<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------
CHARTWELL INTERNATIONAL, INC.
(Name of Small Business Issuer in its Charter)
NEVADA 95-3979080
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
5275 DTC PARKWAY, SUITE 110
DENVER, COLORADO 80111
(Address of principal executive offices) (Zip Code)
(303) 804-0100
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
None None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Some of the statements contained in this Form 10-SB for Chartwell
International, Inc. ("Chartwell" or the "Company"), discuss future
expectations, contain projections of results of operations or financial
condition or state other "forward-looking" information. The term "Chartwell"
or the "Company" refers to Chartwell International, Inc. or to Chartwell
International, Inc. and its consolidated subsidiaries, as applicable. These
statements are subject to known and unknown risks, uncertainties, and other
factors that could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking information is based on
various factors and is derived using numerous assumptions. Important factors
that may cause actual results to differ from projections include, for example:
- the success or failure of management's efforts to implement its
business strategy;
- the ability of the Company to raise sufficient capital to meet
operating requirements;
- the ability of the Company's subsidiaries and affiliated companies
to compete within the industries in which they engage in business;
- the ability of the Company to compete with major established
companies;
- the effect of changing economic conditions;
- the ability of the Company to attract and retain quality
employees; and
- other risks that may be described in future filings with the U.S.
Securities and Exchange Commission ("SEC").
GENERAL
Chartwell International, Inc. is a Nevada corporation that was
incorporated in December 1984. The Company conducts its operations in the
following areas:
- National College Recruiting Association, Inc. ("NCRA") is a wholly
owned subsidiary that owns a high school athlete college recruiting and
scholarship assistance program as well as the publishing rights to "BlueChip
Illustrated," a magazine associated with the NCRA programs. All of NCRA's
rights are licensed to College Bound Student Alliance, Inc.
- College Bound Student Alliance, Inc. ("CBSA"), is a business that
was begun by the Company in June, 1997, to develop college athlete and
student scholarship advisory services. CBSA became a public company in
January, 1988. Chartwell currently holds approximately 47% (approximately
8,200,000 Shares) of the outstanding common shares of CBSA. See Financial
Statements.
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- Approximately 200 acres of undeveloped residential real estate near
Ramona, California, east of San Diego, that is currently listed for sale.
- Undeveloped gypsum mining rights and claims on U.S. Bureau of Land
Management property near St. George, Utah, that are currently for sale or
joint venture.
The Company's long-term strategy is to dispose of a portion of its
existing assets in an orderly manner and pursue acquisitions of one or more
private companies.
CHARTWELL INTERNATIONAL, INC.
In December 1984, the Company was incorporated in Nevada under the
name Chartwell Publishing Company, Inc. In June, 1985, it was the surviving
corporation in a merger of Ladies Three, Inc. a Utah corporation. Ladies
Three, Inc. was a company in the business of temporary secretarial and
clerical services that had ceased doing business prior to the merger. Ladies
Three was a publicly traded company at the time of the merger and the
transaction, therefore, resulted in Chartwell becoming a public company.
In 1989, the point at which the Company became an operating
business, Chartwell purchased 100% of CBC, Inc. CBC, Inc. shortly thereafter
changed its name to Sports Media, Inc. Sports Media was a publisher of
official team yearbooks for teams in the National Football League, the
National Basketball Association and the National Hockey League. Sports Media
became public in 1991 and Chartwell liquidated all of its interest in Sports
Media between 1992 and 1994. The Company changed its name to Chartwell
International, Inc. in June, 1993.
The Company is located at 5275 DTC Parkway, Suite 110, Englewood,
Colorado 80111. Its telephone number is (303) 804-0100. Chartwell shares
these facilities with two of its affiliated companies, National College
Recruiting Association, Inc. and College Bound Student Alliance, Inc.
As of September 1, 1999, the Company employed two persons on a
full-time basis and three persons on a part-time basis, none of whom are
covered by a collective bargaining agreement.
RAMONA, CALIFORNIA, PROPERTY
In 1994, Chartwell purchased 200 acres of residential real estate
near Ramona, California, about 40 miles east of San Diego, California. The
property is located in the northern portion of the county of San Diego just
south of a sub-division known as San Diego Country Estates and above the San
Vicente Golf Course. Adjacent to the east of the property are subdivided
parcels of five to ten acres including easements for open space. Parcels
further west and on the hills above the golf course include well-developed
lots with fine residences. Lands to the north include smaller lots of the San
Diego Country Estates developed more than twenty-five years ago. Larger
undeveloped acreage in large parcels exists to the south of the property.
The parcel has a sloping topography, varying from moderate to steep in grade.
Zoning is agricultural/residential (one dwelling per 6-10 acres).
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The Ramona property is currently listed for sale with an asking
price of $2.2 million under a standard listing contract with a Ramona,
California, real estate agent, Keller William Realty. The contract provides
for a six percent commission to the agent upon sale of the property. The
property has been listed since November, 1998, and the asking price was
reduced from $2.4 million to its current asking price in February, 1999. The
Company is unaware of any current potential buyers for the property.
The property was originally purchased for $1.2 million from an
unaffiliated third party bankruptcy estate. The $1.2 million consisted of
cash, Sports Media, Inc. stock and Chartwell Series C Preferred stock.
Subsequent to litigation involving the seller and Chartwell, refinancing of
the property and pledging of the property as collateral for additional
Chartwell obligations, the property is subject to approximately $1,250,000 of
obligations as follows:
- $600,000 note to an unaffiliated third party dated February 22,
1999, and secured by a first deed of trust. Interest is at 12% per annum.
Payments are of interest only of approximately $6,000 per month until March
1, 2004, at which time all remaining accrued interest and principal becomes
due and payable.
- $31,684 note to an unaffiliated third party dated August 1, 1998,
and secured by a deed of trust. Interest is at 10% per annum. Payments are
of interest only until October 31, 1999 ("Maturity Date"). $10,000 of
principal was due and paid on August 31, 1999, and $10,000 of principal is
due "on or before September 1999." All remaining unpaid principal and
accrued interest is due upon the Maturity Date.
- $170,000 note to Mr. John J. Grace, a consultant to and
shareholder of the Company, dated March 5, 1999, secured by a deed of trust
as well as other assets of the Company. Interest is at 10% per annum
compounded monthly. All principal and accrued interest is due and payable
August 1, 2000. See "Management's Discussion and Analysis" and "Security
Ownership of Certain Beneficial Owners and Management."
- $300,000 note to John J. Grace IRA Rollover Account dated March 5,
1999, secured by a deed of trust as well as other assets of the Company.
Interest is at 10% per annum compounded monthly. All principal and interest
is due and payable August 1, 2000. See Management's Discussion and Analysis"
and "Security Ownership of Certain Beneficial Owners and Management."
- $130,000 note to John J. Grace IRA Rollover Account dated March 5,
1999, secured by a deed of trust as well as other assets of the Company.
Interest is at 10% per annum compounded monthly. All principal and interest
is due and payable August 1, 2000. See "Management's Discussion and
Analysis" and "Security Ownership of Certain Beneficial Owners and
Management."
- $14,362.69 note to an unaffiliated third party dated November 23,
1998, secured by a deed of trust. $10,000 of principal was paid on this note
April 23, 1999. Interest is at 12% per annum. All principal and accrued
interest is due upon the earlier of the following (i) the sale of the Ramona
property or (ii) (by amendment) November 1, 1999.
- An obligation to the seller of the property as follows: "Within
90 days of completion and full County approval of the Final Map and platting
of all lots, Chartwell shall convey title by special warranty deed, free of
all encumbrances to Poway of lots equivalent in value to $250,000.00." This
obligation is cross collateralized by an option to purchase 333,333 shares in
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another company held by Chartwell (College Bound Student Alliance, Inc. f/k/a
SportsStar Marketing, Inc.) at $.75 per share (such shares are in escrow).
Unless the mapping and platting are completed by November 1, 1999, (an event
that Chartwell is not pursuing) the cross collateralization will then be
effective for two years. The shares of the other company currently trade at
about half the option exercise price. Chartwell has the right to repurchase
these options for $350,000. The agreement does not specify what is to happen
upon sale of the whole tract without the final mapping and platting.
NATIONAL COLLEGE RECRUITING ASSOCIATION, INC.
National College Recruiting Association, Inc. ("NCRA") is a
California corporation that was formed in November, 1991. Chartwell
purchased all of the outstanding stock of NCRA in May, 1995. The purchase
price was valued at $2,120,000 and consisted of cash, promissory notes and
stock in Chartwell. Subsequent to the purchase, the parties settled
litigation that resulted in cancellation of the promissory notes and return
of a portion of the stock to Chartwell. The litigation settlement was
treated in the 1995 financial statements as a gain on the property.
NCRA owns the rights to a program to promote high school athletes to
colleges in the pursuit of scholarship money for the athletes. NCRA's
principal method of promotion is through area consultants who act as
promotional agents for the athletes (some of whom are franchised) and through
publication of its quarterly magazine, "BlueChip Illustrated." "BlueChip
Illustrated" lists many high school athletes in several sports and highlights
the enhanced profiles (often with photographs) of athletes who have paid NCRA
for the enhanced profile. Athletes also pay for the services of the
promotional services of area consultants. College coaches are the typical
subscribers of "BlueChip Illustrated."
In June, 1997, NCRA licensed its data bank, technology, publishing
rights and franchises to College Bound Student Alliance, Inc. ("CBSA",
formerly known as SportsStar Marketing, Inc.), a Colorado corporation formed
and then wholly owned by Chartwell as described below. The licensing
agreement provides for an initial cash payment of $150,000 and a royalty fee
of "2.5% of the gross [CBSA] revenues from NCRA, "BlueChip Illustrated" and
the 900 lines operations." The term of the Agreement is for a 5-year period,
with unlimited 5-year renewals under the same terms and conditions. In
addition, NCRA shares its office space with CBSA on a rent free basis. Other
than its licensing revenue, NCRA is inactive and has no paid employees. All
operational details of NCRA's former business including the granting of, areas
covered by, training provided to and pricing for franchises are determined
by CBSA.
NCRA has overlapping officers and directors with Chartwell as
follows:
- Janice A. Jones, Ph.D. is Chief Executive Officer and a director
of Chartwell as well as President and a director of NCRA.
- Ms. Alice Gluckman is Secretary, Treasurer and a director of
Chartwell as well as Secretary, Treasurer and a director of NCRA.
INTELLECTUAL PROPERTY
NCRA has a trademark for "BlueChip Illustrated" registered with the
U.S. Patent and Trademark Office in the class of paper goods and printed matter.
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NCRA also has a service mark for its NCRA logo registered with the same
office. The logo consists of the NCRA initials over the words "NATIONAL
COLLEGE RECRUITING ASSOCIATION" and flanked by the silhouettes of two persons
in college graduation dress.
COLLEGE BOUND STUDENT ALLIANCE, INC.
GENERAL
College Bound Student Alliance, Inc. ("CBSA") was incorporated in
the State of Colorado on July 15, 1993, under the name Winter Park Ventures,
Inc. and acquired by the Company in 1996, for $600. On April 22, 1997, CBSA
filed Amended and Restated Articles of Incorporation, changing its name to
SportsStar Marketing, Inc. and on July 15, 1999, changed its name to College
Bound Student Alliance, Inc. CBSA is a development-stage company with a
staff of consultants nationwide who represent high school students and
student-athletes seeking financial, informational, recruiting and admissions
assistance to attend college. CBSA common stock is traded under the symbol
"GRAD" on the Over The Counter Bulletin Board operated by the National
Association of Securities Dealers, Inc. CBSA is not currently a reporting
company under the Securities Exchange Act of 1934, but plans to file a Form
10-SB with the SEC to become a reporting company in the near future. Current
information on CBSA is provided to the marketplace for its stock pursuant to
the SEC's Rule 15c2-11.
CBSA became a public company in January, 1998, pursuant to the sale
of $1,000,000 of common stock (2,000,000 shares) under Rule 504 of Regulation
D promulgated by the SEC. After such sales, Chartwell owned approximately
70% of the outstanding CBSA common stock. Subsequent to January, 1998,
Chartwell experienced further dilution of its holdings to approximately 47%
of CBSA's outstanding stock (approximately 8,200,000 shares) as a result of a
major Chartwell shareholder's/officer's conversion of a convertible
promissory note into CBSA shares and the issuance of CBSA shares by CBSA upon
acquisition of College Bound Student Athletes, Inc., and to a lesser extent,
the issuance of shares by CBSA as compensation to its directors, employees
and consultants and the occasional sales of CBSA stock by Chartwell as funds
were needed by the Company. Chartwell's plan is to continue to be a long term
holder of CBSA stock, but to sell shares on the open market as Chartwell's
cash needs may dictate. See Financial Statements and "Management's Discussion
and Analysis."
In June, 1997, CBSA licensed NCRA's data bank, technology,
publishing rights and franchises. The term of the Agreement is for a 5-year
period, with unlimited 5-year renewals under the same terms and conditions.
As consideration for the license, CBSA is obligated to pay NCRA an initial
payment of $150,000, plus 2.5% of the gross revenues realized from the
business operations of NCRA. $50,000 of such fees will be due and payable to
NCRA out of any proceeds realized from an offering of up to $1,000,000 of
CBSA common stock being conducted by that company (currently in registration
with the state of Nevada under Rule 504 of Regulation D promulgated by the
SEC) and the balance of $50,000 will be due from proceeds received in
subsequent fundings. CBSA's current plans are to seek an additional
$5,000,000 in a future financing. Other than the registration of the
offering in Nevada, however, CBSA has not embarked upon any definite strategy
to raise the additional financing. There can be no assurance that CBSA's
current offering or future financing will be successful.
In April, 1999, CBSA was the surviving corporation in a merger with
College Bound Student Athletes, Inc., ("Athletes"), Milwaukee, Wisconsin.
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Athletes, formerly a direct competitor of CBSA, was in the college recruiting
business for approximately 10 years. Athletes had approximately 200 sales
personnel; generated revenues between $1.8 and $2.2 million per year over the
last 3 years; and had been consistently profitable in its business
operations. To date, Athletes has served and assisted over 18,000 students
with their collegiate goals in over 43 states and 10 countries. Students
assisted by Athletes have received financial assistance packages aggregating
over $170,000,000. The joint resources of the CBSA and Athletes is expected
to greatly enhance CBSA's ability to expand aggressively in the student
financial aid market.
MANAGEMENT SERVICES AGREEMENT
In February, 1999, CBSA entered into a Management Services Agreement
with Chartwell under which Chartwell provides certain accounting, financial
and management services and personnel to CBSA on an as-needed basis in
exchange for $7,500 per month. Pursuant to the terms of the Agreement, when
CBSA's revenues exceed $4,000,000 per year, the monthly fee will be increased
to 2 1/2% of total revenues. In addition, all out-of-pocket expenses
incurred by Chartwell on behalf of the CBSA are reimbursed. Under this
agreement, CBSA currently owes Chartwell $75,210.
BACKGROUND AND HISTORY OF CBSA's INDUSTRY
Each year approximately 1.9 million high school graduates go on to
enroll at a college or university. The cost of a college education has
escalated over the years to the point where few qualified students can afford
to attend the schools of their choice without some form of financial
assistance. Recent figures put the cost of a four-year degree between $35,000
for a state university and $150,000 at the more exclusive private colleges
and universities. In addition, only 55% of students complete their degrees in
four years. As a consequence, more and more students and their parents are
seeking an efficient and effective method to increase the chances of securing
as much financial aid as possible and to find the "right" college for them.
The initial focus for CBSA when it licensed NCRA's operations was on
student-athletes. In an effort to expand its business, however, CBSA's focus
has recently been broadened to serve the larger areas of academics and fine
arts. Furthermore, athletic scholarships are often supplemented by other
financial aid and/or merit award programs. For every athlete, there are 50
non-athletes planning on entering college and looking for financial help.
Financial aid is a $58-billion-dollar-a-year industry. CBSA provides:
college financial aid analysis and planning, financial aid application
submissions and annual renewal, and merit award search for students with
grade point averages of 3.0 and above.
CBSA's MARKET
The market for CBSA's services in assisting students to gain
entrance into colleges, is very large and is growing rapidly. Each year
approximately 1.9 million high school graduates enroll at a college or
university, and approximately 80% of those graduates seek some kind of
financial aid. There are 3.5 million new students entering high school each
year, and this number is expected to increase to 5.5 million entrants over
the next decade.
CBSA currently serves three distinct markets of students seeking
financial aid: academic, fine arts and athletic. CBSA's primary method is to
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repeatedly expose the talents and ability levels (the "student profile") of
high school students to those schools in the United States and Canada that
they qualify to attend. This exposure, along with CBSA's guidance, brings
students higher levels of collegiate recruitment opportunities. The goal is
for the students to gain entrance into colleges that are not only "right" for
them, but also present them with many financial assistance opportunities to
subsidize the costs of their education.
CBSA has achieved success in securing letters of interest,
admissions, or financial aid for all of its students. While not always
obtaining partial or full scholarships for all of its students, CBSA has
always obtained recruiting interest and has over a 92% customer satisfaction
rate with its clients, as determined by regular mailings to clients.
MARKETING AND SALES
CBSA markets its services largely through corporate sponsors and an
organization of full- and part-time consultants. The consultants live in
specified areas and are familiar with the high schools, students, teachers,
and athletics coaches in those areas. CBSA targets students and athletes who
meet minimum standards of academic, fine arts and athletic performance.
Sales are generally conducted at the student's home with the student's
parents and the student.
Over the last nine years, CBSA and its merger partner have assisted
over 18,000 students through its programs. CBSA estimates that over $170
million of financial assistance and scholarships have been awarded to clients
of CBSA and its merger partner.
CBSA is currently seeking financing to develop an Internet-driven
delivery vehicle that provides students, parents, high schools and college
staffs worldwide with comprehensive and cost-effective programs and services
for helping to bring students and colleges together. Via an expanded
Internet presence, the focus of CBSA will be to greatly expand it efforts in
four distinct markets: the academics, fine arts and athletics assistance
markets currently being served by CBSA as well as an additional vocational
studies assistance market.
REVENUE SOURCES
1. Direct Sale of Student Profiles: Sold directly to students and
parents via the Internet and/or direct contact through CBSA's 200 consultants.
2. Corporate Sponsorships: National and local organizations cover
the students' fees for utilizing CBSA's programs primarily for public
relations and employee benefits. Current corporate sponsors include -
McDonald's, Coca-Cola, Kentucky Fried Chicken, CitiCorp, the Denver Broncos
and the Pittsburgh Steelers.
3. Corporate Advertising & Promotion: Corporations pay an annual
fee to gain exclusive product category rights to promote their branded
products in/on CBSA vehicles, through Internet advertising, with logo
placement on student profiles, through "BlueChip Illustrated" ads, and
through branded communications in mailings.
4. Employee Benefit Programs: Organizations cover the student fees
for CBSA services as an addition to their current employee benefits package.
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CBSA services are treated as an expanded tuition reimbursement program to
help attract and retain employees.
5. "BlueChip Illustrated" Magazine Sales: "BlueChip Illustrated"
has generated revenues through athlete-directed advertising and has
historically had approximately 4,000 subscribers. It is also a great
credibility builder for CBSA, often referenced by USA Today and ESPN as a
good source for college recruiting analysis.
6. Additional Revenue Sources: Additional programs, such as
student highlights videos, student camps, SAT and ACT preparation programs,
course tutoring, selection evaluations and college-major interest tests are
also available from CBSA for additional fees.
COMPETITION
CBSA estimates that less than 1% of the potential market is being
served by CBSA and its competitors. There are two primary types of student
recruiting: (i) Internet companies where, for a small fee, the student
places his/her own information on an Internet site, and (ii) companies with
operations similar to those of CBSA.
Internet Based - CBSA has informally gathered information that
admissions directors, department heads, and coaches do not express a great
deal of interest in Internet profiles due to the biased, undocumented and
unverified nature of the information presented.
Similar Operations - With the merger of CBSA and Athletes, there are
only two companies (College Prospects of America and The National Scouting
Report) which have been identified as conducting business similar to that of
CBSA. Both of these companies are franchise or license-based, are smaller
than CBSA and are not felt by CBSA to be a competitive threat to its future
growth.
There can be no assurance CBSA will be able to maintain its position
in the industry. Barriers to entry into Internet based businesses are low
and the development by others of new, improved or modified programs and/or
services could make CBSA's products and/or services obsolete. Therefore,
even if CBSA develops services or products that prove to be commercially
feasible, there is no assurance that a new development by a competitor will
not supersede any such services or products. CBSA must, therefore,
continuously improve its services and develop new products in order to be
competitive. In this regard, CBSA may not have sufficient resources to
undertake the research and development necessary to remain competitive in the
industry.
RECENT ACQUISITION ANNOUNCEMENT
On August 23, 1999, CBSA announced that it had signed a binding
letter of intent to acquire College Management Resource, Inc. d/b/a College
Financial Aid Services of America ("CFASA"). Closing is expected within 30
days of the announcement. The purchase price is to consist of 2,000,000
shares of CBSA common stock and $4,000,000 in five percent notes due through
2004 payable out of cash flow. CFASA is one of the country's largest
providers of career counseling, college selection and financial aid analysis
for college students and their families. In 1998 it earned revenues of $7.1
million and $1.9 million in pre-tax operating cash flow.
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GOVERNMENT REGULATION
Few regulations control CBSA's business and operations, other than
regulations applicable to businesses generally. It is possible, however,
that future laws and regulations may be adopted with respect to college
financial aid covering such issues as privacy, pricing, quality of services,
and libel, among others. Any such new legislation or regulation could have
an adverse impact on CBSA's business.
CBSA is subject to state and federal laws regarding its past sales
of franchises to a small number of its area consultants (approximately 15% of
CBSA's area consultants are franchisees). The last franchise was sold in
January, 1999. CBSA, however, has discontinued offering franchises and has
no plans to offer franchises in the future.
EMPLOYEES
CBSA has a total of 6 employees (5 full-time) in its Denver offices
and a total of 12 employees (all full-time) at its offices in Wisconsin. In
addition, CBSA has over 200 independent sales consultants located throughout
the country.
CBSA's continued future success depends in significant part upon the
continued service of its key senior management personnel and its continuing
ability to attract and retain highly qualified technical and managerial
personnel. The time that the officers and directors devote to the business
affairs of CBSA and the skill with which they discharge their
responsibilities will substantially impact CBSA's success. To the extent the
services of these individuals would be unavailable to CBSA for any reason,
CBSA would be required to identify, hire, train and retain other highly
qualified technical and managerial personnel to manage and operate CBSA.
CBSA's business could be adversely affected to the extent such key
individuals could not be replaced.
EXECUTIVE OFFICES
CBSA's executive offices are located at 5270-5275 DTC Parkway, Suite
110, Englewood, Colorado 80111. CBSA leases approximately 5,000 sq. ft. of
office space from Chartwell at a monthly rental rate of $4,121. The term of
the lease is until July 1, 2000, at which time CBSA intends to renegotiate
the lease term with Chartwell. The current monthly rental rate is
competitive with comparable office space in the area. See "Certain
Transactions".
In connection with the acquisition of Athletes, CBSA also assumed a
lease agreement with an unrelated third party for approximately 4,710 sq. ft.
of office and warehouse space located at N 19 W 6717 Commerce Court,
Cedarburg, Wisconsin, where it conducts its Athletes operations. The term of
the lease is for 5 years, commencing on September 1, 1995, at a monthly
rental rate of approximately $3,700 per month, a competitive rental rate for
comparable office space in the area.
MANAGEMENT
CBSA and Chartwell have overlapping management as follows: Janice
A. Jones, Ph.D. is Corporate Secretary, Treasurer and a Director of CBSA as
well as Chief Executive Officer and a Director of Chartwell; William R.
Willard is a Director of CBSA and Chartwell as well as a paid consultant to
each company. See "Directors and Executive Officers, Promoters and Control
Persons." CBSA has
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four Directors, the other two of whom are otherwise unaffiliated
with Chartwell or NCRA.
The directors of CBSA are elected annually by the shareholders and
hold office until their successors are elected and qualified. The officers
of CBSA will serve in their respective capacities until the next annual
meeting of CBSA's Board of Directors or until their successors are duly
appointed and have qualified. Set forth below are the names and positions of
the current officers and directors of CBSA.
<TABLE>
<CAPTION>
Name Age Position(s)
<S> <C> <C>
Jerome M. Lapin 69 Chief Executive Officer and
Director
Richard N. Newton 48 Chairman of the Board of
Directors
Kevin Gemas 37 President and Chief Operating
Officer
Arthur D. Harrison 67 Chief Financial Officer
and Treasurer
William R. Willard 57 Director
Dr. Janice A. Jones 51 Director and Secretary
Serena V. Riedel 29 Vice President - Administration
</TABLE>
BACKGROUND OF OFFICERS AND DIRECTORS
JEROME M. LAPIN has been Chief Executive Officer and a Director of
CBSA since September 1, 1999. From January, 1994, to July, 1999, Mr. Lapin
was President, CEO and Chairman of the Board of Directors of American Coin
Merchandising Corporation, a publicly traded company, (symbol ACMI). Mr.
Lapin was a co-founder of International House of Pancakes in 1958. In 1966
he retired to Australia where he pursued private business interests including
World Hosts Pty, Ltd. which owned Caprice Restaurant and introduced Orange
Julius to Australia. In 1978 Mr. Lapin returned to the United States and
became President and CEO of Topsy's International, Inc. which acquired the
Tastee Freez chain of 800 units. He was also President of Sanwa Foods, Inc.,
a soup manufacturer in Los Angeles that was subsequently acquired by Campbell
Soups.
RICHARD N. NEWTON has been the Chairman of the Board of Directors of
CBSA since April, 1999. From November, 1996 to March, 1999, he was Director
of Corporate Finance Services at American Express Co. From April, 1990, to
October, 1996, he was CEO of Systems Science Institute. Mr. Newton has more
than 28 years of multi-industry experience ranging from start-up to Fortune
500 companies, and is primarily responsible for CBSA's recent acquisition of
Athletes. He graduated from the University of Colorado with a Degree in
Engineering. Mr. Newton devotes approximately 20% of his time to the
business of CBSA.
KEVIN GEMAS has been the President and Chief Operating Officer of
CBSA since April, 1999. From January, 1991 to April, 1999, he was President
of College Bound Student Athletes, Inc., which he founded and operated and
which
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was acquired by CBSA in April, 1999. He graduated from Clemson University in
1985 with a B.S. Degree in Business Administration. Mr. Gemas devotes full
time to the business of CBSA.
ARTHUR D. HARRISON has been the Chief Financial Officer of CBSA
since February, 1999. Since 1983, he has also been owner of Arthur Harrison
& Co., a financial services consulting firm in Englewood, Colorado. He has
represented companies in Colorado's manufacturing, construction, distribution
and service industries and has served a Vice Chairman of Colorado Venture
Centers and The Rockies Venture Club. In addition, he served on the Boards
of Jackson Sound, Atmospheric Instrumentation Research, Inc. and Napro
Biotherapeutics, Inc., a publicly-traded pharmaceutical company. As
co-editor of a column for The Denver Post newspaper for 6 years, he provided
business advice to many high-tech and low-tech companies. He graduated from
Bucknell University in 1954 with a B.S. Degree in Commerce & Finance. Mr.
Harrison devotes his time as required to the business of CBSA.
WILLIAM R. WILLARD has been a Director of CBSA since 1997. Since
1997, he has also been a Director of Chartwell. Mr. Willard's background is
set forth in Chartwell's management item , below. Mr. Willard devotes his
time as required to the business of CBSA.
JANICE A. JONES, Ph.D., has been a Director, Treasurer and Corporate
Secretary of CBSA since 1998. Dr. Jones' background is set forth in
Chartwell's management item, below. Dr. Jones devotes full time to the
business of CBSA.
SERENA V. RIEDEL has been the Vice President of Administration for
CBSA since November, 1998. She is also Director of Investor Relations for
Chartwell. From March, 1998, to November, 1998, she was Vice President of
Operations for Ryan Insurance Strategies Corporation, an insurance company in
Denver, Colorado. From July, 1997 to March, 1998, she was Executive
Administrative Assistant for Yale Residential Security, a lock/door hardware
manufacturer in Norcross, Georgia. From September, 1996, to June, 1997, she
was Sales Coordinator/Manager of Operations for National Practice Brokerages,
Inc., a company which markets optometry practices in Lakewood, Colorado.
From April, 1995, to September, 1996, she was Executive Secretary for Bertram
& MacLeod, a wholesale furniture manufacturer in Lancaster, Pennsylvania and
from Mary, 1989, to August, 1996, she was Payroll Secretary for Pets N
Stuff/Birds N Stuff in Lancaster, Pennsylvania. Ms. Riedel devotes her time
as required to the business of CBSA.
ADVISORY BOARD
CBSA has just recently engaged the following persons to serve on its
newly-formed Advisory Board:
<TABLE>
<S> <C>
Jerome M. Lapin Chairman of Advisory Board; Chief Executive Officer and
director of CBSA; former Chief Executive Officer of
American Coin Merchandising Corporation
John Frew Chairman and President of Colorado Ski Country
John Brodie National Football League (Most Valuable Player, San
Francisco 49ers Quarterback) & Senior Professional
Golf Association Veteran
Stedman Graham Chief Executive Officer of Graham, Gregory and Bozel;
Director of National Urban League; Director of
12
<PAGE>
National Junior Achievement; Founder and Executive
Director of Athletes Against Drugs
Tom Donahoe V.P.-General Manager of the Pittsburgh Steelers
The Hon. Terry Lister Minister of Development - Bermuda
Jack Renkins Recruiting Realties
Steve Garban Sr. V.P.-Finance, Operations & Treasurer-Pennsylvania
State University; Director of Metropolitan Life
Series Fund and State Street Management Mutual
Funds
Donald Harper Human Resource Contract Consultant
Paul A. Lester, Esq. Founding Partner - Fieldstone, Lester, Shear & Denberg
Jeff Tripician Dairy Industry's "Milk Mustache" Innovator
</TABLE>
CBSA intends to continue recruiting professionals throughout the country to
serve on its Advisory Board.
CONSULTANTS
On March 29, 1999, in connection with the acquisition of Athletes,
CBSA entered into a Consulting Agreement with Wayne O. Gemas, father of Kevin
Gemas, President and COO of CBSA. Pursuant to the terms of the Consulting
Agreement, Wayne Gemas will provide consulting services to CBSA on all
matters pertaining to the business of CBSA for a period of 5 years and will
receive a fee of $1,500.00 per month for such services. In addition, Mr.
Gemas is entitled to health insurance coverage, with the premium for such
policy to be paid by CBSA.
EMPLOYMENT AGREEMENTS
Upon joining CBSA, Jerome M. Lapin entered into a compensation
agreement under which he is to receive $60,000 deferred cash compensation and
an option to purchase 500,000 shares of CBSA common stock at 80% of the June
1, 1998, market value for five years. 250,000 of the options vested on
August 9, 1999, and 250,000 of the options are to vest August 9, 2000.
On March 29, 1999, Kevin Gemas, President and Chief Operating
Officer of CBSA, and the former founder of Athletes, entered into an
Executive Employment Agreement with CBSA. Pursuant to the terms of the
Agreement, Mr. Gemas will be employed by CBSA for an initial term of 5 years,
with annual extensions thereafter by mutual consent of the parties, and is to
be paid an annual cash compensation of $90,000, subject to annual review. In
addition, Mr. Gemas will receive a standard benefit package (health
insurance, vacation pay, sick pay) and after the first year, will be entitled
to participate in any CBSA executive management bonus and/or stock option
plans.
In February, 1999, CBSA entered into a written employment agreement
with Arthur D. Harrison, Chief Financial Officer, whereby Mr. Harrison
receives compensation for his services as follows: $15.00 per hour cash,
payable upon receipt of hourly billing; $35.00 per hour payable upon receipt
of financing in excess of $750,000; and $90.00 per hour in the form of CBSA
warrants or stock options based on the current offering valuation.
13
<PAGE>
In April, 1999, CBSA entered into an employment contract with
Richard N. Newton, Chairman of the Board of Directors. Pursuant to the terms
of the contract, Mr. Newton received 50,000 shares of CBSA's restricted
common stock upon engagement of his services as Chairman and a 5-year option
to purchase up to an additional 1,000,000 shares at $.50 per share, to be
vested at the rate of 200,000 shares per year. In addition, upon reaching
operating profitability of $100,000 per year, Mr. Newton will commence
receiving an annual salary of $25,000. On August 10, 1999, the Board of
Directors rescinded the 5-year option to purchase up to 1,000,000 shares, but
granted Mr. Newton the option to purchase up to a total of 60,000 shares, the
amount vested since his employment commenced.
CBSA has entered into a verbal agreement with Janice A. Jones, a
Director and Secretary, and William Willard, a Director, whereby both parties
receive 8,000 shares of CBSA's restricted common stock per quarter as
compensation for their services. In addition, Mr. John J. Grace, husband of
Dr. Jones, receives 8,000 shares of CBSA's restricted common stock per
quarter as compensation for services he renders to CBSA.
CBSA presently has no pension, retirement, annuity, profit sharing
or similar benefit plans.
EXECUTIVE COMPENSATION
The following tables contain compensation data for the Chief
Executive Officer and other named executive officers of CBSA for the most
recent fiscal year:
<TABLE>
<CAPTION>
Cash
Name of Individual Capacities Served Compensation
<S> <C> <C>
Kevin Gemas President and Chief $90,000/yr. (1)
Operating Officer
Jerome M. Lapin Chief Executive Officer $60,000/yr. (2)
</TABLE>
- ----------------
(1) CBSA commenced paying this compensation on April 1, 1999, when it
acquired Athletes and Mr. Gemas became an Officer and Director of CBSA.
(2) Commencing September 1, 1999, and deferred until the Company's cash
flow permits payment.
- ----------------
No CBSA executive officer receives an annual salary and bonus in excess
of $100,000.
UTAH GYPSUM MINING CLAIMS AND RIGHTS
In April, 1985, Chartwell entered into an agreement to have the right
to mine up to 2,000,000 tons of gypsum from the Riverview Placer Claims 1
through 9 on Bureau of Land Management land near St. George, Utah. This
agreement expires January 4, 2001. The mining rights were acquired in exchange
for the issuance of an 8% convertible debenture in the amount of $42,300;
1,080,000 shares of Chartwell common stock valued at $472,500 and 150,000 shares
of Chartwell Series B Preferred Stock valued at $10.00 per share (converted to
14
<PAGE>
3,000,000 shares of Common Stock in 1995). As part of the agreement, an
outside party has royalty rights of 25% of net mining profits (selling price
less expenses to mine) or $1.00 per ton of materials, whichever is greater.
To protect its interest in this property, the Company re-staked and re-filed
the claims in its own name and renamed them as "New Riverview Claims" 1
through 12. The property underlying the New Riverview Claims 1 through 9 is
believed to be (and was intended to be) identical to the property underlying
the Riverview Placer Claims 1 through 9. New Riverview Claims 10, 11 and 12
adjoin New Riverview Claims 1 through 9.
In January, 1993, the Company purchased rights to mine 3,000,000
tons of gypsum from the same claims in exchange for $1,500,000 in the form of
150,000 shares of Chartwell's Series B Preferred stock (since converted to
Common Stock). This agreement expires January 4, 2001.
The BLM accepts the payment by Chartwell of the annual maintenance
fee for the twelve New Riverview Claims. As to the Riverview Placer Claims,
the BLM has most recently responded that, "After reviewing our records, the
Riverview [Placer Claims] 1-3 and Riverview [Placer Claims] 5-6 were closed
by Bureau of Land Management Decision dated June 17, 1994." The BLM goes on
to say, "Furthermore, the 1999 maintenance fees were already paid for the
Riverview [Placer Claims] 4 and the Riverview [Placer Claims] 7-9 mining
claims . . . by Western Gypsum, Inc." As a result of additional
investigation, Chartwell has concluded that it owns mining claims to the
property covered by the Riverview Placer Claims, 1, 2, 3, 5 and 6 (renamed
"New Riverview Claims 1, 2, 3, 5 and 6") and New Riverview Claims 10, 11, and
12. It also has contractual mining rights as to the property covered by
Riverview Placer Claims 4, 7, 8 and 9.
Gypsum is the commercial or generic name for calcium sulfate. In
September, 1992, Chartwell engaged Ludlow Engineering, Nephi, Utah,
("Ludlow") to update an earlier engineering report on the claims.
It is Ludlow's "opinion that the Riverview Placer Claims have large
reserves of high grade gypsum and by selective mining, Chartwell can recover
their entire 2 million tons as food and pharmaceutical applications by mining
the higher grade beds. Food and pharmaceutical grade gypsum commands a
substantial premium price over the conventional lower grade gypsum that are
commonly used in the construction and agricultural industry. Current [1992]
market price for the higher grade food and pharmaceutical gypsum ranges from
about $320 per ton for powder grade to about $960 per ton for specially
processed granular grade. This compare [sic] with $8.50 per ton for gypsum
currently [1992] sold from producing mines in the vicinity to the
construction and agricultural industry."
The price per ton quoted above does not reflect the value of the
gypsum in the claims for any time after 1992, but the information is
significant because it illustrates the substantially higher price paid for
pharmaceutical grade gypsum when contrasted with that paid for construction
and agricultural grade gypsum. In addition, the above prices per ton do not
reflect any of the expenses of mining the gypsum. Ludlow estimated in 1992,
however, that on a 50,000 tons per year basis, mining costs would begin at
$3.59 per ton for the first year and go down thereafter to $3.29 per ton plus
cost of inflation. Chartwell has done no investigations as to the current
cost of mining or the current market price for various grades of gypsum, but
assumes that mining costs, at least, will be higher than the 1992 estimates.
Finally, the Ludlow report gives no indication as to whether there should be
any distinction between the quality and value of the gypsum in (a) the
property on which Chartwell has
15
<PAGE>
mining rights and (b) the property on which Chartwell has mining claims
(other than Riverview Claims 10, 11 and 12, which are not covered by the
Ludlow report).
The claims and rights have been for sale since July, 1998, at which
time there was a negotiated settlement with an unaffiliated third party that
had contracted to purchase and develop the claims. (The settlement was
effectively a rescission of the earlier development contract, except that
Chartwell and the broker involved in the transaction retained approximately
140,000 and 30,000 shares, respectively, of the buyer's common stock which
currently has no market value.) Chartwell would also consider a joint
venture development of the claims and rights. The Company, however, has no
plans to be the lead developer of the claims and rights or to develop the
claims and rights by itself. Although the Company has had recent inquiries
regarding the claims and rights, no discussions have resulted in, or
presently indicate the likelihood of, any purchase or joint venture proposals.
COMPANY'S ACQUISITION OBJECTIVES
The Company's long-term strategy is to dispose of or develop most of
its existing assets in an orderly manner and to pursue an acquisition or
merger with one or more private companies. The Company's objective is to
acquire profitable operating companies or companies with extraordinary
potential in transactions that would not result in a change of control of the
Company. The Company has had early discussions with one potential
acquisition candidate, but terms have not yet been established or agreed upon
and there is no assurance that this acquisition will be completed.
MISCELLANEOUS
During 1994 the Company made various investments in gold mining
concessions in the State of Bolivar in Southeastern Venezuela. Chartwell's
investment was in the form of the issuance of 60,000 shares of Series C
Preferred Stock. Due to the difficulty the Company has experienced in
engaging an operator for the property and what it views as an unstable
political situation in Venezuela, the Company has written down the value of
the concessions to $45,000. Although the Company's current plans are to
eventually sell any interest it has in the concessions, it has not been
actively pursuing the matter.
Chartwell has four dormant wholly owned subsidiaries for which it
has no current plans.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATIONS AND LIQUIDITY
The Company's primary focus over the last three years has been on
organizing, recruiting personnel, acquiring a competitor, and expanding the
business of its 47% owned entity, College Bound Student Alliance, Inc.
("CBSA"). The Company plans to continue to perform these services for CBSA as
needed.
In July 1999 the Company's ownership interest in CBSA decreased
below 50%, which required the Company to change its accounting for CBSA from
consolidation to the equity method of accounting.
16
<PAGE>
In addition the Company will continue to attempt to sell or enter
into joint ventures to develop its real estate holdings in San Diego County,
California and its gypsum deposits in St. George, Utah.
The Company also plans to seek acquisition candidates during the
next 12 months with emphasis on profitable operating companies or companies
with promising products.
In addition, the Company could raise cash, if necessary, by
liquidating or joint venturing its land and mineral properties.
The Company will also continue to receive license fees and
management fees from CBSA. The Company anticipates that CBSA will continue
to grow and be successful in fiscal 2000, and accordingly, the Company
believes that it will earn increased license fee income and that the market
value of its investment in CBSA will increase.
The Company expects to meet its cash requirements over the next 12
months as it has over the last 3 years, either through borrowings from
related parties and third parties or by selling portions of its securities of
CBSA. The Company's holdings in CBSA amount to approximately $2,700,000
based on the July 30, 1999 public trading price. However, there can be no
assurance that adequate funds from any source will continue to be available
on terms acceptable to the Company.
ANALYSIS OF STATEMENT OF OPERATIONS
General and administrative expenses decreased to $278,447 in fiscal
1999 from $799,910 in fiscal 1998. In fiscal 1998, the Company's travel
expenses and legal expenses were higher than in fiscal 1999 by approximately
$142,000 and $97,000, respectively. Two other factors accounted for most of
the remaining difference. First, in fiscal 1998, the Company settled a
dispute with a third party, which increased fiscal 1998 expenses by
approximately $154,000. Secondly, in fiscal 1999, general and administrative
expenses were reduced by approximately $142,000 as a result of the reversal
of certain liabilities of NCRA that had been established in prior years. The
Company determined that payment of these will not be necessary.
Gains on sales of stock decreased to $370,113 in fiscal 1999 from
$1,012,794 in fiscal 1998. The primary reason for the decrease was that in
fiscal 1998, the Company exchanged a larger amount of its appreciated stock
of CBSA in payment of liabilities.
In fiscal 1998 the Company had a gain of $569,000 from a capital
transaction of CBSA. In fiscal 1999, CBSA did not have any comparable
capital transactions.
In fiscal 1999 the share of loss of CBSA on the equity method was
$207,386 as compared to $450,492 in fiscal 1998. At July 31, 1999, the
carrying value of the investment in and advances to CBSA had been reduced to
zero and the Company has ceased recognizing further losses from its share of
CBSA, as required under generally accepted accounting principles.
A loss of $2,325,200 was recognized in fiscal 1998 on the reversal
of the sale of the Company's gypsum property. Also, in fiscal 1999, the
Company reported a write-down of $284,668 of its other mining property.
17
<PAGE>
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer systems that use two
digits rather than four to define the applicable year that may prevent such
systems from accurately processing dates ending in the year 2000 and after.
This could result in system failures or in miscalculations causing disruption
of operations, including, but not limited to, an inability to process
transactions, to send and receive electronic data, or to engage in routine
business activities and operations.
Management has spoken to all management personnel at each of its
businesses regarding each company's reliance on computer systems. Based upon
these discussions, management believes that the Company does not have
significant exposure to the Year 2000 issue. The businesses of Chartwell's
associated companies do not rely on computer operations for conducting the
significant parts of their business, and accordingly, the Company does not
believe that their products and services involve any material year 2000 risks.
The Company does not presently anticipate that the costs to address
the Year 2000 issue will have a material adverse effect on the Company's
financial condition, results of operations or liquidity due to the
aforementioned factors. However, management has not performed a formal
estimate of the costs for conversion of systems necessitated by the Year 2000
issue.
The Company presently anticipates that it will complete its Year
2000 assessment and any necessary remediations by December 31, 1999.
However, there can be no assurance that the Company will be successful in
implementing its year 2000 remediation plan according to the anticipated
schedule. In addition, the Company may be adversely affected by the
inability of other companies whose systems interact with the Company to
become year 2000 compliant and by potential interruptions of utility,
communication or transportation systems as a result of year 2000 issues.
Although the Company expects its internal systems to be year 2000
compliant as described above, the Company intends to prepare a contingency
plan that will specify what it plans to do if it or important external
companies are not year 2000 compliant in a timely manner. The Company
expects to prepare its contingency plan during 1999.
ITEM 3. DESCRIPTION OF PROPERTY
The Company operates from its office in Englewood, Colorado. The
Company leases its office space pursuant to a lease that expires July 31,
2000. Lease payments are $5,270 per month, of which $4,121 per month is paid
by College Bound Student Alliance, Inc. with whom Chartwell and National
College Recruiting Association, Inc. (Chartwell's wholly owned subsidiary)
share the space. See "Description of Business - Ramona, California,
Property" and "Description of Business - Utah Gypsum Mining Claims" for a
description of additional properties. The Company believes its facilities
are adequate to meet current business needs and that its properties are
adequately covered by insurance.
18
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 9, 1999, the number
and percentage of outstanding shares of Company Common Stock owned by (i)
each person known to the Company to beneficially own more than 5% of its
outstanding Common Stock, (ii) each director, (iii) each named executive
officer, and (iv) all executive officers and directors as a group. The
following calculations are made according to the rules of the SEC. Share
ownership is deemed to include all shares that may be acquired through the
exercise or conversion of any other security immediately or within the next
sixty days. Such shares that may be so acquired are also deemed outstanding
for purposes of calculating the percentage of ownership for that individual
or any group of which that individual is a member. Shares outstanding were
determined as of July 31, 1999.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF COMMON
BENEFICIAL OWNER OWNERSHIP STOCK BENEFICIALLY OWNED
<S> <C> <C>
Janice A. Jones, Ph.D. (1) 47% 38,270,841 (2)
5275 DTC Parkway, No. 110
Denver, CO 80111
William R. Willard * 60,000
356 Playa Del Norte, No. 2
La Jolla, CA 92037
Barry M. Goldwater, Jr. * 200,000
3104 East Camelback Rd., No. 274
Phoenix, AZ 85016
John J. Grace (1)(3) 11% 7,280,689
5275 DTC Parkway, No. 110
Denver, CO 80111
K.T. Mao (4) 8% 5,458,794
2676 East Easter Ave.
Littleton, CO 80122
Jennifer Mao Jones Trust (5) 7% 4,000,000
c/o Janice Jones
5275 DTC Parkway, No. 110
Denver, CO 80111
Justin Mao Jones Trust (5) 7% 4,000,000
c/o Janice Jones
5275 DTC Parkway, No. 110
Denver, CO 80111
All executive officers and 48% 38,530,841
directors as a group (2)(6)
(4 persons)
</TABLE>
- ----------------
* Indicates ownership of less than one percent.
(1) Dr. Jones and Mr. Grace are husband and wife. Each disclaims
beneficial ownership of shares owed individually by the other. They have no
joint ownership of any shares.
19
<PAGE>
(2) Includes shares owned by the following entities that are 100% owned
and controlled by Dr. Jones: Family Jewels II Limited Partnership, Jones
Family Limited Partnership II, The Chartwell Group, Inc., and East West
Trust. Also includes 18,996,790 shares that may be acquired through the
exercise of options or the conversion of Series A Preferred Stock or Series B
Preferred Stock. Also includes 1,500,000 shares that may be purchased
pursuant to warrants that Dr. Jones is to receive from K.T. Mao pursuant to a
contractual obligation. Does not include shares in the children's trusts
listed below in the table.
(3) Includes 5,000,000 shares that may be acquired through the exercise
of options.
(4) Mr. Mao is the former husband of Dr. Jones. Includes 4,000,000
shares that may be acquired through the exercise of warrants. Includes
1,500,000 shares that may be purchased pursuant to warrants that Mr. Mao is
obligated to convey to Dr. Jones Mao pursuant to a contract.
(5) Trusts for the benefit of the children of Dr. Jones and Mr. Mao.
Dr. Jones' mother, Dorothy Jones, is the trustee as to the trusts owning
3,520,000 for the benefit of each child. Dr. Jones is trustee as to the
trusts owning the balance of shares for each child. Dr. Jones disclaims
beneficial interest in the children's trusts.
(6) Alice Gluckman, an executive officer and Director, has no beneficial
ownership in any shares of the Company.
- ----------------
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF SERIES
BENEFICIAL OWNER OWNERSHIP A PREFERRED BENEFICIALLY
OWNED (1)
<S> <C> <C>
Janice A. Jones, Ph.D. 92% 550,000 (2)
5275 DTC Parkway, No. 110
Denver, CO 80111
R. Bradford 8% 50,000
45 Sunshine Ave.
Sausalito, CA 94965
All executive officers and 92% 550,000
directors as a group
(4 persons)
</TABLE>
- ----------------
(1) Each share of Series A Preferred Stock is convertible into one share of
Common Stock.
(2) Includes 250,000 shares owned by East West Trust that is owned and
controlled by Dr. Jones.
- ----------------
20
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF SERIES
BENEFICIAL OWNER OWNERSHIP B PREFERRED BENEFICIALLY
OWNED (1)
<S> <C> <C>
Janice A. Jones, Ph.D. 17% 5,000
5275 DTC Parkway, No. 110
Denver, CO 80111
ITEX Corporation 83% 25,000
One Lincoln Center
P.O. Box2309
Portland, OR 97208
All executive officers and 17% 5,000
directors as a group
(4 persons)
</TABLE>
- ----------------
(1) Each share of Series B Preferred Stock is convertible into twenty
shares of Common Stock.
- ----------------
The Company currently has no information as to the beneficial ownership
of its Series C Preferred Stock, of which 42,412 shares are outstanding. Each
share of Series C Preferred Stock is convertible into ten shares of Common
Stock. No executive officers or directors own any Series C Preferred Stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Pursuant to the Company's Certificate of Incorporation and its By-Laws,
the members of the Board of Directors serve for one-year terms. The Company's
directors and executive officers are:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Janice A. Jones, Ph.D. 51 Chair of the Board,
Chief Executive
Officer, Director
Alice M. Gluckman 54 Secretary, Treasurer,
Director
William R. Willard 57 Director
Barry M. Goldwater, Jr. 61 Director
</TABLE>
- ----------------
JANICE A. JONES, Ph.D. has been a Director of the Company since
inception and Chair of the Board, President and Treasurer since August, 1990.
Her positions with the Company have been her full time occupation since 1990.
Dr. Jones is also a director and Secretary of College Bound Student Alliance,
Inc., a publicly held company, and President and a director of National College
Recruiting, Inc., both of which are affiliated with the Company as described
above. In 1979 she formed, and continues to keep active, The Chartwell Group,
Inc., an investment banking and financial relations firm serving emerging growth
companies. Dr. Jones was engaged in investor relations for several companies
21
<PAGE>
from 1973 to 1982 including Cameron & Associates from 1976 to 1980. Dr.
Jones holds Ph.D., 1980, and Masters, 1976, degrees in Social Sciences from
Yeshiva University, and a B.A., 1973, from Hunter College. She received the
Hunter College Hall of Fame Award in 1986.
In June, 1995, Dr. Jones consented to the entry of an Order of the
Commission relative to Cease and Desist Proceedings instituted by the SEC.
Without admitting or denying the matters set forth therein, Dr. Jones was
found to have failed to have failed for three years and two month to file a
Schedule 13G or amendments thereto or to timely file Forms 3, 4 and 5 with
respect to a public company of which she was an officer, director and greater
than 5% shareholder.
ALICE M. GLUCKMAN has been Secretary, Treasurer and a Director of
the Company since June, 1993, and was Assistant Secretary of the Company
prior to that time from September, 1991. Ms. Gluckman is also Secretary,
Treasurer and a director of National College Recruiting Association, Inc., a
company affiliated with Chartwell as described above. From June, 1997, to
the present Ms. Gluckman has been Assistant to the Associate Director,
Division of Educational Advancement and Innovation at Johns Hopkins
University Institute for the Advancement of Youth (Programs for Gifted
Youth), Los Angeles, CA. From January, 1997, to June, 1997, she was
President and owner of A & J Enterprises, a secretarial business. From
October, 1987 to 1994 Ms. Gluckman was Executive Secretary for Chartwell
while it was principally engaged in the sports media business.
Ms. Gluckman filed a Chapter 7 Petition in Bankruptcy, Central
District of California, in 1998 under which debts were discharged in January,
1999.
WILLIAM R. WILLARD has been a Director and consultant to the Company
since April, 1997. Mr. Willard is actively involved with public offerings,
private placements mergers and acquisitions and other corporate finance
activities both domestically and internationally at Bridgestream Partners,
L.L.C. since May, 1992, where he is Managing Partner and owns 100% of the
membership interest. Prior to that time he formed Willard Capital Group Ltd.
in 1988. Prior to forming Willard Capital Group Ltd., Mr. Willard was First
Vice President in Corporate Finance for Bateman Eichler, Hill Richards, Inc.
Mr. Willard has diverse experience at several other investment bankers,
consulting firms and an advertising firm. Mr. Willard received his B.S. in
Political Science and International Relations from the University of
Wisconsin in 1965 and an M.B.A. in Finance and International Business from
the University of Chicago, Graduate School of Business in 1971. He also
attended the Sorbonne (Paris, France) where he received his Cour Practique
certificate. He serves on the boards of directors of: College Bound Student
Alliance, Inc. (a company affiliated with Chartwell as described above),
Trans-Leasing International, Inc. (a reporting company under the Securities
Exchange Act of 1934), IDAS Corporation, E-2000, Chick's Natural.
BARRY M. GOLDWATER, JR. has been a Director of the Company since
September, 1998. Since 1994 Mr. Goldwater has been a self-employed business
consultant specializing in finance, management and government and political
affairs. His consulting projects included acting as Director of Business
Affairs for Hormel Enterprises (1994-96) among other engagements. From 1984
to 1993 he was a General Partner of Hambrose Leasing, Ltd. He was a
Congressman from the State of Arizona from 1969 to 1984. Mr. Goldwater is
active in many civic organizations including the Boy Scouts of America, Big
Brothers of America
22
<PAGE>
and the National Wildlife Federation. Mr. Goldwater graduated from the
University of Arizona in 1962 with a B.S. in Marketing and Management.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company maintains an officer and director liability insurance
policy in the face amount of $1,000,000 in the aggregate ($30,000 or $100,000
max. per claim described below) underwritten by certain Underwriters at
Loyd's London, England. The Correspondent issuing the certificate of
insurance is HSBC Gibbs Limited, London, England. The annual premium is
US$12,000 and expires April 29, 2000.
The policy, among other things, states as follows:
"Underwriters shall pay on behalf of the Company for Loss sustained by the
Company resulting from any Securities Action Claim first made during the
Policy Period against the Company for a Wrongful Act. . . . "Securities
Action Claim" means any judicial or administrative proceeding initiated
against any of the Directors and Officers or the Company based upon, arising
out of, or in any way involving the Securities Act of 1933, the Securities
Exchange Act of 1934, rules or regulations of the Securities Exchange
Commission under either or both Acts, similar securities laws or regulations
of any state, or any common law relating to any transaction arising out of,
involving, or relating to the sale of securities in which they may be
subjected to a binding adjudication of liability for damages or other relief,
including any appeal therefrom." The limits of this coverage are $100,000.
The policy provides no coverage for each of the Directors and
Officers personally. The amount by which the "Underwriters shall reimburse
the Company for Loss which the Company pays as indemnification to any of the
Officers and Directors resulting form any Claim first made during the Policy
Period for a Wrongful Act" is limited to $30,000, except for a Securities
Action Claim as described above.
The policy excludes any "Claim brought about or contributed to in
fact by any dishonest, fraudulent or criminal act or omission, or any
personal profit or advantage gained by any of the Directors and Officers to
which they were not legally entitled as established by a judgment or other
final adjudication.
ITEM 6. EXECUTIVE COMPENSATION
The following tables contain compensation data for the Chief
Executive Officer and other named executive officers of the Company for the
fiscal year ended July 31, 1999:
<TABLE>
<CAPTION>
Annual Compensation
---------------------
Name Other
And Annual
Principal Compen-
Position Salary Bonus sation
<S> <C> <C> <C>
Janice A. $-0- $-0- $58,400(1)(2)
Jones, Ph.D.
23
<PAGE>
Chair of
Board, CEO,
Director
</TABLE>
- ----------------
(1) Dr. Jones receives 8,000 shares of CBSA restricted common stock per
calendar quarter from CBSA as compensation to serve as Secretary and as a
Director on CBSA's Board. The CBSA shares are valued at $.50 per share.
(2) Consists of: personal use of trade credits from barter exchanges of
$22,000; payments by Company on life insurance policy of $20,400.
- ----------------
No other executive officer of the Company or any of its subsidiaries
receives an annual salary and bonus in excess of $100,000.
EMPLOYMENT ARRANGEMENTS
Pursuant to September 1, 1999, resolutions of the Company's Board of
Directors (subject to the expected final signature by the Company's three
disinterested Directors), Dr. Jones is employed pursuant to an Employment
Agreement that was originally entered into March 10, 1995. The terms of that
agreement were ignored by both the Company and Dr. Jones because of the
Company's situation. In the September 1, 1999, resolution, however, Dr. Jones
and the Company agreed to forego compensation obligations to Dr. Jones under the
1995 agreement through July 31, 1999, but reaffirmed it for the balance of its
term commencing August 1, 1999. The agreement employs Dr. Jones as Executive
President for a term of eight years and retains her as an advisor and consultant
for life. Dr. Jones is not required to devote more than thirty hours in any
month in her capacity as advisor and consultant to the Company. Compensation is
at the rate of $5,000 per month from each company that Chartwell receives
cash-flow revenues. Total compensation for the first 12 months shall be no
larger than $15,000 per month. Compensation shall increase to maximum $22,500
per month during the second 12 months and to maximum $30,000 per month during
the following 72 months. Dr. Jones is to receive additional bonus compensation
at the rate of 1% of the amount by which net profits (as defined) in any year
exceed the net profits for the fiscal year ended July 15, [sic] 1995, plus 1/10
of 1% of the amount by which net sales (as defined) in any year exceed the net
sales of the company for its fiscal year ending July 15, [sic] 1995. Further
bonuses and stock options are at the discretion of the Board of Directors.
(Terms for restricted stock options within the agreement itself were not
specified.) During the period that Dr. Jones is engaged as an advisor and
consultant to the Company, she is to receive office space comparable to that she
has as the Executive President and no further compensation. Upon disability
during the eight-year term of the agreement, Dr. Jones continues to receive full
compensation. Upon death during the eight-year term of the agreement, her
spouse or, if no spouse, her estate, is to receive two years of compensation
over five years or in a lump sum, respectively. The September 1, 1999,
resolutions provide Dr. Jones additional compensation as follows:
- Personal use of trade credits from barter exchanges, including ITEX
Corporation, BXI, Trade Bank International, and any other trade barter company,
for the period March 10, 1995 through the end of the employment contract
(initially March 10, 2003);
24
<PAGE>
- Life insurance payments of $1,700 per month and family health
insurance through the employment term.
- Conveyance of 7 1/2% interest in any acquisition made by the
Company through her employment period, but excluding acquisitions made by
CBSA.
- A five year option to purchase 500,000 shares of the Company's
CBSA common stock at $.30 per share with cashless exercise privileges.
- Addition of the cashless exercise privileges to all other options
on Company CBSA stock currently held by her.
The September 1, 1999, resolutions also provide Dr. Jones with $2,500 per
month compensation commencing August 1, 1999, to serve as a Director of the
Company.
Pursuant to a letter agreement dated April 4, 1997, Mr. Willard is
to be compensated at the rate of $2,000 per month payable quarterly in
Chartwell restricted common stock "at $.10 per share for the first quarter
and at market value for issuance thereafter." Market value is not defined in
the letter agreement. The Company, however, has been paying Mr. Willard
periodically with shares of CBSA at $.50 per share.
Pursuant to a letter agreement with Mr. Goldwater dated September
24, 1998, in consideration for his first year of service as Director, he
received a two year option to purchase 200,000 shares of Chartwell common
stock at $.15 per share.
Pursuant to various resolutions of the Company's Board of Directors,
Ms. Gluckman receives $1,000 per month payable periodically (approximately
once per year has been the past practice) in Chartwell restricted common
stock, although the Company has paid this obligation periodically with shares
of CBSA common stock at $.50 per share.
STOCK OPTIONS AND WARRANTS
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY 1999 End FY 1999 End
Shares Acquired Exercisable/ Exercisable/
Name on Exercised Unexercisable Unexercisable
<S> <C> <C> <C>
Janice A. Jones, Ph.D. -0- 18,596,790/-0- $-0-/$-0-
</TABLE>
- ----------------
(1) Computed based on the differences between the fair market value on
July 31, 1999 and aggregate exercise prices. All exercise prices are $.10
per share.
25
<PAGE>
- ----------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Several of the following transactions involve shares of CBSA common
stock owned by Chartwell. All such shares owned by Chartwell were acquired
by the Company for a de minimus amount.
On October 27, 1997, in consideration for the extension of
additional credit to the Company of $100,000, John J. Grace, a consultant to
the Company, was issued 350,000 shares of restricted Common Stock as
compensation. These share were valued at $.01 per share. In addition, Mr.
Grace was granted an option to purchase 2,000,000 shares of restricted Common
Stock until November 11, 2000, at $.10 per share. These options were valued
at a de minimus amount.
On October 31, 1997, Janice A. Jones entered into an arrangement to
convert $1,000,000 of the Company's debt to her into 2,000,000 of CBSA
restricted common stock owned by the Company. In addition, Dr. Jones
forfeited "interest income on the debt converted provided that if at the end
of one year from October 31, 1997, upon the sale of her stock she receives
full payment for the debt in cash equivalents." In the event that the value
of the CBSA stock on October 31, 1998, were not equal to $1,000,000 then she
was to "be granted additional consideration, including accrued interest."
Dr. Jones received 1,000,000 CBSA shares for the described conversion on
October 31, 1997, and was allowed to maintain the 1,000,000 conversion in
abeyance under a conversion option that was to expire July 31, 1998. See
September 2, 1998, and June 7, 1999, transactions described below.
On December 31, 1997, Janice A. Jones agreed to forgive $396,000 of
the company's indebtedness to her; the related interest income due her on the
underlying notes for the period from August 1, 1997, through December 31,
1997, to continue to be owing to her.
On April 2, 1998, John J. Grace, a consultant to the Company was
issued 1,000,000 shares of restricted Common Stock for services rendered.
These shares were valued at $.01 per share. On that date the Company also
entered into an agreement to compensate Mr. Grace at the rate of $100,000 per
year.
On April 16, 1998, the Company issued 10,000 shares of CBSA
restricted common stock to Alice M. Gluckman as compensation for Director and
Treasurer services.
On May 29, 1998, Janice A. Jones agreed to forgive $228,000 of the
Company's indebtedness to her; the related interest income due her on the
underlying notes for the period from August 1, 1997, through May 31, 1998, to
continue to be owing to her.
On June 1, 1998, in consideration for extending the due dates on
several loans owing by the Company to Janice A. Jones and entities that she
owns and controls, the Company granted Dr. Jones an option to acquire 400,000
shares of CBSA common stock at the market price on July 31, 1998 ($.32), said
options to expire July 31, 2003. At that time and as part of the same
transaction, the Company also granted an option to acquire 4,354,110 shares
of Chartwell restricted common stock at $.10 per share until June 1, 2003, to
an entity that is owned and controlled by Janice A. Jones. Another entity
owned and controlled by Dr. Jones was granted similar options to acquire
3,062,680 shares of
26
<PAGE>
Chartwell restricted Common Stock. In addition, Dr. Jones was granted
similar options to acquire 3,500,000 shares of Chartwell restricted Common
Stock. All of these options replaced conversion features in the related
convertible promissory notes. New notes were executed by the Company to Dr.
Jones in the principal amount of $690,936 with simple interest at 10% per
annum and due August 1, 2002, and with the original conversion features
deleted. On that same date the Company granted John J. Grace options for
200,000 shares of CBSA common stock similar to those described above for
extending the due dates on loans owed by the Company to him. Finally, the
Company also granted to John J. Grace a similar option to acquire 1,500,000
shares of Chartwell Common Stock.
On July 31, 1998, 300,000 shares of restricted Series A Preferred
Stock were issued to Family Jewels Ltd, Partnership II in conversion to
equity of $300,000 in notes payable owed to the partnership. The partnership
is wholly owned by Janice A. Jones. These shares were valued at $300,000.
On September 2, 1998, the Company adjusted the October 31, 1997,
conversion rate set forth above with respect to the conversion into CBSA
common stock of amounts owed to Janice A. Jones. Dr. Jones received an
additional 500,000 shares of CBSA restricted common stock. In addition,
interest was to "accrue from October 31, 1997, and continue to be an
obligation of the Company until the cash value received by Dr. Jones reaches
$500,000." Finally, Dr. Jones extended "the cash value due date from October
31, 1998, to April 30, 1999, at which time if the bid price of CBSA common
stock was above $.50 per share on that date, "then no additional shares will
be issued and interest accrued will cease."
On September 15, 1998, the Company granted Barry M. Goldwater, Jr.
an option to purchase 200,000 shares of Chartwell restricted Common stock
until September 15, 2000, at $.15 per share in consideration for his services
as a Director of the Company.
On September 17, 1998, the Company agreed to William R. Willard's
compensation in the form of CBSA common stock at the rate of $.50 per share
through July 31, 1998, and authorized the payment of its board members for
the second half of fiscal 1999 and fiscal 2000 "in either cash, stock, or a
combination of the two depending on the cash position and needs of the
Company."
On March 5, 1999, John J. Grace, a consultant to the Company, was
granted an option to purchase 1,500,000 shares of restricted Common Stock for
five years at $.10 per share. The grant was in consideration of the
extension of loans due from the Company to Mr. Grace, for the loan of $16,000
with interest at 10% per annum compounded monthly, and for deferral of
payment of compensation due him for his services. These options were valued
at a de minimus amount. The Company also granted Mr. Grace a second deed of
trust on the Ramona, California, property and pledged 1,500,000 shares of
CBSA common stock as additional security for his loans in satisfaction of
part of the security granted to Mr. Grace pursuant to the terms of the
original 1997 loan agreement. New promissory notes were prepared in the
principal amount of $600,000 with interest at 10% per annum, compounded
monthly.
On May 31, 1999, Alice M. Gluckman received 17,000 shares of CBSA
shares for "Director's Fees for the period July 16, 1998 through May 31,
1999. On that same date William R. Willard received 48,000 shares of CBSA
common stock for "Director's Fees for the period April 4, 1998 through April
4, 1999."
27
<PAGE>
On June 7, 1999, the Company further adjusted the conversion rate
with respect to transactions entered into with Janice A. Jones on October 31,
1997. On June 7, 1999, Dr. Jones waived the interest provision of the
September 2, 1998, agreement. Dr. Jones was also issued 155,000 shares of
CBSA restricted common stock in exchange for waiving any future adjustments
under the conversion agreement. Finally, Dr. Jones was granted a 5 year
option to purchase 200,000 shares of CBSA common stock at $.50 per share.
The conversion option with respect to the "remaining $500,000 of Dr. Jones'
(&/or her related entities) debt not yet converted" remained in effect.
On July 31, 1999, Janice A. Jones forgave $37,000 of the Company's
principal obligation due her and the Company issued new note to Janice A.
Jones in the principal amount of $143,554 replacing the old $180,554 note.
On September 1, 1999, the Company entered into its employment
agreement with Janice A. Jones described in the Item 6 hereof. All prior
compensation agreements with Dr. Jones that are reflected in various Board of
Directors minutes were cancelled; Dr. Jones received no compensation under
those arrangements. At that time Dr. Jones had accrued approximately $90,000
on her credit cards for the benefit of the Company on which the Company had
been making monthly payments. Dr. Jones agreed to continue to be
contingently liable on the credit card debt; forgave $137,461 interest on her
notes due her through July 31, 1998 and $88,567 interest for the year ended
July 31, 1999; and forgave $37,000 principal balance on her note due her as
of July 31, 1999.
Janice A. Jones is paid by CBSA for services to that company as a
director and Secretary. Dr. Jones' arrangements are described in Item 6,
above. William R. Willard is paid by CBSA for services to that company as a
director (8,000 shares of CBSA restricted common stock per quarter). John J.
Grace also receives 8,000 shares of CBSA restricted common stock per quarter
from CBSA for consulting services he renders to that company.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 90,000,000 shares of Common
Stock, of which 60,272,512 shares are issued and outstanding as of July 31,
1999 and 29,502,910 shares are reserved for issuance pursuant to the exercise
of outstanding options, warrants or convertible preferred stock. Holders of
Common Stock have no cumulative voting rights, and, accordingly, the holders
of a majority of the outstanding shares have the ability to elect all of the
directors. Holders of Common Stock have no preemptive or other rights to
subscribe for shares.
PREFERRED STOCK
The Company has 10,000,000 authorized preferred shares issuable in
one or more series with rights and preferences as determined by the Board of
Directors. As of July 31, 1999, the Board of Directors had authorized the
following:
- Series A Preferred Stock - 2,000,000 shares; par value $0.001 per
share; non-cumulative dividend of $.30 per share prior to any dividend on the
Common Stock and participating in any dividend on the Common Stock
thereafter; liquidation preference of $.30 per share and participating with
the Common Stock
28
<PAGE>
thereafter; identical voting rights with the Common Stock; convertible at any
time into Common Stock on a one-to-one basis; and the conversion privilege is
protected by an anti-dilution provision in the event the number of shares of
Common Stock outstanding is changed through a stock split, reverse stock
split, share dividend or other similar corporate action. The number of
Series A Preferred shares outstanding as of July 31, 1999, was 600,000.
- Series B Preferred Stock - 150,000 shares authorized; stated
value $10.00 per share; "dividends rate, non-cumulative, of 0% in year one,
3% at end of year two of date of issue, 3% at end of year three, 4% at end of
year 4, 5% at end of year 5 and 6% at the end of year six and each year
thereafter"; liquidation preference of $10.00 per share before any payment
shall be made in respect of the Company's Common Stock or junior stock and
participating with the Common Stock thereafter; identical voting rights with
the Common Stock; convertible at any time into twenty shares Common Stock;
the conversion privilege is protected by an anti-dilution provision in the
event the number of shares of Common Stock outstanding is changed through a
stock split, reverse stock split, share dividend or other similar corporate
action; and the stock is callable by the Company at 110% of stated value with
15 days written notice to the holders thereof. The number of Series A
Preferred shares outstanding as of July 31, 1999, was 30,000.
- Series C Preferred Stock - 300,000 shares authorized; stated
value $10.00 per share; non-cumulative dividends, "pari passu with all other
series or shares of preferred stock", before any dividend is paid on Common
Stock and participating in any dividend on the Common Stock thereafter;
liquidation preference "pari passu with all other series or shares of
preferred stock" of $10.00 per share before any payment shall be made in
respect of the Company's Common Stock or junior stock and participating with
the Common Stock thereafter; identical voting rights with the Common Stock;
convertible at any time commencing eighteen months after the date of issuance
into ten shares Common Stock; and the conversion privilege is protected by an
anti-dilution provision in the event the number of shares of Common Stock
outstanding is changed through a stock split, reverse stock split, share
dividend or other similar corporate action. The number of Series A Preferred
shares outstanding as of July 31, 1999, was 50,612.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The Company's Common Stock trades under the symbol "CHAP" on the OTC
Electronic Bulletin Board. The following table sets forth the high and low
bid prices per share of the Common Stock for the last two fiscal years as
reported by the OTC Electronic Bulletin Board and available through America
Online. These prices reflect inter-dealer prices, without retail mark-ups,
mark-downs or commissions, and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
HIGH LOW
FISCAL 1998
<S> <C> <C>
First Quarter .13 .0625
Second Quarter .12 .06
Third Quarter .13 .0625
Fourth Quarter .08 .06
29
<PAGE>
FISCAL 1999
First Quarter .07 .03
Second Quarter .08 .03
Third Quarter .0625 .03
Fourth Quarter .07 .04
</TABLE>
The Company has been informed by its transfer agent that as of July
31, 1999, there were approximately 506 record owners of its Common Stock.
It is the present policy of the Company not to pay cash dividends
and to retain future earnings to support the Company's growth. Any payment
of cash dividends in the future will be dependent upon the amount of funds
legally available therefor, the Company's earnings, financial condition,
capital requirements and other factors that the Board of Directors may deem
relevant. The Company does not anticipate paying any cash dividends in the
foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
1 - On September 6, 1996, and as amended on October 7, 1996, the
Company and two of its shareholders, one of whom is the Company's Chief
Executive Officer, entered into a transaction for the benefit of the Company as
follows:
The shareholders agreed to contribute and return to the Company
3,500,000 shares each of the Company's restricted Common Stock for use by the
Company to attract new management and to meet certain pending obligations.
The shareholders agreed that up to 1,000,000 shares each could be liquidated
pursuant to Rule 144 of the Securities Act of 1933 and that the net proceeds
from such sales were to be contributed to the Company as a capital
contribution. These 1,000,000 shares each were in fact sold by the
shareholders at the direction of the Company without any return of the shares
themselves to the Company. As part of the same transaction, the non-officer
shareholder was granted an option until January 2, 2002, to purchase
4,000,000 share of restricted common stock at $.20 per share. The proceeds
of these sales amounted to approximately $211,000.
2 - On September 30, 1996, 700,000 shares of unrestricted Common
Stock were issued to One Capital Corporation valued at $.05 per share.
3 - On January 8, 1997, the following shares of restricted Common
Stock were issued in lieu of compensation and valued at $.10 per share:
30
<PAGE>
(a) Alice Gluckman 100,000
(b) James Conway 63,000
(c) Paul Shumard 60,000
4 - On January 8, 1997, issued into escrow 230,000 shares of
restricted Common Stock as collateral for a rent obligation to Stuart Marks.
Because the obligation was not met by September 30, 1997, the escrow was to
closed with the shares being transferred to Mr. Marks. The shares were
valued at $20,000.
5 - On January 10, 1997, Janice A. Jones, Ph.D. was granted an
option to purchase 10,810,790 shares of restricted Common Stock until April
1, 2002, at $.10 per share in consideration for the forgiveness of interest
owed to her by the Company on several promissory notes. The options were
valued at a de minimus amount.
6 - On February 14, 1997, 25,000 shares of Series C Preferred Stock
were issued to ITEX Corporation in consideration of $250,000 of ITEX barter
credits. See Financial Statements.
7 - On April 1, 1997, John J. Grace, a consultant to the Company,
was granted an option to purchase 1,500,000 shares of restricted Common Stock
until April 1, 2002, at $.10 per share. These options were valued at a de
minimus amount. On that same date Mr. Grace was issued 730,000 shares of
restricted Common Stock for services rendered through March 3, 1997. These
shares were valued at $.10 per share.
8 - On May 5, 1997, William Kroske and Kathryn Lydens were
respectively issued 107,500 and 10,000 shares of restricted Common Stock as
employee compensation. These shares were valued at $.10 per share.
9 - On August 1, 1997, the Company issued 14, 000 shares of
restricted Common Stock to First Southwest Co. for services. These shares
were valued at $.01 per share.
10 - On August 19, 1997, the Company issued shares of restricted
Common Stock valued at $.01 per share for services to the following persons:
(a) Bridgestream Trust 60,000
(b) Robert Kihm 20,000
(c) William Rogers, Jr. 50,000
11 - On October 10, 1997, the Company issued shares of restricted
Common Stock valued at $.01 per share for services to the following persons:
(a) Kathryn Chase 27,680
(b) Robert Kihm 50,000
(c) Robert Fahey 90,000
12 - On October 27, 1997, John J. Grace, a consultant to the Company,
was issued 350,000 shares of restricted Common Stock as compensation. These
31
<PAGE>
share were valued at $.01 per share. In addition, Mr. Grace was granted an
option to purchase 2,000,000 shares of restricted Common Stock until November
11, 2000, at $.10 per share. These options were valued at a de minimus
amount.
13 - On November 4, 1997, the Company issued 85,429 shares of
restricted Common Stock to Hial Gernert for services. These shares were
valued at $.01 per share.
14 - On December 23, 1997, Robert Fahey was issued 90,000 shares of
restricted Common Stock as compensation. These shares were valued at $.01
per share.
15 - On April 2, 1998, John J. Grace, a consultant to the Company
was issued 1,000,000 shares of restricted Common Stock for services rendered.
These share were valued at $.01 per share.
16 - On July 31, 1998, 300,000 shares of restricted Series A
Preferred Stock were issued to Family Jewels Ltd, Partnership II in
conversion to equity of $300,000 in notes payable owed to the partnership.
The partnership is wholly owned by Janice A. Jones, Ph.D. These shares were
valued at $300,000.
17 - On March 5, 1999, John J. Grace, a consultant to the Company,
was granted an option to purchase 1,500,000 shares of restricted Common Stock
for five years at $.10 per share. The grant was in consideration of the
extension of loans due from the Company to Mr. Grace and for deferral of
payment of compensation due him for his services. These options were valued
at a de minimus amount.
The Company believes transactions in 1 through 17 were exempt from
registration pursuant to Section 4(2) of the Act as privately negotiated,
isolated, non-recurring transactions not involving any public solicitation.
The purchasers in each case represented their intention to acquire the
securities for investment only and not with a view to the distribution
thereof. Appropriate restrictive legends are affixed to the stock
certificates issued in such transactions. All recipients either received
adequate information about the Company or had access, through employment or
other relationships, to such information. In addition, the purchasers
described in paragraphs 3(a), 3(b), 5, 7, 9, 10(a), 12, 14, 15, 16, and 17,
above, were "accredited investors" (as that term is defined in Rule 501(a)(3)
of Regulation D).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 the indemnitee undertakes to pay any such
amounts if it is later determined that such person was not entitled to be
indemnified by the Company. The Company's Bylaws provide for indemnification
of all directors, officers, and control persons. In addition, the Company's
Articles of Incorporation eliminate personal liability for breach of
fiduciary duty by an officer or director to the extent permitted under Nevada
law. The Company has purchased director and
32
<PAGE>
officer errors and omissions liability insurance as described in detail
above. See Item 5, above.
Insofar as indemnification by the Company for liabilities arising
under the Act may be permitted to directors, officers and controlling persons
of the Company pursuant to provisions of the Certificate of Incorporation and
Bylaws, or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification by such director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding is
asserted by such director, officer or controlling person in connection with
the securities being offered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
PART F/S
PART III
ITEM 1. EXHIBITS
The following exhibits are filed as part of the Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
<S> <C>
2(1) Articles of Incorporation and amendments thereto.
2(2) By-laws
6(1) 9/6/96 Agreement regarding contribution to capital by
shareholders and amendments thereto
6(2) 11/25/97 Settlement Agreement between Chartwell
International, Inc. and Poway Partners
6(3) 6/20/97 Agreement licensing assets of National College
Recruiting Association, Inc. to SportsStar Marketing,
Inc.
6(4) 2/ /98 Management Service Agreement between Chartwell
International, Inc. and SportsStar Marketing, Inc.
6(5) 3/10/95 Agreement Between Chartwell International, Inc.
and Janice Jones regarding employment and 9/1/99 Board
of Directors Resolution modifying same
6(6) 4/4/97 letter regarding compensation of William Willard
6(7) 9/24/98 letter regarding compensation of Barry M.
33
<PAGE>
Goldwater, Jr.
6(8) 6/8/99 letter regarding compensation of Alice M.
Gluckman
6(9) 6/1/98 Promissory Note for $78,400 held by Janice Jones
6(10) 7/31/99 Promissory Note for $133,554 held by Janice
Jones
6(11) 6/1/98 Promissory Note for $612,536 held by Janice Jones
6(12) 3/5/99 Promissory Note for $300,000 held by John J.
Grace's IRA Rollover Account
6(13) 3/5/99 Promissory Note for $130,000 held by John J.
Grace's IRA Rollover Account
6(14) 3/5/99 Promissory Note for $170,000 held by John J.
Grace
6(15) 4/1/99 Promissory Note for $16,000 held by John J. Grace
6(16) 6/1/98 Option for 4,354,110 shares held by Family Jewels
II Limited Partnership
6(17) 6/1/98 Option for 3,062,680 shares held by The Chartwell
Group, Inc.
6(18) 6/1/98 Option for 3,500,00 shares held by Dr. Janice A.
Jones
6(19) 9/6/96 Warrant for 4,000,000 shares held by K.T. Mao
6(20) 8/1/97 Option for 6,000,000 shares held by Dr. Janice A.
Jones
6(21) 7/31/97 Option for 1,680,000 shares held by Dr. Janice
A. Jones
6(22) 3/5/99 Option for 1,500,000 shares held by John J. Grace
6(23) 6/1/98 Option for 1,500,000 shares held by John J. Grace
6(24) 10/27/97 Option for 2,000,000 shares held by John J.
Grace
6(25) 9/15/98 Option for 200,000 shares held by Barry M.
Goldwater, Jr.
6(26) 6/1/98 Option for 200,000 shares held by John J. Grace
6(27) 10/31/97 Option for 1,000,000 shares held by Dr. Janice
A. Jones
34
<PAGE>
6(28) 6/1/98 Option for 400,000 shares held by Dr. Janice A.
Jones
6(29) 6/7/99 Option for 200,000 shares held by Dr. Janice A.
Jones
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
CHARTWELL INTERNATIONAL, INC.
Dated: September 20, 1999 By:/s/ Janice A. Jones
------------------------------------------
Janice A. Jones, Chief Executive Officer
35
<PAGE>
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountant F-1
Consolidated Balance Sheets at July 31, 1999 and 1998 F-2
Consolidated Statements of Operations for the Fiscal Years
Ended July 31, 1999 and 1998 F-3
Consolidated Statements of Stockholders' Equity for the
Fiscal Years Ended July 31, 1999 and 1998 F-4
Consolidated Statements of Cash Flows for the Fiscal
Years Ended July 31, 1999 and 1998 F-5
Notes to Consolidated Financial Statements F-6
</TABLE>
<PAGE>
Ronald R. Chadwick, P.C.
CERTIFIED PUBLIC ACCOUNTANT
3025 S. PARKER ROAD
SUITE 109
AURORA, COLORADO 80014
TELEPHONE: (303) 306-1967
TELECOPIER: (303) 306-1944
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Chartwell International, Inc.
Englewood, Colorado
I have audited the accompanying consolidated balance sheets of Chartwell
International, Inc. as of July 31, 1998 & 1999 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chartwell International,
Inc. as of July 31, 1998 & 1999 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Aurora, Colorado /s/ Ronald R. Chadwick, P.C.
August 27, 1999 RONALD R. CHADWICK, P.C.
F-1
<PAGE>
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 15,574 $ 4,683
Trade credits 24,606 39,161
Receivables from related parties 109,037 56,822
------------- -------------
Total current assets 149,217 100,666
Investment in real estate 1,195,655 1,195,655
Mineral properties 2,014,800 2,296,236
Recruiting systems and publishing rights, net 1,506,883 1,603,068
Organization costs and goodwill, net 32,784 104,529
Investment in CBSA -- 234,793
Other assets, net 88,385 24,691
------------- -------------
Total assets $ 4,987,724 $ 5,559,638
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 235,673 $ 405,393
Notes payable, current 57,569 65,526
------------- -------------
Total current liabilites 293,242 470,919
Long-term debt:
Due to related parties 1,517,845 1,393,055
Other notes payable 665,863 669,453
------------- -------------
Total liabilities 2,476,950 2,533,427
------------- -------------
Minority interests -- 41,323
------------- -------------
Stockholders' Equity:
Preferred Series A stock 600 600
Preferred Series B stock 300,000 300,000
Preferred Series C stock 1,106,120 1,106,120
Common stock; $.001 par value; 90,000,000 60,272 61,772
shares authorized; 60,272,512 and 61,772,512
issued in 1999 and 1998, respectively
Additional paid-in capital 10,013,901 9,975,401
Accumulated deficit (8,963,234) (8,452,120)
------------- -------------
2,517,659 2,991,773
Less, Treasury stock (68,850 shares) at cost (6,885) (6,885)
------------- -------------
Total stockholders' equity 2,510,774 2,984,888
------------- -------------
Total liabilities and stockholders' equity $ 4,987,724 $ 5,559,638
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
Management and license fee revenue $ 90,989 $ 10,500
Operating expenses:
General and administrative 278,447 799,910
Depreciation and amortization 128,663 128,636
------------- -------------
Total operating expenses 407,110 928,546
------------- -------------
Operating loss (316,121) (918,046)
Other income (expenses):
Gain on sales of stock 370,113 1,012,794
Gain on capital transaction of
equity method investee 569,000
Share of CBSA loss (207,386) (450,492)
Writedown of mineral property (284,668)
(Reversal) of gain on sale of mineral property (2,325,200)
Minority interest share of losses 41,323 1,093
Interest expense, net (95,484) (129,775)
Miscellaneous (expense), net (18,891) (52,216)
------------- -------------
Total other income (expense) (194,993) (1,374,796)
------------- -------------
Net loss $ (511,114) $ (2,292,842)
------------- -------------
------------- -------------
Loss per common share $ (0.01) $ (0.04)
------------- -------------
------------- -------------
Weighted average number of common shares 61,647,512 60,351,541
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
Series A Series B Series C
Preferred Preferred Preferred Common Additional
Stock Stock Stock Stock Paid-in Capital
--------- --------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Balances, August 1, 1997:
Shares 300,000 30,000 166,512 58,850,403
Amount $ 300 $300,000 $1,665,120 $ 58,850 $ 8,421,996
Officer cancellation of debt:
Shares $ 624,000
Amount
Officer conversion of debt:
Shares 300,000
Amount $ 300 $ 299,700
Conversion of Series C Preferred:
Shares (55,900) 559,000
Amount (559,000) $ 559 $ 558,441
Stock issued for services:
Shares 2,363,109
Amount $ 2,363 $ 71,264
Change in valuation allowance:
Shares
Amount
Net loss, fiscal 1997:
Shares
Amount
Balances, July 31, 1998:
Shares 600,000 30,000 110,612 61,772,512
Amount $ 600 $300,000 1,106,120 $ 61,772 $ 9,975,401
Cancellation of common stock:
Shares (1,500,000)
Amount $ (1,500) $ 1,500
Officer cancellation of debt:
Shares
Amount $ 37,000
Net loss, fiscal 1999:
Shares
Amount
Balances, July 31, 1999:
Shares 600,000 30,000 110,612 60,272,512
Amount $ 600 $300,000 1,106,120 $ 60,272 $10,013,901
<CAPTION>
Valuation
Allowance Total
for Equity Treasury Accumulated Stockholders'
Securities Stock Deficit Equity
---------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Balances, August 1, 1997:
Shares (68,850)
Amount $ (255,000) $ (6,885) $(6,159,278) $ 4,025,103
Officer cancellation of debt:
Shares $ 624,000
Amount
Officer conversion of debt:
Shares
Amount $ 300,000
Conversion of Series C Preferred:
Shares
Amount
Stock issued for services:
Shares
Amount $ 73,627
Change in valuation allowance:
Shares
Amount $ 255,000 $ 255,000
Net loss, fiscal 1997:
Shares
Amount $(2,292,842) $(2,292,842)
Balances, July 31, 1998:
Shares (68,850)
Amount $ 0 $ (6,885) $(8,452,120) $ 2,984,888
Cancellation of common stock:
Shares
Amount
Officer cancellation of debt:
Shares
Amount $ 37,000
Net loss, fiscal 1999:
Shares
Amount $ (511,114) $ (511,114)
Balances, July 31, 1999:
Shares (68,850)
Amount $ 0 $ (6,885) $(8,963,234) $ 2,510,774
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (511,114) $ (2,292,842)
Adjustments to reconcile net income to net
cash (used for) operating activities:
Reversal of gain on sale of mineral property 2,325,200
Depreciation and amortization 128,663 128,636
Services paid for in stock 77,500 473,515
Gain on sale of securities (370,113) (1,102,174)
Gain on capital transaction of equity method investee (569,000)
Share of loss from investee accounted for by
the equity method 242,960 450,492
Writedown of mineral property 284,668
Minority interest share of net loss (41,323) (1,093)
Changes in assets and liabilities:
Decrease in trade credits 56,688 152,183
(Increase) decrease in accounts receivable 22,995 (6,378)
(Increase) Decrease in due from related parties (75,210) 94,843
(Increase) Decrease in prepaid and other assets (35,826) 57,308
(Decrease) in accounts payable and accruals (190,366) (80,467)
Increase in accrued interest due to related parties 56,192 56,623
------------- -------------
Net cash (used for) operating activities (354,286) (313,154)
------------- -------------
Cash Flows From Investing Activities:
Proceeds from sale of securities 147,898 112,906
------------- -------------
Net cash provided by investing
activities 147,898 112,906
------------- -------------
Cash Flows From Financing Activities:
Proceeds from borrowings from related parties 102,149 105,208
Proceeds from borrowings from third parties 200,000 100,000
Repayments on borrowings from related parties (4,000)
Repayments on borrowings from third parties (84,870) (2,715)
------------- -------------
Net cash provided by financing activities 217,279 198,493
------------- -------------
Net increase (decrease) in cash 10,891 (1,755)
Cash, beginning of year 4,683 6,438
------------- -------------
Cash, end of year $ 15,574 $ 4,683
------------- -------------
------------- -------------
Supplemental Cash Flow Information:
Cash paid for interest $ 48,267 $ 24,333
------------- -------------
------------- -------------
</TABLE>
Schedule of Non-Cash Investing and Financing Activities:
Fiscal year ended July 31, 1998:
(a) The Company recovered mineral properties with cost of $2,014,800 that had
been exchanged for securities valued at $4,340,000 in the year ended
July 31, 1997.
(b) An officer made a contribution to additional paid-in capital by
cancellation of debt totalling $624,000
(c) An officer converted debt of $300,000 into Series A Preferred Stock.
(d) Series C Preferred Stock totaling $559,000 was converted into common stock.
Fiscal year ended July 31, 1999:
(a) An officer made a contribution to additional paid-in capital by
cancellation of debt totaling $37,000.
(b) The Company cancelled 1,500,000 shares of common stock held by a third
party in connection with its successful litigation against the former
owners of NCRA, Inc.
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 1. ORGANIZATION, OPERATIONS, AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Chartwell International, Inc. (formerly Chartwell Publishing Company, Inc.)
("Chartwell" or the "Company") was incorporated in the State of Nevada on
December 27, 1984. The Company's principal line of business is procurement of
scholarships for high school athletes and related education and media
activities. The Company also owns rights to gypsum deposits and owns a parcel
of real estate which is being held for future development or sale.
A summary of the Company's significant accounting policies follows:
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Chartwell International, Inc., its wholly owned subsidiary, National College
Recruiting Association, Inc. (NCRA), and Chartwell's 47% owned entity College
Bound Student Alliance, Inc. (CBSA) (f/k/a SportsStar Marketing, Inc.), which
is accounted for by the equity method. Intercompany accounts and transactions
have been eliminated.
TRADE CREDITS
The Company accounts for trade credits according to EITF 93-11. Trade credits
are recorded at cost, and represent purchasing value for goods and services
on established barter markets. The Company reviews its trade credits
periodically to assess the fair value of carrying amounts.
MINERAL PROPERTIES
Costs of acquiring, exploring, and developing specific mineral properties are
capitalized on a property by property basis until the commercial viability of
each property is determined. When a property reaches the production stage,
the related capitalized costs will be amortized using the units of production
method on the basis of periodic estimates of mineral reserves. Mining
properties are periodically assessed for impairment of value and any
impairments are charged to operations at the time of impairment. Should a
property be sold or abandoned, its capitalized costs are charged to
operations and gain or loss recognized.
FAIR VALUE OF DEBT
The carrying value of the Company's financial instruments approximates fair
value.
INCOME TAX
The Company has a net operating loss carry forward at July 31, 1999 of
approximately $7,600,000, which will begin to expire in the year 2002 if not
used. The resulting deferred tax asset of approximately $2,700,000 has been
offset by a 100% valuation allowance.
F-6
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 1 (CONTINUED)
LOSS PER SHARE
The loss per share is computed by dividing the net loss by the weighted
average number of common shares outstanding. Warrants, stock options,
convertible notes payable, and common stock issuable upon conversion of the
Company's preferred stock are not included in the computation when there is a
loss because the effect of such inclusion would be anti-dilutive.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of significant contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates and assumptions.
NOTE 2. MINERAL PROPERTIES AND MARKETABLE SECURITIES:
NEW RIVERVIEW CLAIMS, WASHINGTON COUNTY, UTAH
On April 15, 1997, the Company sold its interest in the New Riverview Claims,
Washington County, Utah, with a carrying value of $2,014,800 for 2,000,000
shares of restricted common stock and 170,000 shares of free trading common
stock in a publicly traded company. The market valuation of the shares at
date of closing totaled $4,340,000, resulting in a gain of $2,325,200 that
was recognized in the fiscal year ended July 31, 1997.
The terms of the sale provided for the purchaser to pay Chartwell additional
cash or marketable securities, or return the mineral property interest if the
value of, and to the extent that, the securities fell below $4,000,000 by
April 1998. The market price of the purchaser's stock declined significantly
and during the year ended July 31, 1998, the mineral property interest was
returned to the Company. Accordingly, the statement of operations for fiscal
1998 reflects the reversal of the gain, and the claims are included in the
Company's balance sheet at the original cost of $2,014,800.
NOTE 3. INVESTMENT IN REAL ESTATE:
The Company owns 200 acres of development land known as San Vincente Estates,
located in San Diego County, Ramona, California. The Company intends to
either develop the property with joint venture partners, or to sell the
property to outside investors. Pursuant to an agreement, the Company must
convey title to lots equivalent to $250,000 in value upon county approval of
the final map and plotting of all lots. Such conveyance is collateralized by
333,333 shares of the Company's holdings in College Bound Student Alliance,
Inc. common stock.
F-7
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 4. NOTES PAYABLE AND LONG TERM DEBT
<TABLE>
<CAPTION>
DUE TO RELATED PARTIES July 31,
- ---------------------- --------
Notes payable to related parties are as follows: 1999 1998
---- ----
<S> <C> <C>
Notes payable to an officer and entities controlled
by the officer, due variously from August 1, 2000 through
July 1, 2004, with interest at 10%, collateralized by the
Company's shares in CBSA and its investments $ 834,490 $ 871,490
Notes payable to a key advisor, due August 1, 2000 with
interest at 10%, collateralized by the Company's shares
in CBSA and its investments 600,000 400,000
Note payable to an officer's family member, due on
August 1, 2000 with interest at 8%, collateralized by the
Company's shares in CBSA and its investments 39,500 39,500
Note payable to a key advisor, due on August 1, 2002, with
interest at 10%, collateralized by a vehicle 16,000 16,000
Other 16,000 18,405
----------- -----------
Total 1,505,990 1,345,395
Accrued interest on above notes, not required to be paid
during the fiscal year ending July 31, 2000 11,855 47,660
----------- -----------
$ 1,517,845 $ 1,393,055
----------- -----------
----------- -----------
</TABLE>
Notes payable to an officer of $500,000 are convertible into 1,000,000 shares
of College Bound Student Alliance, Inc. common stock owned by the Company.
F-8
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 4 (CONTINUED)
<TABLE>
<CAPTION>
NOTES PAYABLE TO OTHERS July 31,
- ---------------------- --------
Other notes payable are as follows: 1999 1998
---- ----
<S> <C> <C>
Note payable to a bank and an individual,
monthly payments of interest only at 12%
with the principal due on March 1, 2004, collateralized
by a first deed of trust on San Vincente Estates $ 600,000 $ 400,000
Note payable to an individual, due on October 31, 1999
with interest at 10%, collateralized by a deed of trust
on the San Vincente Estates 31,684 25,000
Note payable to a partnership with interest
at 12%, payable at $572 per month, collateralized
by a second deed of trust on the San Vincente Estates - 57,200
Note payable to an individual due on April 6, 2000 with
interest at 10% - 100,000
Line of credit with a bank, due on demand with interest
at the bank's prime rate plus 2% - 11,860
Other 91,748 140,919
----------- -----------
723,432 734,979
Less, current portion 57,569 65,526
----------- -----------
Long-term portion $ 665,863 $ 669,453
----------- -----------
----------- -----------
</TABLE>
Minimum scheduled principal payments on long-term debt to maturity as of
July 31, 1999 are as follows:
<TABLE>
<CAPTION>
Related Parties Others
--------------- ------
<S> <C> <C>
Years ending July 31,
2000 $ - $ 57,569
2001 655,500 20,500
2002 78,400 17,863
2003 159,554 17,500
2004 - 610,000
Thereafter 612,536 -
---------- ---------
Total $1,505,990 $ 723,432
---------- ---------
---------- ---------
</TABLE>
F-9
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 4 (CONTINUED)
The Company's Board of Directors granted a security interest to a group of
lenders with notes outstanding in the aggregate of $2,165,547 in Company real
estate and its investment in College Bound Student Alliance, Inc.
NOTE 5. OPERATING LEASE
The Company leases office space in Englewood, Colorado pursuant to a lease
which expires July 31, 2000. Lease payments are $5,270 a month, of which
$4,121 is paid by College Bound Student Alliance, Inc.
Rent expense for the years ended July 31, 1999 and 1998 was approximately
$15,000 and $24,000, respectively, and is expected to be $15,000 for the year
ending July 31, 2000.
NOTE 6. STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company has 10,000,000 authorized preferred shares issuable in one or
more series. From these authorized shares, the Company has established the
following preferred stock:
PREFERRED SERIES A STOCK - The Company has provided for the issuance of
2,000,000 shares, par value $0.001 share, convertible Preferred Series
A Stock ("Series A"), of which 600,000 shares were outstanding as of
July 31, 1999 and 1998.
Each Series A share is convertible into one share of the Company's
common stock at any time after the date of issuance.
No call provision exists with respect to the Series A shares. The
Series A stock is not subject to any operation of a retirement or
sinking fund. The Series A stock has preferential dividend and
liquidation rights to the common stock, equal dividend and
liquidation rights to the Preferred Series C Stock and liquidation
rights that are subordinate to the Preferred Series B Stock.
PREFERRED SERIES B STOCK - The Company has provided for the issuance of
150,000 shares of stated value $10 per share convertible Preferred
Series B Stock ("Series B"), of which 30,000 shares were outstanding as
of July 31, 1999. Each Series B share is convertible into 20 shares of
the Company's common stock.
F-10
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 6 (CONTINUED)
Series B shares are callable at 110% of par value with 15 days prior
notice to give the holders an opportunity to convert. The Series B
stock is not subject to any operation of a retirement or sinking fund.
The Series B stock has a dividend rate of 2% in year two, increasing
gradually to 6% in year six, and each year thereafter, and preferential
liquidation rights to the common stock, Preferred Series A Stock and
Preferred Series C Stock.
PREFERRED SERIES C STOCK - The Company has provided for the issuance of
300,000 shares stated value $10 per share convertible Preferred Series
C Stock ("Series C"), of which 110,612 shares were outstanding as of
July 31, 1999 and 1998. Each Series C share is convertible into 10
shares of the Company's common stock at any time commencing 18 months
after the date of issuance.
No call provision exists relevant to the Series C shares. The Series C
stock is not subject to any operation of a retirement or sinking fund.
The Series C stock has preferential dividend rights to the common
stock, equal dividend rights to the Preferred Series A Stock, and
preferential liquidation rights to the common stock, equal liquidation
rights to the Preferred Series A Stock and subordinate liquidation
rights to the Preferred Series B Stock.
On September 1, 1999 the Company received 60,000 shares of outstanding
Preferred C Stock in exchange for $27,500 in cash and notes payable as
a settlement of a dispute.
COMMON STOCK
The Company has 90,000,000 authorized shares of common stock, par value
$0.001, of which 60,272,512, and 61,772,512 shares were outstanding at
July 31, 1999 and 1998, respectively.
The Company has exercisable stock options and warrants outstanding
issued in connection with debt instruments and capital transactions as
follows:
<TABLE>
<CAPTION>
Number of Shares Exercise Price Date of Expiration
---------------- -------------- ------------------
<S> <C> <C>
6,000,000 $0.10 August 1, 2002
1,680,000 0.10 July 31, 2002
12,416,790 0.10 June 1, 2002
2,000,000 0.10 November 1, 2002
1,500,000 0.10 March 5, 2004
4,000,000 0.20 January 2, 2002
----------
27,596,790
----------
----------
</TABLE>
Of the above options and warrants, 23,596,790 are held by related parties.
F-11
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 7. EMPLOYEE STOCK OPTIONS
STOCK OPTIONS
During fiscal 1999, the Company awarded options to purchase 200,000 shares of
common stock to a director. The Company applies APB Opinion 25 and related
interpretations in accounting for stock options using the intrinsic value
method. Accordingly, no compensation expense has been recognized in the
statement of operations for the stock option award in 1999. Had compensation
cost for the Company's stock option award been determined based on the fair
value method of FASB Statement 123, there would not have been a material
change to the Company's net loss.
NOTE 8. RECRUITING SYSTEMS, PUBLISHING RIGHTS, AND OTHER AMORTIZABLE ASSETS:
Recruiting systems, publishing rights, and other amortizable assets are as
follows as of July 31, 1999 and 1998:
<TABLE>
<CAPTION>
July 31, 1999 July 31, 1998
------------- -------------
Accumulated Net Accumulated Net
Cost Amortization Book Value Cost Amortization Book Value
---------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Recruiting Systems $1,173,702 $(261,600) $ 912,102 $1,173,702 $(202,915) $ 970,787
Publishing Rights 750,000 (155,219) 594,781 750,000 (117,719) 632,281
Franchise Rights 47,400 (19,841) 27,559 47,400 (15,101) 32,299
Goodwill - - - 100,390 (42,119) 58,271
Organization Costs 63,499 (58,274) 5,225 63,499 (49,540) 13,959
---------- --------- ---------- ---------- --------- ----------
$2,034,601 $(494,934) $1,539,667 $2,134,991 $(427,394) $1,707,597
---------- --------- ---------- ---------- --------- ----------
---------- --------- ---------- ---------- --------- ----------
</TABLE>
Recruiting systems and publishing rights represent the allocation of part of
the purchase price of NCRA based on an independent valuation study.
Publishing rights consists of rights owned by the Company to NCRA's name and
recruiting publications. Recruiting systems consists of NCRA's nationwide
network of universities and coaches which use and promote NCRA products.
Organization costs are costs incurred to establish a company. Amortization
expense is provided on a straight-line basis using estimated lives of twenty
years for recruiting systems and publishing rights and five years for
organization costs. Amortization expense for the years ended July 31, 1999
and 1998 was $128,663 and $128,636, respectively.
NOTE 9. NCRA SUBSIDIARY:
NCRA is wholly subsidiary of the Company through which it licenses marketing
and publishing rights to College Bound Student Alliance, Inc.
F-12
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 10. INVESTMENT IN COLLEGE BOUND STUDENT ALLIANCE, INC. (CBSA):
The financial statements include the Company's investment in CBSA on the
equity method. Generally accepted accounting principles require restating
prior financial statements to use the equity method when the Company's equity
interest in a previously majority-owned entity falls to 50% or less. This
occurred in the fourth quarter of fiscal 1999 with respect to the Company's
interest in CBSA. CBSA was previously accounted for as a consolidated
subsidiary when the Company's holdings were over 50%.
Summarized information on assets, liabilities, and results of operations for
CBSA are as follows:
<TABLE>
<CAPTION>
July 31, 1999 July 31, 1998
------------- -------------
ASSETS (unaudited)
<S> <C> <C>
Current assets $ 214,187 $ 89,364
Equipment and other assets 70,809 21,034
Recruiting systems, technology, net 1,381,422 204,750
------------- ------------
Total $ 1,666,418 $ 315,148
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 803,332 $ 158,960
Long-term notes payable to
former owners of CBSA 776,000 -
Stockholders' equity 87,096 156,188
------------- ------------
Total $ 1,666,418 $ 315,148
------------- ------------
------------- ------------
RESULTS OF OPERATIONS
Revenues $ 707,006 $ 2,435
Operating and other expenses 1,264,033 33,747
------------- ------------
Net Loss $ (557,027) $ (31,312)
------------- ------------
------------- ------------
</TABLE>
Under generally accepted accounting principles, the Company is required to
carry its investment in CBSA at cost as adjusted for the equity method, which
is zero at July 31, 1999. CBSA is a publicly traded Company and the Company's
47% interest (8,200,000 shares) in CBSA has a value of approximately
$2,700,000 at July 31, 1999 based on the market price of CBSA publicly traded
stock.
The Company can recognize gains on its investment only upon disposition of
its stock in CBSA (which resulted in gains of $1,012,794 in fiscal 1998 and
$370,113 in fiscal 1999), or as third party investments in CBSA increase the
amount of the Company's proportionate share of net equity of CBSA (which
resulted in a gain of $569,000 in fiscal 1998).
Certain related parties hold options to acquire up to 1,800,000 shares of the
Company's CBSA stock at prices ranging from $0.32 to $0.50 per share.
F-13
<PAGE>
CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
NOTE 11. CONTINGENCIES:
The Company is contingently liable on notes payable of third parties of
approximately $28,000. During fiscal 1999 the Company cancelled 1,500,000
common shares held by a third party in connection with its successful
litigation against the former owners of NCRA, Inc.
NOTE 12. SUBSIDIARY STOCK ISSUANCES
The Company recognizes gains and losses from subsidiary stock issuance. In
fiscal 1998 the Company issued 1,540,000 shares of common stock in its then
subsidiary, CBSA, in a public offering resulting in net proceeds to the
Company of $745,000 and a gain of $569,000. The Company's proportionate
interest in CBSA decreased from 86% to 77%.
F-14
<PAGE>
ARTICLES OF INCORPORATION
OF
CHARTWELL PUBLISHING COMPANY, INC.
That we, the undersigned, having this day associated ourselves
together for the purpose of forming a corporation under and by virtue of the
laws of the State of Nevada, hereby adopt the following Articles of
Incorporation:
ARTICLE I
NAME
The name of this Corporation is Chartwell Publishing Company, Inc.
ARTICLE II
DURATION
The duration of this Corporation is perpetual.
ARTICLE III
PURPOSES
The purpose or purposes for which this Corporation is organized are:
(a) To engage in any lawful act or activity for which the Corporation may be
organized under the General Corporation laws of Nevada, including but not
limited to the business of a public relations, printing and publishing
company.
(b) To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at anytime may appear conducive to or
expedient for the protection or benefit of this Corporation and to do said
acts as fully and to the same extent as natural persons might or could do in
any part of the world as
Page 1
<PAGE>
principles, agents, partners, trustees or otherwise, either alone or in
conjunction with any other person, association or corporation.
ARTICLE IV
STOCK
The Corporation shall have the authority to issue fifty million
(50,000,000) shares of common stock with a par value of $.001 per share, all
stock of the Corporation shall be of the same class common and shall have the
same rights and preferences, fully paid stock of the Corporation shall not be
liable to any further call or assessment.
ARTICLE V
AMENDMENT
These Articles of Incorporation may be amended by the affirmative
vote of a majority of the shares entitled to vote on each such amendment.
ARTICLE VI
SHAREHOLDER RIGHTS
The authorized and treasury stock of this Corporation may be issued
at such time, upon such terms and conditions and for such consideration as
the Board of Directors shall determine. Shareholders shall not have
pre-emptive rights to acquire unissued shares of the stock of this
Corporation and cumulative voting is denies.
ARTICLE VII
CAPITALIZATION
This Corporation will not commence business until at least $1,000.00
has been received by it as consideration for the issuance of shares.
ARTICLE VIII
INITIAL OFFICE AND AGENT
The address of the initial registered office of the Corporation is 1
East 1st Street, Reno, Washoe County, Nevada, and the name of the
Corporation's initial registered agent at such address is Corporation Trust
Company of Nevada.
Page 2
<PAGE>
ARTICLE IX
DIRECTORS
The number of Directors constituting the initial Board of Directors
of this Corporation is three. The names and addresses of persons who are to
serve as Directors until the first annual meeting stockholders, or until
their successors are elected and qualified are:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE X
INCORPORATORS
The name and address of each incorporator is:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE XI
COMMON DIRECTORS - TRANSACTION BETWEEN CORPORATIONS
No contract or other transaction between this Corporation and one or
more of its Directors or any other corporation, firm, association or entity
in which one or more of its Directors are Directors or Officers or are
financially interested, shall be either void or voidable because of such
relation or interest, or because such Director or Directors are present at
the meeting of the Board of Directors, or a committee thereof which
authorizes, approves or ratified such contract or transaction, or because
his or their votes are counted for such purpose if: (a) The fact of such
relationship or interest
Page 3
<PAGE>
is disclosed or known to the Board of Directors or committee which
authorizes, approves, or ratifies this contract or transaction by vote or
consent sufficient for the purpose without counting the votes or consents of
such interested Directors;
(b) The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee
thereof which authorizes, approves or ratifies such contract or transaction.
DATED this 17th day of December 1984. /s/ Janice A. Jones
----------------------
Janice A. Jones
/s/ K.T. Mao
----------------------
K.T. Mao
/s/ George R. Farquhar
----------------------
George R. Farquhar
STATE OF CALIFORNIA )
: ss
COUNTY OF LOS ANGELES )
On this 17th day of December 1984, before me Constance Lee Gibbs, a notary
public in and for said Los Angeles County, State of California, residing
therein, duly commissioned and sworn, personally appeared Janice A. Jones,
K.T. Mao and George R. Farquhar, known to be to be the persons whose names
are subscribed to the foregoing Articles of Incorporation, as incorporators
and who are also named therein as Directors, and each duly 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 at Los Angeles, California the day AS above written.
/s/ Constance Lee Gibbs
-----------------------
OFFICIAL SEAL NOTARY PUBLIC, in and for Los
Constance Lee Gibbs Angeles County, State of California
NOTARY PUBLIC * CALIFORNIA
LOS ANGELES COUNTY
My comm. Expires JUN 26, 1986
Page 4
<PAGE>
Filed in the office of the Secretary of State, Frankie SheDelpapa, Sue Delpapa,
of the state of Nevada
February 24, 1988 No. 8650-84
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CHARTWELL PUBLISHING COMPANY, INC.
The undersigned, Janice A. Jones and K.T. Mao, hereby certify that:
(a) They are the President and Secretary, respectively, of Chartwell
Publishing Company, Inc., a Nevada corporation (the "Corporation").
(b) The original Articles of Incorporation of the Corporation were filed with
the Nevada Secretary of State as of December 27, 1984, and with the County
Clerk of Washoe County as of December 27, 1984.
(c) The Board of Directors of the Corporation has approved the amendments of
the Articles of Incorporation of the Corporation as set forth herein.
(d) The amendments of the Articles of Incorporation as set forth herein have
been duly approved by the affirmative vote of a majority of the shares
entitle to vote on each such amendment.
(e) The Articles of Incorporation are hereby amended in whole to read as
follows:
ARTICLE I [not amended]
NAME
The name of this Corporation is Chartwell Publishing Company, Inc.
[not amended]
Page 1
<PAGE>
ARTICLE II
DURATION
The duration of this Corporation is perpetual.
ARTICLE III [not amended]
PURPOSES
The purpose or purposes for which this Corporation is organized are:
(a) To engage in any lawful act or activity for which the Corporation may be
organized under the General Corporation laws of Nevada, including but not
limited to the business of a public relations, printing and publishing
company.
(b) To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at anytime may appear conducive to or
expedient for the protection or benefit of this Corporation and to do said
acts as fully and to the same extent as natural persons might or could do in
any part of the world as principles, agents, partners, trustees or otherwise,
either alone or in conjunction with any other person, association or
Corporation.
ARTICLE IV [amended]
STOCK
This Corporation is authorized to issue two classes of shares,
designated respectively "Common Stock" and "Preferred
Page 2
<PAGE>
Stock" and referred to herein either as Common Stock or Common Shares and
Preferred Stock or Preferred Shares, respectively. The number of shares of
Common Stock which the Corporation is authorized to issue is fifty million,
with a par value of .001 per share, and the number of Preferred Stock which
the Corporation is authorized to issue is ten million, with a par value of
.001.
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of
any series of Preferred Shares and to determine the designation of any such
series. The Board of Directors is also authorized to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon
any wholly unissued series of Preferred Shares and, within the limits and
restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to the issue
of shares of that series.
ARTICLE V [not amended]
AMENDMENT
These Articles of Incorporation may be amended by the affirmative
vote of a majority of the shares entitled to vote on each such amendment.
[not amended]
Page 3
<PAGE>
ARTICLE VI
SHAREHOLDER RIGHTS
The authorized and treasury stock of this Corporation may be issued
at such time, upon such terms and conditions and for such consideration as
the Board of Directors shall determine. Shareholders shall not have
pre-emptive rights to acquire unissued shares of the stock of this
Corporation and cumulative voting is denies.
ARTICLE VII [not amended]
CAPITALIZATION
This Corporation will not commence business until at least $1,000.00
has been received by it as consideration for the issuance of shares.
ARTICLE VIII [not amended]
INITIAL OFFICE AND AGENT
The address of the initial registered office of the Corporation is 1
East 1st Street, Reno, Washoe County, Nevada, and the name of the
Corporation's initial registered agent at such address is Corporation Trust
Company of Nevada.
ARTICLE IX [not amended]
DIRECTORS
The number of Directors constituting the initial Board of Directors
of this Corporation is three. The names and
Page 4
<PAGE>
addresses of persons who are to serve as Directors until the first annual
meeting stockholders, or until their successors are elected and qualified are:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE X [not amended]
INCORPORATORS
The name and address of each incorporator is:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE XI [not amended]
COMMON DIRECTORS - TRANSACTION BETWEEN CORPORATIONS
No contract or other transaction between this Corporation and one or
more of its Directors or any other corporation, firm, association or entity
in which one or more of its Directors are Directors or Officers or are
financially interested, shall be either void or voidable because of such
relation or interest, or because such Director or Directors are
Page 5
<PAGE>
present at the meeting of the Board of Directors, or a committee thereof
which authorizes, approves or ratified such contract or transaction, or
because his or their votes are counted for such purpose if:
(a) The fact of such relationship or interest is disclosed or known to the
Board of Directors or committee which authorizes, approves, or ratifies this
contract or transaction by vote or consent sufficient for the purpose without
counting the votes or consents of such interested Directors;
(b) The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee
thereof, which authorizes, approves or ratifies such contract or transaction.
ARTICLE XII [amended]
LIABILITY
The private property of the Stockholders, Directors, and Officers
shall not be subject to the payment of corporate debts to any extent
whatsoever.
No Director and no 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 provision does not eliminate or limit
in any way the liability of a Director or Officer for:
Page 6
<PAGE>
(a) Acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
(b) The payment of dividends in violation of Nevada Revised Statutes (N.R.S.)
78.300.
IN WITNESS WHEREOF, the undersigned, being the President and
Secretary, respectively, for the purpose of amending the Articles of
Incorporation of the Corporation pursuant to the General Corporation Law of
the State of Nevada, do make and file this Certificate of Amendment of
Articles of Incorporation, hereby declaring and certifying that the facts
herein stated are true, and accordingly have set our hands hereunto this 4TH
day of February 1988.
/s/ Janice A. Jones
-------------------------
Janice A. Jones, President
K.T. Mao
-------------------------
K.T. Mao, Secretary
Page 7
<PAGE>
STATE OF CALIFORNIA )
): ss
COUNTY OF LOS ANGELES )
On this 4th day of February 1988, before me the undersigned, a notary public
in and for said Los Angeles County, State of California, personally appeared
Janice A. Jones and K.T. Mao, known to be to be the persons whose names are
subscribed to the foregoing Certificate of Amendment of Articles of
Incorporation, and each duly acknowledged to me that he/she 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 at the day above written.
/s/ Mattie Smith
-------------------------
OFFICIAL SEAL NOTARY PUBLIC, in and for Los
MATTIE SMITH Angeles County, State of California
Notary Public * California
Principal Office In
Los Angeles County
My comm. Exp. DEC. 22, 1989
Page 8
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CHARTWELL INTERNATIONAL, INC.
The undersigned, Janice A. Jones-President and Alice M.
Gluckman-Secretary of Chartwell International, Inc., a Nevada corporation,
hereby certify that pursuant to the provisions of N.R.S. 78.390 the Board of
Directors and the stockholders of the Corporation have adopted resolutions
amending the Articles of Incorporation as follows:
ARTICLE I [not amended]
NAME
The name of this Corporation is Chartwell Publishing Company, Inc.
ARTICLE II [not amended]
DURATION
The duration of this Corporation is perpetual.
ARTICLE III [not amended]
PURPOSES
The purpose or purposes for which this Corporation is organized are:
(a) To engage in any lawful act or activity for which the Corporation may be
organized under the General Corporation laws of Nevada, including but not
limited to the business of a public relations, printing and publishing
company.
(b) To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at anytime may appear conducive to or
expedient for the protection or benefit of this Corporation and to do said
acts as fully and to the same extent as natural persons might or could do in
any part of the world as principles, agents, partners, trustees or otherwise,
either alone or in conjunction with any other person, association or
Corporation.
Page 1
<PAGE>
ARTICLE IV [amended]
STOCK
This Corporation is authorized to issue two classes of shares,
designated respectively "Common Stock" and "Preferred Stock" and referred to
herein either as Common Stock or Common Shares and Preferred Stock or
Preferred Shares, respectively. The number of shares of Common Stock which
the Corporation is authorized to issue is sixty million (60,000,000), with a
par value of $.001 per share, and the number of shares of Preferred Stock
which the Corporation is authorized to issue is ten million (10,000,000),
with a par value of $.001.
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of
any series of Preferred Shares and to determine the designation of any such
series. The Board of Directors is also authorized to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon
any wholly unissued series of Preferred Shares and, within the limits and
restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to the
issuance of shares of that series.
ARTICLE V [not amended]
AMENDMENT
These Articles of Incorporation may be amended by the affirmative
vote of a majority of the shares entitled to vote on each such amendment.
ARTICLE VI [not amended]
SHAREHOLDER RIGHTS
The authorized and treasury stock of this Corporation may be issued
at such time, upon such terms and conditions and for such consideration as
the Board of Directors shall determine. Shareholders shall not have
pre-emptive rights to acquire unissued shares of the stock of this
Corporation and cumulative voting is denies.
ARTICLE VII [not amended]
CAPITALIZATION
Page 2
<PAGE>
This Corporation will not commence business until at least $1,000.00
has been received by it as consideration for the issuance of shares.
ARTICLE VIII [not amended]
INITIAL OFFICE AND AGENT
The address of the initial registered office of the Corporation is 1
East 1st Street, Reno, Washoe County, Nevada, and the name of the
Corporation's initial registered agent at such address is Corporation Trust
Company of Nevada.
ARTICLE IX [not amended]
DIRECTORS
The number of Directors constituting the initial Board of Directors
of this Corporation is three. The names and addresses of persons who are to
serve as Directors until the first annual meeting stockholders, or until
their successors are elected and qualified are:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE X [not amended]
INCORPORATORS
The name and address of each incorporator is:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
Page 3
<PAGE>
ARTICLE XI [not amended]
COMMON DIRECTORS - TRANSACTION BETWEEN CORPORATIONS
No contract or other transaction between this Corporation and one or
more of its Directors or any other corporation, firm, association or entity
in which one or more of its Directors are Directors or Officers or are
financially interested, shall be either void or voidable because of such
relation or interest, or because such Director or Directors are present at
the meeting of the Board of Directors, or a committee thereof which
authorizes, approves or ratified such contract or transaction, or because his
or their votes are counted for such purpose if:
(a) The fact of such relationship or interest is disclosed or known to the
Board of Directors or committee which authorizes, approves, or ratifies this
contract or transaction by vote or consent sufficient for the purpose without
counting the votes or consents of such interested Directors;
(b) The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee
thereof, which authorizes, approves or ratifies such contract or transaction.
ARTICLE XII [amended]
LIABILITY
The private property of the Stockholders, Directors, and Officers
shall not be subject to the payment of corporate debts to any extent
whatsoever.
No Director and no 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 provision does not eliminate or limit in
any way the liability of a Director or Officer for:
(a) Acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
(b) The payment of dividends in violation of Nevada Revised Statutes (N.R.S.)
78.300.
This Certificate of Amendment of Articles of Incorporation was
adopted by stockholders holding shares entitling them to exercise 54% of the
voting power.
Page 4
<PAGE>
IN WITNESS WHEREOF, we have executed this Certificate as of the 23rd
day of May 1996.
/s/ Janice A. Jones
------------------------------
Janice A. Jones, President
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman, Secretary
Subscribe and sworn to before me this 23rd day of May 1996.
/s/ Kris A. Jeters
------------------------------
KRIS A. JETERS NOTARY PUBLIC, in and for Los
Commission #1097937 Angeles County, State of California
Notary Public * California
Los Angeles County
My comm. Expires MAY 17, 2000
Page 5
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CHARTWELL INTERNATIONAL, INC.
We the undersigned, Janice A. Jones-President and Alice M.
Gluckman-Secretary of Chartwell International, Inc. do hereby certify:
That the Board of Directors of said Corporation at a meeting duly
convened, held on the 3rd day of June 1996, adopted a resolution to amend the
Articles of Incorporation as follows:
ARTICLE I [not amended]
NAME
The name of this Corporation is Chartwell Publishing Company, Inc.
ARTICLE II [not amended]
DURATION
The duration of this Corporation is perpetual.
ARTICLE III [not amended]
PURPOSES
The purpose or purposes for which this Corporation is organized are:
(a) To engage in any lawful act or activity for which the Corporation may be
organized under the General Corporation laws of Nevada, including but not
limited to the business of a public relations, printing and publishing
company.
(b) To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at anytime may appear conducive to or
expedient for the protection or benefit of this Corporation and to do said
acts as fully and to the same extent as natural persons might or could do in
any part of the world as principles, agents, partners, trustees or otherwise,
either alone or in conjunction with any other person, association or
Corporation.
Page 1
<PAGE>
ARTICLE IV [amended]
STOCK
This Corporation is authorized to issue two classes of shares,
designated respectively "Common Stock" and "Preferred Stock" and referred to
herein either as Common Stock or Common Shares and Preferred Stock or Preferred
Shares, respectively. The number of shares of Common Stock which the Corporation
is authorized to issue is ninety million (90,000,000), with a par value of .001
per share, and the number of Preferred Stock which the Corporation is authorized
to issue is ten million (10,000,000), which at the present time consists of:
Series Class A Convertible Preferred Stock, two million shares (2,000,000) with
a par value of $.001; Series Class B Convertible Preferred Stock, one hundred
fifty thousand shares (150,000) with a par value of $.50 per share; and Series
Class C Convertible Preferred Stock, three hundred thousand shares (300,000)
with a par value of $10.00 per share.
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of
any series of Preferred Shares and to determine the designation of any such
series. The Board of Directors is also authorized to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon
any wholly unissued series of Preferred Shares and, within the limits and
restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to the issue
of shares of that series.
The terms and preferences of Series Class B Convertible Preferred
Stock $.50 par value is amended as follows:
(a) The stated par value of Series Class B Convertible Preferred Stock will
be $10.00 stated par value per share;
(b) To create a dividend rate, non-cumulative, of 0% in year one, 2% at end
of year two of date of issue, 3% at end of year three, 4% at end of year
four,5% at end of year five and 6% at end of year six and each year
thereafter as long as said shares are outstanding;
(c) That said Preferred Stock is callable by the Corporation at 110% of par
value with 15 days written notice to the holders of the Preferred Stock. Said
holders may in turn give the Corporation its notice to convert said shares
into Common Stock of the Corporation at the stated conversion rate of 20
Common Shares for each Preferred Class B Share; and
Page 2
<PAGE>
(d) That the conversion rights extend for the entire period the Preferred
Stock is outstanding.
ARTICLE V [not amended]
AMENDMENT
These Articles of Incorporation may be amended by the affirmative
vote of a majority of the shares entitled to vote on each such amendment.
ARTICLE VI [not amended]
SHAREHOLDER RIGHTS
The authorized and treasury stock of this Corporation may be issued
at such time, upon such terms and conditions and for such consideration as
the Board of Directors shall determine. Shareholders shall not have
pre-emptive rights to acquire unissued shares of the stock of this
Corporation and cumulative voting is denies.
ARTICLE VII [not amended]
CAPITALIZATION
This Corporation will not commence business until at least $1,000.00
has been received by it as consideration for the issuance of shares.
ARTICLE VIII [not amended]
INITIAL OFFICE AND AGENT
The address of the initial registered office of the Corporation is 1
East 1st Street, Reno, Washoe County, Nevada, and the name of the
Corporation's initial registered agent at such address is Corporation Trust
Company of Nevada.
ARTICLE IX [not amended]
DIRECTORS
The number of Directors constituting the initial Board of Directors
of this Corporation is three. The names and addresses of persons who are to
serve as Directors until the first annual meeting stockholders, or until
their successors are elected and qualified are:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
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<PAGE>
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE X [not amended]
INCORPORATORS
The name and address of each incorporator is:
Janice A. Jones 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
K.T. Mao 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
George R. Farquhar 900 E. Wilshire Blvd., Suite 714
Los Angeles, California 90017
ARTICLE XI [not amended]
COMMON DIRECTORS - TRANSACTION BETWEEN CORPORATIONS
No contract or other transaction between this Corporation and one or
more of its Directors or any other corporation, firm, association or entity
in which one or more of its Directors are Directors or Officers or are
financially interested, shall be either void or voidable because of such
relation or interest, or because such Director or Directors are present at
the meeting of the Board of Directors, or a committee thereof which
authorizes, approves or ratified such contract or transaction, or because his
or their votes are counted for such purpose if:
(a) The fact of such relationship or interest is disclosed or known to the
Board of Directors or committee which authorizes, approves, or ratifies this
contract or transaction by vote or consent sufficient for the purpose without
counting the votes or consents of such interested Directors;
(b) The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee
thereof, which authorizes, approves or ratifies such contract or transaction.
Page 4
<PAGE>
ARTICLE XII [not amended]
LIABILITY
The private property of the Stockholders, Directors, and Officers
shall not be subject to the payment of corporate debts to any extent
whatsoever.
No Director and no 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 provision does not eliminate or limit
in any way the liability of a Director or Officer for:
(a) Acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
(b) The payment of dividends in violation of Nevada Revised Statutes (N.R.S.)
78.300.
The number of shares of the Corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 31,687,377; that the
said changes and amendment have been consented to approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitle to vote thereon.
/s/ Janice A. Jones 3/26/97
--------------------- -------
Janice A. Jones, President Date
State of Colorado
County of Arapahoe
On March 26, 1997, personally appeared before me, a Notary Public,
Janice Jones, who acknowledged that they executed the above instrument.
My Commission Expires 8-30-99 /s/ Kramer
--------------------
Signature of Notary
(Notary Stamp or Seal)
Page 5
<PAGE>
Filed in the office of the Secretary of CHARTWELL INTERNATIONAL, INC
State, Dean Heller, of the 05/08/1997 1275.00
State of Nevada MAY 08, 1997 No. 8650-84 Rec'd by Phyllis Furlong ($1,375)
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF CHARTWELL INTERNATIONAL, INC.
We the undersigned, Janice A. Jones, President and Alice M.
Gluckman, Secretary of Chartwell International, Inc. do hereby certify:
That the Board of Directors of said Corporation at a meeting duly
convened, held on the 3rd day of June 1996, adopted a resolution to amend the
original articles as follows:
Article IV hereby amended to read as follows:
This corporation is authorized to issue two classes of shares,
designated respectively "Common Stock" and "Preferred Stock" and referred to
herein either as Common Stock or Common Shares and Preferred Stock or
Preferred Shares, respectively. The number of shares of Common Stock which
the corporation is authorized to issue is ninety million (90,000,000), with a
par value of .001 per share, and the number of shares of Preferred Stock
which the corporation is authorized to issue is ten million (10,000,000),
which at the present time consists of: Series Class A Convertible Preferred
Stock, two million shares (2,000,000) with a par value of .001 per share.
Series Class B Convertible Preferred Stock, one hundred fifty thousand shares
(150,000) with a par value of $.50 per share and Series Class C Convertible
Preferred Stock, three hundred thousand shares (300,000) with a par value of
$10.000 per share.
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of
any series of Preferred Shares and to determine the designation of any such
series. The Board of Directors is also authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon
any wholly unissued series of Preferred Shares and, within the limits and
restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to the issue
of shares of that series.
The terms and preferences of Series Class B Convertible Preferred
Stock $.50 par value is amended as follows:
(1) The stated par value of Series Class B Convertible Preferred
Stock will be $10.00 stated par value per share.
(2) To create a dividend rate, non-cumulative, of 0% in year one,
2% at end of year two of date of issue, 3% at end of year
three, 4% at end of year 4, 5% at end of year five and 6 % at
the end of year six and each year thereafter as long as said
shares are outstanding.
(3) That said Preferred Stock is callable by the Corporation at
110% of par value with 15 days written notice to the holders
of the preferred stock; said holders may in turn give the
Corporation its notice to convert said shares into the common
stock of the corporation at the stated conversion rate of 20
common shares for each Preferred Class B share.
<PAGE>
Page 2
June 3, 1996
Certificate of Amendment
of the Articles of Incorporation
Chartwell International, Inc.
(3) That the conversion rights extend for the entire period the
preferred stock is outstanding.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 31,687,377; 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.
/s/ Janice A. Jones 3/26/97
--------------------------
President
--------------------------
Secretary
State of Colorado
County of Arapahoe
On March 26, 1997, personally appeared before me, a
Notary Public, Janice Jones, who
acknowledged that they executed the above instrument.
My Commission Expires 8-30-99 /s/ Kramer
--------------------------
Signature of Notary
(Notary Stamp or Seal)
<PAGE>
Secretary of State seal
State of Nevada
Secretary of State
I hereby certify that this is a
true and complete copy of
the document as filed in this
office.
May 09, 97
/s/ Dean Heller
Dean Heller
Secretary of State
By /s/ D. Zarnier
---------------
<PAGE>
Filed in the office of the Secretary of State of Nevada, Dean Heller,
Secretary of State
JUN. 05, 1996 No. 8650-84
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
CHARTWELL INTERNATIONAL, INC.
The undersigned, Janice S. Jones, President and Alice M. Gluckman, Secretary
of Chartwell International, Inc., a Nevada corporation, hereby certify that
pursuant to the provisions of N.R.S. 78.390 the Board of Directors and the
stockholders of this corporation have adopted resolutions amending Article IV
of the Articles of Incorporation to read as follows:
ARTICLE IV
This corporation is authorized to issue two classes of shares,
designated respectively "Common Stock" and "Preferred Stock" and
referred to herein either as Common Stock or Common Shares and
Preferred Stock or Preferred Shares, respectively. The number of shares
of Common Stock which the corporation is authorized to issue is sixty
million (60,000,000), with a par value of $.001 per share, and the
number of shares of Preferred Stock which the corporation is authorized
to issue is ten million (10,000,000), with a par value of $.001 per
share.
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of
shares of any series of Preferred Shares and to determine the
designation of any such series. The Board of Directors is also
authorized to determine or alter the rights, preferences, privileges
and restrictions granted to or imposed upon any wholly unissued series
of Preferred Shares and, within the limits and restrictions stated in
any resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to the
issuance of shares of that series.
This Amendment to the Articles of Incorporation was adopted by stockholders
holding shares entitling them to exercise 54% of the voting power.
IN WITNESS WHEREOF we have executed this certificate as of the 23th day of
May, 1996.
/s/ Janice A. Jones /s/ Alice M. Gluckman
- -------------------------- ----------------------------
Janice A. Jones, President Alice M. Gluckman, Secretary
Subscribed and sworn before Subscribed and sworn before
Me this 23 day of May 1996 Me this 23 day of May 1996
Personally appeared Janice Jones /s/ Kris A. Jeters
/s/ Shawn Notary seal - Kris A. Jeters -
Notary seal Commission # 1097907
Notary Public - California - Los
Angeles County
My comm. Expires May 17, 2000
<PAGE>
BYLAWS
OF
CHARTWELL PUBLISHING COMPANY, INC.
TABLE OF CONTENTS
ARTICLE I Office
ARTICLE II Shareholders' Meeting
Section 2.1 Annual Meetings
Section 2.2 Special Meetings
Section 2.3 Notice of Shareholders' Meeting
Section 2.4 Waiver of Notice
Section 2.5 Place of Meeting
Section 2.6 Closing of Transfer Books or Fixing Record Date
Section 2.7 Quorum of Shareholders
Section 2.8 Voting Lists
Section 2.9 Voting
Section 2.10 Proxies
Section 2.11 Informal Action by Shareholders
ARTICLE III Board of Directors
Section 3.1 General Powers
Section 3.2 Number, Tenure and Qualifications
Section 3.3 Election of Board of Directors
Section 3.4 Regular Meetings
Section 3.5 Special Meetings
Section 3.6 Waiver of Notice
Section 3.7 Quorum
Section 3.8 Manner of Acting
Section 3.9 Powers of Directors
Section 3.10 Vacancies
Section 3.11 Removals
Section 3.12 Resignations
Section 3.13 Presumption of Assent
Section 3.14 Compensation
Section 3.15 Emergency Power
Section 3.16 Chairman
ARTICLE IV Officers
Section 4.1 Number
Section 4.2 Election and Term of Office
Section 4.3 Resignation
Section 4.4 Removal
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<PAGE>
Section 4.5 Vacancies
ARTICLE IV Officers
Section 4.6 President
Section 4.7 Vice President
Section 4.8 Secretary
Section 4.9 Treasurer
Section 4.10 General Manager
Section 4.11 Other Officers
Section 4.12 Salaries
Section 4.13 Surety Bonds
ARTICLE V Committees
Section 5.1 Executive Committee
Section 5.2 Other Committees
ARTICLE VI Contracts, Loans, Deposits and Checks
Section 6.1 Contracts
Section 6.2 Loans
Section 6.3 Deposits
Section 6.4 Checks and Drafts
Section 6.5 Bonds and Debentures
ARTICLE VII Capital Stock
Section 7.1 Certificate of Share
Section 7.2 Transfer of Shares
Section 7.3 Transfer Agent and Registrar
Section 7.4 Lost or Destroyed Certificates
Section 7.5 Consideration for Shares
Section 7.6 Registered Shareholders
ARTICLE VIII Indemnification
Section 8.1 Indemnification
Section 8.2 Other Indemnification
Section 8.3 Insurance
Section 8.4 Settlement by Corporation
ARTICLE IX Amendments
ARTICLE X Fiscal Year
ARTICLE XI Dividends
ARTICLE XII Corporate Seal
Page 2
<PAGE>
BYLAWS
OF
CHARTWELL PUBLISHING COMPANY, INC.
ARTICLE I
OFFICE
SECTION 1.1 OFFICE. The principal office of the Corporation in the State of
Nevada shall be located at 1 East 1st Street, Reno, Washoe County, Nevada.
The Corporation may maintain such other offices, within or without the State
of Nevada, as the Board of Directors may from time to time designate. The
Board of Directors may change the location of the principal office.
ARTICLE II
SHAREHOLDERS' MEETING
SECTION 2.1 ANNUAL MEETINGS. The annual meeting of the shareholders of the
Corporation shall be held at such place within or without the State of Nevada
as shall be set forth in compliance with these Bylaws. The meeting shall be
held on the first Monday of the month of April of each year beginning with
the year 1986 at 1:30pm. If such day is a legal holiday, the meeting shall be
on the next business day. This meeting shall be for the election of Directors
and for the transaction of such other business as may properly come before it.
In the event that such annual meeting is omitted by oversight r
otherwise on the date herein provided for, the Directors shall cause a
meeting n lieu thereof to be held as soon thereafter as conveniently may be,
and any business transacted or elections held at such meeting shall be as
valid as if transacted or held at the annual meeting. If the election of
Directors shall not be held on the date designated herein for any annual
meeting of shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of
shareholders as soon thereafter
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<PAGE>
as may conveniently be called. Such subsequent meetings shall be called in
the same manner as is provided for the annual meeting of shareholders.
SECTION 2.2 SPECIAL MEETINGS. Special meetings of shareholders, other than
those regulated by statute, may be called at any time by the President, or by
a majority of the Directors, and must be called by the President upon written
request of the holders of not less than10% of the issued and outstanding
shares entitled to vote at such special meeting.
SECTION 2.3 NOTICE OF SHAREHOLDERS' MEETING. The President, Vice President or
Secretary shall give written notice stating the place, day and hour of the
meeting, and in the case of a special meeting the purpose or purposes for
which the meeting is called, which shall be delivered not less than ten nor
more than fifty days before the day of the meeting, either personally or by
mail to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears
on the books of the Corporation, with postage thereon prepaid.
Any meeting of which all shareholders shall at any time waive or
have waived notice in writing shall be a legal meeting for the transaction of
business notwithstanding that notice has not been given as hereinbefore
provided.
SECTION 2.4 WAIVER OF NOTICE. Whenever any notice whatever is required to be
given by these Bylaws, or the Articles of Incorporation, or by any of the
Corporation Laws of the State of Nevada, a shareholder may waive the notice
of meeting by attendance, either in person or by proxy, at the meeting, or by
so stating in writing, either before or after such meeting. Attendance at a
meeting for the express purpose of objecting that the meeting was not
lawfully called or convened shall not, however, constitute a waiver of notice.
SECTION 2.5 PLACE OF MEETING. The Board of Directors may designate any place,
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<PAGE>
either within or without the State of Nevada, as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors.
If no designation is, or if a special meeting were otherwise called, the
place of meeting shall be the registered office of the Corporation.
SECTION 2.6 CLOSING OF TRANSFER BOOKS OR FIXING RECORD DATE. For the purpose
of determining shareholders entitled to notice or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors of the Corporation may
provide that the stock transfer books shall be closed for a period not to
exceed in any case 50 days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least 10 days
immediately preceding the date determined to be the date of record. In lieu
of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than 50 days and in case of a meeting of
shareholders not less than 10 days prior to the date o which the particular
action requiring such determination of shareholders is to be taken. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice or to vote at a meeting of
shareholders or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be deemed the date of record for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Page 5
<PAGE>
SECTION 2.7 QUORUM OF SHAREHOLDERS. Except as herein provided and as
otherwise provided by law, at any meeting of shareholders a majority in
interest of all the Type A shares issued and outstanding represented by
shareholders of record in person or by proxy shall constitute a quorum, but a
less interest may adjourn any meeting and the meeting may be held as
adjourned without further notice; provided, however, that Directors shall not
be elected at the meeting so adjourned. When a quorum is present at any
meeting, a majority in interest of the shares represented thereat shall
decide any question brought before such meeting, unless the question is one
upon which the express provision of law or of the Articles of Incorporation
or of these Bylaws a larger or different vote is required, in which case such
express provision shall govern and control the decision of such question.
SECTION 2.8 VOTING LISTS. The Officer of agent having charge of the stock
transfer books for shares of the Corporation shall make a complete list of
the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any
shareholder, for any purpose germane to the meeting, during the whole time of
the meeting. The original stock transfer books shall be prima-facie evidence
as to who are the shareholders entitled to examine such list or transfer
books or to vote at any meeting of shareholders.
SECTION 2.9 VOTING. A holder of an outstanding share entitled to vote at a
meeting may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Incorporation, every shareholder
shall be entitled to one vote for each share standing in his name on the
record of shareholders. Except as herein or in the Articles of Incorporation
otherwise provided, all corporate action shall be determined by a majority of
the votes cast at a meeting of shareholders by the
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<PAGE>
holders of shares entitled to vote thereon.
SECTION 2.10 PROXIES. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy.
SECTION 2.11 INFORMAL ACTION BY SHAREHOLDERS. Any action required to be taken
at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 GENERAL POWERS. The business and affairs of the Corporation shall
be managed by its Board of Directors. The Board of Directors may adopt such
rules and regulations for the conduct of their meetings and the management of
the Corporation, as they deem proper.
SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of directors for
the Board of Directors of the Corporation shall be not less than three nor
more than seven. Each Director shall hold office until the next annual
meeting of shareholders and until his successor shall have been elected and
qualified. Directors need not be residents of the State of Nevada or
shareholders of the Corporation.
SECTION 3.3 ELECTION OF BOARD OF DIRECTORS. The Board of Directors shall be
chosen by ballot at the annual meeting of shareholders or at any meeting held
in place thereof as provided by law.
SECTION 3.4 REGULAR MEETINGS. A regular meeting of the Board of Directors
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<PAGE>
shall be held without other notice than by this Bylaw, immediately following
and at the same place as the annual meeting of the shareholders. The Board of
Directors may provide by resolution the time and place for the holding of
additional regular meetings without other notice than this resolution.
SECTION 3.5 SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by order of the Chairman of the Board, the President or by
one-third of the Directors. The Secretary shall give notice of the time,
place and purpose or purposes of each special meeting by mailing the same at
least two days before the meeting or by telephoning or telegraphing the same
at least one day before the meeting to each Director.
SECTION 3.6 WAIVER OF NOTICE. Whenever any notice whatever is required to be
given by these Bylaws, or the Articles of Incorporation of the Corporation,
or by any of the Corporation Laws of the State of Nevada, a Director may
waive the notice of meeting by attendance in person at the meeting, or by so
stating in writing, either before or after such meeting. Attendance at a
meeting for the express purpose of objecting that the meeting was not
lawfully called or convened shall not, however, constitute a waiver of notice.
SECTION 3.7 QUORUM. A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business, but less than a quorum
may adjourn any meeting from time to time until a quorum shall be present,
whereupon the meeting may be held, as adjourned, without further notice. At
any meeting at which every Director shall be present, even though without any
notice, any business may be transacted.
SECTION 3.8 MANNER OF ACTING. At all meetings of the Board of Directors, each
Director shall have one vote. The act of a majority present at a meeting
shall be the act of the Board of Directors, provided a quorum is present. Any
action required to
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<PAGE>
be taken or which may be taken at a meeting of the Directors may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all the Directors. The Directors may conduct a meeting by
means of a conference telephone or any similar communication equipment by
which all persons participating in the meeting can hear each other.
SECTION 3.9 POWERS OF DIRECTORS. The Board of Directors shall have the
responsibility for the entire management of the business of the Corporation.
In the management and control of the property, business and affairs of the
Corporation the Board of Directors is hereby vested with all of the powers
possessed by the Corporation itself so far as this delegation of authority is
not inconsistent with the laws of the State of Nevada and with the Articles
of Incorporation or with these Bylaws. The Board of Directors shall have the
power to determine what constitutes net earnings, profits and surplus,
respectively, and what amounts shall be reserved for working capital and for
any other purpose and what amounts shall be declared as dividends, and such
determination by the Board of Directors shall be final and conclusive.
SECTION 3.10 VACANCIES. A vacancy in the Board of Directors shall be deemed
to exist in case of death, resignation or removal of any Director, or if the
authorized number of Directors be increased, or if the shareholders fail at
any meeting of shareholders at which any Director is to be elected, to elect
the full authorized number to be elected at that meeting.
Any vacancy occurring in the Board of Directors may be filled by an
affirmative vote of the majority of the remaining Directors though less than
a quorum of the Board of Directors, unless otherwise provided by law or the
Articles of Incorporation. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. And directorship
to be filled by reason of an increase in the number of Directors shall be
filled by election at the annual meeting or at a special
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<PAGE>
meeting of shareholders called for that purpose.
SECTION 3.11 REMOVALS. Directors may be removed at any time, at a meeting
called expressly for that purpose by a vote of the shareholders holding a
majority of the shares issued and outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor
is duly elected and qualified, except that any directorship to be filled by
reason of removal by the shareholders may be filled by election, by the
shareholders, at the meeting at which the Director is removed. No reduction
of the authorized number of Directors shall have the effect of removing any
Director prior to the expiration of his term of office.
SECTION 3.12 RESIGNATIONS. A Director may resign at any time by delivering
written notification thereof to the President or Secretary of the
Corporation. Such resignation shall become effective upon its acceptance by
the Board of Directors; provided, however, that if the Board of Directors has
not acted thereon within ten days from the date of its delivery, the
resignation shall upon the tenth day be deemed accepted.
SECTION 3.13 PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Director who voted in favor of such action.
SECTION 3.14 COMPENSATION. By resolution of the Board of Directors, the
Directors shall be paid their expenses, if any, of attendance at each meeting
of the Board of
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Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 3.15 EMERGENCY POWER. When, due to a national disaster or death, a
majority of the Directors are incapacitated or otherwise unable to attend the
meetings and function as Directors, the remaining members of the Board of
Directors shall have all the powers necessary to function as a complete Board
and, for the purpose of doing business and filling vacancies, shall
constitute a quorum until such time as all Directors can attend or vacancies
can be filed pursuant to these Bylaws.
SECTION 3.16 CHAIRMAN. The Board of Directors may elect from its own number a
Chairman of the Board, who shall preside at all meetings of the Board of
Directors, and shall perform such other duties as may be prescribe from time
to time by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 4.1 NUMBER. The Officers of the Corporation shall be a President, one
or more Vice Presidents, a Secretary and a Treasure, each of whom shall be
elected by a majority of the Board of Directors. Such other Officers and
assistant Officers as may be deemed necessary may be elected or appointed by
the Board of Directors. In its discretion, the Board of Directors may leave
unfilled for any such period as it may determine any office except those of
President and Secretary. Any two or more offices may be held by the same
person, except the offices of President and Secretary. Officers may or may
not be Directors or shareholders of the Corporation.
SECTION 4.2 ELECTION AND TERM OF OFFICE. The Officers of the Corporation are
to be elected by the Board of Directors
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at the first meeting of the Board of Directors held after each annual meeting
of the shareholders. If the election of Officers shall not be held at such
meeting, such election shall be held as soon thereafter as convenient. Each
Officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he resigns or shall have
been removed in the manner hereinafter provided.
SECTION 4.3 RESIGNATION. Any Officer may resign at any time by delivering a
written resignation either to the President or to the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
SECTION 4.4 REMOVAL. Any Officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
Officer or agent shall not of itself create contract rights. Any such removal
shall require a majority vote of the Board of Directors, exclusive of the
Officer in question if he is also a Director.
SECTION 4.5 VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, or if a new office shall be created,
may be filled by the Board of Directors for the unexpired portion of the term.
SECTION 4.6 PRESIDENT. The President shall be the Chief Executive and
Administrative Officer of the Corporation. He shall preside at all meetings
of the shareholders and, in the absence of the Chairman of the Board, at
meetings of the Board of Directors. He shall exercise such duties as
customarily pertain to the office of President and shall have general and
active supervision over the property, business and affairs of the Corporation
an over its several Officers. He may appoint Officers, agents or employees
other than those appointed by the Board of Directors. He may sign, execute
and deliver in the name of the Corporation, powers of attorney, certificates
of stock, contracts, bonds, deeds, mortgages and other obligations and shall
perform
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such other duties as nay be prescribed from time to time by the Board of
Directors or by the Bylaws.
SECTION 4.7 VICE PRESIDENT. The Vice President shall have such powers and
perform such duties as may be assigned to him by the Board of Directors or
the President. In the absence or disability of the President, the Vice
President designated by the Board or the President shall perform the duties
and exercise the powers of the President. In the event there is more than one
Vice President and the Board of Directors has not designated which Vice
President is to act as President, then the Vice President who was elected
first shall act as President. A Vice President may sign and execute contracts
and other obligations pertaining to the regular course of his duties.
SECTION 4.8 SECRETARY. The Secretary shall keep the minutes of all meetings
of the shareholders and of the Board of Directors and to the extent ordered
by the Board of Directors or the President, the minutes of meetings of all
committees. He shall cause notice to be given of the meetings of
shareholders, of the Board of Directors and of any committee appointed by the
Board. He shall have custody of the corporate seal and general charge of the
records, documents and papers of the Corporation not pertaining to the
performance of the duties vested in other Officers, which shall at all
reasonable times be open to the examination of any Director. He may sign or
execute contracts with the President or Vice President thereunto authorized
in the name of the Corporation and affix the seal of the Corporation thereto.
He shall perform such other duties as may be prescribed from time to time by
the Board o Directors or by the Bylaws. He shall be sworn to the faithful
discharge of his duties. Assistant Secretaries shall assist the Secretary and
shall keep and record such minutes of meetings as shall be directed by the
Board of Directors.
SECTION 4.9 TREASURER. The Treasurer shall have general custody of the
collection and disbursement of funds of the Corporation for collection
checks, notes, and other
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obligations, and shall deposit the same to the credit of the Corporation in
such bank or banks or depositories as the Board of Directors may designate.
He may sign, with the President, or such other persons as may be designated
for the purpose by the Board of Directors, all bills of exchange or
promissory notes of the Corporation. He shall enter or cause to be entered
regularly in the books of the Corporation full and accurate accounts of all
monies received and paid by him on account of the Corporation; shall at all
reasonable times exhibit his books and accounts to any Director of the
Corporation upon application at the office of the Corporation during business
hours; and, whenever required by the Board of Directors or the President,
shall render a statement of his accounts. He shall perform such other duties
as may be prescribed from time to time by the Board of Directors or by the
Bylaws.
SECTION 4.10 GENERAL MANAGER. The Board of Directors may employ and appoint a
General Manger who may, or may not, be on of the Officers or Directors of the
Corporation. If employed by the Board of Directors he shall be the Chief
Operating Officer of the Corporation and, subject to the directions of the
Board of Directors, shall have general charge of the business operations of
the Corporation and general supervision over its employees and agents. He
shall have the exclusive management of the business of the Corporation and of
all of its dealings, but at all times subject to the control of the Board of
Directors. Subject to the approval of the Board of Directors or the executive
committee, he shall employ all employees of the Corporation, or delegate such
employment to subordinate Officers, or such division Officers, or such
division chiefs, and shall have authority to discharge any person so
employed. He shall make a quarterly report to the President and Directors, or
more often if required to do so, setting forth the result of the operations
under his charge, together with suggestions looking to the improvement and
betterment of the condition of the Corporation, and to perform such other
duties as the Board of Directors shall require.
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<PAGE>
SECTION 4.11 OTHER OFFICERS. Other Officers shall perform such duties and
have such powers a may be assigned to them by the Board of Directors.
SECTION 4.12 SALARIES. The salaries or other compensation of the Officers of
the Corporation shall be fixed from time to time by the Board of Directors
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any
subordinate Officers or agents. No Officer shall be prevented from receiving
any such salary or compensation by reason of the fact that he is also a
Director of the Corporation.
SECTION 4.13 SURETY BONDS. In case the Board of Directors shall so require,
any Officer or agent of the Corporation shall execute to the Corporation a
bond in such sums and with sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all
property, monies or securities of the Corporation which may come into his
hands.
ARTICLE V
COMMITTEES
SECTION 5.1 EXECUTIVE COMMITTEE. The Board of Directors may appoint from
among its members an Executive Committee of not less than two nor more than
seven members, one of whom shall be the President, and shall designate one or
more of its members as alternates to serve as a member or members of the
Executive Committee in the absence of a regular member or members. The Board
of Directors reserves to itself alone the power to declare dividends, issue
stock, recommend to shareholders any action requiring their approval, change
the membership of any committee at any time, fill vacancies therein, and
discharge any committee either with or without cause at any time. Subject to
the foregoing limitations, the Executive Committee shall possess and exercise
all other powers of the Board of Directors during the intervals between
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<PAGE>
meetings.
SECTION 5.2 OTHER COMMITTEES. The Board of Directors may also appoint from
among its own members such other committees as the Board may determine, which
shall in each case consist of not less than two Directors, and which shall
have such powers and duties as shall from time to time be prescribed by the
Board. The President shall be a member ex officio of each committee appointed
by the Board of Directors. A majority of the members of any committee may fix
its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, DEPOSITS AND CHECKS
SECTION 6.1 CONTRACTS. The Board of Directors may authorize any Officer or
Officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 6.2 LOANS. No loan or advances shall be contracted on behalf of the
Corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated or transferred as
security for the payment of any loan, advance, indebtedness or liability of
the Corporation unless and except as authorized by the Board of Directors.
Any such authorization may be general or confined to specific instances.
SECTION 6.3 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited form time to time to the credit of the Corporation in such
banks, trust companies or other depositories s the Board of Directors may
select, or as may be selected by any Office or agent authorized to do so by
the Board of Directors.
SECTION 6.4 CHECKS AND DRAFTS. All notes, drafts, acceptances, checks,
endorsements and evidences of indebtedness of the Corporation shall be signed
by such
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Officer or Officers or such agent or agents of the Corporation and in such
manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the Corporation in any of its duly
authorized depositories shall be made in such manner as the Board of
Directors form time to time may determine.
SECTION 6.5 BONDS AND DEBENTURES. Every bond or debenture issued by the
Corporation shall be evidenced by an appropriate instrument, which shall be
signed by the President or a Vice President, and by the Treasurer or
Secretary, and sealed with the seal of the Corporation. The seal may be
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized Officer of the Corporation or
other trustee designated by the indenture of trust or other agreement under
which such security is issued, the signature of any of the Corporation's
Officers named thereon may be facsimile. In case any Officer who signed, or
whose facsimile signature has been used on any such bond or debenture, shall
cease to be an Officer of the Corporation for any reason before the same has
been delivered by the Corporation, such bond or debenture may nevertheless be
adopted by the Corporation and issued and delivered as thought the person who
signed it or whose facsimile signature has been used thereon had not ceased
to be such Officer.
ARTICLE VII
CAPITAL STOCK
SECTION 7.1 CERTIFICATE OF SHARE. The shares of the Corporation shall be
represented by certificates prepared by the Board of Directors and signed by
the President or Vice President, and by the Secretary or Assistant Secretary,
and sealed with the seal of the Corporation or a facsimile thereof. The
signatures of such Officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation itself or one of its employees. All certificates
for shares shall be consecutively numbered or otherwise
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<PAGE>
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation, all certificates
surrendered to the Corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for alike number of
shares shall have been surrendered and canceled, except that in case of a
lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors
may prescribe.
SECTION 7.2 TRANSFER OF SHARES. Transfer of shares of the Corporation shall
be made only on the stock transfer books of the Corporation by the holder of
record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation t be the owner thereof for all purposes.
SECTION 7.3 TRANSFER AGENT AND REGISTRAR. The Board of Directors shall have
power to appoint one or more transfer agents and registrars for the transfer
and registration of certificates of stock of any class, and may require that
stock certificates shall be countersigned and registered by one or more of
such transfer agents and registrars.
SECTION 7.4 LOST OR DESTROYED CERTIFICATES. The Corporation may issue a new
certificate to replace any certificate theretofore issued by it alleged to
have been lost or destroyed. The Board of Directors may require the owner of
such a certificate or his legal representatives to give the Corporation a
bond in such sum and with such sureties as the Board of Directors may direct
to indemnity the Corporation and its
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<PAGE>
transfer agents and registrars, if any, against claims that may be mad on
account of the issuance of such new certificate may be issued without
requiring any bond.
SECTION 7.5 CONSIDERATION FOR SHARES. The capital stock of the Corporation
shall be issued for such consideration, but not less than the par value
thereof, as shall be fixed from time to time by the Board of Directors. In
the absence of fraud, the determination of the Board of Directors as to the
value of any property or services received in full or partial payment of
shares shall be conclusive.
SECTION 7.6 REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder
thereof in fact, and shall not be bound to recognize any equitable or other
claim to or on behalf of the Corporation, any and all of the rights and
powers incident to the ownership of such stock at any such meeting, and shall
have power and authority to execute and deliver proxies and consents on
behalf of the Corporation in connection with the exercise by the Corporation
shall be entitled to treat the holder of record of any share or shares of
stock as the holder thereof in fact, and shall not be bound to recognize any
equitable or other claim to or on behalf of the Corporation, any and all of
the rights and powers incident to the ownership of such stock at any such
meeting, and shall have power and authority to execute and deliver proxies
and consents on behalf of the Corporation in connection with the exercise by
the Corporation of the right and powers incident to the ownership of such
stock. The Board of Directors, form time to time may confer like powers upon
any other person or persons.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION. No Officer or Director shall be personally
liable for any obligations arising out of any acts or conduct of said Officer
or Director performed for or on behalf of the Corporation. The Corporation
shall and does hereby indemnify and hold harmless each person and his heirs
and administrators who shall serve at any time hereafter as a Director or
Officer of the Corporation from and against any and all claims, judgments and
liabilities to which such persons shall become subject by reason of any
action alleged to have been heretofore or hereafter taken or omitted
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<PAGE>
to have been taken by him as such Director or Officer, and shall reimburse
each such person for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability; including power to defend
such person from all suits as provided for under the provisions of the Nevada
Corporation Laws; provided, however that no such person shall be indemnified
against, or be reimbursed for, any expense incurred in connection with any
claim or liability arising out of his own negligence or willful misconduct.
The rights accruing to any person under the foregoing provisions of this
section shall not exclude any other right to which he may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its Directors,
Officers, employees and agents shall be fully protected in taking any action
or making any payment or in refusing so to do in reliance upon the advice of
counsel.
SECTION 8.2 OTHER INDEMNIFICATION. The indemnification herein provided shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested Directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
Officer or employee and shall inure to the benefit of the heirs, executors
and administrators of such a person.
SECTION 8.3 INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, Officer or employee of the
Corporation, or is or was serving at the request of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any capacity, or arising out of
his status as such, whether or not the Corporate would have the power to
indemnify him against liability under the provisions of this
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<PAGE>
article or the laws of the State of Nevada.
SECTION 8.4 SETTLEMENT BY CORPORATION. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim,
action, suit or proceeding at the expense of the Corporation by the payment
of the amount of such settlement and the costs and expenses incurred in
connection therewith.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended, repealed, or added to by the
affirmative vote of the holders of a majority of the shares entitled to vote
in the election of any Director at an annual meeting or at a special meeting
called for that purpose, provided that a written notice shall have been sent
to each shareholder of record entitled to vote at such meetings at least ten
days before the date of such annual or special meetings, which notice shall
state the alterations, amendments, additions, or changes which are proposed
to be mad in such Bylaws. Only such changes shall be mad as have been
specified in the notice. The Bylaws may also be altered, amended, repealed,
or new Bylaws adopted by a majority of the entire Board of Directors at any
regular or special meeting. Andy Bylaws adopted by the Board may be altered,
amended, or repealed by a majority of the shareholders entitle to vote.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be September 30 and may
be varied by resolution of the Board of Directors.
ARTICLE XI
DIVIDENDS
The Board of Directors may at any regular or special meeting, as
they deem
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advisable, declare dividends payable out of the unreserved and unrestricted
earned surplus of the Corporation except the Directors may declare dividends
in accordance with the laws of the State of Nevada.
ARTICLE XII
CORPORATE SEAL
The seal of the Corporation shall be in the form of a circle and
shall bear the name of the Corporation and the year of incorporation.
Adopted by resolution of the Board of Directors the 15th day of
January 1985.
/s/ K.T. Mao
-------------------------
CORPORATE SEAL K.T. Mao, Secretary
[SEAL]
Page 22
<PAGE>
Exhibit 6.1
AGREEMENT
This Agreement is entered into among K.T. Mao ("Shareholder A"),
Janice A. Jones ("Shareholder B"), and Chartwell International, Inc., a
Nevada corporation, (the "Company") on September 6, 1996.
WHEREAS, the Company represents that it is a publicly-held company
and its common stock is traded in the OTC Bulletin Board;
WHEREAS, the Company represents that it need additional equity and
working capital and that it needs to restructure its equity and debt
structure in order to attract new management, to meet certain pending
obligations, and to raise new capital;
WHEREAS, Shareholder A and Shareholder B represents that they are
major shareholders of the Company and have made major loans and advances to
the Company;
WHEREAS, the Company has asked Shareholder A and Shareholder B to
contribute additional capital;
WHEREAS, Shareholder A and Shareholder B hereby agree to contribute
additional capital pursuant to the terms and conditions as set forth below:
1. Shareholder A agrees to contribute and return three and a
half million (3,500,000) shares of the restricted common stock of the Company
("Shares A") which he owns back to the Company for use by the Company to
attract new management and to meet certain pending obligations, subject to
Paragraph 2 herein;
2. Shareholder A and the Company agree that out of Share A,
only up to one million (1,000,000) shares can be liquidated pursuant to Rule
144 of the Securities Act of 1933 (Rule 144") and the net proceeds from such
sale will be contributed by Shareholder A to the Company's capital account;
3. Shareholder A and the Company agree that the regu7latory
compliance for SEC filings and any tax consequences for the sale of any
portion of Share A pursuant to Rule 144 is the responsibility of Shareholder
A and therefore the sale must be coordinated between the parties in order for
Shareholder A to comply with all the provisions of Rule 144, including the
provision restricting the volume of share that can be sold over any 90-day
period;
4. Shareholder A also agrees and hereby confirms the
contribution to capital of the Company the rights and interest on his
$537,092 promissory note due from the Company and related accrued interest
effective July 31, 1995;
5. Shareholder B agrees to contribute and return three and a
half million (3,500,000) shares of the restricted common stock of the Company
("Shares B") which she owns back to the Company for use by the Company to
attract new management and to meet certain pending obligations, subject to
Paragraph 6 herein;
<PAGE>
6. Shareholder B and the Company agree that out of Share B, at
least one million (1,000,000) shares can be liquidated pursuant to Rule 144
of the Securities Act of 1933 ("Rule 144") and the net proceeds from such
sale will be contributed by Shareholder B to the Company's capital account;
7. Shareholder B and the Company agree that the regulatory
compliance for SEC filings and any tax consequences for the sale of any
portion of Share B pursuant to Rule 144 is the responsibility of Shareholder
B and therefore the sale must be coordinated between the parties in order for
Shareholder B to comply with all the provisions of Rule 144, including the
provision restricting the volume of shares that can be sold over any 90-day
period;
IN CONSIDERATION OF THE FOREGOING, the parties agree as follows:
8. In accepting Share A and Share B as contribution to
capital, the Company agrees that these shares will be used solely for the
purposes (a) to provide incentives to attract and recruit senior management
personnel to assist the Company including a Chief Executive Officer, a
marketing specialist, a specialist experienced in sports businesses and
markets, and a specialist experienced in developing businesses for the
marketing of sports scholarships; (b) to provide compensation to an entity to
raise new capital for the Company; (c) to pay for professional services
including legal and accounting services; and (d) to meet certain pending
obligations.
9. The Company also agrees that by no later than March 31,
1997, it will expand the membership of the Board of Directors of the Company
from the present two members by three additional new members to a total of
five members, and that one of the new members shall be the new Chief
Executive Officer and the other two members must be outside Board members.
10. The Company also agrees to grant Shareholder A a stock
purchase warrant to purchase four million (4,000,000) shares of restricted
common stock of the Company's common stock, at an exercise price of twenty
cents ($0.20) per share, expiring January 2, 2002.
11. In the event any portion of Share A and Share B are not
used or committed by the Company for the purposes as set forth in Paragraph 8
herein by March 31, 1997, all unused and uncommitted shares shall be returned
respectively to Shareholder A and Shareholder B by no later than May 1, 1997.
12. Shareholder A's performance of Paragraph 1 through 4 herein
is subject to Shareholder B's performance of Paragraph 5 through 7.
13. To achieve the purposes of this Agreement and the
foregoing, the parties agree to prepare and execute such documents as
necessary and as required by counsel, including but not limited to Board
resolutions and stock purchase warrants.
14. The representations contained in this Agreement shall be
true on and as of the effective date of this Agreement.
15. This Agreement constitute the entire agreement and
understanding among the parties with respect to the subject matter herein and
no party shall be liable or bound to any other party in any party in any
manner by any warranties, representations, or covenants except as
specifically set forth herein.
<PAGE>
16. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
17. The Agreement shall be governed and construed exclusively
in accordance with the laws of the State of Colorado.
18. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Denver, State of Colorado, and judgment upon the award
rendered by the Arbitrator may be entered in any Court having jurisdiction
thereof. The prevailing party in such arbitration shall be entitled, in
addition to such other relief may be granted, to a reasonable sum for
attorney's fees and costs in such arbitration, which sum shall be determined
by the Arbitrator.
19. Any notice required under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit with the United States Post office, by registered or certified mail,
postage prepaid, addressed (a) if to the Company, at 5445 DTC Parkway, Suite
735, Englewood, CO 80111; (b) if to Shareholder A, at 2676 E. Easter Avenue,
Littleton, CO 80122-1706; and (c) if to Shareholder B, at 5445 DTC Parkway,
Suite 735, Englewood, CO 80111 or at such other address as any party may
designate by giving five (5) day's written notice to the other parties in the
manner provided herein.
20. Any term of this Agreement may be amended in writing by all
the parties and when amended shall be binding on all parties.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above written.
SHAREHOLDER A CHARTWELL INTERNATION, INC.
A Nevada corporation
/S/K.T. MAO By /S/ JANICE A. JONES
- ----------------------- ---------------------
K.T. Mao Its President
SHAREHOLDER B
/S/ JANICE A. JONES
- -----------------------
Janice A. Jones
<PAGE>
AMENDMENT 1 TO
AGREEMENT AMONG
K.T. MAO, JANICE A. JONES, AND
CHARTWELL INTERNATIONAL, INC.
This is an Amendment 1 ("Amendment 1") dated October 7, 1996 to the
Agreement which was entered into among K.T. Mao ("Shareholder A"), Janice A.
Jones ("Shareholder B"), and Chartwell International, Inc., a Nevada
corporation, (the "Company") on September 6, 1996 (the "Agreement").
WHEREAS, Shareholder A, Shareholder B, and the Company agreed to
certain terms and conditions pursuant to the Agreement, effective September
6, 1996, in regards to certain capital contributions by Shareholder A and
Shareholder B to the Company;
WHEREAS, the Company has researched its books and records and have
confirmed the monies that were loaned to the Company by Shareholder A and is
prepared to deliver to Shareholder A canceled promissory note, evidencing the
$537,092 that was loaned by Shareholder A to the Company;
WHEREAS, the Company has sought the opinion of a professional expert
in taxation and has provided Shareholder A with said expert's opinion on the
tax deductibility of the forgiveness of said promissory note; the Company
hereby expresses its willingness to indemnify and to hold Shareholder A
harmless from the tax consequences to Shareholder A, if any, that may result
form the sale of the Company's common stock by Shareholder A pursuant to
Paragraph 2 of the Agreement, and pursuant to applicable state and federal
securities laws and regulations which the Company hereby represents and
warrants to be in compliance with;
NOW, THEREFORE, Shareholder A, Shareholder B, and the Company hereby
agree as follows:
1. The Company hereby agrees to indemnify and hold harmless
Shareholder A, his heirs, successors and assigns, his attorney7s,
accountants, and representatives, jointly and severally, each in their
individual and representative capacities from any and all claims, debts,
liabilities, demands, obligations, promises, acts, agreements, costs,
expenses, damages, actions, or causes of actions, of whatever kind or nature,
whether known or unknown, suspected or unsuspected, contingent or fixed,
arising out of, or in connection with, in any way, from the tax consequences
to Shareholder A, if any, that may result from the sale of the Company's
common stock by Shareholder A pursuant to Paragraph 2 of the Agreement;
2. The Company agrees to deliver to shareholder A upon the
execution of this Amendment 1 all applicable documentation evidencing the
$537,092 promissory note and the cancellation of the note by the Company.
This Amendment 1, when executed by all the parties, shall be binding
on all the parties and shall be construed, together with the Agreement, as
part of the entire agreement between the parties.
<PAGE>
Amendment 1 to Agreement among
K.T. Mao, Janice A. Jones and
Chartwell International, Inc.
October 7, 1996
Page 2
IN WITNESS WHEREOF, the parties have executed this Agreement in
Englewood, Colorado, effective as of the date first above written.
SHAREHOLDER A CHARTWELL INTERNATIONAL, INC
A Nevada corporation
/S/ K.T. MAO By /S/ JANICE A. JONES
- ----------------------- --------------------------
K.T. Mao Its President
SHAREHOLDER B
/S/ JANICE A. JONES
- -----------------------
Janice A. Jones
<PAGE>
AMENDMENT 2 TO
AGREEMENT AMONG
K.T. MAO, JANICE A. JONES, AND
CHARTWELL INTERNATIONAL, INC.
This is an Amendment 2 ("Amendment 2") dated October 7, 1996 to the
Agreement which was entered into among K.T. Mao ("Shareholder A"), Janice A.
Jones ("Shareholder B"), and Chartwell International, Inc., a Nevada
corporation, (the "Company") on September 6, 1996 (the "Agreement").
WHEREAS, Shareholder A, Shareholder B, and the Company agreed to
certain terms and conditions pursuant to the Agreement, effective September
6, 1996 in regards to certain capital contributions by Shareholder A and
Shareholder B to the Company;
WHEREAS, pursuant to Paragraph 2 of the Agreement, the Company has
instructed Shareholder A to sell his shares of common stock of the Company to
the Company's designated market maker, La Jolla Securities Corporation (the
"Market Maker");
WHEREAS, as of the effective date of Amendment 2, Shareholder A has
sold from his personal holdings 400,000 shares of the common stock of the
Company to the Market Maker and has delivered the net proceeds of such sale
as capital contribution to the Company pursuant to Paragraph 2 of the
Agreement;
WHEREAS, the Company endeavors and is interested in shareholder A's
cooperation to speed up the process in the sale of Shareholder A's remaining
commitment, pursuant to Paragraph 2 of the Agreement, which is an amount up
to 600,000 shares of Shareholder A's holdings in the common stock of the
Company;
WHEREAS, the Company has asked Shareholder A to grant a Power of
Attorney to the Company's officer and director, Alice M. Gluckman ("Officer
and Director") with an authorization to permit the Officer and Director to
instruct the Market Maker to transfer, sell, and release the net proceeds of
such sale to the Company as Shareholder A's capital contribution to the
Company, subject to Shareholder A's sole option to elect to reserve for
Shareholder A's sole benefit the sale of twenty percent (20%) of the volume
of shares that have been exempted from registration requirements pursuant to
Rule 144 of the Securities Act of 1933 ("Rule 144") over any 90-day period;
NOW, THEREFORE, Shareholder A, Shareholder B, and the Company hereby
agree as follows:
1. Shareholder A hereby agrees to grant and to deliver the
Company a signed Power of Attorney ("Power of Attorney"), attached as Exhibit
A, designating and authorizing the Company's officer and director, Alice M.
Gluckman "Officer and Director") to instruct the Market Maker to transfer and
sell up to 600,000 shares of the common stock of the Company from Shareholder
A's holdings, pursuant to Paragraph 2 of the Agreement, to the Market Maker
and to release the net proceeds of such sale to the Company as Shareholder
A's capital contribution to the Company;
<PAGE>
Amendment 2 to Agreement among
K.T. Mao, Janice A. Jones and
Chartwell International, Inc.
October 7, 1996
Page 2
2. Company hereby agrees to advise and to notify Shareholder A
in writing immediately upon the transfer and sale of any such shares,
including the number of shares and the price per share;
3. Shareholder B and the Company hereby agree to grant
Shareholder A the sole option to elect to reserve for Shareholder A's sole
benefit the sale of twenty percent (20%) of the volume of shares that have
been exempted from registration requirements pursuant to Rule 144 of the
Securities Act of 1933 ("Rule 144") over any 90-day period, in connection
with any sale of stock pursuant to Paragraph 2 of the Agreement;
4. Further, the Company hereby agrees to indemnify and hold
harmless Shareholder A, his heirs, successors and assigns, his attorneys,
accountants, and representatives, jointly and severally, each in their
individual and representative capacities form any and all claims, debts,
liabilities, demands, obligations, promises, acts, agreements, costs,
expenses, damages, actions, or causes of actions, of whatever kind or nature,
whether known or unknown, suspected or unsuspected, contingent or fixed,
arising out of, or in connecting with, in any way, relating to any potential,
alleged, or actual breach of applicable federal and state securities laws and
regulations from the sale of the Company's common stock by Shareholder A
pursuant to Paragraph 2 of the Agreement;
This Amendment 2, when executed by all the parties, shall be binding
on all the parties and shall be construed, together with the Agreement, as
part of the entire agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement in
Englewood, Colorado, effective as of the date first above written.
SHAREHOLDER A CHARTWELL INTERNATIONAL, INC.
A Nevada corporation
/S/ K.T. MAO By /S/ JANICE A. JONES
- ----------------------- --------------------------
K.T. Mao Its President
SHAREHOLDER B
/S/ JANICE A. JONES
- -----------------------
Janice A. Jones
<PAGE>
SETTLEMENT AGREEMENT
THIS AGREEMENT is entered into on this 25th day of November, 1997,
by and between CHARTWELL INTERNATIONAL, Inc. (hereafter "Chartwell") and
POWAY PARTNERS, A California general partnership (hereafter "Poway").
WHEREAS Poway and Steven Morizono have filed a lawsuit against Chartwell,
Janice Jones, Alice Gluckman and Does 1-100 inclusive in Los Angeles Superior
Court, Case No. BC172423 on or about June 6, 1997; and
WHEREAS Chartwell, Janice Jones, Alice Gluckman and Does 1-100 have denied
the allegations set forth in said lawsuit; and
WHEREAS each party is desirous of avoiding protracted litigation and the
costs appurtenant thereto, and
WHEREAS the parties have attempted to settle their differences without
admission of liability or wrongdoing by any party to the lawsuit;
NOW THEREFORE, Poway and Chartwell, for themselves and on behalf of all
parties named in said lawsuit, for good and valuable consideration of the
promises set forth herein, hereby agree as follows:
1. CASH. The following items shall be paid from proceeds of the sale of
Chartwell International, Inc. free trading stock:
<TABLE>
<S> <C>
Consulting fees to Poway: $33,000.00
Legal fees to Gerard N. Casale Jr. $20,000.00
----------
TOTAL PROCEEDS $53,000.00
</TABLE>
Said proceeds to be obtained as spelled out by the procedure detailed on
Exhibit "A", and shall be carried out as expeditiously as possible, but in
any event, within 10 business days from the receipt by Centex Securities of
the unlegended stock certificate for 600,000 shares as outlined in Exhibit
"A". Each party shall act in good faith and use due diligence in promptly
performing their obligations as set forth in Exhibit "A".
2. STOCK.
a) $50,000.00 in Chartwell International, Inc. Restricted Common
Stock shall be delivered to Poway within 10 business days of execution of the
final settlement agreement. The number of shares to be issued shall be
determined based on the average of the Bid and Ask price as of the closing on
the date of the final settlement. Chartwell shall have the right to
repurchase all shares delivered to Poway within 12 months of the date of the
final settlement agreement for the price of $75,000.00.
<PAGE>
b) $75,000.00 cash equivalent in Sportstar Marketing, Inc. common
stock shall be delivered by Chartwell to Poway. All said stock to be issued
with piggyback rights for the holder, subject to approval by the underwriter.
The price for said common stock shall be determined based on the average
between the Bid and Ask at the close of the first day of trading. Chartwell
shall deliver said stock to Poway within 10 business days of the close of the
1st day of trading on Sportstar Marketing, Inc.
3. PROMISSORY NOTE. $3,200.00, together with accrued interest on the
$50,000.00 note estimated at $3,500.00, shall be added to the principal
balance of the existing 2nd mortgage held by Poway. This modification to the
terms of the Note shall also reflect that in the event that Chartwell is able
to secure re-financing of the existing 1st mortgage on more favorable terms,
Poway hereby agrees to subordinate its mortgage to a new 1st mortgage in an
amount not to exceed the remaining principal balance of the existing 1st
mortgage at the time of such refinance and at an interest rate not to exceed
12.00%, at no cost to Poway. Poway agrees to cooperate with any such
refinancing or recasting of senior debt by Chartwell, so long as its priority
position is not jeopardized or in any way negatively affected.
4. REAL ESTATE LOTS.
a) Within 90 days of completion and full County approval of the
Final Map and platting of all lots, Chartwell shall convey title by special
warranty deed, free of all encumbrances to Poway of lots equivalent in value
to $250,000.00. Value to be determined by independent MAI appraiser. Said
appraiser to be selected as follows: Chartwell and Poway to each select an
appraiser. Those appraisers shall then select the independent MAI appraiser,
who shall be familiar with properties in the area of the subject property.
The lot or lots to be conveyed by Chartwell to Poway or its designated
representative shall be by random selection. Upon conveyance of the lots,
Poway or its representatives shall have no further interest in any
development proceeds arising from the remaining property owned by Chartwell
and/or its assignees.
b) The obligation to convey lots to Poway as described in 4(a) shall
be cross collateralized by the following stock option:
c) STOCK OPTION. Chartwell shall grant to Poway an option to
purchase sufficient shares from its holdings in Sportstar Marketing, Inc.
restricted common stock such that the discount from the market price (which
shall be determined as the average of the Bid and Ask price of Sportstar
stock on the close of the 1st day of trading) multiplied by the number of
shares granted, is equivalent to $250,000.00 as of the end of the first day
of trading of Sportstar Marketing, Inc. This option shall commence at the end
of 90 days from the completion and full approval by San Diego County of the
Final Map and platting of all lots, or 2 years, whichever is less
("Commencement date"). The option period shall run for two years from the
Commencement date, after which all rights of Poway shall terminate. It is
understood by all parties that the option agreement is for
cross-collateralization purposes only, and Poway shall be entitled to
exercise on the option agreement only if Chartwell fails to perform pursuant
to the terms of paragraph 4(a) above. Chartwell makes no warranties to Poway,
its officers, agents or employees, either express or implied, that the value
of the stock options at the time of option
<PAGE>
commencement or any period thereafter will be equal to $250,000.00. Chartwell
shall retain the sole right to repurchase all options granted to Poway,
whether or not the option period has commenced, for the sum of $300,000.00,
payable by cash or cashier's check.
5. RELEASE AND INDEMNITY PROVISIONS. Each party, upon execution of the final
settlement agreement, hereby agrees to execute contemporaneously a complete
release, discharge, indemnity and hold harmless agreement in compliance with
C.C.P. Section 1542 whereby each party agrees to indemnify, discharge,
release and hold harmless the other party or parties from all past, present
or future claims arising from the initial purchase transaction, and to
dismiss all pending claims or counterclaims currently pending before any
court of law in any jurisdiction. The agreement contemplated by this
paragraph shall inure to the heirs, successors, devisees or assigns of all
parties.
6. PROHIBITION AGAINST RECORDING. This settlement agreement shall remain
strictly confidential between the parties. Recordation of the Settlement
Agreement by either party shall render the agreement, together with all
release and indemnity provisions, null and void.
7. ACCEPTANCE. If this settlement proposal is not executed by all parties by
November 25, 1997 at 5:00p.m. PST, then this offer is terminated.
Agreed to this 25 day of November, 1997.
CHARTWELL INTERNATIONAL, INC. POWAY PARTNERS
/s/ Janice Jones /s/ Steven Morizono
- --------------------------------------- ------------------------------
Dr. Janice Jones, Chairman of the Board Steve Morizono
<PAGE>
EXIBIT A
Legal procedure for sale of stock:
1. Morizano/Poway Partners ("Designee") to overnight Morizano's Chartwell
Preferred Share Certificate along with an SEC legal opinion regarding
the authority to convert shares into 600,000 common and to remove the
restrictive legend. This Certificate should be sent to Oxford
Transfer & Registrar ("OTR"):
Ms. Gina Beckett
Oxford Transfer & Registrar
317 SW Alder
Suite 1120
Portland, OR 97204
(503)225-0375
2. Simultaneously, Chartwell will forward a letter requesting that 600,000
shares of common stock be issued in Designee's name and the restrictive
legend released.
3. Any excess stock or proceeds received by Designee over and above cash
requirement per the settlement agreement will be immediately returned
to Chartwell upon payment in full to Designee.
4. Simultaneously, Mr. Jim Chincholl of Centex Securities will be
contacting Gerald Casale regarding establishing an account for
Designee for purposes of liquidating the stock. Mr. Chincholl can
be reached at the following location:
Mr. Jim Chincholl
Centex Securities
12487 E. Ceder Avenue
Aurora, CO 80012
(303) 340-1105
5. This process to sell the Chartwell stock is a condition subsequent
to the full release of pending litigation.
<PAGE>
LOAN MODIFICATION AGREEMENT
AND
SUBORDINATION AGREEMENT
THIS Loan Modification Agreement is entered into this 11th day of
December, 1997 by and between POWAY PARTNERS, a California General
Partnership (hereinafter "Lender") and CHARTWELL INTERNATIONAL, INC., a
Nevada corporation (hereinafter "Borrower").
WHEREAS Borrower, on November 10, 1994, executed a Promissory Note in
favor of Lender in the original amount of Fifty Thousand and 00/100 Dollars
($50,000.00), payable at the annual rate of 12.000 per cent interest, with
monthly payments of $500.00, or more, commencing on December 15, 1994; and
WHEREAS Borrower secured this Promissory Note with a Deed of Trust dated
November 10, 1994 and recorded November 15, 1994 in the official records of
the San Diego County, California Recorder's Office at Reception No.
1994-0658932_ in favor of CB Service Corporation, a California corporation,
as Trustee for Lender and encumbering that certain property owned by Borrower
which is located in the County of San Diego, State of California and which is
legally described as follows:
See ATTACHED EXHIBIT "A"
AND WHEREAS Borrower and Lender are desirous of modifying the terms and
conditions of said Promissory Note and Deed of Trust,
NOW THEREFORE, Borrower and Lender, for and in consideration of the sum
of Ten Dollars and other valuable consideration, paid to Lender, the receipt
of which is hereby acknowledged, do hereby covenant and agree as follows:
1. The principal balance on said Promissory Note shall be modified to be
$57,200.00, as of the date set forth above.
2. Payments on said Promissory Note shall be modified to be $572.00 per
month, with the 1st payment due one month from the date of this agreement and
all subsequent payments due on the same day of each month, until this Note is
paid in full.
3. Execution of this Loan Modification Agreement shall be prima facie
evidence that the Promissory Note referenced herein is cm-rent and in good
standing as of the date of the execution of this Agreement by both Lender and
Borrower.
4. Lender hereby agrees that the Subordination Agreement, attached hereto as
Exhibit "B" and executed by Lender, shall be integrated into and deemed an
integral part of both the Promissory Note and the Deed of Trust referenced
herein, as of the date of execution of this Agreement, and that the execution
of said Subordination Agreement attached to this Agreement
<PAGE>
shall not affect the current statutory priority of Lender's interest in any
property secured by said Deed of Trust, nor be deemed a release of any rights
of Lender in or to said Deed of Trust.
Lender and Borrower have agreed to and acknowledged the above
modifications, as evidenced by their respective signatures below.
POWAY PARTNERS, A CALIFORNIA GENERAL PARTNERSHIP
BY: /s/ Steven Morizono
-------------------------- ------------------------------
-------------------------- ------------------------------
CHART INTERNATIONAL, INC., A NEVADA CORPORATION
BY: /s/ Janice A Jones
--------------------------
Dr. Janice A. Jones, President
STATE OF CALIFORNIA
COUNTY OF Los Angeles
On 12-11-97, before me TEENA MARTIN SMITH, a Notary Public in and for
said State, personally appeared Steven Morizono personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies)
and that by his/her/their signature(s) on the instrument, the person(s) or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
NOTARY SEAL - TEENA MARTIN SMITH
Signature: /s/ Teena Martin-Smith COMM. # 1051326
NOTARY PUBUC - CALIFORNIA
- --------------------------------- LOS ANGELES COUNTY
NAME (TYPED OR PRINTED) My commission expires: Feb. 13, 1999
My commission expires: 2-13-99
STATE OF COLORADO
COUNTY OF ARAPAHOE
On 12/8/97, before me Amy McMillan Notary Public in and for said State,
personally appeared Dr. Janice A. Jones as President of Chartwell
International, Inc. personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her
authorized capacity and that by her signature on the instrument, the person
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
NOTARY SEAL - AMY MCMILLAN
Signature: /s/ Amy McMillan COMM. # 1051326
NOTARY PUBUC
- --------------------------------- STATE OF COLORADO
NAME (TYPED OR PRINTED) My commission expires: 08/25/2001
My commission expires: 8-25-2001
<PAGE>
EXIBIT "B"
SUBORDINATION AGREEMENT
WHEREAS CHARTWELL INTERNATIONAL, INC. a Nevada corporation executed
a Deed of Trust dated November 10, 1994 to CB Service Corporation, Trustee,
secured by a Promissory Note in the amount of $50,000.00, and recorded
November 15, 1994, at Reception No. 1994-0658932 of the records of San Diego
County, California, for the use of POWAY PARTNERS, a California General
Partnership, which Deed of Trust is a lien against the property described
therein; and
WHEREAS, CHARTWELL INTERNATIONAL, INC., the owner of said property,
and POWAY PARTNERS have agreed that certain subordination provisions be
incorporated into said Deed of Trust pursuant to the Loan Modification
Agreement of which this Subordination Agreement is a part;
NOW THEREFORE, CHARTWELL INTERNATIONAL, Inc. and POWAY PARTNERS for
the good and valuable consideration referenced within the Loan Modification
Agreement, hereby incorporate into said Deed of Trust the following
Subordination Agreement provision:
POWAY PARTNERS, Inc. hereby agree to subordinate this Deed of Trust to any
new Deed of Trust which shall replace the existing 1st Deed of Trust
encumbering the property, so long as the amount of the new Deed of Trust does
not exceed the then current principal balance of the existing 1st Deed of
Trust, of $400,000.00 and rate not to exceed 12% and so long as the loan
proceeds of any new Deed of Trust are used solely to satisfy in full the
outstanding principal balance, plus all accrued interest and late charges, if
any, then owed on said existing 1st Deed of Trust. Further, it shall be a
condition precedent to any obligation by POWAY PARTNERS under this
Subordination Agreement that all obligations by CHARTWELL INTERNATIONAL, Inc.
to POWAY PARTNERS shall be current and not be in default.
POWAY PARTNERS and CHARTWELL INTERNATIONAL, INC. hereby further
agree that this subordination provision shall be exercised by providing to
POWAY PARTNERS in writing, a Request for Subordination, no later than 30 days
prior to the date said subordination shall occur, and to provide to POWAY
copies of any Note and Deed of Trust to which POWAY PARTNERS shall
subordinate.
Upon receipt of said Request for Subordination, POWAY PARTNERS
agrees to promptly execute all documents and instruments necessary or
required to effectuate such subordination; provided however, that in no event
shall the priority of the Deed of Trust held by POWAY PARTNERS be diminished
beyond a 2nd lien position by virtue of said subordination. POWAY PARTNERS,
Inc. shall not be liable for any cost or expense as a result of any
subordination requested by CHARTWELL INTERNATIONAL, Inc.
<PAGE>
This Subordination Agreement shall inure to the heirs, successors,
devisees and assigns of both POWAY PARTNERS and CHARTWELL INTERNATIONAL, INC.
Dated this 11th day of December, 1997.
POWAY PARTNERS
BY: /s/ Steven Morizono
--------------------------
-------------------------- ------------------------------
STATE OF CALIFORNIA
COUNTY OF Los Angeles
On 12-11-97, before me TEENA MARTIN SMITH, a Notary Public in and for said
State, personally appeared Steven Morizono personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies)
and that by his/her/their signature(s) on the instrument, the person(s) or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
NOTARY SEAL - TEENA MARTIN SMITH
Signature: /s/ Teena Martin-Smith COMM. # 1051326
NOTARY PUBUC - CALIFORNIA
- --------------------------------- LOS ANGELES COUNTY
NAME (TYPED OR PRINTED) My commission expires: Feb. 13, 1999
My commission expires: 2-13-99
<PAGE>
SETTLEMENT AGREEMENT
AND MUTUAL GENERAL RELEASE OF ALL CLAIMS
This Settlement Agreement and Mutual General Release of All Claims
is entered into effective December 11, 1997 by POWAY PARTNERS, a California
General Partnership, and STEVEN MORIZONO on the one hand, and CHARTWELL
INTERNATIONAL, INC., a Nevada Corporation, JANICE JONES, ALICE GLUCKMAN AND
DOES 1-100, on the other hand, both of whom are hereinafter collectively
referred to as all the "Parties."
RECITALS
Certain disputes have arisen between the parties in connection with
the claims set forth in that certain Complaint and Demurrer filed on June 6,
1997 in Los Angeles County, California Superior Court, Case No. BC172423 (the
"Lawsuit"). It is the intention of the parties to settle all disputes between
POWAY PARTNERS and STEVEN MORIZANO a/k/a STEVEN MORIZONO, on the one hand,
and CHARTWELL INTERNATIONAL, INC., JANICE JONES, ALICE GLUCKMAN AND DOES
1-100 on the other hand.
1. SETTLEMENT TERMS
The Parties hereby agree to execute all documents and perform all
actions as set forth and described in that particular document titled
"Settlement Agreement" dated November 25, 1997, a signed copy of which is
attached hereto and incorporated into this document.
<PAGE>
When the above terms are performed by all Parties no later than
DECEMBER 19, 1997, each Party will be in full settlement of any and all
claims it has against each and every other Party named in the Complaint set
forth above.
2. WHAT HAPPENS IN THE EVENT OF A DEFAULT
If any Party fails to timely perform its obligations pursuant to the
settlement terms set forth in the Settlement Agreement attached hereto, then
this Settlement Agreement and Mutual Release of All Claims shall be null and
void and each Party shall be entitled to pursue all legal remedies available
to it.
3. DISMISSAL OF THE COMPLAINT AS TO DEFENDANTS
Within 24 hours after receipt by Morizono or his counsel of
$53,000.00 in cashier's check or certified funds, pursuant to Paragraph 1 of
the Settlement Agreement, counsel for POWAY PARTNERS and STEVEN MORIZONO
shall forthwith file a Request for Dismissal with Prejudice of all claims as
to each and very Defendant in the Lawsuit. Each Party shall bear its own
attorneys' fee and costs relating to the lawsuit, except as may be provided
for in the Settlement Agreement.
4. MUTUAL GENERAL RELEASE
POWAY PARTNERS hereby releases CHARTWELL INTERNATIONAL, INC., JANICE
JONES, ALICE GLUCKMAN and DOES 1-100 from any and all claims, actions, causes
of action, cross-complaints, demands and obligations of any kind whatsoever
("Claims"), whether known or unknown, suspected or unsuspected, fixed or
contingent, which each party
<PAGE>
now has or may hereafter have, arising in or which could have arisen in the
above mentioned dispute.
CHARTWELL INTERNATIONAL, Inc., JANICE JONES, ALICE GLUCKMAN and DOES
1-100 do hereby release POWAY PARTNERS from any and all claims, actions,
causes of action, cross-complaints, demands and obligations of any kind
whatsoever ("Claims"), whether known or unknown, suspected or unsuspected,
fixed or contingent, which each party now has or may hereafter have, arising
in or which could have arisen in the above mentioned dispute.
The signatories hereto hereby agree that they will forever refrain
and forebear from commencing or prosecuting any lawsuit or proceeding against
each other arising in or out of or which could have arisen in or out of the
above mentioned dispute(s).
5. NO ADMISSION OF LIABILITY
Each of the signatories hereto understands and agrees that neither
the payment of any sum of money nor the execution of this agreement or any
document related thereto, shall constitute or be construed as an admission of
any liability whatsoever in these matters.
6. ATTORNEYS FEES PROVISION
If legal action is taken to remedy a breach of this agreement, then
the party prevailing in said legal action shall be awarded its attorney's
fees and costs.
7. CALIFORNIA LAW GOVERNS
California law shall govern this Settlement Agreement and Mutual
General Release of All Claims. Each of the parties was represented by
counsel who participated in the preparation
<PAGE>
of the Agreement and, in the event of any claim arising from a breach, its
language shall not be construed against or in favor of any party.
8. REPRESENTATIVES, SUCCESSORS, HEIRS AND ASSIGNS
This Settlement Agreement and Mutual General Release of All Claims
shall be binding upon and inure to the benefit of the parties and their
representatives, successors, heirs and assigns.
9. LEGAL CAPACITY TO EXECUTE THE AGREEMENT
Each party warrants that he/she has not assigned the claims covered
by this Settlement Agreement and Mutual General Release of All Claims and has
the legal capacity to execute this Agreement.
10. COMPLETE AGREEMENT
This Settlement Agreement and Mutual General Release of All Claims
contains the entire agreement and understanding between the signatories
hereto regarding the subject matter. This Settlement Agreement and Mutual
General Release of All Claims replaces all prior negotiations and proposed
agreements, whether written or oral. Each of the signatories hereto
acknowledges that no other signatory hereto has made any promise,
representation or warranty whatsoever, express or implied, not contained
herein, concerning the subject matter hereof, to induce him to execute this
Settlement Agreement. Each of the signatories hereto further acknowledges
that each signatory hereto has not executed this Settlement Agreement and
Mutual General Release of All Claims in reliance upon any promise,
representation or warranty not expressly set forth
<PAGE>
herein. Each of the Parties represents that he or she has conferred with an
attorney of his or her own choosing who has advised the party with respect to
this Settlement Agreement and Mutual General Release of All Claims, and that
no party has relied on the representations of any other party in deciding to
enter into this Settlement Agreement and Mutual General Release of All Claims.
11. COUNTERPARTS
This Settlement Agreement and Mutual General Release of All Claims
may be executed in duplicate counterparts, each of which shall be deemed an
original agreement and all of which shall constitute and agreement to be
effective as of the date of signing.
AGREED TO AND ACCEPTED BY:
POWAY PARTNERS, a California General Partnership
BY: /s/ Steven Morizono
--------------------------
STEVEN MORIZONO
/s/ Steven Morizono
- -----------------------------
CHARTWELL INTERNATIONAL, INC. a Nevada corporation
BY: /s/ Janice A. Jones
--------------------------
JANICE JONES
/s/ Janice A. Jones
- -----------------------------
ALICE FLUCKMAN
- -----------------------------
<PAGE>
State of California
County Los Angeles
On 12-11-97 before me Teena Martin Smith
-------- -----------------------------------------------------
(Name/title of officer-i.e."Jane Doe, Notary Public")
Personally appeared Steven Morizono
----------------------
(Name(s) of Signer(s))
personally known to me -or- X proved to me on the
basis of satisfactory
evidence to be the
person(s) whose name(s)
is/are subscribed to the
within instrument and
acknowledged to me that
he/she/they executed the
same in his/her/their
authorized capacity(ies),
and that by his/her/their
signature(s) on the
NOTARY SEAL - TEENA MARTIN SMITH instrument the person(s),
COMM. # 1051326 or the entity upon behalf
NOTARY PUBUC - CALIFORNIA of which the person(s)
LOS ANGELES COUNTY acted, executed the
My commission expires: Feb. 13, 1999 instrument.
Witness my hand and official seal.
/s/ Teena Martin Smith
-----------------------------------
ATTENTION NOTARY
The information requested below and in the column to the right is OPTIONAL.
Recording of this document is not required by law and is also optional. It
could, however, prevent fraudulent attachment of this certificate to any
Officer(s) unauthorized document.
THIS CERTIFICATE Title or Type of document
MUST BE ATTACHED ----------------------
TO THE DOCUMENT Number of Pages Date of Document
DESCRIBED AT RIGHT ---- -----------
Signer(s) Other Than Named Above
---------------
Right thumbprint (optional)
Capacity Clamed by signer(s)
Individual(s)
Corporate
-----------
Officer(s)
----------
Partner(s) Limited
General
Attorney in Fact
Trustee (s)
Guardian/Conservator
other
-------------------------
- ----------------------------------
Signer is Representing:
(Name of Person(s) or Entity(ies)
- ----------------------------------
- ----------------------------------
Right thumbprint (optional)
Capacity Clamed by signer(s)
Individual(s)
Corporate
-----------
Officer(s)
----------
Partner(s) Limited
General
Attorney in Fact
Trustee (s)
Guardian/Conservator
other
-------------------------
- ----------------------------------
Signer is Representing:
(Name of Person(s) or Entity(ies)
<PAGE>
AGREEMENT
This Agreement is made effective the 20th day of June 1997 by and
between SportsStar Marketing, Inc., a Colorado corporation, whose address is
5275 DTC Parkway, Suite 110, Englewood, Colorado 80111 ("SportsStar") and
National College Recruiting Association, Inc. ("NCRA").
WITNESETH:
WHEREAS, NCRA has developed products and services in the sports industry
which it currently markets on its own and through sales of franchises
("Franchises") and publication of a sports magazine entitled BLUE CHIP
Illustrated, which includes a 900 sports line; and
WHEREAS, NCRA wishes to grant SportsStar the exclusive right to all the
assets and rights for doing business of NCRA on the terms herein in North
America;
WHEREAS, SportsStar desires to sell and service franchises and publish
BLUE CHIP Illustrated; and
WHEREAS, SportsStar shall at all times use its best efforts to promote,
develop and increase the sale and demand for Franchises and franchise
services in all markets; and
WHEREAS, for terms noted herein, NCRA grants SportsStar the right to use
any and all of NCRA's trademarks and trade names, profiles, publications
(including Blue Chip Magazine) and other promotional materials.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. NCRA hereby appoints SportsStar as its exclusive agent
to develop the NCRA programs, and SportsStar hereby accepts said
appointment. SportsStar understands it has the responsibility to service
all existing NCRA Franchisees. However, if an existing franchise chooses
not to participate in the current program, chooses to dispute the terms
of any new agreement offered, or litigate conditions from the existing
agreement, NCRA will continue to be responsible for this franchise.
During such circumstance, SportsStar will continue to provide services to
the franchisee for which they will receive 10% of the gross income
generated from said franchisee during the period in question.
2. TERM. The term of this Agreement shall commence on the date stated
above and shall be for a five year period, with unlimited five year
renewals under the same terms and conditions, unless or until earlier
terminated in accordance with the provisions of this Agreement.
<PAGE>
3. ROYALTY. SportsStar shall receive all revenues from the sale of NCRA
franchises, franchise royalties and revenus from the publication of BLUE
CHIP Illustrated, i.e., any revenue generated from NCRA business, and SHALL
PAY NCRA $150,000 AS AN INITIAL PAYMENT FOR SIAD LICENSE PLUS 2.5% OF THE
GROSS SportsStar REVENUE FROM NCRA, BLUE CHIP ILLUSTRATED AND THE 900 LINES
OPERATIONS. Such payments are due 15 days after the end of each calendar
quarter based on reported revenue for said quarter.
4. TERMINATION. NCRA shall have right to terminate or renegotiate
the terms of this agreement if the SportsStar revenue forecasts are not
substantially met. For the purpose of this Agreement the "substantially
met" test would be 70% of forecasted revenues from the Business Plan
attached as Exhibit A, and included in the 504 Business Plan.
5. SALES AFTER TERMINATION. Upon termination of this Agreement
provisions hereof relating to commissions shall remain applicable to any
sales of Franchises or Sponsorships made by SportsStar prior to the date of
termination.
6. INDEMNITY. Each party hereby agrees to indemnify, defend and save
harmless the other party from and against any and all liabilities, demands,
claims, actions or causes of action, assessments, losses, costs, damages or
expenses whatsoever, including attorney's fees, sustained or incurred by
either party resulting from or arising out of that party's negligence or
willful misconduct or breach of its representations or obligations to be
performed pursuant to this Agreement, except insofar as such losses are
caused by the other party's negligence or willful disregard of its
obligations hereunder, or insofar as such losses are limited by the terms
of this Agreement. NCRA agrees to indemnify SportsStar for any NCRA
liabilities occurring prior to the signing of this agreement.
7. TRADEMARKS AND TRADE NAMES. NCRA warrants and represents that NCRA
owns, controls or licenses the rights for the Franchises, and of the
related trademarks, and trade names, and that for solicitation of Franchise
Offers by SportsStar will be free from claims of infringement of rights of
third parties.
8. NOTICES. All notices to NCRA or SportsStar pursuant to this Agreement
shall be in writing and may be given by personal delivery, telex,
facsimile transmission, or by mailing the same, registered or
certified mail, return receipt requested. Notices shall be deemed to
have been received and given as of the seventh day following the date
of posting in the case of registered or certified mail, and as of the
date of transmission in the case of telexes or facsimile
transmissions. Notices pursuant to this Agreement shall be
transmitted to the addresses set forth above, or if by facsimile, to
NCRA at 303-801-0100 or to SportsStar at 303-801-0100. Either party
may change its address upon giving reasonable notice.
<PAGE>
9. ASSIGNMENT. Any purported assignment or transfer of this Agreement,
in whole or in part, by either party without prior written consent of the
other party, shall be void and of no effect.
10. MISCELLANEOUS.
a. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
b. The terms and conditions of this Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado.
c. The failure of either party to require performance of any term
or condition of this Agreement or the waiver by either party of any
breach of this Agreement shall not prevent the subsequent enforcement
of such term or condition, nor be deemed a waiver of any subsequent
breach or of any rights it may have.
d. This Agreement contains the entire agreement of the parties
relating to its subject matter and supersedes all prior negotiations,
understandings and agreements, whether written, oral, or implied,
between the parties hereto with respect to such subject matter and
constitutes the entire agreement between the parties.
e. This Agreement may not be changed or modified unless the same
is made in writing and executed by authorized representatives of the
parties.
f. If any provision of this Agreement is held invalid by a court
having jurisdiction, such provision shall be deemed modified to the
extent necessary to eliminate such conflict or invalidity, this
Agreement shall be construed to give effect to the remaining
provisions thereof, and the parties shall mutually negotiate in good
faith an acceptable alternative to such term, sentence, clause or
provision for such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first given above.
SportsStar Marketing, Inc. National College Recruiting Association, Inc.
By /s/ William Kroske By /s/ Janice A. Jones
----------------------------- -----------------------------
William Kroske, President Janice A. Jones, Chairman
<PAGE>
MEMORANDUM OF UNDERSTANDING
AMONG NATIONAL COLLEGE RECRUITING ASSOCIATION, INC.
AND SportsStar MARKETING, INC.
JUNE 20, 1997
1. Upon receipt of $135,000 from SportsStar Offering: (a) NCRA, Inc. will be
paid $50,000 of the License fee payable to NCRA, Inc. (b) SportsStar will
use $40,000 for operations, including the new lease and (c) the balance of
$45,000 will be held as a reserve as needed for either Chartwell
International, Inc. or SportsStar Marketing, Inc.
2. Upon receipt of the $865,000 balance from the SportsStar Marketing, Inc.
offering the balance of license fee due NCRA, Inc. will be paid.
3. SportsStar Marketing, Inc. and NCRA, Inc. will endeavor to obtaining
additional financing for SportsStar and upon receipt of said additional
financing, a supplemental license fee of $100,000 will be paid to NCRA,
Inc.
4. SportsStar Marketing, Inc. will be responsible for the new lease for
facilities jointly occupied by NCRA, Inc. and SportsStar Marketing, Inc.
5. Cash expenditures for SportsStar Marketing, Inc. from January 1, 1997 will
be invoiced to SportsStar by and/or NCRA, Inc. and paid by Sportsstar upon
receipt of $865,000 by SportsStar.
6. SportsStar disbursements will the require 2 signatures (Dr. Janice J. Jones
and Dr. Bill Kroske) for expenditures over $250.00.
Agreed, Approved and Understood; Agreed, Approved and Understood;
/s/ Janice A. Jones /s/ William H. Kroske
- --------------------------------------- ---------------------------------
Dr. Janice A. Jones, Chair of the Board Dr. William H. Kroske, President
National College Recruiting Association SportsStar Marketing, Inc.
<PAGE>
Management Service Agreement
SportsStar Marketing, Inc. and Chartwell International, Inc. are hereby
entering into a Management Service Agreement to provide SportsStar with the
following services:
1. Raising capital for SSMK as required.
2. Accounting and financial services, including:
a. implementing financial controls and procedures;
b. financial advice and direction;
c. oversee preparation of financial statements;
d. management of cash and trade credit resources;
e. establishing effective banking relationships;
f. interface to Chartwell's financial issues;
g. maintaining financial and business relationships with CRG and
related entities;
h. establishing and maintaining investment banking relationships.
3. Provide acquisition services as follows:
a. prospecting;
b. investigation of potential targets;
c. consultation on acquisition strategies;
d. negotiation of acquisitions;
e. monitor and advise on the integration of acquired companies with SSMK.
4. Communicate with major outside investors, business partners, legal counsel
as it relates to the structure and arrangement of important ongoing
business issues.
<PAGE>
5. Assist in effective utilization of trade credits, including search for
uses, negotiation of terms, etc.
6. Include SSMK in external promotional announcements such as radio, T.V.,
and press releases where appropriate.
7. Other advisory services as required.
8. Assist and consult with SSMK in preparation of business plans and revisions
thereof and other related activities.
It should be noted many of the above services were provided to SSMK gratis
until it received funding on January 2, 1998. SSMK agrees to pay $7,500 per
month beginning February 1, 1998 until the revenue of SSMK exceeds $4,000,000
per annum, at which time the fee would be paid monthly at a rate of 2.5% of
the revenues. Potential acquisitions where separate management fees to
Chartwell are negotiated would be excluded from the SSMK revenue base for
purpose of the 2.5% test.
It is understood that Chartwell will provide these services on an as needed
basis and the time committed of Chartwell personnel will vary significantly
from time to time as the needs of SSMK fluctuate. For example, Chartwell will
assign Mr. Robert Fahey to be temporary financial manager for an estimated
six months, until SSMK needs a full time CFO. The management fee, however,
will not be adjusted as changes in Chartwell's efforts on behalf of SSMK
occur.
Chartwell will not charge any other fees to SSMK while this agreement remains
in effect. Finders' fees paid to outsiders in connection with raising capital
and acquisitions will be born by SSMK, including fees payable for such
circumstances under formal agreements with William Grimes, Robert Fahey, and
William Willard.
SSMK will pay Chartwell a fee of 10% of the purchase price of Lessonware, if
purchased by SSMK, as such transaction was found and negotiated by Chartwell
prior to the commencement of this Agreement.
All out of pocket expenses in connection with Chartwell's activities on
behalf of SSMK under this Agreement will be reimbursed to Chartwell upon
presentment of appropriate documentation. When at all possible, these
expenses will be acknowledged to SSMK in advance.
While Mr. Fahey is on direct assignment to SSMK as business and finance
manager he will commit whatever time is necessary in conjunction with his
responsibilities with Chartwell to adequately perform his responsibilities
with Chartwell to adequately perform his duties, such time is expected to
vary widely as tasks are started and completed.
During the first year of this Agreement Chartwell agrees to advance back to
SSMK up to
<PAGE>
the amount of fees received by Chartwell International, Inc. if SSMK has
depleted its funds before receiving additional financing. These funds are
reimbursable back to Chartwell after sufficient funds are received by SSMK.
The above provisions are hereby noted and agreed to:
/s/ William Kroske 2/25/98
- ----------------------------- ---------
Dr. William Kroske Date
President
SportsStar Marketing, Inc.
/s/ Janice A. Jones 2/26/98
- ----------------------------- ---------
Dr. Janice A. Jones Date
Chair of the Board
Chartwell International, Inc.
<PAGE>
AGREEMENT BETWEEN CHARTWELL INTERNATIONAL, INC.
AND JANICE JONES
AGREEMENT made the 10th day of March 1995, by and between Chartwell
International, Inc. a Nevada corporation with its principal office at 7605
Santa Monica Blvd. Suite 631, West Hollywood, California 90046 (hereinafter
called the "Company") and Janice Jones, 37 Terry Hills Farm Dr., Inglewood,
Colorado 80110 (hereinafter called the ("Executive").
WITNESSETH
WHEREAS. The Executive is President of the Company and has served the
company continuously during the past 3 years as its principal executive, and
WHEREAS. The leadership of the executive has constituted a major factor in
the growth and development of the Company and the Company is greatly in need
of the Executive's continued leadership so that the further and uninterrupted
progress of the Company will be assured, and
WHEREAS. The Company acknowledges and recognizes the value of the
Executive's services, including the capacity for services of special, unique,
and extraordinary character, and
WHEREAS. The Company desires to employ, retain and make secure for itself
the vast experience, outstanding abilities and services of the Executive as
President for a period of at least eight years from the effective date hereof
and thereafter to employ, retain and make secure for the Company her services
in an advisory and consultative capacity for life and to prevent any other
competitive business from securing the services of said executive and
utilizing her experience, background and know-how, and
WHEREAS. Both parties desire to embody the terms and conditions of
employment of said Executive, and the restricted stock option granted to her
in connection therewith, into a written Agreement, and
WHEREAS. All of the terms, conditions and undertakings of this Agreement,
including without limitations those of the restricted stock option embodied
herein, and the execution of this Agreement, were duly fixed, stated,
approved, authorized and directed for and on behalf of the Company by
resolution of its Board Of Directors at a meeting of such Board held at the
office of the Company on the 10th day of March, 1995, at which a quorum of
Directors was present and voted, exclusive of the Executive, and to which
resolution reference is hereby made, and which resolution by this reference
is incorporated herein as though fully at length repeated.
NOW, THEREFORE, It is mutually agreed by and between the parties hereto as
follows:
Page 1 of 9
<PAGE>
1. EMPLOYMENT PERIOD AND DUTIES- The Company agrees to and does hereby employ
the Executive President and said Executive agrees to serve the Company in
such capacity for a period commencing on the effective date of this
Agreement and continuing for (8) years thereafter (such period being
hereinafter called "The Employment Period", unless sooner terminated as
provided hereunder. The effective date hereof shall be March 10, 1995.
2. ADVISORY EMPLOYMENT TERM AND DUTIES- The Company agrees to, and does
hereby, employ Janice Jones, and she agrees to serve the Company, for the
period commencing with the expiration or termination of the employment
period and continuing for life (hereinafter called the "Advisory Employment
Term") as an advisor and consultant to the Company with such duties of an
advisory or consultative nature as may reasonable be requested by its Board
Of Directors- provided, however, that,
(A) Services required of said Executive during the advisory employment
term shall be performed in such places in the United States or
overseas as she may designate.
(B) Said Executive shall not be required to devote more than thirty (30)
hours in any month to such services,
(C) Said Executive shall not be required to return from any vacation or
any journey to render any such services,
(D) Said Executive shall not be required to render such services during
periods of illness or other incapacity.
3. COMPENSATION- The Company shall pay to said Executive, and said Executive
shall accept from the Company for her services during the employment
period, compensation at the rate of $5,000 per month from each company that
CII receives cash-flow revenues. Total compensation for first 12 months
shall be no larger than $15,000 per month. Compensation shall increase to
maximum $22,500 per month during second 12 months. With strong expansion
and growth of the Company during the 8 year period of this contract
compensation increases, bonuses and stock options shall be given when and
as approved by the Board-Of-Directors.
4. EXPENSES- During the employment period the Company will pay all expenses
incurred by the Executive in furtherance of or in connection with the
business of the Company and its subsidiaries, affiliates, including but not
by way of limitation, all traveling expenses, and all entertainment
expenses (whether incurred at the Executive's residence, while traveling,
or otherwise). If any such expenses are paid in the first instance by the
said Executive the Company will reimburse her therefor.
During the Advisory Employment Term, the Company will reimburse said
Executive for any and all expenses of any kind incident to the rendition of
the advisory and consultative services to be rendered hereunder and said
Executive shall be entitled to the use of office space and all facilities
of the same nature and character as were furnished to said Executive during
the employment period.
Page 2 of 9
<PAGE>
5. SERVICES- The Executive agrees to devote her full time and efforts during
the employment period to the business of the Company and its subsidiaries
and to serve as the President of the Company. If elected as such,
provided, however, that she shall be entitled to a minimum vacation period
totaling at least one (1) month each year which she may take, at her option
either in whole or in part, consecutively or not, in any year, and which
vacation periods shall be cumulative over the term of the employment
period, but for no more than four months in any given year.
The Executive shall perform her duties faithfully, diligently, and to the
best of her ability during the employment period and during the Advisory
Employment Term.
6. RIGHT TO TERMINATE- The Executive shall have the right to terminate the
employment period specified herein at the end of the fifth (5the) year
thereof by giving at least one hundred and twenty (120) days prior written
notice to the Company and shall have the further right to terminate such
employment period as hereinbefore provided, the advisory and consultative
services to the Company and provided for herein and shall thereupon receive
the compensation provided for herein for such services.
7. COMPANY RIGHT TO TERMINATE- The Company shall have the right to terminate
the employment period specified herein at any time the Executive is not
able to properly perform her duties and responsibilities due to an extreme
delinquencies, criminal actions and total mental or physical disability.
As long as the Executive performs her duties and responsibilities in a
satisfactory manner, continues to improve the Company operations, and sets
personal standards of leadership the Company cannot terminate the Executive
during the period of this contract.
In the event that during the employment period said Executive shall be
disabled from rendering services hereunder as President to the Company for
nine (9) consecutive months, the Board-Of-Directors of the Company may
terminate the employment period after sixty (60) days written notice, and
in such event, the Advisory Employment Term shall begin on the first day
following such sixty (60) day period. In such event, said Executive shall
commence rendering advisory and consultative services provided and shall
receive the compensation
Page 3 of 9
<PAGE>
8. RESTRICTIVE COVENANT- The Executive agrees that so long as this
Agreement is in full force and effect, she will not, directly or
indirectly, either as principal, agent, stock holder, or in any other
capacity, engage in or have a financial interest in, any business which is
competitive to the business of the Company and its subsidiaries, except
that nothing contained herein shall preclude the Executive from purchasing
or owning stock in any such business, providing that her holdings do not
exceed _____(%) percent of the issued and outstanding capital stock. For
the purposes hereof, a business will be deemed competitive if it involves
the production, manufacture or distribution of any product similar to those
produced, manufactured or distributed by the Company or any of its
subsidiaries. The executive expressly agrees that upon a breach or
violation of the foregoing provision of this Agreement, the Company in
addition to all other remedies shall be entitled, as a matter of right, to
injunctive relief in any court of competent jurisdiction.
9. SECRET PROCESSES- The Executive will not divulge, furnish or make
accessible to any one (otherwise than in the regular course of the business
of the Company or any of its subsidiaries) any knowledge or information
with respect to confidential or secret processes, formula, machinery,
plans, devices or material of the Company or any of its subsidiaries, with
respect to any confidential or secret process, formulas, development or
research work of the Company or any of its subsidiaries, or with respect to
any other confidential or secret aspect of the business of the Company of
any of its subsidiaries.
10. DEATH- In the event of the death of the Executive the Company shall pay to
her surviving spouse an amount equal to two (2) years compensation
calculated on the basis of the compensation payable to the Executive under
this Agreement at the date of her death. Such payments shall be made in
equal monthly installments over a period of five (5) years from the date of
the death of the Executive. If the Executive has no surviving spouse, then
such amount shall be paid to the Executive's estate in a lump sum. If the
Executive's spouse survives her but dies before all of the aforementioned
monthly payments have been made, then the balance of such payments shall be
paid to the Executive's estate in a lump sum.
11. RENEWAL OF CONTRACT- This Executive Agreement shall become renewable for
another (8) years at the end of each eight (8) year period of (32) years so
long as the Executive has fulfilled her duties and responsibilities
satisfactorily and according to the covenants set out in this Agreement.
Page 4 of 9
<PAGE>
12. BONUSES FROM INCREASED NET-PROFITS & NET SALES
RATE OF COMPENSATION
(A) A sum, with respect to any fiscal year of the Company during the term
of employment hereunder in which the Net Profits of the Company (determined
as hereinafter provided) shall exceed the Net Profits of the Company (so
determined) for its fiscal year ending JULY 15, 1995 equal to 1% of such
excess.
(B) A sum, with respect to any fiscal year of the Company during the term
of employment hereunder in which the Net Sales of the Company (determined
as hereinafter provided)shall exceed the Net Sales of the Company (so
determined) for its fiscal year ending JULY 15, 1995 equal to 1/10th of 1%
of such excess.
TIME OF PAYMENT
(A) The sum, if any, payable with respect to any such fiscal year during
the term of employment hereunder pursuant to subdivision.
(B) or (B) Of Paragraph (1) shall be paid within 30 days after the amount
so payable has been computed as the manner hereafter provided.
METHOD OF COMPUTING PAYMENT- The Net Profits of the Company for any period
shall be determined in accordance with good accounting practice, and giving
effect to proper deductions on account of the following:
(A) All expenses paid or accrued with respect to such period, including
the amount of all compensation paid or payable hereunder in respect of
such period, and all insurance premiums paid or payable, whether
hereunder or otherwise,
(B) Adjustment of the values of inventories and any other assets and
depreciation on property, plant and equipment,
(C) All Local, State and Federal Taxes, whether on profits or otherwise,
and
(D) All other proper charges against profits, whether or not of any class
herein specified.
DETERMINATION OF NET PROFITS- The amounts of the Net Profits of the
Company for the Company's fiscal year ending JULY 15 1995, and for each
fiscal year during the term of your employment hereunder, shall be
determined as soon as practicable after the end of such year by such public
accountant or firm of public accountants as shall be designated for the
purpose by the Board Of Directors of the Company and a statement setting
forth the results of such determination shall be furnished promptly after
the completion thereof. Each such determination shall be conclusive.
Page 5 of 9
<PAGE>
DETERMINATION OF NET-SALES- The Net Sales of the company for any period
shall be deemed to be the excess of the gross receipts from the Company
from the sale of product or services (excluding the amount of any sales tax
collection) over the amount of all returns and allowances made in such
period in respect of merchandise and services sold by the Company and any
depreciation in value of returned funds, all determined in accordance with
the Company's usual accounting practice.
Notwithstanding anything herein contained - (I) the Net Sales of the
Company for any fiscal year shall not be deemed to include any sales made
by any so-called leased department or division (namely any business
conducted otherwise than by the Company), and (II) in determining the
amount of the Company's Net Sales for any fiscal year no account shall be
taken of any sales and services, returns or allowances applicable, in
accordance with good accounting practice, to any new department, division
and subsidiary started after the beginning of such fiscal year operated by
the Company, or to any additional department, division and subsidiary
started by the Company after the beginning of such fiscal year, or to any
new business venture commenced by the Company after the beginning of such
fiscal year.
13. RESTRICTED STOCK OPTION- As a further inducement to the Executive to enter
into this Agreement and to provide a means of enhancing the Executive's
proprietary interest in the Company and to increase the Executive's
incentive, the Company hereby grants to the Executive the right and option
to purchase from the Company up to (_______) shares of its _________,
exercisable upon the following terms and conditions-
(A) The option price shall be eighty (80%) percent of the highest price at
which said stock is sold on the New York, NASDAC, or Over The Counter
exchange on the effective date hereof
(B) Subject to the provisions hereof, this option shall be exercisable as
follows-
(1) After the expiration of one (1) year form the effective date
hereof this option may be exercised with respect to all or any
part of (___________) shares of the said total ___________shares.
(2) After the expiration of two (2) years from the effective date
(______) shares of its ________
(3) After the expiration of three (3) years from the effective date
(______) shares of its _______________
(4) After the expiration of four (4) years from the effective date
(______) shares of its ________
(5) After the expiration of five (5) years from the effective date
(________) shares of its __________
Page 6 of 9
<PAGE>
(C) This option shall not be transferable by the Executive otherwise than
by will or the laws of descent and distribution, and shall be
exercisable during her lifetime only by her (and in no event later
than eight (8) years from the effective date hereof).
(D) In the event that the Executive ceases to be an employee of the
Company hereunder, any portion of this option not then exercisable
terminates at once, and any unexercised portion of this option which
has by then become exercisable shall be exercisable by the Executive
within three (3) months after she cease to be an employee (unless
cessation of employment results from the death of the Executive as
specifically provided for in subparagraph (E) hereof), provided
however, that in no event shall such option be exercisable after the
expiration of eight (8) years from the effective date hereof.
(E) In the event of the death of the Executive while an employee of the
Company (or within three (3) months after she ceases to be an
employee), this option may be exercised by the estate of the Executive
or by any person who hereafter acquires the right to exercise such
option by bequest or inheritance of by reason of the death of the
Executive, within the period of two (2) years after the date of death
or such shorter period as may then be required under the provision of
the United States Internal Revenue Code relating to restricted stock
options and in no event later than eight (8) years from the effective
date hereof,
(F) This Executive shall make no disposition (within the meaning of
"disposition" as defined in 421(D)(4) of the Internal Revenue Code of
1954) of any share or shares transferred to her pursuant to any
exercise of this option, within tow (2) years from the date this
option is granted nor within six (6) months after the transfer of such
shares or shares to her.
(G) Subject to the requirements for restricted stock options of the United
States Internal Revenue Code, as now in effect or as hereafter
amended-
In case the Company shall hereafter declare or pay to the
holders________
(H) This option shall be exercised by written notice or notices delivered
to the Company's principal place of business.
(I) Delivery of the certificates representing the shares of stock as to
which this option shall be exercised at any given time, shall be made
promptly after receipt of such notice by the Company against the
payment of the purchase price of the shares with respect to which the
option is exercised at such time,
Page 7 of 9
<PAGE>
(J) The Executive, on behalf of herself, her legal representative and any
other person who may become entitled to act hereunder by reason of the
Executive's death, undertakes and agrees that, in conjunction with
each purchase of stock hereunder, the purchaser will deliver to the
Company her written representation that such shares are being
purchased with the then present intention of holding the same for
investment and not with a view to the distribution thereof.
(K) Nothing contained in this paragraph "13" is intended, or shall be
construed, to deprive the Executive of the full benefits of this
option for (_______) ________ shares in the event of the wrongful
discharge of the Executive or other breach of this Agreement by the
Company,
(L) The Company agrees that it now holds and will hold available a
sufficient number of shares of its par value stock to satisfy the
requirements of this option.
(M) Nothing contained in this paragraph "13" is intended, or shall be
construed, in any way to affect the restricted stock options
heretofore granted to the Executive, it being specifically understood
that the restricted stock option hereby granted to the Executive shall
be independently of, and in addition to, such restricted stock option
s heretofore granted by the Company to the Executive.
14. EXECUTIVE'S RIGHTS UNDER CERTAIN PLANS- The Company agrees that nothing
contained herein is intended to or shall be deemed to be granted to the
Executive in lieu of any rights and privileges which the Executive may be
entitled to as an employee of the Company under any retirement, pension,
insurance, hospitalization, or other plans which may now be in effect of
which may hereafter be adopted, it being understood that the Executive
shall have the same rights and privileges to participate in such plans or
benefits as any other employee.
15. SUCCESSORS, ETC. OF THE COMPANY- This Agreement shall inure to the benefit
of and be binding upon the company, its successors and assigns, including
without any person, partnership or corporation which may acquire all or
substantially all of the company's assets and business, or with or into
which the Company may be consolidated or merged, and this provision shall
apply in the event of any subsequent merger, consolidation or transfer, and
the Executive, his heirs, assigns, executors and personal representatives.
16. ENTIRE AGREEMENT- The parties hereto agree that this Agreement supersedes
any existing employment agreement between the Executive and the Company as
amended and extended and contains the entire understanding and agreement
between the parties and cannot be amended, modified or supplemented in any
respect, except by a subsequent written agreement entered into by both
parties hereto.
Page 8 of 9
<PAGE>
17. EFFECTIVE DATE- The restricted stock option provided for in Paragraph "13"
hereof shall become effective as of the date of this agreement, provided,
however, that said restricted stock option shall be submitted to the
stockholders of the Company at their annual meeting, and in the event that
a majority of the stockholders present in person or by proxy at said
meeting shall disapprove said restricted stock option, then said restricted
stock option shall be of no force and effect. In the event of such
disapproval by stockholders the Executive shall have the right within 30
days after date of said annual meeting to cancel this agreement by written
notice to the Company.
18. APPLICABLE LAW- This agreement shall be construed according to the laws of
the Sate of Nevada.
IN WITNESS WHEREOF, the parties hereto have exercised this agreement the day and
year first above mentioned.
/s/ Janice Jones /s/ Alice M. Gluckman
- ----------------------------- -----------------------------
Janice Jones, President Alice M. Gluckman, Corp. Sec.
Chartwell International, Inc. Chartwell International, Inc.
Dated: 3-22-95 Dated: 3/27/95
<PAGE>
MINUTES OF THE BOARD OF DIRECTORS
CHARTWELL INTERNATINAL, INC.
(A NEVADA CORPORATION)
ACTION TAKEN WITHOUT MEETING
SEPTEMBER 1, 1999
Pursuant to Section 3.8 of the by-laws of Chartwell International, Inc., and
pursuant to Section 78.315 of the Nevada Revised Statues, the undersigned,
constituting a majority of the members of the Board of Directors of Chartwell
International, Inc., a Nevada corporation, ("the Company"), hereby consent to
a meeting as though said resolutions were adopted at a duly convened meeting
of said Board:
WHEREAS, the Company and Janice A. Jones, its Chairman of the Board and
acting President had entered into an employment agreement dated March 10,
1995 (attached), as amended per the Board of Directors minutes of April 19,
1998 which provided for deferred compensation of $120,000 annually, and
WHEREAS, the Company Board of Directors authorized additional compensation to
Janice A. Jones of $2,500 cash per month as Chair of the Board of Directors
as per its September 17, 1998 meeting, and
WHEREAS, Janice A. Jones has worked diligently at improving the Company's
operations, including extensive work of recruiting executive personnel,
raising financing, and securing acquisitions for its CBSA, Inc. (f/k/a
SportsStar Marketing, Inc. and NCRA, Inc.) subsidiary, and has not received
cash compensation for her efforts through July 31, 1999, and
WHEREAS, Janice A. Jones has indicated to the Company a willingness to forgive
any compensation under the above agreements for her efforts through July 31,
1999 in exchange for considerations which follow:
1. A re-affirmation of the March 10, 1995 compensation agreement and
Board compensation agreement effective beginning August 1, 1999.
2. The personal use of trade credits from barter exchanges, including
ITEX Corporation, BXI, Trade Bank International, and any other trade
barter company, for the period March 10, 1995 through the end of the
employment contract ( initially March 10, 2003).
3. The continued payments on her life insurance policy with New York Life
Insurance Co. through her employment period at $1,700 per month.
4. The continued payments on her family health insurance through her
employment period.
<PAGE>
5. The conveyance to Janice A. Jones of a 7 1/2% interest in any
acquisition made by the Company through her employment period, but
excluding acquisitions made by CBSA.
6. The granting to Janice Jones a 5 year option at $.30/share (a recent
trading price) to acquire 500,000 shares of the Company's CBSA, Inc.
common stock.
7. The granting of an option to Janice Jones to forego paying $.30/share
cash upon exercise of the above stock option by surrendering the
equivalent of $150,000 of said stock at the market value of said
shares at the date of exercise of this option, and that Janice Jones
be granted a similar option with respect to the other options on CBSA
stock currently held by her.
WHEREAS, Janice A. Jones has provided credit to the Company over this year
through the use of credit cards in her name, or in the name of the company
with her personal guarantee, in the current outstanding amount of
approximately $90,000, and the Company had made monthly payments on these
obligations.
WHEREAS, the Company is unable to currently pay off these credit obligations,
and Janice Jones has indicated a willingness to be continually contingently
liable for these obligations.
WHEREAS, Janice Jones wishes the Company to reaffirm its obligations for the
credit card debt and to continue to make payments on them until such
obligations are paid-off.
WHEREAS, Janice Jones has forgiven $137,461 interest on her notes due her
through July 31, 1998 and $88,567 interest accrued for the year ended July
31, 1999.
WHEREAS, Janice Jones has forgiven $37,000 principal balance on her note due
her as of July 31, 1999.
RESOLVED, the Company reaffirms its March 10, 1995 employment agreement and
its September 17, 1998 board compensation agreement with Janice Jones
affective beginning August 1, 1999 and affirms the consideration listed in
one through seven above.
RESOLVED, the Company cancels the April 19, 1998 deferred compensation
amendment with Janice Jones.
RESOLVED, the Company will continue to pay and be responsible for the credit
card obligations, until paid-off.
RESOLVED, the Company recognizes Janice Jones' forgiveness of interest and
expresses its appreciation of same.
RESOLVED, the Company recognizes Janice Jones' forgiveness of $37,000 debt as
of July 31, 1999 and expresses its appreciation of same.
<PAGE>
IN WITNESS WHEREOF, the undersigned, constituting a majority of the Board of
Directors of the Company, have executed this written consent effective as of
the date first shown above.
ABSTAINS
-------------------------------------------
Dr. Janice A. Jones Chair of the Board
-------------------------------------------
Alice M. Gluckman Member of the Board
-------------------------------------------
William R. Willard Member of the Board
-------------------------------------------
Barry Goldwater, Jr. Member of the Board
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 07 1999
No. C8650-84
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
RESOLUTIONS ESTABLISHING TERMS AND PREFERENCES
OF PREFERRED SHARES OF
CHARTARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
The undersigned, Janice A. Jones, does hereby certify:
1. I am the duly elected Chairman of the Board and acting President of
Chartwell International, Inc., a Nevada corporation.
2. Pursuant to authority given by said corporation's Articles of
Incorporation, the Board of Directors of said corporation has duly adopted
the following recitals and resolutions:
WHEREAS, the Articles of Incorporation of this corporation provide for a
class of its authorized shares known as Preferred Shares, comprising Ten
Million (10,000,000) shares issuable from time to time in one or more series;
and
WHEREAS, the Board of Directors of this corporation is authorized to fix
the number of shares of any series of Preferred Shares and to determine the
designation of any such series. The Board of Directors is also authorized to
determine or alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of Preferred Shares
and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any such
series subsequent to the issue of shares of that series; and
WHEREAS, this corporation has authorized the designation of 150,000 of
such Preferred Shares as "Series B Preferred Stock" and it is the desire of
the Board of Directors of this corporation, pursuant to Its authority as
aforesaid, to reaffirm the rights, preferences, restrictions and other
matters relating to the said Series B Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does provide
for the issue of a series of Preferred Shares of the corporation consisting
of One Hundred Fifty Thousand (150,000) shares designated as "Series B
Preferred Stock" and does hereby fix the rights, preferences, restrictions
and other matters relating to said Series B Preferred Stock as follows:
(a) STATED VALUE
The stated value of the Series B Preferred Stock shall be $10.00 per share.
(b) DIVIDENDS
The holders of outstanding Series B Preferred Shares shall be entitled
to receive, out of funds at the time legally available
<PAGE>
therefor, noncumulative dividends in the amount of 0% of the stated value in
year one, 2% at the end of year two of date of issuance, 3% at end of year
three, 4% at end of year four, 5% at end of year five, and 6% at end of year
six and each year thereafter as long as said shares are outstanding,before
any dividend is paid on Common Shares. No right shall accrue to holders of
Series B Preferred Shares by reason of at the fact that dividends on said
shares are not paid, nor shall any unpaid dividend bear or accrue interest.
Such noncumulative dividend shall be payable as determined by the Board of
Directors when and as declared by the Board of Directors.
(c) PREFERENCE ON LIQUIDATION
(1) In the event of any liquidation, dissolution or winding
up of the corporation, the holders of Series B Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the corporation
available for distribution to its stockholders, whether from capital, surplus
or earnings, before any payment shall be made in respect of the corporation's
Common Shares or junior stock, an amount equal to Ten Dollars ($10.00) per
share less an amount equal to the dividends, if any, paid thereon pursuant to
subdivision (b) above. If, upon liquidation, dissolution or winding up of
the corporation, the assets of the corporation available for the distribution
to its shareholders shall be insufficient to pay the holders of the Series B
Preferred Shares an amount equal to Ten Dollars ($10.00) per share, less an
amount equal to the dividends, if any, declared thereon, the holders of the
Series B Preferred Shares shall share ratably in any distribution of assets
according to the respective amounts which would be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to said shares were paid in full. After the holders of Series B
Preferred Shares have received an amount equal to Ten Dollars ($10.00) per
share less an amount equal to the dividends, if any, declared thereon, the
assets then remaining shall be distributed equally per share to the holders
of Series A and C Preferred Shares, and then any remaining assets to the
holders of Common Shares.
(2) A reorganization, consolidation or merger of the
corporation with or into any other corporation or corporations, or a sale of
all or substantially all of the assets of the corporation, shall not be
deemed to be a liquidation, dissolution or winding up of the corporation as
those terms are used in this subdivision (b) and, in the event of any such
reorganization, consolidation, merger of sale of assets, the Series B
Preferred Shares shall be entitled only to the rights provided in the plan of
reorganization of the Colorado Corporations Code.
(d) VOTING RIGHTS
The holders of the Preferred Shares and the holders of the Common
Shares issued and outstanding shall have and possess equal rights to notice
of shareholders' meetings, and identical voting rights and powers to vote
upon the election of directors or upon any other matter.
2
<PAGE>
(e) CONVERSION OF SERIES B PREFERRED STOCK INTO COMMON STOCK
(1) Subject to the provisions of this subdivision (e),
the holder of record of any share or shares of Series B Preferred Stock shall
have the right, at his option, at any time commencing after the date of
issuance of said shares, to convert each said share of Series B Preferred
Stock into twenty fully paid and nonassessable share of Common Stock of the
Company.
(2) Any holder of a share or shares of Series B
Preferred Stock desiring to convert such Series B Preferred Stock into Common
Stock shall surrender the certificate or certificates representing the share
or shares of Series B Preferred Stock so to be converted duly endorsed to the
Company, or in blank, at the principal office of the Company, and shall give
written notice to the Company at said office that be elects to convert the
same, and setting forth the name or names (with the address or addresses) in
which the shares of Common Stock are to be issued.
(3) Conversion of Series B Preferred Stock shall be
subject to the following additional terms and provisions:
(A) As promptly as practicable after the surrender for
conversion of any Series B Preferred Stock, the Company shall
deliver or cause to be delivered at the principal office of the
Company (or such other place as may be designated by the
Company), to or upon the written order of the holder of such
Series B Preferred Stock, certificates representing the shares
of Common Stock issuable upon such conversion, issued in such
name or names as such holder may direct. Shares of the Series B
Preferred Stock shall be deemed to have been converted as of the
close of business on the date of the surrender of the Series B
Preferred Stock for conversion, as provided above, end the
rights of the holders of such Series B Preferred Stock shall
cease at such time, and the person or persons in whose name or
names the certificates for such shares are to be issued shall be
treated for all purposes as having become the record holder or
holders of such Common Stock at such time; provided, however,
that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person
or persons in whose name or names the certificates for such
shares are to be issued as the record holder or holders thereof
for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open.
(B) In the event that the Company shall at any time
subdivide or combine in a greater or lesser number of shares the
outstanding shares of Common Stock, the number of shares of
Common Stock issuable upon conversion of the Series B Preferred
Stock shall be proportionately increased in the case of
subdivision or decreased in the case of a combination, effective
in either case at the close of business
3
<PAGE>
on the date when such subdivision or combination shall become
effective.
(C) In the event that the Company shall be recapitalized,
consolidated with or merged into any other corporation, or shall
sell or convey to any other corporation all or substantially all
of its property as entirety, provision shall be made as part of
the terms of such recapitalization, consolidation, merger, sale
or conveyance so that any holder of Series B Preferred Stock may
thereafter receive in lieu of the Common Stock otherwise
issuable to him upon conversion of his Series B Preferred Stock,
but at the conversion ratio stated in this subdivision (b), the
same kind and amount of securities or assets as may be
distributable upon such recapitalization, consolidation, merger,
sale or conveyance, with respect to the Common Stock of the
Company.
(D) In the event that the Company shall at any time pay to
the holders of Common Stock a dividend in common Stock, the
number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock shall be proportionately increased,
effective at the close of business on the record date for
determination of the holders of Common Stock entitled to such
dividend.
(E) Such adjustments shall be made successively if more
than one event listed in subdivisions (e) (3) (B), (C) and (D)
hereof shall occur.
(F) No adjustment of the conversion ratio shall be made by
reason of
(i) the purchase, acquisition, redemption or
retirement by the company of any shares of the Common Stock
or any other class of the capital stock of the Company,
except as provided n subdivision (e) (3) (B); or
(ii) the issuance, other than as provided in
subdivisions (e) (3) (B) and (D), of any shares of Common
Stock of the Company, or of any securities convertible into
shares of Common Stock or other securities of the Company,
or of any rights, warrants or options to subscribe for or
purchase shares of the Common Stock or other securities of
the Company, or of any other securities of the Company,
provided that in the event the Company offers any of its
securities, or any rights, warrants or options to subscribe
for or purchase any of its securities, to the holders of
its Common Stock pursuant to any preemptive or preferential
rights granted to holders of Common Stock
4
<PAGE>
by the Certificate of Incorporation of the Company, or
pursuant to any similar rights that may be granted to such
holders of Common Stock by the Board of Directors of the
Company, at least 20 days prior to the expiration of any
such offer the Company shall mail written notice of such
offer to the holders of the Series B Preferred stock then
of record; or
(iii) any offer by the Company to redeem or acquire
shares of its Common Stock by paying or exchanging therefor
stock of another corporation or the carrying out by the
Company of the transactions contemplated by such offer,
provided that at least 20 days prior to the expiration of
any such offer the Company shall mail written notice of
such offer to the holders of the Series B Preferred Stock
then of record.
(G) The Company shall at all times reserve and keep
available solely for the purpose of issue upon conversion of
Series B Preferred Stock, as herein provided, such number of
shares of Common Stock as shall be issuable upon the conversion
of all outstanding Series B Preferred Stock.
(4) The issuance of certificates for shares of Common
Stock upon conversion of the Series B Preferred Stock shall be made without
charge for any tax in respect of such issuance. However, if any certificate
is to be issued in a name other than that of the holder of record of the
Series B Preferred Stock so converted, the person or persons requesting the
issuance thereof shall pay to the Company the amount of any tax which may be
payable in respect of any transfer involved in such issuance, or shall
establish to the satisfaction of the Company that such tax has been paid or
is not due and payable.
(f) CALL PROVISIONS
Said Series B Preferred Stock is callable by the Corporation at
110% of stated value with 15 days written notice to the holders of the
preferred stock; said holders may in turn give the Corporation its notice to
convert said shares into the Common Stock of the Corporation in accordance
with subdivision (e) above.
RESOLVED FURTHER, that Janice A. Jones, the Chairman of the Board and
acting President of this corporation, is and hereby is, authorized and
directed to execute, acknowledge, file and record a certificate evidencing
the adoption of these resolutions in accordance with the foregoing
resolutions and the provisions of Nevada law.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
September 3, 1999.
/s/ Janice A. Jones
------------------------------------
Janice A. Jones, President/Secretary
5
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 07 1999
No. C8650-84
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
RESOLUTIONS ESTABLISHING TERMS AND PREFERENCES
OF PREFERRED SHARES OF
CHARTARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
The undersigned, Janice A. Jones, does hereby certify:
1. I am the duly elected Chairman of the Board and acting
President of Chartwell International, Inc., a Nevada corporation.
2. Pursuant to authority given by said corporation's Articles of
Incorporation, the Board of Directors of said corporation has duly adopted
the following recitals and resolutions:
WHEREAS, the Articles of Incorporation of this corporation provide for a
class of its authorized shares known as Preferred Shares, comprising Ten
Million (10,000,000) shares issuable from time to time in one or more series;
and
WHEREAS, the Board of Directors of this corporation is authorized to fix
the number of shares of any series of Preferred Shares and to determine the
designation of any such series. The Board of Directors is also authorized to
determine or alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of Preferred Shares
and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any such
series subsequent to the issue of shares of that series; and
WHEREAS, this corporation has authorized the designation of 150,000 of
such Preferred Shares as "Series C Preferred Stock" and it is the desire of
the Board of Directors of this corporation, pursuant to Its authority as
aforesaid, to reaffirm the rights, preferences, restrictions and other
matters relating to the said Series C Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does provide
for the issue of a series of Preferred Shares of the corporation consisting
of Three Hundred Thousand (300,000) shares designated as "Series C Preferred
Stock" and does hereby fix the rights, preferences, restrictions and other
matters relating to said Series C Preferred Stock as follows:
(a) STATED VALUE
The stated value of the Series C Preferred Stock shall be
$10.00 per share.
(b) DIVIDENDS
The holders of outstanding Series C Convertible Preferred
Stock shall be entitled to receive out of funds at the time legally
<PAGE>
available therefor noncumulative dividends, PARI PASSU with all other series
or shares of preferred stock, before any dividend is paid on Common Shares.
No right shall accrue to holders of Series C Convertible Preferred Stock by
reason of the fact that dividends on said shares are not declared, nor shall
any undeclared or unpaid divined bear or accrue interest. Such noncumulative
dividends shall be payable as determined by the Board of Directors when and
as declared by the Board of Directors. After noncumulative dividends on the
Series C Convertible Preferred Stock shall have been declared and paid or set
apart, then, if the Board of Directors shall elect to declare and pay
additional dividends out of funds legally available therefor, such additional
dividends shall be declared and paid in equal amounts per share to the
holders of Common Shares.
(c) PREFERENCE ON LIQUIDATION
(1) In the event of any liquidation, dissolution or winding
up of the corporation, the holders of Series C Convertible Preferred Stock
then outstanding shall be entitled to be paid out of the assets of this
corporation available for distribution to its stockholders PARI PASSU with
all other series or shares of preferred stock, whether from capital, surplus
or earnings, before any payment shall be made in respect of the corporation's
Common Shares or junior stock, an amount equal to Ten Dollars ($10.00) per
share. If, upon liquidation, dissolution or winding up of this corporation,
the assets of the corporation available for the distribution to its
shareholders shall be insufficient to pay the holders of the Series C
Convertible Preferred Stock an amount equal to Ten Dollars ($10.00) per
share, the holders of the Series C Convertible Preferred Stock shall share
ratably in any distribution of assets according to the respective amounts
which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to said shares were
paid in full. After the holders of Series C Convertible Preferred Stock have
received an amount equal to Ten Dollars ($10.00) per share the assets then
remaining shall be distributed equally per share to the holders of Common
Shares and junior stock.
(2) A reorganization, consolidation or merger of the
corporation with or into any other corporation or corporations, or a sale of
all or substantially all of the assets of the corporation, shall not be
deemed to be a liquidation, dissolution or winding up of the corporation as
those terms are used in this subdivision (b) and, in the event of any such
reorganization, consolidation, merger of sale of assets, the Series C
Preferred Shares shall be entitled only to the rights provided in the plan of
reorganization of the Colorado Corporations Code.
(d) VOTING RIGHTS
The holders of the Preferred Shares and the holders of the Common
Shares issued and outstanding shall have and possess equal rights to notice
of shareholders' meetings, and identical voting rights and powers to vote
upon the election of directors or upon any other matter.
2
<PAGE>
(e) CONVERSION OF SERIES C PREFERRED STOCK INTO COMMON STOCK
(1) Subject to the provisions of this subdivision (e), the
holder of record of any share or shares of Series C Preferred Stock shall
have the right, at his option, at any time commencing 18 months after the
date of issuance of said shares, to convert each said share of Series C
Preferred Stock into ten fully paid and nonassessable share of Common Stock
of the Company.
(2) Any holder of a share or shares of Series C Preferred
Stock desiring to convert such Series C Preferred Stock into Common Stock
shall surrender the certificate or certificates representing the share or
shares of Series C Preferred Stock so to be converted duly endorsed to the
Company, or in blank, at the principal office of the Company, and shall give
written notice to the Company at said office that be elects to convert the
same, and setting forth the name or names (with the address or addresses) in
which the shares of Common Stock are to be issued.
(3) Conversion of Series C Preferred Stock shall be subject
to the following additional terms and provisions:
(A) As promptly as practicable after the surrender for
conversion of any Series C Preferred Stock, the Company shall deliver
or cause to be delivered at the principal office of the Company (or
such other place as may be designated by the Company), to or upon the
written order of the holder of such Series C Preferred Stock,
certificates representing the shares of Common Stock issuable upon
such conversion, issued in such name or names as such holder may
direct. Shares of the Series C Preferred Stock shall be deemed to
have been converted as of the close of business on the date of the
surrender of the Series C Preferred Stock for conversion, as provided
above, end the rights of the holders of such Series C Preferred Stock
shall cease at such time, and the person or persons in whose name or
names the certificates for such shares are to be issued shall be
treated for all purposes as having become the record holder or holders
of such Common Stock at such time; provided, however, that any such
surrender on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose name
or names the certificates for such shares are to be issued as the
record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books
are open.
(B) In the event that the Company shall at any time subdivide or
combine in a greater or lesser number of shares the outstanding shares
of Common Stock, the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock shall be proportionately
increased in the case of subdivision or decreased in the case of a
combination, effective in either case at the close of business
3
<PAGE>
on the date when such subdivision or combination shall become
effective.
(C) In the event that the Company shall be recapitalized,
consolidated with or merged into any other corporation, or shall sell
or convey to any other corporation all or substantially all of its
property as entirety, provision shall be made as part of the terms of
such recapitalization, consolidation, merger, sale or conveyance so
that any holder of Series C Preferred Stock may thereafter receive in
lieu of the Common Stock otherwise issuable to him upon conversion of
his Series C Preferred Stock, but at the conversion ratio stated in
this subdivision (b), the same kind and amount of securities or assets
as may be distributable upon such recapitalization, consolidation,
merger, sale or conveyance, with respect to the Common Stock of the
Company.
(D) In the event that the Company shall at any time pay to the
holders of Common Stock a dividend in common Stock, the number of
shares of Common Stock issuable upon conversion of the Series C
Preferred Stock shall be proportionately increased, effective at the
close of business on the record date for determination of the holders
of Common Stock entitled to such dividend.
(E) Such adjustments shall be made successively if more than one
event listed in subdivisions (e) (3) (B), (C) and (D) hereof shall
occur.
(F) No adjustment of the conversion ratio shall be made by
reason of
(i) the purchase, acquisition, redemption or retirement
by the company of any shares of the Common Stock or any other
class of the capital stock of the Company, except as provided n
subdivision (e) (3) (B); or
(ii) the issuance, other than as provided in subdivisions
(e) (3) (B) and (D), of any shares of Common Stock of the
Company, or of any securities convertible into shares of Common
Stock or other securities of the Company, or of any rights,
warrants or options to subscribe for or purchase shares of the
Common Stock or other securities of the Company, or of any other
securities of the Company, provided that in the event the Company
offers any of its securities, or any rights, warrants or options
to subscribe for or purchase any of its securities, to the
holders of its Common Stock pursuant to any preemptive or
preferential rights granted to holders of Common Stock
4
<PAGE>
by the Certificate of Incorporation of the Company, or pursuant
to any similar rights that may be granted to such holders of
Common Stock by the Board of Directors of the Company, at least
20 days prior to the expiration of any such offer the Company
shall mail written notice of such offer to the holders of the
Series C Preferred stock then of record; or
(iii) any offer by the Company to redeem or acquire
shares of its Common Stock by paying or exchanging therefor stock
of another corporation or the carrying out by the Company of the
transactions contemplated by such offer, provided that at least
20 days prior to the expiration of any such offer the Company
shall mail written notice of such offer to the holders of the
Series C Preferred Stock then of record.
(G) The Company shall at all times reserve and keep available
solely for the purpose of issue upon conversion of Series C Preferred
Stock, as herein provided, such number of shares of Common Stock as
shall be issuable upon the conversion of all outstanding Series C
Preferred Stock.
(4) The issuance of certificates for shares of Common Stock
upon conversion of the Series C Preferred Stock shall be made without charge
for any tax in respect of such issuance. However, if any certificate is to
be issued in a name other than that of the holder of record of the Series C
Preferred Stock so converted, the person or persons requesting the issuance
thereof shall pay to the Company the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish to
the satisfaction of the Company that such tax has been paid or is not due and
payable.
RESOLVED FURTHER, that Janice A. Jones, the Chairman of the Board and
acting President of this corporation, is and hereby is, authorized and
directed to execute, acknowledge, file and record a certificate evidencing
the adoption of these resolutions in accordance with the foregoing
resolutions and the provisions of Nevada law.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
September 3, 1999.
/s/ Janice A. Jones
------------------------------------
Janice A. Jones, President/Secretary
5
<PAGE>
Exhibit 6.6
Chartwell International, Inc.
April 4, 1997
Mr. Bill Willard
Willard Capital Group, Inc.
1200 Prospect Street
Suite 175
La Jolla, California 90237
Dear Bill,
I am pleased to learn from my conversation with Jack Grace that you have agreed
to serve as a Director of Chartwell International, Inc..
I have outlined some of the areas in which we can use your assistance. This
will, of course, be an ever-changing list of requirements as the Company's needs
change:
1. Review 504 Memorandum for SportsStar Marketing, Inc. This
needs work. We are also seeking a Broker-Dealer to place it.
Maybe there is some other alternative way of financing this
company.
2. Assist in bridge financing for Sportsstar Marketing, Inc.
3. Identify other opportunities for SportsStar Marketing, Inc.
including sports figures, acquisitions with positive cash
flow, etc.
4. Assist in selling or trading out land in San Diego County.
5. Identify capital acquisitions and requirements of CAG.
6. Attend period Board Meetings.
7. Assist in any other areas as required.
- --------------------------------------------------------------------------------
5445 DTC PARKWAY - SUITE 735 - ENGLEWOOD, COLORADO 80111
TEL: (303)804-0100 - FAX:(303)804-0315
<PAGE>
You have agreed to accept $2,000 per month (for a minimum of five days per
month). This amount will be payable on a quarterly basis, in Chartwell
International, Inc. restricted common stock. The stock will be issued at $.10
per share for the first quarter and at market value for issuance thereafter.
We look forward to working with you.
Sincerely,
/s/Janice A. Jones
- --------------------------
Dr. Janice A. Jones
Chair of the Board
Agreed, Approved and Understood:
/s/William R. Willard 4/7/97
- ---------------------------- ------
Mr. Bill Willard Date
<PAGE>
Exhibit 6.7
Chartwell International, Inc.
September 24, 1998
Mr. Barry M. Goldwater, Jr.
3104 E. Camelback Rd, Suite 274
Phoenix, Arizona 85016
(602) 840-3510
Dear Barry:
It is my great pleasure to have you join the Chartwell International, Inc. Board
of Directors. I am confident that we can move forward together to achieve our
mutual goals for the Company.
In consideration for your first year of service, we are prepared to issue to you
a two-year option to purchase 200,000 shares of Chartwell common stock at $0.15
per share.
I will also introduce you to the Company's market maker, Jim Chincholl of Centex
Securities, who has indicated to me that he can provide a large block of free
trading stock in the Company at a discount from the market. I would encourage
you to take advantage of the current low price of the stock.
I look forward to working with you.
Sincerely,
/s/Janice A. Jones
- --------------------
Dr. Janice A. Jones
Chair of Board
<PAGE>
Exhibit 6.8
Chartwell International, Inc.
June 8, 1999
Ms. Alice M. Gluckman
Corp Secretary / Treasurer
CHARTWELL INTERNATIONAL, INC.
5730 Saloma Avenue
Van Nuys, CA 91411
(818) 989-0999 VIA FAX: (310) 823-6370
Dear Alice:
This letter confirms our understanding that you have agreed to accept a
combination of $2,000 in cash and 17,000 shares of SportsStar Marketing, Inc.
restricted common stock for your Director Fees through May 31, 1999.
From looking at our records, your fees consist of $1,000 per month and you have
been paid through July 15, 1998.
<TABLE>
<S> <C> <C>
July 16, 1998 - May 31, 1999 10 1/2 months x $1,000 $10,500
- cash payment 2,000
----------
8,500
x cost per share .50
----------
SSMK shares 17,000
</TABLE>
Upon receipt of your signature, the Company will overnight a check in the amount
of $2,000 and issue 17,000 shares of SSMK restricted common stock in your name.
In addition, the Company agrees to pay Sharon Roddan for your legal opinion
letter with the understanding that this amount will be debited against your
future Director Fees.
Sincerely,
/s/Janice A. Jones
- --------------------
Dr. Janice A. Jones
Chair of the Board
Agreed, Approved, and Understood:
/s/ Alice Gluckman
- ------------------------------- ----------------------------------
Alice M. Gluckman Date
<PAGE>
PROMISSORY NOTE
$78,400 Englewood, Colorado
June 1, 1998
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to Dr. Janice A. Jones ("the Holder") at 2450 W. Kettle
Avenue, Littleton, CO 80120-4334 the sum of
seventy-eight-thousand-four-hundred dollars ($78,400) with a simple interest
rate of 10% per annum, in lawful money of the United States.
This Note is due and payable in full on or before August 1, 2002 or at the
option of the Holder at the time financing is received.
Accrued interest is due on July 31st of each year until the maturity date,
and any and all accrued interest is due on August 1, 2002.
This Note shall be considered in default if this Note is not paid off by
August 1, 2002. Should default occur, then at any time after August 1, 2002,
the entire amount of unpaid principal shall, at the option of the payee,
become immediately due and payable.
This Note is secured by the Company's security investments in Chartwell
Automotive Group Inc., SportsStar Marketing Inc., NCRA Inc., Prentice Capital
Inc., Canaima Gold Corporation, the Company's unsecured interest arising from
the trade or sale of its real estate in San Diego County, and the Company's
interests in its Gypsum mineral rights in St. George, Utah.
The undersigned agrees, in the event of default, to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
PROMISSORY NOTE
$133,554 Englewood, Colorado
July 31, 1999
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to Dr. Janice A. Jones ("the Holder") at 2450 W. Kettle
Avenue, Littleton, CO 80120-4334 the sum of one hundred thirty-three thousand
dollars ($133,000) with a simple interest rate of 10% per annum, in lawful
money of the United States.
This Note is due and payable in full on or before August 1, 2002 or at the
option of the Holder at the time financing is received.
Accrued interest is due on July 31st of each year until the maturity date,
and any and all accrued interest is due on August 1, 2002.
This Note shall be considered in default if this Note is not paid off by
August 1, 2002. Should default occur, then at any time after August 1, 2002,
the entire amount of unpaid principal shall, at the option of the payee,
become immediately due and payable.
This Note is secured by the Company's security investments in Chartwell
Automotive Group Inc., SportsStar Marketing Inc., NCRA Inc., Prentice Capital
Inc., Canaima Gold Corporation, the Company's unsecured interest arising from
the trade or sale of its real estate in San Diego County, and the Company's
interests in its Gypsum mineral rights in St. George, Utah.
The undersigned agrees, in the event of default, to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
PROMISSORY NOTE
$612,536 Englewood, Colorado
June 1, 1998
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to Dr. Janice A. Jones ("the Holder") at 2450 W. Kettle
Avenue, Littleton, CO 80120-4334 the sum of six-hundred-twelve-thousand
five-hundred-thirty-six dollars ($612,536) with a simple interest rate of 10%
per annum, in lawful money of the United States.
This Note is due and payable in full on or before August 1, 2002 or at the
option of the Holder at the time financing is received.
Accrued interest is due on July 31st of each year until the maturity date,
and any and all accrued interest is due on August 1, 2002.
This Note shall be considered in default if this Note is not paid off by
August 1, 2002. Should default occur, then at any time after August 1, 2002,
the entire amount of unpaid principal shall, at the option of the payee,
become immediately due and payable.
This Note is secured by the Company's security investments in Chartwell
Automotive Group Inc., SportsStar Marketing Inc., NCRA Inc., Prentice Capital
Inc., Canaima Gold Corporation, the Company's unsecured interest arising from
the trade or sale of its real estate in San Diego County, and the Company's
interests in its Gypsum mineral rights in St. George, Utah.
The undersigned agrees, in the event of default, to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
PROMISSORY NOTE
$300,000 Englewood, Colorado
March 5, 1999
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to John J. Grace's IRA Rollover Account ("the Holder") at
Englewood, Colorado the sum of three hundred thousand dollars ($300,000) with
a simple interest rate of 10% per annum, compounded monthly, in lawful money
of the United States.
This Note is due and payable in full on or before August 1, 2000 or at the
option of the Holder at the time financing is received.
This Note shall be considered in default if not paid off by August 1, 2000,
unless the Holder provides written consent to extend the period of this Note.
Should default occur, then at any time after August 1, 2000 the entire amount
of unpaid principal shall, at the option of the Holder, become immediately
due and payable.
This note is secured by a Deed of Trust given and accepted upon the express
provision that should the property hereinbefore described, or any part
hereof, be conveyed or alienated by Trustor, either voluntarily or by
operation of law, without Beneficiary's written consent, then all sums
secured thereby shall, at Beneficiary's option, become immediately due and
payable.
This Note is secured by a Deed of Trust to SBS Trust Deed Network, a
California corporation, as Trustee, recorded in the County of San Diego,
State of California.
This Note is also secured by the Company's security investments in Chartwell
Automotive Group, Inc., SportsStar Marketing, Inc., NCRA, Inc., Prentice
Capital, Inc., and Canaima Gold Corporation.
The undersigned agrees in the event of default to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
--------------------------------------
Alice M. Gluckman, Corporate Secretary
<PAGE>
PROMISSORY NOTE
$130,000 Englewood, Colorado
March 5, 1999
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to John J. Grace's IRA Rollover Account ("the Holder") at
Englewood, Colorado the sum of one hundred thirty thousand dollars ($130,000)
with a simple interest rate of 10% per annum, compounded monthly, in lawful
money of the United States.
This Note is due and payable in full on or before August 1, 2000 or at the
option of the Holder at the time financing is received.
This Note shall be considered in default if not paid off by August 1, 2000,
unless the Holder provides written consent to extend the period of this Note.
Should default occur, then at any time after August 1, 2000 the entire amount
of unpaid principal shall, at the option of the Holder, become immediately
due and payable.
This note is secured by a Deed of Trust given and accepted upon the express
provision that should the property hereinbefore described, or any part
hereof, be conveyed or alienated by Trustor, either voluntarily or by
operation of law, without Beneficiary's written consent, then all sums
secured thereby shall, at Beneficiary's option, become immediately due and
payable.
This Note is secured by a Deed of Trust to SBS Trust Deed Network, a
California corporation, as Trustee, recorded in the County of San Diego,
State of California.
This Note is also secured by the Company's security investments in Chartwell
Automotive Group, Inc., SportsStar Marketing, Inc., NCRA, Inc., Prentice
Capital, Inc., and Canaima Gold Corporation.
The undersigned agrees in the event of default to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
--------------------------------------
Alice M. Gluckman, Corporate Secretary
<PAGE>
PROMISSORY NOTE
$170,000 Englewood, Colorado
March 5, 1999
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to John J. Grace ("the Holder") at Littleton, Colorado the
sum of one hundred seventy thousand dollars ($170,000) with a simple interest
rate of 10% per annum, compounded monthly, in lawful money of the United
States.
This Note is due and payable in full on or before August 1, 2000 or at the
option of the Holder at the time financing is received.
This Note shall be considered in default if not paid off by August 1, 2000,
unless the Holder provides written consent to extend the period of this Note.
Should default occur, then at any time after August 1, 2000 the entire amount
of unpaid principal shall, at the option of the Holder, become immediately
due and payable.
This note is secured by a Deed of Trust given and accepted upon the express
provision that should the property hereinbefore described, or any part
hereof, be conveyed or alienated by Trustor, either voluntarily or by
operation of law, without Beneficiary's written consent, then all sums
secured thereby shall, at Beneficiary's option, become immediately due and
payable.
This Note is secured by a Deed of Trust to SBS Trust Deed Network, a
California corporation, as Trustee, recorded in the County of San Diego,
State of California.
This Note is also secured by the Company's security investments in Chartwell
Automotive Group, Inc., SportsStar Marketing, Inc., NCRA, Inc., Prentice
Capital, Inc., and Canaima Gold Corporation.
The undersigned agrees in the event of default to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
--------------------------------------
Alice M. Gluckman, Corporate Secretary
<PAGE>
PROMISSORY NOTE
$16,000 Englewood, Colorado
April 1, 1999
For value received the undersigned, Chartwell International, Inc., hereby
promises to pay to John J. Grace ("the Holder") at 2450 W. Kettle Avenue,
Littleton, CO 80120-4334 the sum of sixteen thousand dollars ($16,000) with a
simple interest rate of 10% per annum, in lawful money of the United States.
This Note is due and payable in full on or before August 1, 2002 or at the
option of the Holder at the time financing is received.
This Note shall be considered in default if this Note is not paid off by
August 1, 2002. Should default occur, then at any time after August 1, 2002,
the entire amount of unpaid principal shall, at the option of the payee,
become immediately due and payable.
This Note shall is collaterized by the 1999 Volvo automobile purchased by the
Company for Mr. Grace's use.
The undersigned agrees, in the event of default, to pay reasonable costs of
collection, including attorney's fees incurred in connection with the
collection of this Note. The undersigned hereby waives presentment, demand,
protest, notice of protest, notice of dishonor, notice of nonpayment, and
notice of any kind with respect to this Note or any guarantee of it.
CHARTWELL INTERNATIONAL, INC.
a Nevada Corporation
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
Exhibit 6.16
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received FAMILY JEWELS II LIMITED PARTNERSHIP
is entitled, upon the terms and subject to the conditions hereinafter set
forth, at any time commencing from the date hereof until JUNE 1, 2003,
("Expiration Date") but not thereafter, to subscribe for and purchase from
Chartwell International, Inc., a Nevada corporation ("the Company"), FOUR
MILLION THREE HUNDRED FIFTY-FOUR THOUSAND ONE HUNDRED TEN (4,354,110) of the
fully paid and non-assessable shares of the Company's restricted common
stock, $0.001 par value, ("Common Stock"), at a purchase price of TEN CENTS
($0.10) PER SHARE ("Purchase Price") The Purchase Price and the number of
shares for which this Option is exercisable shall be subject to adjustment as
provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof, if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof, and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date
hereof issue additional shares of Common Stock in stock
dividend, stock distribution or subdivision paid with
respect to Common Stock, or declare any dividend or other
distribution payable with additional shares of Common Stock
(or securities convertible into Common Stock) with respect
to Common Stock or effect a split or subdivision of the
outstanding shares of the Company's Common Stock, the
Purchase Price then in effect immediately prior to such
stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the
effectiveness of such stock dividend, stock distribution or
subdivision, or the earlier declaration thereof, be
proportionately decreased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately increased in proportion to such increase of
outstanding shares.
b) In the event the outstanding shares of Common Stock shall at
any time after the date hereof be combined or consolidated,
by reclassification or otherwise, into a lesser number of
shares of Common Stock, the Purchase Price then in effect
immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased
and the number of shares of Common Stock issuable upon
exercise of this Option shall be appropriately decreased in
proportion to such decrease in outstanding shares.
c) In case, at any time after the date hereof, of any
consolidation or merger of the Company with or into another
corporation or the conveyance of all or substantially all of
the assets of the Company to another corporation, the shares
of Common Stock issuable upon the exercise of this Option
shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder
would have been entitled if immediately prior to such
consolidation, merger or conveyance he had exercised this
Option in its entirety; and in any such case, appropriate
adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that
the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the Purchase
Price) shall thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable
upon the exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less
than $0.01 which is not made shall be carried forward and
shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts
to any adjustment of $0.01 or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in
carrying out all the provisions of this Paragraph 9 and in
the taking of all such action as may be necessary or
appropriate to protect the rights of the holder of this
Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of
the Purchase Price pursuant to this Paragraph 9, the Company
at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare
and furnish to the holder of this Option a certificate
setting forth adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment
is based The Company shall, upon written request at any time
of the holder of this Option, furnish or cause to be
furnished to such holder a like certificate setting forth.
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be
received upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of
determining the holders thereto who are entitled to receive
any dividend (other than a cash dividend) or other
distribution, the Company shall mail to the holder of this
Option at least twenty (20) days prior to such record day, a
notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
i) The Company shall at all times reserve and keep available
out of the authorized but unissued shares of the Common
Stock, solely for the purpose of effecting the exercise of
this Option, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the exercise
of this Option; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient
to affect the exercise of this Option, the Company will take
such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization,
transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the
carrying out of all the provisions hereof and in the taking
of all such actions as may be necessary or appropriate in
order to protect the rights of the holders of this Option
against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received THE CHARTWELL GROUP, INC. is
entitled, upon the terms and subject to the conditions hereinafter set forth,
at any time commencing from the date hereof until JUNE 1, 2003, ("Expiration
Date") but not thereafter, to subscribe for and purchase from Chartwell
International, Inc., a Nevada corporation ("the Company"), THREE MILLION
SIXTY-TWO THOUSAND SIX HUNDRED EIGHTY (3,062,680) of the fully paid and
non-assessable shares of the Company's restricted common stock, $0.001 par
value, ("Common Stock"), at a purchase price of TEN CENTS ($0.10) PER SHARE
(`Purchase Price") The Purchase Price and the number of shares for which this
Option is exercisable shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof, if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof, and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date
hereof issue additional shares of Common Stock in stock
dividend, stock distribution or subdivision paid with
respect to Common Stock, or declare any dividend or other
distribution payable with additional shares of Common Stock
(or securities convertible into Common Stock) with respect
to Common Stock or effect a split or subdivision of the
outstanding shares of the Company's Common Stock, the
Purchase Price then in effect immediately prior to such
stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the
effectiveness of such stock dividend, stock distribution or
subdivision, or the earlier declaration thereof, be
proportionately decreased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately increased in proportion to such increase of
outstanding shares.
b) In the event the outstanding shares of Common Stock shall at
any time after the date hereof be combined or consolidated,
by reclassification or otherwise, into a lesser number of
shares of Common Stock, the Purchase Price then in effect
immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased
and the number of shares of Common Stock issuable upon
exercise of this Option shall be appropriately decreased in
proportion to such decrease in outstanding shares.
c) In case, at any time after the date hereof, of any
consolidation or merger of the Company with or into another
corporation or the conveyance of all or substantially all of
the assets of the Company to another corporation, the shares
of Common Stock issuable upon the exercise of this Option
shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder
would have been entitled if immediately prior to such
consolidation, merger or conveyance he had exercised this
Option in its entirety; and in any such case, appropriate
adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that
the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the Purchase
Price) shall thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable
upon the exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less
than $0.01 which is not made shall be carried forward and
shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts
to any adjustment of $0.01 or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in
carrying out all the provisions of this Paragraph 9 and in
the taking of all such action as may be necessary or
appropriate to protect the rights of the holder of this
Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of
the Purchase Price pursuant to this Paragraph 9, the Company
at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare
and furnish to the holder of this Option a certificate
setting forth adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment
is based. The Company shall, upon written request at any
time of the holder of this Option, furnish or cause to be
furnished to such holder a like certificate setting forth:
i) such adjustments and readjustments,
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be
received upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of
determining the holders thereto who are entitled to receive
any dividend (other than a cash dividend) or other
distribution, the Company shall mail to the holder of this
Option at least twenty (20) days prior to such record day, a
notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
i) The Company shall at all times reserve and keep available
out of the authorized but unissued shares of the Common
Stock, solely for the purpose of effecting the exercise of
this Option, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the exercise
of this Option; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient
to affect the exercise of this Option, the Company will take
such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization,
transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the
carrying out of all the provisions hereof and in the taking
of all such actions as may be necessary or appropriate in
order to protect the rights of the holders of this Option
against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Option shall be
binding upon any successors or assigns of the Company This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any TIME
COMMENCING FROM the date hereof until JUNE 1, 2003, ("Expiration Date") but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), THREE MILLION FIVE HUNDRED
THOUSAND (3,500,000) of the fully paid and non-assessable shares of the
Company's restricted common stock, $0.001 par value, ("Common Stock"), at a
purchase price of TEN CENTS ($0.10) PER SHARE ("Purchase Price"). The
Purchase Price and the number of shares for which this Option is exercisable
shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof, if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof, and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date
hereof issue additional shares of Common Stock in stock
dividend, stock distribution or subdivision paid with
respect to Common Stock, or declare any dividend or other
distribution payable with additional shares of Common Stock
(or securities convertible into Common Stock) with respect
to Common Stock or effect a split or subdivision of the
outstanding shares of the Company's Common Stock, the
Purchase Price then in effect immediately prior to such
stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the
effectiveness of such stock dividend, stock distribution or
subdivision, or the earlier declaration thereof, be
proportionately decreased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately increased in proportion to such increase of
outstanding shares.
b) In the event the outstanding shares of Common Stock shall at
any time after the date hereof be combined or consolidated,
by reclassification or otherwise, into a lesser number of
shares of Common Stock, the Purchase Price then in effect
immediately prior to such combination or consolidation
shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased
and the number of shares of Common Stock issuable upon
exercise of this Option shall be appropriately decreased in
proportion to such decrease in outstanding shares.
c) In case, at any time after the date hereof, of any
consolidation or merger of the Company with or into another
corporation or the conveyance of all or substantially all of
the assets of the Company to another corporation, the shares
of Common Stock issuable upon the exercise of this Option
shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder
would have been entitled if immediately prior to such
consolidation, merger or conveyance he had exercised this
Option in its entirety; and in any such case, appropriate
adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that
the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the Purchase
Price) shall thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable
upon the exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less
than $0.01 which is not made shall be carried forward and
shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts
to any adjustment of $0.01 or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in
carrying out all the provisions of this Paragraph 9 and in
the taking of all such action as may be necessary or
appropriate to protect the rights of the holder of this
Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of
the Purchase Price pursuant to this Paragraph 9, the Company
at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare
and furnish to the holder of this Option a certificate
setting forth adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment
is based. The Company shall, upon written request at any
time of the holder of this Option, furnish or cause to be
furnished to such holder a like certificate setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be
received upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of
determining the holders thereto who are entitled to receive
any dividend (other than a cash dividend) or other
distribution, the Company shall mail to the holder of this
Option at least twenty (20) days prior to such record day, a
notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
i) The Company shall at all times reserve and keep available
out of the authorized but unissued shares of the Common
Stock, solely for the purpose of effecting the exercise of
this Option, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the exercise
of this Option; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient
to affect the exercise of this Option, the Company will take
such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization,
transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the
carrying out of all the provisions hereof and in the taking
of all such actions as may be necessary or appropriate in
order to protect the rights of the holders of this Option
against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF
CHART WELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received K. T. MAO is entitled, upon the terms
and subject to the conditions hereinafter set forth, at any time commencing
from the date hereof until JANUARY 2, 2002, ("Expiration Date") but not
thereafter, to subscribe for and purchase from Chartwell International, Inc.,
a Nevada corporation (the "Company"), FOUR MILLION (4,000,000) of the filly
paid and non-assessable shares of the Company's restricted common stock,
$0.001 par value, ("Common Stock"), at a purchase price of TWENTY CENTS
($0.20) PER SHARE ("Purchase Price"). The Purchase Price and the number of
shares for which this warrant is exercisable shall be subject to adjustment
as provided herein.
1. TITLE TO WARRANT. Prior to the Expiration Date and subject
to compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.
2. EXERCISE OF WARRANT. The purchase rights represented by
this Warrant are exercisable by the registered holder hereof, in whole or in
part, in increments of one thousand (1,000) shares, commencing from the date
hereof to and before the close of business on the Expiration Date by the
surrender of this Warrant and the Subscription Form duly executed at the
office of the Company at 5445 DTC Parkway, Suite 735, Englewood, CO 80111, or
such other office or agency appearing on the books of the Company, and upon
the payment of the Purchase Price of the shares thereby purchased (by cash or
by cancellation of indebtedness of the Company to the holder hereof, if any,
at the time of exercise in an amount equal to the Purchase Price of the
shares thereby purchased); whereupon the holder of this Warrant, shall
receive a certificate or certificates each in proper form, for the number of
shares of common stock so purchased. The Company agrees that if at the time
of the surrender of this Warrant and purchase, the holder shall be entitled
to exercise this Warrant, the shares so purchased shall be and be deemed to
be issued to such holder as the record owner of such shares as of the close
of business on the date on which this Warrant shall be exercised as
aforesaid. The Common Stock issued upon exercise of this Warrant in
accordance with its terms shall be validly issued and outstanding, filly paid
and non-assessable.
<PAGE>
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant, be filly paid and
non-assessable and free from all taxes, liens and charges in respect to the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. Any fractional shares shall be rounded up to the nearest whole
share.
4. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made
without charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company and such certificates
shall be issued in the name of the holder of this Warrant or in such name or
names as may be directed by the holder of this Warrant; provided, however,
that in the event certificates for shares of Common Stock are to be issued in
a name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto, duly
executed by the holder hereof, and provided further, that upon any transfer
involved in the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition, thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
5. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of
the Company prior to the exercise hereof.
6. EXCHANGE AND REGISTRY OF WARRANTS. This Warrant is
exchangeable, upon the surrender hereof by the registered holder at the
above-mentioned office or agency of the Company for a new Warrant of like
tenor.
The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this
Warrant. This Warrant may be surrendered for exchange, transfer or exercise,
in accordance with its terms at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry. Upon such registry, this Warrant may only
be transferred in accordance with the requirements of APPLICABLE federal and
state securities laws.
7. LOSS, THEFT, DESTRUCTION, OR MUTILATION OF WARRANT. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft
or destruction reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver
a new Warrant of like tenor in lieu of this Warrant.
8. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday or a Sunday, or shall be a legal holiday,
or shall be a day on which the office of the Company at this Warrant is to be
surrendered for exercise, is not open for business, then such action may be
taken
<PAGE>
or such right may be exercised on the next succeeding day not a legal holiday
and on which such office of the Company is open for business.
9. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The
Purchase Price of this Warrant and the number of shares issuable upon its
exercise shall be subject to adjustment from time to time as follows:
(a) In the event the Company shall at any time after
the date hereof issue additional shares of Common Stock in stock dividend,
stock distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with additional shares of
Common Stock (or securities convertible into Common Stock) with respect to
Common Stock or effect a split or subdivision of the outstanding shares of
the Company's Common Stock, the Purchase Price then in effect immediately
prior to such stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the effectiveness of such stock
dividend, stock distribution or subdivision, or the earlier declaration
thereof, be proportionately decreased and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be appropriately increased
in proportion to such increase of outstanding shares.
(b) In the event the outstanding shares of Common
Stock shall at any time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of share of Common Stock,
the Purchase Price then in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination
or consolidation, be proportionately increased and the number of shares of
Common Stock issuable upon exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(c) In case, at any time after the date hereof, of any
consolidation or merger of the Company with or into another corporation or
the conveyance of all or substantially all of the assets of the Company to
another corporation, the shares of Common Stock issuable upon the exercise of
this Warrant shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder would have been
entitled if immediately prior to such consolidation, merger or conveyance lie
had exercised this Warrant in its entirety; and in any such case, appropriate
adjustment (as determined in good faith by the Board of Directors) shall be
made in the application of the provisions herein set fortl1 with respect to
the rights and interest thereafter of the holder of this Warrant and that the
provisions set forth herein (including provisions with respect to changes in
and other adjustments of the Purchase Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of this Warrant.
(d) All calculations under this paragraph 9 shall be
made to the nearest cent or to the nearest one tenth (1/10th) of a share, as
the case may be.
(e) No adjustment in the Purchase Price need be made
if such adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be made at the
time of and together with any subsequent adjustment which, on a cumulative
basis, amounts to any adjustment of $0.01 or more in the Purchase Price.
<PAGE>
(f) The Company will, at all times, in good faith
assist in carrying out all the provisions of this Paragraph 9 and in the
taking of all such action as may be necessary or appropriate to protect the
rights of the holder of this Warrant from impairment.
(g) Upon the occurrence of each adjustment or
readjustment of the Purchase Price pursuant to this Paragraph 9, the Company
at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the holder of
this Warrant a certificate setting forth adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon written request at any time of the holder of
this Warrant, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments; (ii) the
Purchase Price at the time in effect; and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time
would be received upon the exercise of this Warrant.
(h) In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of
determining the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company shall mail to
the holder of this Warrant at least twenty (20) days prior to such record
day, a notice specifying the date on which any such record is to be taken for
the purpose of sucl1 dividend or distribution.
(i) The Company shall at all times reserve and keep
available out of the authorized but unissued shares of the Common Stock,
solely for the purpose of effecting the exercise of this Warrant, such number
of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
affect the exercise of this Warrant, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(j) The Company will not, by amendment of its Articles
of Incorporation or By-Laws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the carrying out of all
the provisions hereof and in the taking of all such actions as may be
necessary or appropriate in order to protect the rights of the holders of
this Warrant against impairment.
10. MISCELLANEOUS
(a) The provisions of this Warrant shall be construed
and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding
upon any successors or assigns of the Company. This Warrant shall constitute
a contract under the laws of the State of Colorado and for all purposes shall
be construed in accordance with and governed by the laws of said state,
excepting only to those matters of corporate organization and power incident
to the issuance of stock pursuant hereto, which shall be governed by the laws
by the State of Nevada.
<PAGE>
(b) The holder acknowledges that all certificates
representing the Common Stock of the Company issued from time to time upon
exercise hereof shall bear the legend set forth on the first page of this
Warrant.
(c) This Warrant is in complete satisfaction of all
obligations of the Company to issue warrants to the initial grantee of this
Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by one of its officers thereunto duly authorized.
DATED AS OF: September 6, 1996
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
BY: /s/ Janice Jones
---------------------------
Its President
<PAGE>
NOTICE OF EXERCISE
TO: CHARTWELL INTERNATIONAL, INC.
(1) The undersigned hereby elects to purchase
__________________________ shares of common stock of Chartwell International,
Inc. pursuant to the terms of the attached Warrant and tenders herewith
payment of the purchase price in full.
(2) Please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned or in
such other name as it specified below:
------------------------------
(Name)
------------------------------
(Address)
(3) The undersigned represents that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned
for investment and not with a view to, or for resale in connection with, the
distribution thereof, and that the undersigned has no present intention of
distribution or reselling such shares.
- ----------------------------- -----------------------------
Date Signature
<PAGE>
K. T. MAO
2676 E. EASTER AVENUE 370 17TH STREET, SUITE 3500
LITTLETON, CO 80122-1706 DENVER, CO 80202-5690
TEL: (303) 771-7282 TEL: (303) 892-5700
FAX: (303) 771-7322 FAX: (303) 893-8912
EMAIL: [email protected]
November 25, 1997
VIA HAND DELIVERY
8:00 AM
Robert A. Bassett, Esq.
Dorsey & Whitney LLP
370 17th Street, Suite 4400
Denver, CO 80202-5644
Escrow Document Services for Lawyers, Inc.
1625 Broadway, Suite 1600
Denver, CO 80202
Attn: Rodney D. Knutson, President
RE: CHARTWELL INTERNATIONAL, INC. (THE "COMPANY")/CERTAIN THREE
PURCHASERS THE CLOSING
OPTION CONTRACT & ESCROW AGREEMENT
Dear Messrs. Bassett and Knutson:
Pursuant to the terms of the Option Contract and the Escrow
Agreement, I hereby CONDITIONALLY tender into escrow the Escrow Deposit by
Seller as follows:
- - Three (3) stock certificates: certificate #3494, 3495, and 3496 for
2,000,000 shares, 500,000 shares, and 500,000 shares of restricted common
stock of Chartwell Publishing Company, Inc. issued in the name of K. T.
Mao, respectively.
- - Three (3) signed irrevocable stock power with signature guaranteed, each
numbered as #1 of 3, #2 of 3, and #3 of 3, respectively.
- - Three (3) signed Assignment Form, each numbered as #1 of 3, #2 of 3, and #3
of 3, respectively.
In addition, I am CONDITIONALLY surrendering to Chartwell
International, Inc. outside of escrow, and in care of Mr. Bassett, the
Original Stock Purchase Warrant that was issued to K. T. Mao for 4,000,000
shares of restricted common stock. The Original Stock Purchase Warrant is
being surrendered in exchange for four (4) Subdivided Warrants.
The CONDITIONAL TENDER AND SURRENDER is necessitated because only
non-cashier checks from the three (3) Purchasers payable to the Escrow Agent
are in the custody of Mr. Bassett, and good, immediately available funds have
not been cleared through the Escrow Agent's bank account. Accordingly, THE
CLOSING BECOMES EFFECTIVE ONLY UPON AND IS SUBJECT TO THE RELEASE OF THE
FOLLOWING TO ME BY NO LATER THAN THE CLOSE OF BUSINESS ON NEXT MONDAY,
DECEMBER 5, 1997,
<PAGE>
Messrs. Robert Bassett and Rodney Knudsen
November 25, 1997
Page two
and concurrently, the Escrow Agent would be authorized to release the Escrow
Deposit by Seller to each of the three Purchasers, pursuant to the Option
Contract and Escrow Agreement.
- - The release of the full Purchase Price of $20,000 less $100 (escrow
fee) to me in a cashier check or by wire of immediately available
funds.
- - A copy of an Option Contract for each of the three Purchasers fully
executed by all the parties.
- - A copy of an Escrow Agreement for each of the three Purchasers fully
executed by all the parties.
- - An original Stock Purchase Warrant for one (1) million shares issued by
Chartwell International, Inc. to K. T. Mao under the same terms and
conditions as the Original Stock Purchase Warrant.
- - A copy of the Board of Director's minutes from Chartwell International,
Inc. authorizing the re-issuance of the subdivided warrants, pursuant
to the Option Contract; and
- - A letter from Chartwell, which rescinds a letter from Chartwell (dated
October 29, 1997) and its accompanying Board of Director minutes dated
October 27, 1997, and which also rescinds the Burg & Eldridge letter
dated November 7, 1997 on the same subject.
The funds for the Purchase Price, less $100 may be wired to my account as
follows:
FOR DEPOSIT TO ACCOUNT #190900410738
ABA ROUTING NUMBER IS: "102000021"
Account name: K. T. Mao
Colorado National Bank
Southglenn Office
2401 E. Arapahoe Road
Littleton, CO 80122
Attention: Ms. Elaine Markwell
Branch Manager
303-738-2223.
In the event the Closing does not close for any reason by December
1, 1997, please return to me all the Escrow Deposits by Seller and the
Original Stock Purchase Warrant, and the option deal would then be deemed to
be terminated. Please acknowledge receipt of the Escrow Deposits by Seller,
the Original Stock Purchase Warrant, and your understanding of the terms and
conditions of this letter.
Sincerely
/s/ K.T. Mao
K.T. Mao
<PAGE>
Messrs. Robert Bassett and Rodney Knudsen
November 25, 1997
Page three
The undersigned have read and understood the foregoing and agrees to be bound
by the terms and conditions as set forth herein.
/s/ Robert A. Bassett 11-25-97
- --------------------------------------------
Robert Bassett, Esq. Date
Counsel for Chartwell International, Inc.
- --------------------------------------------
Rodney D. Knutsen, Date
for the Escrow Agent
Escrow Document Services for Lawyers, Inc.
cc: Nathan Upfal, Esq.
Fax: (248) 642-5241
Chartwell International, Inc.
Fax (303) 804-0315
<PAGE>
Stock Certificate
#3496
to KT Mao
500,000 shares
<PAGE>
Stock Certificate
#3495
to KT Mao
500,000 shares
<PAGE>
Stock Certificate
#3494
to KT Mao
2,000,000 shares
<PAGE>
1 of 3
IRREVOCABLE STOCK OR BOND POWER
FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SOCIAL SECURITY OR TAXPAYER IDENTIFYING NO.)
IF STOCK, COMPLETE THIS PORTION
_________ Shares of the _________________ stock of ________________
Represented by Certificate(s) No(s) _______________ inclusive, Standing in
the name of the undersigned on the books of said Company.
IF BONDS, COMPLETE THIS PORTION
______________________________________________ bonds of _____________________
in the principal amount of $________________ No(s) _______________ inclusive,
standing in the name of the undersigned on the books of said Company.
The undersigned does (do) hereby irrevocable constitute and appoint
Attorney ____________________________________________________________________
To transfer the said stock or bond(s), as the case man be, on the books
of said Company, with full power of substitution in the premises.
Dated
----------------------------
Important - Read Carefully
The signature(s) to this Power must correspond
With the name(s) as written upon face of the
Certificate(s) or bond(s) in every particular without
alteration or enlargement or any change whatever.
------------------------------
/s/ K. T. Mao
------------------------------
(PERSON(S) EXECUTING THIS POWER
SIGN(S) HERE)
Signature guaranteed
Medallion guaranteed
Colorado National Bank
/s/ Mathew S. Opl
- -----------------------------
ATHORIZED SIGNATURE
(21) x9002379
Securities Transfer Agents Medallion Program
<PAGE>
2 of 3
IRREVOCABLE STOCK OR BOND POWER
FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SOCIAL SECURITY OR TAXPAYER IDENTIFYING NO.)
IF STOCK, COMPLETE THIS PORTION
_________ Shares of the _________________ stock of ________________
Represented by Certificate(s) No(s) _______________ inclusive, Standing in
the name of the undersigned on the books of said Company.
IF BONDS, COMPLETE THIS PORTION
______________________________________________ bonds of _____________________
in the principal amount of $________________ No(s) _______________ inclusive,
standing in the name of the undersigned on the books of said Company.
The undersigned does (do) hereby irrevocable constitute and appoint
Attorney ____________________________________________________________________
To transfer the said stock or bond(s), as the case man be, on the books
of said Company, with full power of substitution in the premises.
Dated
----------------------------
Important - Read Carefully
The signature(s) to this Power must correspond
With the name(s) as written upon face of the
Certificate(s) or bond(s) in every particular without
alteration or enlargement or any change whatever.
------------------------------
/S/ K. T. MAO
------------------------------
(PERSON(S) EXECUTING THIS POWER
SIGN(S) HERE)
Signature guaranteed
Medallion guaranteed
Colorado National Bank
/s/ Mathew S. Opl
- -----------------------------
ATHORIZED SIGNATURE
(21) x9002379
Securities Transfer Agents Medallion Program
<PAGE>
3 of 3
IRREVOCABLE STOCK OR BOND POWER
FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SOCIAL SECURITY OR TAXPAYER IDENTIFYING NO.)
IF STOCK, COMPLETE THIS PORTION
_________ Shares of the _________________ stock of ________________
Represented by Certificate(s) No(s) _______________ inclusive, Standing in
the name of the undersigned on the books of said Company.
IF BONDS, COMPLETE THIS PORTION
______________________________________________ bonds of _____________________
in the principal amount of $________________ No(s) _______________ inclusive,
standing in the name of the undersigned on the books of said Company.
The undersigned does (do) hereby irrevocable constitute and appoint
Attorney ____________________________________________________________________
To transfer the said stock or bond(s), as the case man be, on the books
of said Company, with full power of substitution in the premises.
Dated
----------------------------
Important - Read Carefully
The signature(s) to this Power must correspond
With the name(s) as written upon face of the
Certificate(s) or bond(s) in every particular without alteration
or enlargement or any change whatever.
------------------------------
/s/ K. T. Mao
------------------------------
(PERSON(S) EXECUTING THIS POWER
SIGN(S) HERE)
Signature guaranteed
Medallion guaranteed
Colorado National Bank
/s/ Mathew S. Opl
- -----------------------------
ATHORIZED SIGNATURE
(21) x9002379
Securities Transfer Agents Medallion Program
<PAGE>
1 of 3
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
- -------------------------------------------------------------------------------
(Please Print)
whose address is
-----------------------------------------------------------
---------------------------------------------------------------------------
DATED: /s/ K.T. Mao
------------------------------
Holder's Signature
11/24/1997
c/o 370 17th Street #2500
------------------------------
Holder's Address
Denver CO 80202-5690
------------------------------
Signature Guaranteed:
----------------------------------------------------------
NOTE:THE SIGNATURE OF THIS ASSIGNMENT FORM MUST CORRESPOND WITH THE NAME AS IT
APPEARS ON THE FACE OF THIS WARRANT, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK OR TRUST COMPANY. OFFICERS
OF CORPORATIONS AND THOSE ACTING IN A FIDUCIARY OR OTHER REPRESENTATIVE CAPACITY
SHALL FILE PROPER EVIDENCE OF AUTHORITY TO ASSIGN THE FOREGOING WARRANT.
<PAGE>
2 of 3
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
- -------------------------------------------------------------------------------
(Please Print)
whose address is
-----------------------------------------------------------
---------------------------------------------------------------------------
DATED: /s/ K.T. Mao
------------------------------
Holder's Signature
11/24/1997
c/o 370 17th Street #2500
------------------------------
Holder's Address
Denver CO 80202-5690
------------------------------
Signature Guaranteed:
----------------------------------------------------------
NOTE: THE SIGNATURE OF THIS ASSIGNMENT FORM MUST CORRESPOND WITH THE NAME AS
IT APPEARS ON THE FACE OF THIS WARRANT, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK OR TRUST COMPANY.
OFFICERS OF CORPORATIONS AND THOSE ACTING IN A FIDUCIARY OR OTHER
REPRESENTATIVE CAPACITY SHALL FILE PROPER EVIDENCE OF AUTHORITY TO ASSIGN THE
FOREGOING WARRANT.
<PAGE>
3 of 3
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
- -------------------------------------------------------------------------------
(Please Print)
whose address is
-----------------------------------------------------------
---------------------------------------------------------------------------
DATED: /s/ K.T. Mao
------------------------------
Holder's Signature
11/24/1997
c/o 370 17th Street #2500
------------------------------
Holder's Address
Denver CO 80202-5690
------------------------------
Signature Guaranteed:
----------------------------------------------------------
NOTE: THE SIGNATURE OF THIS ASSIGNMENT FORM MUST CORRESPOND WITH THE NAME AS
IT APPEARS ON THE FACE OF THIS WARRANT, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK OR TRUST COMPANY.
OFFICERS OF CORPORATIONS AND THOSE ACTING IN A FIDUCIARY OR OTHER
REPRESENTATIVE CAPACITY SHALL FILE PROPER EVIDENCE OF AUTHORITY TO ASSIGN THE
FOREGOING WARRANT.
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for VALUE received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until AUGUST 1, 2002, ("Expiration Date') but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), SIX MILLION (6,000,000) of the
fully paid and non-assessable shares of the Company's restricted common
stock, $0.001 par value, ("Common Stock"), at a purchase price of TEN CENTS
($0.10) PER SHARE ("Purchase Price'). The Purchase Price and the number of
shares for which this Option is exercisable shall be subject to adjustment as
provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with
applicable laws, this Option and all rights hereunder are
transferable, in whole or in part, at the office or agency of the
Company, referred to in Section 2 hereof, by the holder hereof in
person or by duly authorized attorney, upon surrender of this Option
together with the Assignment Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof, if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, filly paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be filly paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof, and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof, be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof, of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.01
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate to protect the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if any,
of other property that at the time would be received upon
the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out of all the provisions
hereof and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one
of its officers thereunto duly authorized.
DATED AS OF: AUGUST 1, 1997
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACTOF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until JULY 31, 2002, ("Expiration Date') but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), ONE MILLION SIX HUNDRED EIGHTY
THOUSAND (1,680,000) of the fully paid and non-assessable shares of the
Company's restricted common stock, $0.001 par value, (`Common Stock'), at a
purchase price of TEN CENTS ($0.10) PER SHARE ("Purchase Price"). The
Purchase Price and the number of shares for which this Option is exercisable
shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof, if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof; shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof; be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof; of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.01
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate to protect the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received
upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out of all the provisions
hereof and in the taking of all such actions as may be necessary
OR appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one
of its officers thereunto duly authorized.
DATED AS OF: JULY 31, 1997
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received JOHN J. GRACE IS ENTITLED, upon the
terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof UNTIL MARCH 5, 2004, ("Expiration Date") but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), ONE MILLION FIVE HUNDRED THOUSAND
(1,500,000) of the fully paid and non-assessable shares of the Company's
restricted common stock, $0.001 par value, ("Common Stock"), at a purchase
price of TEN CENTS ($0.10) PER SHARE ("Purchase Price"). The Purchase Price
and the number of shares for which this Option is exercisable shall be
subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof; by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, LIENS, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry, Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof; be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof; of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.01
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate to protect the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received
upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will NOT, by amendment of its Articles of
Incorporation or Bylaws OR through any REORGANIZATION, TRANSFER
OF ASSETS, CONSOLIDATION, MERGER, dissolution, issue or sale of
SECURITIES OR ANY OTHER VOLUNTARY ACTION, avoid or seek TO AVOID
the observance OR performance of any of the TERMS TO be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out OF all the provisions
hereof and in the taking of all such actions as may be necessary
OR appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one
of its officers thereunto duly authorized.
DATED AS OF: MARCH 5, 1999
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received JOHN J. GRACE is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until JUNE 1, 2003, ("Expiration Date") but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), ONE MILLION FIVE HUNDRED THOUSAND
(1,500,000) of the fully paid and non-assessable shares of the Company's
restricted common stock, $0.001 par value, ("Common Stock"), at a purchase
price of TEN CENTS ($0.10) PER SHARE ("Purchase Price"). The Purchase Price
and the number of shares for which this Option is exercisable shall be
subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof; by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
SUNDAY, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof, be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof, of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
EXERCISE OF this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.01
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate TO PROTECT the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received
upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out of all the provisions
hereof and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
A Nevada corporation
/s/ Alice M. Gluckman
-------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE WITH RULE 144
UNDER THE ACT, OR THE COMPANY RECEWES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received JOHN J. GRACE is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until NOVEMBER 1, 2002, ("Expiration Date")
but not thereafter, to subscribe for and purchase from Chartwell
International, Inc., a Nevada corporation ("the Company"), TWO MILLION
(2,000,000) of the fully paid and non-assessable shares of the Company's
restricted common stock, $0.001 par value, ("Common Stock"), at a purchase
price of TEN CENTS ($0.L0) PER SHARE ("Purchase Price"). The Purchase Price
and the number of shares for which this Option is exercisable shall be
subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof; shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof; be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof; of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.01
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate to protect the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received
upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out of all the provisions
hereof and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: OCTOBER 27, 1997
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
-------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE WITH RULE 144
UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT, OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received BARRY M. GOLDWATER, JR. is entitled,
upon the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until SEPTEMBER 15, 2000, ("Expiration Date")
but not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), TWO HUNDRED THOUSAND (200,000) of
the frilly paid and non-assessable shares of the Company's restricted common
stock, $0.001 par value, ("Common Stock'), at a purchase price of FIFTEEN CENTS
($0.15) PER SHARE ("Purchase Price'). The Purchase Price and the number of
shares for which this Option is exercisable shall be subject to adjustment as
provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof if any, at the time of exercise in an amount equal to
the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, frilly paid and
non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be frilly paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
The Purchase Price of this Option and the number of shares issuable
upon its exercise shall be subject to adjustment from time to time as
follows:
a) In the event the Company shall at any time after the date hereof
issue additional shares of Common Stock in stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or
declare any dividend or other distribution payable with
additional shares of Common Stock (or securities convertible into
Common Stock) with respect to Common Stock or effect a split or
subdivision of the outstanding shares of the Company's Common
Stock, the Purchase Price then in effect immediately prior to
such stock dividend, stock distribution or subdivision or such
declaration thereof, shall, concurrently with the effectiveness
of such stock dividend, stock distribution or subdivision, or the
earlier declaration thereof, be proportionately decreased and the
number of shares of Common Stock issuable upon exercise of this
Option shall be appropriately increased in proportion to such
increase of outstanding shares.
b) In the event the outstanding shares of Common Stock shall at any
time after the date hereof be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Purchase Price then in effect immediately prior
to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased and the number of shares of Common
Stock issuable upon exercise of this Option shall be
appropriately decreased in proportion to such decrease in
outstanding shares.
c) In case, at any time after the date hereof, of any consolidation
or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the
Company to another corporation, the shares of Common Stock
issuable upon the exercise of this Option shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder would have been entitled
if immediately prior to such consolidation, merger or conveyance
he had exercised this Option in its entirety; and in any such
case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Option and that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Purchase Price) shall
thereafter be
<PAGE>
Page 4
applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the
exercise of this Option.
d) All calculations under this Paragraph 9 shall be made to the
nearest cent or to the nearest share, as the case may be.
e) No adjustment in the Purchase Price need be made if such
adjustment would be less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to any adjustment of $0.0l
or more in the Purchase Price.
f) The Company will, at all times, in good faith assist in carrying
out all the provisions of this Paragraph 9 and in the taking of
all such action as may be necessary or appropriate to protect the
rights of the holder of this Option from impairment.
g) Upon the occurrence of each adjustment or readjustment of the
Purchase Price pursuant to this Paragraph 9, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the
holder of this Option a certificate setting forth adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
written request at any time of the holder of this Option, furnish
or cause to be furnished to such holder a like certificate
setting forth:
i) such adjustments and readjustments;
ii) the Purchase Price at the time in effect; and
iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received
upon the exercise of this Option.
h) In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereto who are entitled to receive any dividend
(other than a cash dividend) or other distribution, the Company
shall mail to the holder of this Option at least twenty (20) days
prior to such record day, a notice specif5ting the date on which
any such record is to be taken for the purpose of such dividend
or distribution.
i) The Company shall at all times reserve and keep available out of
the authorized but unissued shares of the Common Stock, solely
for the purpose of effecting the exercise of this Option, such
number of its shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Option; and if at
any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to affect the exercise of this
Option, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
<PAGE>
Page 5
j) The Company will not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed
or performed hereunder by the Company but will at all times in
good faith assist in the carrying out of all the provisions
hereof and in the taking of all such actions as may be necessary
or appropriate in order to protect the rights of the holders of
this Option against impairment.
10) REGISTRATION RIGHTS
The Company shall immediately endeavor to register the securities
relating to this option under the Securities Act of 1933 at the request
of holder(s) representing an aggregate of at least ten million
(10,000,000) shares under option.
11) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) The holder acknowledges that all certificates representing the
Common Stock of the Company issued from time to time upon exercise
hereof shall bear the legend set forth on the first page of this
Option, unless registration rights are exercised under Paragraph
10 above.
c) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
Dated as of: September 15, 1998
Chartwell INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
-----------------------------
A1ice M. Gluckman
Corporate Secretary
<PAGE>
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
SPORTSSTAR MARKETING, INC.
A COLORADO CORPORATION
HELD IN THE NAME OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received JOHN J. GRACE is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until JULY 31, 2003, ("Expiration Date") but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), TWO HUNDRED THOUSAND (200,000) of
the fully paid and non-assessable shares of the Company's SportsStar
Marketing, Inc.'s restricted common stock, $0.001 par value, ("Common
Stock"), at a purchase price of THIRTY-TWO CENTS ($0.32) PER SHARE ("Purchase
Price"). The Purchase Price and the number of shares for which this Option is
exercisable shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of' a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
To the extent Chartwell is entitled, as a holder of the SportsStar
securities, any adjustments in the number of SportsStar shares it holds
as a result of stock dividends, revenue splits, stock splits,
dividends, exchanges of shares relating to mergers, etc., then said
shares &/or Purchase Price of this Option will be adjusted accordingly
and proportionately.
10) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
-------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
SPORTSSTAR MARKETING, INC.
A COLORADO CORPORATION
HELD IN THE NAME OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof to subscribe for and purchase from Chartwell
International, Inc., a Nevada corporation ("the Company"), ONE MILLION
(1,000,000) of the fully paid and non-assessable shares of the Company's
SportsStar Marketing, Inc.'s restricted common stock, $0.001 par value, ("Common
Stock"), at a purchase price of FIFTY CENTS ($0.50) PER SHARE ("Purchase
Price"). The Purchase Price and the number of shares for which this Option is
exercisable shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Subject to compliance with applicable laws, this Option and all rights
hereunder are transferable, in whole or in part, at the office or
agency of the Company, referred to in Section 2 hereof; by the holder
hereof in person or by duly authorized attorney, upon surrender of this
Option together with the Assignment Form annexed hereto properly
endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof, in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof by the
surrender of this Option and the Subscription Form duly executed at the
office of the Company at 5275 DTC Parkway, Suite 110, Englewood,
Colorado 80111-2752, or such other office or agency appearing on the
books of the Company, and upon the payment of the Purchase Price of the
shares thereby purchased (by cash or by cancellation of indebtedness of
the Company to the holder hereof; if any, at the time of exercise in an
amount equal to the Purchase Price of the shares thereby purchased);
whereupon the holder this Option, shall receive a certificate or
certificates each in proper form, for the number of shares of Common
Stock so purchased. The Company agrees that if at the time of the
surrender of this Option and purchase, the holder shall be entitled to
exercise this Option, the shares so purchased shall be and be deemed to
be issued to such holder as the record owner of such shares as of the
close of business on the date on which this Option shall be exercised
as aforesaid. The Common Stock issued upon exercise of this Option in
accordance with its terms shall be validly issued and outstanding,
fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
To the extent Chartwell is entitled, as a holder of the SportsStar
securities, any adjustments in the number of SportsStar shares it holds
as a result of stock dividends, revenue splits, stock splits,
dividends, exchanges of shares relating to mergers, etc., then said
shares &/or Purchase Price of this Option will be adjusted accordingly
and proportionately.
9) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be given
effect in all respects as if it had been issued and delivered by the
Company on the date hereof. This Option shall be binding upon any
successors or assigns of the Company. This Option shall constitute a
contract under the laws of the State of Colorado and for all purposes
shall be construed in accordance with and governed by the laws of
said state, excepting only to those matters of corporate organization
and power incident to the issuance of stock pursuant hereto, which
shall be governed by the laws by the State of Nevada.
b) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: OCTOBER 31, 1997
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
-------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
SPORTSSTAR MARKETING, INC.
A COLORADO CORPORATION
HELD IN THE NAME OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until JULY 31, 2003, ("Expiration Date") but not
thereafter, to subscribe for and purchase from Chartwell International, Inc., a
Nevada corporation ("the Company"), FOUR HUNDRED THOUSAND (400,000) of the fully
paid and non-assessable shares of the Company's SportsStar Marketing, Inc.'s
restricted common stock, $0.00l par value, ("Common Stock'), at a purchase price
of THIRTY-TWO CENTS ($0.32) PER SHARE ("Purchase Price"). The Purchase Price and
the number of shares for which this Option is exercisable shall be subject to
adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof; by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
<PAGE>
Page 2
The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof.
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
<PAGE>
Page 3
Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
To the extent Chartwell is entitled, as a holder of the SportsStar
securities, any adjustments in the number of SportsStar shares it holds
as a result of stock dividends, revenue splits, stock splits,
dividends, exchanges of shares relating to mergers, etc., then said
shares &/or Purchase Price of this Option will be adjusted accordingly
and proportionately.
10) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one of
its officers thereunto duly authorized.
DATED AS OF: JUNE 1, 1998
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
-------------------------------
Alice M. Gluckman
Corporate Secretary
<PAGE>
STOCK OPTION
TO PURCHASE SHARES OF COMMON STOCK OF
SPORTSSTAR MARKETING, INC.
A COLORADO CORPORATION
HELD IN THE NAME OF
CHARTWELL INTERNATIONAL, INC.
A NEVADA CORPORATION
THIS CERTIFIES that, for value received DR. JANICE A. JONES is entitled, upon
the terms and subject to the conditions hereinafter set forth, at any time
commencing from the date hereof until JUNE 30, 2004, ("Expiration Date") but
not thereafter, to subscribe for and purchase from Chartwell International,
Inc., a Nevada corporation ("the Company"), TWO HUNDRED THOUSAND (200,000) of
the fully paid and non-assessable shares of the Company's SportsStar
Marketing, Inc.'s restricted common stock; $0.001 par value, ("Common
Stock"), at a purchase price of FIFTY CENTS ($0.50) PER SHARE ("Purchase
Price"). The Purchase Price and the number of shares for which this Option is
exercisable shall be subject to adjustment as provided herein.
1) TITLE TO OPTION
Prior to the Expiration Date and subject to compliance with applicable
laws, this Option and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company, referred to in
Section 2 hereof; by the holder hereof in person or by duly authorized
attorney, upon surrender of this Option together with the Assignment
Form annexed hereto properly endorsed.
2) EXERCISE OF OPTION
The purchase rights represented by the Option are exercisable by the
registered holder hereof; in whole or in part, increments of one
thousand (1,000) shares, commencing from the date hereof to and before
the close of business on the Expiration Date by the surrender of this
Option and the Subscription Form duly executed at the office of the
Company at 5275 DTC Parkway, Suite 110, Englewood, Colorado 80111-2752,
or such other office or agency appearing on the books of the Company,
and upon the payment of the Purchase Price of the shares thereby
purchased (by cash or by cancellation of indebtedness of the Company to
the holder hereof; if any, at the time of exercise in an amount equal
to the Purchase Price of the shares thereby purchased); whereupon the
holder this Option, shall receive a certificate or certificates each in
proper form, for the number of shares of Common Stock so purchased. The
Company agrees that if at the time of the surrender of this Option and
purchase, the holder shall be entitled to exercise this Option, the
shares so purchased shall be and be deemed to be issued to such holder
as the record owner of such shares as of the close of business on the
date on which this Option shall be exercised as aforesaid. The Common
Stock issued upon exercise of this Option in accordance with its terms
shall be validly issued and outstanding, fully paid and non-assessable.
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The Company covenants that all shares of Common Stock which may be
issued upon the exchange of rights represented by this Option will,
upon exercise of the rights represented by this Option, be fully paid
and non-assessable and free from all taxes, liens, and charges in
respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
3) NO FRACTIONAL SHARES OR SCRIP
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Option. Any fractional shares shall be
rounded up to the nearest whole share.
4) CHARGES, TAXES, AND EXPENSES
Issuance of certificates for shares of Common Stock upon the exercise
of this Option shall be made without charge to the holder hereof for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be
paid by the Company and such certificates shall be issued in the name
of the holder of this Option or in such name or names as may be
directed by the holder of this Option; provided, however, that in the
event certificates for shares of Common Stock are to be issued in a
name of the holder of this Option, this Option when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto,
duly executed by the holder hereof; and provided further, that upon any
transfer involved in the issuance or delivery of any certificates for
shares of Common Stock, the Company may require, as a condition,
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5) NO RIGHTS AS SHAREHOLDERS
This Option does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof
6) EXCHANGE AND REGISTRY OF OPTIONS
This Option is exchangeable, upon the surrender hereof by the
registered holder at the above mentioned office or agency of the
Company for new Option of like tenor.
The Company shall maintain at the above mentioned office or agency a
registry showing the name and address of the registered holder of this
Option. This Option may be surrendered for exchange, transfer, or
exercise in accordance with its terms at such office or agency of the
Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry. Upon such
registry, this Option may only be transferred in accordance with the
requirements of applicable federal and state securities laws.
7) LOSS, THEFT, DESTRUCTION, OR MUTILATION OF OPTION
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction, or mutilation of this Option, and in
case of loss, theft, or destruction reasonable satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this
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Option, if mutilated, the Company will make and deliver a new Option of
like tenor in lieu of this Option.
8) SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday,
Sunday, legal holiday, or be a day on which the office of the Company
is not open for business, then such action may be taken or such right
may be exercised on the next succeeding day of business.
9) ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
To the extent Chartwell is entitled, as a holder of the SportsStar
securities, any adjustments in the number of SportsStar shares it holds
as a result of stock dividends, revenue splits, stock splits,
dividends, exchanges of shares relating to mergers, etc., then said
shares &/or Purchase Price of this Option will be adjusted accordingly
and proportionately.
10) MISCELLANEOUS
a) The provisions of this Option shall be construed and shall be
given effect in all respects as if it had been issued and
delivered by the Company on the date hereof This Option shall be
binding upon any successors or assigns of the Company. This Option
shall constitute a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance
with and governed by the laws of said state, excepting only to
those matters of corporate organization and power incident to the
issuance of stock pursuant hereto, which shall be governed by the
laws by the State of Nevada.
b) This Option is in complete satisfaction of all obligations of the
Company to issue options to the initial grantee of this Option.
IN WITNESS WHEREOF, the Company has caused this Option to be executed by one
of its officers thereunto duly authorized.
DATED AS OF: JUNE 7, 1999
CHARTWELL INTERNATIONAL, INC.
a Nevada corporation
/s/ Alice M. Gluckman
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Alice M. Gluckman
Corporate Secretary
