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UNITED STATES PRIVATE
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 1998
WHITNEY AMERICAN CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
0-22907 84-1070022
(Commission File Number) (I.R.S. Employer Identification Number)
8150 East Leesburg Pike, Suite 1200, Vienna, Virginia 22182
(Address of Principal Executive Offices and Zip Code)
(703) 893-0582
(Registrant's telephone number, including area code)
12373 E. Cornell Avenue, Aurora, Colorado 80014
(Former name or former address, if changed since last report)
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Item 1. CHANGE IN CONTROL.
Acquisition of Other Businesses
Whitney American Corporation, a Delaware corporation ("Company"), entered
into and consummated the following Stock Exchange Agreements (collectively,
the "Agreements") dated March 6, 1998, among the Company and Kemron
Environmental Services, Inc., a New York corporation ("Kemron"), and its
shareholders ("Kemron Agreement"); Coastline International, Inc., a Delaware
corporation ("Coastline"), and its shareholders ("Coastline Agreement"); New
Horizons, Inc., a Delaware corporation ("New Horizons"), and its shareholders
("New Horizons Agreement"); and Exeter Group, Inc., a Florida corporation
("Exeter"), and its shareholders ("Exeter Agreement"). Pursuant to the
Agreements the Company acquired such corporations in a stock-for-stock
exchange with the shareholders of those corporations, issuing an aggregate of
8,000,000 common shares to consummate the acquisitions. These transactions are
sometimes collectively referred to below in this report as the "Exchange."
In connection with the Exchange, the Company has undergone a change of
control by virtue of changes in share ownership and changes in its management
and board of directors, both as described below. Neither of the companies
acquired pursuant to the Agreements nor their respective shareholders were
affiliates of the Company or known to own any of the shares of the Company
prior to the Exchange. Information concerning the Company's new executive
officers, directors and principal shareholders is set forth below, as is a
description of the business of the companies acquired.
The Company did not mail to shareholders or file with the Securities and
Exchange Commission any notice pursuant to Section 14(f) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and Rule 14f-1 thereunder,
because it obtained the prior approval of its shareholders for the Exchange in
accordance with Section 228 of the Delaware General Corporation Law.
CHANGE IN MANAGEMENT
Issuance of Shares
At the time of consummating the Exchange, the Company had an aggregate of
362,515 common shares issued and outstanding. As called for in the Agreements,
the Company has issued an aggregate of 8,000,000 additional common shares.
Accordingly, the shareholders of Kemron, Coastline, New Horizons and Exeter,
as a group, own approximately 95% of the Company's 8,362,515 currently issued
and outstanding shares.
Change of Control
Prior to execution of the Purchase Agreement, Stephen M. Siedow was the
sole director and executive officer of the Company, as permitted by Delaware
law. Pursuant to the Agreements, Mr. Siedow resigned as an officer and
director of the Company, and the persons named below were elected to the
respective positions noted as the executive officers and directors of the
Company.
Executive Officers and Directors
The current executive officers and directors of the Company are listed
below, all of whom assumed office effective March 10, 1998. Directors serve
one-year terms until the next annual meeting of shareholders, or until
successors have been elected and duly qualified. Officers hold office at the
pleasure of the Board of Directors, absent any employment agreement, of which
none currently exist.
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Juan J. Gutierrez DIRECTOR, Chairman, Chief Executive Officer
Hector I. Hernandez, Sr. DIRECTOR, Executive Vice President, Secretary
Heatherlynn Colburn DIRECTOR, Chief Operating Officer, Executive
Vice President
John Heishman DIRECTOR, Assistant Secretary, Treasurer
Michael Goldberg DIRECTOR
David Vandenberg DIRECTOR
John M. Dwyer DIRECTOR
Biographical Information
Following is a brief account of the business experience during at least
the past five years of each director and executive officer, including the
principal occupation and employment during that period.
JUAN J. GUTIERREZ, 56, is Chairman and CEO of the Company. He has been
Chairman and CEO of Kemron Environmental Services, Inc. since 1983, when he
purchased Kemron. He is also Chairman and CEO of InterAmerica Technologies,
Inc., a software development and systems integration company which he found in
1971. Both companies have enjoyed rankings on the list of the 500 largest
Hispanic-owned businesses compiled by Hispanic Business magazine. Mr.
Gutierrez has received numerous achievements and community awards, including
being selected by the U.S. Hispanic Chamber of Commerce as the 1984 Hispanic
Businessman of the Year, and receiving the 1994 Small Business
Administration's Lifetime Minority Business Achievement Award. He is a
graduate of Pan American University at Edinburg, Texas.
HECTOR I. HERNANDEZ, SR., ESQ., 37, is an Executive Vice President,
Secretary, General Counsel and Director of the Company. Mr. Hernandez is a
licensed attorney, and received his Juris Doctor degree from Georgetown
University Law Center in Washington, DC, in 1986. From 1990 to 1993, Mr.
Hernandez served as officer and director of Sibir, Inc., U.S.A., a Virginia
corporation which in 1994 was liquidated pursuant to Chapter seven of the U.S.
Bankruptcy Code. From 1986 to 1990, Mr. Hernandez was an attorney with the
U.S. Department of State. Mr. Hernandez presently serves as a director of
HDN, Inc., which filed a form S-1 Registration Statement with the Securities
and Exchange Commission on December 31, 1997.
HEATHERLYNN COLBURN, 28, is an Executive Vice President, Chief Operating
Officer and Director of the Company. She is also the Chairman of the Board
and CEO of Costa Real Corporation, a shareholder of the Company; and a
director of HDN, Inc., a Delaware corporation which recently filed an S-1
Registration Statement with the Securities and Exchange Commission. Ms.
Colburn provides in-depth knowledge of the financial markets and financial
communities, and will play an integral role in the development of the
Company's expansion of its markets from regional to national.
JOHN M. DWYER, 37, is a Director of the Company, and a Vice President of
Kemron. Mr. Dwyer is responsible for the management and administration of
Kemron's Consulting and Engineering Division, including profit and loss
performance, and is Kemron's head of marketing. He has been with Kemron for
over 17 years and brings a wealth of experience and expertise in the
development, design, and execution of small and large scale environmental
programs involving hazardous waste site investigations, remedial construction,
environmental assessments and permitting assistance services, as well as
leaking
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underground storage tanks. Mr. Dwyer holds an A.S. degree in computer
and electrical technology from the Southern Institute of Technology.
MICHAEL GOLDBERG, 48, is a Director of the Company and an officer of
Exeter Group, Inc. Mr. Goldberg graduated dean's list from the Pennsylvania
State University in 1971. Mr. Goldberg graduated as an Asper Fellow from the
University of Maryland Law School in 1974. In 1973 and 1974, Mr. Goldberg
served as an Asper Fellow with the United States Attorney's Office (Criminal
Division) in Washington, D.C. Mr. Goldberg worked on the Watergate case as
well as other major cases. From 1974 through 1977, Mr. Goldberg was an
Assistant District Attorney in Philadelphia, PA. Mr. Goldberg served in the
Narcotics, Major Trials and Homicide Division. From 1978 until 1986, Mr.
Goldberg was in private practice with his firm representing such clients as F.
Lee Bailey, Mayor Frank L. Rizzo, the Philadelphia Eagles and the City of
Philadelphia. Mr. Goldberg became Chairman, CEO and President of RX Medical
Services Corp. (a publicly traded company listed on the American Stock
Exchange), in 1991, and oversaw the growth of that company from $2.7 million
to over $20 million in annual revenues. Mr. Goldberg resigned as Chairman and
CEO of RX Medical Services Corp. in December 1997. Mr. Goldberg has received
honors as Who'' Who Leading American Executives in 1992; Adaptive Business
Leaders Organization (ABL) in 1992; and Outstanding Young Man of America in
1983.
DAVID VANDENBERG, 41, is a Director of the Company, and a Vice President
of Kemron. He is a 1979 graduate of the University of Wisconsin with degrees
in Chemistry and Business. With 19 years of experience in the environmental
field, he has been involved with the development and management of Kemron's
business through the changes in legislation, market conditions and growth of
the environmental service industry. He has managed the growth of a 3 person
environmental laboratory to a staff of over 70 professionals, and today
Kemron's Ohio Valley Laboratory is one of the nation's largest, most respected
environmental laboratories. Mr. Vandenberg is responsible for the
laboratory's sales and marketing strategies, operation oversight and profit
and loss performance.
JOHN S. HEISHMAN, 32, is the Assistant Secretary/Treasurer and a Director
of the Company, and is responsible for Finance and Contract Administration for
the Company. He has 10 years of finance and accounting experience in both
commercial and federal contracting. Mr. Heishman joined the KEMRON management
team in 1996 and has brought vast experience in forecasting/budgeting, cash
management, financial analysis, corporate and operational accounting. Prior
to joining KEMRON, Mr. Heishman worked for Computer Sciences Corporation, and
in public accounting with Ernst & Young. He has extensive knowledge of GAAP,
FAR, and CAS issues. He holds a BBA in accounting from James Madison
University, and is a Certified Public Accountant in Virginia.
Executive Compensation
During the fiscal year ended May 31, 1997, no director or executive
officer of the Company received cash or non-cash compensation for service to
the Company. Subsequent to the fiscal year end, the Company awarded shares of
its common stock to officer and director Stephen M. Siedow (150,000 shares)
and to Secretary and corporate counsel John D. Brasher Jr.(150,000 shares)
under the Company's 1997 Employee Stock Compensation Plan for services
rendered to the Company and not otherwise compensated. Such shares were valued
at a price of $.025 per share. Prior to issuance, these shares were registered
under the Act under cover of a registration statement on Form S-8. Mr. Brasher
and Mr. Siedow were in addition owed approximately $105,000 for services
rendered and expenses advanced on behalf of the Company, which the Company
intends to pay.
On March 12, 1998, the Company awarded stock options to officers and
directors (Juan J. Gutierrez: 350,000; Hector I. Hernandez, Sr.: 350,000;
Heatherlynn Colburn: 400,000; Michael Goldberg: 100,000; John Dwyer: 25,000;
and David Vandenberg: 25,000) under the Company's 1997 Stock Option Plan.
Such options have an exercise price of $0.25 per share. Prior to issuance,
these shares were registered under the Act under cover of a registration
statement on Form S-8.
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PRINCIPAL SHAREHOLDERS
Beneficial Ownership Following Acquisitions
The following table sets forth as of March 12, 1998, the names of persons
who own of record, or were known by the Company to own beneficially, more than
five percent of its total issued and outstanding common stock and the
beneficial ownership of all such stock as of that date by executive officers
and directors of the Company and all such executive officers and directors as
a group. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as to
such shares.
<TABLE>
<CAPTION>
Name and Address Amount & Nature Percent
of Beneficial of Beneficial of
Title of Class Owner Ownership Class
<S> <C> <C> <C>
Common Stock, *Juan J. Gutierrez 3,460,001 35.9% 1, 4
$.00001 par 8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
SAME *Hector I. Hernandez 2,100,000 21.8% 2, 4
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
SAME *Heatherlynn Colburn 2,150,000 22.4% 3, 4
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
SAME *Michael Goldberg 100,000 1% 4
2008 Bayview Drive
Ft. Lauderdale, Florida 33305
SAME *David Vandenberg 191,666 1.9% 4
109 Starlite Park
Marietta, Ohio 45750
SAME *John M. Dwyer 191,666 1.9% 4
2987 Clairmont Road, Suite 150
Atlanta, Georgia 30329
SAME *John Heishman -0- -0-
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
SAME Costa Real Corporation 1,750,000 18% 3
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
SAME Twenty First Century Heritage Trust 1,750,000 18% 2
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
</TABLE>
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<TABLE>
<S> <C> <C> <C>
SAME InterAmerica Technologies, Inc. 887,778 9.1% 1
8150 Leesburg Pike, Suite 1200
Vienna, Virginia 22182
*All executive officers and
directors as a group (7 persons) 8,193,333 85.2%
</TABLE>
1 Mr. Gutierrez is the sole owner of shareholder InterAmerica
Technologies, Inc., and claims beneficial ownership of shares held by that
entity.
2 Mr. Hernandez is the administrator of Twenty First Century Heritage
Trust and claims beneficial ownership of shares held by the trust due to
voting control possessed.
3 Ms. Colburn is the president of Costa Real Corporation and claims
beneficial ownership of shares held by that entity due to voting control
possessed.
4 Includes common shares of the Company subject to purchase upon the
exercise of options granted under the Company's 1997 Compensatory Stock Option
Plan, including 350,000 (Juan Gutierrez), 350,000 (Hector Hernandez), 400,000
(Heatherlynn Colburn), 100,000 (Michael Goldberg), 25,000 (John Dwyer), and
25,000 (David Vandenberg).
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
ACQUISITION OF UNRELATED COMPANIES
The Company entered into and consummated the following Stock Exchange
Agreements (collectively, the "Agreements") dated March 6, 1998, among the
Company and:
(a) Kemron Environmental Services, Inc., a New York corporation
("Kemron"), and its shareholders ("Kemron Agreement"), pursuant to which among
other things the Company acquired in a stock-for-stock exchange all of the
issued and outstanding shares of capital stock of Kemron and in exchange
therefor issued to the shareholders of Kemron an aggregate of 3,500,000 shares
of the Company's authorized but unissued common stock;
(b) Coastline International, Inc., a Delaware corporation
("Coastline"), and its shareholders ("Coastline Agreement"), pursuant to which
among other things the Company acquired in a stock-for-stock exchange all of
the issued and outstanding shares of capital stock of Coastline and in
exchange therefor issued to the shareholders of Coastline an aggregate of
1,750,000 shares of the Company's authorized but unissued common stock;
(c) New Horizons, Inc., a Delaware corporation ("New Horizons"), and
its shareholders ("New Horizons Agreement"), pursuant to which among other
things the Company acquired in a stock-for-stock exchange all of the issued
and outstanding shares of capital stock of New Horizons and in exchange
therefor issued to the shareholders of New Horizons an aggregate of 1,750,000
shares of the Company's authorized but unissued common stock;
(d) Exeter Group, Inc., a Florida corporation ("Exeter"), and its share
holders ("Exeter Agreement"), pursuant to which among other things the Company
acquired in a stock-for-stock exchange all of the issued and outstanding
shares of capital stock of Exeter and in exchange therefor issued to the
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shareholders of Exeter an aggregate of 1,000,000 shares of the Company's
authorized but unissued common stock;
The shares issued pursuant to the Agreements were not registered under
the Securities Act of 1933, as amended ("Act"), on the grounds that the sale,
issuance and delivery of such shares were transactions not involving any
public offering within the meaning of Section 4(2) of the Act. Accordingly,
all such shares are deemed "restricted securities" as defined in Rule 144(a)
under the Act. All certificates evidencing the shares issued pursuant to the
Agreements bear a customary form of investment legend, and a stop order has
been entered in the Company's transfer records in respect of such shares. No
person has been granted registration rights as to any of such shares, although
the Company is not prevented from registering any of such shares for resale at
a later date..
The four exchange agreements referred to above contained certain common
terms and provisions, as discussed below.
Expenses
The Company, Kemron, Coastline, New Horizons and Exeter each bore their
own expenses incurred in connection with the Exchange. In the Kemron
Agreement, Kemron agreed to guarantee the payment by the Company of
approximately $100,000 in outstanding payables of the Company.
Representations and Warranties
The exchange agreements contain customary representations and warranties
by the parties regarding due organization and good standing, capitalization,
no defaults, due authorization and similar matters. The shareholders of the
acquired companies made certain representations and warranties as to their
investment intent, the private nature of the transaction, the lack of any
general advertising or general solicitation, the quantity and quality of
information possessed by them regarding the Company, and other matters.
Indemnification
The shareholders of the acquired companies agreed to indemnify the
Company, and the Company agreed to indemnify those shareholders, from and
against certain damages occurring after the closing date but arising out of
events prior to the closing date, arising from breach of the exchange
agreements or failure of or breach of any representations and warranties in
the exchange agreements. However, the indemnity is available only to damages
exceeding $10,000 in the aggregate and as to which the party claiming
indemnification has received actual notice of the claim giving rise to the
right to indemnification within twenty-four months of the closing date.
Reverse Split Prohibition
In order to protect persons who were the Company's shareholders at the
closing, the parties agreed that, for a period of eighteen (18) months
following the closing, the Company is prohibited from effecting any reverse
split of its common stock or any corporate action that would change the number
of common shares of the Company into a smaller number of shares. However,
this prohibition does not prevent the Company from engaging in a merger,
exchange, consolidation or similar transaction with an unaffiliated entity
which has the effect of reducing the number of common shares.
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BRIEF DESCRIPTION OF KEMRON ENVIRONMENTAL SERVICES, INC.
Kemron Environmental Services, Inc. ("Kemron"), a New York corporation,
was first incorporated under the name of Industrial Hygienics, Inc. (IHI) on
June 3, 1975. Between 1975 and 1981, IHI operated as a stand alone industrial
hygiene consulting and laboratory company on Long Island, New York. In 1981,
IHI acquired Kemron Environmental Services, a division of the Borg-Warner
Corporation, and changed its name to IHI-Kemron. The acquisition brought to
IHI-Kemron a network of industrial hygiene and environmental laboratories in
the midwest, the Ohio River Valley, and Louisiana. The Louisiana laboratory
was established as early as 1952 and was the premier ambient air and emissions
testing facility in the Southeast. In 1982, IHI-Kemron acquired WAPORA, which
at the time was the leading Regional Mission contractor for the Environmental
Protection Agency with a staff of over 100 environmental scientists located in
five states throughout the eastern half of the U.S.
IHI-Kemron was not successful in merging and consolidating its operations
after the acquisitions and eventually ran into financial difficulties.
Consequently, IHI-Kemron was purchased in 1983 by Juan J. Gutierrez, a
Virginia based management consultant. Gutierrez reorganized the company,
eliminated unprofitable operations, and guided the company back to
profitability. In 1988, Gutierrez changed the name of the company from
IHI-Kemron, to its name under Borg-Warner, Kemron Environmental Services,
Inc. In 1993, WAPORA, the wholly-owned subsidiary, was merged with the parent
company to form the present day operating structure.
Kemron is a full service environmental engineering and consulting company
offering four distinct lines of service which include Site Investigations and
Engineering; Site Remediation and Construction; Environmental Management &
Permitting Assistance; and Analytical/Laboratory Services. Its consulting and
Engineering Division is comprised of three operating groups located in
Atlanta, GA, Marietta, OH, and Vienna, VA, serving a diverse client base such
as Fortune 1000 companies, the Georgia State Department of Environmental
Resources and the U.S. Army Corp of Engineers. Kemron's laboratory, also
located in the heart of the Ohio River Valley in Marietta, OH, is housed in a
20,000+ square feet facility, fully equipped with state-of-the-art testing
equipment capable of performing a full array of inorganic and organic testing
in all types of media. The laboratory's principal clients are Fortune 1000
clients representing several sectors of the economy, as well as the U.S. Air
Force and the Department of Energy's Los Alamos National Laboratory located at
Los Alamos, New Mexico. The laboratory maintains a marketing office in San
Antonio, Texas.
STRUCTURE OF KEMRON ENVIRONMENTAL SERVICES
Kemron has over 120 environmental scientist, engineers and chemists
organized into two operating divisions and an administrative unit. The two
operating divisions are its Consulting and Engineering (CE) Division and its
Laboratory Analytical (Lab) Division. The CE Division is headed by a
Vice-President and has three Regional Managers, one for each of the offices
identified above. The lab is a stand-alone operation also headed by a
Vice-President. The administrative unit consists of the President/CEO, a
Director of Finance and Contract Administration, a Director of Human
Resources and support personnel for the overall administrative function. The
administrative unit is based at the corporate headquarters in Vienna, VA.
DESCRIPTION OF KEMRON'S SERVICES
Site Investigation and Engineering Services
Kemron provides site investigations and assessment services at
non-regulated contaminated sites and at sites covered by RCRA and CERCLA
regulations. These investigations may included preliminary assessments, site
investigations, groundwater assessments, remedial investigations and
feasibility studies, and remedial action. Kemron also provides services for
designing remedial action plans. Some of the plans designed and executed by
Kemron have include: Closure plans for in-place capping and clean closure
scenarios; Corrective action plans for groundwater programs; Plans for buried
waste excavation, removal
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and soil remediation; Plans for building decontamination and demolition; Plans
for lagoon closure; In-situ biological treatment of soil and groundwater;
Underground Storage Tanks ("UST") removal; Asbestos abatement; Thermal treatment
of contaminated soil; and Soil vapor extraction and air sparging.
Site Remediation and Construction
Kemron performs site remediation and construction services at
contaminated sites regulated by RCRA and CERCLA regulation. Kemron has
undertaken projects requiring groundwater treatment, soil vapor extraction,
air stripping, and building decontamination, as well as more conventional
methods involving soil excavation, solidification, capping, treatment and
disposal. Kemron also utilizes bio-degradation technologies utilizing
indigenous as well as proprietary micro-organisms to maximize remediation
abilities. Using this approach, Kemron installed the first closed loop
biological system permitted by the Commonwealth of Virginia and the first
system permitted in the state of Maryland. Kemron also employs other
approaches, such as air stripping, soil venting, soil aeration, and in-situ
air sparging to remove highly volatile compounds.
Environmental Management and Permitting
Kemron provides environmental management services which include a full
range of ecological services including: environmental assessments; wetlands
delineation; endangered species studies; and terrestrial and aquatic
ecological surveys. Phase I Environmental Site Assessments (ESA) are also
conducted by Kemron .
KEMRON'S ANALYTICAL LABORATORY
Kemron operates an environmental testing laboratory in Marietta, Ohio
employing over 70 professionals. Kemron has experience in providing lab
testing services for varying analytical programs such as NPDES, RCRA, CERCLA
and OSHA. Kemron's laboratory has experience in the use of EPA, NIOSH, ASTM
and APHA standards and methods. These methods have been applied to soil,
water, air, biological samples, sludge and wastes.
Kemron participates in various certification and audit programs, when
available, including Federal and State Voluntary Proficiency Programs.
Kemron's laboratory is accredited by the American Association for Laboratory
Accreditation (A2LA), and certified by the U.S. Army Corps of Engineers,
Missouri River Division and approved to perform analytical work for the U.S.
Air Force AFCEE Program. Kemron is also certified by a multiple of state
certification programs which include, but are not limited to the following:
Arizona, Florida, Georgia, Kansas, Maryland, Massachusetts, New Jersey, North
Dakota, Ohio, South Carolina, Tennessee, Virginia, West Virginia, and
Wisconsin.
BRIEF DESCRIPTION OF NEW HORIZONS, INC.
The Company has acquired 100% of the issued and outstanding stock of New
Horizons, Inc., a Delaware corporation established in 1996 to provide oil and
gas well servicing to the energy sector. At the time of the acquisition of
New Horizons by the Company, New Horizons had no revenue nor operations. The
Company intends to raise capital through the sale of stock, the proceeds of
which will be used to capitalize the operations of New Horizons.
New Horizons does have a signed Letter of Intent to acquire all of the
assets of Vector Horizontal Ventures, L.L.C., a Nevada limited liability
company currently engaged in short radius horizontal drilling
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services, with rights to utilize technology developed and patented by the Amoco
Corporation. The Asset Purchase will transfer to New Horizons all of Vector's
tangible and intangible assets, including drilling equipment, inventory of
materials, existing and future contracts to provide horizontal drilling
services, Vector's existing personnel, and the Amoco license. Amoco has agreed
to the transfer of the Vector license directly to New Horizons upon closing the
Vector Asset Purchase. In acquiring the Assets of Vector, the Company will
assume approximately $500,000.00 in trade-related debt and will issue common
stock and options to the present management of Vector.
Declining production and depletion of existing reserves within the United
States is causing increasing pressure on state and federal agencies to create
incentives for oil and gas operators and the investment community to drill for
new reserves and rework the hundreds of thousands of existing wells that are
either temporarily abandoned or marginally producing. The oil and gas
industry needs an inexpensive, low risk technology that will allow operators
to increase existing production levels and unlock new reserves.
Short radius horizontal drilling is rapidly becoming a chosen alternative
in the re-entry and completion of oil and gas wells, to exploit the vast
quantities of remaining reserves. Short radius horizontal drilling
technologies, perfected by Amoco Corporation over many years of testing and
commercial development, have proven to be reliable and very cost effective and
are becoming widely accepted by the petroleum industry as the preferred choice
for a variety of applications.
In 1986, the United States had 635,015 producing oil wells. Daily
production averaged 14 bbl oil/well and has declined since then. Current
estimates place 80% of oil wells in the "stripper" class, less than 10 bbl
oil/day. There are oil fields that still have energy and oil but do not
produce due to some type of engineering problem. Many of these are horizontal
drilling targets. Every sedimentary basin in the U.S. will have prospects.
If 10% of the stripper wells can be helped by horizontal drilling, there are
about 45,000 target wells for re-entry. If the industry re-enters these
existing wells and drills 450 horizontal wells per year, it will take 100
years to drill all of these prospects.
The most popular casing used by independent operators is 4.5 inch outside
diameter casing. The Amoco system is the only short radius drilling system
that can drill 30 foot radii from inside 4.5 inch casing. Certainly, the
potential re-entry market is very large.
In addition to the re-entry market, there is the market for horizontal
completion of new wells. The recent increases in the price of oil and gas,
and the predicted future stability has increased drilling activity to levels
not seen in years. Horizontal completion of wells is becoming the chosen
alternative to conventional completion technologies. Industry analysts'
predictions of an upward trend in oil prices, modified by the short term
market cycles should provide service companies with stability and growth
potential.
Now that the petroleum industry has become much more aware of the many
technical advantages and lower cost of the rotary steerable short radius
horizontal system, in comparison to alternative systems such as articulated
mud motors, demand for these services has suddenly skyrocketed. New Horizons
will offer a full range of services to the energy sector. The subsidiary will
offer turn-key services to its energy sector clientele, providing a vast array
of services depending on the customized needs of the client. Several
contracts are presently being negotiated for services including plugging of
abandoned wells and engineering of re-entry and stimulation activities
designed to enhance production. For specialized situations, the subsidiary
will employ its Amoco technology, as needed. The Amoco Technology, thereby,
provides a potent tool in the subsidiary's arsenal of modern technologies
which will be offered to the oil, gas and coal industries.
More traditional horizontal drilling methods will also be employed in
those situations where needed. The mud motors used in medium radius
horizontal drilling are in some cases the technology of
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choice, particularly in instances where the rotary tools of the Amoco process
will not suffice. Depending on the needs of the client and the specific
requirements of the formation and the geology, New Horizons will provide the
best technology available coupled with efficient service.
With the Vector Acquisition, New Horizons will have the exclusive benefit
of a management team who originally fostered the successful development of
these patented and proprietary technologies from the very earliest
experimental prototypes nearly a decade ago. Even more importantly, the
Company's senior operating personnel and service technicians have been
identified, trained, and recruited on the basis of their experience and proven
performance with the technology in the field. New Horizons will combine the
assets and personnel of predecessor organizations in order to optimize the
full range of skills and services that can be made available from a single
source.
New Horizons' personnel will have a combined experience of more than 50
years operating this short radius technology, including its early testing,
development and field application. In total, New Horizons' team has been
involved in the drilling of more than 200 test wells and more than 60 field
applications. New Horizons' personnel have drilled wells in Oklahoma, Texas,
Louisiana, Indiana, Illinois, Montana, Wyoming, North Dakota, Michigan, Ohio
and West Virginia.
BRIEF DESCRIPTION OF COASTLINE INTERNATIONAL, INC.
Coastline International, Inc., a Delaware corporation, was incorporated
on November 6, 1996, to provide innovative bio-technologies applicable to the
energy and water sectors. At the time of the acquisition of Coastline by the
Company, Coastline had no revenue and no operations. The Company intends to
raise capital through the sale of stock, the proceeds of which will be used to
capitalize the operations of Coastline.
Coastline's licenses and distribution concessions include a unique
bio-technology for the treatment of paraffin, scale, corrosion and reservoir
skin damage; and a unique bio-technology for treatment of municipal,
agricultural and industrial wastewater. These two principal areas will become
the focus of two divisions within Coastline; Coastline Energy and Coastline
Water, as further described below.
Coastline Energy
Coastline has secured a license and distribution rights for a library of
facultative anaerobic microorganisms developed by Micro-Bac International,
Inc., of Austin, Texas, which increase production in individual oil and gas
wells and in fields with skin damage, due to paraffin accumulations,
corrosion, emulsion and scale formation. The treatment is custom designed for
each individual well and field, and strains of bacteria are isolated through
laboratory testing to achieve optimum performance.
These neutrally charged marine organisms, in a saline solution of
nutrients, are naturally occurring, non-pathogenic, non-toxic,
non-carcinogenic, non-combustible and require no permits from the
Environmental Protection Agency for storage, transportation or disposal.
Environmentally, these microorganisms are as safe as any product in the
industry to control and reduce skin damage.
Paraffin, corrosion, emulsion and scale formation have resulted in
significant economic losses, reducing profitability for producers and
operators. The resulting skin damage can be controlled and reduced through
proper treatment by locating microorganisms in the immediate formation,
perforations, and in the case of most problem preventing restrictions in
production streams or failures in lifting equipment. Traditional control
methods for treatment involve implementing techniques such as hot oiling,
paraffin cutting, chemical and condensate treatments. These techniques have
been marginally successful, economically prohibitive and temporary at best. Man
y of these traditional methods are dangerous from a
<PAGE>
safety standpoint and often have caused serious long term damage to the
productive life of the well, especially in the case of hot oiling.
Paraffin skin damage can either be naturally occurring or man-made due to
repeated hot oil-hot water treatments down the annulus. Naturally occurring
paraffin is due to a formation temperature lower than the cloud point of the
fluids produced. Paraffins created by hot oil - hot water treatments can
cause a large amount of skin damage due to the liquids burning off the lighter
hydrocarbons and pushing the heavier ends, possibly pulled from the bottom of
a stock tank, downhole. Both types of damage reduce the effective
permeability and porosity at or near the formation face while a hot oil
treatment can cause plugged perforations and restrictions in the wellbore.
Since the microorganisms thrive at the oil/water or water/paraffin
contact, they will naturally seek out the paraffin skin damage and gradually
remediate the high carbon chain paraffins with a cloud point above the
formation temperature. This remediation process will gradually biodegrade the
skin damage that is interfering with the natural inflow of fluids into the
wellbore and control formation of paraffin accumulations in the production
system.
Depending on the type of oil and other reservoir characteristics, the
bacteria treatment will affect one or more of the following: API, viscosity,
melting point and interfacial tension. The bacteria have been used
successfully in the treatment of thousands of wells. A typical application
will require certain equipment including a surface pump, hoses, tanks, and a
truck for transportation. Depending on the proximity of the wells, one
technician can treat three to four wells per hour.
The technology is environmentally safe, is efficient and very cost
effective, thereby creating a service with high profit margins for the
Company, which at the same time enhances production and cures many of the
prevalent production problems and difficulties experienced by oil and gas
producers.
Coastline Water Services
Coastline has secured the exclusive world-wide distribution rights to a
unique bio-technology developed by Greenwave Biotech, Inc., of Beaufort, South
Carolina, which has proven effective against a wide range of organic pollutant
problems, provides final effluent polishing, achieves sludge
digestion/stabilization tasks, and controls pathogens. The ability to reduce
volatile organic materials in domestic/industrial sludge provides a cost
effective solution for compliance with current regulatory waste disposal
requirements.
Many of this country's large cities are presently under cease and desist
orders from the Environmental Protection Agency, for failure to control sludge
and for emission of pathogens and volatile organics into the rivers and water
streams. In addition, pending legislation will impose new requirements on
agricultural wastewater, creating additional demand for Coastline's products
and services. For years the industry has been crying out for an effective
solution to the myriad of problems confronted by most municipal waste
treatment plants. Many cities and municipalities are spending hundreds of
millions of dollars on physical plant enhancements which for the most part do
not provide a viable solution to the underlying problems. After many years of
searching for a technology which will remedy these problems, the management of
Coastline has found a bacteria which is effective at reducing sludge and
pathogens from human and animal waste streams.
The acquisition of Coastline allows the Company to diversify into the
energy services sector, which is presently one of the most vibrant sectors in
today's economy. The Coastline acquisition has provided to the Company
licensed and proprietary technologies for Microbial Enhanced Oil Production
(MEOP); and bio-degradation of sludge and pathogens in wastewater streams, and
other bio-technological solutions to common, everyday problems. The Company
anticipates synergies to be created from the cross
<PAGE>
marketing efforts of Coastline into both the energy and environmental
industries, although no assurances can be given that such synergies will evolve.
BRIEF DESCRIPTION OF EXETER GROUP, INC.
Exeter Group, Inc., a Florida corporation, was incorporated in November
1996, and began operations in 1997. Exeter offers environmental consulting
services to companies bringing forth new and/or cutting edge technologies.
This entails negotiating any and all permits, licensing rights,
government registrations, of E.P.A , Interior, Food and Drug
Administration, OSHA, NIOSH, National Marine Fisheries Service, the US Forest
Service and other regulatory agencies dealing with natural resources ,
primarily at the Federal level. Drawing from an extensive background in
both the environmental sciences and government procedures, the Exeter
management team can tailor a business plan to fit the unique requirements of a
diverse clientele. The present trend towards environmentally focused laws and
regulations will require companies to seek working relationships with
companies such as Exeter to avoid costly delays and other obstacles.
Exeter has the capability of doing fish and wildlife surveys, timber
cruising, wetland delineation, CERCLA site development and measurement,
superfund cleanup, RCRA activities dealing with development of waste dumps of
Sub title C,D, and E. TOSCA and Pesticide developmental work in terms of
registrations are a key part of our activities. We do work on clean water and
sludge regulatory development with water and sewer authorities. Work in
foreign countries include South Africa, Haiti, Dominican Republic, Bermuda,
Grenada, Puerto Rico, Cameroon and others are in developmental stages.
Basically, if an environmental problem exists we can analyze, set up
corrective actions and execute the solutions
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. The required financial statements are
anticipated to be filed within the 60-day period permitted by Item 7(b) of
Form 8-K.
The following table sets forth selected financial information concerning
the Company, and is included herein on an interim basis, pending the filing of
the financial statements anticipated to be filed within the 60-day period
permitted by Item 7(b) of Form 8-K:
<PAGE>
WHITNEY AMERICAN CORPORATION
INCOME STATEMENT - COMPARATIVES
3RD QUARTER ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
FOR 3RD QUARTER ENDED FEBRUARY 28,
------------------------------------
1998 1997 1996
<S> <C> <C> <C>
TOTAL REVENUES 7,890,514 9,445,874 12,388,068
DIRECT PURCHASED GOODS & SVCS
SUBCONTRACTORS 1,460,223 998,194 1,787,019
WASTE DISPOSAL 10,032 37,366 568,252
MATERIALS 92,751 293,426 172,290
CONSULTANTS 1,649 7,429 26,080
OTHER LAB 49,244 80,961 192,522
EQUIPMENT RENTAL 48,291 244,680 110,901
------------------------------------
SUBTOTAL PURCHASED GOODS 1,662,190 1,662,056 2,857,064
NET SERVICE REVENUE 6,228,324 7,783,818 9,531,004
DIRECT COSTS
LABOR 560,845 1,087,760 1,236,911
FRINGE EXPENSE 168,344 336,075 400,724
------------------------------------
SUBTOTAL LABOR 729,189 1,423,835 1,637,635
DIRECT NON-LABOR COSTS
TRAVEL 61,079 238,844 204,064
COMMUNICATIONS 10,215 14,013 11,393
NON BILLABLE ODC'S 12,449 20,832 106,669
REPRODUCTION 2,820 14,304 11,645
OTHER 36,998 174,404 70,831
LAB DIRECT COST 3,472,986 3,082,151 3,889,345
------------------------------------
TOTAL DIRECT NON-LABOR 3,596,547 3,544,548 4,293,947
TOTAL LABOR AND OTHER DIRECT COSTS 4,325,736 4,968,383 5,931,582
REGIONAL OVERHEAD 855,544 2,070,869 2,277,169
TOTAL SERVICE COSTS 5,181,280 7,039,252 8,208,751
GROSS MARGIN 1,047,044 744,566 1,322,253
CORPORATE ALLOCATIONS
GENERAL & ADMINISTRATIVE 628,013 1,125,788 1,397,347
INTEREST 176,594 196,752 266,586
OTHER INCOME (3,231) 1,521 19,742
------------------------------------
TOTAL CORPORATE ALLOCATIONS 807,838 1,321,019 1,644,191
INCOME BEFORE TAX BENEFIT 239,206 (576,453) (321,938)
====================================
</TABLE>
<PAGE>
The "Selected Financial Data" is a summary only and has been derived from
and is qualified in its entirety by reference to the Company's financial
statements, anticipated to be filed within the 60-day period permitted by Item
7(b) of Form 8-K.
(b) Pro Forma Financial Information. The required pro forma financial
information is anticipated to be filed within the 60-day period permitted by
Item 7(b) of Form 8-K.
(c) Exhibits. The following documents are filed as exhibits to this report
on Form 8-K, or have been incorporated by reference to another registration
statement, report or document. References in the list of exhibits to the
"Company" refer to Whitney American Corporation.
10.1 Stock Purchase Agreement dated March 6, 1998, among the Company, Kemron
Environmental Services, Inc., a New York corporation, and the shareholders of
Kemron Environmental Services, Inc.
10.2 Stock Purchase Agreement dated March 6, 1998, among the Company, Coastline
International, Inc., a Delaware corporation, and the shareholders of Coastline
International, Inc.
10.3 Stock Purchase Agreement dated March 6, 1998, among the Company, New
Horizons, Inc., a Delaware corporation, and the shareholders of New Horizons,
Inc.
10.4 Stock Purchase Agreement dated March 6, 1998, among the Company, Exeter
Group, Inc., a Florida corporation, and the shareholders of Exeter Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this current report on Form 8-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
DATED: March 25, 1998
WHITNEY AMERICAN CORPORATION
By
------------------------------------------
Juan J. Gutierrez, Chief Executive Officer
<PAGE>
STOCK EXCHANGE AGREEMENT
This Agreement ("Agreement") is made and entered into on March 5, 1998, by
and among KEMRON ENVIRONMENTAL SERVICES, INC., a New York corporation, as the
acquired company ("KEMRON"); WHITNEY AMERICAN CORPORATION, a Delaware
corporation, as the acquiring company (the "WHAM"); and those persons executing
this Agreement in their capacity as shareholders of KEMRON (the "Shareholders").
WHEREAS, WHAM wishes to acquire and the Shareholders wish to transfer all
the issued and outstanding stock of KEMRON in a transaction intended to qualify
as a reorganization within the meaning of I.R.C. Section 368(a)(1)(B), as
amended.
NOW, THEREFORE, WHAM, KEMRON and the Shareholders adopt this plan of
reorganization and agree as follows:
1. Certain Definitions. As used herein and in any exhibit or schedule
incorporated herein, or in any document, certificate or opinion required to be
delivered pursuant to this Agreement, the following terms shall have the
meanings ascribed below.
(a) "Closing Date" means the date at which Closing hereunder shall
occur, which date shall be March 6, 1998, or any other date which may be
mutually agreed upon by the parties hereto.
(b) "Closing" means the settlement and consummation of the
purchase transaction contemplated hereby to be held at 2:00 p.m. Eastern
Standard Time on the Closing Date at the offices of John D. Brasher, Jr., Esq.,
counsel for WHAM, 90 Madison Street, Suite 707, Denver, CO 80206, or at such
other place as may be mutually agreed upon by the parties hereto.
(c) "KEMRON Shares" means One Hundred(100%) percent of the issued
and outstanding capital stock of KEMRON to be delivered to WHAM at the Closing.
2. Exchange of Stock
(a) Exchange. Subject to the terms and conditions herein set
forth, at the Closing on the Closing Date;
(i) The Shareholders agree to transfer to WHAM the number of
KEMRON Shares, without par value, shown opposite their names in Exhibit A, in
exchange for an aggregate of Three Million Five Hundred Thousand
<PAGE>
(3,500,000) shares of voting common stock of WHAM, $0.00001 par value per share,
(the "Exchange Shares"), to be issued at the Closing to the Shareholders in the
numbers shown opposite their names in Exhibit A.
(ii) The transfer of KEMRON Shares by the Shareholders shall
be effected by the delivery to WHAM at the Closing of certificates representing
the transferred shares endorsed in blank.
(iii) At the Closing and from time to time thereafter the
Shareholders shall execute such additional instruments and take such other
action as WHAM may request in order more effectively to sell, transfer, and
assign the transferred stock to WHAM and to confirm WHAM's title thereto.
(b) Restricted Status of Exchange Shares. The Exchange Shares have
not been registered under the Securities Act of 1933, as amended ("Act"), in
reliance upon exemptions from registration provided by Section 4(2) of the Act
and Rule 506 under the Act and under the securities or blue sky laws of
applicable states or any rules or regulations promulgated thereunder, on the
grounds that the transactions contemplated in this Agreement do not involve any
public offering. The Exchange Shares are "restricted securities" as that term is
defined in Rule 144(a) of the General Rules and Regulations under the Act and
must be held indefinitely, unless they are subsequently registered under the Act
or an exemption from such registration requirements is available for their
resale. The prior written consent of WHAM will be necessary for any transfer of
any or all of the Exchange Shares, unless the shares have been duly registered
under the Act or the transfer is made in accordance with Rule 144 or other
available exemption under the Act. Further, any and all certificates which are
issued representing Exchange Shares shall, unless and until removed in
accordance with law, bear a restrictive legend substantially in the following
form:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are "restricted
securities" as that term is defined in Rule 144 under the Act. These shares may
not be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which must be established to the
satisfaction of the Company's counsel."
(c) Officers and Directors of WHAM. At the Closing, the current
officers and directors of WHAM shall resign and the persons below shall be
elected as the directors and executive officers of WHAM:
Name Position
1. Juan J. Gutierrez Chairman of the Board, Chief
Executive Officer
2. Hector I. Hernandez, Sr. Executive Vice President, Director
<PAGE>
3. Heatherlynn Colburn Executive Vice President, Chief
Operating Officer, Director
4. John M. Dwyer Director
5. David Vandenberg Director
6. Michael Goldberg Director
7. John Heishman Assistant Secretary/Treasurer, Director
3. Representations and Warranties of KEMRON and the Shareholders.
KEMRON and the Shareholders make to WHAM the following representations and
warranties, in reliance upon which WHAM has entered into this Agreement.
(a) Each Shareholder represents and warrants that he, she or it is
not now insolvent and will not be insolvent after selling and delivering the
KEMRON Shares to WHAM on the terms of this Agreement, and that he, she or it is
receiving new consideration at least equal to the full and fair value of the
KEMRON Shares being sold.
(b) KEMRON and the Shareholders understand and acknowledge that (i)
there is no active trading market in the common stock of WHAM, although quoted
name-only on the OTC Board, (ii) WHAM is a shell company with no cash or other
assets, no operations and no full-time or experienced management, (iii) no
person currently an officer, director or shareholder of or professional adviser
to WHAM has made any representation whatsoever to any Shareholder relating to
WHAM's stock price, operations, profitability or prospects following the
Closing, (iv) persons designated by KEMRON and/or the Shareholders will become
the officers and directors of WHAM at the Closing, and no person now an officer
or director of WHAM will be such after the Closing or have any responsibility or
input as to operations after the Closing, the officers and directors of WHAM
solely responsible for its operations and success will be persons designated by
KEMRON and the Shareholders, and (v) the Exchange Shares are speculative and
involve a high degree of risk.
(c) Each Shareholder acknowledges and agrees that he, she or it have
been furnished with substantially the same kind of information regarding WHAM
and its assets, financial condition and plan of operation as would be contained
in a registration statement and included prospectus prepared in connection with
a public offering of the Exchange Shares and has reviewed all information
concerning WHAM publicly available on the website maintained by the Securities
and Exchange Commission. Each Shareholder further represents that he, she or it
has had an opportunity to ask questions of and receive answers from WHAM and its
officers and directors regarding WHAM and its assets, financial condition and
plan of operation and the terms and conditions of the issuance of the Exchange
Shares.
<PAGE>
(d) The Shareholder, alone or together with the Shareholder's
adviser(s), have such knowledge and experience in financial, tax and business
matters as to enable Shareholder to utilize the information made available by
WHAM, in connection with the Exchange and issuance of the Exchange Shares, to
evaluate the merits and risks of acquiring the Exchange Shares and to make an
informed investment decision with respect thereto.
(e) Each Shareholder agrees that he, she or it was not solicited by
WHAM by any form of general solicitation or general advertising, including but
not limited to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or made available over telephone lines by any information
service, or any seminar or meeting whose attendees had been invited by any means
of general solicitation or general advertising.
(f) Except as expressly set forth in this Agreement and any
Schedules, Exhibits or other attachments hereto, WHAM has not made any
representation or warranty to any Shareholder in connection with this Agreement,
and WHAM has made no communication to any Shareholder that constitutes tax or
investment advice.
(g) Authority. The Shareholders have valid and marketable title to
the KEMRON Shares free and clear of any claims, liens, trusts, encumbrances,
rights or interests of any person. The Shareholders have the right, power, and
authority to enter into, and perform their respective obligations under this
Agreement. This Agreement has been and as of the Closing Date will be, duly and
validly authorized, executed and delivered on behalf of the Shareholders, have
all requisite power and authority to consummate the transactions contemplated
herein. This Agreement is the valid and binding obligation of the Shareholders.
No third-party approvals or consents of any kind are necessary in connection
with this Agreement.
(h) Organization and Good Standing. KEMRON is duly organized, validly
existing and in good standing under the laws of the State of New York and has
full charter power to carry on its business as it is now being conducted and to
own and operate the properties now owned, operated or leased by it. KEMRON is
qualified to do business as a foreign corporation in every state in which the
nature of the business carried on and properties owned or leased by them
presently requires them to be so qualified in any other jurisdiction.
(i) Capitalization. The authorized capitalization of KEMRON consists
of Ten Thousand (10,000) shares of Common Stock, $0.01 par value per share. As
of the date hereof, KEMRON has issued and outstanding 315 shares of such Common
Stock. All of such issued and outstanding shares have been duly
<PAGE>
and validly issued, are fully paid and non-assessable and were issued and sold
pursuant to, and within limitations contained in, appropriate permits and
consents of each governmental authority from whom any permit or consent was
required.
(j) Title to KEMRON Shares. The Shareholders have good and valid
title to all of the issued and outstanding common stock of KEMRON, free and
clear of all claims, liens, mortgages, charges, security interests, encumbrances
and other restrictions or limitations of any kind whatsoever. The Shareholders
are not a party to, or bound by, any other agreement, instrument or
understanding restricting the transfer of such interests.
(k) Financial Statements. Attached hereto and incorporated herein
by this reference, is the audited consolidated Financial Statements of KEMRON
for the year ended May 31, 1997, accompanied by the related opinions of KEMRON's
official independent auditors as of such dates and for such periods (the
"Financial Statements"). Said Financial Statements (i) were prepared in
accordance with the books and records of KEMRON; (ii) were prepared in
accordance with generally accepted accounting principles consistently applied;
and (iii) sets forth fairly KEMRON's financial condition and the results of its
operations as of the relevant dates thereof and for the periods covered thereby.
Except as to the extent reflected or reserved against in the Financial
Statements, KEMRON as of the date thereof had no liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, including without
limitation, tax liabilities due or to become due and whether incurred in respect
of or measured by the income of KEMRON for any period prior to such date, or
arising out of any transaction entered into, or any state of facts existing,
prior hereto. Since the date of such Financial Statements, absent written
disclosure, no credit or charge has been made to any surplus account of KEMRON.
(l) Events Subsequent to May 31, 1997. Since May 31, 1997, absent
a written disclosure delivered to WHAM, there has not been any:
(i) material adverse change in the financial condition,
liabilities, assets, business, or prospects of KEMRON;
(ii) destruction, damage to, or loss of any asset of KEMRON
that may substantially affect the financial condition, business, or prospects of
KEMRON;
(iii) change in accounting methods or practices (including,
without limitation, any change in inventory accounting or in depreciation or
amortization policies or rates) by KEMRON;
(iv) revaluation by KEMRON of any of its assets;
(v) declaration, setting aside, or payment of a dividend or
other dividend or other distribution in respect to the capital stock of KEMRON,
or any direct or indirect redemption, purchase, or other acquisition
<PAGE>
by KEMRON of any of its shares of capital stock;
(vi) any other transaction by KEMRON except in the ordinary
course of business;
(vii) direct or indirect increase in the salary or other
compensation payable or to become payable by KEMRON to any of its officers,
directors or employees, or the declaration, payment or commitment or obligations
of any kind for the payment by KEMRON of a bonus or other additional salary or
compensation to any such person;
(viii) sale or transfer of any single asset of KEMRON having a
value in excess of $1,000;
(ix) amendment or termination of any contract, agreement, or
license to which KEMRON is a party except in the ordinary course of business;
(x) loan by KEMRON to any person or entity, or guaranty by
KEMRON of any loan;
(xi) mortgage, pledge, or other encumbrance of any asset of
KEMRON;
(xii) waiver or release of any right or claim of KEMRON;
(xiii) issuance or sale by KEMRON of any shares of KEMRON's
capital stock;
(xiv) bid submitted or sales contract entered into or any other
contract or agreement entered into involving more than $1,000 in each case,
except in the ordinary course of business;
(xv) obligation or debt incurred in excess of $1,000.
(m) Liabilities. KEMRON has no known debt, liability, or
obligation of any nature, whether accrued, absolute, contingent, or otherwise,
whether due or to become due, that is not fully provided or reserved for in the
Financial Statements, including the notes thereto, except for those (1) that may
have been incurred after the date of the Financial Statements in the ordinary
course of business, or (2) that are not required by generally accepted
accounting principles to be included in the Financial Statements. All debts,
liabilities and obligations incurred after the date of the Financial Statements
were incurred in the ordinary course of business and not in violation of any
provision of this Agreement, are usual and normal in amount both individually
and in the aggregate.
(n) Taxes. Within the time and in the manner prescribed by law,
KEMRON has filed all Federal, state and local tax returns required by law and
have paid all taxes, assessments, and penalties due and payable. The
Shareholders shall cause KEMRON (i) to prepare and file all Federal, state and
local income tax returns for KEMRON required to be filed through the Closing
Date covering the most recent taxable period; (ii) to pay all taxes, penalties
and assessments related to such returns, and upon filing thereof shall promptly
supply copies of such returns to WHAM. The provision for taxes
<PAGE>
reflected in the Financial Statements are adequate for any and all federal,
state, county, and local taxes for the period ending on the date of such
Financial Statements and for all prior periods, whether or not disputed,
including without limitation any and all taxes that may be assessed by the
Internal Revenue Service as a result of an audit of the Company's tax returns.
There are no present disputes as to taxes of any nature payable by KEMRON or
with respect to the KEMRON Shares. On or before the Closing Date, KEMRON shall
have furnished to WHAM, in form satisfactory to it, true and accurate copies of
all Federal, state and local tax returns, filings, waivers, elections and
deficiency notices for each of the past fiscal year of KEMRON and a true and
complete copy of the unaudited consolidated and consolidating balance sheets of
KEMRON as of February 28, 1998 ("Current Balance Sheet").
(o) Title to Properties and Assets. KEMRON has good and marketable
title to its properties and assets, including the properties and assets
reflected in the Current Balance Sheet referred to above (except as since
disposed of in the ordinary course of business) subject to no liens, mortgages,
encumbrances or charges which are not reflected in the Current Balance Sheet or
which, either in any case or in the aggregate, are substantial in amount or
which materially detract from the value of the property subject thereto or which
materially impair the operation of KEMRON, or which have not arisen otherwise
than in the ordinary course of business. No personal property needed by KEMRON
for the conduct of its business is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement, or
is located other than in the possession and under the control of KEMRON. The
tangible personal property reflected in those books and records constitutes all
such tangible personal property necessary for the conduct by KEMRON of its
business as now conducted.
(p) Proprietary Rights. KEMRON owns or possesses adequate licenses
or other rights to use all patents, patent applications, trademarks, trademark
applications, trade secrets, service marks, trade names, copyrights, inventions,
drawings, designs, customer lists, proprietary know-how or information, or other
rights with respect thereto (collectively referred to as "Proprietary Rights"),
used by it and the same are sufficient to conduct such business as it has been
and is now being conducted. The operations of KEMRON neither conflict with nor
infringe, and no one has asserted to KEMRON that such operations conflict with
or infringe, any intangible property rights owned, possessed or used by any
third party which are of the same kind as the Proprietary Rights. There are no
claims, disputes, actions, proceedings, suits or appeals pending against KEMRON
with respect to any Proprietary Rights and none has been threatened against
KEMRON. To the best knowledge of KEMRON (after reasonable investigation), there
are no facts which would result in any claim which would have an adverse effect
on the condition (financial or otherwise), business, net worth, assets,
properties or operations of KEMRON
<PAGE>
based on an assertion that KEMRON does not have the unrestricted right to use,
free of any rights or claims of others, all Proprietary Rights.
(q) Insurance. Prior to the Closing Date, KEMRON shall have
delivered, in form satisfactory to WHAM pursuant to this subparagraph, a
certificate or certificates of all insurance coverage of KEMRON. Such
certificates evidence policies of fire, liability and other forms of casualty
insurance and workmen's compensation insurance held by KEMRON. Such policies
will be maintained in force and in effect by KEMRON in present amounts up to and
including the Closing Date. KEMRON is not in material default under any of such
policies.
(r) Contracts. The Shareholders have previously submitted a list
of all written contracts and bids and as further detailed and a summary of all
oral contracts and bids of the following categories to which KEMRON is a party:
(i) Contracts not made in the ordinary course of business
(excluding this Agreement and the Exhibits hereto), and all material contracts,
whether or not made in the ordinary course of business;
(ii) Employment contracts;
(iii) Contracts with a labor union or association;
(iv) Bonus, pension, profit sharing, retirement, stock
purchase, stock option, hospitalization, insurance or similar plans providing
employee benefits;
(v) Distribution, franchise, sales agency or advertising
contracts;
(vi) Output or requirements agreements;
(vii) Any indenture, mortgage deed of trust or lease;
(viii) Options with respect to any property, real or personal,
whether as grantor or grantee;
(ix) Contracts or outstanding bids involving potential
expenditures or liabilities of KEMRON in excess of $1,000.00;
(x) Contracts continuing over a period of more than one (1)
year from their respective dates;
(xi) Contracts or commitments relating to commission
arrangements with others;
(xii) Patent, trade name, and all other license agreements, to
which KEMRON is a party, either as licensor or licensee;
(xiii) Contracts containing covenants limiting the freedom of
KEMRON to compete in any line of business or with any person; and
(xiv) Agreements evidencing all indebtedness.
There is no default or event that with notice or lapse of time, or both, would
constitute a default by KEMRON, or to KEMRON's knowledge, any other party to
<PAGE>
any of these agreements. KEMRON has received no notice that any party to any of
these agreements intends to cancel or terminate any of these agreements. KEMRON
is not a party to, nor is KEMRON or the property of KEMRON bound by any
agreement that is materially adverse to the business, properties or financial
condition of KEMRON. KEMRON is not a party to any significant contract except as
provided in writing.
(s) Banks. Prior to the execution of this Agreement, the
Shareholders have delivered to WHAM pursuant to this subparagraph a complete
list showing the name of each bank in which KEMRON maintains accounts (including
a description of the account), certificates of deposit or safe deposit boxes and
the names of all persons authorized to draw thereon or to have access thereto.
(t) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to the knowledge
of KEMRON, there is no action, suit or proceeding threatened or pending which,
if it were to result in a decision adverse to KEMRON, would in the judgment of
KEMRON result in any material adverse change in the condition, financial or
otherwise, business or prospects of KEMRON or would materially adversely affect
its properties or assets.
(u) No Resulting Breach or Default. The consummation of the
transactions contemplated by this Agreement will not result in or constitute any
of the following: (i) a default or any event that, with notice or lapse of time
or both, would be a default, breach, or violation of applicable law or
regulation or of the Articles of Incorporation or Bylaws of KEMRON, or any
judgment, order, writ, injunction, or decree of any court or governmental
authority or of any lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument,
or arrangement to which KEMRON is a party or by which its property is bound;
(ii) an event that would permit a party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of KEMRON, or
(iii) the creation or imposition of any security interest, lien, charge, or
encumbrance on any of the properties or assets of KEMRON.
(v) Corporate Documents. KEMRON has furnished to WHAM for its
examination (i) copies of the Articles of Incorporation and Bylaws of KEMRON,
including all amendments, (ii) the complete minute books of KEMRON of all
meetings of the shareholders and Board of Directors of KEMRON, (iii) the stock
transfer books of KEMRON setting forth all transfers of capital stock. The
meetings of the Board of Directors and Shareholders referred to therein were
duly called and duly held and the signatures appearing on all documents
contained therein are the true signatures of the person purporting to have
signed the same. All documents delivered hereto contain accurate records of
<PAGE>
all meetings and accurately reflect all corporate action of the stockholders and
directors of KEMRON.
(w) Compliance with Other Instruments, etc.; None Burdensome. To
the best of the Shareholder's knowledge and belief, KEMRON is not in violation
of any term or provision of any charter, by-law, mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, injunction, statute, rule or
regulation. The execution, delivery and performance of and compliance with this
Agreement and the KEMRON Shares to be exchanged hereunder will not result in any
such violation or be in conflict with or constitute a default under any such
term or provision, or result in the creation of any mortgage, lien, encumbrance
or charge upon any of the properties or assets of KEMRON pursuant to any such
term or provision. There is no term or provision of this Agreement which
materially adversely affects the business, prospects, condition (financial or
other), or operations of KEMRON or any of its properties or assets.
(x) Indebtedness to Officers, Directors and Shareholders. KEMRON
is not indebted to any person who is an officer, director or shareholder of
KEMRON in any amount whatsoever other than for salaries for services rendered or
for reimbursable business expenses.
(y) Brokerage and Finder's Fees. KEMRON has not incurred any
unpaid liability to any broker, finder or agent for any brokerage fees, finder's
fees or commissions with respect to the transactions contemplated by this
Agreement.
(z) Full Disclosure. On or prior to the date of the execution of
this Agreement, the Shareholders have delivered or made available to WHAM all of
the material documents and contracts to which KEMRON is a party which in any way
affects any of the properties, assets or business of KEMRON. Neither the
Financial Statements referred to in subparagraph (e) of this Paragraph nor any
other certificate or statement furnished to WHAM by the Shareholders or in
behalf of KEMRON in connection with the transactions contemplated hereby nor
this Agreement contains any untrue statement of a material fact, known as of the
date thereof, or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading. There is no known fact
which materially adversely affects the business, prospects or condition
(financial or other) or operations of KEMRON or any of its properties or assets
which has not been set forth herein or disclosed by the Financial Statements
referred to herein or in any certificate or statement furnished to WHAM by the
Shareholders or in behalf of KEMRON.
4. Conduct of KEMRON's Business Pending Closing. KEMRON and the
<PAGE>
Shareholders hereby covenant and agree with WHAM that between the date hereof
and the Closing Date:
(a) KEMRON will not, without the prior written consent of WHAM,
amend or otherwise change its Articles of Incorporation or By-laws, or any
instrument similar in purpose and intent to them.
(b) The Shareholders will not, without the prior written consent
of WHAM, transfer or encumber in any way, voluntarily or involuntarily, any of
the KEMRON Shares.
(c) KEMRON will not declare or pay any dividend or make any other
distribution of assets of any kind whatsoever to any of its Shareholders in
redemption of or as the purchase price for any of its capital stock, or in
discharge or cancellation, whether in whole or in part, of any indebtedness,
whether in payment of principal, interest or otherwise, owing to any of such
Shareholders.
(d) KEMRON will conduct its business diligently in the ordinary
course, use its best efforts to preserve intact its business organization, use
its best efforts to retain in its employ all of its key employees, and use its
best efforts to preserve its relationships with its suppliers and customers and
others having business relations with it.
(e) KEMRON will not make any commitments for capital expenditures
or for indirect charges exceeding $1,000 except with respect to expenditures
required in the normal course of performing current contracts.
(f) KEMRON will not sell or transfer any of its assets, cancel any
debts or claims, or mortgage, pledge or subject to lien, charge or encumbrance
of any kind, except liens for taxes not due, any of its assets, except in the
ordinary course of business.
(g) KEMRON will not, except in the ordinary course of business
amend or terminate any material contract or agreement to which it is a party, or
enter into or become a party to any contract or agreement under which (i) the
value of services to be performed or the cost of goods to be sold will exceed
$1,000; or (ii) the reasonably anticipated costs and expenses will exceed the
anticipated receipts.
(h) KEMRON will continue in force its existing insurance policies,
subject only to variation in amounts required by the ordinary operations of its
business.
(i) KEMRON will not increase the compensation payable or to
<PAGE>
become payable to any of its officers, directors, employees or agents, or any
bonus payment or similar arrangement made to or with any of such officers,
directors, employees or agents.
(j) KEMRON will not incur any indebtness to any person who is an
officer, director or shareholder of KEMRON in any amount whatsoever other than
for salaries for services rendered or for reimbursable business expenses.
(k) KEMRON and its representatives will keep confidential any
information not otherwise readily available from public sources which they or
their representatives obtain from WHAM concerning the properties, assets and
business of WHAM.
5. Representations and Warranties of WHAM. WHAM hereby makes the
following representations and warranties in reliance upon which the KEMRON
Shareholders have entered into this Agreement.
(a) Organization and Good Standing. WHAM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as it is now
being conducted and to own and operate the properties now owned, operated or
leased by it. WHAM is qualified to do business as a foreign corporation in all
states in which the nature of the business carried on and properties owned or
leased by WHAM requires WHAM to be so qualified in any other jurisdiction.
WHAM's filings with the Securities and Exchange Commission, Washington, D.C.
("SEC"), are current and have been timely filed. WHAM will ensure that the
latest Form 10-QSB, for the quarter ended February 28, 1998, is or will be
timely filed with the SEC.
(b) Authority. The execution of this Agreement by WHAM and its
delivery to the Shareholders has been duly authorized by the Board of Directors
of WHAM, and no further corporate action is necessary on the part of WHAM to
make this Agreement valid and binding upon WHAM in accordance with its terms.
(c) Capitalization. The authorized capitalization of WHAM consists
of 50,000,000 shares of common stock, $0.00001 par value per share, and
5,000,000 shares of preferred stock, $0.00001 par value per share, of which
362,515 shares of Common are issued and outstanding, fully paid and non-
assessable, and no shares of preferred stock have been issued.
(d) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to the knowledge
of WHAM, there is no action, suit proceeding threatened or pending
<PAGE>
which, if it were to result in a decision adverse to WHAM, would in the judgment
of WHAM result in any material adverse change in the condition, financial or
otherwise, business or prospects of WHAM or would materially adversely affect
its properties or assets.
(e) No Defaults. The consummation of the transactions contemplated
by this Agreement will not result in or constitute any of the following: (i) a
default or any event that, with notice or lapse of time or both, would be a
default, breach, or violation of applicable law or regulation or of the Articles
of Incorporation or Bylaws of WHAM, or any judgment, order, writ, injunction, or
decree of any court or governmental authority or of any lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which WHAM is a
party or by which its property is bound; (ii) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of WHAM, or (iii) the creation or imposition of
any security interest, lien, charge, or encumbrance on any of the properties or
assets of WHAM.
6. Indemnification by the KEMRON and Juan J. Gutierrez. KEMRON and Juan
J. Gutierrez (hereafter the "Seller Group"), jointly and severally, shall
indemnify, defend and hold harmless WHAM against and in respect of any and all
actions, causes of action, assessments, claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including any liabilities for obligations which arise after the Closing Date
based on events or conditions occurring before the Closing Date, and interest,
penalties and reasonable attorneys' fees and expenses, that WHAM shall incur or
suffer, which arise, result from or relate to any inaccuracy in, or any breach
of any of the Seller Group's representations or warranties, or any failure by
the Seller Group to perform any of their covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or to be furnished by any of the Seller Group under this Agreement; provided,
however, that the right to indemnity as aforesaid with respect to a breach by
the Seller Group or any of their representations or warranties in this Agreement
shall be limited by the following: (i) such indemnity shall apply only if the
facts or circumstances resulting in such breach are such as to result in damages
to WHAM in excess of $10,000 in the aggregate; and (ii) such right to indemnity
shall apply only as to all claims giving rise to a right of indemnity hereunder
of which WHAM has received actual notice within twenty-four (24) months after
the Closing Date.
7. Indemnification by WHAM. Subject to the terms and conditions of this
Paragraph 7, WHAM hereby agrees to indemnify, defend and hold harmless the
Shareholders and their respective successors, if any, and their officers,
<PAGE>
directors and controlling persons, at any time after the Closing Date, from and
against all demands, claims, actions, or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys' fees and expenses, which were reasonably
incurred by or imposed upon the Shareholders or KEMRON, net of any insurance
proceeds received by the Shareholders or KEMRON with respect thereto, asserted
against, resulting to, imposed upon or incurred by the Shareholders or KEMRON,
directly or indirectly, by reason of or resulting from any misrepresentation,
breach of any warranty, non-performance or breach of any covenant, obligation or
agreement of WHAM contained in this Agreement; provided, however, that the right
to indemnity as aforesaid with respect to a breach by WHAM or any of its
representations or warranties in this Agreement shall be limited by the
following: (i) such indemnity shall apply only if the facts or circumstances
resulting in such breach are such as to result in damages to the Shareholders or
KEMRON in excess of $10,000 in the aggregate; and (ii) such right to indemnity
shall apply only as to all claims giving rise to a right of indemnity hereunder
of which the Shareholders or KEMRON has received actual notice within twenty-
four (24) months after the Closing Date.
8. Claims by Third Parties. The obligations and liabilities of an
indemnifying party under any provision of this Agreement with respect to claims
relating to third parties shall be subject to the following terms and
conditions:
(a) Whenever any indemnified party shall have received notice that
a claim has been asserted or threatened against such indemnified party, which,
if valid, would subject the indemnifying party to an indemnity obligation under
this Agreement, the indemnified party shall promptly notify the indemnifying
party of such claim in the manner described in Paragraph 22; provided, however,
that the failure of the indemnified party to give timely notice hereunder shall
not relieve the indemnifying party of its indemnification obligations under this
Agreement unless, and only to the extent that, such failure caused the damages
for which the indemnifying party is obligated to be greater than they would have
been had the indemnified party given timely notice.
(b) The indemnifying party or its designee will have the right but
not the obligation, to assume the defense of any claim described in Paragraph 6
or 7 above, provided, however, the indemnified party shall have the right at its
option to defend and to compromise or settle such claim which compromise or
settlement shall be made only with the written consent of the indemnifying
party, such consent not be unreasonably withheld. If the indemnifying party
fails to assume the defense of such claim within 15 days after receipt of notice
of a claim pursuant to Paragraph 22, the indemnified
<PAGE>
party against which such claim has been asserted will (upon delivering notice to
such effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or settlement of
such claim on behalf of and for the account and risk of the indemnifying party,
subject to the right of the indemnifying party to assume the defense of such
claim at any time prior to settlement, compromise or final determination thereof
and provided, however, that the indemnified party shall not enter into any such
compromise or settlement without the written consent of the indemnifying party.
In the event the indemnified party assumes defense of the claim, the indemnified
party will keep the indemnifying party reasonably informed of the progress of
any such defense, compromise or settlement. The indemnifying party shall not be
liable for any settlement of any action effected without its consent, but if
settled with the consent of the indemnifying party or if there be a final
judgment beyond review or appeal, for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless an indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Any party who does not undertake the defense of a claim may, at its own expense,
retain such additional attorneys and other advisors as it shall deem necessary,
which attorneys and advisors will be permitted by the party undertaking such
defense, and its attorneys, to observe the defense of such claim.
9. Indemnity for Taxes of Indemnified Party. Each party hereto further
agrees that, with respect to payment or indemnity under this Paragraph 9, such
payment or indemnity shall include any amount necessary to hold the indemnified
party harmless on an after-tax basis from all taxes required to be paid with
respect to the receipt of such payment or indemnity under the laws of any
Federal, state or local government or taxing authority in the United States, or
under the laws of any foreign government of taxing authority or governmental
subdivision of a foreign country.
10. Shareholders' Representatives. The Shareholders hereby irrevocably
designate and appoint Juan J. Gutierrez and Hector I. Hernandez, Sr., Esq., or
either of them, as their agents and attorneys in fact ("Shareholders'
Representatives"), with full power and authority until the Closing to execute,
deliver, and receive on their behalf all notices, requests, and other
communications hereunder; to fix and alter on their behalf the date, time, and
place of the Closing; to waive, amend, or modify any provisions of this
Agreement, and to take such other action on their behalf in connection with this
Agreement, the Closing, and the transactions contemplated hereby as such agent
or agents deem appropriate; provided, however, that no such waiver, amendment,
or modification may be made if it would decrease the number of shares to be
issued to the Shareholders or increase the extent of
<PAGE>
their obligation to indemnify WHAM hereunder.
11. Conditions Precedent to Shareholders' Obligations. The
obligations of the Shareholders hereunder are subject to each of the
conditions set forth below being fulfilled on the Closing Date. Any of such
conditions may, at the option of the Shareholders, be waived:
(a) Opinion of Counsel. The Shareholders shall have received an
opinion of John D. Brasher, Jr., Esq., counsel for WHAM, dated as of the
Closing Date, to the effect that:
(i) WHAM is a corporation duly organized, validly existing
and in good standing under the laws of the Delaware.
(ii) WHAM's Board of Directors have approved the
transactions contemplated by this Agreement.
(iii) All SEC filings have been timely made, including those
for the latest quarter.
(b) Conditions Performed. Except as provided herein, as of the
Closing Date, all the terms and conditions of this Agreement to be complied
with and performed by WHAM at or before the Closing Date shall have been
complied with or performed in all material respects.
(c) Representations and Warranties True at Closing. The
representations and warranties of WHAM in this Agreement shall be correct in
all material respects at and as of the Closing Date, and WHAM shall have
delivered to the Shareholders a certificate to such effect signed by an
executive officer of WHAM.
12. Conditions of WHAM's Obligations. The obligations of WHAM
hereunder are subject to each of the conditions set forth below being
fulfilled on the Closing Date, or thereafter as provided below. Any of such
conditions can be waived by WHAM.
(a) KEMRON's Board of Directors' Approval. The Board of
Directors of KEMRON shall have approved the transactions contemplated by this
Agreement.
(b) Opinion of Counsel. On or before the Closing Date, WHAM
shall have received an opinion of Hector I. Hernandez, Sr., Esq., counsel for
KEMRON, dated the Closing Date, as to the matters below and setting forth the
documents examined as the basis therefor:
(i) KEMRON is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York with
<PAGE>
requisite corporate power and authority to transact it business and own its
properties.
(ii) All of the KEMRON Shares have been duly authorized and
issued, are validly outstanding, are fully paid and non-assessable.
(iii) The capitalization of KEMRON is as set forth in this
Agreement. Other than as provided herein, there are no outstanding options or
rights with respect to the capital stock of KEMRON or any securities
convertible into or exchangeable for shares of such stock, or any other
commitments of any kind for the issuance of additional shares of interests or
securities of KEMRON.
(iv) Neither the execution and delivery of this Agreement
nor the performance of the transactions contemplated hereby will (a)
constitute a breach of the Articles of Incorporation or By-Laws of KEMRON or
any evidence of indebtedness or agreement to which it or they are a party, or
constitute an event which entitles any other party to any agreement to which
KEMRON is a party to terminate such agreement, (b) cause a default under any
mortgage or deed of trust, or other lien, charge or encumbrance to which any
of KEMRON's property is subject, (c) accelerate, or constitute an event
entitling, or which would on notice or lapse of time or both, entitle the
holder of any indebtedness of KEMRON to accelerate, or (d) conflict with or
result in the breach of any writ, injunction or decree of any court or
governmental instrumentality;
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Shareholders and KEMRON and is valid and binding
upon them in accordance with its terms;
(vi) The Shareholders have good and marketable title to the
shares of capital stock of KEMRON with full right and power to transfer and
sell said shares to WHAM, free and clear of all liens, encumbrances and
claims;
(vii) Such counsel does not know of any action, suit,
proceeding or claim pending or threatened against KEMRON, its or their
property or business, or the transactions contemplated by this Agreement;
(viii) No consent, approval or other order of any
governmental or administrative board or body is required for the execution and
delivery by the Shareholders of this Agreement and the sale of the KEMRON
Shares to WHAM pursuant hereto.
(ix) KEMRON has one subsidiary, Kemron Construction
Corporation, and none other.
(c) Instruments of Transfer. WHAM shall have received
instruments of transfer effecting the transfer of the KEMRON Shares to WHAM.
(d) Compliance with Conditions. As of the Closing Date, all the
terms and conditions of this Agreement to be complied with and performed by
KEMRON on or before the Closing Date shall have been complied with and
<PAGE>
performed in all material respects. KEMRON shall have delivered to WHAM
certificate(s) to such effect in form and substance satisfactory to WHAM.
(e) Correctness of Representations and Warranties. The
representations and warranties of KEMRON herein shall be correct in all
material respect at and as of the Closing Date, and KEMRON, respectively,
shall have delivered to WHAM a certificate to such effect.
(f) Certificate of Good Standing. KEMRON shall deliver to WHAM
at the Closing, a certificate issued by the New York Secretary of State
certifying as to the good standing of KEMRON as of a date not more than
fifteen (15) days prior to the Closing Date.
13. Additional Covenants and Undertaking of the parties. The
performance and adherence to the following undertakings and covenants of WHAM
and the Shareholders are additional conditions to the parties' obligations
under this Agreement.
(a) Notice of Certain Defaults or Claims. Each party shall give
prompt notice to the other of any notice of default relating to either party
received subsequent to the date of this Agreement and prior to the Closing
Date and of the assertion of any claim which, if upheld, or the occurrence of
any event, which would render inaccurate any representation or warranty of the
affected party.
(b) Implementation of Representations and Warranties. Each
party will take all reasonable action within its or their capability necessary
to render accurate as of the Closing Date such party's representations and
warranties contained in this Agreement and each party will refrain from taking
any action which would render inaccurate as of the Closing Date any such
representations or warranties.
(c) Delivery of Additional Documents. Each party will execute
and deliver, or cause to be executed and delivered, such additional
assignments, endorsements and other documents as the other party may
reasonably request for the purpose of carrying out this Agreement.
(d) Consents. The Shareholders shall cause KEMRON to prosecute
and obtain appropriate consents and authorization of all cognizant government
agencies necessary to approve the transfer of control of KEMRON without
adverse effects upon the continuation of all contracts, if any.
(e) Special Covenants of KEMRON and the Shareholders. KEMRON
and the Shareholders agree that following the Closing, they will cause the
<PAGE>
following actions to be taken by WHAM:
(i) Press Releases. Any press releases necessary will be
promptly disseminated by customary means.
(ii) SEC Filings. KEMRON and the Shareholders acknowledge
that WHAM is subject to the reporting and informational requirements of
Section 13 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Such new directors and executive officers and all Shareholders who
after the Exchange hold five percent or more of WHAM's common stock shall as
applicable promptly and timely file Form 3 reports and Schedule 13D's with the
Securities and Exchange Commission ("Commission"), as required by law. KEMRON
and the Shareholders also agree that after the Closing they will cause WHAM to
timely file a report on Form 8-K and to timely file (within all permitted
extensions) all audited and proforma consolidated financial statements
required by Form 8-K.
(f) WHAM Shareholder Approval. The parties acknowledge that
WHAM, absent first obtaining the consent of its shareholders for the Exchange,
must comply with Section 14(f) of the Exchange Act and Rule 14f-1 of the
Commission thereunder, which requires ten days' prior notice to the Commission
and to WHAM's shareholders before the new members of WHAM's board of directors
designated by KEMRON may take office. WHAM, KEMRON and the Shareholders agree
that the written concurrence pursuant to Section 228 of the Delaware General
Corporation Law of two (2) shareholders of WHAM holding in the aggregate more
than fifty percent of WHAM's issued and outstanding shares in lieu of a
general meeting of its shareholders, will constitute the approval of WHAM's
shareholders.
(g) No Reverse Split. The parties acknowledge that, following
the Closing, the Shareholders when acting as a group will hold the voting
power to effect any corporate action. It is expressly agreed among WHAM,
KEMRON and the Shareholders that, for a period of eighteen (18) months
following the Closing ("Period"), WHAM shall not effect any "prohibited
action," defined as any reverse split or combination of its common shares, or
any reorganization, recapitalization or other action whatsoever (other than a
merger, exchange, consolidation or similar transaction with an unaffiliated
entity) which has the effect of changing the number of outstanding WHAM common
shares into a smaller number of common shares. Each Shareholder expressly
agrees that, during the Period, he, she or it will not vote for or support any
such prohibited action nor grant a proxy or other voting right to a person
other than a Shareholder to vote at any meeting or act by written consent on a
proposal to effect a prohibited action, and will affirmatively oppose any
attempt to effect a prohibited action during the Period.
This provision is intended for the protection of existing shareholders of
<PAGE>
WHAM and persons who become shareholders during the Period, and all parties
agree that this provision and the duration of the Period is reasonable. The
parties expressly agree that all shareholders of WHAM at the time of the
taking of a prohibited action are or shall be third party beneficiaries of
this provision, and any one or more of such shareholders may bring an
injunctive action to prevent a prohibited action(s) or an action to force WHAM
to revoke or rescind a prohibited action as if it had never been effected, or
may otherwise judicially enforce this provision. Any shareholder prevailing in
such injunctive or other action shall be entitled to reimbursement from WHAM
for the costs and reasonable attorneys' fees incurred in bringing such
action(s).
14. The Closing.
(a) Time and Place. The Closing of the transactions
contemplated by this Agreement shall be at the offices of John D. Brasher,
Jr., Esq., BRASHER & COMPANY, 90 Madison Street, Suite 707, Denver, CO, at
2:00 p.m. on March 6, 1998, or any other date or place that may mutually be
agreed upon by the parties.
(b) Documents to be Delivered by the Shareholders on the Closing
Date. On the Closing Date, the Shareholders shall deliver to WHAM, in form
satisfactory to WHAM's counsel, the following documents:
(i) copies of certificates representing the KEMRON Shares,
on which there is no endorsement, legend or notice of adverse claims, duly
endorsed by the Shareholders for transfer;
(ii) all instruments referred to in Paragraph 13 above, the
delivery of which are therein specified as conditions to WHAM's obligation to
close.
(c) Documents Delivered by WHAM on Closing Date. All
instruments referred to in Paragraph 11 above, the delivery of which are
therein specified as conditions to the Shareholders' obligation to close.
15. Access to Information.
(a) KEMRON's Access to Information and Documentation. WHAM will
afford to a representative or representatives of KEMRON the opportunity upon
reasonable request and during regular business hours to make a reasonable
investigation of WHAM's operations. If for any reason the Closing
contemplated by this Agreement is not consummated, KEMRON and the Shareholders
agree not to disclose to any person any non-public information obtained by
them from such access and investigation.
<PAGE>
(b) WHAM's Access to Information and Documentation. The
Shareholders shall cause KEMRON to afford to representatives of WHAM, upon
reasonable request and during regular business hours, full and free access to
the property, business records, stock book, minute books, records and books of
account, instruments, documents and evidences of title of KEMRON so that WHAM
may have full opportunity to make such investigation as it shall desire to
make of the affairs of KEMRON in its sole and absolute discretion. If for any
reason the Closing contemplated by this Agreement is not consummated, WHAM
agrees not to disclose to any person any information obtained by it from such
access and investigation.
(c) Effect of Investigations. Any investigations of KEMRON or
WHAM as permitted by this Paragraph shall not affect any of the
representations and warranties hereunder and shall be conducted in such manner
as will not interfere unreasonably with the operations of the business or the
personnel of WHAM or KEMRON, as the case may be.
16. Costs.
(a) Finders' Fees. Each of the Shareholders, KEMRON and WHAM
represents and warrants that it has dealt with no broker or finder in
connection with any of the transactions contemplated by this Agreement, and,
insofar as it knows, no broker or other person is entitled to any commission
or finder's fee in connection with any of these transactions. The
Shareholders jointly and severally agree to indemnify and hold harmless WHAM,
and WHAM agrees to indemnify and hold them harmless against any loss,
liability, damage, cost, claim or expense incurred by reason of any brokerage
commission or finder's fee alleged to be payable because of their individual
act or omission or statement.
(b) Other Costs. WHAM, the Shareholders and KEMRON shall each
pay all of their own costs and expenses incurred or to be incurred by it or
them incident to the preparation and carrying out of the transactions herein
contemplated.
(c) Assumption of WHAM Debt. The parties acknowledge that WHAM
currently has total debts and payables outstanding in an aggregate amount of
approximately $105,000.00, all of which is owed to Stephen M. Siedow, PC, and
Brasher & Company. In the event that WHAM has failed to pay such outstanding
debts and payables on or before April 10, 1998, KEMRON hereby agrees to pay
such outstanding debts and payables, without interest or other charge, in an
amount not to exceed $105,000.00. Such payments shall be made as follows:
$75,000.00 Stephen M. Siedow, PC
<PAGE>
30,000.00 Brasher & Company
The satisfaction of any payables, debts or other obligations of WHAM of
every kind existing at or arising prior to Closing in excess of $105,000.00
shall be the joint and several responsibility of Stephen M. Siedow, PC, and
Brasher & Company or, if owed to them, shall be written off by them, and they
shall so agree in writing at Closing.
17. Termination of This Agreement.
(a) This Agreement shall terminate:
(i) By mutual written consent of the WHAM and KEMRON;
(ii) Automatically, without need of action by any party, if the
Closing has not occurred by the Closing date herein provided for or any
extensions agreed to by WHAM and KEMRON;
(iii) By KEMRON or WHAM, if:
(A) all the conditions precedent to its respective obligations
hereunder have not been satisfied or waived prior to the Closing Date, as it
may be accelerated or extended, or if any Shareholder refuses to execute this
Agreement or deliver the KEMRON Shares as herein called for;
(B) any party shall have defaulted or refused to perform in
any material respect under this Agreement, or if WHAM or KEMRON should have
reasonable cause to believe there has been a material representation
concerning, or failure or breach of, any representation or warranty by the
other party, or if it appears that either KEMRON or WHAM has committed any
unlawful acts affecting the other party;
(C) the transactions contemplated in this Agreement and
related agreements have not been consummated on the Closing Date, as it may be
accelerated or extended, OR
(D) either WHAM or KEMRON shall reasonably determine that the
transactions contemplated in this Agreement have become inadvisable by reason
of the institution or threat by any federal, state or municipal governmental
authorities or by other person whatever of a formal investigation or of any
action, suit or proceeding of any kind against either or both parties which in
one party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
(b) Any termination of this Agreement (other than automatic
termination) shall be made in accordance with the above listed grounds and, if
terminated by KEMRON or WHAM, shall be accompanied by a copy of the resolution
of the terminating party's board of directors. Written notice of termination
shall be given to the other party as required in this Agreement as promptly as
is practical under the circumstances. Upon a party's receipt of such
termination notice, this Agreement shall terminate and the transactions herein
contemplated shall be abandoned without further action by the parties.
<PAGE>
18. Form of Agreement.
(a) Subject Headings. The subject headings in this Agreement
are included for convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof.
(b) Entire Agreement; Modification. This Agreement and all
exhibits and documents incorporated herein by reference constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations and
understandings of the parties, whether oral or in writing. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in writing by the parties against which asserted.
(c) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
(d) Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
19. Parties.
(a) Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third persons to
any party to this Agreement, nor shall any provision give any third persons
any right of subrogation or action over against any party to this Agreement.
(b) Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties to it and their respective
heirs, legal representatives, successors and assigns; provided, however, that
neither WHAM nor the Shareholders may assign any of its rights or obligations
or duties under this Agreement without the express written consent of the
other party.
20. Remedies.
(a) Remedies Cumulative, etc. No right, power or remedy herein
<PAGE>
conferred upon or reserved to any party hereto is intended to be exclusive of
any other right, power or remedy, and every right, power and remedy pursuant
to this Agreement, now or hereafter existing at law or in equity or by statute
or otherwise, shall be cumulative and concurrent, to the extent permitted by
law, and shall be in addition to every other right, power or remedy pursuant
to this Agreement, now or hereafter existing at law or in equity or by statute
or otherwise. The exercise or beginning of the exercise by any party hereto
of any such right, power or remedy shall not preclude the simultaneous or
later exercise of any right, power or remedy.
(b) No Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar. No waiver shall be binding unless
specifically so titled, and executed in writing by the party making the
waiver. No failure or delay to insist upon the strict performance of any
term, condition, covenant or agreement of this Agreement, or to exercise any
right, power or remedy hereunder or consequent upon a breach hereof, shall
constitute a waiver of any such term, condition, covenant, agreement, right,
power or remedy of any such breach, or preclude the exercise of any such
right, power or remedy at any later time or times.
(c) Specific Performance. The obligations under this Agreement
are unique. If any party should default in its obligations under this
Agreement, the parties hereto acknowledge that it would be impracticable to
measure the resulting damages; accordingly, the non-breaching party in
addition to any other available rights or remedies, may sue for specific
performance, and the other party waives the defense that a remedy in damages
will be adequate.
(d) Arbitration. Any disputes arising out of this Agreement, or
the performance of duties contemplated by this Agreement shall be resolved
through arbitration in accordance with the rules of the American Arbitration
Association. Any such arbitration shall be conducted at Washington, D.C. Any
awards or decisions resulting from said arbitration shall be final and may be
enforced by any court of competent jurisdiction. If any action is brought for
the enforcement of this Agreement or to recover damages, the successful or
prevailing party or parties shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action, in addition to any other relief
to which it or they may be entitled.
21. Survival. All representations, warranties, covenants and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion or other writing provided for in it, shall survive any
investigation made by either party and shall survive the Closing subject to
<PAGE>
the provisions of Paragraphs 6 and 7 hereof.
22. Notices. All notices, request, instruction or other document to
be given hereunder by a party shall be in writing and delivered personally or
by facsimile transmission, or by electronic mail, or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to KEMRON: KEMRON ENVIRONMENTAL SERVICES, INC.
8150 Leesburg Pike, Suite 1200
Vienna, VA 22182
If to WHAM: WHITNEY AMERICAN CORPORATION
12373 E. Cornell Avenue
Aurora, CO 80014
23. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
WHEREFORE, the premises considered, the parties herein have executed the
foregoing Agreement, intending to be so bound, on the day first above written.
WHITNEY AMERICAN CORPORATION
A Delaware corporation
By:
Stephen M. Siedow
Its: COB, CEO
KEMRON ENVIRONMENTAL SERVICES, INC.
By:
Juan J. Gutierrez
Its: COB/CEO
SHAREHOLDERS
- ------------------------------------------------
Juan J. Gutierrez, David Bumgarner
- -------------------------
InterAmerica Technologies, Inc.
-------------------------
By: Sally A. Roy, Marilyn Zumbro
<PAGE>
- --------------------------------------------------
John M. Dwyer, Sally A. Roy
- ------------------------------------------------
David Vandenberg, Oscar Cabrisses
<PAGE>
Exhibit A
Name No. Of KEMRON Shares No. Of WHAM Shares
Juan J. Gutierrez 200 2,222,223
InterAmerica Technologies, Inc. 79 877,778
John Dwyer 15 166,666
David Vandenberg 15 166,666
David Bumgarner 4 44,444
Marilyn Zumbro 1 11,111
Sally Roy & half; 5,556
Oscar Cabrisses & half; 5,556
-------------------- ------------------
TOTAL 315 3,500,000
<PAGE>
STOCK EXCHANGE AGREEMENT
This Agreement ("Agreement") is made and entered into on March 5, 1998,
by and among COASTLINE INTERNATIONAL, INC., a Delaware corporation, as the
acquired company ("COASTLINE"); WHITNEY AMERICAN CORPORATION, a Delaware
corporation, as the acquiring company (the "WHAM"); and those persons
executing this Agreement in their capacity as shareholders of COASTLINE (the
"Shareholders").
WHEREAS, WHAM wishes to acquire and the Shareholders wish to transfer all
the issued and outstanding stock of COASTLINE in a transaction intended to
qualify as a reorganization within the meaning of I.R.C. Section 368(a)(1)(B),
as amended.
NOW, THEREFORE, WHAM, COASTLINE and the Shareholders adopt this plan of
reorganization and agree as follows:
1. Certain Definitions. As used herein and in any exhibit or schedule
incorporated herein, or in any document, certificate or opinion required to be
delivered pursuant to this Agreement, the following terms shall have the
meanings ascribed below.
(a) "Closing Date" means the date at which Closing hereunder shall
occur, which date shall be March 6, 1998, or any other date which may be
mutually agreed upon by the parties hereto.
(b) "Closing" means the settlement and consummation of the
purchase transaction contemplated hereby to be held at 2:00 p.m. Eastern
Standard Time on the Closing Date at the offices of John D. Brasher, Jr., Esq.,
counsel for WHAM, 90 Madison Street, Suite 707, Denver, CO 80206, or at such
other place as may be mutually agreed upon by the parties hereto.
(c) "COASTLINE Shares" means One Hundred(100%) percent of the
issued and outstanding capital stock of COASTLINE to be delivered to WHAM at the
Closing.
2. Exchange of Stock
<PAGE>
(a) Exchange. Subject to the terms and conditions herein set
forth, at the Closing on the Closing Date;
(i) The Shareholders agree to transfer to WHAM the number
of COASTLINE Shares, without par value, shown opposite their names in Exhibit
A, in exchange for an aggregate of One Million Seven Hundred Fifty Thousand
(1,750,000) shares of voting common stock of WHAM, $0.00001 par value per
share, (the "Exchange Shares"), to be issued at the Closing to the
Shareholders in the numbers shown opposite their names in Exhibit A.
(ii) The transfer of COASTLINE Shares by the Shareholders
shall be effected by the delivery to WHAM at the Closing of certificates
representing the transferred shares endorsed in blank.
(iii) At the Closing and from time to time thereafter the
Shareholders shall execute such additional instruments and take such other
action as WHAM may request in order more effectively to sell, transfer, and
assign the transferred stock to WHAM and to confirm WHAM's title thereto.
(b) Restricted Status of Exchange Shares. The Exchange Shares
have not been registered under the Securities Act of 1933, as amended ("Act"),
in reliance upon exemptions from registration provided by Section 4(2) of the
Act and Rule 506 under the Act and under the securities or blue sky laws of
applicable states or any rules or regulations promulgated thereunder, on the
grounds that the transactions contemplated in this Agreement do not involve any
public offering. The Exchange Shares are "restricted securities" as that term is
defined in Rule 144(a) of the General Rules and Regulations under the Act and
must be held indefinitely, unless they are subsequently registered under the Act
or an exemption from such registration requirements is available for their
resale. The prior written consent of WHAM will be necessary for any transfer of
any or all of the Exchange Shares, unless the shares have been duly registered
under the Act or the transfer is made in accordance with Rule
<PAGE>
144 or other available exemption under the Act. Further, any and all
certificates which are issued representing Exchange Shares shall, unless and
until removed in accordance with law, bear a restrictive legend substantially
in the following form:
"The shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and are "restricted
securities" as that term is defined in Rule 144 under the Act. These shares may
not be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which must be established to the
satisfaction of the Company's counsel."
(c) Officers and Directors of WHAM. At the Closing, the current
officers and directors of WHAM shall resign and the persons below shall be
elected as the directors and executive officers of WHAM:
Name Position
1. Juan J. Gutierrez Chairman of the Board, Chief
Executive Officer
Hector I. Hernandez, Sr. Executive Vice President, Director
Heatherlynn Colburn Executive Vice President, Chief
Operating Officer, Director
John M. Dwyer Director
David Vandenberg Director
Michael Goldberg Director
John Heishman Assistant Secretary/Treasurer, Director
3. Representations and Warranties of COASTLINE and the Shareholders.
COASTLINE and the Shareholders make to WHAM the following representations and
warranties, in reliance upon which WHAM has entered into this Agreement.
(a) Each Shareholder represents and warrants that he, she or it is
not now insolvent and will not be insolvent after selling and delivering the
COASTLINE Shares to WHAM on the terms of this Agreement, and that he, she or it
is receiving new consideration at least equal to the full and fair value of the
COASTLINE Shares being sold.
(b) COASTLINE and the Shareholders understand and acknowledge that
<PAGE>
(i) there is no active trading market in the common stock of WHAM, although
quoted name-only on the OTC Board, (ii) WHAM is a shell company with no cash or
other assets, no operations and no full-time or experienced management, (iii) no
person currently an officer, director or shareholder of or professional adviser
to WHAM has made any representation whatsoever to any Shareholder relating to
WHAM's stock price, operations, profitability or prospects following the
Closing, (iv) persons designated by COASTLINE and/or the Shareholders will
become the officers and directors of WHAM at the Closing, and no person now an
officer or director of WHAM will be such after the Closing or have any
responsibility or input as to operations after the Closing, the officers and
directors of WHAM solely responsible for its operations and success will be
persons designated by COASTLINE and the Shareholders, and (v) the Exchange
Shares are speculative and involve a high degree of risk.
(c) Each Shareholder acknowledges and agrees that he, she or it
have been furnished with substantially the same kind of information regarding
WHAM and its assets, financial condition and plan of operation as would be
contained in a registration statement and included prospectus prepared in
connection with a public offering of the Exchange Shares and has reviewed all
information concerning WHAM publicly available on the website maintained by the
Securities and Exchange Commission. Each Shareholder further represents that he,
she or it has had an opportunity to ask questions of and receive answers from
WHAM and its officers and directors regarding WHAM and its assets, financial
condition and plan of operation and the terms and conditions of the issuance of
the Exchange Shares.
(d) The Shareholder, alone or together with the Shareholder's
adviser(s), have such knowledge and experience in financial, tax and business
matters as to enable Shareholder to utilize the information made available by
WHAM, in connection with the Exchange and issuance of the Exchange Shares, to
evaluate the merits and risks of acquiring the Exchange Shares and to make an
informed investment decision with respect thereto.
(e) Each Shareholder agrees that he, she or it was not solicited
by WHAM by any form of general solicitation or general advertising, including
but not limited to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or made available over telephone lines by any information
service, or any seminar or meeting whose attendees had been invited by any means
of general solicitation or general advertising.
<PAGE>
(f) Except as expressly set forth in this Agreement and any
Schedules, Exhibits or other attachments hereto, WHAM has not made any
representation or warranty to any Shareholder in connection with this Agreement,
and WHAM has made no communication to any Shareholder that constitutes tax or
investment advice.
(g) Authority. The Shareholders have valid and marketable title to
the COASTLINE Shares free and clear of any claims, liens, trusts, encumbrances,
rights or interests of any person. The Shareholders have the right, power, and
authority to enter into, and perform their respective obligations under this
Agreement. This Agreement has been and as of the Closing Date will be, duly and
validly authorized, executed and delivered on behalf of the Shareholders, have
all requisite power and authority to consummate the transactions contemplated
herein. This Agreement is the valid and binding obligation of the Shareholders.
No third-party approvals or consents of any kind are necessary in connection
with this Agreement.
(h) Organization and Good Standing. COASTLINE is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full charter power to carry on its business as it is now being conducted
and to own and operate the properties now owned, operated or leased by it.
COASTLINE is qualified to do business as a foreign corporation in every state in
which the nature of the business carried on and properties owned or leased by
them presently requires them to be so qualified in any other jurisdiction.
(i) Capitalization. The authorized capitalization of COASTLINE
consists of One Thousand (1,000) shares of Common Stock, $0 par value per share.
As of the date hereof, COASTLINE has issued and outstanding 1,000 shares of such
Common Stock. All of such issued and outstanding shares have been duly and
validly issued, are fully paid and non-assessable and were issued and sold
pursuant to, and within limitations contained in, appropriate permits and
consents of each governmental authority from whom any permit or consent was
required.
(j) Title to COASTLINE Shares. The Shareholders have good and
valid title to all of the issued and outstanding common stock of COASTLINE, free
and clear of all claims, liens, mortgages, charges, security interests,
encumbrances and other restrictions or limitations of any kind whatsoever. The
Shareholders are not a party to, or bound by, any other agreement, instrument or
understanding restricting the transfer of such interests.
(k) Financial Statements. Attached hereto and incorporated herein
by this reference, is the unaudited consolidated Financial Statements
<PAGE>
of COASTLINE for the year ended December 31, 1997, accompanied by the related
opinions of COASTLINE's official independent auditors as of such dates and for
such periods (the "Financial Statements"). Said Financial Statements (i) were
prepared in accordance with the books and records of COASTLINE; (ii) were
prepared in accordance with generally accepted accounting principles
consistently applied; and (iii) sets forth fairly COASTLINE's financial
condition and the results of its operations as of the relevant dates thereof and
for the periods covered thereby. Except as to the extent reflected or reserved
against in the Financial Statements, COASTLINE as of the date thereof had no
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, including without limitation, tax liabilities due or to become due
and whether incurred in respect of or measured by the income of COASTLINE for
any period prior to such date, or arising out of any transaction entered into,
or any state of facts existing, prior hereto. Since the date of such Financial
Statements, absent written disclosure, no credit or charge has been made to any
surplus account of COASTLINE.
(l) Events Subsequent to December 31, 1997. Since December 31,
1997, absent a written disclosure delivered to WHAM, there has not been any:
(i) material adverse change in the financial condition,
liabilities, assets, business, or prospects of COASTLINE;
(ii) destruction, damage to, or loss of any asset of
COASTLINE that may substantially affect the financial condition, business, or
prospects of COASTLINE;
(iii) change in accounting methods or practices (including,
without limitation, any change in inventory accounting or in depreciation or
amortization policies or rates) by COASTLINE;
(iv) revaluation by COASTLINE of any of its assets;
(v) declaration, setting aside, or payment of a dividend or
other dividend or other distribution in respect to the capital stock of
COASTLINE, or any direct or indirect redemption, purchase, or other acquisition
by COASTLINE of any of its shares of capital stock;
(vi) any other transaction by COASTLINE except in the
ordinary course of business;
(vii) direct or indirect increase in the salary or other
compensation payable or to become payable by COASTLINE to any of its officers,
directors or employees, or the declaration, payment or commitment or
<PAGE>
obligations of any kind for the payment by COASTLINE of a bonus or other
additional salary or compensation to any such person;
(viii) sale or transfer of any single asset of COASTLINE
having a value in excess of $1,000 ;
(ix) amendment or termination of any contract, agreement, or
license to which COASTLINE is a party except in the ordinary course of business;
(x) loan by COASTLINE to any person or entity, or guaranty
by COASTLINE of any loan;
(xi) mortgage, pledge, or other encumbrance of any asset of
COASTLINE;
(xii) waiver or release of any right or claim of COASTLINE;
(xiii) issuance or sale by COASTLINE of any shares of
COASTLINE's capital stock;
(xiv) bid submitted or sales contract entered into or any
other contract or agreement entered into involving more than $1,000 in each
case, except in the ordinary course of business;
(xv) obligation or debt incurred in excess of $1,000.
(m) Liabilities. COASTLINE has no known debt, liability, or
obligation of any nature, whether accrued, absolute, contingent, or otherwise,
whether due or to become due, that is not fully provided or reserved for in the
Financial Statements, including the notes thereto, except for those (1) that may
have been incurred after the date of the Financial Statements in the ordinary
course of business, or (2) that are not required by generally accepted
accounting principles to be included in the Financial Statements. All debts,
liabilities and obligations incurred after the date of the Financial Statements
were incurred in the ordinary course of business and not in violation of any
provision of this Agreement, are usual and normal in amount both individually
and in the aggregate.
(n) Taxes. Within the time and in the manner prescribed by law,
COASTLINE has filed all Federal, state and local tax returns required by law and
have paid all taxes, assessments, and penalties due and payable. The
Shareholders shall cause COASTLINE (i) to prepare and file all Federal, state
and local income tax returns for COASTLINE required to be filed through the
Closing Date covering the most recent taxable period; (ii) to pay all taxes,
penalties and assessments related to such returns, and upon filing thereof shall
promptly supply copies of such returns to WHAM. The provision for taxes
reflected in the Financial Statements are adequate for any and all federal,
state, county, and local taxes for the period ending on the date of such
Financial Statements and for all prior periods, whether or not disputed,
<PAGE>
including without limitation any and all taxes that may be assessed by the
Internal Revenue Service as a result of an audit of the Company's tax returns.
There are no present disputes as to taxes of any nature payable by COASTLINE or
with respect to the COASTLINE Shares. On or before the Closing Date, COASTLINE
shall have furnished to WHAM, in form satisfactory to it, true and accurate
copies of all Federal, state and local tax returns, filings, waivers, elections
and deficiency notices for each of the past fiscal year of COASTLINE and a true
and complete copy of the unaudited consolidated and consolidating balance sheets
of COASTLINE as of January 31, 1998 ("Current Balance Sheet").
(o) Title to Properties and Assets. COASTLINE has good and
marketable title to its properties and assets, including the properties and
assets reflected in the Current Balance Sheet referred to above (except as since
disposed of in the ordinary course of business) subject to no liens, mortgages,
encumbrances or charges which are not reflected in the Current Balance Sheet or
which, either in any case or in the aggregate, are substantial in amount or
which materially detract from the value of the property subject thereto or which
materially impair the operation of COASTLINE, or which have not arisen otherwise
than in the ordinary course of business. No personal property needed by
COASTLINE for the conduct of its business is held under any lease, security
agreement, conditional sales contract, or other title retention or security
arrangement, or is located other than in the possession and under the control of
COASTLINE. The tangible personal property reflected in those books and records
constitutes all such tangible personal property necessary for the conduct by
COASTLINE of its business as now conducted.
(p) Proprietary Rights. COASTLINE owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, trade secrets, service marks, trade names, copyrights,
inventions, drawings, designs, customer lists, proprietary know-how or
information, or other rights with respect thereto (collectively referred to as
"Proprietary Rights"), used by it and the same are sufficient to conduct such
business as it has been and is now being conducted. The operations of COASTLINE
neither conflict with nor infringe, and no one has asserted to COASTLINE that
such operations conflict with or infringe, any intangible property rights owned,
possessed or used by any third party which are of the same kind as the
Proprietary Rights. There are no claims, disputes, actions, proceedings, suits
or appeals pending against COASTLINE with respect to any Proprietary Rights and
none has been threatened against COASTLINE. To the
<PAGE>
best knowledge of COASTLINE (after reasonable investigation), there are no facts
which would result in any claim which would have an adverse effect on the
condition (financial or otherwise), business, net worth, assets, properties or
operations of COASTLINE based on an assertion that COASTLINE does not have the
unrestricted right to use, free of any rights or claims of others, all
Proprietary Rights.
(q) Insurance. Prior to the Closing Date, COASTLINE shall have
delivered, in form satisfactory to WHAM pursuant to this subparagraph, a
certificate or certificates of all insurance coverage of COASTLINE. Such
certificates evidence policies of fire, liability and other forms of casualty
insurance and workmen's compensation insurance held by COASTLINE. Such
policies will be maintained in force and in effect by COASTLINE in present
amounts up to and including the Closing Date. COASTLINE is not in material
default under any of such policies.
(r) Contracts. The Shareholders have previously submitted a list
of all written contracts and bids and as further detailed and a summary of all
oral contracts and bids of the following categories to which COASTLINE is a
party:
(i) Contracts not made in the ordinary course of business
(excluding this Agreement and the Exhibits hereto), and all material
contracts, whether or not made in the ordinary course of business;
(ii) Employment contracts;
(iii) Contracts with a labor union or association;
(iv) Bonus, pension, profit sharing, retirement, stock
purchase, stock option, hospitalization, insurance or similar plans providing
employee benefits;
(v) Distribution, franchise, sales agency or advertising
contracts;
(vi) Output or requirements agreements;
(vii) Any indenture, mortgage deed of trust or lease;
(viii) Options with respect to any property, real or
personal, whether as grantor or grantee;
(ix) Contracts or outstanding bids involving potential
expenditures or liabilities of COASTLINE in excess of $1,000.00;
(x) Contracts continuing over a period of more than one
(1) year from their respective dates;
(xi) Contracts or commitments relating to commission
arrangements with others;
(xii) Patent, trade name, and all other license agreements,
to which COASTLINE is a party, either as licensor or licensee;
<PAGE>
(xiii) Contracts containing covenants limiting the freedom
of COASTLINE to compete in any line of business or with any person; and
(xiv) Agreements evidencing all indebtedness.
There is no default or event that with notice or lapse of time, or both, would
constitute a default by COASTLINE, or to COASTLINE's knowledge, any other party
to any of these agreements. COASTLINE has received no notice that any party to
any of these agreements intends to cancel or terminate any of these agreements.
COASTLINE is not a party to, nor is COASTLINE or the property of COASTLINE bound
by any agreement that is materially adverse to the business, properties or
financial condition of COASTLINE. COASTLINE is not a party to any significant
contract except as provided in writing.
(s) Banks. Prior to the execution of this Agreement, the
Shareholders have delivered to WHAM pursuant to this subparagraph a complete
list showing the name of each bank in which COASTLINE maintains accounts
(including a description of the account), certificates of deposit or safe
deposit boxes and the names of all persons authorized to draw thereon or to have
access thereto.
(t) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to knowledge of
COASTLINE, there is no action, suit proceeding threatened or pending which, if
it were to result in a decision adverse to COASTLINE, would in the judgment of
COASTLINE result in any material adverse change in the condition, financial or
otherwise, business or prospects of COASTLINE or would materially adversely
affect its properties or assets.
(u) No Resulting Breach or Default. The consummation of the
transactions contemplated by this Agreement will not result in or constitute any
of the following: (i) a default or any event that, with notice or lapse of time
or both, would be a default, breach, or violation of applicable law or
regulation or of the Articles of Incorporation or Bylaws of COASTLINE, or any
judgment, order, writ, injunction, or decree of any court or governmental
authority or of any lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument,
or arrangement to which COASTLINE is a party or by which its property is bound;
(ii) an event that would permit a party to terminate any agreement or to
accelerate the maturity of any indebtedness or other
<PAGE>
obligation of COASTLINE, or (iii) the creation or imposition of any security
interest, lien, charge, or encumbrance on any of the properties or assets of
COASTLINE.
(v) Corporate Documents. COASTLINE has furnished to WHAM for its
examination (i) copies of the Articles of Incorporation and Bylaws of COASTLINE,
including all amendments, (ii) the complete minute books of COASTLINE of all
meetings of the shareholders and Board of Directors of COASTLINE, (iii) the
stock transfer books of COASTLINE setting forth all transfers of capital stock.
The meetings of the Board of Directors and Shareholders referred to therein were
duly called and duly held and the signatures appearing on all documents
contained therein are the true signatures of the person purporting to have
signed the same. All documents delivered hereto contain accurate records of all
meetings and accurately reflect all corporate action of the stockholders and
directors of COASTLINE.
(w) Compliance with Other Instruments, etc.; None Burdensome.
To the best of the Shareholder's knowledge and belief, COASTLINE is not in
violation of any term or provision of any charter, by-law, mortgage, indenture,
contract, agreement, instrument, judgment, decree, order, injunction, statute,
rule or regulation. The execution, delivery and performance of and compliance
with this Agreement and the COASTLINE Shares to be exchanged hereunder will not
result in any such violation or be in conflict with or constitute a default
under any such term or provision, or result in the creation of any mortgage,
lien, encumbrance or charge upon any of the properties or assets of COASTLINE
pursuant to any such term or provision. There is no term or provision of this
Agreement which materially adversely affects the business, prospects, condition
(financial or other), or operations of COASTLINE or any of its properties or
assets.
(x) Indebtedness to Officers, Directors and Shareholders.
COASTLINE is not indebted to any person who is an officer, director or
shareholder of COASTLINE in any amount whatsoever other than for salaries for
services rendered or for reimbursable business expenses.
(y) Brokerage and Finder's Fees. COASTLINE has not incurred
any unpaid liability to any broker, finder or agent for any brokerage fees,
finder's fees or commissions with respect to the transactions contemplated by
this Agreement.
(z) Full Disclosure. On or prior to the date of the execution
of this Agreement, the Shareholders have delivered or made available to WHAM
<PAGE>
all of the material documents and contracts to which COASTLINE is a party which
in any way affects any of the properties, assets or business of COASTLINE.
Neither the Financial Statements referred to in subparagraph (e) of this
Paragraph nor any other certificate or statement furnished to WHAM by the
Shareholders or in behalf of COASTLINE in connection with the transactions
contemplated hereby nor this Agreement contains any untrue statement of a
material fact, known as of the date thereof, or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading. There is no known fact which materially adversely affects the
business, prospects or condition (financial or other) or operations of COASTLINE
or any of its properties or assets which has not been set forth herein or
disclosed by the Financial Statements referred to herein or in any certificate
or statement furnished to WHAM by the Shareholders or in behalf of COASTLINE.
4. Conduct of COASTLINE's Business Pending Closing. COASTLINE and
the Shareholders hereby covenant and agree with WHAM that between the date
hereof and the Closing Date:
(a) COASTLINE will not, without the prior written consent of
WHAM, amend or otherwise change its Articles of Incorporation or By-laws, or
any instrument similar in purpose and intent to them.
(b) The Shareholders will not, without the prior written consent
of WHAM, transfer or encumber in any way, voluntarily or involuntarily, any
of the COASTLINE Shares.
(c) COASTLINE will not declare or pay any dividend or make any
other distribution of assets of any kind whatsoever to any of its shareholders
in redemption of or as the purchase price for any of its capital stock, or in
discharge or cancellation, whether in whole or in part, of any indebtedness,
whether in payment of principal, interest or otherwise, owing to any of such
shareholders.
(d) COASTLINE will conduct its business diligently in the ordinary
course, use its best efforts to preserve intact its business organization, use
its best efforts to retain in its employ all of its key employees, and use its
best efforts to preserve its relationships with its
<PAGE>
suppliers and customers and others having business relations with it.
(e) COASTLINE will not make any commitments for capital
expenditures or for indirect charges exceeding $1,000 except with respect to
expenditures required in the normal course of performing current contracts.
(f) COASTLINE will not sell or transfer any of its assets,
cancel any debts or claims, or mortgage, pledge or subject to lien, charge or
encumbrance of any kind, except liens for taxes not due, any of its assets,
except in the ordinary course of business.
(g) COASTLINE will not, except in the ordinary course of business
amend or terminate any material contract or agreement to which it is a party, or
enter into or become a party to any contract or agreement under which (i) the
value of services to be performed or the cost of goods to be sold will exceed
$1,000; or (ii) the reasonably anticipated costs and expenses will exceed the
anticipated receipts.
(h) COASTLINE will continue in force its existing insurance
policies, subject only to variation in amounts required by the ordinary
operations of its business.
(i) COASTLINE will not increase the compensation payable or to
become payable to any of its officers, directors, employees or agents, or any
bonus payment or similar arrangement made to or with any of such officers,
directors, employees or agents.
(j) COASTLINE will not incur any indebtedness to any person who is
an officer, director or shareholder of COASTLINE in any amount whatsoever other
than for salaries for services rendered or for reimbursable business expenses.
(k) COASTLINE and its representatives will keep confidential any
information not otherwise readily available from public sources which they or
their representatives obtain from WHAM concerning the properties, assets and
business of WHAM.
5. Representations and Warranties of WHAM. WHAM hereby makes the
following representations and warranties in reliance upon which the COASTLINE
Shareholders have entered into this Agreement.
(a) Organization and Good Standing. WHAM is a corporation duly
<PAGE>
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as it is now
being conducted and to own and operate the properties now owned, operated or
leased by it. WHAM is qualified to do business as a foreign corporation in all
states in which the nature of the business carried on and properties owned or
leased by WHAM requires WHAM to be so qualified in any other jurisdiction.
WHAM's filings with the Securities and Exchange Commission, Washington, D.C.
("SEC"), are current and have been timely filed. WHAM will ensure that the
latest Form 10-QSB, for the quarter ended February 28, 1998, is or will be
timely filed with the SEC.
(b) Authority. The execution of this Agreement by WHAM and its
delivery to the Shareholders has been duly authorized by the Board of Directors
of WHAM, and no further corporate action is necessary on the part of WHAM to
make this Agreement valid and binding upon WHAM in accordance with its terms.
(c) Capitalization. The authorized capitalization of WHAM consists
of 50,000,000 shares of common stock, $0.00001 par value per share, and
5,000,000 shares of preferred stock, $0.00001 par value per share, of which
362,515 shares of Common are issued and outstanding, fully paid and non-
assessable, and no shares of preferred stock have been issued.
(d) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to the knowledge
of WHAM, there is no action, suit proceeding threatened or pending which, if it
were to result in a decision adverse to WHAM, would in the judgment of WHAM
result in any material adverse change in the condition, financial or otherwise,
business or prospects of WHAM or would materially adversely affect its
properties or assets.
(e) No Defaults. The consummation of the transactions contemplated
by this Agreement will not result in or constitute any of the following: (i) a
default or any event that, with notice or lapse of time or both, would be a
default, breach, or violation of applicable law or regulation or of the Articles
of Incorporation or Bylaws of WHAM, or any judgment, order, writ, injunction, or
decree of any court or governmental authority or of any lease, license,
promissory note, conditional sales contract, commitment,
<PAGE>
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which WHAM is a party or by which its property is bound; (ii)
an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of WHAM, or
(iii) the creation or imposition of any security interest, lien, charge, or
encumbrance on any of the properties or assets of WHAM.
6. Indemnification by the Shareholders. The Shareholders (hereafter the
"Seller Group"), jointly and severally, shall indemnify, defend and hold
harmless WHAM against and in respect of any and all actions, causes of action,
assessments, claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including any liabilities for obligations
which arise after the Closing Date based on events or conditions occurring
before the Closing Date, and interest, penalties and reasonable attorneys' fees
and expenses, that WHAM shall incur or suffer, which arise, result from or
relate to any inaccuracy in, or any breach of any of the Seller Group's
representations or warranties, or any failure by the Seller Group to perform any
of their covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by any of
the Seller Group under this Agreement; provided, however, that the right to
indemnity as aforesaid with respect to a breach by the Seller Group or any of
their representations or warranties in this Agreement shall be limited by the
following: (i) such indemnity shall apply only if the facts or circumstances
resulting in such breach are such as to result in damages to WHAM in excess of
$10,000 in the aggregate; and (ii) such right to indemnity shall apply only as
to all claims giving rise to a right of indemnity hereunder of which WHAM has
received actual notice within twenty-four (24) months after the Closing Date.
7. Indemnification by WHAM. Subject to the terms and conditions of
this Paragraph 7, WHAM hereby agrees to indemnify, defend and hold harmless
the Shareholders and their respective successors, if any, and their officers,
directors and controlling persons, at any time after the Closing Date, from
and against all demands, claims, actions, or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and attorneys' fees and expenses, which were
reasonably incurred by or imposed upon the Shareholders or COASTLINE, net of
any insurance proceeds received by the Shareholders or COASTLINE with respect
thereto, asserted against, resulting to, imposed upon or incurred by the
<PAGE>
Shareholders or COASTLINE, directly or indirectly, by reason of or resulting
from any misrepresentation, breach of any warranty, non-performance or breach of
any covenant, obligation or agreement of WHAM contained in this Agreement;
provided, however, that the right to indemnity as aforesaid with respect to a
breach by WHAM or any of its representations or warranties in this Agreement
shall be limited by the following: (i) such indemnity shall apply only if the
facts or circumstances resulting in such breach are such as to result in damages
to the Shareholders or COASTLINE in excess of $10,000 in the aggregate; and (ii)
such right to indemnity shall apply only as to all claims giving rise to a right
of indemnity hereunder of which the Shareholders or COASTLINE has received
actual notice within twenty-four (24) months after the Closing Date.
8. Claims by Third Parties. The obligations and liabilities of an
indemnifying party under any provision of this Agreement with respect to
claims relating to third parties shall be subject to the following terms and
conditions:
(a) Whenever any indemnified party shall have received notice that
a claim has been asserted or threatened against such indemnified party, which,
if valid, would subject the indemnifying party to an indemnity obligation under
this Agreement, the indemnified party shall promptly notify the indemnifying
party of such claim in the manner described in Paragraph 22; provided, however,
that the failure of the indemnified party to give timely notice hereunder shall
not relieve the indemnifying party of its indemnification obligations under this
Agreement unless, and only to the extent that, such failure caused the damages
for which the indemnifying party is obligated to be greater than they would have
been had the indemnified party given timely notice.
(b) The indemnifying party or its designee will have the right but
not the obligation, to assume the defense of any claim described in Paragraph 6
or 7 above, provided, however, the indemnified party shall have the right at its
option to defend and to compromise or settle such claim which compromise or
settlement shall be made only with the written consent of the indemnifying
party, such consent not be unreasonably withheld. If the indemnifying party
fails to assume the defense of such claim within 15 days after receipt of notice
of a claim pursuant to Paragraph 22, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the
indemnifying party) have the right to undertake, at the indemnifying party's
cost and expense, the defense, compromise or settlement
<PAGE>
of such claim on behalf of and for the account and risk of the indemnifying
party, subject to the right of the indemnifying party to assume the defense of
such claim at any time prior to settlement, compromise or final determination
thereof and provided, however, that the indemnified party shall not enter into
any such compromise or settlement without the written consent of the
indemnifying party. In the event the indemnified party assumes defense of the
claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall not be liable for any settlement of any action effected
without its consent, but if settled with the consent of the indemnifying party
or if there be a final judgment beyond review or appeal, for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless an
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Any party who does not undertake the defense of a claim
may, at its own expense, retain such additional attorneys and other advisors as
it shall deem necessary, which attorneys and advisors will be permitted by the
party undertaking such defense, and its attorneys, to observe the defense of
such claim.
9. Indemnity for Taxes of Indemnified Party. Each party hereto further
agrees that, with respect to payment or indemnity under this Paragraph 9, such
payment or indemnity shall include any amount necessary to hold the indemnified
party harmless on an after-tax basis from all taxes required to be paid with
respect to the receipt of such payment or indemnity under the laws of any
Federal, state or local government or taxing authority in the United States, or
under the laws of any foreign government of taxing authority or governmental
subdivision of a foreign country.
10. Shareholders' Representatives. The Shareholders hereby irrevocably
designate and appoint Heatherlynn Colburn and Hector I. Hernandez, Sr., Esq., or
either of them, as their agents and attorneys in fact ("Shareholders'
Representatives"), with full power and authority until the Closing to execute,
deliver, and receive on their behalf all notices, requests, and other
communications hereunder; to fix and alter on their behalf the date, time, and
place of the Closing; to waive, amend, or modify any
<PAGE>
provisions of this Agreement, and to take such other action on their behalf in
connection with this Agreement, the Closing, and the transactions contemplated
hereby as such agent or agents deem appropriate; provided, however, that no such
waiver, amendment, or modification may be made if it would decrease the number
of shares to be issued to the Shareholders or increase the extent of their
obligation to indemnify WHAM hereunder.
11. Conditions Precedent to Shareholders' Obligations. The
obligations of the Shareholders hereunder are subject to each of the
conditions set forth below being fulfilled on the Closing Date. Any of such
conditions may, at the option of the Shareholders, be waived:
(a) Opinion of Counsel. The Shareholders shall have received an
opinion of John D. Brasher, Jr., Esq., counsel for WHAM, dated as of the Closing
Date, to the effect that:
(i) WHAM is a corporation duly organized, validly existing
and in good standing under the laws of the Delaware.
(ii) WHAM's Board of Directors have approved the
transactions contemplated by this Agreement.
(iii) All SEC filings have been timely made, including those
for the latest quarter.
(b) Conditions Performed. Except as provided herein, as of the
Closing Date, all the terms and conditions of this Agreement to be complied
with and performed by WHAM at or before the Closing Date shall have been
complied with or performed in all material respects.
(c) Representations and Warranties True at Closing. The
representations and warranties of WHAM in this Agreement shall be correct in
all material respects at and as of the Closing Date, and WHAM shall have
delivered to the Shareholders a certificate to such effect signed by an
executive officer of WHAM.
12. Conditions of WHAM's Obligations. The obligations of WHAM
hereunder are subject to each of the conditions set forth below being
fulfilled on the Closing Date, or thereafter as provided below. Any of such
conditions can be waived by WHAM.
(a) COASTLINE's Board of Directors' Approval. The Board of
<PAGE>
Directors of COASTLINE shall have approved the transactions contemplated by
this Agreement.
(b) Opinion of Counsel. On or before the Closing Date, WHAM
shall have received an opinion of Hector I. Hernandez, Sr., Esq., counsel for
COASTLINE, dated the Closing Date, as to the matters below and setting forth
the documents examined as the basis therefor:
(i) COASTLINE is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware with requi
site corporate power and authority to transact it business and own its
properties.
(ii) All of the equitable interests of COASTLINE have been
duly authorized and issued, are validly outstanding, are fully paid and
non-assessable.
(iii) The capitalization of COASTLINE is as set forth in this
Agreement. Other than as provided herein, there are no outstanding options or
rights with respect to the capital stock of COASTLINE or any securities
convertible into or exchangeable for shares of such stock, or any other
commitments of any kind for the issuance of additional shares of interests or
securities of COASTLINE.
(iv) Neither the execution and delivery of this Agreement nor
the performance of the transactions contemplated hereby will (a) constitute a
breach of the Articles of Incorporation or By-Laws of COASTLINE or any evidence
of indebtedness or agreement to which it or they are a party, or constitute an
event which entitles any other party to any agreement to which COASTLINE is a
party to terminate such agreement, (b) cause a default under any mortgage or
deed of trust, or other lien, charge or encumbrance to which any of COASTLINE's
property is subject, (c) accelerate, or constitute an event entitling, or which
would on notice or lapse of time or both, entitle the holder of any indebtedness
of COASTLINE to accelerate, or (d) conflict with or result in the breach of any
writ, injunction or decree of any court or governmental instrumentality;
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Shareholders and COASTLINE and is valid and
binding upon them in accordance with its terms;
(vi) The Shareholders have good and marketable title to the
shares of capital stock of COASTLINE with full right and power to transfer and
sell said shares to WHAM, free and clear of all liens, encumbrances and claims;
(vii) Such counsel does not know of any action, suit,
<PAGE>
proceeding or claim pending or threatened against COASTLINE, its or their
property or business, or the transactions contemplated by this Agreement;
(viii) No consent, approval or other order of any governmental
or administrative board or body is required for the execution and delivery by
the Shareholders of this Agreement and the sale of the COASTLINE Shares to WHAM
pursuant hereto.
(ix) COASTLINE has no subsidiaries.
(c) Instruments of Transfer. WHAM shall have received instruments
of transfer effecting the transfer of the COASTLINE Shares to WHAM.
(d) Compliance with Conditions. As of the Closing Date, all the
terms and conditions of this Agreement to be complied with and performed by
COASTLINE on or before the Closing Date shall have been complied with and
performed in all material respects. COASTLINE shall have delivered to WHAM
certificate(s) to such effect in form and substance satisfactory to WHAM.
(e) Correctness of Representations and Warranties. The
representations and warranties of COASTLINE herein shall be correct in all
material respect at and as of the Closing Date, and COASTLINE, respectively,
shall have delivered to WHAM a certificate to such effect.
(f) Certificate of Good Standing. COASTLINE shall deliver to WHAM
at the Closing, a certificate issued by the Delaware Secretary of State
certifying as to the good standing of COASTLINE as of a date not more than
fifteen (15) days prior to the Closing Date.
13. Additional Covenants and Undertaking of the parties. The
performance and adherence to the following undertakings and covenants of WHAM
and the Shareholders are additional conditions to the parties' obligations
under this Agreement.
(a) Notice of Certain Defaults or Claims. Each party shall give
prompt notice to the other of any notice of default relating to either party
received subsequent to the date of this Agreement and prior to the Closing Date
and of the assertion of any claim which, if upheld, or the occurrence of any
event, which would render inaccurate any representation or warranty of the
affected party.
<PAGE>
(b) Implementation of Representations and Warranties. Each party
will take all reasonable action within its or their capability necessary to
render accurate as of the Closing Date such party's representations and
warranties contained in this Agreement and each party will refrain from taking
any action which would render inaccurate as of the Closing Date any such
representations or warranties.
(c) Delivery of Additional Documents. Each party will execute and
deliver, or cause to be executed and delivered, such additional assignments,
endorsements and other documents as the other party may reasonably request for
the purpose of carrying out this Agreement.
(d) Consents. The Shareholders shall cause COASTLINE to prosecute
and obtain appropriate consents and authorization of all cognizant government
agencies necessary to approve the transfer of control of COASTLINE without
adverse effects upon the continuation of all contracts, if any.
(e) Special Covenants of COASTLINE and the Shareholders. COASTLINE
and the Shareholders agree that following the Closing, they will cause the
following actions to be taken by WHAM:
(i) Press Releases. Any press releases necessary will be
promptly disseminated by customary means.
(ii) SEC Filings. COASTLINE and the Shareholders acknowledge
that WHAM is subject to the reporting and informational requirements of Section
13 of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Such new
directors and executive officers and all Shareholders who after the Exchange
hold five percent or more of WHAM's common stock shall as applicable promptly
and timely file Form 3 reports and Schedule 13D's with the Securities and
Exchange Commission ("Commission"), as required by law. COASTLINE and the
Shareholders also agree that after the Closing they will cause WHAM to timely
file a report on Form 8-K and to timely file (within all permitted extensions)
all audited and proforma consolidated financial statements required by Form 8-K.
(f) WHAM Shareholder Approval. The parties acknowledge that WHAM,
absent first obtaining the consent of its shareholders for the Exchange, must
comply with Section 14(f) of the Exchange Act and Rule 14f-1 of the Commission
thereunder, which requires ten days' prior notice to the
<PAGE>
Commission and to WHAM's shareholders before the new members of WHAM's board of
directors designated by COASTLINE may take office. WHAM, COASTLINE and the
Shareholders agree that the written concurrence pursuant to Section 228 of the
Delaware General Corporation Law of two (2) shareholders of WHAM holding in the
aggregate more than fifty percent of WHAM's issued and outstanding shares in
lieu of a general meeting of its shareholders, will constitute the approval of
WHAM's shareholders.
(g) No Reverse Split. The parties acknowledge that, following the
Closing, the Shareholders when acting as a group will hold the voting power to
effect any corporate action. It is expressly agreed among WHAM, COASTLINE and
the Shareholders that, for a period of eighteen (18) months following the
Closing ("Period"), WHAM shall not effect any "prohibited action," defined as
any reverse split or combination of its common shares, or any reorganization,
recapitalization or other action whatsoever (other than a merger, exchange,
consolidation or similar transaction with an unaffiliated entity) which has the
effect of changing the number of outstanding WHAM common shares into a smaller
number of common shares. Each Shareholder expressly agrees that, during the
Period, he, she or it will not vote for or support any such prohibited action
nor grant a proxy or other voting right to a person other than a Shareholder to
vote at any meeting or act by written consent on a proposal to effect a
prohibited action, and will affirmatively oppose any attempt to effect a
prohibited action during the Period.
This provision is intended for the protection of existing shareholders of
WHAM and persons who become shareholders during the Period, and all parties
agree that this provision and the duration of the Period is reasonable. The
parties expressly agree that all shareholders of WHAM at the time of the taking
of a prohibited action are or shall be third party beneficiaries of this
provision, and any one or more of such shareholders may bring an injunctive
action to prevent a prohibited action(s) or an action to force WHAM to revoke or
rescind a prohibited action as if it had never been effected, or may otherwise
judicially enforce this provision. Any shareholder prevailing in such injunctive
or other action shall be entitled to reimbursement from WHAM for the costs and
reasonable attorneys' fees incurred in bringing such action(s).
<PAGE>
14. The Closing.
(a) Time and Place. The Closing of the transactions contemplated
by this Agreement shall be at the offices of John D. Brasher, Jr., Esq., BRASHER
& COMPANY, 90 Madison Street, Suite 707, Denver, CO, at 2:00 p.m. on March 6,
1998, or any other date or place that may mutually be agreed upon by the
parties.
(b) Documents to be Delivered by the Shareholders on the Closing
Date. On the Closing Date, the Shareholders shall deliver to WHAM, in form
satisfactory to WHAM's counsel, the following documents:
(i) copies of certificates representing the COASTLINE Shares,
on which there is no endorsement, legend or notice of adverse claims, duly
endorsed by the Shareholders for transfer;
(ii) all instruments referred to in Paragraph 13 above, the
delivery of which are therein specified as conditions to WHAM's obligation to
close.
(c) Documents Delivered by WHAM on Closing Date. All instruments
referred to in Paragraph 11 above, the delivery of which are therein specified
as conditions to the Shareholders' obligation to close.
15. Access to Information.
(a) COASTLINE's Access to Information and Documentation. WHAM will
afford to a representative or representatives of COASTLINE the opportunity upon
reasonable request and during regular business hours to make a reasonable
investigation of WHAM's operations. If for any reason the Closing contemplated
by this Agreement is not consummated, COASTLINE and the Shareholders agree not
to disclose to any person any non-public information obtained by them from such
access and investigation.
(b) WHAM's Access to Information and Documentation. The
Shareholders shall cause COASTLINE to afford to representatives of WHAM, upon
reasonable request and during regular business hours, full and free access to
the property, business records, stock book, minute books, records and books of
account, instruments, documents and evidences of title of COASTLINE so that WHAM
may have full opportunity to make such investigation as it shall desire to make
of the affairs of COASTLINE in its sole and absolute discretion. If
<PAGE>
for any reason the Closing contemplated by this Agreement is not consummated,
WHAM agrees not to disclose to any person any information obtained by it from
such access and investigation.
(c) Effect of Investigations. Any investigations of COASTLINE or
WHAM as permitted by this Paragraph shall not affect any of the representations
and warranties hereunder and shall be conducted in such manner as will not
interfere unreasonably with the operations of the business or the personnel of
WHAM or COASTLINE, as the case may be.
16. Costs.
(a) Finders' Fees. Each of the Shareholders, COASTLINE and WHAM
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement, and, insofar as it
knows, no broker or other person is entitled to any commission or finder's fee
in connection with any of these transactions. The Shareholders jointly and
severally agree to indemnify and hold harmless WHAM, and WHAM agrees to
indemnify and hold them harmless against any loss, liability, damage, cost,
claim or expense incurred by reason of any brokerage commission or finder's fee
alleged to be payable because of their individual act or omission or statement.
(b) Other Costs. WHAM, the Shareholders and COASTLINE shall each
pay all of their own costs and expenses incurred or to be incurred by it or them
incident to the preparation and carrying out of the transactions herein
contemplated.
17. Termination of This Agreement.
(a) This Agreement shall terminate:
(i) By mutual written consent of the WHAM and COASTLINE;
(ii) Automatically, without need of action by any party, if the
Closing has not occurred by the Closing date herein provided for or any
extensions agreed to by WHAM and COASTLINE;
(iii) By COASTLINE or WHAM, if:
(A) all the conditions precedent to its respective obligations
hereunder have not been satisfied or waived prior to the Closing Date, as it may
be accelerated or extended, or if any Shareholder refuses to execute this
Agreement or deliver the COASTLINE Shares as herein called for;
(B) any party shall have defaulted or refused to perform in
<PAGE>
any material respect under this Agreement, or if WHAM or COASTLINE should have
reasonable cause to believe there has been a material representation concerning,
or failure or breach of, any representation or warranty by the other party, or
if it appears that either COASTLINE or WHAM has committed any unlawful acts
affecting the other party;
(C) the transactions contemplated in this Agreement and related
agreements have not been consummated on the Closing Date, as it may be
accelerated or extended, OR
(D) either WHAM or COASTLINE shall reasonably determine that the
transactions contemplated in this Agreement have become inadvisable by reason of
the institution or threat by any federal, state or municipal governmental
authorities or by other person whatever of a formal investigation or of any
action, suit or proceeding of any kind against either or both parties which in
one party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
(b) Any termination of this Agreement (other than automatic
termination) shall be made in accordance with the above listed grounds and, if
terminated by COASTLINE or WHAM, shall be accompanied by a copy of the
resolution of the terminating party's board of directors. Written notice of
termination shall be given to the other party as required in this Agreement as
promptly as is practical under the circumstances. Upon a party's receipt of such
termination notice, this Agreement shall terminate and the transactions herein
contemplated shall be abandoned without further action by the parties.
18. Form of Agreement.
(a) Subject Headings. The subject headings in this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof.
(b) Entire Agreement; Modification. This Agreement and all
exhibits and documents incorporated herein by reference constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations and
understandings of the parties, whether oral or in writing. No supplement,
modification or amendment of this Agreement shall be binding unless executed
<PAGE>
in writing by the parties against which asserted.
(c) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
(d) Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
19. Parties.
(a) Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over against any party to this Agreement.
(b) Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties to it and their respective heirs,
legal representatives, successors and assigns; provided, however, that neither
WHAM nor the Shareholders may assign any of its rights or obligations or duties
under this Agreement without the express written consent of the other party.
20. Remedies.
(a) Remedies Cumulative, etc. No right, power or remedy herein
conferred upon or reserved to any party hereto is intended to be exclusive of
any other right, power or remedy, and every right, power and remedy pursuant to
this Agreement, now or hereafter existing at law or in equity or by statute or
otherwise, shall be cumulative and concurrent, to the extent permitted by law,
and shall be in addition to every other right, power or remedy pursuant to this
Agreement, now or hereafter existing at law or in equity or by statute
<PAGE>
or otherwise. The exercise or beginning of the exercise by any party hereto of
any such right, power or remedy shall not preclude the simultaneous or later
exercise of any right, power or remedy.
(b) No Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar. No waiver shall be binding unless specifically so
titled, and executed in writing by the party making the waiver. No failure or
delay to insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement, or to exercise any right, power or remedy hereunder
or consequent upon a breach hereof, shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy of any such breach, or
preclude the exercise of any such right, power or remedy at any later time or
times.
(c) Specific Performance. The obligations under this Agreement are
unique. If any party should default in its obligations under this Agreement, the
parties hereto acknowledge that it would be impracticable to measure the
resulting damages; accordingly, the non-breaching party in addition to any other
available rights or remedies, may sue for specific performance, and the other
party waives the defense that a remedy in damages will be adequate.
(d) Arbitration. Any disputes arising out of this Agreement, or
the performance of duties contemplated by this Agreement shall be resolved
through arbitration in accordance with the rules of the American Arbitration
Association. Any such arbitration shall be conducted at Washington, D.C. Any
awards or decisions resulting from said arbitration shall be final and may be
enforced by any court of competent jurisdiction. If any action is brought for
the enforcement of this Agreement or to recover damages, the successful or
prevailing party or parties shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action, in addition to any other relief to
which it or they may be entitled.
21. Survival. All representations, warranties, covenants and agreements
of the parties contained in this Agreement, or in any instrument,
<PAGE>
certificate, opinion or other writing provided for in it, shall survive any
investigation made by either party and shall survive the Closing subject to the
provisions of Paragraphs 6 and 7 hereof.
22. Notices. All notices, request, instruction or other document to be
given hereunder by a party shall be in writing and delivered personally or by
facsimile transmission, or by electronic mail, or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to COASTLINE: COASTLINE INTERNATIONAL, INC.
8150 Leesburg Pike, Suite 1200
Vienna, VA 22182
If to WHAM: WHITNEY AMERICAN CORPORATION
12373 E. Cornell Avenue
Aurora, CO 80014
23. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
WHEREFORE, the premises considered, the parties herein have executed the
foregoing Agreement, intending to be so bound, on the day first above written.
WHITNEY AMERICAN CORPORATION
A Delaware corporation
By:
Stephen M. Siedow
Its: COB, CEO
COASTLINE INTERNATIONAL, INC.
By:
Heatherlynn Colburn
Its: COB/CEO
SHAREHOLDERS
- -----------------------------------
<PAGE>
COSTA REAL CORPORATION
By: Heatherlynn Colburn
- -----------------------------------
TWENTY FIRST CENTURY HERITAGE TRUST
<PAGE>
Exhibit A
Name No. Of COASTLINE Shares No. Of WHAM Shares
Costa Real Corporation 500 875,000
Twenty First Century Heritage Trust 500 875,000
---- ---------
TOTAL 1000 1,750,000
<PAGE>
STOCK EXCHANGE AGREEMENT
This Agreement ("Agreement") is made and entered into on March 5, 1998,
by and among NEW HORIZONS, INC., a Delaware corporation, as the acquired
company ("NEW HORIZONS"); WHITNEY AMERICAN CORPORATION, a Delaware
corporation, as the acquiring company (the "WHAM"); and those persons
executing this Agreement in their capacity as shareholders of NEW HORIZONS
(the "Shareholders").
WHEREAS, WHAM wishes to acquire and the Shareholders wish to transfer all
the issued and outstanding stock of NEW HORIZONS in a transaction intended to
qualify as a reorganization within the meaning of I.R.C. Section 368(a)(1)(B),
as amended.
NOW, THEREFORE, WHAM, NEW HORIZONS and the Shareholders adopt this plan
of reorganization and agree as follows:
1. Certain Definitions. As used herein and in any exhibit or
schedule incorporated herein, or in any document, certificate or opinion
required to be delivered pursuant to this Agreement, the following terms shall
have the meanings ascribed below.
(a) "Closing Date" means the date at which Closing hereunder
shall occur, which date shall be March 6, 1998, or any other date which may be
mutually agreed upon by the parties hereto.
(b) "Closing" means the settlement and consummation of the
purchase transaction contemplated hereby to be held at 2:00 p.m. Eastern
Standard Time on the Closing Date at the offices of John D. Brasher, Jr.,
Esq., counsel for WHAM, 90 Madison Street, Suite 707, Denver, CO 80206, or
at such other place as may be mutually agreed upon by the parties hereto.
(c) "NEW HORIZONS Shares" means One Hundred(100%) percent of the
issued and outstanding capital stock of NEW HORIZONS to be delivered to WHAM
at the Closing.
2. Exchange of Stock
(a) Exchange. Subject to the terms and conditions herein set
forth, at the Closing on the Closing Date;
(i) The Shareholders agree to transfer to WHAM the number
of NEW HORIZONS Shares, without par value, shown opposite their names in
Exhibit A, in exchange for an aggregate of One Million Seven Hundred Fifty
<PAGE>
Thousand (1,750,000) shares of voting common stock of WHAM, $0.00001 par value
per share, (the "Exchange Shares"), to be issued at the Closing to the
Shareholders in the numbers shown opposite their names in Exhibit A.
(ii) The transfer of NEW HORIZONS Shares by the
Shareholders shall be effected by the delivery to WHAM at the Closing of
certificates representing the transferred shares endorsed in blank.
(iii) At the Closing and from time to time thereafter the
Shareholders shall execute such additional instruments and take such other
action as WHAM may request in order more effectively to sell, transfer, and
assign the transferred stock to WHAM and to confirm WHAM's title thereto.
(b) Restricted Status of Exchange Shares. The Exchange Shares
have not been registered under the Securities Act of 1933, as amended ("Act"),
in reliance upon exemptions from registration provided by Section 4(2) of the
Act and Rule 506 under the Act and under the securities or blue sky laws of
applicable states or any rules or regulations promulgated thereunder, on the
grounds that the transactions contemplated in this Agreement do not involve
any public offering. The Exchange Shares are "restricted securities" as that
term is defined in Rule 144(a) of the General Rules and Regulations under the
Act and must be held indefinitely, unless they are subsequently registered
under the Act or an exemption from such registration requirements is available
for their resale. The prior written consent of WHAM will be necessary for any
transfer of any or all of the Exchange Shares, unless the shares have been
duly registered under the Act or the transfer is made in accordance with Rule
144 or other available exemption under the Act. Further, any and all
certificates which are issued representing Exchange Shares shall, unless and
until removed in accordance with law, bear a restrictive legend substantially
in the following form:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are "restricted
securities" as that term is defined in Rule 144 under the Act. These shares
may not be offered for sale, sold or otherwise transferred except pursuant to
an effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which must be established
to the satisfaction of the Company's counsel."
(c) Officers and Directors of WHAM. At the Closing, the current
officers and directors of WHAM shall resign and the persons below shall be
elected as the directors and executive officers of WHAM:
Name Position
1.Juan J. Gutierrez Chairman of the Board, Chief
Executive Officer
2.Hector I. Hernandez, Sr. Executive Vice President, Director
<PAGE>
3. Heatherlynn Colburn Executive Vice President, Chief
Operating Officer, Director
4. John M. Dwyer Director
5. David Vandenberg Director
6. Michael Goldberg Director
7. John Heishman Assistant Secretary/Treasurer,
Director
3. Representations and Warranties of NEW HORIZONS and the
Shareholders. NEW HORIZONS and the Shareholders make to WHAM the following
representations and warranties, in reliance upon which WHAM has entered into
this Agreement.
(a) Each Shareholder represents and warrants that he, she or it is
not now insolvent and will not be insolvent after selling and delivering the
NEW HORIZONS Shares to WHAM on the terms of this Agreement, and that he, she
or it is receiving new consideration at least equal to the full and fair value
of the NEW HORIZONS Shares being sold.
(b) NEW HORIZONS and the Shareholders understand and acknowledge
that (i) there is no active trading market in the common stock of WHAM,
although quoted name-only on the OTC Board, (ii) WHAM is a shell company with
no cash or other assets, no operations and no full-time or experienced
management, (iii) no person currently an officer, director or shareholder of
or professional adviser to WHAM has made any representation whatsoever to any
Shareholder relating to WHAM's stock price, operations, profitability or
prospects following the Closing, (iv) persons designated by NEW HORIZONS
and/or the Shareholders will become the officers and directors of WHAM at the
Closing, and no person now an officer or director of WHAM will be such after
the Closing or have any responsibility or input as to operations after the
Closing, the officers and directors of WHAM solely responsible for its
operations and success will be persons designated by NEW HORIZONS and the
Shareholders, and (v) the Exchange Shares are speculative and involve a high
degree of risk.
(c) Each Shareholder acknowledges and agrees that he, she or it
have been furnished with substantially the same kind of information regarding
WHAM and its assets, financial condition and plan of operation as would be
contained in a registration statement and included prospectus prepared in
connection with a public offering of the Exchange Shares and has reviewed all
information concerning WHAM publicly available on the website maintained by
the Securities and Exchange Commission. Each Shareholder further represents
that he, she or it has had an opportunity to ask questions of and receive
answers from WHAM and its officers and directors regarding WHAM and its
assets, financial condition and plan of operation and the terms and conditions
of the issuance of the Exchange Shares.
<PAGE>
(d) The Shareholder, alone or together with the Shareholder's
adviser(s), have such knowledge and experience in financial, tax and business
matters as to enable Shareholder to utilize the information made available by
WHAM, in connection with the Exchange and issuance of the Exchange Shares, to
evaluate the merits and risks of acquiring the Exchange Shares and to make an
informed investment decision with respect thereto.
(e) Each Shareholder agrees that he, she or it was not solicited by
WHAM by any form of general solicitation or general advertising, including but
not limited to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or made available over telephone lines by any information
service, or any seminar or meeting whose attendees had been invited by any
means of general solicitation or general advertising.
(f) Except as expressly set forth in this Agreement and any
Schedules, Exhibits or other attachments hereto, WHAM has not made any
representation or warranty to any Shareholder in connection with this
Agreement, and WHAM has made no communication to any Shareholder that
constitutes tax or investment advice.
(g) Authority. The Shareholders have valid and marketable title
to the NEW HORIZONS Shares free and clear of any claims, liens, trusts,
encumbrances, rights or interests of any person. The Shareholders have the
right, power, and authority to enter into, and perform their respective
obligations under this Agreement. This Agreement has been and as of the
Closing Date will be, duly and validly authorized, executed and delivered on
behalf of the Shareholders, have all requisite power and authority to
consummate the transactions contemplated herein. This Agreement is the valid
and binding obligation of the Shareholders. No third-party approvals or
consents of any kind are necessary in connection with this Agreement.
(h) Organization and Good Standing. NEW HORIZONS is duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has full charter power to carry on its business as it is now
being conducted and to own and operate the properties now owned, operated or
leased by it. NEW HORIZONS is qualified to do business as a foreign
corporation in every state in which the nature of the business carried on and
properties owned or leased by them presently requires them to be so qualified
in any other jurisdiction.
(i) Capitalization. The authorized capitalization of NEW
HORIZONS consists of One Thousand (1,000) shares of Common Stock, $0 par value
per share. As of the date hereof, NEW HORIZONS has issued and outstanding
1,000 shares of such Common Stock. All of such issued and outstanding shares
<PAGE>
have been duly and validly issued, are fully paid and non-assessable and were
issued and sold pursuant to, and within limitations contained in, appropriate
permits and consents of each governmental authority from whom any permit or
consent was required.
(j) Title to NEW HORIZONS Shares. The Shareholders have good
and valid title to all of the issued and outstanding common stock of NEW
HORIZONS, free and clear of all claims, liens, mortgages, charges, security
interests, encumbrances and other restrictions or limitations of any kind
whatsoever. The Shareholders are not a party to, or bound by, any other
agreement, instrument or understanding restricting the transfer of such
interests.
(k) Financial Statements. Attached hereto and incorporated
herein by this reference, is the unaudited consolidated Financial Statements
of NEW HORIZONS for the year ended December 31, 1997 (the "Financial
Statements"). Said Financial Statements (i) were prepared in accordance with
the books and records of NEW HORIZONS; (ii) were prepared in accordance with
generally accepted accounting principles consistently applied; and (iii) sets
forth fairly NEW HORIZONS's financial condition and the results of its
operations as of the relevant dates thereof and for the periods covered
thereby. Except as to the extent reflected or reserved against in the
Financial Statements, NEW HORIZONS as of the date thereof had no liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
including without limitation, tax liabilities due or to become due and whether
incurred in respect of or measured by the income of NEW HORIZONS for any
period prior to such date, or arising out of any transaction entered into, or
any state of facts existing, prior hereto. Since the date of such Financial
Statements, no credit or charge has been made to any surplus account of NEW
HORIZONS.
(l) Events Subsequent to December 31, 1997. Since December 31,
1997, absent a written disclosure delivered to WHAM, there has not been any:
(i) material adverse change in the financial condition,
liabilities, assets, business, or prospects of NEW HORIZONS;
(ii) destruction, damage to, or loss of any asset of NEW
HORIZONS that may substantially affect the financial condition, business, or
prospects of NEW HORIZONS;
(iii) change in accounting methods or practices (including,
without limitation, any change in inventory accounting or in depreciation or
amortization policies or rates) by NEW HORIZONS;
(iv) revaluation by NEW HORIZONS of any of its assets;
(v) declaration, setting aside, or payment of a dividend or
other dividend or other distribution in respect to the capital stock of NEW
HORIZONS, or any direct or indirect redemption, purchase, or other acquisition
<PAGE>
by NEW HORIZONS of any of its shares of capital stock;
(vi) any other transaction by NEW HORIZONS except in the
ordinary course of business;
(vii) direct or indirect increase in the salary or other
compensation payable or to become payable by NEW HORIZONS to any of its
officers, directors or employees, or the declaration, payment or commitment or
obligations of any kind for the payment by NEW HORIZONS of a bonus or other
additional salary or compensation to any such person;
(viii) sale or transfer of any single asset of NEW HORIZONS
having a value in excess of $1,000;
(ix) amendment or termination of any contract, agreement,
or license to which NEW HORIZONS is a party except in the ordinary course of
business;
(x) loan by NEW HORIZONS to any person or entity, or
guaranty by NEW HORIZONS of any loan;
(xi) mortgage, pledge, or other encumbrance of any asset
of NEW HORIZONS;
(xii) waiver or release of any right or claim of NEW
HORIZONS;
(xiii) issuance or sale by NEW HORIZONS of any shares of
NEW HORIZONS's capital stock;
(xiv) bid submitted or sales contract entered into or any
other contract or agreement entered into involving more than $1,000 in each
case, except in the ordinary course of business;
(xv) obligation or debt incurred in excess of $1,000.
(m) Liabilities. NEW HORIZONS has no known debt, liability, or
obligation of any nature, whether accrued, absolute, contingent, or otherwise,
whether due or to become due, that is not fully provided or reserved for in
the Financial Statements, including the notes thereto, except for those (1)
that may have been incurred after the date of the Financial Statements in the
ordinary course of business, or (2) that are not required by generally
accepted accounting principles to be included in the Financial Statements.
All debts, liabilities and obligations incurred after the date of the
Financial Statements were incurred in the ordinary course of business and not
in violation of any provision of this Agreement, are usual and normal in
amount both individually and in the aggregate.
(n) Taxes. Within the time and in the manner prescribed by law,
NEW HORIZONS has filed all Federal, state and local tax returns required by
law and have paid all taxes, assessments, and penalties due and payable. The
Shareholders shall cause NEW HORIZONS (i) to prepare and file all Federal,
state and local income tax returns for NEW HORIZONS required to be filed
through the Closing Date covering the most recent taxable period; (ii) to pay
all taxes, penalties and assessments related to such returns, and upon filing
<PAGE>
thereof shall promptly supply copies of such returns to WHAM. The provision
for taxes reflected in the Financial Statements are adequate for any and all
federal, state, county, and local taxes for the period ending on the date of
such Financial Statements and for all prior periods, whether or not disputed,
including without limitation any and all taxes that may be assessed by the
Internal Revenue Service as a result of an audit of the Company's tax
returns. There are no present disputes as to taxes of any nature payable by
NEW HORIZONS or with respect to the NEW HORIZONS Shares. On or before the
Closing Date, NEW HORIZONS shall have furnished to WHAM, in form satisfactory
to it, true and accurate copies of all Federal, state and local tax returns,
filings, waivers, elections and deficiency notices for each of the past fiscal
year of NEW HORIZONS and a true and complete copy of the unaudited
consolidated and consolidating balance sheets of NEW HORIZONS as of January
31, 1998 ("Current Balance Sheet").
(o) Title to Properties and Assets. NEW HORIZONS has good and
marketable title to its properties and assets, including the properties and
assets reflected in the Current Balance Sheet referred to above (except as
since disposed of in the ordinary course of business) subject to no liens,
mortgages, encumbrances or charges which are not reflected in the Current
Balance Sheet or which, either in any case or in the aggregate, are
substantial in amount or which materially detract from the value of the
property subject thereto or which materially impair the operation of NEW
HORIZONS, or which have not arisen otherwise than in the ordinary course of
business. No personal property needed by NEW HORIZONS for the conduct of its
business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located
other than in the possession and under the control of NEW HORIZONS. The
tangible personal property reflected in those books and records constitutes
all such tangible personal property necessary for the conduct by NEW HORIZONS
of its business as now conducted.
(p) Proprietary Rights. NEW HORIZONS owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, trade secrets, service marks, trade names, copyrights,
inventions, drawings, designs, customer lists, proprietary know-how or
information, or other rights with respect thereto (collectively referred to as
"Proprietary Rights"), used by it and the same are sufficient to conduct such
business as it has been and is now being conducted. The operations of NEW
HORIZONS neither conflict with nor infringe, and no one has asserted to NEW
HORIZONS that such operations conflict with or infringe, any intangible
property rights owned, possessed or used by any third party which are of the
same kind as the Proprietary Rights. There are no claims, disputes, actions,
proceedings, suits or appeals pending against NEW HORIZONS with respect to any
Proprietary Rights and none has been threatened against NEW HORIZONS. To the
<PAGE>
best knowledge of NEW HORIZONS (after reasonable investigation), there are no
facts which would result in any claim which would have an adverse effect on
the condition (financial or otherwise), business, net worth, assets,
properties or operations of NEW HORIZONS based on an assertion that NEW
HORIZONS does not have the unrestricted right to use, free of any rights or
claims of others, all Proprietary Rights.
(q) Insurance. Prior to the Closing Date, NEW HORIZONS shall
have delivered, in form satisfactory to WHAM pursuant to this subparagraph, a
certificate or certificates of all insurance coverage of NEW HORIZONS. Such
certificates evidence policies of fire, liability and other forms of casualty
insurance and workmen's compensation insurance held by NEW HORIZONS. Such
policies will be maintained in force and in effect by NEW HORIZONS in present
amounts up to and including the Closing Date. NEW HORIZONS is not in material
default under any of such policies.
(r) Contracts. The Shareholders have previously submitted a
list of all written contracts and bids and as further detailed and a summary
of all oral contracts and bids of the following categories to which NEW
HORIZONS is a party:
(i) Contracts not made in the ordinary course of business
(excluding this Agreement and the Exhibits hereto), and all material
contracts, whether or not made in the ordinary course of business;
(ii) Employment contracts;
(iii) Contracts with a labor union or association;
(iv) Bonus, pension, profit sharing, retirement, stock
purchase, stock option, hospitalization, insurance or similar plans providing
employee benefits;
(v) Distribution, franchise, sales agency or advertising
contracts;
(vi) Output or requirements agreements;
(vii) Any indenture, mortgage deed of trust or lease;
(viii) Options with respect to any property, real or
personal, whether as grantor or grantee;
(ix) Contracts or outstanding bids involving potential
expenditures or liabilities of NEW HORIZONS in excess of $1,000.00;
(x) Contracts continuing over a period of more than one (1)
year from their respective dates;
(xi) Contracts or commitments relating to commission
arrangements with others;
(xii) Patent, trade name, and all other license agreements,
to which NEW HORIZONS is a party, either as licensor or licensee;
(xiii) Contracts containing covenants limiting the freedom
of NEW HORIZONS to compete in any line of business or with any person; and
<PAGE>
(xiv) Agreements evidencing all indebtedness.
There is no default or event that with notice or lapse of time, or both, would
constitute a default by NEW HORIZONS, or to NEW HORIZONS's knowledge, any
other party to any of these agreements. NEW HORIZONS has received no notice
that any party to any of these agreements intends to cancel or terminate any
of these agreements. NEW HORIZONS is not a party to, nor is NEW HORIZONS or
the property of NEW HORIZONS bound by any agreement that is materially adverse
to the business, properties or financial condition of NEW HORIZONS. NEW
HORIZONS is not a party to any significant contract except as provided in
writing.
(s) Banks. Prior to the execution of this Agreement, the
Shareholders have delivered to WHAM pursuant to this subparagraph a complete
list showing the name of each bank in which NEW HORIZONS maintains accounts
(including a description of the account), certificates of deposit or safe
deposit boxes and the names of all persons authorized to draw thereon or to
have access thereto.
(t) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to the
knowledge of NEW HORIZONS, there is no action, suit proceeding threatened or
pending which, if it were to result in a decision adverse to NEW HORIZONS,
would in the judgment of NEW HORIZONS result in any material adverse change in
the condition, financial or otherwise, business or prospects of NEW HORIZONS
or would materially adversely affect its properties or assets.
(u) No Resulting Breach or Default. The consummation of the
transactions contemplated by this Agreement will not result in or constitute
any of the following: (i) a default or any event that, with notice or lapse
of time or both, would be a default, breach, or violation of applicable law or
regulation or of the Articles of Incorporation or Bylaws of NEW HORIZONS, or
any judgment, order, writ, injunction, or decree of any court or governmental
authority or of any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which NEW HORIZONS is a party or by which its
property is bound; (ii) an event that would permit a party to terminate any
agreement or to accelerate the maturity of any indebtedness or other
obligation of NEW HORIZONS, or (iii) the creation or imposition of any
security interest, lien, charge, or encumbrance on any of the properties or
assets of NEW HORIZONS.
(v) Corporate Documents. NEW HORIZONS has furnished to WHAM for
its examination (i) copies of the Articles of Incorporation and Bylaws of NEW
HORIZONS, including all amendments, (ii) the complete minute books of NEW
<PAGE>
HORIZONS of all meetings of the shareholders and Board of Directors of NEW
HORIZONS, (iii) the stock transfer books of NEW HORIZONS setting forth all
transfers of capital stock. The meetings of the Board of Directors and
Shareholders referred to therein were duly called and duly held and the
signatures appearing on all documents contained therein are the true
signatures of the person purporting to have signed the same. All documents
delivered hereto contain accurate records of all meetings and accurately
reflect all corporate action of the stockholders and directors of NEW
HORIZONS.
(w) Compliance with Other Instruments, etc.; None Burdensome.
To the best of the Shareholder's knowledge and belief, NEW HORIZONS is not in
violation of any term or provision of any charter, by-law, mortgage,
indenture, contract, agreement, instrument, judgment, decree, order,
injunction, statute, rule or regulation. The execution, delivery and
performance of and compliance with this Agreement and the NEW HORIZONS Shares
to be exchanged hereunder will not result in any such violation or be in
conflict with or constitute a default under any such term or provision, or
result in the creation of any mortgage, lien, encumbrance or charge upon any
of the properties or assets of NEW HORIZONS pursuant to any such term or
provision. There is no term or provision of this Agreement which materially
adversely affects the business, prospects, condition (financial or other), or
operations of NEW HORIZONS or any of its properties or assets.
(x) Indebtedness to Officers, Directors and Shareholders. NEW
HORIZONS is not indebted to any person who is an officer, director or
shareholder of NEW HORIZONS in any amount whatsoever other than for salaries
for services rendered or for reimbursable business expenses.
(y) Brokerage and Finder's Fees. NEW HORIZONS has not incurred
any unpaid liability to any broker, finder or agent for any brokerage fees,
finder's fees or commissions with respect to the transactions contemplated by
this Agreement.
(z) Full Disclosure. On or prior to the date of the execution
of this Agreement, the Shareholders have delivered or made available to WHAM
all of the material documents and contracts to which NEW HORIZONS is a party
which in any way affects any of the properties, assets or business of NEW
HORIZONS. Neither the Financial Statements referred to in subparagraph (e) of
this Paragraph nor any other certificate or statement furnished to WHAM by the
Shareholders or in behalf of NEW HORIZONS in connection with the transactions
contemplated hereby nor this Agreement contains any untrue statement of a
material fact, known as of the date thereof, or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading. There is no known fact which materially adversely affects the
<PAGE>
business, prospects or condition (financial or other) or operations of NEW
HORIZONS or any of its properties or assets which has not been set forth
herein or disclosed by the Financial Statements referred to herein or in any
certificate or statement furnished to WHAM by the Shareholders or in behalf of
NEW HORIZONS.
4. Conduct of NEW HORIZONS's Business Pending Closing. NEW HORIZONS
and the Shareholders hereby covenant and agree with WHAM that between the date
hereof and the Closing Date:
(a) NEW HORIZONS will not, without the prior written consent of
WHAM, amend or otherwise change its Articles of Incorporation or By-laws, or
any instrument similar in purpose and intent to them.
(b) The Shareholders will not, without the prior written consent
of WHAM, transfer or encumber in any way, voluntarily or involuntarily, any of
the NEW HORIZONS Shares.
(c) NEW HORIZONS will not declare or pay any dividend or make
any other distribution of assets of any kind whatsoever to any of its
shareholders in redemption of or as the purchase price for any of its capital
stock, or in discharge or cancellation, whether in whole or in part, of any
indebtedness, whether in payment of principal, interest or otherwise, owing to
any of such shareholders.
(d) NEW HORIZONS will conduct its business diligently in the
ordinary course, use its best efforts to preserve intact its business
organization, use its best efforts to retain in its employ all of its key
employees, and use its best efforts to preserve its relationships with its
suppliers and customers and others having business relations with it.
(e) NEW HORIZONS will not make any commitments for capital
expenditures or for indirect charges exceeding $1,000 except with respect to
expenditures required in the normal course of performing current contracts.
(f) NEW HORIZONS will not sell or transfer any of its assets,
cancel any debts or claims, or mortgage, pledge or subject to lien, charge or
encumbrance of any kind, except liens for taxes not due, any of its assets,
except in the ordinary course of business.
(g) NEW HORIZONS will not, except in the ordinary course of
business amend or terminate any material contract or agreement to which it is
a party, or enter into or become a party to any contract or agreement under
which (i) the value of services to be performed or the cost of goods to be
<PAGE>
sold will exceed $1,000; or (ii) the reasonably anticipated costs and expenses
will exceed the anticipated receipts.
(h) NEW HORIZONS will continue in force its existing insurance
policies, subject only to variation in amounts required by the ordinary
operations of its business.
(i) NEW HORIZONS will not increase the compensation payable or
to become payable to any of its officers, directors, employees or agents, or
any bonus payment or similar arrangement made to or with any of such officers,
directors, employees or agents.
(j) NEW HORIZONS will not incur any indebtedness to any person
who is an officer, director or shareholder of NEW HORIZONS in any amount
whatsoever other than for salaries for services rendered or for reimbursable
business expenses.
(k) NEW HORIZONS and its representatives will keep confidential
any information not otherwise readily available from public sources which they
or their representatives obtain from WHAM concerning the properties, assets
and business of WHAM.
5. Representations and Warranties of WHAM. WHAM hereby makes the
following representations and warranties in reliance upon which the NEW
HORIZONS Shareholders have entered into this Agreement.
(a) Organization and Good Standing. WHAM is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has full corporate power to carry on its business as it is now
being conducted and to own and operate the properties now owned, operated or
leased by it. WHAM is qualified to do business as a foreign corporation in
all states in which the nature of the business carried on and properties owned
or leased by WHAM requires WHAM to be so qualified in any other jurisdiction.
WHAM's filings with the Securities and Exchange Commission, Washington, D.C.
("SEC"), are current and have been timely filed. WHAM will ensure that the
latest Form 10-QSB, for the quarter ended February 28, 1998, is or will be
timely filed with the SEC.
(b) Authority. The execution of this Agreement by WHAM and its
delivery to the Shareholders has been duly authorized by the Board of
Directors of WHAM, and no further corporate action is necessary on the part of
WHAM to make this Agreement valid and binding upon WHAM in accordance with its
terms.
<PAGE>
(c) Capitalization. The authorized capitalization of WHAM
consists of 50,000,000 shares of common stock, $0.00001 par value per share,
and 5,000,000 shares of preferred stock, $0.00001 par value per share, of
which 362,515 shares of Common are issued and outstanding, fully paid and
non-assessable, and no shares of preferred stock have been issued.
(d) Litigation. There is no action, suit or proceeding pending
before any court or governmental agency, authority or body and, to the
knowledge of WHAM, there is no action, suit proceeding threatened or pending
which, if it were to result in a decision adverse to WHAM, would in the
judgment of WHAM result in any material adverse change in the condition,
financial or otherwise, business or prospects of WHAM or would materially
adversely affect its properties or assets.
(e) No Defaults. The consummation of the transactions
contemplated by this Agreement will not result in or constitute any of the
following: (i) a default or any event that, with notice or lapse of time or
both, would be a default, breach, or violation of applicable law or regulation
or of the Articles of Incorporation or Bylaws of WHAM, or any judgment, order,
writ, injunction, or decree of any court or governmental authority or of any
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which WHAM is a party or by which its property is bound; (ii)
an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of WHAM, or
(iii) the creation or imposition of any security interest, lien, charge, or
encumbrance on any of the properties or assets of WHAM.
6. Indemnification by the Shareholders. The Shareholders (hereafter
the "Seller Group"), jointly and severally, shall indemnify, defend and hold
harmless WHAM against and in respect of any and all actions, causes of action,
assessments, claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including any liabilities
for obligations which arise after the Closing Date based on events or
conditions occurring before the Closing Date, and interest, penalties and
reasonable attorneys' fees and expenses, that WHAM shall incur or suffer,
which arise, result from or relate to any inaccuracy in, or any breach of any
of the Seller Group's representations or warranties, or any failure by the
Seller Group to perform any of their covenants or agreements in this Agreement
or in any schedule, certificate, exhibit or other instrument furnished or to
be furnished by any of the Seller Group under this Agreement; provided,
however, that the right to indemnity as aforesaid with respect to a breach by
the Seller Group or any of their representations or warranties in this
Agreement shall be limited by the following: (i) such indemnity shall apply
<PAGE>
only if the facts or circumstances resulting in such breach are such as to
result in damages to WHAM in excess of $10,000 in the aggregate; and (ii) such
right to indemnity shall apply only as to all claims giving rise to a right of
indemnity hereunder of which WHAM has received actual notice within
twenty-four (24) months after the Closing Date.
7. Indemnification by WHAM. Subject to the terms and conditions of
this Paragraph 7, WHAM hereby agrees to indemnify, defend and hold harmless
the Shareholders and their respective successors, if any, and their officers,
directors and controlling persons, at any time after the Closing Date, from
and against all demands, claims, actions, or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and attorneys' fees and expenses, which were
reasonably incurred by or imposed upon the Shareholders or NEW HORIZONS, net
of any insurance proceeds received by the Shareholders or NEW HORIZONS with
respect thereto, asserted against, resulting to, imposed upon or incurred by
the Shareholders or NEW HORIZONS, directly or indirectly, by reason of or
resulting from any misrepresentation, breach of any warranty, non-performance
or breach of any covenant, obligation or agreement of WHAM contained in this
Agreement; provided, however, that the right to indemnity as aforesaid with
respect to a breach by WHAM or any of its representations or warranties in
this Agreement shall be limited by the following: (i) such indemnity shall
apply only if the facts or circumstances resulting in such breach are such as
to result in damages to the Shareholders or NEW HORIZONS in excess of $10,000
in the aggregate; and (ii) such right to indemnity shall apply only as to all
claims giving rise to a right of indemnity hereunder of which the Shareholders
or NEW HORIZONS has received actual notice within twenty-four (24) months
after the Closing Date.
8. Claims by Third Parties. The obligations and liabilities of an
indemnifying party under any provision of this Agreement with respect to
claims relating to third parties shall be subject to the following terms and
conditions:
(a) Whenever any indemnified party shall have received notice
that a claim has been asserted or threatened against such indemnified party,
which, if valid, would subject the indemnifying party to an indemnity
obligation under this Agreement, the indemnified party shall promptly notify
the indemnifying party of such claim in the manner described in Paragraph 22;
provided, however, that the failure of the indemnified party to give timely
notice hereunder shall not relieve the indemnifying party of its
indemnification obligations under this Agreement unless, and only to the
extent that, such failure caused the damages for which the indemnifying party
<PAGE>
is obligated to be greater than they would have been had the indemnified party
given timely notice.
(b) The indemnifying party or its designee will have the right
but not the obligation, to assume the defense of any claim described in
Paragraph 6 or 7 above, provided, however, the indemnified party shall have
the right at its option to defend and to compromise or settle such claim which
compromise or settlement shall be made only with the written consent of the
indemnifying party, such consent not be unreasonably withheld. If the
indemnifying party fails to assume the defense of such claim within 15 days
after receipt of notice of a claim pursuant to Paragraph 22, the indemnified
party against which such claim has been asserted will (upon delivering notice
to such effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or settlement
of such claim on behalf of and for the account and risk of the indemnifying
party, subject to the right of the indemnifying party to assume the defense of
such claim at any time prior to settlement, compromise or final determination
thereof and provided, however, that the indemnified party shall not enter into
any such compromise or settlement without the written consent of the
indemnifying party. In the event the indemnified party assumes defense of the
claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall not be liable for any settlement of any action
effected without its consent, but if settled with the consent of the
indemnifying party or if there be a final judgment beyond review or appeal,
for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless an indemnified party from and against any loss or
liability by reason of such settlement or judgment. Any party who does not
undertake the defense of a claim may, at its own expense, retain such
additional attorneys and other advisors as it shall deem necessary, which
attorneys and advisors will be permitted by the party undertaking such
defense, and its attorneys, to observe the defense of such claim.
9. Indemnity for Taxes of Indemnified Party. Each party hereto
further agrees that, with respect to payment or indemnity under this Paragraph
9, such payment or indemnity shall include any amount necessary to hold the
indemnified party harmless on an after-tax basis from all taxes required to be
paid with respect to the receipt of such payment or indemnity under the laws
of any Federal, state or local government or taxing authority in the United
States, or under the laws of any foreign government of taxing authority or
governmental subdivision of a foreign country.
10. Shareholders' Representatives. The Shareholders hereby
<PAGE>
irrevocably designate and appoint Heatherlynn Colburn and Hector I. Hernandez,
Sr., Esq., or either of them, as their agents and attorneys in fact
("Shareholders' Representatives"), with full power and authority until the
Closing to execute, deliver, and receive on their behalf all notices, requests,
and other communications hereunder; to fix and alter on their behalf the date,
time, and place of the Closing; to waive, amend, or modify any provisions of
this Agreement, and to take such other action on their behalf in connection with
this Agreement, the Closing, and the transactions contemplated hereby as such
agent or agents deem appropriate; provided, however, that no such waiver,
amendment, or modification may be made if it would decrease the number of shares
to be issued to the Shareholders or increase the extent of their obligation to
indemnify WHAM hereunder.
11. Conditions Precedent to Shareholders' Obligations. The obligations of
the Shareholders hereunder are subject to each of the conditions set forth below
being fulfilled on the Closing Date. Any of such conditions may, at the option
of the Shareholders, be waived:
(a) Opinion of Counsel. The Shareholders shall have received an
opinion of John D. Brasher, Jr., Esq., counsel for WHAM, dated as of the Closing
Date, to the effect that:
(i) WHAM is a corporation duly organized, validly existing
and in good standing under the laws of the Delaware.
(ii) WHAM's Board of Directors have approved the transactions
contemplated by this Agreement.
(iii) All SEC filings have been timely made, including those
for the latest quarter.
(b) Conditions Performed. Except as provided herein, as of the
Closing Date, all the terms and conditions of this Agreement to be complied with
and performed by WHAM at or before the Closing Date shall have been complied
with or performed in all material respects.
(c) Representations and Warranties True at Closing. The
representations and warranties of WHAM in this Agreement shall be correct in all
material respects at and as of the Closing Date, and WHAM shall have delivered
to the Shareholders a certificate to such effect signed by an executive officer
of WHAM.
12. Conditions of WHAM's Obligations. The obligations of WHAM hereunder
are subject to each of the conditions set forth below being fulfilled on the
Closing Date, or thereafter as provided below. Any of such conditions can be
waived by WHAM.
<PAGE>
(a) NEW HORIZONS's Board of Directors' Approval. The Board of
Directors of NEW HORIZONS shall have approved the transactions contemplated by
this Agreement.
(b) Opinion of Counsel. On or before the Closing Date, WHAM shall
have received an opinion of Hector I. Hernandez, Sr., Esq., counsel for NEW
HORIZONS, dated the Closing Date, as to the matters below and setting forth the
documents examined as the basis therefor:
(i) NEW HORIZONS is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware with
requisite corporate power and authority to transact it business and own its
properties.
(ii) All of the equitable interests of NEW HORIZONS have been
duly authorized and issued, are validly outstanding, are fully paid and non-
assessable.
(iii) The capitalization of NEW HORIZONS is as set forth in
this Agreement. Other than as provided herein, there are no outstanding options
or rights with respect to the capital stock of NEW HORIZONS or any securities
convertible into or exchangeable for shares of such stock, or any other
commitments of any kind for the issuance of additional shares of interests or
securities of NEW HORIZONS.
(iv) Neither the execution and delivery of this Agreement nor
the performance of the transactions contemplated hereby will (a) constitute a
breach of the Articles of Incorporation or By-Laws of NEW HORIZONS or any
evidence of indebtedness or agreement to which it or they are a party, or
constitute an event which entitles any other party to any agreement to which NEW
HORIZONS is a party to terminate such agreement, (b) cause a default under any
mortgage or deed of trust, or other lien, charge or encumbrance to which any of
NEW HORIZONS's property is subject, (c) accelerate, or constitute an event
entitling, or which would on notice or lapse of time or both, entitle the holder
of any indebtedness of NEW HORIZONS to accelerate, or (d) conflict with or
result in the breach of any writ, injunction or decree of any court or
governmental instrumentality;
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Shareholders and NEW HORIZONS and is valid and
binding upon them in accordance with its terms;
(vi) The Shareholders have good and marketable title to the
shares of capital stock of NEW HORIZONS with full right and power to transfer
and sell said shares to WHAM, free and clear of all liens, encumbrances and
claims;
(vii) Such counsel does not know of any action, suit,
proceeding or claim pending or threatened against NEW HORIZONS, its or their
property or business, or the transactions contemplated by this Agreement;
(viii) No consent, approval or other order of any governmental
or administrative board or body is required for the execution and
<PAGE>
delivery by the Shareholders of this Agreement and the sale of the NEW HORIZONS
Shares to WHAM pursuant hereto.
(ix) NEW HORIZONS has no subsidiaries.
(c) Instruments of Transfer. WHAM shall have received instruments
of transfer effecting the transfer of the NEW HORIZONS Shares to WHAM.
(d) Compliance with Conditions. As of the Closing Date, all the
terms and conditions of this Agreement to be complied with and performed by NEW
HORIZONS on or before the Closing Date shall have been complied with and
performed in all material respects. NEW HORIZONS shall have delivered to WHAM
certificate(s) to such effect in form and substance satisfactory to WHAM.
(e) Correctness of Representations and Warranties. The
representations and warranties of NEW HORIZONS herein shall be correct in all
material respect at and as of the Closing Date, and NEW HORIZONS, respectively,
shall have delivered to WHAM a certificate to such effect.
(f) Certificate of Good Standing. NEW HORIZONS shall deliver to
WHAM at the Closing, a certificate issued by the Delaware Secretary of State
certifying as to the good standing of NEW HORIZONS as of a date not more than
fifteen (15) days prior to the Closing Date.
13. Additional Covenants and Undertaking of the parties. The performance
and adherence to the following undertakings and covenants of WHAM and the
Shareholders are additional conditions to the parties' obligations under this
Agreement.
(a) Notice of Certain Defaults or Claims. Each party shall give
prompt notice to the other of any notice of default relating to either party
received subsequent to the date of this Agreement and prior to the Closing Date
and of the assertion of any claim which, if upheld, or the occurrence of any
event, which would render inaccurate any representation or warranty of the
affected party.
(b) Implementation of Representations and Warranties. Each party
will take all reasonable action within its or their capability necessary to
render accurate as of the Closing Date such party's representations and
warranties contained in this Agreement and each party will refrain from taking
any action which would render inaccurate as of the Closing Date any such
representations or warranties.
(c) Delivery of Additional Documents. Each party will execute
<PAGE>
and deliver, or cause to be executed and delivered, such additional assignments,
endorsements and other documents as the other party may reasonably request for
the purpose of carrying out this Agreement.
(d) Consents. The Shareholders shall cause NEW HORIZONS to
prosecute and obtain appropriate consents and authorization of all cognizant
government agencies necessary to approve the transfer of control of NEW HORIZONS
without adverse effects upon the continuation of all contracts, if any.
(e) Special Covenants of NEW HORIZONS and the Shareholders. NEW
HORIZONS and the Shareholders agree that following the Closing, they will cause
the following actions to be taken by WHAM:
(i) Press Releases. Any press releases necessary will be
promptly disseminated by customary means.
(ii) SEC Filings. NEW HORIZONS and the Shareholders
acknowledge that WHAM is subject to the reporting and informational requirements
of Section 13 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Such new directors and executive officers and all Shareholders who after
the Exchange hold five percent or more of WHAM's common stock shall as
applicable promptly and timely file Form 3 reports and Schedule 13D's with the
Securities and Exchange Commission ("Commission"), as required by law. NEW
HORIZONS and the Shareholders also agree that after the Closing they will cause
WHAM to timely file a report on Form 8-K and to timely file (within all
permitted extensions) all audited and proforma consolidated financial statements
required by Form 8-K.
(f) WHAM Shareholder Approval. The parties acknowledge that WHAM,
absent first obtaining the consent of its shareholders for the Exchange, must
comply with Section 14(f) of the Exchange Act and Rule 14f-1 of the Commission
thereunder, which requires ten days' prior notice to the Commission and to
WHAM's shareholders before the new members of WHAM's board of directors
designated by NEW HORIZONS may take office. WHAM, NEW HORIZONS and the
Shareholders agree that the written concurrence pursuant to Section 228 of the
Delaware General Corporation Law of two (2) shareholders of WHAM holding in the
aggregate more than fifty percent of WHAM's issued and outstanding shares in
lieu of a general meeting of its shareholders, will constitute the approval of
WHAM's shareholders.
(g) No Reverse Split. The parties acknowledge that, following the
Closing, the Shareholders when acting as a group will hold the voting power to
effect any corporate action. It is expressly agreed among WHAM, NEW HORIZONS and
the Shareholders that, for a period of eighteen (18) months following the
Closing ("Period"), WHAM shall not effect any "prohibited
<PAGE>
action," defined as any reverse split or combination of its common shares, or
any reorganization, recapitalization or other action whatsoever (other than a
merger, exchange, consolidation or similar transaction with an unaffiliated
entity) which has the effect of changing the number of outstanding WHAM common
shares into a smaller number of common shares. Each Shareholder expressly agrees
that, during the Period, he, she or it will not vote for or support any such
prohibited action nor grant a proxy or other voting right to a person other than
a Shareholder to vote at any meeting or act by written consent on a proposal to
effect a prohibited action, and will affirmatively oppose any attempt to effect
a prohibited action during the Period.
This provision is intended for the protection of existing shareholders of
WHAM and persons who become shareholders during the Period, and all parties
agree that this provision and the duration of the Period is reasonable. The
parties expressly agree that all shareholders of WHAM at the time of the
taking of a prohibited action are or shall be third party beneficiaries of
this provision, and any one or more of such shareholders may bring an
injunctive action to prevent a prohibited action(s) or an action to force WHAM
to revoke or rescind a prohibited action as if it had never been effected, or
may otherwise judicially enforce this provision. Any shareholder prevailing in
such injunctive or other action shall be entitled to reimbursement from WHAM
for the costs and reasonable attorneys' fees incurred in bringing such
action(s).
14. The Closing.
(a) Time and Place. The Closing of the transactions contemplated by
this Agreement shall be at the offices of John D. Brasher, Jr., Esq., BRASHER &
COMPANY, 90 Madison Street, Suite 707, Denver, CO, at 2:00 p.m. on March 6,
1998, or any other date or place that may mutually be agreed upon by the
parties.
(b) Documents to be Delivered by the Shareholders on the Closing
Date. On the Closing Date, the Shareholders shall deliver to WHAM, in form
satisfactory to WHAM's counsel, the following documents:
(i) copies of certificates representing the NEW HORIZONS
Shares, on which there is no endorsement, legend or notice of adverse claims,
duly endorsed by the Shareholders for transfer;
(ii) all instruments referred to in Paragraph 13 above, the
delivery of which are therein specified as conditions to WHAM's obligation to
close.
(c) Documents Delivered by WHAM on Closing Date. All instruments
referred to in Paragraph 11 above, the delivery of which are
<PAGE>
therein specified as conditions to the Shareholders' obligation to close.
15. Access to Information.
(a) NEW HORIZONS's Access to Information and Documentation. WHAM
will afford to a representative or representatives of NEW HORIZONS the
opportunity upon reasonable request and during regular business hours to make a
reasonable investigation of WHAM's operations. If for any reason the Closing
contemplated by this Agreement is not consummated, NEW HORIZONS and the
Shareholders agree not to disclose to any person any non-public information
obtained by them from such access and investigation.
(b) WHAM's Access to Information and Documentation. The
Shareholders shall cause NEW HORIZONS to afford to representatives of WHAM, upon
reasonable request and during regular business hours, full and free access to
the property, business records, stock book, minute books, records and books of
account, instruments, documents and evidences of title of NEW HORIZONS so that
WHAM may have full opportunity to make such investigation as it shall desire to
make of the affairs of NEW HORIZONS in its sole and absolute discretion. If for
any reason the Closing contemplated by this Agreement is not consummated, WHAM
agrees not to disclose to any person any information obtained by it from such
access and investigation.
(c) Effect of Investigations. Any investigations of NEW HORIZONS or
WHAM as permitted by this Paragraph shall not affect any of the representations
and warranties hereunder and shall be conducted in such manner as will not
interfere unreasonably with the operations of the business or the personnel of
WHAM or NEW HORIZONS, as the case may be.
16. Costs.
(a) Finders' Fees. Each of the Shareholders, NEW HORIZONS and WHAM
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement, and, insofar as it
knows, no broker or other person is entitled to any commission or finder's fee
in connection with any of these transactions. The Shareholders jointly and
severally agree to indemnify and hold harmless WHAM, and WHAM agrees to
indemnify and hold them harmless against any loss, liability, damage, cost,
claim or expense incurred by reason of any brokerage commission or finder's fee
alleged to be payable because of their individual act or omission or statement.
(b) Other Costs. WHAM, the Shareholders and NEW HORIZONS shall
<PAGE>
each pay all of their own costs and expenses incurred or to be incurred by it or
them incident to the preparation and carrying out of the transactions herein
contemplated.
17. Termination of This Agreement.
(a) This Agreement shall terminate:
(i) By mutual written consent of the WHAM and NEW HORIZONS;
(ii) Automatically, without need of action by any party, if
the Closing has not occurred by the Closing date herein provided for or any
extensions agreed to by WHAM and NEW HORIZONS;
(iii) By NEW HORIZONS or WHAM, if:
(A) all the conditions precedent to its respective
obligations hereunder have not been satisfied or waived prior to the Closing
Date, as it may be accelerated or extended, or if any Shareholder refuses to
execute this Agreement or deliver the NEW HORIZONS Shares as herein called for;
(B) any party shall have defaulted or refused to perform in
any material respect under this Agreement, or if WHAM or NEW HORIZONS should
have reasonable cause to believe there has been a material representation
concerning, or failure or breach of, any representation or warranty by the other
party, or if it appears that either NEW HORIZONS or WHAM has committed any
unlawful acts affecting the other party;
(C) the transactions contemplated in this Agreement and
related agreements have not been consummated on the Closing Date, as it may be
accelerated or extended, OR
(D) either WHAM or NEW HORIZONS shall reasonably determine
that the transactions contemplated in this Agreement have become inadvisable by
reason of the institution or threat by any federal, state or municipal
governmental authorities or by other person whatever of a formal investigation
or of any action, suit or proceeding of any kind against either or both parties
which in one party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
(b) Any termination of this Agreement (other than automatic
termination) shall be made in accordance with the above listed grounds and, if
terminated by NEW HORIZONS or WHAM, shall be accompanied by a copy of the
resolution of the terminating party's board of directors. Written notice of
termination shall be given to the other party as required in this Agreement as
promptly as is practical under the circumstances. Upon a party's receipt of such
termination notice, this Agreement shall terminate and the transactions herein
contemplated shall be abandoned without further action by the parties.
18. Form of Agreement.
<PAGE>
(a) Subject Headings. The subject headings in this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of any of the provisions hereof.
(b) Entire Agreement; Modification. This Agreement and all exhibits
and documents incorporated herein by reference constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties, whether oral or in writing. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by the parties against which asserted.
(c) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
(d) Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
19. Parties.
(a) Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
(b) Successors and Assigns. This Agreement shall be binding on, and
shall inure to the benefit of, the parties to it and their respective heirs,
legal representatives, successors and assigns; provided, however, that neither
WHAM nor the Shareholders may assign any of its rights or obligations or duties
under this Agreement without the express written consent of the other party.
20. Remedies.
(a) Remedies Cumulative, etc. No right, power or remedy herein
conferred upon or reserved to any party hereto is intended to be exclusive of
any other right, power or remedy, and every right, power and remedy pursuant
<PAGE>
to this Agreement, now or hereafter existing at law or in equity or by statute
or otherwise, shall be cumulative and concurrent, to the extent permitted by
law, and shall be in addition to every other right, power or remedy pursuant to
this Agreement, now or hereafter existing at law or in equity or by statute or
otherwise. The exercise or beginning of the exercise by any party hereto of any
such right, power or remedy shall not preclude the simultaneous or later
exercise of any right, power or remedy.
(b) No Waiver. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar. No waiver shall be binding unless specifically so titled, and
executed in writing by the party making the waiver. No failure or delay to
insist upon the strict performance of any term, condition, covenant or agreement
of this Agreement, or to exercise any right, power or remedy hereunder or
consequent upon a breach hereof, shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy of any such breach, or
preclude the exercise of any such right, power or remedy at any later time or
times.
(c) Specific Performance. The obligations under this Agreement are
unique. If any party should default in its obligations under this Agreement, the
parties hereto acknowledge that it would be impracticable to measure the
resulting damages; accordingly, the non-breaching party in addition to any other
available rights or remedies, may sue for specific performance, and the other
party waives the defense that a remedy in damages will be adequate.
(d) Arbitration. Any disputes arising out of this Agreement, or the
performance of duties contemplated by this Agreement shall be resolved through
arbitration in accordance with the rules of the American Arbitration
Association. Any such arbitration shall be conducted at Washington, D.C. Any
awards or decisions resulting from said arbitration shall be final and may be
enforced by any court of competent jurisdiction. If any action is brought for
the enforcement of this Agreement or to recover damages, the successful or
prevailing party or parties shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action, in addition to any other relief to
which it or they may be entitled.
21. Survival. All representations, warranties, covenants and agreements
of the parties contained in this Agreement, or in any instrument, certificate,
opinion or other writing provided for in it, shall survive any investigation
made by either party and shall survive the Closing subject to the provisions of
Paragraphs 6 and 7 hereof.
<PAGE>
22. Notices. All notices, request, instruction or other document to be
given hereunder by a party shall be in writing and delivered personally or by
facsimile transmission, or by electronic mail, or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to NEW HORIZONS: NEW HORIZONS, INC.
8150 Leesburg Pike, Suite 1200
Vienna, VA 22182
If to WHAM: WHITNEY AMERICAN CORPORATION
12373 E. Cornell Avenue
Aurora, CO 80014
23. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
WHEREFORE, the premises considered, the parties herein have executed the
foregoing Agreement, intending to be so bound, on the day first above written.
WHITNEY AMERICAN CORPORATION
A Delaware corporation
By:
Stephen M. Siedow
Its: COB, CEO
NEW HORIZONS, INC.
By:
Heatherlynn Colburn
Its: COB/CEO
SHAREHOLDERS
- ----------------------------------
COSTA REAL CORPORATION
By: Heatherlynn Colburn
- -----------------------------------
TWENTY FIRST CENTURY HERITAGE TRUST
By: Hector I. Hernandez, Sr.
<PAGE>
Exhibit A
Name No. Of NEW HORIZONS Shares No. Of WHAM Shares
Costa Real Corporation 500 875,000
Twenty First Century Heritage Trust 500 875,000
---- ---------
TOTAL 1000 1,750,000
<PAGE>
STOCK EXCHANGE AGREEMENT PRIVATEC
This Agreement ("Agreement") is made and entered into on March 6, 1998, by and
among EXETER GROUP, INC., a Florida corporation, as the acquired company
("EXETER"); WHITNEY AMERICAN CORPORATION, a Delaware corporation, as the
acquiring company (the "WHAM"); and those persons executing this Agreement in
their capacity as shareholders of EXETER (the "Shareholders").
WHEREAS, WHAM wishes to acquire and the Shareholders wish to transfer all the
issued and outstanding stock of EXETER in a transaction intended to qualify as a
reorganization within the meaning of I.R.C. Section 368(a)(1)(B), as amended.
NOW, THEREFORE, WHAM, EXETER and the Shareholders adopt this plan of
reorganization and agree as follows:
1. Certain Definitions. As used herein and in any exhibit or schedule
incorporated herein, or in any document, certificate or opinion required to be
delivered pursuant to this Agreement, the following terms shall have the
meanings ascribed below.
(a) "Closing Date" means the date at which Closing hereunder shall
occur, which date shall be March 9, 1998, or any other date which may be
mutually agreed upon by the parties hereto.
(b) "Closing" means the settlement and consummation of the purchase
transaction contemplated hereby to be held at 2:00 p.m. Eastern Standard Time on
the Closing Date at the offices of John D. Brasher, Jr., Esq., counsel for WHAM,
90 Madison Street, Suite 707, Denver, CO 80206, or at such other place as may be
mutually agreed upon by the parties hereto.
(c) "EXETER Shares" means One Hundred (100%) percent of the issued and
outstanding capital stock of EXETER to be delivered to WHAM at the Closing.
2. Exchange of Stock
(a) Exchange. Subject to the terms and conditions herein set forth, at
--------
the Closing on the Closing Date;
(i) The Shareholders agree to transfer to WHAM the number of EXETER
Shares, without par value, shown opposite their names in Exhibit A, in exchange
for an aggregate of One Million (1,000,000) shares of voting common stock of
WHAM, $0.00001 par value per share, (the "Exchange Shares"), to be issued at the
Closing to the Shareholders in the numbers shown opposite their names in Exhibit
A.
(ii) The transfer of EXETER Shares by the Shareholders shall be
effected by the delivery to WHAM at the Closing of certificates representing the
transferred shares endorsed in blank.
<PAGE>
(iii) At the Closing and from time to time thereafter the Shareholders
shall execute such additional instruments and take such other action as WHAM may
request in order more effectively to sell, transfer, and assign the transferred
stock to WHAM and to confirm WHAM's title thereto.
(b) Restricted Status of Exchange Shares. The Exchange Shares have not
been registered under the Securities Act of 1933, as amended ("Act"), in
reliance upon exemptions from registration provided by Section 4(2) of the Act
and Rule 506 under the Act and under the securities or blue sky laws of
applicable states or any rules or regulations promulgated thereunder, on the
grounds that the transactions contemplated in this Agreement do not involve any
public offering. The Exchange Shares are "restricted securities" as that term is
defined in Rule 144(a) of the General Rules and Regulations under the Act and
must be held indefinitely, unless they are subsequently registered under the Act
or an exemption from such registration requirements is available for their
resale. The prior written consent of WHAM will be necessary for any transfer of
any or all of the Exchange Shares, unless the shares have been duly registered
under the Act or the transfer is made in accordance with Rule 144 or other
available exemption under the Act. Further, any and all certificates which are
issued representing Exchange Shares shall, unless and until removed in
accordance with law, bear a restrictive legend substantially in the following
form:
"The shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and are "restricted
securities" as that term is defined in Rule 144 under the Act. These shares may
not be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which must be established to the
satisfaction of the Company's counsel."
(c) Officers and Directors of WHAM. At the Closing, the current officers
and directors of WHAM shall resign and the persons below shall be elected as the
directors and executive officers of WHAM:
NAME POSITION
----------- ---------
1. Juan J. Gutierrez Chairman of the Board, Chief Executive Officer
Hector I. Hernandez, Sr. Executive Vice President, Director
Heatherlynn Colburn Executive Vice President, Chief Operating
Officer, Director
John M. Dwyer Director
David Vandenberg Director
Michael Goldberg Director
John Heishman Assistant Secretary/Treasurer, Director
3. Representations and Warranties of EXETER and the Shareholders. EXETER and
the Shareholders make to WHAM the following representations and warranties, in
reliance upon which WHAM has entered into this Agreement.
(a) Each Shareholder represents and warrants that he, she or it is not now
insolvent and will not be insolvent after selling and delivering the EXETER
Shares to WHAM on the terms of this Agreement, and that he, she or it is
receiving new consideration at least equal to the full and fair value of the
EXETER Shares being sold.
(b) EXETER and the Shareholders understand and acknowledge that (i) there
is no active trading market in the common stock of WHAM, although quoted name-
only on the OTC Board, (ii) WHAM is a shell company with no cash or other
assets, no operations and no full-time or experienced management, (iii) no
person currently an officer, director or shareholder of or professional adviser
to WHAM has made any representation whatsoever to any Shareholder relating to
WHAM's stock price,
<PAGE>
operations, profitability or prospects following the Closing, (iv) persons
designated by EXETER and/or the Shareholders will become the officers and
directors of WHAM at the Closing, and no person now an officer or director of
WHAM will be such after the Closing or have any responsibility or input as to
operations after the Closing, the officers and directors of WHAM solely
responsible for its operations and success will be persons designated by EXETER
and the Shareholders, and (v) the Exchange Shares are speculative and involve a
high degree of risk.
(c) Each Shareholder acknowledges and agrees that he, she or it have been
furnished with substantially the same kind of information regarding WHAM and its
assets, financial condition and plan of operation as would be contained in a
registration statement and included prospectus prepared in connection with a
public offering of the Exchange Shares and has reviewed all information
concerning WHAM publicly available on the website maintained by the Securities
and Exchange Commission. Each Shareholder further represents that he, she or it
has had an opportunity to ask questions of and receive answers from WHAM and its
officers and directors regarding WHAM and its assets, financial condition and
plan of operation and the terms and conditions of the issuance of the Exchange
Shares.
(d) The Shareholder, alone or together with the Shareholder's adviser(s),
have such knowledge and experience in financial, tax and business matters as to
enable Shareholder to utilize the information made available by WHAM, in
connection with the Exchange and issuance of the Exchange Shares, to evaluate
the merits and risks of acquiring the Exchange Shares and to make an informed
investment decision with respect thereto.
(e) Each Shareholder agrees that he, she or it was not solicited by WHAM
by any form of general solicitation or general advertising, including but not
limited to any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, or made available over telephone lines by any information service, or any
seminar or meeting whose attendees had been invited by any means of general
solicitation or general advertising.
(f) Except as expressly set forth in this Agreement and any Schedules,
Exhibits or other attachments hereto, WHAM has not made any representation or
warranty to any Shareholder in connection with this Agreement, and WHAM has made
no communi cation to any Shareholder that constitutes tax or investment advice.
(g) Authority. The Shareholders have valid and marketable title to the
EXETER Shares free and clear of any claims, liens, trusts, encumbrances, rights
or interests of any person. The Shareholders have the right, power, and
authority to enter into, and perform their respective obligations under this
Agreement. This Agreement has been and as of the Closing Date will be, duly and
validly authorized, executed and delivered on behalf of the Shareholders, have
all requisite power and authority to consummate the transactions contemplated
herein. This Agreement is the valid and binding obligation of the Shareholders.
No third-party approvals or consents of any kind are necessary in connection
with this Agreement.
<PAGE>
(h) Organization and Good Standing. EXETER is duly organized, validly
existing and in good standing under the laws of the State of Florida and has
full charter power to carry on its business as it is now being conducted and to
own and operate the properties now owned, operated or leased by it. EXETER is
qualified to do business as a foreign corporation in every state in which the
nature of the business carried on and properties owned or leased by them
presently requires them to be so qualified in any other jurisdiction.
(i) Capitalization. The authorized capitalization of EXETER consists
of One Thousand (1,000) shares of Common Stock, $0 par value per share. As of
the date hereof, EXETER has issued and outstanding 100 shares of such Common
Stock. All of such issued and outstanding shares have been duly and validly
issued, are fully paid and non-assessable and were issued and sold pursuant to,
and within limitations contained in, appropriate permits and consents of each
governmental authority from whom any permit or consent was required.
(j) Title to EXETER Shares. The Shareholders have good and valid title to
all of the issued and outstanding common stock of EXETER, free and clear of all
claims, liens, mortgages, charges, security interests, encumbrances and other
restrictions or limitations of any kind whatsoever. The Shareholders are not a
party to, or bound by, any other agreement, instrument or understanding
restricting the transfer of such interests.
(k) Financial Statements. Attached hereto and incorporated herein by
this reference, is the unaudited consolidated Financial Statements of EXETER for
the year ended December 31, 1997, accompanied by the related opinions of
EXETER's official independent auditors as of such dates and for such periods
(the "Financial Statements"). Said Financial Statements (i) were prepared in
accordance with the books and records of EXETER; (ii) were prepared in
accordance with generally accepted accounting principles consistently applied;
and (iii) sets forth fairly EXETER's financial condition and the results of its
operations as of the relevant dates thereof and for the periods covered thereby.
Except as to the extent reflected or reserved against in the Financial
Statements, EXETER as of the date thereof had no liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, including without
limitation, tax liabilities due or to become due and whether incurred in respect
of or measured by the income of EXETER for any period prior to such date, or
arising out of any transaction entered into, or any state of facts existing,
prior hereto. Since the date of such Financial Statements, absent written
disclosure, no credit or charge has been made to any surplus account of EXETER.
(l) Events Subsequent to December 31, 1997. Since December 31, 1997,
absent a written disclosure delivered to WHAM, there has not been any: (i)
material adverse change in the financial condition, liabilities, assets,
business, or prospects of EXETER;
(ii) destruction, damage to, or loss of any asset of EXETER that may
substantially affect the financial condition, business, or prospects of EXETER;
(iii) change in accounting methods or practices (including, without
limitation, any change in inventory accounting or in depreciation or
amortization policies or rates) by EXETER;
<PAGE>
(iv) revaluation by EXETER of any of its assets;
(v) declaration, setting aside, or payment of a dividend or other
dividend or other distribution in respect to the capital stock of EXETER, or any
direct or indirect redemption, purchase, or other acquisition by EXETER of any
of its shares of capital stock;
(vi) any other transaction by EXETER except in the ordinary course of
business;
(vii) direct or indirect increase in the salary or other compensation
payable or to become payable by EXETER to any of its officers, directors or
employees, or the declaration, payment or commitment or obligations of any kind
for the payment by EXETER of a bonus or other additional salary or compensation
to any such person;
(viii) sale or transfer of any single asset of EXETER having a value
in excess of $1,000;
(ix) amendment or termination of any contract, agreement, or license
to which EXETER is a party except in the ordinary course of business;
(x) loan by EXETER to any person or entity, or guaranty by EXETER of
any loan;
(xi) mortgage, pledge, or other encumbrance of any asset of EXETER;
(xii) waiver or release of any right or claim of EXETER;
(xiii) issuance or sale by EXETER of any shares of EXETER's capital
stock;
(xiv) bid submitted or sales contract entered into or any other
contract or agreement entered into involving more than $1,000 in each case,
except in the ordinary course of business;
(xv) obligation or debt incurred in excess of $1,000.
(m) Liabilities. EXETER has no known debt, liability, or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, whether due or to
become due, that is not fully provided or reserved for in the Financial
Statements, including the notes thereto, except for those (1) that may have been
incurred after the date of the Financial Statements in the ordinary course of
business, or (2) that are not required by generally accepted accounting
principles to be included in the Financial Statements. All debts, liabilities
and obligations incurred after the date of the Financial Statements were
incurred in the ordinary course of business and not in violation of any
provision of this Agreement, are usual and normal in amount both individually
and in the aggregate.
<PAGE>
(n) Taxes. Within the time and in the manner prescribed by law, EXETER has
filed all Federal, state and local tax returns required by law and have paid all
taxes, assessments, and penalties due and payable. The Shareholders shall cause
EXETER (i) to prepare and file all Federal, state and local income tax returns
for EXETER required to be filed through the Closing Date covering the most
recent taxable period; (ii) to pay all taxes, penalties and assessments related
to such returns, and upon filing thereof shall promptly supply copies of such
returns to WHAM. The provision for taxes reflected in the Financial Statements
are adequate for any and all federal, state, county, and local taxes for the
period ending on the date of such Financial Statements and for all prior
periods, whether or not disputed, including without limitation any and all taxes
that may be assessed by the Internal Revenue Service as a result of an audit of
the Company's tax returns. There are no present disputes as to taxes of any
nature payable by EXETER or with respect to the EXETER Shares. On or before the
Closing Date, EXETER shall have furnished to WHAM, in form satisfactory to it,
true and accurate copies of all Federal, state and local tax returns, filings,
waivers, elections and deficiency notices for each of the past fiscal year of
EXETER and a true and complete copy of the unaudited consolidated and
consolidating balance sheets of EXETER as of February 28, 1998 ("Current Balance
Sheet").
(o) Title to Properties and Assets. EXETER has good and marketable title
to its properties and assets, including the properties and assets reflected in
the Current Balance Sheet referred to above (except as since disposed of in the
ordinary course of business) subject to no liens, mortgages, encumbrances or
charges which are not reflected in the Current Balance Sheet or which, either in
any case or in the aggregate, are substantial in amount or which materially
detract from the value of the property subject thereto or which materially
impair the operation of EXETER, or which have not arisen otherwise than in the
ordinary course of business. No personal property needed by EXETER for the
conduct of its business is held under any lease, security agreement, conditional
sales contract, or other title retention or security arrangement, or is located
other than in the possession and under the control of EXETER. The tangible
personal property reflected in those books and records constitutes all such
tangible personal property necessary for the conduct by EXETER of its business
as now conducted.
(p) Proprietary Rights. EXETER owns or possesses adequate licenses or
other rights to use all patents, patent applications, trademarks, trademark
applications, trade secrets, service marks, trade names, copyrights, inventions,
drawings, designs, customer lists, proprietary know-how or information, or other
rights with respect thereto (collectively referred to as "Proprietary Rights"),
used by it and the same are sufficient to conduct such business as it has been
and is now being conducted. The operations of EXETER neither conflict with nor
infringe, and no one has asserted to EXETER that such operations conflict with
or infringe, any intangible property rights owned, possessed or used by any
third party which are of the same kind as the Proprietary Rights. There are no
claims, disputes, actions, proceedings, suits or appeals pending against EXETER
with respect to any Proprietary Rights and none has been threatened against
EXETER. To the best knowledge of EXETER (after reasonable investigation), there
are no facts which would result in any claim which would have an adverse effect
on the condition (financial or otherwise), business, net worth, assets,
properties or operations of EXETER based on an assertion that EXETER does not
have the unrestricted right to use, free of any rights or claims of others, all
Proprietary Rights.
<PAGE>
(q) Insurance. Prior to the Closing Date, EXETER shall have delivered, in
form satisfactory to WHAM pursuant to this subparagraph, a certificate or
certificates of all insurance coverage of EXETER. Such certificates evidence
policies of fire, liability and other forms of casualty insurance and workmen's
compensation insurance held by EXETER. Such policies will be maintained in force
and in effect by EXETER in present amounts up to and including the Closing Date.
EXETER is not in material default under any of such policies.
(r) Contracts. EXETER has previously provided a list of all written
contracts and bids and as further detailed and a summary of all oral contracts
and bids of the following categories to which EXETER is a party:
(i) Contracts not made in the ordinary course of business (excluding
this Agreement and the Exhibits hereto), and all material contracts, whether or
not made in the ordinary course of business;
(ii) Employment contracts;
(iii) Contracts with a labor union or association;
(iv) Bonus, pension, profit sharing, retirement, stock purchase, stock
option, hospitalization, insurance or similar plans providing employee benefits;
(v) Distribution, franchise, sales agency or advertising contracts;
(vi) Output or requirements agreements;
(vii) Any indenture, mortgage deed of trust or lease;
(viii) Options with respect to any property, real or personal, whether
as grantor or grantee;
(ix) Contracts or outstanding bids involving potential expenditures or
liabilities of EXETER in excess of $1,000.00;
(x) Contracts continuing over a period of more than one (1) year from
their respective dates;
(xi) Contracts or commitments relating to commission arrangements with
others;
(xii) Patent, trade name, and all other license agreements, to which
EXETER is a party, either as licensor or licensee;
(xiii) Contracts containing covenants limiting the freedom of EXETER
to compete in any line of business or with any person; and
(xiv) Agreements evidencing all indebtedness.
There is no default or event that with notice or lapse of time, or both, would
constitute a default by EXETER, or to EXETER's knowledge, any other party to any
of these agreements. EXETER has received no notice that any party to any of
these agreements intends to cancel or terminate any of these agreements. EXETER
is not a party to, nor is EXETER or the property of EXETER bound by any
agreement that is materially adverse to the business, properties or financial
condition of EXETER. EXETER is not a party to any significant contract except
as provided in writing.
(s) Banks. Prior to the execution of this Agreement, the Shareholders
have delivered to WHAM pursuant to this subparagraph a complete list showing the
name of each bank in which EXETER maintains accounts (including a description of
the account), certificates of deposit or safe deposit boxes and the names of all
persons authorized to draw thereon or to have access thereto.
(t) Litigation. There is no action, suit or proceeding pending before any
court or governmental agency, authority or body and, to knowledge of EXETER,
there is no action, suit proceeding threatened or pending which, if it were to
result in a decision adverse to EXETER, would in the judgment of EXETER result
in any material adverse change in the condition, financial or otherwise,
business or prospects of EXETER or would materially adversely affect its
properties or assets.
<PAGE>
(u) No Resulting Breach or Default. The consummation of the transactions
contemplated by this Agreement will not result in or constitute any of the
following: (i) a default or any event that, with notice or lapse of time or
both, would be a default, breach, or violation of applicable law or regulation
or of the Articles of Incorporation or Bylaws of EXETER, or any judgment, order,
writ, injunction, or decree of any court or governmental authority or of any
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which EXETER is a party or by which its property is bound; (ii)
an event that would permit a party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation of EXETER, or (iii) the
creation or imposition of any security interest, lien, charge, or encumbrance on
any of the properties or assets of EXETER.
(v) Corporate Documents. EXETER has furnished to WHAM for its examination
(i) copies of the Articles of Incorporation and Bylaws of EXETER, including
all amendments, (ii) the complete minute books of EXETER of all meetings of
the shareholders and Board of Directors of EXETER, (iii) the stock transfer
books of EXETER setting forth all transfers of capital stock. The meetings of
the Board of Directors and Shareholders referred to therein were duly called
and duly held and the signatures appearing on all documents contained therein
are the true signatures of the person purporting to have signed the same. All
documents delivered hereto contain accurate records of all meetings and
accurately reflect all corporate action of the stockholders and directors of
EXETER.
(w) Compliance with Other Instruments, etc.; None Burdensome. To the best
of the Shareholder's knowledge and belief, EXETER is not in violation of any
term or provision of any charter, by-law, mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, injunction, statute, rule or
regulation. The execution, delivery and performance of and compliance with this
Agreement and the EXETER Shares to be exchanged hereunder will not result in any
such violation or be in conflict with or constitute a default under any such
term or provision, or result in the creation of any mortgage, lien, encumbrance
or charge upon any of the properties or assets of EXETER pursuant to any such
term or provision. There is no term or provision of this Agreement which
materially adversely affects the business, prospects, condition (financial or
other), or operations of EXETER or any of its properties or assets.
(x) Indebtedness to Officers, Directors and Shareholders. EXETER is not
indebted to any person who is an officer, director or shareholder of EXETER in
any amount whatsoever other than for salaries for services rendered or for
reimbursable business expenses.
(y) Brokerage and Finder's Fees. EXETER has not incurred any unpaid
liability to any broker, finder or agent for any brokerage fees, finder's fees
or commissions with respect to the transactions contemplated by this Agreement.
(z) Full Disclosure. On or prior to the date of the execution of this
Agreement, the Shareholders have delivered or made available to WHAM all of
the material documents and contracts to which EXETER is a party which in any way
affects any of the properties, assets or business of EXETER. Neither the
Financial Statements referred to in subparagraph (e) of this Paragraph nor any
other certificate or statement furnished to WHAM by the Shareholders or in
behalf of EXETER in connection with the transactions contemplated hereby nor
this Agreement contains any untrue statement of a material fact, known as of the
date thereof, or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading. There is no known fact
which materially adversely affects the business, prospects or condition
(financial or other) or operations of EXETER or any of its properties or assets
which has not been set forth herein or disclosed by the Financial Statements
referred to herein or in any certificate or statement furnished to WHAM by the
Shareholders or in behalf of EXETER.
4. Conduct of EXETER's Business Pending Closing. EXETER and the Shareholders
hereby covenant and agree with WHAM that between the date hereof and the Closing
Date:
<PAGE>
(a) EXETER will not, without the prior written consent of WHAM, amend
or otherwise change its Articles of Incorporation or By-laws, or any
instrument similar in purpose and intent to them.
(b) The Shareholders will not, without the prior written consent of
WHAM, transfer or encumber in any way, voluntarily or involuntarily, any of
the EXETER Shares.
(c) EXETER will not declare or pay any dividend or make any other
distribution of assets of any kind whatsoever to any of its shareholders in
redemption of or as the purchase price for any of its capital stock, or in
discharge or cancellation, whether in whole or in part, of any indebtedness,
whether in payment of principal, interest or otherwise, owing to any of such
shareholde rs.
(d) EXETER will conduct its business diligently in the ordinary
course, use its best efforts to preserve intact its business organization, use
its best efforts to retain in its employ all of its key employees, and use its
best efforts to preserve its relationships with its suppliers and customers and
others having business relations with it.
(e) EXETER will not make any commitments for capital expenditures or
for indirect charges exceeding $1,000 except with respect to expenditures
required in the normal course of performing current contracts.
(f) EXETER will not sell or transfer any of its assets, cancel any
debts or claims, or mortgage, pledge or subject to lien, charge or encumbrance
of any kind, except liens for taxes not due, any of its assets, except in the
ordinary course of business.
(g) EXETER will not, except in the ordinary course of business amend
or terminate any material contract or agreement to which it is a party, or enter
into or become a party to any contract or agreement under which (i) the value of
services to be performed or the cost of goods to be sold will exceed $1,000; or
(ii) the reasonably anticipated costs and expenses will exceed the anticipated
receipts.
(h) EXETER will continue in force its existing insurance policies,
subject only to variation in amounts required by the ordinary operations of its
business.
(i) EXETER will not increase the compensation payable or to become
payable to any of its officers, directors, employees or agents, or any bonus
payment or similar arrangement made to or with any of such officers, directors,
employees or agents.
(j) EXETER will not incur any indebtedness to any person who is an
officer, director or shareholder of EXETER in any amount whatsoever other than
for salaries for services rendered or for reimbursable business expenses.
(k) EXETER and its representatives will keep confidential any
information not otherwise readily available from public sources which they or
their representatives obtain from WHAM concerning the properties, assets and
business of WHAM.
5. Representations and Warranties of WHAM. WHAM hereby makes the following
representations and warranties in reliance upon which the EXETER Shareholders
have entered into this Agreement.
(a) Organization and Good Standing. WHAM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as it is now
being conducted and to own and operate the properties now owned, operated or
leased by it. WHAM is qualified to do business as a foreign corporation in all
states in which
<PAGE>
the nature of the business carried on and properties owned or leased by
WHAM requires WHAM to be so qualified in any other jurisdiction. WHAM's filings
with the Securities and Exchange Commission, Washington, D.C. ("SEC"), are
current and have been timely filed. WHAM will ensure that the latest Form 10-
QSB, for the quarter ended February 28, 1998, is or will be timely filed with
the SEC.
(b) Authority. The execution of this Agreement by WHAM and its
delivery to the Shareholders has been duly authorized by the Board of Directors
of WHAM, and no further corporate action is necessary on the part of WHAM to
make this Agreement valid and binding upon WHAM in accordance with its terms.
(c) Capitalization. The authorized capitalization of WHAM consists of
5,000,000 shares common stock, $0.00001 par value per share, and 5,000,000
shares of preferred stock, $0.00001 par value per share, of which 362,515 shares
of Common are issued and outstanding, fully paid and non-assessable, and no
shares of preferred stock have been issued.
(d) Litigation. There is no action, suit or proceeding pending before
any court or governmental agency, authority or body and, to the knowledge of
WHAM, there is no action, suit proceeding threatened or pending which, if it
were to result in a decision adverse to WHAM, would in the judgment of WHAM
result in any material adverse change in the condition, financial or otherwise,
business or prospects of WHAM or would materially adversely affect its
properties or assets.
(e) No Defaults. The consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
default or any event that, with notice or lapse of time or both, would be a
default, breach, or violation of applicable law or regulation or of the Articles
of Incorporation or Bylaws of WHAM, or any judgment, order, writ, injunction, or
decree of any court or governmental authority or of any lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which WHAM is a
party or by which its property is bound; (ii) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of WHAM, or (iii) the creation or imposition of
any security interest, lien, charge, or encumbrance on any of the properties or
assets of WHAM.
6. Indemnification by the Shareholders. The Shareholders (hereafter the
"Seller Group"), jointly and severally, shall indemnify, defend and hold
harmless WHAM against and in respect of any and all actions, causes of action,
assessments, claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including any liabilities for obligations
which arise after the Closing Date based on events or conditions occurring
before the Closing Date, and interest, penalties and reasonable attorneys' fees
and expenses, that WHAM shall incur or suffer, which arise, result from or
relate to any inaccuracy in, or any breach of any of the Seller Group's
representations or warranties, or any failure by the Seller Group to perform any
of their covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by any of
the Seller Group under this Agreement; provided, however, that the right to
indemnity as aforesaid with respect to a breach by the Seller Group or any of
their representations or warranties in this Agreement shall be limited by the
following: (i) such indemnity shall apply only if the facts or circumstances
resulting in such breach are such as to result in damages to WHAM in excess of
$10,000 in the aggregate; and (ii) such right to indemnity shall apply only as
to all claims giving rise to a right of indemnity hereunder of which WHAM has
received actual notice within twenty-four (24) months after the Closing Date.
7. Indemnification by WHAM. Subject to the terms and conditions of this
Paragraph 7, WHAM hereby agrees to indemnify, defend and hold harmless the
Shareholders and their respective successors, if any, and their officers,
directors and controlling persons, at any time after the Closing Date, from and
against all demands, claims, actions, or causes of action, assessments, losses,
damages, liabilities,
<PAGE>
costs and expenses, including, without limitation, interest, penalties and
attorneys' fees and expenses, which were reasonably incurred by or imposed upon
the Shareholders or EXETER, net of any insurance proceeds received by the
Shareholders or EXETER with respect thereto, asserted against, resulting to,
imposed upon or incurred by the Shareholders or EXETER, directly or indirectly,
by reason of or resulting from any misrepresentation, breach of any warranty,
non-performance or breach of any covenant, obligation or agreement of WHAM
contained in this Agreement; provided, however, that the right to indemnity as
aforesaid with respect to a breach by WHAM or any of its representations or
warranties in this Agreement shall be limited by the following: (i) such
indemnity shall apply only if the facts or circumstances resulting in such
breach are such as to result in damages to the Shareholders or EXETER in excess
of $10,000 in the aggregate; and (ii) such right to indemnity shall apply only
as to all claims giving rise to a right of indemnity hereunder of which the
Shareholders or EXETER has received actual notice within twenty-four (24) months
after the Closing Date.
8. Claims by Third Parties. The obligations and liabilities of an
indemnifying party under any provision of this Agreement with respect to claims
relating to third parties shall be subject to the following terms and
conditions:
(a) Whenever any indemnified party shall have received notice that a claim
has been asserted or threatened against such indemnified party, which, if valid,
would subject the indemnifying party to an indemnity obligation under this
Agreement, the indemnified party shall promptly notify the indemnifying party of
such claim in the manner described in Paragraph 22; provided, however, that the
failure of the indemnified party to give timely notice hereunder shall not
relieve the indemnifying party of its indemnification obligations under this
Agreement unless, and only to the extent that, such failure caused the damages
for which the indemnifying party is obligated to be greater than they would have
been had the indemnified party given timely notice.
(b) The indemnifying party or its designee will have the right but not the
obligation, to assume the defense of any claim described in Paragraph 6 or 7
above, provided, however, the indemnified party shall have the right at its
option to defend and to compromise or settle such claim which compromise or
settlement shall be made only with the written consent of the indemnifying
party, such consent not be unreasonably withheld. If the indemnifying party
fails to assume the defense of such claim within 15 days after receipt of notice
of a claim pursuant to Paragraph 22, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the
indemnifying party) have the right to undertake, at the indemnifying party's
cost and expense, the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the indemnifying party, subject to the right
of the indemnifying party to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof and provided, however,
that the indemnified party shall not enter into any such compromise or
settlement without the written consent of the indemnifying party. In the event
the indemnified party assumes defense of the claim, the indemnified party will
keep the indemnifying party reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying party shall not be liable
for any settlement of any action effected without its consent, but if settled
with the consent of the indemnifying party or if there be a final judgment
beyond review or appeal, for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless an indemnified party from and
against any loss or liability by reason of such settlement or judgment. Any
party who does not undertake the defense of a claim may, at its own expense,
retain such additional attorneys and other advisors as it shall deem necessary,
which attorneys and advisors will be permitted by the party undertaking such
defense, and its attorneys, to observe the defense of such claim.
9. Indemnity for Taxes of Indemnified Party. Each party hereto further
agrees that, with respect to payment or indemnity under this Paragraph 9, such
payment or indemnity shall include any amount necessary to hold the indemnified
party harmless on an after-tax basis from all taxes required to be
<PAGE>
paid with respect to the receipt of such payment or indemnity under the laws of
any Federal, state or local government or taxing authority in the United States,
or under the laws of any foreign government of taxing authority or governmental
subdivision of a foreign country.
10. Shareholders' Representatives. The Shareholders hereby irrevocably
designate and appoint Michael Goldberg as their agent and attorney in fact
("Shareholders' Representative"), with full power and authority until the
Closing to execute, deliver, and receive on their behalf all notices, requests,
and other communications hereunder; to fix and alter on their behalf the date,
time, and place of the Closing; to waive, amend, or modify any provisions of
this Agreement, and to take such other action on their behalf in connection with
this Agreement, the Closing, and the transactions contemplated hereby as such
agent or agents deem appropriate; provided, however, that no such waiver,
amendment, or modification may be made if it would decrease the number of shares
to be issued to the Shareholders or increase the extent of their obligation to
indemnify WHAM hereunder.
11. Conditions Precedent to Shareholders' Obligations. The obligations of
the Shareholders hereunder are subject to each of the conditions set forth below
being fulfilled on the Closing Date. Any of such conditions may, at the option
of the Shareholders, be waived:
(a) Opinion of Counsel. The Shareholders shall have received an opinion of
John D. Brasher, Jr., Esq., counsel for WHAM, dated as of the Closing Date, to
the effect that:
(i) WHAM is a corporation duly organized, validly existing and in good
standing under the laws of the Delaware.
(ii) WHAM's Board of Directors have approved the transactions
contemplated by this Agreement.
(iii) All SEC filings have been timely made, including those for the
latest quarter.
(b) Conditions Performed. Except as provided herein, as of the Closing
Date, all the terms and conditions of this Agreement to be complied with and
performed by WHAM at or before the Closing Date shall have been complied with or
performed in all material respects. with or performed in all material respects.
(c) Representations and Warranties True at Closing. The representations and
warranties of WHAM in this Agreement shall be correct in all material respects
at and as of the Closing Date, and WHAM shall have delivered to the Shareholders
a certificate to such effect signed by an executive officer of WHAM.
12. Conditions of WHAM's Obligations. The obligations of WHAM hereunder are
subject to each of the conditions set forth below being fulfilled on the Closing
Date, or thereafter as provided below. Any of such conditions can be waived by
WHAM.
(a) EXETER's Board of Directors' Approval. The Board of Directors of
EXETER shall have approved the transactions contemplated by this Agreement.
(b) Opinion of Counsel. On or before the Closing Date, WHAM shall have
received an opinion of Hector I. Hernandez, Sr., Esq., counsel for EXETER,
dated the Closing Date, as to the matters below and setting forth the documents
examined as the basis therefor:
(i) EXETER is a corporation duly organized and validly existing and in good
standing under the laws of the State of Florida with requisite corporate
power and authority to transact it business and own its properties.
<PAGE>
(ii) All of the equitable interests of EXETER have been duly authorized and
issued, are validly outstanding, are fully paid and non-assessable.
(iii) The capitalization of EXETER is as set forth in this Agreement. Other
than as provided herein, there are no outstanding options or rights with respect
to the capital stock of EXETER or any securities convertible into or
exchangeable for shares of such stock, or any other commitments of any kind for
the issuance of additional shares of interests or securities of EXETER.
(iv) Neither the execution and delivery of this Agreement nor the performance of
the transactions contemplated hereby will (a) constitute a breach of the
Articles of Incorporation or By-Laws of EXETER or any evidence of
indebtedness or agreement to which it or they are a party, or constitute an
event which entitles any other party to any agreement to which EXETER is a
party to terminate such agreement, (b) cause a default under any mortgage
or deed of trust, or other lien, charge or encumbrance to which any of
EXETER's property is subject, (c) accelerate, or constitute an event
entitling, or which would on notice or lapse of time or both, entitle the
holder of any indebtedness of EXETER to accelerate, or (d) conflict with or
result in the breach of any writ, injunction or decree of any court or
governmental instrumentality;
(v) This Agreement has been duly and validly authorized, executed and delivered
by the Shareholders and EXETER and is valid and binding upon them in
accordance with its terms;
(vi) The Shareholders have good and marketable title to the shares of capital
stock of EXETER with full right and power to transfer and sell said shares
to WHAM, free and clear of all liens, encumbrances and claims;
(vii) Such counsel does not know of any action, suit, proceeding or claim
pending or threatened against EXETER, its or their property or business, or the
transactions contemplated by this Agreement;
(viii) No consent, approval or other order of any governmental or
administrative board or body is required for the execution and delivery by the
Shareholders of this Agreement and the sale of the EXETER Shares to WHAM
pursuant hereto.
(ix) EXETER has no subsidiaries.
(c) Instruments of Transfer. WHAM shall have received instruments of transfer
-----------------------
effecting the transfer of the EXETER Shares to WHAM.
(d) Compliance with Conditions. As of the Closing Date, all the terms and
--------------------------
conditions of this Agreement to be complied with and performed by EXETER on
or before the Closing Date shall have been complied with and performed in
all material respects. EXETER shall have delivered to WHAM certificate(s)
to such effect in form and substance satisfactory to WHAM.
(e) Correctness of Representations and Warranties. The representations and
---------------------------------------------
warranties of EXETER herein shall be correct in all material respect at and
as of the Closing Date, and EXETER, respectively, shall have delivered to
WHAM a certificate to such effect.
(f) Certificate of Good Standing. EXETER shall deliver to WHAM at the
----------------------------
Closing, a certificate issued by the Florida Secretary of State certifying
as to the good standing of EXETER as of a date not more than fifteen (15)
days prior to the Closing Date.
13. Additional Covenants and Undertaking of the parties. The performance and
---------------------------------------------------
adherence to the following undertakings and covenants of WHAM and the
Shareholders are additional conditions to the parties' obligations under this
Agreement.
(a) Notice of Certain Defaults or Claims. Each party shall give prompt notice
------------------------------------
to the other of any notice of default relating to either party received
subsequent to the date of this Agreement and prior to the Closing Date and
of the assertion of any claim which, if upheld, or the occurrence of any
event, which would render inaccurate any representation or warranty of the
affected party.
<PAGE>
(b) Implementation of Representations and Warranties. Each party will take all
------------------------------------------------
reasonable action within its or their capability necessary to render
accurate as of the Closing Date such party's representations and warranties
contained in this Agreement and each party will refrain from taking any
action which would render inaccurate as of the Closing Date any such
representations or warranties.
(c) Delivery of Additional Documents. Each party will execute and deliver, or
--------------------------------
cause to be executed and delivered, such additional assignments,
endorsements and other documents as the other party may reasonably request
for the purpose of carrying out this Agreement.
(d) Consents. The Shareholders shall cause EXETER to prosecute and obtain
--------
appropriate consents and authorization of all cognizant government agencies
necessary to approve the transfer of control of EXETER without adverse
effects upon the continuation of all contracts, if any.
(e) Special Covenants of EXETER and the Shareholders. EXETER and the
-------------------------------------------------
Shareholders agree that following the Closing, they will cause the
following actions to be taken by WHAM:
(i) Press Releases. Any press releases necessary will be promptly disseminated
---------------
by customary means.
(ii) SEC Filings. EXETER and the Shareholders acknowledge that WHAM is subject
-----------
to the reporting and informational requirements of Section 13 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Such new
directors and executive officers and all Shareholders who after the
Exchange hold five percent or more of WHAM's common stock shall as
applicable promptly and timely file Form 3 reports and Schedule 13D's with
the Securities and Exchange Commission ("Commission"), as required by law.
EXETER and the Shareholders also agree that after the Closing they will
cause WHAM to timely file a report on Form 8-K and to timely file (within
all permitted extensions) all audited and proforma consolidated financial
statements required by Form 8-K.
(f) WHAM Shareholder Approval. The parties acknowledge that WHAM, absent first
-------------------------
obtaining the consent of its shareholders for the Exchange, must comply
with Section 14(f) of the Exchange Act and Rule 14f-1 of the Commission
thereunder, which requires ten days' prior notice to the Commission and to
WHAM's shareholders before the new members of WHAM's board of directors
designated by EXETER may take office. WHAM, EXETER and the Shareholders
agree that the written concurrence pursuant to Section 228 of the Delaware
General Corporation Law of two (2) shareholders of WHAM holding in the
aggregate more than fifty percent of WHAM's issued and outstanding shares
in lieu of a general meeting of its shareholders, will constitute the
approval of WHAM's shareholders.
(g) No Reverse Split. The parties acknowledge that, following the Closing, the
-----------------
Shareholders when acting as a group will hold the voting power to effect
any corporate action. It is expressly agreed among WHAM, EXETER and the
Shareholders that, for a period of eighteen (18) months following the
Closing ("Period"), WHAM shall not effect any "prohibited action," defined
as any reverse split or combination of its common shares, or any
reorganization, recapitalization or other action whatsoever (other than a
merger, exchange, consolidation or similar transaction with an unaffiliated
entity) which has the effect of changing the number of outstanding WHAM
common shares into a smaller number of common shares. Each Shareholder
expressly agrees that, during the Period, he, she or it will not vote for
or support any such prohibited action nor grant a proxy or other voting
right to a person other than a Shareholder to vote at any meeting or act by
written consent on a proposal to effect a prohibited action, and will
affirmatively oppose any attempt to effect a prohibited action during the
Period.
This provision is intended for the protection of existing shareholders of WHAM
and persons who become shareholders during the Period, and all parties agree
that this provision and the duration of the Period is reasonable. The parties
expressly agree that all shareholders of WHAM at the time of the taking of a
prohibited action are or shall be third party beneficiaries of this provision,
and any one or more of such
<PAGE>
shareholders may bring an injunctive action to prevent a prohibited action(s) or
an action to force WHAM to revoke or rescind a prohibited action as if it had
never been effected, or may otherwise judicially enforce this provision. Any
shareholder prevailing in such injunctive or other action shall be entitled to
reimbursement from WHAM for the costs and reasonable attorneys' fees incurred in
bringing such action(s).
14. The Closing.
-----------
(a) Time and Place. The Closing of the transactions contemplated by this
--------------
Agreement shall be at the offices of John D. Brasher, Jr., Esq., BRASHER &
COMPANY, 90 Madison Street, Suite 707, Denver, CO, at 2:00 p.m. on March 9,
1998, or any other date or place that may mutually be agreed upon by the
parties.
(b) Documents to be Delivered by the Shareholders on the Closing Date. On the
-----------------------------------------------------------------
Closing Date, the Shareholders shall deliver to WHAM, in form satisfactory
to WHAM's counsel, the following documents:
(i) copies of certificates representing the EXETER Shares, on which there is no
endorsement, legend or notice of adverse claims, duly endorsed by the
Shareholders for transfer;
(ii) all instruments referred to in Paragraph 13 above, the delivery of which
are therein specified as conditions to WHAM's obligation to close.
(c) Documents Delivered by WHAM on Closing Date. All instruments referred to
-------------------------------------------
in Paragraph 11 above, the delivery of which are therein specified as
conditions to the Shareholders' obligation to close.
15. Access to Information.
---------------------
(a) EXETER's Access to Information and Documentation. WHAM will afford to a
------------------------------------------------
representative or representatives of EXETER the opportunity upon reasonable
request and during regular business hours to make a reasonable
investigation of WHAM's operations. If for any reason the Closing
contemplated by this Agreement is not consummated, EXETER and the
Shareholders agree not to disclose to any person any non-public information
obtained by them from such access and investigation.
(b) WHAM's Access to Information and Documentation. The Shareholders shall
----------------------------------------------
cause EXETER to afford to representatives of WHAM, upon reasonable request
and during regular business hours, full and free access to the property,
business records, stock book, minute books, records and books of account,
instruments, documents and evidences of title of EXETER so that WHAM may
have full opportunity to make such investigation as it shall desire to make
of the affairs of EXETER in its sole and absolute discretion. If for any
reason the Closing contemplated by this Agreement is not consummated, WHAM
agrees not to disclose to any person any information obtained by it from
such access and investigation.
(c) Effect of Investigations. Any investigations of EXETER or WHAM as
------------------------
permitted by this Paragraph shall not affect any of the representations and
warranties hereunder and shall be conducted in such manner as will not
interfere unreasonably with the operations of the business or the personnel
of WHAM or EXETER, as the case may be.
16. Costs.
-----
<PAGE>
(a) Finders' Fees. Each of the Shareholders, EXETER and WHAM represents and
-------------
warrants that it has dealt with no broker or finder in connection with any
of the transactions contemplated by this Agreement, and, insofar as it
knows, no broker or other person is entitled to any commission or finder's
fee in connection with any of these transactions. The Shareholders jointly
and severally agree to indemnify and hold harmless WHAM, and WHAM agrees to
indemnify and hold them harmless against any loss, liability, damage, cost,
claim or expense incurred by reason of any brokerage commission or finder's
fee alleged to be payable because of their individual act or omission or
statement.
(b) Other Costs. WHAM, the Shareholders and EXETER shall each pay all of their
-----------
own costs and expenses incurred or to be incurred by it or them incident to
the preparation and carrying out of the transactions herein contemplated.
17. Termination of This Agreement.
-----------------------------
(a) This Agreement shall terminate:
(i) By mutual written consent of the WHAM and EXETER;
(ii) Automatically, without need of action by any party, if the Closing has not
occurred by the Closing date herein provided for or any extensions agreed
to by WHAM and EXETER;
(iii) By EXETER or WHAM, if:
(A) all the conditions precedent to its respective obligations hereunder have
not been satisfied or waived prior to the Closing Date, as it may be accelerated
or extended, or if any Shareholder refuses to execute this Agreement or deliver
the EXETER Shares as herein called for;
(B) any party shall have defaulted or refused to perform in any material
respect under this Agreement, or if WHAM or EXETER should have reasonable cause
to believe there has been a material representation concerning, or failure or
breach of, any representation or warranty by the other party, or if it appears
that either EXETER or WHAM has committed any unlawful acts affecting the other
party;
(C) the transactions contemplated in this Agreement and related agreements
have not been consummated on the Closing Date, as it may be accelerated or
extended, OR
(D) either WHAM or EXETER shall reasonably determine that the transactions
contemplated in this Agreement have become inadvisable by reason of the
institution or threat by any federal, state or municipal governmental
authorities or by other person whatever of a formal investigation or of any
action, suit or proceeding of any kind against either or both parties which in
one party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
(b) Any termination of this Agreement (other than automatic termination) shall
be made in accordance with the above listed grounds and, if terminated by
EXETER or WHAM, shall be accompanied by a copy of the resolution of the
terminating party's board of directors. Written notice of termination shall
be given to the other party as required in this Agreement as promptly as is
practical under the circumstances. Upon a party's receipt of such
termination notice, this Agreement shall terminate and the transactions
herein contemplated shall be abandoned without further action by the
parties.
18. Form of Agreement.
-----------------
(a) Subject Headings. The subject headings in this Agreement are included for
----------------
convenience only, and shall not affect the construction or interpretation
of any of the provisions hereof.
(b) Entire Agreement; Modification. This Agreement and all exhibits and
documents incorporated herein by reference constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties, whether oral or in writing.
No supplement, modification
<PAGE>
or amendment of this Agreement shall be binding
unless executed in writing by the parties against which asserted.
(c) Severability. In case any one or more of the provisions contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
(d) Counterparts. This Agreement may be executed simultaneously in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. Parties.
-------
(a) Parties in Interest. Nothing in this Agreement, whether express or
-------------------
implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over against any party to
this Agreement.
(b) Successors and Assigns. This Agreement shall be binding on, and shall
----------------------
inure to the benefit of, the parties to it and their respective heirs,
legal representatives, successors and assigns; provided, however, that
-------- -------
neither WHAM nor the Shareholders may assign any of its rights or
obligations or duties under this Agreement without the express written
consent of the other party.
20. Remedies.
--------
(a) Remedies Cumulative, etc. No right, power or remedy herein conferred upon
-------------------------
or reserved to any party hereto is intended to be exclusive of any other
right, power or remedy, and every right, power and remedy pursuant to this
Agreement, now or hereafter existing at law or in equity or by statute or
otherwise, shall be cumulative and concurrent, to the extent permitted by
law, and shall be in addition to every other right, power or remedy
pursuant to this Agreement, now or hereafter existing at law or in equity
or by statute or otherwise. The exercise or beginning of the exercise by
any party hereto of any such right, power or remedy shall not preclude the
simultaneous or later exercise of any right, power or remedy.
(b) No Waiver. No waiver of any of the provisions of this Agreement shall be
---------
deemed, or shall constitute, a waiver of any other provision, whether or
not similar. No waiver shall be binding unless specifically so titled, and
executed in writing by the party making the waiver. No failure or delay to
insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement, or to exercise any right, power or remedy
hereunder or consequent upon a breach hereof, shall constitute a waiver of
any such term, condition, covenant, agreement, right, power or remedy of
any such breach, or preclude the exercise of any such right, power or
remedy at any later time or times.
(c) Specific Performance. The obligations under this Agreement are unique. If
--------------------
any party should default in its obligations under this Agreement, the
parties hereto acknowledge that it would be impracticable to measure the
resulting damages; accordingly, the non-breaching party in addition to any
<PAGE>
other available rights or remedies, may sue for specific performance, and
the other party waives the defense that a remedy in damages will be
adequate.
(d) Arbitration. Any disputes arising out of this Agreement, or the
-----------
performance of duties contemplated by this Agreement shall be resolved
through arbitration in accordance with the rules of the American
Arbitration Association. Any such arbitration shall be conducted at
Washington, D.C. Any awards or decisions resulting from said arbitration
shall be final and may be enforced by any court of competent jurisdiction.
If any action is brought for the enforcement of this Agreement or to
recover damages, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees and other costs incurred in
that action, in addition to any other relief to which it or they may be
entitled.
21. Survival. All representations, warranties, covenants and agreements of
--------
the parties contained in this Agreement, or in any instrument, certificate,
opinion or other writing provided for in it, shall survive any investigation
made by either party and shall survive the Closing subject to the provisions of
Paragraphs 6 and 7 hereof.
22. Notices. All notices, request, instruction or other document to be given
-------
hereunder by a party shall be in writing and delivered personally or by
facsimile transmission, or by electronic mail, or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to EXETER: EXETER GROUP, INC.
2008 Bayview Drive
Fort Lauderdale, FL 33305
If to WHAM: WHITNEY AMERICAN CORPORATION
12373 E. Cornell Avenue
Aurora, CO 80014
23. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
WHEREFORE, the premises considered, the parties herein have executed the
foregoing Agreement, intending to be so bound, on the day first above written.
WHITNEY AMERICAN CORPORATION
A Delaware corporation
By:____________________________________________________________
Stephen M. Siedow
Its: COB, CEO
EXETER GROUP, INC.
By:____________________________________________________________________________
Michael Goldberg
Its: Secretary
SHAREHOLDERS
_____________________________________
CARIBBEAN TRANSFER AGENCY, LTD.
By: Michael Goldberg
<PAGE>
_________________________________________
THE FIRST INTERNATIONAL MONETARY AGENCY OF LONDON, LTD
By: Michael Goldberg
_________________________________________
THE CARSTAIRS GROUP, LTD.
By: Michael Goldberg
_________________________________________
ATLANTIC PRODUCTIONS INTERNATIONAL, LTD.
By: Michael Goldberg
_________________________________________
THE BRINTON-PAISLEY FAMILY TRUST
By: Michel Goldberg
C:\MyFiles\EXETER Whitney.wpd
<PAGE>
Exhibit A
Name No. Of EXETER Shares No. Of WHAM Shares
- ---- -------------------- ------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Caribbean Transfer Agency, Ltd. 200 200,000
The First International Monetary Agency
of London, Ltd. 250 250,000
The Carstairs Group, Ltd. 250 250,000
Atlantic Productions International, Ltd. 200 200,000
The Brinton-Paisley Family Trust 100 100,000
---- ---------
TOTAL 1000 1,000,000
</TABLE>
