficial Interest of The R&S Group.
___. That, also on this date the Director of The R8S Group accepted the offer
of The Rainbow Group. Further, the Director of The Rainbow Group hereby
attests that the aforementioned conveyance of The Rainbow Group
properties, will be a fair exchange. When these conveyances have been
consummated The Rainbow Group will have divested itself of ownership,
right, title, and interest in FEE SIMPLE to its properties and will hold
ONLY A CERTIFICATE OF BENEFICIAL INTEREST in the income of Th R8S Group
that the Oiredors may resolve to distribute at such time as it may be
beneficial for The R&S Group to distribute in their absolute discretion.
___. That, also on this date the Director of The Rainbow Group transfered its
properties to The R&S Group in exchange for fifty (50) Units of
Beneficial Interest being fifty percent (SO%) of the Beneficial Interest
of The R&S Group. Said transfer was accomplished by Bill of Sale, and the
transfers will be formally completed in a timely manner.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made, seconded and carried, the meeting
adjourned.
/s/ Robert R. Krilich
- ---------------------
Robert R. Krilich, Sr., Director of The Abuello Company, Ltd., incorporated
under the International Companies Act, 1990 (No 9 of 1990) Wection 14(3), in the
country of Belize, Central America
COPY
<PAGE>
Ths Senior Group
(a common law business
organization)
Minutes of Meeting
Held on November 10, 1995
At a MEETING of the Board of Directors of The Senior Group, held at its offices,
and a majority of Directors being present, by unanimous accord the following was
affirmed and ratified, viz:
___. That, on this date, THE DIRECTOR OF The Senior Group offered its assets
to The RIBS Group (a common law business organization) for and in
exchange for fifty (50) Units of Beneficial Interest being fifty percent
(50%) of the Beneficial Interest of The R&S Group.
___. That, also on this date the Director of The R&S Group accepted the offer
of The Senior Group. Further, the Director of The Senior Group hereby
attests that the aforementioned conveyance of The Senior Group
properties, will be a fair exchange. When these conveyances have been
consummated The Senior Group will have divested itself of ownership,
right, title, and interest in FEE SIMPLE to its properties and null hold
ONLY A CERTIFICATE OF BENEFICIAL INTEREST in the income of The R8S Group
that the Directors may resolve to distribute at such time as it may be
beneficial for The R&S Group to distribute in their absolute discretion.
___. That, also on this date the Director of The Senior Group transfered its
properties to The R&S Group in exchange for fifty (50) Units of
Beneficial Interest being fifty percent (50%) of the Beneficial Interest
of The R&S Group. Said transfer was accomplished by Bill of State, and
the transfers will be formally completed in a timely manner.
In accordance with the Minutes and, there being no further business to come
before the meeting, on motion duly made, seconded and carried, the meeting
adjourned.
/s/Robert R. Krilich 11-10-98
- -----------------------------
Robert R. Krilich, Sr., Director of The Abuello Company, Ltd., incorporated
under the International Companies Act 1990 (No. 9 of 1990), Section 14(3), in
the country of Belize, Central America
COPY
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. One Units of Beneficial Interest: Fifty (50)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Rainbow Group of Oakbrook
Terrace, Illinois is the owner of 50 Units of Beneficial Interest, said Units
being non-assessable and non-taxable as described in the Articles of the
contract which exempt both Directors and Beneficiaries from personal liability
for debts or obligations, contractual or tortious, beyond The Company assets.
This Certificate conveys no legal or equitable interest of any kind in The
Company assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract.
IN WITNESS WHEREOF The Director has signed this equity interest certificate as
authorized this November 10,1995.
/s/Maurice Furlong
- ------------------
Maurice Furlong ,Director
Endorsement For Transfer
I, Robert R. Krilich, Sr., Director of The Abuelio Company, which is the
Director of Rainbow Group hereby give, grant, endow, assign, transfer unto The
R&S G p These Units of Beneficial Interest represented by this certificate No.
One as recorded by the Secretary of The R&S Group.
Dated 11-5~5 Signed:/s/Robert R. Krilich
- ------------ --------------------
Robert K. Krilich
In the presence of: /s/Cynthia Vrachan
------------------
Cynthia Vrachan
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. Two Units of Beneficial Interest: fifty (50)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Senior Group of Oakbrook
Terrace, Illinois is the owner of 50 Units of Beneficial Interest, said Units
being non-assessable and non-taxable as described in the Articles of the
contract which exempt both Directors and Beneficiaries from personal liability
for debts or obligations, contractual or tortious, beyond The Company assets.
This Certificate conveys no legal or equitable interest of any kind in The
Company assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract
IN WITNESS WHEREOF The Director has signed this equity interest certificate as
authorized this November 10,1995.
/s/Maurice Furlong
Maurice Furlong, Director
================================================================================
Endorsement For Transfer
I, Robert R. Krilich, Sr., Director of The Abuello Company, which is the
Director of Senior Group hereby give, grant, endow, assign, transfer unto The
R&S Group These Units of Beneficial Interest represented by this certificate No.
Two as recorded by the Secretary of The R&S Group.
Dated 11-5-95 Signed /s/ Robert R. Krilich
- -------- ---------------------
Robert R. Krilich
In the presence of: /s/ Cynthia Vrachan
-------------------
Cynthia Vrachan
<PAGE>
THE R&S GROUP
(A Common Law Business Organization)
Certificate No. Three Units of Beneficial Interest One Hundred (100)
THE COMMON LAW BUSINESS ORGANIZATION CONTRACT dated November 5,1995 creates The
R&S Group owner of The Company Assets, being held by appointed Directors holding
Assets in Fee Simple, managing The Company and Assets thereof as designated in
said contract, who as such Directors, are therein authorized to issue One
Hundred uniform (like) Units evidenced by their Certificates of Beneficial
Interest.
THEREFORE, they, as Directors, do hereby certify that Health Care Centers of
Amexica, Inc. is the owner of 100 Units of Beneficial Interest, said Units being
non-assessable and non-taxable as described in the Articles of the contract
which exempt both Directors and Beneficiaries from personal liability for debts
or obligations, contractual or torlious, beyond The Company assets. This
Certificate conveys no legal or equitable interest of any kind in The Company
assets, management or control thereof.
Benefits hereby conveyed consist solely of the distributions of income from the
earnings of the assets as distributed by the action of The Directors and nothing
more. The Units of Beneficial Interest, as represented by This Certificate, are
transferable in accordance with the contract on file in the office of the
Secretary of The Board of Directors. Moreover, upon the death, insolvency, or
dissolution of the holder hereof, this Certificate (and all rights hereunder)
shall be absolutely NULL AND VOID. However, all or part of the Units hereby
represented may be transferred before death, insolvency, or dissolution of the
holder, but only upon the prior approval of the Directors, and in accordance
with the provisions of the Contract Creating This Entity on file in the office
of the Directors.
This Certificate evidences consideration of love and affection, the receipt of
money and other property or thing of value, whether tangible or intangible, sold
or conveyed to Said Company under the conditions and for the purposes set forth
in the agreement and Contract which confers no rights, powers, privileges or
interest not specified in Said Contract.
IN WITNESS WHERE OF The Directors have signed this equity interest certificate
as authorized this 15th day of November, 1995
/s/Maurice Furlong
- ------------------
Maurice Furlong, Director
================================================================================
Endorsement For Transfer
I,________________________________________ hereby give, grant, endow, assign,
transfer unto ______________________________These Units of Beneficial Interest
represented by this certificate No._________________________as recorded by the
Secretary of ____________________________________________________________. Dated
the_______ day of __________________________,19___________.
Signed:___________________ In the presence
of:____________________________________ ________________________________
CONSENT OF INDEPENDENT CHEMIST AND ASSAYER
Health Care Centers of America, Inc.
I hereby consent to the filing of the following reports with the
registration statement of Health Care Centers of America, Inc., filed on Form
10-SB in accordance with Section 12 of the Securities Exchange Act of 1934:
1. Assay no. 2972A dated June 12, 1997 and letter relating thereto dated
June 28, 1997, relating to approximately 500,000 tons of ore
concentrate belonging to Peeples Mine, and located in the vicinity of
Skull Valley, Arizona
2. Assay nos. 2220, 2221 and 2222, dated February 6, 1996, and letter
relating thereto dated February 9, 1996, relating to properties
belonging to F&H Mining in the vicinity of Mesquite, Nevada
I further consent to the reference to my name is such registration
statement and to future reports and announcements, to the effect that I have
tested samples from such concentrate, that such samples indicate commercial
quantities of precious metals, including gold, platinum, iridium, and osmium,
and subject to the qualifications set forth in my report, 500,000 tons of such
concentrate would in my judgment be worth in excess of $3 billion based on
prices at March 21, 1997.
Metallurgical Research & Assay Laboratory
By: /s/Donald E. Jordan
-------------------
Donald E. Jordan
Henderson, Nevada
August 26, 1997
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Health Care Centers of America, Inc.
I hereby consent to the use of my report dated March 31, 1997, in the
registration statement of Health Care Centers of America, Inc., filed in Form
10-SB in accordance with Section 12 of the Securities Exchange Act of 1934.
I also consent to my report referred to above being considered as
comprehending my opinion that the supplemental schedules of Health Care Centers
of America, Inc. and its subsidiary as of December 31, 1994, 1995 and 1996, and
for each of the years then ended, included in such registration statement, when
considered in relation to the basic consoli dated financial statements, present
fairly in all material respects the information shown therein.
/s/ W. Dale McGhie
-------------------
W. Dale McGhie, CPA
Reno, Nevada
August 22, 1997
Roy E. Sinkovich
Certified Public Accountant
Doctor of Jurisprudence
Health Care Centers of America, Inc.
100 North Arlington Avenue
Suite 22F
Reno, Nevada 89501
To Whom It May Concern:
I prepared a prior audit report of Health Care Centers of America, Inc. ("the
Company"), for the period ending December 31, 1995. Management had reported in
the financial statements transactions of various agreements prior to consumation
of the agreements. As a result of the contingency status of the contracts,
Management adjusted their financial statements to reflect these changes.
Due to Managements decision to revise the financial statements by excluding
these varioius contingent contracts, I am withdrawing my audit report for the
period ending December 31, 1995. Please accept the audit reports prepared by Mr.
W. Dale McGhie for the years ending December 31, 1994 and 1995, plus Mr. W. Dale
Mcghie's interim report for the period ending September 30, 1996.
Sincerely,
Mr. Roy Sinkovich
Certified Public Accountant
P.O. Box 110726 / Nashville, Tennessee 37211 / Office 615-834-0025 / Fax
615-834-0027
HCCA
November 29, 1996
To whom it may concern:
The Board of Directors of Health Care Centers of America, Inc. has requested the
withdrawal of the audited financial statements for the period ended December 31,
1995 and the financial report prepared by Mr. Roy Sinkovich dated March 7, 1996,
which has been replaced by the financial report of Mr. W. Dale McGhie for the
audit of the financial statements for the periods ending Decmeber 31, 1994 and
1995 and for the interim period ending September 30, 1996.
In the financial statements prepared for Mr. Roy Sinkovich for the period ending
December 31, 1995, management included in the financial statements transactions
of various contract agreements. Management realized that to complete audits of
the various entities in a timely manner would have delayed the registration of
the filing of the form 10-SB, and therefore, finalization of the various
contracts were delayed until after registration of the Company. It is
anticipated that the majority of these mergers will be completed during 1997.
Should you be aware of the distribution of additional financial reports dated
December 31, 1995 prepared by Mr. Roy Sinkovich, we appreciate your best efforts
in assisting us in diseeminating this information to those who may have this
financial report in their possession.
Sincerely,
/s/ W. Maurice Furlong
President and Chairman of the Board
HEALTH CARE CENTERS OF AMERICA, INC. 510 Renaissance
Drive Oakbrook Terrace, IL 60181
METALLURGICAL RESEARCH AND ASSAY LABORATORY
745 SUNSET RD., SUITE 8
HENDERSON, NV 89015
702-565-0074
June 25, 1997
Mr. W. Dale McGhie
1539 Vassar Street
Reno, NV 89502
Dear Mr. McGhie:
In response to your request as to Peoples Mining Company's ability to
process dore bars and sell them for more than the cost of making them. It is my
opinion, that if HCCA's Peoples Mining can recover approximately 80% of the
values, and if they have 800,000 tons of this material as represented, then by
using the current prices ( 3/21/97 ) of precious and rare earth metals present,
they can expect a gross profit.
The plasma furnace will smelt 1/4 ton of ore per hour at a cost of
approximately $700 per hour. Using the metal values given, peoples Mining has
$13,600 per ton of ore. If 80% is recovered to sell in a dore bar to a refinery
Peoples can expect to receive $10,900 per processed ton or ore. The direct cost
of recovery should not exceed $3000 per ton. Peoples should have a gross profit
of over $7900 per treated ton of ore.
The length of time to process 500,000 tons of ore is mostly dependent
on Peoples ability to purchase a number of plasma furnaces at a cost of
approximately $500,000 per unit.
Therefore based on the above, it is my opinion that the value of the
ore in its current state would be almost $4,000,000,000.
Sincerely,
[unsigned]
Donald E. Jordan
If you need any additional information please call us at the above number.
Thank you.
Sincerely,
/s/ Donald E. Jordan
Donald E. Jordan
EXHIBIT 12(d)
METALLURGICAL RESEARCH AND ASSAY LABORATORY
745 SUNSET RD., SUITE 8
HENDERSON, NV 89015
702-565-0074
February 9, 1996
Mr. Harrigan
We retrieved and analyzed three samples for you (results shown on
separate assay reports #'s 220, 2221, and 2222 dated 2/9/96. These samples were
taken over a 7 claim area and identified as B4 foot bank, M14 foot bank, and T
prospect hole 200 yards to the north east. These samples, if representative of
the 7 claims, have values according to our assays above as follows:
7 claims = 700,000 cubic yards and each cubic yard weighs ca 1.5 ton.
or 1,050,000 ton/7claims.
The average value/ton for each metal is:
Gold $ 80
Platinum 700
Rhodium 250
Osmium 1000
Ruthenium 18
Palladium 15
Iridium 180
TOTAL $2243/ton
$2243 X 1,050,000 tons =$ 2,355,150,000.00
Of course these value are just an estimate but from the assays and the
area covered we feel that they are a pretty good estimate.
Very truly yours
Donald E. Jordan
/s/ Donald E. Jordan
<PAGE>
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2220 DATE: 2/9/96
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION BY ROAD 4 FOOT BANK SAMPLE
Element ppm or ug/g Troy oz/s.ton
Au-Gold 7.0 0.20
Ag-Silver 5.6 0.16
Pt-Platinum 46.4 1.35
Rh-Rhodium 9.0 0.26
Os-Osmeium 50.0 1.46
Ru-Ruthenium 9.1 0.27
Pd-Pladdium 3.7 0.11
Ir-Iridium 71.0 2.07
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 2/9/96
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS REPORT.
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2221 DATE: 2/9/96
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION BY ROAD 14 FOOT BANK SAMPLE
Element ppm or ug/g Troy oz/s.ton
Au-Gold 7.8 0.20
Ag-Silver 8.4 0.24
Pt-Platinum 54.0 1.57
Rh-Rhodium 15.5 0.45
Os-Osmeium 89.5 2.61
Ru-Ruthenium 8.2 0.24
Pd-Pladdium 3.4 0.16
Ir-Iridium 102.0 2.97
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 2/9/96
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS REPORT.
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2222 DATE: 2/9/96
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION BY ROAD 14 FOOT BANK SAMPLE
Element ppm or ug/g Troy oz/s.ton
Au-Gold 9.8 0.29
Ag-Silver 10.5 0.31
Pt-Platinum 77.0 2.25
Rh-Rhodium 20.4 0.59
Os-Osmeium 121.0 3.53
Ru-Ruthenium 15.6 0.45
Pd-Pladdium 6.6 0.19
Ir-Iridium 131.0 3.82
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 2/9/96
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS
REPORT.
METALLURGICAL RESEARCH AND ASSAY LABORATORY
745 SUNSET RD., SUITE 8
HENDERSON, NV 89015
702-565-0074
June 13, 1997
Dale McGhie
1539 Vassar Street
Reno, NV
89502
Dear Mr. McGhie:
Enclosed ar The assays from the skull valley property that we sampled for Mr.
Furlong. Mr. Graham and I were present and observed the taking of the samples.
We physically took possession of these samples, brought them to our laboratory,
prepared and assayed each sample.
If you need any additional information please call us at the above number.
Thank you.
Sincerely,
/s/ Donald E. Jordan
Donald E. Jordan
<PAGE>
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2972A DATE: 6/12/97
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION #1 PIT - 90+ FEET
Element ppm or ug/g Troy oz/s.ton
Au-Gold 35.2 1.03
Ag-Silver 39.3 1.14
Pt-Platinum 105.5 3.08
Rh-Rhodium 42.5 1.24
Os-Osmeium 670.0 19.54
Ru-Ruthenium 92.5 2.70
Pd-Pladdium 13.9 0.40
Ir-Iridium 251.5 7.34
Fe-Iron 278,000.0 8,108.15
Cu-Copper 312.0 9.10
SULFUR : 0.012 %
S102 : 50.9 %
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 6/12/97
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS REPORT.
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2972B DATE: 6/12/97
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION #1 PIT - 90'
Element ppm or ug/g Troy oz/s.ton
B-Boron 0.0 0.00
Zn-Zinc 216.0 6.30
Ni-Nickel 475.5 13.87
Mo-Molybdenum 82.5 2.41
Re-Rhenium 4.6 0.13
As-Arsenic 1,270.0 37.04
Sb-Antimony 530.0 15.46
Co-Cobalt 2,850.0 83.12
Mn-Manganese 304.5 8.88
Te-Tellerium 730.0 28.58
Sn-Tin 296.0 8.63
Cr-Chromium 1,955.0 57.02
Pb-Lead 435.0 12.69
Al-Aluminum 15,700.0 457.91
Tl-Thallium 53.0 1.55
Zr-Zirconium 28.3 0.82
Ti-Titanium 8,300.0 242.08
Li-Lithium 0.0 0.00
Cu-Copper 312.0 9.16
W-Tungsten 135.5 3.95
Bi-Bismuth 35.4 1.03
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 6/12/97
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS REPORT.
Metallurgical Research and Assay Laboratory
745 Sunset Road Suite 8
Henderson, NV 89015
702-565-0074
702-564-0726
ASSAY REPORT
ASSAY NUMBER 2972C DATE: 6/12/97
CUSTOMER CRAIG FURLONG
SAMPLE IDENTIFICATION #1 PIT - 90'
Element ppm or ug/g Troy oz/s.ton
Se-Selenium 165.5 4.83
Ge-Germanium 157.0 4.58
Ga-Gallium 289.5 8.44
Yb-Yitterbium 79.5 2.32
Md-Meodymium 720.0 21.00
Pr-Praseodymium 25.5 0.74
Sn-Sanarium 45.3 1.32
Tm-Thulium 930.0 27.12
Lu-Luteium 31.7 0.92
Dy-Dysprosium 13.6 0.40
Ce-Cerium 323.5 9.44
Er-Erbium 9,300.0 271.24
Tb-Terbium 40.0 1.17
Eu-Europium 405.5 11.83
Ho-Holmium 63.5 1.85
U-Uranium 0.0 0.00
Sc-Scandium 1.4 0.04
Y-Yittrium 10.3 0.30
REGISTERED ASSAYER
CERTIFICATE NO. 19127
DONALD E. JORDAN
/s/ DONALD E. JORDAN
Date Signed 6/12/97
ARIZONA, U.S.A.
UNLESS PRIOR ARRANGEMENTS ARE MADE, ALL SAMPLES WILL BE DISCARDED AFTER 30
DAYS.THESE RESULTS ARE BASED ON WELL KNOWN ACCEPTED ANALYTICAL PROCEDURES USED
SOLELY ON THE SAMPLE TAKEN BY JORDAN, GRAHAM, AND HERRON. THIS REPORT IS
PREPARED EXCLUSIVELY FOR THE CLIENT. NO WARRNTIES AS TO THE REPRODUCIBILITY OR
EXTRACTABILITY OF MATERIAL OTHER THAN THE SAMPLE IS GIVEN. DONALD E. JORDAN
AND/OR METALLURGICAL RESEARCH AND ASSAY LABORATORY MAKE NO REPRESENTATION
EXPRESS OR IMPLIED ON MATERIAL OTHER THAN THAT REPRESENTED BY THE SAMPLE
ASSAYED.
NOTE: "#VALUE!" MEANS THAT ELEMENT HAS NOT BEEN ANALYZED FOR THIS REPORT.
<PAGE>
METALLURGICAL RESEARCH AND ASSAY LABORATORY
745 SUNSET RD., SUITE 8
HENDERSON, NV 89015
702-565-0074
6/28/97
Mr. V. Dale McGhie
Certified Public Accountant
1539 Vassar Street
Reno, NV 89502
Re: Auditors request to summarize Peeples Mining Companies ore value.
Dear Mr. McGhie:
It is my opinion, assuming Peeples Mining Company reduces its ore
inventory to a dore bar using a plasma furnace, they can recover approximately
80% of the values.
Assuming Peeples Mining Company has in excess of 500,000 tons of
material as represented by Paul Mason, the market prices, as of March 21, 1997,
for the precious metals present in Peeples ore are as follows:
Gold $ 354.00 per oz.
Silver $ 5.00 per oz.
Platinum $ 395.00 per oz.
Rhodium $ 321.00 per oz.
Osmium $ 425.00 per oz.
Ruthenium $ 12.00 per oz.
Palladium $ 145.00 per oz.
Iridium $ 425.00 per oz.
Assuming Peeples Mining Company installs 2 furnaces to start with, they
will be able to process one half ton of ore, to the dore bar state, every hour.
Assuming Peeples operates their furnaces 24 hours per day - 7 days per
week they will be able to process 84 tons of ore to the dore bar state each
week. As stated the plasma furnaces will collect approximately 80% of the ores
values in the dore bars.
The Assay $ 2972A I performed on June 12, 1997, shows the Precious
Metal values per ton of Peeples ore to be $13,619.86 present in each ton of ore.
Peeples approximate recovery of 80% of the present values, given
Peeples a representative value of $10,900 per ton or ore (not per ton of dore
bars).
The estimated cost per ton of ore to create the dore bars should not
exceed $3,000 per ton of ore.
The [before tax profit] Peeples Mining Co. Will be approximately $
7,900.00 per ton of concentrate.
Assuming that Peeples Mining Co. Has an excess of 500,000 tons of this
ore as stated above, they can expect their before tax profit would be
$3,950,000,000.00 (three billion nine hundred fifty million dollars).
It's my professional opinion, based on the above, that with just the
precious metal values being considered, Peeples Mining Companies inventory of
ore is worth well in excess of $3,000,000,000.00 (three billion dollars).
Sincerely,
/s/ Donald E. Jordan
Donald E. Jordan
[GRAPHIC OMITTED]
ARTICLES OF INCORPORATION
OF
PEEPLES MINING COMPANY
The undersigned, acting as incorporator, pursuant to the
provisions of the laws of the State of Nevada relating to private corporations,
hereby adopts the following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
PEEPLES MINING COMPANY
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service
of process is Nevada Agency and Trust Company, 50 West Liberty Street, Suite
880, City of Reno, County of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the
corporation is organized are to engage in any activity or business not in
conflict with the laws of the State of Nevada or of the United States of
America, and without limiting the generality of the foregoing, specifically:
I. [OMNIBUS]. To have to exercise all the powers now
or hereafter conferred by the laws of the State of Nevada upon
corporations organized pursuant to the laws under which the
corporation is organized and any and all acts amendatory
thereof and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct
and carry on its business or any branch thereof in any state
or territory of the United States or in any foreign country in
conformity with the laws of such state, territory, or foreign
country, and, to have and maintain in any state, territory, or
foreign country a business office, plant, store or other
facility.
III. [PURPOSES TO 8E CONSTRUED A8 POWERS]. The
purposes specified herein shall be construed both as purposes
and powers and shall be in no wise limited or restricted by
reference to, or inference from, the terms of any other clause
in this or any other article, but the purposes and powers
specified in each of the clauses herein shall be regarded as
<PAGE>
independent purposes and powers, and the enumeration of
specific purposes and powers shall not be construed to limit
or restrict in any manner the meaning of general terms or of
the general powers of the corporation; nor shall the
expression of one thing be deemed to exclude another, although
it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have
authority to issue an aggregate of TEN THOUSAND (10,000) shares of Capital
Stock, ONE DOLLAR ($1.00) PAR VALUE per share, for a total capitalization of TEN
THOUSAND DOLLARS ($10,000).
The holders of shares of capital stock of the corporation
shall not be entitled,to pre-emptive or preferential rights to subscribe to any
unissued stock or any other securities which the corporation may now or
hereafter be authorized to issue.
The corporation's capital stock may be issued and sold from
time to time for such consideration as may be fixed by the Board of Directors,
provided that the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at
all shareholders meetings called for the purpose of electing a Board of
Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation
shall be governed by a Board of Directors of no more than six (6) nor less than
one (1) person. The names and addresses of the first Board of Directors are:
NAME ADDRESS
Maurice Furlong 100 North Arlington, 122E
Reno, Nevada 89501
Alvin Schlabach 100 North Arlington, #22F
Reno, Nevada 89501
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the
corporation, after the amount of the subscription price or par value has been
paid in, shall not be subject to pay debts of the corporation, and no paid up
stock and no stock issued as fully paid up shall ever be assessable or assessed.
<PAGE>
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the
incorporator of the corporation is as follows:
NAME ADDRESS
Amanda W. Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence
of the corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the
corporation shall be adopted by its Board of Directors'. The power to alter,
amend, or repeal the By-laws, or to adopt new By-laws, shall be vested in the
Board of Directors, except as otherwise may be specifically provided in the
By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of
stockholders shall be held at such place within or without the State of Nevada
as may be provided by the By-laws of the corporation. Special meetings of the
stockholders may be called by the President or any other executive officer of
the corporation, the Board of Directors, or any member thereof, or by the record
holder or holders of at least ten percent (10%) of all shares entitled to vote
at the meeting. Any action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or
other transaction between the corporation and any other corporation, whether or
not a majority of the shares of the capital stock of such other corporation is
owned by this corporation, and no act of this corporation shall in any way be
affected or invalidated by the fact that any of the directors of this
corporation are pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of this corporation,
individually, or any firm of which such director may be a member, may be a party
to, or may be pecuniarily or otherwise interested in any contract or transaction
of the corporation; provided, however, that the fact that he or such firm is so
interested shall be disclosed or shall have been known to the Board of Directors
of this corporation, or a majority thereof; and any director of this corporation
who is also a director or officer of such other corporation, or who is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of this corporation that shall authorize such
contract or transaction, and may vote thereat to authorize such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested.
<PAGE>
ARTICLE TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No
director or officer shall have any personal liability to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer,
except that this Article Twelve shall not eliminate or limit the~liability of a
director or officer for (I) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of the Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto
affixed his signature at Reno, Nevada this 3rd day of February, 1997.
/s/ Amanda W. Cardinalli
AMANDA W. CARDINALLI
STATE OF NEVADA ]
: ss.
COUNTY OF WABHOE }
On the 3rd day of February, 1997, before me, the undersigned,
a Notary Public in and for the State of Nevada, personally appeared AMANDA W.
CARDINALLI, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that she executed the same
freely and voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
/S/ Margaret A. Oliver
Margaret A. Oliver
NOTARY PUBLIC
Residing fn Reno, Nevada
My Commission Expires:
October 10, 1998
Margaret A. Oliver
Notary Public - State of Nevada
Appointment Recorded in Washoe County
MY APPOINTMENT EXPIRES OCT. 10, 1998
<PAGE>
PEEPLES MINING COMPANY
FOR THE PERIOD FROM 1999 TO 2000 DUE BY FEB 28, 1999.
NEVADA AGENCY & TRUST COMPANY
50 W LIBERTY ST STE 880
RENO NV 89501
The Secretary of State of Nevada does hereby certify that the above Corporation,
after having paid the annual fee of $85.00 for filing in this office a list of
its officers and directors and designation of resident agent for the above
filing period, together with penalty in the sum of
Sections 78.150-78.165 and 80.110-80.140 as amended is hereby authorized to
transact and conduct business within this state for the aforesaid period.
THIS CERTIFICATE BECOMES A RECEIPT UPON BEING VALIDATED BY THE OFFICE OF
SECRETARY OF STATE
/s/Dean Heller
DEAN HELLER
Secretary of State
<PAGE>
FOR THE PERIOD FEV 1999 TO 2000. DUE BY FEB 28, 1999. The Corporation's duly
appointed resident agent in the State of Nevada upon whom process can be served
is:
NEVADA AGENCY C TRUST COMPANY
50 W LIBERTY ST STE 880
RENO NV 99501
IF THE ABOVE INFORMATION IS INCORRECT. PLEASE CHECK THIS BOX AND A CHANI:F OF
RESIDENT AGENT/ADDRESS FORM WILL BE SENT.
PLEASE READ INSTRUCTIONS BEFORE COMPLETING AND RETURNING THIS FORM.
(Directions)
FILING FEE: 185.00 PENALTY: $15.00
Maurice Furlong
President,
Secretary,
Treasurer
100 N. Arlington 22-F
Reno, NV 89501
/s/Maurice Furlong
Maurice Furlong
Signature of Officer
Date 3/9/99
<PAGE>
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statues which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, PEEPLES MINING COMPANY, as a corporation
organized under the laws of Nevada and existing under and by virtue of the laws
of the State of Nevada since February 4, 1997, and is in good standing in this
state.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office, in Carson City, Nevada, on October 14, 1999.
/s/ Dean Heller
Dean Heller
Secretary of State
By
Certification Clerk
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<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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