As filed with the Securities and Exchange Commission on February 6, 1996
File No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
WHITESTONE INDUSTRIES, INC.
(Exact name of issuer as specified in its charter)
Delaware 75-2228828
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
702 Marshall Street
Redwood City, California 94063
(Address of principal executive offices) (Zip Code)
----------------------
CONSULTING AGREEMENT WITH HAYDEN FINANCIAL CORP.
(Full title of the plan)
----------------------
Donald Yu
702 Marshall Street, Suite 500
Redwood City, CA 94063
(415)364-7030
(Name and address of agent for service)
Copy to:
James Schneider, Esq.
Gayle Coleman, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
(305) 763-1200
----------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
maximum maximum
offering aggregate Amount of
Title of securities Amount to be price per offering registration
to be registered registered(1) share(1) price(1) fee (1)
===============================================================================
Common Stock
($.0001 par value) 250,000 shares $3.82 $955,000 $329.31
===============================================================================
(1) Pursuant to Rule 457(h) and Rule 457(c), the maximum offering
price was calculated based upon the average of the bid and asked price
of the Registrant's Common Stock in the over-the- counter market on
January 31, 1996, but giving effect to the one for ten (1:10) that was
effective on February 2, 1996.
<PAGE>
WHITESTONE INDUSTRIES, INC.
CROSS REFERENCE SHEET REQUIRED BY ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-8 ITEM NUMBER
AND CAPTION CAPTION IN PROSPECTUS
-------------------- ---------------------
<S> <C> <C>
1. Forepart of Registration State- Facing Page of Registration
ment and Outside Front Cover Statement and Cover Page of
Page of Prospectus Prospectus
2. Inside Front and Outside Back Inside Cover Page of Pro-
Cover Pages of Prospectus spectus and Outside Cover
Page of Prospectus
3. Summary Information, Risk Fac- Not Applicable
tors and Ratio of Earnings to
Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Sales by Selling Security
Holders
8. Plan of Distribution Cover Page of Prospectus
and Sales by Selling
Security Holders
9. Description of Securities to be Description of Securities;
Registered Consulting Agreement
10. Interests of Named Experts and Legal Matters
Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Infor- Incorporation of Certain
mation by Reference Documents by Reference
13. Disclosure of Commission Posi- Indemnification of Direc-
tion on Indemnification for tors and Officers; Under-
Securities Act Liabilities takings
</TABLE>
<PAGE>
PROSPECTUS
WHITESTONE INDUSTRIES, INC.
250,000 SHARES OF COMMON STOCK
($.0001 PAR VALUE)
Issued Pursuant to a Consulting Agreement with
Hayden Financial Corp After Giving Effect to a
1 for 10 Reverse Stock Split of the Company's Common Stock
This Prospectus is part of a Registration Statement which registers an
aggregate 250,000 shares of Common Stock, $.0001 par value (the "Common Stock")
of Whitestone Industries, Inc. (the "Company") which have been issued to Hayden
Financial Corp. (the "Consultant"), a consultant to the Company, pursuant to a
written Consulting Agreement dated December 8, 1995, as amended ("Consulting
Agreement") providing for the issuance of 250,000 shares of Common Stock. The
250,000 shares of Common Stock are referred to as the "Consultant Shares" and
the number of Consultant Shares are calculated based upon a 1 for 10 Reverse
Stock Split of the Company's Common Stock which was effective on February 2,
1996. The Consultant Shares will be issued in the name of the Consultant. Such
selling stockholder in relation to the sale of the Shares may hereinafter
sometimes be referred to as the "Selling Security Holder." All of the Consultant
Shares are being issued to the Selling Security Holder pursuant to two separate
written compensation contracts. The Company has been advised by the Selling
Security Holder that it may sell all or a portion of the shares of Consultant
Shares from time to time in the over-the-counter market in negotiated
transactions, directly or through brokers or otherwise, and that such shares
will be sold at market prices prevailing at the time of such sales or at
negotiated prices, and the Company will not receive any proceeds from such
sales.
No person has been authorized by the Company to give any information or
to make any representation other than as contained in this Prospectus, and if
given or made, such information or representation must not be relied upon as
having been authorized by the Company. Neither the delivery of this Prospectus
nor any distribution of the Consultant Shares issuable under the terms of the
Agreements shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
The date of this Prospectus is February 6, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company's Common Stock is traded in the over-the-counter market on the OTC
Bulletin Board under the symbol "WHSN."
The Company has filed with the Commission a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), with respect to an aggregate of 250,000 shares of the
Company's Common Stock, to be issued to a consultant of the Company pursuant to
the Consulting Agreement. This Prospectus, which is Part I of the Registration
Statement, omits certain information contained in the Registration Statement.
For further information with respect to the Company and the shares of the Common
Stock offered by this Prospectus, reference is made to the Registration
Statement, including the exhibits thereto. Statements in this Prospectus as to
any document are not necessarily complete, and where any such document is an
exhibit to the Registration Statement or is incorporated by reference herein,
each such statement is qualified in all respects by the provisions of such
exhibit or other document, to which reference is hereby made, for a full
statement of the provisions thereof. A copy of the Registration Statement, with
exhibits, may be obtained from the Commission's office in Washington, D.C. (at
the above address) upon payment of the fees prescribed by the rules and
regulations of the Commission, or examined there without charge.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference and made a part hereof:
1. The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994; and
2. The Company's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1995.
3. The Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1995.
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<PAGE>
4. The Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1995.
All reports and documents filed by the Company pursuant to Section 13,
14 or 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
date of filing of such documents. Any statement incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement modified or superseded
shall not be deemed, except as so modified or superseded, to constitute part of
this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, Whitestone
Industries, Inc., 702 Marshall Street, Redwood City, California 94063; Telephone
number (415)364-7030.
3
<PAGE>
THE COMPANY
Whitestone Industries, Inc. (the "Company") was organized under the
laws of the State of Delaware on April 19, 1988 under the name Fortunistics Inc.
The Company originally engaged in the acquisition and development of oil and gas
properties, interests and production and the sale and disposition of such
properties, interests and production. The Company began operations in 1993 and
since that time, the Company's drilling activities were limited to small
workovers on existing wells. Subsequently, the Company disposed of all of its
interest in its oil and gas properties.
On December 7, 1995, the Company, Whitestone Group, Ltd., a British
Virgin Islands limited partnership organized under the laws of British Virgin
Islands ("WGL"), Golden Bear Entertainment Corporation, a California corporation
("GBEC"), and Donald Yu, ("Yu") entered into a Stock Purchase and Exchange
Agreement (the "Agreement"). Pursuant to the Agreement, WGL contributed back to
the Company its right and interest in 6,700,000 shares of its 8,700,000 shares
of WII Common Stock, in exchange for the Company's interest in certain
securities. Prior to December 7, 1995, WGL owned approximately 64.2% of the
outstanding capital stock interest of the Company. Upon consummation of the
transaction, WGL owned approximately 5.9% of the outstanding capital stock
interest of the Company.
Pursuant to the Agreement, the Company acquired all of the capital
stock of GBEC in exchange for the distribution to Mr. Yu, the sole stockholder
of GBEC, of (i) 3,200,000 shares of restricted common stock of the Company and
(ii) 500,000 shares of newly issued shares of Series A Convertible Preferred
Stock (the "Series A Preferred Stock") that are convertible into 24,000,000
shares of Common Stock of the Company. At that time, the Common Stock and the
Series A Preferred Stock issued to Mr. Yu represents approximately 79.89% of the
outstanding capital stock interest of the Company.
On January 23, 1996, Mr. Yu converted 400,000 of his 500,000 shares of
Preferred Stock into 19,200,000 shares of Common Stock (pre-split or 1,920,000
shares of Common Stock post-split), however, these shares of Common Stock shall
not be issued to Mr. Yu until the effective date of the reverse stock split of
the Company's Common Stock, which was effective on February 2, 1996. On
January 28, 1996, the Board of Directors of the Company and the Majority
Shareholder of the Company amended the Statement of Designation for the Series A
Preferred Stock to provide that as of January 28, 1996, the number of Common
Stock into which the Series A Preferred Stock may be converted would not be
affected by the reverse stock split. Thus, Mr. Yu would be entitled to convert
his remaining 100,000 shares of Series A Preferred Stock into 4,800,000 shares
of Common Stock.
4
<PAGE>
GBEC, which is now a wholly-owned subsidiary of the Company and the
only asset of the Company, is a newly organized California corporation that
intends to manufacture, develop, market and sell certain video and interactive
games. The products are intended to be both educational and interactive and will
be designed to appeal to parents' concerns for education as well as fun for
children. It is GBEC's intent to focus its efforts in two major areas:
interactive products and communications. GBEC owns certain intellectual property
rights to four toys that are being developed by the Company. It also has the
exclusive worldwide licensing rights to use, make or have made and sell two
additional electronic toys.
CONSULTING AGREEMENT
GENERAL
On December 8, 1995, the Company entered into a Consulting Agreement
with Hayden Financial Corporation to which the Company agreed to issue to the
Consultant 250,000 shares of Common Stock of the Company (post-split) in
consideration for certain consulting services to be provided to the Company over
an anticipated one year period commencing as of the date of Consulting Agreement
1. Initial services relative to the performance under Consulting Agreement has
already commenced. Under the terms of Consulting Agreement, the Consultant is to
provide the following consulting services on behalf of the Company (i)
identification, evaluation, structure, negotiation and closing of business
acquisitions, consolidations, mergers and strategic alliances; and (ii)
technical and analytical consulting concerning management, marketing, corporate
organization and structure, and expansion of services. The Consultant is a
Florida corporation whose sole shareholder, director, and officer is Robert
Gartzman. For the initial phase of the Agreement, Mr. Gartzman intends to spend
a predominant amount of his time in his duties for the Company.
FEDERAL INCOME TAX EFFECTS
The following discussion applies to the Consultant Shares issued under
the Consulting Agreement and is based on federal income tax laws and regulations
in effect on December 31, 1995. In connection with the issuance of Consultant
Shares as compensation payable to the Consultant under the Consulting Agreement,
the Consultant must include in gross income the excess of the fair market value
of the property received over the amount, if any, paid for the property in the
first taxable year in which the Consultant's beneficial interest in the property
either is "transferable" or is not subject to a "substantial risk of
forfeiture." A substantial risk of forfeiture exists where rights and property
that have been transferred are conditioned, directly or indirectly, upon the
future performance (or refraining from performance) of substantial services by
any person, or the
5
<PAGE>
occurrence of a condition related to the purpose of the transfer, and the
possibility of forfeiture is substantial if such condition is not satisfied.
Consultant Shares received by a person who is subject to the short swing profit
recovery rule of Section 16(b) of the Securities Exchange Act of 1934 is
considered subject to a substantial risk of forfeiture so long as the sale of
such property at a profit could subject the stockholder to suit under that
section. The rights of the Consultant are treated as transferable if and when
the Consultant can sell, assign, pledge or otherwise transfer any interest in
the Consultant Shares to any person. Inasmuch as the Consultant would not be
subject to the short swing profit recovery rule of Section 16(b) of the
Securities Exchange Act of 1934 and the Consultant Shares, upon receipt
following satisfaction of condition prerequisites to receipt, will be presently
transferable and not subject to a substantial risk of forfeiture, the Consultant
would be obligated to include in gross income the fair market value of the
Consultant Shares received once the conditions to receipt of the Consultant
Shares are satisfied.
RESTRICTIONS UNDER SECURITIES LAWS
The sale of any shares of Common Stock acquired upon the exercise of
the Options must be made in compliance with federal and state securities laws.
Officers, directors and 10% or greater stockholders of the Company, as well as
certain other persons or parties who may be deemed to be "affiliates" of the
Company under the Federal Securities Laws, should be aware that resales by
affiliates can only be made pursuant to an effective Registration Statement,
Rule 144 or any other applicable exemption. Officers, directors and 10% and
greater stockholders are also subject to the "short swing" profit rule of
Section 16(b) of the Securities Exchange Act of 1934. Section 16(b) of the
Exchange Act generally provides that if an officer, director or 10% and greater
stockholder sold any Common Stock of the Company acquired pursuant to the
exercise of a stock option or warrant, he would generally be required to pay to
the Company any "profits" resulting from the sale of the stock and receipt of
the stock option. Section 16(b) exempts all option exercises from being treated
as purchases and, instead, treats a option grant as a purchase of the underlying
security, which grant/purchase may be matched with any sale of the underlying
security within six months of the date of grant.
SALES BY SELLING SECURITY HOLDER
The following table sets forth the name of the Selling Security Holder,
the amount of shares of Common Stock held directly or indirectly, the maximum
amount of shares of Common Stock to be offered by the Selling Security Holder,
the amount of Common Stock to be owned by the Selling Security Holder following
sale of such shares of Common Stock and the percentage of shares of Common Stock
to be owned by the Selling Security Holder following completion of
6
<PAGE>
such offering (based on 18,744,239 shares of Common Stock of the Company
outstanding at January 30, 1996).
PERCENTAGE
SHARES TO BE TO BE OWNED
NAME OF SELLING NUMBER OF SHARES TO OWNED AFTER AFTER
SECURITY HOLDER SHARES OWNED BE OFFERED OFFERING OFFERING
- --------------- ------------ ---------- ------------ ------------
Hayden Financial
Corp. 250,000 250,000 -0- --
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 20,000,000,000
shares of Common Stock, $.0001 par value, of which 18,744,239 shares were
outstanding as of January 30, 1996. The Company is also authorized to issue up
to 1,000,000 shares of Preferred Stock, $.01 par value, of which 100,000 shares
are issued or outstanding as of January 30, 1996.
COMMON STOCK
Subject to the dividend rights of the holders of preferred stock, upon
any subsequent authorization thereof, holders of shares of Common Stock are
entitled to share, on a ratable basis, such dividends as may be declared by the
Board of Directors out of funds legally available therefor. Upon liquidation,
dissolution or winding up of the Company, after payment to creditors and holders
of preferred stock that may be outstanding, the assets of the Company will be
divided pro rata on a per share basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of Directors
can elect all of the Directors if they choose to do so, and, in such event, the
holders of the remaining shares will not be able to elect any Directors. The By-
Laws of the Company require that only one-third of the issued and outstanding
shares of Common Stock of the Company need be represented to constitute a quorum
and to transact business at a stockholders' meeting. The Common Stock has no
preemptive, subscription or conversion rights and is not redeemable by the
Company.
PREFERRED STOCK
On December 6, 1995, the Company designated 500,000 shares of its
Preferred Stock, par value $.01, as "Series A Convertible Voting Preferred
Stock" (the "Series A Preferred Stock"). The Series A Preferred Stock has no
dividend or preemptive rights and
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<PAGE>
is not be subject to a right of redemption on the part of the Company at any
time.
Holders of the Series A Preferred Stock have the right, at their
option, to convert each share of Series A Preferred Stock into Common Stock,
calculated as to each conversion to the nearest share at any time at a
conversion ratio of forty-eight (48) shares of the Common Stock for each share
of Series A Preferred Stock. No fractional share or scrip representing a
fractional share will be issued upon conversion of the Series A Preferred Stock.
Through January 27, 1996, in the event of any reclassification, merger,
consolidation or change of shares of the Series A Preferred Stock and/or the
Common Stock, the Company shall make adjustments to the conversion ratio which
shall be as nearly equivalent to that stated above as may be practical.
Subsequent to January 28, 1996, no adjustments to the conversion ratio would
occur in the event of a reverse stock split of the Common Stock.
The Series A Preferred Stock shall be automatically converted
into shares of the Company's Common Stock at such time as the Company amends its
Certificate of Incorporation to increase its authorized Common Stock to permit
the conversion of the Series A Preferred Stock into shares of Common Stock. The
Company agrees expeditiously to secure approval of its stockholders for such
amendment to its Certificate of Incorporation.
The Series A Preferred Stock is currently subject adjustment
in certain events, including (i) the issuance of capital stock as a dividend or
distribution on Common Stock, (ii) subdivision, combinations, reverse stock
splits and reclassification of the Common Stock, (iii) the fixing of a record
date for the issuance to all holders of Common Stock of rights or warrants
entitling them (for a period expiring within 45 days of such record date) to
subscribe for Common Stock and (iv) the fixing of a record date for the
distribution to all holders of Common Stock of evidence of indebtedness or
assets (other than cash dividends) of the Company's or subscription
rights or warrants (other than those referred to above).
In addition to any voting rights provided by law, each share of the
Series A Preferred Stock shall be entitled to 48 votes on all matters submitted
to a vote of the stockholders of the Company. Unless the vote or consent of the
holders of a greater number of shares is required by law, the consent of the
holders of at least a majority of all of the Series A Preferred Stock at the
time outstanding shall be necessary to change, alter or revoke the rights and
preferences conferred on the Series A Preferred Stock by the Certificate of
Incorporation or these resolutions or to adopt any amendment to the Certificate
of Incorporation materially adversely affecting the rights of the holders of the
Series A Preferred Stock.
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<PAGE>
In the event of the liquidation, dissolution or winding up of the
Company, holders of the Series A Preferred Stock shall be entitled to receive,
after due payment or provision for payment for the debts and other liabilities
of the Company, a liquidating distribution before any distribution may be made
to holders of Common Stock of the Company. The holders of the Series A Preferred
Stock outstanding shall be entitled to receive an amount equal to the greater of
$.01 per share, or the liquidation payment per share of Common Stock multiplied
by a factor of 48, plus declared dividends to the date of the final
distribution, whether or not such liquidation, dissolution or winding up is
voluntary or involuntary on the part of the Company. Any shares of the Series A
Preferred Stock which at any time have been redeemed or converted, shall, after
such redemption or conversion, be automatically retired and shall have the
status of authorized but unissued shares of Preferred Stock, without designation
as to class or series, until such shares are once more designated as part of a
particular class or series by the Board of Directors.
OVER-THE-COUNTER MARKET
The Company's Common Stock is traded on the over-the-counter market
on the OTC Bulletin Board of NASDAQ under the symbol "WHSN."
TRANSFER AGENT
The Company's Transfer Agent is Securities Transfer Corporation whose
address is 16910 Dallas Parkway, Suite 10, Dallas, Texas 75248.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by the Law Offices of Atlas,
Pearlman, Trop & Borkson, P.A.
EXPERTS
The financial statements of the Company appearing in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1994 have been
audited by Feldman Radin & Co., P.C., independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are, and audited financial statements to be
included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Feldman Radin & Co., P.C. pertaining to such
financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such firm as
experts in accounting and auditing.
9
<PAGE>
INDEMNIFICATION
Article X of the Articles of Incorporation of the Company provides as
follows:
"The Corporation shall indemnify to the fullest extent
permitted by Delaware Statute 145, as may be amended from time to time,
any director or officer of the Corporation who is a party or who is
threatened to be made a party to any proceeding which is a threatened,
pending or completed action or suit brought against said officer or
director in his official capacity. This Corporation shall not indemnify
any director or officer in any action or suit, threatened, pending or
completed, brought by him against the Corporation, in the event the
officer or director is not the prevailing party. Indemnification of any
other persons, such as employees or agents of the Corporation, or
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be determined in the sole and absolute
discretion of the Board of Directors of the Corporation."
10
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (a) through (f) below are incorporated by
reference in the Registration Statement. All documents subsequently filed by the
Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a
post- effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in the Registration Statement and to be part
thereof from the date of filing of such documents.
(a) The Registrant's latest annual report filed
pursuant to Section 13(a) or 15(d) of the Exchange Act, or, in the case of the
Registrant, either (1) the latest prospectus filed pursuant to Rule 424(b) under
the Securities Act of 1933, as amended (the "Act"), that contains audited
financial statements for the Registrant's latest fiscal year for which such
statements have been filed or (3) the Registrant's effective registration
statement on Form 10 or 30F filed under the Exchange Act containing audited
financial statements for the Registrant's latest fiscal year.
(b) The Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995.
(c) The Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995.
(d) The Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
(e) All other reports filed pursuant to Section 13(a)
or 15(d) of the Exchange Act since the end of the fiscal year covered by the
Registrant's document referred to in (a) above.
(f) The description of the Common Stock of the Company
which is contained in a Registration Statement filed under the Exchange Act,
including any amendment or report filed for the purpose of updating such
description.
ITEM 4. DESCRIPTION OF SECURITIES
A description of the Registrant's securities is set forth in the
Prospectus incorporated as a part of this Registration Statement.
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<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article X of the Articles of Incorporation of the Company provides as
follows:
"The Corporation shall indemnify to the fullest extent
permitted by Delaware Statute 145, as may be amended from time to time,
any director or officer of the Corporation who is a party or who is
threatened to be made a party to any proceeding which is a threatened,
pending or completed action or suit brought against said officer or
director in his official capacity. This Corporation shall not indemnify
any director or officer in any action or suit, threatened, pending or
completed, brought by him against the Corporation, in the event the
officer or director is not the prevailing party. Indemnification of any
other persons, such as employees or agents of the Corporation, or
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall be determined in the sole and absolute
discretion of the Board of Directors of the Corporation."
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inasmuch as the Consultants that received the Options of the Registrant
were knowledgeable, sophisticated and had access to comprehensive information
relevant to the Registrant, such
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<PAGE>
transaction was undertaken in reliance on the exemption from registration
provided by Section 4(2) of the Act. As a condition precedent to such grant,
the Consultants were required to express an investment intent and consent to
the imprinting of a restrictive legend on each stock certificate to be received
from the Registrant except upon sale of the underlying shares of Common Stock
pursuant to a registration statement.
Item 8. EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
(4) Consulting Agreement between the Company and
Hayden Financial Corp. dated December 8, 1996.
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
relating to the issuance of shares of securities
pursuant to the above Consulting Agreement
(23.1) Consent of such counsel included in the opinion
filed as exhibit (5) hereto
(23.2) Consent of independent certified public
accountants
ITEM 9. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offerings or
sales are being made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
(b) That, for the purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration
iii
<PAGE>
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) Insofar as indemnification for liabilities arising under the
Act may be permitted to Directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
iv
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S- 8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Redwood City, California, on the 5th day of February, 1996.
WHITESTONE INDUSTRIES, INC.
By: /s/ DONALD YU
---------------------------------
Donald Yu
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DONALD YU President, Principal February 5, 1996
- ----------------------- Executive Officer,
Donald Yu Principal Financial
and Accounting Offi-
cer, Treasurer and
Director
/s/ GEORGE ESHOO Director February 5, 1996
- -----------------------
George Eshoo
v
EXHIBIT 4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into
this 8th day of December, 1995, by and between HAYDEN FINANCIAL CORP, INC., a
Florida corporation, hereinafter referred to as the "Consultant" and GOLDEN
BEAR ENTERTAINMENT, D/B/A WHITESTONE INDUSTRIES INC. (WHST), a Delaware,
Corporation, hereinafter referred to as the "Company."
WHEREAS, the Consultant is desirous of being engaged by the Company,
and the Company has agreed to engage the Consultant upon certain term and
conditions contained in this Agreement, one of which is the execution of this
Agreement by Consultant;
WHEREAS, the Consultant, by virtue of the Consultant's relationship
with the Company has become familiar with the business of WHITESTONE INDUSTRIES
INC.;
WHEREAS, the Company requires investment banking services and the
Company desires to employ Consultant to provide such services.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Consultant do hereby agree as follows:
1. ENGAGEMENT. The Company hereby engages the Consultant on a
nonexclusive basis and the Consultant hereby accepts such engagement upon the
terms and conditions hereinafter set forth.
2. TERM. The Term of this Agreement shall begin upon execution
of this Agreement and terminate 12 months thereafter.
3. COMPENSATION. As the Consultant's compensation for services
provided under this Agreement, the Company shall pay the Consultant a fee of
2,500,000 (two million five hundred thousand) pre-split shares or 250,000 (two
hundred fifty thousand) post-split shares of unrestricted S-8 Common Stock in
the Company.
4. TIME FOR COMPENSATION. Said stock to be issued by Company
on a best efforts basis on or before Feb. 1, 1996.
5. SERVICES OF THE CONSULTANT. The Consultant shall provide
consulting services in any or all of the following areas:
(a) identification, evaluation, structuring, negotiating
and closing of business acquisitions, consolidations, mergers and strategic
alliance.
(b) technical and analytical consulting concerning
management, marketing, corporate organization and structure, and expansion
of services.
<PAGE>
6. REPRESENTATION AND INDEMNIFICATION OF COMPANY.
(a) Company shall be deemed to make a continuing
representation of the accuracy of any and all material facts, material
information, and data which it supplies to Consultant and the Company
acknowledges its awareness that Consultant will rely on such continuing
representation in disseminating such information and otherwise performing its
investor relations functions.
(b) Consultant, in the absence of notice from the
Company, will rely on continuing accuracy of material, information, and data
supplied by the Company.
(c) Company hereby authorizes Consultant to issue, in
Consultant's sole discretion, corrective, amendatory, supplemental, or
explanatory press releases, shareholder communications and reports, or data
supplied to analysts, broker/dealers, market makers, other members of the
financial community.
(d) Company hereby agrees to indemnify Consultant
against, and to hold the Consultant harmless from, any claims, demands, suits,
loss, damages, etc. arising out of the Consultants reliance upon the accuracy
and continuing accuracy of such facts, material information and data, unless
Consultant has been grossly negligent in fulfilling his duties and obligations
hereunder.
(e) Company hereby agrees to indemnify Consultant
against, and to hold Consultant harmless from, any claims, demands, suits, loss,
damages, etc., arising out of Consultant's reliance upon the general
availability of information supplied to Consultant and Consultant's ability to
promulgate such information, unless Consultant has been negligent in fulfilling
his duties.
7. REPRESENTATION AND INDEMNIFICATION BY CONSULTANT.
(a) Consultant shall devote time and effort in
performing services hereunder as is reasonably required and at reasonable times.
(b) Consultant agrees that it will not release or
disseminate any information pertaining to the Company or its shareholders
without providing Company with an advance copy thereof and obtaining
authorization for such release.
(c) Consultant hereby agrees to indemnify Company
against, and to hold harmless from, any claims, demands, suits, losses and
damages arising out of any inaccurate statement or misrepresentation provided
that such indemnification shall not pertain to any information provided by or
attributable to Company.
8. TERMINATION. This Agreement may not be terminated by either
party prior to the expiration of the term except as follows:
2
<PAGE>
(a) upon the bankruptcy of either party;
(b) upon either party having or applying a receiver
appointed for all or a substantial part of such
parties assets or business;
(c) upon a material breach by either party;
(d) upon the assignment of this Agreement by either
party;
(e) upon the death of Consultant;
(f) no such termination shall affect the receipt of
consideration therefore received by Consultant.
9. SELECTION OF ENTITIES. Consultant, in its sole and absolute
discretion, shall hire, retain, or employ such individuals, corporations,
partnerships or other entity or entities to perform services as Consultant
deems necessary for per nuance of obligations hereunder.
10. COSTS AND EXPENSES. All costs, expenses and compensation that
Consultant shall incur as a result of the aforementioned services on behalf of
Company shall be the sole responsibility of Consultant.
11. PARTIES RELATIONSHIP. Consultant shall not by reason of this
Agreement or the performance of duties hereunder, unless otherwise agreed to
between the parties, be or be deemed to be, an employee, agent, partner,
co-venturer or controlling person of Company. Consultant shall have no power to
enter into any agreement on behalf of or otherwise bind Company. Consultant
shall not have or be deemed to have, any fiduciary obligation or duties to
Company and is not an agent to Company. Neither party to this Agreement is
intended to have any interest in the business or property of the other.
12. ASSIGNABILITY. This contract is not assignable by Consultant
but shall be assignable by Company in connection with the sale, transfer or
other disposition of its business or to any of Company's affiliates controlled
by or under common control with Company.
13. HOLD HARMLESS. Company agrees to indemnify, defend, save and
hold harmless Consultant and its agents from and against any and all claims,
losses, damages, liabilities or expenses related to, growing out of or arising
from:
(a) Any representation based on facts, material
information and data made by Company and relied upon by Consultant;
(b) Any service provided to or by Consultant pursuant
to this Agreement.
14. SEVERABILITY. If any part of this Agreement is adjudged
invalid, illegal, or unenforceable, the remaining parts shall be enforceable.
3
<PAGE>
15. PARAGRAPH HEADINGS. The headings of the paragraphs contained
in this Agreement are for convenience only, and are not to be considered a part
of this Agreement or used in determining its content or context.
16. LAW. Any dispute between Consultant and Company involving
the interpretation or application of any provision of this Agreement shall be
governed by the Laws of the State of Florida. Venue will be in Palm Beach
County, Florida.
17. OTHER AGREEMENTS. The parties represent that no other
agreement, oral or written, exists between them. This Agreement sets forth the
entire Agreement between the parties hereto and cannot be modified or
supplemented orally.
18. NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to the principal office of the party to be so
notified.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bond,
have executed this Agreement on the date above.
HAYDEN FINANCIAL GROUP, INC.
/s/ Robert Gartzman
- -------------------------------------------
BY: ROBERT GARTZMAN
GOLDEN BEAR ENTERTAINMENT D/B/A
WHITESTONE INDUSTRIES INC.
/s/ DONALD YU
- -------------------------------------------
BY: DONALD R. YU
5
<PAGE>
RELEASE OF CONTRACT CLAIM
Know all Men by These Presents, that HAYDEN FINANCIAL CORP., a Florida
corporation of 21560 Toledo Road, Boca Raton, Florida 33433, for the sum of
$10.00 (ten dollars) and other valuable consideration, the receipt of which is
hereby acknowledged, does hereby, for himself and his heirs, executors,
administrators and personal representatives, release and forever discharge
WHITESTONE INDUSTRIES INC., their heirs, executors, administrators and personal
representatives, from any and all manner of claims, demands, damages, causes of
action or suits that he might have or that might subsequently accrue to him by
reason of the contracts titled "CONSULTING AGREEMENT" entered into on or about
DECEMBER 8, 1995, by and between HAYDEN FINANCIAL CORP. and WHITESTONE
INDUSTRIES INC.
DATED DECEMBER 8, 1995
HAYDEN FINANCIAL CORP.
/s/ Robert Z. Gartzman
- ---------------------------
BY: Robert Z. Gartzman
President
6
EXHIBIT 5
Direct Line: (954) 766-7858
February 5, 1996
Whitestone Industries, Inc.
702 Marshall Street, Suite 500
Redwood City, CA 94063
Re: REGISTRATION STATEMENT ON FORM S-8 - RECLAIM, INC. COMMON STOCK
ISSUED PURSUANT TO A CONSULTING AGREEMENT WITH HAYDEN FINANCIAL CORP.
(THE "AGREEMENT")
Ladies and Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission (the "Commission") with respect to the
registration by Whitestone Industries, Inc. (the "Company") of an aggregate of
250,000 shares of Common Stock, $.0001 par value (the "Common Stock"), issued
pursuant to the Agreement.
In our capacity as special counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Agreement, the
Company's Amended and Restated Articles of Incorporation, Statements of
Designation, as amended, By-Laws and corporate minutes provided to us by the
Company. In all such examinations, we have assumed the genuineness of all
signatures on original documents, and the conformity to originals or certified
documents of all copies submitted to us as conformed, photostat or other copies.
In passing upon certain corporate records and documents of the Company, we have
necessarily assumed the correctness and completeness of the statements made or
included therein by the Company, and we express no opinion thereon.
Based upon and in reliance of the foregoing, we are of the opinion
that, upon issuance of the Common Stock pursuant to the terms of the Agreement,
the Common Stock will be validly issued, fully paid and nonassessable.
<PAGE>
Whitestone Industries, Inc.
February 5, 1996
Page 2
We hereby consent to the use of this opinion in the Registration
Statement on Form S-8 to be filed with the Commission.
Very truly yours,
/s/ ATLAS, PEARLMAN, TROP & BORKSON, P.A.
-----------------------------------------
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated June 23, 1995, with respect to the
financial statements of Whitestone Industries, Inc., included in its Annual
Report on Form 10-KSB for the year ended December 31, 1994.
/s/ FELDMAN RADIN & CO., P.C.
---------------------------------
FELDMAN RADIN & CO., P.C.
Certified Public Accountants
New York, New York
February 1, 1996
