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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
----------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-21821
Consolidated Capital of North America, Inc.
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(Exact name of small business issuer as specified in its charter)
Colorado 93-0962072
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
410 17th Street, Suite 400
Denver, Colorado 80202
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(Address of principal executive offices)
888-313-8051
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Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 15,872,121 shares of common
stock, $.0001 par value, as of October 29, 1997.
Transitional Small Business Disclosure Format (check one);
Yes No X
--- ---
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Consolidated Capital of North America, Inc.
Quarterly Report on Form 10-QSB for the
Quarter Ended September 30, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - September 30, 1997
and December 31, 1996 3
Consolidated Statements of Operations for the
three months ended September 30, 1997 and 1996 5
Consolidated Statements of Operations for the nine
months ended September 30, 1997 and 1996 6
Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1996 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 356,660 $ 26,937
Accounts receivable, less allowance
for doubtful accounts of $194,741 2,129,492 --
Inventories, net 1,062,049 --
Prepaid expenses and other 192,094 --
Assets held for sale -- 131,125
---------- ----------
Total current assets 3,740,295 158,062
Property and equipment, net of
accumulated depreciation of $161,925 2,084,090 --
Goodwill, net 2,191,963 --
Other assets 275,561 --
---------- ----------
Total assets $8,291,909 $ 158,062
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,773,468 $ 24,632
Accrued liabilities 270,137 36,000
Current portion of long-term debt 313,033 --
Notes payable to affiliates 550,000 --
Other 293,261 20,000
----------- -----------
Total current liabilities 5,199,899 80,632
----------- -----------
Long-term debt - less current portion 3,577,114 --
----------- -----------
Stockholders' equity:
Preferred stock Series A, par value $.01 per share:
Authorized - 10,000,000 shares, none issued -- --
Preferred stock Series B, par value $.01 per share:
Authorized - 5,000,000 share, none issued -- --
Common stock, par value $.0001 per share:
Authorized - 50,000,000 shares, 15,862,121
and 1,570,546 shares outstanding, respectively 1,586 157
Additional paid-in capital 2,023,294 855,756
Accumulated deficit (2,509,984) (778,483)
----------- -----------
Total stockholders' equity (485,104) 77,430
----------- -----------
Total liabilities and stockholders' equity $ 8,291,909 $ 158,062
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Revenue:
Sale of real estate $ -- $ 668,250
Net sales 4,164,102 --
------------ ------------
Total revenue 4,164,102 668,250
------------ ------------
Cost of goods sold:
Real estate -- 345,016
Other 3,499,007 --
------------ ------------
Total cost of goods sold 3,499,007 345,016
------------ ------------
Gross profit 665,095 323,234
------------ ------------
Operating expenses:
Selling and shipping 580,227 --
General and administrative 613,071 23,562
Depreciation and amortization 128,403 4,813
------------ ------------
Total expenses 1,321,701 28,375
------------ ------------
Profit (loss) from operations (656,606) 294,859
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Other income (expense):
Interest expense (169,323) (2,877)
Other 19,409 (144,685)
------------ ------------
(149,914) (147,562)
------------ ------------
Net income (loss) $ (806,520) $ 147,297
============ ============
Net income (loss) per share $ (.05) $ .10
============ ============
Weighted average number of
common shares outstanding 15,817,882 1,529,546
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Revenue:
Sales of real estate $ -- $ 668,250
Net sales 14,618,684 --
------------ ------------
Total revenue 14,618,684 668,250
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Cost of goods sold:
Real estate -- 346,591
Other 12,068,261 --
------------ ------------
Total cost of goods sold 12,068,261 346,591
------------ ------------
Gross profit 2,550,423 321,659
------------ ------------
Operating expenses:
Selling and shipping 1,809,027 --
General and administrative 1,833,684 58,507
Depreciation and amortization 328,970 6,166
------------ ------------
Total expenses 3,971,681 64,673
------------ ------------
Profit (loss) from operations (1,421,258) 256,986
------------ ------------
Other income (expense):
Interest expense (397,319) 34,207
Other 87,076 (165,159)
------------ ------------
(310,243) (130,952)
------------ ------------
Net income (loss) $ (1,731,501) $ 126,034
============ ============
Net income (loss) per share $ (.12) $ .08
============ ============
Weighted average number of
common shares outstanding 14,671,792 1,529,546
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,731,501) $ 126,034
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations:
Amortization and depreciation 328,970 6,166
Gain (loss) on sale of assets (1,000) 1,750
Noncash interest expense 149,567 --
Minority interest gain -- 153,306
Change in assets and liabilities:
Accounts receivable, net 388,589 (12,543)
Inventories, net 912,090 284,687
Prepaid expenses and other (159,738) --
Other assets (187,463) --
Accounts payable and accrued liabilities 410,238 36,656
Other liabilities 273,261 --
----------- -----------
Net cash provided by operating activities 383,013 596,056
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of business, net of cash acquired (939,197) --
Purchase of property and equipment (94,463) --
Notes receivable from land sales -- (605,750)
Proceeds from sale of assets held for sale 100,000 2,450
Collection of notes receivable -- 190,000
Payment receives from related parties -- 10,514
Advance to related parties -- (6,187)
----------- -----------
Net cash used in investing activities (933,660) (408,973)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 931,731 --
Principal payments on long-term debt (1,033,262) (193,000)
Principal payments on note payable to former officer (285,000) (1,000)
Advances from related parties -- 12,000
Proceeds from notes payable to affiliates 300,000 --
Proceeds from issuance of common stock, net of costs 966,901 --
----------- -----------
Net cash provided by (used in) financing activities 880,370 (182,000)
----------- -----------
NET INCREASE IN CASH 329,723 5,083
CASH AT BEGINNING OF PERIOD 26,937 6,494
----------- -----------
CASH AT END OF PERIOD $ 356,660 $ 11,577
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 261,017 $ 805
=========== ===========
NONCASH FINANCING ACTIVITIES:
Issuance of common stock for loan fees $ 201,101 $ --
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(unaudited)
1. GENERAL
The accompanying unaudited interim financial statements of Consolidated Capital
of North America, Inc. (the "Company") include the accounts of the Company and
its subsidiaries, after elimination of all significant intercompany
transactions, accounts and profits. These statements include all adjustments
(consisting solely of normal recurring adjustments) which, in the opinion of
management, are necessary to fairly present the financial position of the
Company as of September 30, 1997 and the results of its operations and its cash
flows for the nine months then ended. The results of operations for this interim
period are not necessarily indicative of results to be expected for the full
year.
These interim financial statements should be read in conjunction with the
Summary of Significant Accounting Policies and other Notes to Financial
Statements included in the Company's annual audited financial statements for the
year ended December 31, 1996. Certain prior year amounts have been reclassified
to conform with the current period presentation.
2. BUSINESS ACTIVITIES
On January 21, 1997, Consolidated Land & Cattle Company, a subsidiary of the
Company, merged with Angeles Acquisition Corp., a privately held company (the
"Merger"). Angeles Acquisition Corp. survived the Merger and became a wholly
owned subsidiary of the Company. In the Merger transaction, the Company issued
8,638,003 new common shares to the sole stockholder of Angeles Acquisition Corp.
Concurrent with the Merger, the Company also sold 5,496,911 shares of common
stock for cash, in a private transaction exempt from registration under
Regulation S of the Securities Act of 1933, as amended, for an aggregate
purchase price of $1,000,000.
Prior to the Merger, Angeles Acquisition Corp. acquired Angeles Metal Trim Co.
and Subsidiary ("Angeles") for approximately $4.3 million, including related
fees and expenses. Angeles fabricates and sells steel framing materials for
commercial and residential structures.
Prior to January 21, 1997, the Company's operations were exclusively in the real
estate business. Since January 21, 1997, the Company has sold all of its real
estate related assets, and intends to focus its future business activities on
the steel frame building business and complementary businesses.
The net assets acquired by the Company as a result of the Merger were recorded
at an amount based upon the purchase price for the acquisition of Angeles.
Goodwill, representing the excess of the purchase price over the fair value of
the net identifiable tangible assets acquired, is being amortized on a
straight-line basis over ten years. Accumulated amortization amounted to
$167,045 as of September 30, 1997. The tangible depreciable assets acquired in
the Merger are being depreciated over their useful lives using the straight-
line method after giving consideration to salvage value.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1997
(unaudited)
3. LONG-TERM DEBT
In connection with the Merger, Angeles incurred bank debt of approximately $4.2
million during January 1997 under two separate bank notes. $1 million of the
debt proceeds was utilized for the repayment of previously outstanding
indebtedness of Angeles and $3.2 million was utilized in connection with the
Merger.
Under the first note, Angeles borrowed $1.4 million at a fixed interest rate of
9.78%. The note is payable in 48 monthly installments commencing February 17,
1997 and is collateralized by all of Angeles' equipment and rolling stock.
Under the terms of the second note, Angeles can borrow up to $4.0 million,
limited to the amount of eligible accounts receivable and inventory. This
revolving line of credit bears interest, which is payable monthly, at a variable
rate equal to 2% per annum over the bank's LIBOR-Rate. The current interest rate
is 8.5%. The principal of the note is payable, in its entirety, during December
1998 and the note is collateralized by all of Angeles' accounts receivable,
inventory and intangibles. The note was initially guaranteed by Angeles
Acquisition Corp. The note agreement contains a number of financial covenants
and Angeles was not in compliance with certain of these covenants during the
first quarter of 1997. During April 1997, Angeles and the bank entered into an
amendment to the loan agreement pursuant to which certain covenants were amended
and/or waived through December 31, 1997. In addition, the Company agreed to also
guaranty the repayment of the note.
During the third quarter of 1997, Angeles was not in compliance with the working
capital requirements of the Union Bank loan agreement. During November 1997,
Angeles obtained from Union Bank a waiver of this financial covenant through
December 31, 1997.
There are no compensating balance requirements under either of these two
financing arrangements.
During April 1997, Angeles borrowed $300,000 from an affiliate of the Company's
major shareholder. Angeles agreed to pay a facility fee of $9,000, which was
added to the principal balance of the note, and the Company has issued 50,000 of
its common shares to the lender and will issue 10,000 common shares on the first
day of each month commencing July 1, 1997 until the note is repaid in full. The
note bears interest at 12% per annum, payable monthly in arrears beginning May
1, 1997. The principal of the note is due, in its entirety, during April 1999.
While the note agreement provides that the note may be prepaid at any time at
the option of Angeles, any prepayment of the note is currently prohibited by the
terms of the amended bank note agreement discussed above.
During June 1997, Angeles borrowed $107,000 from an affiliate of the Company's
major shareholder. Angeles agreed to pay a commitment fee of $3,120, which was
added to the principal balance of the note and the Company has issued 16,666 of
its common shares to the lender. The note bears interest at 12% per annum,
payable monthly in arrears, beginning July 1, 1997. The principal of the note is
due, in its entirety, during June 1999. Angeles has the option to prepay the
note, without penalty, at any time.
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CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1997
(unaudited)
The following is a schedule by year of the maturities of the long-term portion
of these notes:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ------
<S> <C>
1998 $2,359,586
1999 782,492
2000 399,902
2001 35,134
----------
$3,577,114
==========
</TABLE>
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this report.
INTRODUCTION AND PLAN OF OPERATION
Prior to January 21, 1997, the Company's operations were exclusively in the real
estate business. On January 21, 1997, Consolidated Land & Cattle Company, a
subsidiary of the Company, merged with Angeles Acquisition Corp., a privately
held company. Angeles Acquisition Corp. survived the Merger and became a wholly
owned subsidiary of the Company. In the Merger transaction, the Company issued
8,638,003 new common shares to the sole stockholder of Angeles Acquisition Corp.
Concurrent with the Merger, the Company also sold 5,496,911 shares of common
stock for cash, in a private transaction exempt from registration under
Regulation S of the Securities Act of 1933, as amended, for an aggregate
purchase price of $1,000,000.
Prior to the Merger, Angeles Acquisition Corp. acquired Angeles Metal Trim Co.
and Subsidiary for approximately $4.3 million, including related fees and
expenses. Angeles fabricates and sells steel framing materials for commercial
and residential structures.
Since January 21, 1997, the Company has sold all of its real estate related
assets, and intends to focus its future business activities on the steel frame
building business and complementary businesses. Acquisition plans, capital needs
and the Company's plans to raise addition capital are described below under
"Liquidity, Capital Resources and Financial Condition".
During April 1997, the Company entered into a non-binding letter of intent to
acquire all of the assets of Capitol Metals Co., Inc. ("CMC"), a Los Angeles
based steel service and distribution center which specializes in the processing
of hot and cold rolled steel. The Company intended to acquire the assets of CMC
for consideration consisting of cash, stock and the assumption of debt with an
estimated value totaling approximately $13.7 million. The consummation of the
transaction was contingent upon a number of closing conditions, including the
negotiation and execution of the definitive agreement and the Company's ability
to secure financing for the transaction. During September 1997, the Company
determined not to proceed with the transaction at that time. During October
1997, CMC filed for protection under the Federal bankruptcy laws. The Company
has submitted a proposal with the bankruptcy court to acquire certain assets of
CMC. The Company has incurred $162,230 of deferred costs, consisting of legal
and accounting fees and related out of pocket costs in connection with this
proposed acquisition.
As described in "Liquidity, Capital Resources and Financial Condition," the
Company is experiencing substantial liquidity difficulties and needs to raise
additional capital to meet the Company's needs and to satisfy the Company's
obligations through the end of the current fiscal year. The Company is pursuing
a number of alternatives to meet its working capital needs. The Company is
seeking to obtain substantial additional capital through the sale of common
and/or preferred shares and through financings related to strategic acquisitions
or business combinations involving the Company. The Company will need such
additional capital for principal and interest payments under the existing
financing arrangements and for the other obligations of the Company described
herein, as well as for working capital purposes. There can be no assurances that
the Company will be successful in obtaining this capital. The failure to secure
the additional capital may have significant negative impact on the operations
of the Company.
RESULTS OF OPERATIONS
The Company reported net sales of $4,164,102 from its steel fabrication
activities during the three months ended September 30, 1997. Cost of goods sold
totaled $3,499,007, resulting in a gross profit of $665,095, or 16% of net
sales. This gross profit was not sufficient to cover the selling and shipping,
general and administrative and depreciation and amortization expenses of
$1,321,701 that
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were incurred during the period. As a result, the Company incurred a loss from
operations of $656,606. Interest expense for the period totaled $169,323 and the
Company reported $19,409 of mostly income from sales of scrap. The net loss for
the three months ended September 30, 1997 was $806,520, or $.05 per share.
The Company reported net sales of $14,618,684 from its steel fabrication
activities during the nine months ended September 30, 1997. Cost of goods sold
totaled $12,068,261, resulting in a gross profit of $2,550,423, or 17% of net
sales. This gross profit was not sufficient to cover the selling and shipping,
general and administrative and depreciation and amortization expenses of
$3,971,681 that were incurred during the period. As a result, the Company
incurred a loss from operations of $1,421,258. Interest expense for the period
totaled $397,319 and the Company reported $87,076 of mostly income from sales of
scrap. The net loss for the nine months ended September 30, 1997 was $1,731,501,
or $.12 per share.
The third quarter loss is approximately $400,000 higher than the second quarter
loss. This resulted from a reduction in sales by $960,000, which after
adjustment for cost of sales reduced gross income by $275,000. General and
administrative expenses rose in the third quarter by $98,000 primarily as a
result of an increase in consulting fees and additional travel and legal
expenses relating to a proposed sale of preferred stock during the third quarter
which was not consummated. There was also an increase in interest expense of
$19,000, a reduction in scrap sales of $20,000 and a reduction in selling and
shipping expenses of $21,000 in the third quarter.
A comparison of operating results for the three and nine month periods ended
September 30, 1997 to the corresponding periods of the prior year has not been
made because such a comparison would not be meaningful given the Merger and the
resultant change in the Company's business activities.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
As of September 30, 1997, the Company had a deficit in working capital of
$1,459,604 as compared to the working capital at December 31, 1996 of $77,430,
which was prior to the Merger, working capital at March 31, 1997 of $277,246,
and working capital at June 30, 1997 at a deficit of $216,304. Stockholder's
equity as of September 30, 1997 is at a deficit of $485,104. As described
further below, the Company is experiencing substantial liquidity difficulties
and needs to raise additional capital to meet the Company's needs and to satisfy
the Company's obligations through the end of the current fiscal year.
During January 1997, Angeles incurred $4.2 million of indebtedness, $1 million
of which was utilized for the repayment of previously outstanding indebtedness
of Angeles and $3.2 million of which was utilized in connection with the
acquisition of Angeles. Union Bank of California, N.A. provided $2.8 million in
financing under a revolving line of credit (the "Union Bank Facility") and
General Electric Capital Corporation provided $1.4 million in financing under a
term loan (the "GE Term Loan").
Under the Union Bank Facility, Angeles can borrow up to a maximum of $4 million
determined by eligible accounts receivable and inventory and the compliance with
certain financial conditions. The Union Bank Facility is available, subject to
support by the appropriate levels of assets and compliance with the applicable
financial covenants, to provide financing for general corporate purposes. The
Union Bank Facility is due on December 15, 1998. Amounts drawn under the Union
Bank Facility bear interest at a base rate which is 2% per annum over Union
Bank's LIBOR-Rate for the interest period. The GE Term Loan is payable in 48
monthly installments of principal and interest at a fixed rate of 9.78% per
annum commencing February 17, 1997.
All of Angeles' equipment and rolling stock are pledged as security for the GE
Term Loan and all of Angeles' accounts receivable, inventory and intangibles are
pledged as security for the Union Bank Facility. The Union Bank Facility was
initially guaranteed by Angeles Acquisition Corp. The Union Bank Facility
agreement contains a number of financial covenants, including certain working
capital and profit requirements and limitations on total liabilities. Angeles
was not in compliance with
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certain of these loan covenants during the first quarter of 1997. During April
1997, Angeles and Union Bank entered into an amendment to the loan agreement
pursuant to which certain of these covenants were amended and/or waived through
December 31, 1997. In addition, the Company agreed to guaranty the repayment of
the Union Bank Facility. A $5,000 fee was paid to Union Bank in connection with
the negotiation of this amendment.
During the third quarter of 1997, Angeles was not in compliance with the working
capital requirements of the Union Bank loan agreement. During November 1997,
Angeles obtained from Union Bank a waiver of this financial covenant through
December 31, 1997.
During April 1997, ERB Acquisition Group, LLC, a Nebraska limited liability
company, ("ERB") loaned $300,000 to Angeles (the "ERB Loan"), which loan is
evidenced by a promissory note payable to ERB (the "ERB Note"). The ERB Loan
proceeds were used to repay a portion of the outstanding balance on the Union
Bank Facility.
In consideration of the ERB Loan, Angeles agreed to pay ERB a facility fee of
$9,000, which was added to the principal balance of the ERB Note, and the
Company agreed to issue 50,000 of its common shares to ERB upon such funding and
10,000 common shares on the first day of each month commencing July 1, 1997
until the ERB Note is repaid in full. The ERB Note bears interest at 12% per
annum, payable monthly in arrears beginning May 1, 1997. The principal of the
ERB Note and any accrued and unpaid interest is due and payable on April 9,
1999. While the ERB Note agreement provides that the ERB Note may be prepaid at
any time at the option of Angeles, any prepayment of the ERB Note is currently
prohibited by the terms of the amended Union Bank Facility agreement.
The obligations under the ERB Loan were guaranteed by the Company and Stone Pine
Colorado, LLC. All of the assets of the Company and all of the assets of Stone
Pine Colorado, LLC, including the Company's common shares owned by Stone Pine
Colorado, LLC, have been pledged as security for the obligations under the ERB
Loan. Stone Pine Colorado, LLC is the owner of approximately 41.2% of the
Company's outstanding common shares and all of the Company's directors have a
financial interest in Stone Pine Colorado, LLC. Two of the Company's directors
also have a financial interest in ERB.
During June 1997, Stone Pine Financial Group, LLC, a Colorado limited liability
company ("SPFG") loaned $107,000 to Angeles (the "SPFG Loan"), which loan is
evidenced by a promissory note payable to SPFG (the "SPFG Note"). The SPFG Loan
proceeds were used to settle all obligations owed by Angeles to the former
majority shareholder/officer of Angeles other than rental payments due and
owing.
In consideration of the SPFG Loan, Angeles agreed to pay SPFG a commitment fee
of $3,210, which was added to the principal balance of the SPFG Note, and the
Company issued 16,666 of its common shares to SPFG upon such funding. The SPFG
Note bears interest at 12% per annum, payable monthly in arrears beginning July
1, 1997. The principal of the SPFG Note and any accrued and unpaid interest is
due and payable on June 18, 1999. Angeles has the option to prepay the SPFG Note
at any time. Two of the Company's directors also have a financial interest in
SPFG.
On August 21, 1997, the Company borrowed an additional $250,000 from SPFG on a
short term basis with an extended due date of December 15, 1997. The Company
issued 60,000 of its common shares in connection with this loan. Interest on
this note is 12% per annum, payable monthly in arrears on the first day of each
month starting September 1, 1997.
The Company borrowed an additional $50,000 from ERB, as evidenced by a
promissory note dated July 8, 1997, with an extended due date of December 15,
1997. The note bears interest at 15% per annum, payable with the principal
balance at the due date. This loan is subject to the security and guarantees
described above with respect to the $309,000 loan.
The Company is experiencing substantial liquidity difficulties and needs to
raise additional capital to meet the Company's needs and to satisfy the
Company's obligations through the end of the current
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fiscal year. The Company is pursuing a number of alternatives to meet is working
capital needs. The Company is seeking to obtain substantial additional capital
through the sale of common and/or preferred shares and through financings,
related to strategic acquisitions or business combinations involving the
Company. The Company will need such additional capital for principal and
interest payments under the existing financing arrangements and for the other
obligations of the Company described herein, as well as for working capital
purposes. There can be no assurances that the Company will be successful in
obtaining this capital. The Company believes it may be unable to fund ongoing
operating requirements solely through operating cash flows and funds available
under the Union Bank Facility and therefore the inability to secure the
additional capital may have a significant negative impact on the operations of
the Company.
Additional capital may also be needed to fund future capital expenditures
relating to the development of the business of the Company. To fund such needs
the Company may be required to obtain additional lines of credit or make
periodic offerings or private placements in order to meet the liquidity needs of
such growth. There can be no assurances that such sources of financing will be
available to the Company in sufficient amounts or on acceptable terms.
The Company also plans to engage in strategic acquisitions in addition to the
acquisition of CMC discussed above. As these investments are identified and
funds are needed to complete such acquisitions, additional funding will be
necessary.
SAFE HARBOR STATEMENT
The Private Securities Litigation Reform Act of 1995 provides a new "safe
harbor" for certain forward-looking statements. Statements contained in this
report that are not historical facts are forward looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those stated in the forward-looking statements. Factors that could cause
actual results to differ materially include, among others: general economic
conditions, changes in laws and government regulations, fluctuations in demand
for the Company's products, the Company's ability to consummate strategic
acquisitions and the Company's ability to successfully finance any such future
acquisitions, as well as its current ongoing operations.
14
<PAGE> 15
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to be filed:
Exhibit No. Description
3.3 Articles of Amendment to Articles of
Incorporation as of August 12, 1997.
3.4 By-Laws Revised and Amended as of August 26,
1997
10.33 Loan Agreement and Term Note, dated as of
August 21, 1997, between Consolidated
Capital of North America, Inc. and Stone
Pine Financial Group, LLC.
10.34 Amendment to Term Note dated August 21,
1997.
10.35 Promissory Note, dated July 8, 1997, between
ERB Acquisition Group, LLC and Consolidated
Capital of North America, Inc.
10.36 Amendment to Promissory Note dated July 8,
1997.
10.37 Consolidated Capital of North America, Inc.
1997 Stock Incentive Plan.
10.38 Consolidated Capital of North America, Inc.
Form of Incentive Stock Option Agreement for
Grants to Employees.
10.39 Consolidated Capital of North America, Inc.
Form of Non-Qualified Stock Option Agreement
for Grants to Employees.
10.40 Consolidated Capital of North America, Inc.
Form of Non-qualified Stock Option Agreement
for Grants to Non-Employees
27.1 Financial Data Schedule.
(b) The Registrant did not file any reports on Form 8-K during the
third quarter of the fiscal year ending December 31, 1997.
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Consolidated Capital of North America, Inc.
(Registrant)
Date: November 19, 1997 By: /s/ Paul Bagley
-----------------------------------
Paul Bagley
Chairman of the Board and Director
(Principal Executive Officer)
By: /s/ Donald R. Jackson
----------------------------------
Donald R. Jackson
Secretary, Treasurer, Chief Financial
Officer and Director (Principal
Financial and Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- -----
<S> <C>
3.3 Articles of Amendment to Articles of Incorporation as of
August 12, 1997.
3.4 By-Laws Revised and Amended as of August 26, 1997.
10.33 Loan Agreement and Term Note, dated as of August 21, 1997,
between Consolidated Capital of North America, Inc. and Stone
Pine Financial Group, LLC.
10.34 Amendment to Term Note dated August 21, 1997.
10.35 Promissory Note, dated July 8, 1997, between ERB Acquisition
Group, LLC and Consolidated Capital of North America, Inc.
10.36 Amendment to Promissory Note dated July 8, 1997.
10.37 Consolidated Capital of North America, Inc. 1997 Stock
Incentive Plan.
10.38 Consolidated Capital of North America, Inc. Form of Incentive
Stock Option Agreement for Grants to Employees.
10.39 Consolidated Capital of North America, Inc. Form of
Non-Qualified Stock Option Agreement for Grants to Employees.
10.40 Consolidated Capital of North America, Inc. Form of
Non-qualified Stock Option Agreement for Grants to
Non-Employees
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 1
Exhibit No. 3.3
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Consolidated Capital of North America,
Inc. (the "Corporation").
SECOND: The following amendment to the Articles of Incorporation was adopted on
August 12, 1997, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
No Common Shares have been issued or Directors Elected-Action by
- --- Incorporators
No Common Shares have been issued but Directors Elected-Action by Directors
- ---
X Such amendment was adopted by the board of directors where Common Shares
- --- have been issued.
Such amendment was adopted by a vote of the shareholders. The number of
- --- Common Shares voted for the amendment was sufficient for approval.
If these amendments are to have a delayed effective date, please list that
date: _________________________________________________________________________
(not to exceed ninety (90) days from the date of filing)
THIRD: The Corporation's Articles of Incorporation are hereby amended to add
the following Section 4 to ARTICLE IV:
A. Authorized Series B Preferred Shares. There is hereby established a
series of Preferred Shares designated "Series B Preferred Shares", consisting
of 5,000,000 Series B Preferred Shares (hereafter in this Section 4 of Article
IV the "Series B Shares", collectively, or the "Series B Share", individually),
having an issue price of $1.50 per share (the "Purchase Price").
B. Mandatory Dividends. The holders of record of the Series B Shares
shall be entitled to receive, out of any funds legally available for the
purpose, prior and in preference to any declaration or payment of any dividend
on the Common Shares of the Corporation, dividends at the rate of 10% of the
Purchase Price per annum. Dividends shall accrue from the date of original
issuance and shall be payable quarterly in arrears on the first day of January,
April, July and October beginning on October 1, 1997. The dividends shall be
paid in cash unless the Corporation and the holders of the Series B Shares
agree that the dividends shall be
<PAGE> 2
paid in unrestricted Common Shares of the Corporation based on the average of
the closing bid price of the Corporation's Common Shares for the five
consecutive trading days preceding the last five trading days of the quarter
for which such dividends are payable.
C. Conversion. The holders of the Series B Shares shall have the right to
convert one Series B Preferred Share into one Common Share of the Corporation
during the period of time from date of original issuance until the second
anniversary of such issuance (the "First Term") or such additional period of
time that the Series B Shares remain outstanding as agreed to by the
Corporation and the holder thereof (the "Second Term") only as follows:
(1) Upon Failure to Pay Dividends. In the event that any dividends on
any Series B Shares have accrued but have not been declared or paid or set
aside for payment within five days of the scheduled payment date, then an
amount of the Series B Shares equal in dollar amount to the amount of unpaid
dividends shall, at the request of any holder of outstanding Series B Shares,
be converted into Common Shares of the Corporation with the value of such
Series B Shares and Common Shares being $3.00 per share for such conversion
purpose and the Common Shares shall be distributed ratably among the holders of
the Series B Shares requesting such conversion in proportion to the number of
Series B Shares converted by each such holder. (For example, if the Corporation
shall fail to pay a quarterly dividend of $187,500, upon the request of the
holders of all outstanding Series B Shares, 62,500 Series B Shares shall be
converted into 62,500 Common Shares.) If the Corporation should fail to pay
dividends for four consecutive quarters, then each outstanding Series B Share
shall automatically be converted into one Common Share of the Corporation,
(2) With the Consent of Corporation. The Series B Shares may be
converted in whole or in part by any holder thereof into Common Shares at any
time after the First Term with the prior written consent of the Corporation.
(3) Upon Expiration of Second Term. In the event that the Series B
Shares remain outstanding at the expiration of the Second Term, then each
Series B Share shall automatically be converted into one Common Share of the
Corporation.
(4) Mechanics of Conversion. Before any holder of the Series B Shares
shall be entitled to convert the same into Common Shares of the Corporation,
the holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
B Shares, and shall give written notice of the name or names in which the
certificates for Common Shares are to be issued. The Corporation or the
transfer agent shall, as soon as practicable thereafter, issue and deliver to
the holder of the Series B Shares or to a designee of the holder of the Series
B Shares certificates for the number of whole Common Shares to which the holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender
of the Series B Shares, and the persons entitled to receive the Common Shares
issuable upon such conversion shall be treated for all purposes as the record
holders of the
2
<PAGE> 3
Common Shares as of such date. In the event the Corporation has given notice of
redemption of any Series B Shares, the conversion rights of the holder of the
Series B Shares shall terminate as to Series B Shares called for redemption at
the close of business on the business day next preceding the redemption date
unless default shall be made in the payment of the redemption price. Upon
conversion of any Series B Shares, no payment or adjustment shall be made on
account of dividends accumulated, whether or not in arrears, on such shares or
on account of dividends declared and payable to holders of Common Shares of
record on a date prior to the date of conversion.
(5) Adjustments to Conversion Procedure. In the event the outstanding
Common Shares of the Corporation shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of Common Shares without a
corresponding combination or consolidation with respect to the Series B Shares
or if the number of outstanding Common Shares shall be increased by way of
declaration of a stock dividend, the number of Common Shares into which the
Series B Shares may be converted shall be proportionately adjusted.
(6) No Fractional Common Shares. No fractional Common Shares shall be
issued upon conversion of the Series B Shares, and the number of Common Shares
to be issued shall be rounded to the nearest whole share. Whether or not
fractional Common Shares are issuable upon such conversion shall be determined
on the basis of the total number of Series B Shares the holder is at the time
converting into Common Shares and the number of Common Shares issuable upon
such aggregate conversion.
(7) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued Common Shares solely for the purpose of effecting the conversion of
the Series B Shares such number of its Common Shares as shall from time to time
be sufficient to effect the conversion of all outstanding Series B Shares; and
if at any time the number of authorized but unissued Common Shares shall not be
sufficient to effect the conversion of all then outstanding Series B Shares, in
addition to such other remedies as shall be available to the holder of the
Series B Shares, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
Common Shares to such number of Series B Shares as shall be sufficient for such
purposes.
D. Redemption. At least sixty (60) days prior to the expiration of the
Initial Term, the Corporation may offer to repurchase the Series B Shares by
written notice to the holders of the Series B Shares, at one hundred ten
percent (110%) of the Purchase Price effective upon the expiration of the
Initial Term. The holders of the Series B Shares may accept such offer in
writing within thirty (30) days of receipt of such written offer. In the event
the holder of the Series B Shares do not accept such repurchase offer or the
Corporation does not offer to repurchase the Series B Shares, the Series B
Shares shall remain outstanding during the Second Term unless the holders of
the Series B Shares and the Corporation agree at any time during that Second
Term that any or all of such Series B Share shall be converted into Common
3
<PAGE> 4
Series B Share shall be automatically converted into one Common Share of the
Corporation unless the Corporation has given written notice to the holder of
the Series B Shares at least thirty (30) days prior to the expiration of the
Second Term that the Corporation intends to redeem the Series B Shares at one
hundred ten percent (110%) of the Purchase Price and the Corporation has
redeemed all of the Series B Shares as of the expiration of such Second Term.
Redeemed Series B Shares shall be restored to the status of authorized
and unissued Preferred Shares and may be reissued by the Corporation.
E. Notices. Any notice required by the provisions of the foregoing
paragraphs to be given to the holders of Series B Shares shall be deemed given
if deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his or her address appearing on the books of the
Corporation.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by
its authorized officer as of August 27, 1997.
[Corporate Sea]] CONSOLIDATED CAPITAL OF
NORTH AMERICA, INC.
By: /s/ Donald R. Jackson
------------------------------------------
Donald R. Jackson
Secretary, Treasurer and Chief
Financial Officer
4
<PAGE> 1
EXHIBIT 3.4
BY-LAWS
OF
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
A COLORADO CORPORATION
(REVISED AND AMENDED AS OF AUGUST 22, 1997)
ARTICLE I
OFFICES
Section 1. The registered office shall be located in the City of
Denver, State of Colorado until otherwise established by a vote of a majority
of the board of directors in office, and a statement of such change is filed in
the manner provided by statute.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Colorado as the board of directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held at such place either within or without the State of Colorado as
may be fixed from time to time by the board of directors and stated in the
notice of the meeting.
Section 2. The board of directors shall fix the date and time of the
annual meeting of the shareholders, and at said meeting the shareholders then
entitled to vote shall elect directors and shall transact such other business
as may properly be brought before the meeting. Failure to hold an annual
meeting as required by these by-laws shall not invalidate any action taken by
the board of directors or officers of the Corporation.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor
more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote on
any issue proposed at such meeting.
<PAGE> 2
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose may be held
at such time and other place within or without the State of Colorado as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than 10 percent of all the shares entitled to vote on any
issue proposed at the meeting.
Section 3. Written notice or printed notice of the special meeting
stating the place, day and hour of the meeting shall be delivered not less than
10 nor more than 60 days before the date of the meeting, either personally or
by mail, by or at the direction of the president, the secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled to vote
on any issue proposed at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding shares of stock, having voting power, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his or her duly authorized attorney-in-fact.
2
<PAGE> 3
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The business of the Corporation shall be managed under the
direction of the board of directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the articles of incorporation or by these by-laws directed or required to be
exercised or done by the shareholders. None of the directors need be
shareholders of the Corporation, but each director shall be at least eighteen
years of age.
Section 2. The board of directors shall consist of such number of
directors, not less than 3 nor more than 15, as may be determined from time to
time by resolution adopted by a vote of at least three-quarters of the entire
board of directors. The board of directors shall be divided into three
classes, Class I, Class II and Class III. The number of directors in each
class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of directors by three, and if a fraction is also
contained in such quotient, then if such fraction is 1/3 the extra director
shall be a member of Class III and if the fraction is 2/3 one of the extra
directors shall be a member of Class III and the other shall be a member of
Class II. After the initial division of the board of directors into classes,
each director shall serve for a term ending on the date of the third annual
meeting following the annual meeting at which such director was elected and
until such director's successor shall have been elected and qualified, except
in the event of death, resignation or removal. The three initial classes of
directors shall be comprised as follows:
(1) Class I shall be comprised of directors who shall serve
until the annual meeting of shareholders in 1998 and until their
successors shall have been elected and qualified.
(2) Class II shall be comprised of directors who shall serve
until the annual meeting of shareholders in 1999 and until their
successors shall have been elected and qualified.
(3) Class III shall be comprised of directors who shall serve
until the annual meeting of shareholders in 2000 and until their
successors shall have been elected and qualified.
Section 3. Vacancies and newly created directorships resulting from any
increase in the
3
<PAGE> 4
authorized number of directors may be filled by a majority of the directors
then in office, though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual election of the
class for which such director shall have been elected and until a successor is
duly elected and qualified, except in the event of death, resignation or
removal. The newly created or eliminated directorship resulting from such
increase or decrease shall be apportioned by the board of directors to such
class or classes as shall, as far as possible, bring the number of directors in
the respective classes into the formula in Section 2 of this Article V, as
applied to the new authorized number of directors. If there are no directors
in office, then an election of directors may be held in the manner provided by
statute.
Section 4. The directors may keep the books of the Corporation, except
such as are required by law to be kept within the state, outside of the State
of Colorado, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise.
Section 6. So long as Innovest Holdings, Ltd. ("Innovest") is a holder
of the Corporation's Common Shares, the Corporation shall take the necessary
steps to ensure that, an Innovest's option, two designees of Innovest shall (i)
be nominated to the Board of Directors of the Corporation or, in the
alternative (ii) have the right to be present and attend all meeting of the
Board of Directors of the Corporation.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may
be held either within or without the State of Colorado.
Section 2. The board of directors may, by resolution, establish dates,
times and places for regular meetings, which may thereafter be held without
further notice. Special meetings may be called by the President or by any
director and shall be held at the principal office of the Corporation unless
another place is consented to by a majority of the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by
the president or
4
<PAGE> 5
any director on at least twenty four (24) hours notice to each director before
the time of the meeting, stating the date, time, and place of the meeting.
Notice may be given orally to the director, personally or by telephone or other
wire or wireless communication. Notice may also be given in writing by
telegraph, teletype, electronically transmitted facsimile, electronic mail, or
private carrier. Notice shall be effective at the earliest of the time it is
received; five days after it is deposited in the United States mail, properly
addressed to the last known address for the director shown on the records of
the Corporation, first class postage prepaid; or the date shown on the return
receipt if mailed by registered or certified mail, return receipt requested,
postage prepaid, in the United States mail and if the return receipt is signed
by the director to which the notice is addressed.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the entire board of directors shall constitute
a quorum for the transaction of business unless a greater number is required by
law or by the articles of incorporation. The act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the board of directors, unless the act of a greater number is required by
statute or by the articles of incorporation. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 7. Any action required or permitted to be taken at a meeting of
the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
ARTICLE VII
COMMITTEES
The board of directors, by resolution adopted by a majority of the full
board, may designate from its members an executive committee and one or more
other committees, each of which, to the extent provided in the resolution
establishing such committee, shall consist of one or more directors and have
such authority as may be specified by the board of directors subject to the
provisions of Section 7-109-106 of the Colorado Business Corporation Act. The
board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Except to the extent specified otherwise by the board of
directors, any such committee shall be governed by the procedural provisions of
these by-laws that govern the operation of the full board of directors,
including with respect to notice and quorum.
5
<PAGE> 6
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given
to any director or shareholder, it shall be given in writing, by mail,
addressed to such director or shareholder, at his or her address as it appears
on the records of the Corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be deposited
in the United States mail. Notice to directors may also be given orally to the
director, personally or by telephone or other wire or wireless communication or
in writing by telegraph, teletype, electronically transmitted facsimile,
electronic mail, or private carrier.
Section 2. Whenever any notice whatsoever is required to be given under
the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
GENERAL
Section 1. The officers of the Corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 3. The salaries of all officers and agents of the Corporation
shall be fixed by the board of directors.
Section 4. The officers of the Corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
Corporation shall be filled by the board of directors.
6
<PAGE> 7
THE PRESIDENT
Section 5. The president shall be the chief executive officer of the
Corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 6. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation.
THE VICE PRESIDENTS
Section 7. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings
of the meetings of the Corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. The secretary shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the
board of directors or president, under whose supervision he or she shall be.
The secretary shall have custody of the corporate seal of the Corporation and
he or she, or an assistant secretary, shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be attested by the
signature of the secretary or by the signature of such assistant secretary.
The board of directors may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by the signature of such
officer.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
7
<PAGE> 8
THE TREASURER AND ASSISTANT TREASURERS
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of
directors.
Section 11. The treasurer shall disburse the funds of the Corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all the transactions performed as treasurer and of the financial condition of
the Corporation.
Section 12. If required by the board of directors, the treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office and for the restoration to the Corporation, in case of
the death, resignation, retirement or removal of the treasurer from office, of
all books, papers, vouchers, money and other property of whatever kind in the
possession of the treasurer or under the control of the treasurer belonging to
the Corporation.
Section 13. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
SHARES
CERTIFICATES AND LOST CERTIFICATES
Section 1. The shares of the Corporation shall be represented by
certificates signed by the chairman or vice chairman of the board of directors
or by the president or a vice-president and by the treasurer or an assistant
treasurer or by the secretary or an assistant secretary of the Corporation, and
may be sealed with the seal of the Corporation or a facsimile thereof.
Section 2. When the Corporation is authorized to issue shares of more
than one class there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of the designations, preferences, limitations, and relative rights of
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<PAGE> 9
the shares of each class authorized to be issued and, if the Corporation is
authorized to issue any preferred or special class in series, the variations in
the relative rights and preferences between the shares of each such series so
far as the same have been fixed and determined and the authority of the board
of directors to fix and determine the relative rights and preferences of
subsequent series.
Section 3. The signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself or an
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if the person were such officer at the date
of its issue.
Section 4. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
it deems expedient, and may require such indemnities as it deems adequate, to
protect the Corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 5. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied or proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of
the Corporation.
CLOSING OF TRANSFER BOOKS; RECORD DATE
Section 6. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty (50) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten days immediately preceding such meeting. In lieu of
closing the stock transfer books, the board of directors may fix in advance a
date as the record date for any such determination of shareholders, such date
in any case to be not more than seventy (70) days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors
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<PAGE> 10
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
REGISTERED SHAREHOLDERS
Section 7. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Colorado.
LIST OF SHAREHOLDERS
Section 8. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the principal office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original share ledger or transfer book, or a duplicate
thereof, shall be prima facie evidence as to who are the shareholders entitled
to examine such list or share ledger or transfer book or to vote at any meeting
of the shareholders.
ARTICLE XI
INDEMNIFICATION
DEFINITIONS
Section 1. For purposes of this Article XI, the following terms shall
have the meanings set forth below:
(a) "Corporation" includes any domestic or foreign entity that is a
predecessor of the Corporation by reason of a merger or other transaction in
which the predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means any individual who is or was a director of the
Corporation and an individual who, while a director of the Corporation, is or
was serving at the Corporation's request as a director, officer, associate,
employee, or fiduciary, manager,
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<PAGE> 11
member, partner, trustee or agent of another foreign or domestic corporation or
other person or of an employee benefit plan. A director shall be considered to
be serving an employee benefit plan at the Corporation's request if his or her
duties to the corporation also impose duties on, or otherwise involve services
by, the director to the plan or to participants in, or beneficiaries of, the
plan. The term "director" includes, unless the context requires otherwise, the
estate or personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine (including an excise
tax assessed with respect to an employee benefit plan) or reasonable expenses.
(e) "Official capacity" means, when used with respect to a director,
the office of director in the Corporation and, when used with respect to a
person other than a director, the office in the Corporation held by the officer
or the employment, fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the Corporation. "Official
capacity" does not include service for any other domestic or foreign
Corporation or other person or employee benefit plan.
(f) "Party" includes an individual who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, or any appeal therein, whether civil, criminal,
administrative, or investigative, and whether formal or informal.
NATURE OF INDEMNITY
Section 2. The Corporation shall indemnify a person made a party to a
proceeding because the person is or was a director against liability incurred
in the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
Corporation, that his or her conduct was in the Corporation's best
interests; and
(2) In all other cases, that his or her conduct was at least not
opposed to the Corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
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Section 3. A director's conduct with respect to an employee benefit
plan for a purpose the director reasonably believed to be in the interests of
the participants in or beneficiaries of the plan is conduct that satisfies the
requirement of Section 2(b)(2). A director's conduct with respect to an
employee benefit plan for a purpose that the director did not reasonably
believe to be in the interests of the participants in or beneficiaries of the
plan shall be deemed not to satisfy the requirement of Section 2(a).
Section 4. The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the standard of
conduct described in Sections 2 or 3 of this Article.
Section 5. The Corporation may not indemnify a director:
(a) In connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the Corporation; or
(b) In connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action in an
official capacity, in which proceeding the director was adjudged liable on the
basis that he or she derived an improper personal benefit.
Section 6. Indemnification permitted under Sections 2 or 3 of this
Article in connection with a proceeding by or in the right of the Corporation
is limited to reasonable expenses incurred in connection with the proceeding.
MANDATORY INDEMNIFICATION
Section 7. The Corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in defense of any proceeding to which
the person was a party because the person is or was a director, against
reasonable expenses incurred by him or her in connection with the proceeding.
ADVANCE PAYMENT OF EXPENSES
Section 8. The Corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in advance of
the final disposition of the proceeding if:
(a) The director furnishes the Corporation a written affirmation of the
director's good-faith belief that he or she has met the standard of conduct
described in Sections 2, 3, or 4 of this Article;
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<PAGE> 13
(b) The director furnishes the Corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it is
ultimately determined that he or she did not meet such standard of conduct; and
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this Article.
Section 9. The undertaking required by Section 8(b) shall be an
unlimited general obligation of the director, but need not be secured and may
be accepted without reference to financial ability to make repayment.
Section 10. Determinations and authorizations of payments under Section
8 shall be made in the manner specified in Section 12.
COURT-ORDERED INDEMNIFICATION
Section 11. A director who is a party or was party to a proceeding may
apply for indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the court,
after giving any notice the court considers necessary, may order
indemnification in the following manner:
(a) If the court determines that the director is entitled to mandatory
indemnification under Section 7, the court shall order indemnification, in
which case the court shall also order the Corporation to pay the director's
reasonable expenses incurred to obtain court-ordered indemnification; or
(b) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not the director met the standard of conduct set forth in Section 2 or was
adjudged liable in the circumstances described in Section 5, the court may
order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability shall have
been adjudged in the circumstances described in Section 5 is limited to
reasonable expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
DETERMINATION THAT INDEMNIFICATION IS PROPER
Section 12. The Corporation may not indemnify a director under Section
2 unless authorized in the specific case after a determination has been made
that indemnification of the director is permissible under the circumstances
because the director has met the standard of conduct set forth in Section 2.
The Corporation shall not advance expenses to a director under Section 8 unless
authorized in the specific case after the written affirmation and undertakings
required by Sections 8(a) and 8(b) are received and the determination required
by Section 8(c) has been made.
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<PAGE> 14
Section 13. The determination required by Section 12 shall be made:
(a) By the board of directors by a majority vote of those present at a
meeting at which a quorum is present, and only those directors not parties to
the proceeding shall be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a committee
of the board of directors designated by the board of directors, which committee
shall consist of two or more directors not parties to the proceeding; except
that directors who are parties to the proceeding may participate in the
designation of directors for the committee.
Section 14. If the quorum cannot be obtained as contemplated in Section
13(a), and a committee cannot be established under Section 13(b), if a quorum
is obtained or a committee is designated, if a majority of the directors
constituting such quorum or such committee so directs, the determination
required to be made by Section 12 shall be made:
(a) By independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in Section 13(a) or 13(b),
or, if a quorum of the full board of directors cannot be obtained and a
committee cannot be established, by independent legal counsel selected by a
majority vote of the full board of directors; or
(b) By the shareholders.
Section 15. Authorization of indemnification and advancement of
expenses shall be made in the same manner as the determination that
indemnification or advancement of expenses is permissible; except that, if the
determination that indemnification or advancement of expenses is permissible is
made by independent legal counsel, authorization of indemnification and
advancement of expenses shall be made by the body that selected such counsel.
INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS
Section 16. The Corporation shall indemnify and advance expenses to an
officer of the Corporation to the same extent as to a director.
Section 17. The Corporation may indemnify and advance expenses to an
employee, fiduciary, or agent of the Corporation to the same extent as to an
officer or director.
Section 18. The Corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a director to a greater
extent than is provided in these by-laws, if not inconsistent with public
policy, and if provided for by general or specific action of its board of
directors or shareholders or by contract.
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<PAGE> 15
SURVIVAL; PRESERVATION OF OTHER RIGHTS; SEVERABILITY
Section 19. The foregoing indemnification provisions shall be deemed to
be a contract between the Corporation and each director, officer, employee and
agent who serves in any such capacity at any time while these provisions as
well as the relevant provisions of the Colorado Business Corporation Act are in
effect and any repeal or modification thereof shall not affect any right or
obligation then existing with respect to any state of facts then or previously
existing or any action, suit, or proceeding previously or thereafter brought or
threatened based in whole or in part upon any such state of facts. Such a
contract right may not be modified retroactively without the consent of such
director, officer, employee or agent.
The indemnification provided by this Article XI shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 20. If this Article XI or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys, fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article XI that shall not have been invalidated and to the
fullest extent permitted by applicable law.
INSURANCE
Section 21. The Corporation may purchase and maintain insurance on
behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the Corporation or who, while a director, officer, employee,
fiduciary, or agent of the Corporation, is or was serving at the request of the
Corporation as a Director, officer, partner, trustee, employee, fiduciary, or
agent of another domestic or foreign Corporation or other person or of an
employee benefit plan, against any liability asserted against or incurred by
the person in that capacity or arising out of his or her status as a director,
officer, employee, fiduciary, or agent, whether or not the Corporation would
have the power to indemnify the person against the same liability under this
Article XI. Any such insurance may be procured from any insurance company
designated by the board of directors, whether such insurance company is formed
under the laws of the State of Colorado or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the Corporation
has equity or any other interest, through stock ownership or otherwise.
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<PAGE> 16
NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR
Section 22. If the Corporation indemnifies or advances expenses to a
director under this Article XI in connection with a proceeding by or in the
right of the Corporation, the Corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice of the
next meeting of shareholders. If the next shareholder action is taken without
a meeting at the instigation of the board of directors, such notice shall be
given to the shareholders at or before the time the first shareholder signs a
writing consenting to such action.
ARTICLE XII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors
at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property or in shares of the capital stock, subject to any provisions
of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside from
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other persons as the board
of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its incorporation and the words "Corporate Seal,
Colorado". The seal may be used
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by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
AMENDMENTS
Section 6. Subject to the provisions of the articles of incorporation
relating thereto and except as otherwise set forth in these by-laws, these by-
laws may be altered, amended or repealed (a) at any regular or special meeting
of shareholders at which a quorum is present or represented, by the affirmative
vote of a majority of the stock entitled to vote, provided notice of the
proposed alteration, amendment or repeal be contained in the notice of such
meeting, or (b) by the affirmative vote of a majority of the board of directors
at any regular or special meeting of the board. The board of directors shall
not make or alter any by-law specifying a fixed number of directors or the
maximum or minimum number of directors and the directors shall not change a
fixed board to a variable board or vice versa in the by-laws. The board of
directors shall not change a by-law, if any, which requires a larger proportion
of the vote of directors for approval than is required by the Colorado Business
Corporation Act.
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EXHIBIT 10.33
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made as of the 21st day of August,
1997, between Consolidated Capital of North America, Inc., a Colorado
corporation ("Borrower") and Stone Pine Financial Group, LLC, a Colorado
limited liability company ("Lender").
RECITAL
Borrower has requested that Lender make a loan to or for the benefit of
Borrower in the amount of $250,000.00, and Lender is willing to do so on the
following terms and conditions.
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, Borrower and Lender agree as follows:
1. LOAN.
1.1 Loan. Subject to all of the terms and conditions contained in
this Agreement, Lender agrees to advance to Borrower, on the date hereof, the
principal sum of $250,000.00 (the "Loan"). The Loan shall be evidenced by and
repayable in accordance with the terms of Borrower's promissory note ("Note"),
the form of which is attached as Exhibit A.
1.2 Equity Shares. (a) As additional consideration for the
advancement of the Loan, Borrower shall issue to Lender Common Shares of
Borrower as follows: 60,000 Common Shares upon advancement of the Loan (the
"Common Shares").
(b) The Common Shares will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and accordingly, will constitute
"restricted securities" for purposes of the Securities Act and Lender will not
be able to transfer such Common Shares except upon compliance with the
registration requirements of the Securities Act and applicable state securities
laws or an exemption therefrom. The certificates evidencing the Common Shares
shall contain a legend to the foregoing effect.
(c) Borrower, shall upon the demand of any holder of the Common
Shares, file a registration statement with the SEC to permit the sale of the
Common Shares by the holders of such shares from time to time. The holders of
the Common Shares shall also have "piggyback" registration rights.
2. CONDITIONS TO THE LOAN.
2.1 Documents. The making of the Loan is conditioned upon the
execution and/or delivery to Lender of the following agreements, instruments
and documents by the parties thereto: (a) this Agreement; (b) the Note; and (c)
a stock certificate for 60,000 Common Shares of Borrower issued in the name of
Lender.
<PAGE> 2
2.2 Representations and Warranties. All representations and
warranties contained in this Agreement shall be true in all material respects
on and as of the date of the making of the Loan as if such representations and
warranties had been made on and as of such date.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of Borrower. Borrower represents
and warrants that as of the date of the execution of this Agreement:
(a) Existence. Borrower is a corporation duly organized and in good
standing under the laws of the State of Colorado and is duly qualified to do
business and is in good standing in all states where such qualification is
necessary, except for those jurisdictions in which the failure to qualify would
not, in the aggregate, have a material adverse effect on Borrower's financial
condition, results of operations or business.
(b) Authority. The execution and delivery by Borrower of this
Agreement and the Note: (a) are within Borrower's corporate powers; (b) are
duly authorized by Borrower's board of directors; (c) are not in contravention
of the terms of Borrower's certificate of incorporation or bylaws; (d) are not
in contravention of any law or laws, or of the terms of any material indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or
any of Borrower's property is bound; (e) do not require any governmental
consent, registration or approval; (f) do not contravene any contractual or
governmental restriction binding upon Borrower; and (g) will not result in the
imposition of any lien, charge, security interest or encumbrance upon any
property of Borrower under any existing indenture, mortgage, deed of trust,
loan or credit agreement or other material agreement or instrument to which
Borrower is a party or by which Borrower or any of Borrower's property may be
bound or affected.
(c) Binding Effect. This Agreement and the Note set forth the legal,
valid and binding obligations of Borrower and are enforceable against Borrower
in accordance with their respective terms.
3.2 Investment Representations of Lender. Lender represents and
warrants to Borrower as follows:
(a) Lender acknowledges that you have advised Lender that the Common
Shares have not been registered under the Securities Act or any other
securities regulation laws of any state and that your reliance on the
availability of certain exemptions from registration is based in part on the
representations made by Lender in this Agreement.
(b) Lender hereby represents to you that Lender is acquiring the Common
Shares for the account of Lender for investment only and not with a view to
resell or otherwise
<PAGE> 3
distribute such Common Shares, and that Lender is not acquiring the Common
Shares on behalf of any other person or entity. Lender further represents that
Lender does not intend to resell, transfer or dispose of all or any part of the
Common Shares without registration under the Securities Act or without an
opinion from counsel acceptable to Borrower, that registration is not required,
and Lender represents that it is able to bear the economic risk of this
investment for an indefinite period of time under these circumstances.
(c) Lender further acknowledges that the Common Shares are "restricted
securities" as that term is defined in Rule 144 of the General Rules and
Regulations under the Securities Act. Lender understands that stop transfer
instructions will be issued to the transfer agent for Borrower's stock, and
Lender consents to the placing of a legend in substantially the following form
on the back of the certificate issued to Lender:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER STATE LAWS REGULATING THE ISSUANCE OF
SECURITIES AND ARE PURCHASED PURSUANT TO AN INVESTMENT
REPRESENTATION BY THE PURCHASER THEREOF. THESE SHARES SHALL NOT
BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE
TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, BY THE PURCHASER
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE
OPINION OF ITS COUNSEL TO THE EFFECT THAT SUCH TRANSFER SHALL NOT
BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS.
(d) Lender agrees to hold harmless and indemnify Borrower for any and
all liabilities resulting to it through violation by Lender of the above
warranties and representations.
4. DEFAULT AND RIGHTS AND REMEDIES.
4.1 Default and Rights and Remedies. Upon the occurrence of default,
Lender shall have the rights and remedies set forth in the Note and the rights
and remedies available to Lender under applicable law.
5. MISCELLANEOUS.
5.1 Reliance by Lender. All covenants, agreements, representations
and warranties made by Borrower shall, notwithstanding any investigation by
Lender, be deemed to be material to and to have been relied upon Lender.
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<PAGE> 4
5.2 Parties. Whenever in this Agreement there is reference made to
any of the parties, such reference shall be deemed to include, wherever
applicable, a reference to the respective successors and assigns of Borrower
and Lender.
5.3 Applicable Law; Severability. THIS AGREEMENT SHALL BE CONSTRUED
IN ALL RESPECTS IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS AND DECISIONS OF
THE STATE OF COLORADO. EACH PARTY TO THIS AGREEMENT HEREBY CONSENTS TO
JURISDICTION AND VENUE IN ANY CONTROVERSY INVOLVING THIS AGREEMENT IN FEDERAL
OR STATE COURT SITTING IN THE CITY OF DENVER, COLORADO. Wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
5.4 Maximum Interest. It is expressly stipulated and agreed to be
the intent of Borrower and Lender at all times to comply with the applicable
law governing the maximum rate of interest payable on or in connection with all
indebtedness and transactions hereunder (or applicable United States federal
law to the extent that it permits Lender to contract for, charge, take, reserve
or receive a greater amount of interest). If the applicable law is ever
judicially interpreted so as to render usurious any amount of money or other
consideration called for hereunder, or contracted for, charged, taken, reserved
or received with respect to any loan or advance hereunder, or if acceleration
of the maturity of the Loan or the indebtedness hereunder or if any prepayment
by Borrower results in Borrower's having paid any interest in excess of that
permitted by law, then it is Borrower's and Lender's express intent that all
excess cash amounts theretofore collected by Lender be credited on the
principal balance of the Loan (or if the Loan has been or would thereby be paid
in full, refunded to Borrower), and the provisions of this Agreement
immediately be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder. The right to accelerate maturity of the
Loan does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and Lender does not intend
to collect any unearned interest in the event of acceleration.
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<PAGE> 5
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
CONSOLIDATED CAPITAL OF
NORTH AMERICA, INC.
a Colorado corporation
By: /s/ Donald R. Jackson
---------------------------------
Donald R. Jackson
Treasurer
STONE PINE FINANCIAL GROUP, LLC
a Colorado limited liability company
By: /s/ Paul Bagley
---------------------------------
Paul Bagley
Chief Executive Officer
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<PAGE> 6
Exhibit A to
Loan Agreement
Note
Attached
<PAGE> 7
TERM NOTE
$250,000.00 August 21, 1997
FOR VALUE RECEIVED, the undersigned, Consolidated Capital of North
America, Inc., a Colorado corporation ("Borrower"), promises to pay to Stone
Pine Financial Group, LLC, a Colorado limited liability company ("Lender"), at
Suite 400, 410 17th Street, Denver, Colorado 80202, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America, the principal amount of $250,000.00 as described herein.
Borrower further promises to pay interest (computed on the basis of a year
consisting of twelve equal months) on the principal balance of this Term Note
(this "Note") outstanding from time to time at the rate of 12.0% per annum.
Interest on this Note shall be payable monthly in arrears on the 1st day
of each month beginning with the 1st day of September, 1997. The principal of
this Note and accrued and unpaid interest hereon shall be due and payable in
full upon the earlier of (a) October 21, 1997 or (b) the closing of the
acquisition of the assets of Capitol Metals Co., Inc. and the related financing
transactions.
Borrower shall have the option at any time to prepay, without penalty,
the whole or a part of the principal of this Note. All prepayments shall be
applied first to accrued and unpaid interest and then to principal.
The existence of any of the following conditions or the occurrence of
one or the following events, if not cured or waived within ten (10) days after
notice shall be an Event of Default of this Note:
(a) Borrower shall fail to make any payment of any installment
of interest or principal of this Note when due and
payable; or
(b) Any warranty or representation contained in the Loan
Agreement shall prove to have been false or incorrect or
breached in any material respect on the date as of which
made; or
(c) Any violation in any material respect of any covenant
contained in the Loan Agreement; or
(d) Borrower shall fail to pay any Credit Obligation (defined
to mean any obligation for the payment of borrowed money
or the installment purchase price of property or an
account of a lease of property, or any obligation under a
guaranty or suretyship agreement covering obligations of
such type) owing by it or them, or any interest or premium
thereon, when due, whether owed to Lender or any other
<PAGE> 8
person and whether such Credit Obligation shall become due
by scheduled maturity, by required prepayment, by
acceleration, by demand, or otherwise, or Borrower shall
fail to perform any term, covenant, or agreement on its or
their part to be performed under any agreement or
instrument evidencing or securing or relating to any such
Credit Obligation when required to be performed which
continues beyond any applicable grace period, if the
effect of such failure is to accelerate or to permit the
holder or holders of such Credit Obligations to accelerate
the maturity of such Credit Obligation, whether or not
such failure to perform shall be waived by the holder or
holders of such Credit Obligation; or
(e) Borrower is dissolved or liquidated, or Borrower makes an
assignment for the benefit of creditors, files a petition
in bankruptcy, is adjudicated insolvent or bankrupt,
petitions or applies to any tribunal for any receiver or
trustee of Borrower, commences any proceeding relating to
Borrower under any bankruptcy, reorganization,
readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect, or there is commenced against Borrower any such
proceeding which remains undismissed for a period of sixty
days, or Borrower by any act indicates its consent to,
approval of or acquiescence in any such proceeding or the
appointment of any receiver of or trustee for Borrower or
any substantial part of its property, or suffers any such
receivership or trusteeship to continue undischarged for a
period of thirty days; or
(f) Lender shall have determined that one or more conditions
exist or events have occurred which will result in a
material adverse change in the business, properties or
financial condition of Borrower.
Upon the happening of any one or more of the foregoing Events of Default
which shall be continuing (i) the unpaid balance of the principal amount
hereof shall become and be immediately due and payable without presentation,
demand, protest or other notice of any kind all of which are expressly waived
by Borrower and (ii) the Borrower shall pay all costs and expenses of
collection, including attorneys' fees.
If any required payment under this Note is not paid within ten (10) days
after the same becomes due and payable, the same shall bear interest at a rate
which is five percent (5.0%) per annum in excess of the otherwise applicable
rate of interest.
This Note is fully transferable by Lender, without the consent of or
notice to, Borrower.
-3-
<PAGE> 9
It is expressly stipulated and agreed to be the intent of Borrower and
Lender at all times to comply with the applicable law governing the maximum
rate of interest payable on or in connection with all indebtedness and
transactions hereunder (or applicable United States federal law to the extent
that it permits Lender to contract for, charge, take, reserve or receive a
greater amount of interest). If the applicable law is ever judicially
interpreted so as to render usurious any amount of money or other consideration
called for hereunder, or contracted for, charged, taken, reserved or received
with respect to any loan or advance hereunder, or if acceleration of the
maturity of this Note or the indebtedness hereunder or if any prepayment by
Borrower results in Borrower's having paid any interest in excess of that
permitted by law, then it is Borrower's and Lender's express intent that all
excess cash amounts theretofore collected by Lender be credited on the
principal balance of this Note (or if this Note has been or would thereby be
paid in full, refunded to Borrower), and the provisions of this Note
immediately be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder. The right to accelerate maturity of
this Note does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and Lender does not intend
to collect any unearned interest in the event of acceleration.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO.
CONSOLIDATED CAPITAL OF
NORTH AMERICA, INC.
a Colorado corporation
By: /s/ Donald R. Jackson
---------------------------------
Donald R. Jackson
Treasurer
-4-
<PAGE> 1
EXHIBIT 10.34
AMENDMENT TO TERM NOTE
DATED AUGUST 21, 1997
Stone Pine Financial Group, LLC ("Lender") and Consolidated Capital of North
America, Inc. ("Borrower") hereby agree to amend the terms of the Term Note
(the "Note") dated August 21, 1997 in the principal amount of $250,000, a copy
of which is attached hereto as Exhibit A.
Lender and Borrower hereby agree that both the principal and any accrued and
unpaid interest due on the Note will be due and payable in full on December 15,
1997.
This Amendment is agreed to and accepted as of September 30, 1997.
Consolidated Capital of North America, Inc.
By: /s/ Thompson H. Rogers
------------------------------
Thompson H. Rogers, Chairman
Stone Pine Financial Group, LLC
By: /s/ Paul Bagley
------------------------------
Paul Bagley, Member
<PAGE> 2
EXHIBIT A
See Exhibit No. 10.33 - Term Note dated August 21, 1997
<PAGE> 1
EXHIBIT 10.35
PROMISSORY NOTE
July 8, 1997
---------------
Date
The undersigned Borrower (jointly and severally if more than one) properties
to pay to the order of ERB Acquisition Group, LLC
X on or before September 30, 1997
- --
- -- upon demand the following designated principal and interest in the manner
set forth below:
PRINCIPAL
X (Single Advance) - the principal sun of $ Fifty Thousand $ 00/100
- -- ($50,000.00)
- -- (Multiple Advance - Non-Revolving) - the amount of principal initially
advanced hereunder together with any additional advances hereafter,
provided, however the aggregate total of all advances shall not
exceed $
-----------------
INTEREST on the principal of this Note shall be due and payable: September
30, 1997, Interest at 15% per annum
INTEREST PAYMENTS - Interest on the principal shall be due and payable:
- -- commencing and continuing on the same day of
----------- ------------
each thereafter.
----------
X at maturity
- --
COMBINED PRINCIPAL AND INTEREST PAYMENTS - Combined principal and interest
payments shall be due and payable: $50,000.00 + 15% per annum at maturity
SECURITY INTEREST - COLLATERAL
Unsecured - if non-payment on September 30, 1997, all terms including
collateral/interest/fees etc., as stated in the $300,000 ERB note will be
applicable to this loan equal to the same pro rata ($50,000 / 300,000 or 1/6).
So if the ERB Note calls for 10,000 this loan would earn 1,667 etc.
PURPOSE OF LOAN - Borrower hereby represents and warrants that the proceeds
of this loan will be used solely for the following purposes: N/A
Individual and/or Proprietorship Corporate, Partnership, or Other
Borrower(s) Borrower
Consolidated Capital of North America, Inc.
- -------------------------------- -------------------------------------------
/s/ Thompson H. Rogers
- -------------------------------- -------------------------------------------
Thompson H. Rogers
- -------------------------------- -------------------------------------------
Title: Chairman
- -------------------------------- -------------------------------------------
<PAGE> 1
EXHIBIT NO. 10.36
AMENDMENT TO PROMISSORY NOTE
DATED JULY 8, 1997
ERB Acquisition Group, L.L.C. ("Lender") and Consolidated Capital of North
America, Inc. ("Borrower") hereby agree to amend the terms of the Promissory
Note (the "Note") dated July 8, 1997 in the principal amount of $50,000, a copy
of which is attached hereto as Exhibit A.
Lender and Borrower hereby agree that both the principal and the interest due on
the Note will be due and payable in full on December 15, 1997.
Lender and Borrower also hereby agree that in the section of the Note entitled
"Security Interest - Collateral": the date of September 30, 1997 shall be
changed to December 15, 1997.
This Amendment is agreed to and accepted as of September 30, 1997
Consolidated Capital of North America, Inc.
By: /s/ Thompson H. Rogers
--------------------------
Thompson H. Rogers, Chairman
ERB Acquisition Group, L.L.C.
By: /s/ Paul Bagley
--------------------------
Paul Bagley, Manager
<PAGE> 2
EXHIBIT A
See Exhibit No. 10.35 - Promissory Note dated July 8, 1997
<PAGE> 1
EXHIBIT NO. 10.37
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
1997 STOCK INCENTIVE PLAN
1. Objectives. The Consolidated Capital of North America, Inc. 1997
Stock Incentive Plan (the "Plan") is designed to attract, motivate and retain
selected employees and directors of the Company and other individuals providing
services to the Company. These objectives are accomplished by making long-term
incentive and other awards under the Plan, thereby providing Participants with a
proprietary interest in the growth and performance of the Company.
2. Definitions.
(a) Affiliate. Any corporation, partnership or other legal
entity in which the Company owns, directly or indirectly, 50%
or more of the total combined voting power of all classes of
stock of such corporation or of the capital interest or
profits interest of such partnership or other legal entity.
(b) Award. The grant of any form of stock option, stock
appreciation right or stock award, whether granted singly, in
combination or in tandem, to a Participant pursuant to such
terms, conditions, performance requirements, limitations and
restrictions as the Committee may establish in order to
fulfill the objectives of the Plan.
(c) Award Agreement. An agreement between the Company and a
Participant setting forth the terms, conditions, performance
requirements, limitations and restrictions applicable to an
Award.
(d) Board. The Board of Directors of Consolidated Capital of
North America, Inc.
(e) Change in Control. The occurrence of any of the following
events:
(i) The members of the Board at the beginning of any
consecutive twenty-four calendar month period (the
"Incumbent Directors") cease for any reason other
than due to death to constitute at least a majority
of the members of the Board, provided that any
director whose election, or nomination for election
by the Company's stockholders, was approved by a vote
of at least a majority of the members of the Board
then still in office who were members of the Board at
the beginning of such twenty-four calendar month
period other than as a result of a proxy contest, or
any agreement arising out of an actual or threatened
proxy contest, shall be treated as an Incumbent
Director; or
<PAGE> 2
(ii) Any "person," including a "group" (as such terms are
used in Sections 13(d) and 14(d)(2) of the Exchange
Act, but excluding the Company, any Affiliate, or any
employee benefit plan of the Company, or any
Affiliate) is or becomes the "beneficial owner" (as
defined in Rule 13(d)(3) under the Exchange Act),
directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power
of the Company's then outstanding securities; or
(iii) The stockholders of the Company shall approve a
definitive agreement (1) for the merger or other
business combination of the Company with or into
another corporation, a majority of the directors of
which were not directors of the Company immediately
prior to the merger and in which the stockholders of
the Company immediately prior to the effective date
of such merger own a percentage of the voting power
in such corporation that is less than one-half of the
percentage of the voting power they owned in the
Company immediately prior to such transactions or (2)
for the sale or other disposition of all or
substantially all of the assets of the Company to any
other entity; or
(iv) The purchase of Stock pursuant to any tender or
exchange offer made by any "person," including a
"group" (as such terms are used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the
Company, or any Affiliate, or an employee benefit
plan of the Company or any of its Affiliates, for 20%
or more of the Stock of the Company.
Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to occur in the event the Company
files for bankruptcy, liquidation or reorganization
under the United States Bankruptcy Code.
(f) Change in Control Price. The higher of (i) the highest
price per share of Stock offered in conjunction with any
transaction resulting in a Change in Control (as determined in
good faith by the Committee if any part of the offered price
is payable other than in cash) or, (ii) the highest Fair
Market Value of the Stock on any of the 30 trading days
immediately preceding the date on which a Change in Control
occurs.
(g) Code. The Internal Revenue Code of 1986, as amended from
time to time.
<PAGE> 3
(h) Committee. The committee of the Board as may be designated
from time to time by the Board to administer the Plan, which
shall consist of two or more members, each of whom shall be a
Non-Employee Director and if there shall not be at least two
Non-Employee Directors, the Plan shall be administered by the
entire Board and all references herein to the Committee shall
be deemed to refer to the entire Board.
(i) Company. Consolidated Capital of North America, Inc. and
its direct and indirect subsidiaries.
(j) Disabled or Disability. Permanent and total disability as
determined under the Company's long-term disability program
or, if no such program has been adopted, the continuous
absence of an employee for 187 consecutive days or more due to
physical or mental illness or incapacity.
(k) Exchange Act. Securities Exchange Act of 1934, as amended,
together with the rules and regulations thereunder.
(l) Fair Market Value. The value of a share of Stock on a
particular date, determined as follows: (i) if the Stock is
not listed on such date on any national securities exchange
but is traded in the over-the-counter market, the mean between
the highest "bid" and lowest "asked" quotations of a share of
Stock on such date (or if none, on the most recent date on
which there were bid and offered quotations of a share of
Stock), as reported on the National Association of Securities
Dealers, Inc. Automated Quotation System, or, if not so
reported, as reported by the National Quotation Bureau,
Incorporated, or any other similar service selected by the
Committee; or (ii) if the Stock is listed on such date on one
or more national securities exchanges, the last reported sale
price of a share of Stock on such date as recorded on the
composite tape system, or, if such system does not cover the
Stock, the last reported sale price of a share of Stock on
such date on the principal national securities exchange on
which the Stock is listed, or if no sale of Stock took place
on such date, the last reported sale price of a share of Stock
on the most recent day on which a sale of a share of Stock
took place as recorded by such system or on such exchange, as
the case may be; or (iii) if the Stock is neither listed on
such date on a national securities exchange nor traded in the
over-the-counter market, as determined by the Committee.
(m) Non-Employee Director. A person defined as such in Rule
16b-3(b)(3)(i) under the Exchange Act, or any successor
definition adopted by the Securities and Exchange Commission.
(n) Participant. An individual to whom an Award has been made
under the Plan. Awards may be made to any employee of, or any
other individual providing services to, the Company. However,
incentive stock options may be granted only
3
<PAGE> 4
to individuals who are employed by the Company or by a
subsidiary corporation (within the meaning of Section 424(f)
of the Code) of the Company, including a subsidiary that
becomes such after the adoption of the Plan.
(o) Stock. Authorized and issued or unissued shares of Common
Stock, $0.0001 par value, of the Company or any security
issued in exchange or substitution therefor.
3. Stock Available for Awards. Subject to Section 11 hereof, a total of
3,000,000 shares of Stock shall be available for issuance pursuant to Awards
granted under the Plan. Shares of Stock may be made available from the
authorized but unissued shares of the Company or from shares held in the
Company's treasury and not reserved for some other purpose. For purposes of
determining the number of shares of Stock issued under the Plan, no shares shall
be deemed issued until they are actually delivered to a Participant, or such
other person in accordance with Section 8. Shares of Stock related to Awards, or
portions of Awards, that are forfeited, cancelled or terminated, expire
unexercised, are surrendered in exchange for other Awards, or are settled in
such manner that all or some of the shares of Stock covered by an Award are not
and will not be issued to a Participant, shall be restored to the total number
of shares of Stock available for issuance pursuant to Awards. Further, shares
tendered to or withheld by the Company in connection with the exercise of stock
options, or the payment of tax withholding on any Award, shall also be available
for future issuance under Awards.
4. Administration. The Plan shall be administered by the Committee,
which shall have full power to select Participants, to grant Awards, to
interpret the Plan, to grant waivers of Award restrictions to whom Awards may be
granted form time to time, to continue, accelerate or suspend exercisability,
vesting or payment of an Award and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or proper. The
interpretation and construction by the Committee of any provision of this Plan
or of any agreement or document evidencing the grant of any Award and any
determination by the Committee pursuant to any provision of this Plan or any
such agreement, notification or document, shall be final and conclusive. No
member of the Committee shall be liable to any person for any such action taken
or determination made in good faith.
5. Awards. The Committee shall determine the types and timing of Awards
to be made to each Participant and shall set forth in the related Award
Agreement the terms, conditions, performance requirements, and limitations
applicable to each Award. Awards may include those listed below in this Section
5. Awards may be granted singly, in combination or in tandem, or in substitution
for, or as alternatives to, grants or rights under any other benefit plan of the
Company, including any plan of any entity acquired by, or merged with or into,
the Company. Awards shall be effected through Award Agreements executed by the
Company in such forms as are approved by the Committee from time to time.
4
<PAGE> 5
The Committee may determine to make any or all of the
following Awards:
(a) Stock Options. A grant of a right to purchase a specified
number of shares of Stock at an exercise price not less than
100% of the Fair Market Value of the Stock on the date of
grant, as determined by the Committee, provided that, in the
case of a stock option granted retroactively in tandem with or
as substitution for another award granted under any plan of
the Company or plan of any entity acquired by, or merged with
or into the company, the exercise price may be the same as the
purchase or designated price of such other award. If the
optionee is an owner of stock (as determined under Section
424(d) of the Internal Revenue Code) that possesses more than
10% of the total combined voting power of all classes of stock
of the Company or a parent or subsidiary corporation ("Ten
Percent Stockholder"), the option price per share in the case
of an incentive stock option shall not be less than 110% of
the fair market value of a share of Common Stock on the date
of the option grant. A stock option may be in the form of (i)
an incentive stock option which, in addition to being subject
to such terms, conditions and limitations as are established
by the Committee, complies with Section 422 of the Code or
(ii) a non-qualified stock option subject to such terms,
conditions and limitations as are established by the
Committee. The aggregate Fair Market Value (as determined as
of the time of grant) of the Stock with respect to which
incentive stock options are exercisable for the first time by
an employee in any calendar year under the Plan (and/or any
other incentive stock option plans of the Company) shall not
exceed $100,000. To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so
designated does not qualify as an Incentive Stock Option, it
shall constitute a Nonqualified Stock Option.
Stock Options granted under the Plan shall be subject
to the following terms and conditions and shall contain such
additional terms and conditions as the Committee shall deem
desirable and set forth on the Award Agreement:
(i) Option Price. The option price per share of
Common Stock shall not be less than the Fair Market
Value of the Common Stock subject to the Stock Option
on the date of grant.
(ii) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Incentive Stock
Option shall be exercisable more than 10 years after
the date the Stock Option is granted.
(iii) Exercisability. Except as otherwise provided
herein, Stock Options shall be exercisable at such
time or times and subject to such terms and
conditions as shall be determined by the Committee.
If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may
at any time waive such installment
5
<PAGE> 6
exercise provisions, in whole or in part, based on
such factors as the Committee may determine. In
addition, the Committee may at any time accelerate
the exercisability of any Stock Option.
(iv) Payment of Exercise Price. The price at which
shares of Stock may be purchased under a Stock Option
shall be paid in full in cash at the time of the
exercise or, if permitted by the Committee, by means
of tendering Stock or surrendering another Award or
any combination thereof. The Committee shall
determine acceptable methods of tendering Stock or
other Awards and may impose such conditions on the
use of Stock or other Awards to exercise a Stock
Option as it deems appropriate.
(b) Stock Appreciation Rights. A right to receive a payment,
in cash, Stock or both, equal in value to the excess of the
Fair Market Value of a specified number of shares of Stock on
the date the stock appreciation right ("SAR") is exercised
over the grant price of the SAR, which shall not be less than
100% of the Fair Market Value on the date of grant of such
SAR, as determined by the Committee, provided that if an SAR
is granted in tandem with or in substitution for another award
granted under any plan of the Company, the grant price may be
the same as the exercise or designated price of such other
award.
(c) Stock Awards. An Award made in Stock or denominated in
units of Stock. All or part of any stock award may be subject
to conditions established by the Committee, and set forth in
the Award Agreement, which may include, but are not limited
to, continuous service with the Company, achievement of
specific business objectives, increases in specified indices,
attaining growth rates, and other comparable measurements of
the Company performance.
6. Tax Withholding. Prior to the payment or settlement of any Award,
the Participant must pay, or make arrangements acceptable to the Company for the
payment of, any and all federal, state and local tax withholding that in the
opinion of the Company is required by law. The Company shall have the right to
deduct applicable taxes from any Award payment and withhold, at the time of
delivery or vesting of shares under the Plan, an appropriate number of shares
for payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes.
7. Transferability. No Award shall be transferable or assignable, or
payable to or exercisable by, anyone other than the Participant to whom it was
granted, except (a) by law, will or the laws of descent and distribution, (b) as
a result of the disability of a Participant or (c) that the Committee (in the
form of an Award Agreement or otherwise) may permit transfers of Awards by gift
or otherwise to a member of a Participant's immediate family and/or trusts whose
6
<PAGE> 7
beneficiaries are members of the Participant's immediate family, or to such
other persons or entities as may be approved by the Committee. Notwithstanding
the foregoing, in no event shall ISOs be transferable or assignable other than
by will or by the laws of descent and distribution.
8. Termination of Employment. If the employment of a Participant
terminates, other than as a result of the death or Disability of a Participant,
all unexercised, deferred and unpaid Awards shall be canceled immediately,
unless the Award Agreement provides otherwise. In the event of the death of a
Participant or in the event a Participant is deemed by the Company to be
Disabled, the Participant, or the Participant's estate, beneficiaries or
representative, as the case may be, shall have the rights and duties of the
Participant under the applicable Award Agreement.
9. Change in Control.
(a) Subject to the provisions of Section 9(b) below, in the
event of a Change in Control, each Stock Option shall, at the
discretion of the Committee, either be cancelled in exchange
for a payment in cash of an amount equal to the excess, if
any, of the Change in Control Price over the exercise price
for such Stock Option, or be fully exercisable regardless of
the exercise schedule otherwise applicable to such Stock
Option and all restricted shares of Stock and all SARs shall
become nonforfeitable and be immediately transferable or
payable, as the case may be.
(b) Notwithstanding Section 9(a), no cancellation,
acceleration of exercisability, vesting, cash settlement or
other payment shall occur with respect to any Award or any
class of Awards if the Committee reasonably determines in good
faith prior to the occurrence of a Change in Control that such
Award or Awards shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted
award hereinafter called an "Alternative Award"), by a
Participant's employer (or the parent or an Affiliate of such
employer) immediately following the Change in Control,
provided that any such Alternative Award must:
(i) be based on stock which is traded on an
established securities market, or which will be so
traded within 60 days of the Change in Control;
(ii) provide such Participant (or each Participant in
a class of Participant) with rights and entitlements
substantially equivalent to or be better than the
rights, terms and conditions applicable under such
Award, including, but not limited to, an identical or
better exercise or vesting schedule and identical or
better timing and methods of payment;
(iii) have substantially equivalent economic value to
such Award (determined at the time of the Change in
Control);
7
<PAGE> 8
(iv) have terms and conditions which provide that in
the event that the Participant's employment is
involuntarily terminated or constructively
terminated, any conditions on a Participant's rights
under, or any restrictions on transfer or
exercisability applicable to, each such Alternative
Award shall be waived or shall lapse, as the case may
be.
For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's base salary or a
Participant's incentive compensation opportunity or a material reduction in the
Participant's responsibilities, in either case without the Participant's written
consent.
10. Term, Amendment and Termination of the Plan. The Plan will
terminate on August 22, 2007. Awards outstanding as of the date of any such
termination shall not be affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan to the
extent it deems appropriate in the best interest of the Company, but no
amendment, alteration or discontinuation shall be made which would (a) impair
the rights of an optionee under a Stock Option or a recipient of a SAR or
restricted share of Stock theretofore granted without the optionee's or
recipient's consent, except such an amendment which is necessary to cause any
Award or transaction under the Plan to qualify, or to continue to quality, for
the exemption to cause any Award or transaction under the Plan to qualify, or to
continue to qualify, for the exemption provided by Rule 16b-3, or (b) disqualify
any Award or transaction under the Plan from the exemption provided by Rule
16b-3. In addition, no such amendment shall be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Award Agreement, but
no such amendment shall impair the rights of any participant without the
participant's consent except such an amendment which is necessary to cause any
Award or transaction under the Plan to qualify, or to continue to qualify, for
the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have
authority to amend the Plan to take into account charges in law and tax and
accounting rules as well as other developments, and to grant Awards that qualify
for beneficial treatment under such rules without stockholder approval.
11. Adjustments. In the event of any change in the outstanding Stock of
the Company by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or similar event, the
Committee may make or provide for adjustments in (a) the number of shares of
Stock (i) available for issuance under the Plan, and (ii) covered by outstanding
Awards denominated in stock or units of Stock; (b) the exercise and grant prices
related to outstanding Awards; and (c) the appropriate Fair Market Value and
other price
8
<PAGE> 9
determinations for such Awards, as the Committee in its sole discretion may in
good faith determine to be equitably required in order to prevent dilution or
enlargement of the rights of Participants. Moreover, in the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Awards under this Plan such alternative consideration as it may in
good faith determine to be equitable under the circumstances and may require in
connection therewith the surrender of all Awards so replaced. The Committee may
also make or provide for such adjustments in the number of Shares specified in
Section 3 of this Plan as the Committee in its sole discretion may in good faith
determine to be appropriate in order to reflect any transaction or event
described in this Section 11. In the event of any other change affecting the
Stock or any distribution to holders of Stock, such adjustments in the number
and kind of shares and the exercise, grant and conversion prices of the affected
Awards as may be deemed equitable by the Committee, including adjustments to
avoid fractional shares, shall be made to give proper effect to such event.
12. Miscellaneous.
(a) The Plan shall be unfunded and the Company shall not be
required to establish any special account or fund or to
otherwise segregate or encumber assets to ensure payment of
any Award.
(b) Nothing contained in the Plan shall prevent the Company
from adopting other or additional compensation arrangements or
plans, subject to shareholder approval if such approval is
required, and such arrangements or plans may be either
generally applicable or applicable only in specific cases.
(c) No Participant shall have any claim or right to be granted
an Award under the Plan and nothing contained in the Plan
shall be deemed or be construed to give any Participant the
right to be retained in the employ of the Company or to
interfere with the right of the Company to discharge any
Participant at any time without regard to the effect such
discharge may have upon the Participant under the Plan.
(d) The Plan and each Award Agreement shall be governed by the
laws of the State of Colorado, excluding any conflicts or
choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive
law of another jurisdiction.
(e) The Committee shall have full power and authority to
interpret the Plan and to make any determinations thereunder
and the Committee's determinations shall be binding and
conclusive. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among
individuals, whether or not such individuals are similarly
situated.
(f) If any provision of the Plan is or becomes or is deemed
invalid, illegal or
9
<PAGE> 10
unenforceable in any jurisdiction, or would disqualify the
Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended
or limited in scope to conform to applicable laws or, in the
discretion of the Committee, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
(g) The Plan shall become effective on the date it is approved
by the Board, subject to approval by the holders of a majority
of the shares of Stock then outstanding. The Committee may
grant Awards subject to the condition that this Plan shall
have been approved by the stockholders of the Company at the
next Annual Meeting of Stockholders.
(h) With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision
of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
(i) The Committee may grant Awards to employees who are
subject to the tax laws of nations other than the United
States, which Awards may have terms and conditions that differ
from other Awards granted under the Plan for the purposes of
complying with foreign tax laws.
10
<PAGE> 1
EXHIBIT 10.38
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
INCENTIVE STOCK OPTION AGREEMENT
[FOR GRANTS TO EMPLOYEES]
Consolidated Capital of North America, Inc., a Colorado corporation (the
"Company"), hereby grants to __________________ (the "Optionee"), an Incentive
Stock Option (the "Option") to purchase a total of ______________ shares of the
Company's Common Stock, at the price set forth herein, and subject to the terms,
definitions and provisions of the 1997 Stock Incentive Plan (the "Plan") adopted
by the Company, which is incorporated herein by reference. The terms defined in
the Plan shall have the same defined meanings herein.
1. NATURE OF THE OPTIONS. The Incentive Stock Option is intended to
qualify as an "incentive stock option" as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). The shares underlying the Option
are hereinafter referred to as the "Shares".
2. EXERCISE PRICE. The exercise price of the Option is $_____ per share
for each share subject to the Option.
3. TERMS OF OPTIONS. This Option is granted in connection with the
Optionee's employment by the Company. Subject to provisions contained elsewhere
in this Agreement, the Option may be exercised cumulatively as set forth below,
until the day preceding the [tenth][fifth] anniversary of the date hereof (the
"Termination Date"):
DATE NUMBER OF OPTIONS
4. ADMINISTRATION. The Plan is administered by a committee of the Board
consisting solely of two or more Non-Employee directors (the "Committee") and if
there shall not be at least two Non-Employee Directors, the Plan shall be
administered by the entire Board and all references herein to the Committee
shall be deemed to refer to the entire Board. All determinations and acts of the
Committee as to any matters concerning the Plan, including interpretations or
constructions of this Option and of the Plan, shall be conclusive and binding on
the Optionee and any parties claiming through the Optionee.
5. EXERCISE. Unless the Optionee ceases to be employed by the Company
or a direct or indirect subsidiary thereof, the right of the Optionee to
purchase Shares hereunder, subject to any installment requirements set forth
above, may be exercised in whole or in part at any time after the accrual of
such respective installment and prior to the Termination Date, except as
otherwise provided herein. The Option may not be exercised for a fraction of a
share.
<PAGE> 2
6. NOTICE OF EXERCISE. The Option shall be exercisable by written
notice (the "Notice") which shall state the election to exercise the Option and
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment in full of the
exercise price in cash, or in any other manner approved by the Committee,
including payment by surrender of shares of Common Stock of the Company at their
fair market value on the date of delivery.
7. DELIVERY OF CERTIFICATES. As soon as practicable after receipt of
the Notice and payment, and subject to the next two paragraphs, the Company
shall, without transfer or issue tax or other incidental expense to the
Optionee, deliver to the Optionee a certificate or certificates for the shares
of Common Stock so purchased. Such delivery shall be made (a) at the offices of
the Company at 410 17th Street, Suite 400, Denver, Colorado 80202, (b) at such
other place as may be mutually acceptable to the Company and the Optionee, or
(c) by certified mail addressed to the Optionee at the Optionee's address shown
in the records of the Company.
8. WITHHOLDING. The Company shall have the right to withhold an
appropriate number of shares of Common Stock (based on the fair market value
thereof on the date of exercise) for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all tax withholding obligations.
9. COMPLIANCE WITH LAWS. The Company may postpone the time of delivery
of certificate(s) for shares of Common Stock for such additional time as the
Company shall deem necessary or desirable to enable it to comply with the
requirements of any securities exchange upon which the Common Stock may be
listed, or the requirements of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any rules or regulations of the
Securities and Exchange Commission promulgated thereunder, or any applicable
state laws relating to the authorization, issuance or sale of securities.
10. NON-TRANSFERABLE OPTIONS. During the Optionee's lifetime, this
Option shall be exercisable only by the Optionee and neither this Option nor any
right hereunder may be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner otherwise than by will or by the laws of descent or
distribution on the terms set forth in Section 13. The terms of this Option
Agreement shall be binding upon the executors, administrator, heirs, successors
and assigns of Optionee.
11. TERMINATION OF EMPLOYMENT.
(a) If Optionee's employment by the Company or its direct or
indirect subsidiaries terminates for any reason other than by reason of death or
disability or "for cause" as defined in Paragraph 11 (b) below, all currently
exercisable installments of this Option shall remain
2
<PAGE> 3
exercisable for a period of ninety (90) days from the date of termination and,
to the extent not exercised, shall terminate. All other non-vested installments
of this Option shall immediately and automatically terminate.
(b) If Optionee's employment by the Company or its direct or indirect
subsidiaries terminates by virtue of a termination for cause (as defined in
Optionee's Employment Agreement, if applicable or as set forth below), the
Option, whether vested or not, shall terminate. If Optionee is not employed
pursuant to an Employment Agreement as of the date of termination, cause shall
mean (1) the Optionee acting fraudulently in his or her relations with the
Company, (2) the Optionee misappropriating or doing material, intentional damage
to the property of the Company, (3) the substantial breach or continuous neglect
by the Optionee of his or her employment obligations, or willful misconduct by
the Optionee in the performance of such obligations which occurs or persists
after notice and an opportunity to cure, (4) the Optionee being convicted of a
felony, or (5) the Optionee's failure to act in the best interest of the Company
or breach of his or her fiduciary duties to the Company.
12. DISABILITY OF OPTIONEE. If Optionee is unable to continue his or
her employment by the Company as a result of disability of the Optionee (as such
condition is defined in the Plan) Optionee may, but only within twelve (12)
months from the date of disability, exercise such portion of the Option which
has vested to the extent the Optionee was entitled to exercise it at the date of
such disability, and such portion of the Option which has not vested shall
terminate. If Optionee does not exercise such portion of the Option which has
vested and which Optionee was entitled to exercise within the time specified
herein, this Option shall terminate.
13. DEATH OF OPTIONEE. In the event of the death of Optionee during the
term of the Option and while an employee of the Company and having been employed
continuously as an employee since the date of grant of the Option, the Option
may be exercised, at any time within twelve (12) months following the date of
death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance but only to the extent of the
right to exercise that had accrued at the date of death. If Optionee's estate or
a person who acquired the right to exercise the Option by bequest or inheritance
does not exercise such portion of Optionee's Option which has vested and which
the Optionee was entitled to exercise in the time specified herein, the Option
shall terminate.
14. FAILURE TO PAY. If, upon tender of delivery thereof, the Optionee
fails to accept delivery of and pay or have paid for all or any part of the
number of shares of Common Stock specified in the Notice, the Optionee's right
to exercise this Option with respect to such undelivered and unpaid for shares
may be terminated by the Company.
15. NO RIGHTS OF SHAREHOLDER. Neither the Optionee nor any person or
persons entitled to exercise the Optionee's rights under this Option in
accordance herewith shall have any rights to dividends or to Common Stock
subject to this Option, except to the extent that
3
<PAGE> 4
a certificate for such shares shall have been issued upon the exercise of this
Option as provided herein.
16. NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of this Option confers on the Optionee any right to continued
employment by the Company (or any of its direct or indirect subsidiaries) or in
any way interferes with or alters any of the Company's (and its direct and
indirect subsidiaries') rights to terminate the employment by the Company of the
Optionee at any time, with or without cause, and without liability therefor.
This Option shall not be deemed a part of the Optionee's regular, recurring
compensation for any purpose, including, without limitation, for the purposes of
any termination indemnity or severance pay law of any jurisdiction.
17. NOTICES. Each notice relating to this Option shall be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Company shall be addressed to it at its offices at 410 17th Street, Suite
400, Denver, Colorado 80202, attention of the Committee, c/o the Company's
Secretary. All notices to the Optionee or other person or persons then entitled
to exercise any rights with respect to this Option shall be addressed to the
Optionee or such other person or persons at the Optionee's address shown in the
records of the Company or the location at which the Optionee is employed by the
Company. Anyone to whom a notice may be given under this Option may designate a
new address by notice to that effect.
18. GOVERNING LAW. This Option and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Internal
Revenue Code of 1986, as amended from time to time, or the securities laws of
the United States, shall be governed by and construed under the laws of the
State of Colorado.
IN WITNESS WHEREOF, Consolidated Capital of North America, Inc.
has caused this Option to be executed by its officers as of the ______ day
of _________________.
Consolidated Capital of North America, Inc.
By:
--------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
- --------------------------
4
<PAGE> 1
EXHIBIT 10.39
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
[FOR GRANTS TO EMPLOYEES]
Consolidated Capital of North America, Inc., a Colorado corporation (the
"Company"), hereby grants to __________________ (the "Optionee"), an Incentive
Stock Option (the "Option") to purchase a total of ______________ shares of the
Company's Common Stock, at the price set forth herein, and subject to the terms,
definitions and provisions of the 1997 Stock Incentive Plan (the "Plan") adopted
by the Company, which is incorporated herein by reference. The terms defined in
the Plan shall have the same defined meanings herein.
1. NATURE OF THE OPTIONS. The Option is a non-qualified stock option.
The shares underlying the Option are hereinafter referred to as the "Shares".
2. EXERCISE PRICE. The exercise price of the Option is $_____ per share
for each share subject to the Option.
3. TERMS OF OPTIONS. This Option is granted in connection with the
Optionee's employment by the Company. Subject to provisions contained elsewhere
in this Agreement, the Option may be exercised cumulatively as set forth below,
until the day preceding the tenth anniversary of the date hereof (the
"Termination Date"):
DATE NUMBER OF OPTIONS
4. ADMINISTRATION. The Plan is administered by a committee of the Board
consisting solely of two or more Non-Employee directors (the "Committee") and if
there shall not be at least two Non-Employee Directors, the Plan shall be
administered by the entire Board and all references herein to the Committee
shall be deemed to refer to the entire Board. All determinations and acts of the
Committee as to any matters concerning the Plan, including interpretations or
constructions of this Option and of the Plan, shall be conclusive and binding on
the Optionee and any parties claiming through the Optionee.
5. EXERCISE. Unless the Optionee ceases to be employed by the Company
or a direct or indirect subsidiary thereof, the right of the Optionee to
purchase Shares hereunder, subject to any installment requirements set forth
above, may be exercised in whole or in part at any time after the accrual of
such respective installment and prior to the Termination Date, except as
otherwise provided herein. The Option may not be exercised for a fraction of a
share.
6. NOTICE OF EXERCISE. The Option shall be exercisable by written
notice (the "Notice") which shall state the election to exercise the Option and
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the
<PAGE> 2
Company pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by payment
in full of the exercise price in cash, or in any other manner approved by the
Committee, including payment by surrender of shares of Common Stock of the
Company at their fair market value on the date of delivery.
7. DELIVERY OF CERTIFICATES. As soon as practicable after receipt of
the Notice and payment, and subject to the next two paragraphs, the Company
shall, without transfer or issue tax or other incidental expense to the
Optionee, deliver to the Optionee a certificate or certificates for the shares
of Common Stock so purchased. Such delivery shall be made (a) at the offices of
the Company at 410 17th Street, Suite 400, Denver, Colorado 80202, (b) at such
other place as may be mutually acceptable to the Company and the Optionee, or
(c) by certified mail addressed to the Optionee at the Optionee's address shown
in the records of the Company.
8. WITHHOLDING. The Company shall have the right to withhold an
appropriate number of shares of Common Stock (based on the fair market value
thereof on the date of exercise) for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all tax withholding obligations.
9. COMPLIANCE WITH LAWS. The Company may postpone the time of delivery
of certificate(s) for shares of Common Stock for such additional time as the
Company shall deem necessary or desirable to enable it to comply with the
requirements of any securities exchange upon which the Common Stock may be
listed, or the requirements of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any rules or regulations of the
Securities and Exchange Commission promulgated thereunder, or any applicable
state laws relating to the authorization, issuance or sale of securities.
10. NON-TRANSFERABLE OPTIONS. During the Optionee's lifetime, this
Option shall be exercisable only by the Optionee and neither this Option nor any
right hereunder may be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner otherwise than by will or by the laws of descent or
distribution on the terms set forth in Section 13 or otherwise with the consent
of the Committee. The terms of this Option Agreement shall be binding upon the
executors, administrator, heirs, successors and assigns of Optionee.
11. TERMINATION OF EMPLOYMENT.
(a) If Optionee's employment by the Company or its direct or
indirect subsidiaries terminates for any reason other than by reason of death or
disability or "for cause" as defined in Paragraph 11 (b) below, all currently
exercisable installments of this Option shall remain exercisable for a period of
ninety (90) days from the date of termination and, to the extent not exercised,
shall terminate. All other non-vested installments of this Option shall
immediately and automatically terminate.
2
<PAGE> 3
(b) If Optionee's employment by the Company or its direct or
indirect subsidiaries terminates by virtue of a termination for cause (as
defined in Optionee's Employment Agreement, if applicable or as set forth
below), the Option, whether vested or not, shall terminate. If Optionee is not
employed pursuant to an Employment Agreement as of the date of termination,
cause shall mean (1) the Optionee acting fraudulently in his or her relations
with the Company, (2) the Optionee misappropriating or doing material,
intentional damage to the property of the Company, (3) the substantial breach or
continuous neglect by the Optionee of his or her employment obligations, or
willful misconduct by the Optionee in the performance of such obligations which
occurs or persists after notice and an opportunity to cure, (4) the Optionee
being convicted of a felony, or (5) the Optionee's failure to act in the best
interest of the Company or breach of his or her fiduciary duties to the Company.
12. DISABILITY OF OPTIONEE. If Optionee is unable to continue his or
her employment by the Company as a result of disability of the Optionee (as such
condition is defined in the Plan) Optionee may, but only within twelve (12)
months from the date of disability, exercise such portion of the Option which
has vested to the extent the Optionee was entitled to exercise it at the date of
such disability, and such portion of the Option which has not vested shall
terminate. If Optionee does not exercise such portion of the Option which has
vested and which Optionee was entitled to exercise within the time specified
herein, this Option shall terminate.
13. DEATH OF OPTIONEE. In the event of the death of Optionee during the
term of the Option and while an employee of the Company and having been employed
continuously as an employee since the date of grant of the Option, the Option
may be exercised, at any time within twelve (12) months following the date of
death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance but only to the extent of the
right to exercise that had accrued at the date of death. If Optionee's estate or
a person who acquired the right to exercise the Option by bequest or inheritance
does not exercise such portion of Optionee's Option which has vested and which
the Optionee was entitled to exercise in the time specified herein, the Option
shall terminate.
14. FAILURE TO PAY. If, upon tender of delivery thereof, the Optionee
fails to accept delivery of and pay or have paid for all or any part of the
number of shares of Common Stock specified in the Notice, the Optionee's right
to exercise this Option with respect to such undelivered and unpaid for shares
may be terminated by the Company.
15. NO RIGHTS OF SHAREHOLDER. Neither the Optionee nor any person or
persons entitled to exercise the Optionee's rights under this Option in
accordance herewith shall have any rights to dividends or to Common Stock
subject to this Option, except to the extent that a certificate for such shares
shall have been issued upon the exercise of this Option as provided herein.
3
<PAGE> 4
16. NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of this Option confers on the Optionee any right to continued
employment by the Company (or any of its direct or indirect subsidiaries) or in
any way interferes with or alters any of the Company's (and its direct and
indirect subsidiaries') rights to terminate the employment by the Company of the
Optionee at any time, with or without cause, and without liability therefor.
This Option shall not be deemed a part of the Optionee's regular, recurring
compensation for any purpose, including, without limitation, for the purposes of
any termination indemnity or severance pay law of any jurisdiction.
17. NOTICES. Each notice relating to this Option shall be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Company shall be addressed to it at its offices at 410 17th Street, Suite
400, Denver, Colorado 80202, attention of the Committee, c/o the Company's
Secretary. All notices to the Optionee or other person or persons then entitled
to exercise any rights with respect to this Option shall be addressed to the
Optionee or such other person or persons at the Optionee's address shown in the
records of the Company or the location at which the Optionee is employed by the
Company. Anyone to whom a notice may be given under this Option may designate a
new address by notice to that effect.
18. GOVERNING LAW. This Option and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Internal
Revenue Code of 1986, as amended from time to time, or the securities laws of
the United States, shall be governed by and construed under the laws of the
State of Colorado.
IN WITNESS WHEREOF, Consolidated Capital of North America, Inc.
has caused this Option to be executed by its officers as of the ______ day
of _________________.
Consolidated Capital of North America, Inc.
By:
--------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
- --------------------------
4
<PAGE> 1
EXHIBIT 10.40
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
[FOR GRANTS TO NON-EMPLOYEES]
Consolidated Capital of North America, Inc., a Colorado corporation (the
"Company"), hereby grants to __________________ (the "Optionee"), an Incentive
Stock Option (the "Option") to purchase a total of ______________ shares of the
Company's Common Stock, at the price set forth herein, and subject to the terms,
definitions and provisions of the 1997 Stock Incentive Plan (the "Plan") adopted
by the Company, which is incorporated herein by reference. The terms defined in
the Plan shall have the same defined meanings herein.
1. NATURE OF THE OPTIONS. The Option is a non-qualified stock option.
The shares underlying the Option are hereinafter referred to as the "Shares".
2. EXERCISE PRICE. The exercise price of the Option is $ ____ per share
for each share subject to the Option.
3. TERMS OF OPTIONS. This Option is granted in connection with the
Optionee's employment by the Company. Subject to provisions contained elsewhere
in this Agreement, the Option may be exercised cumulatively as set forth below,
until the day preceding the tenth anniversary of the date hereof (the
"Termination Date"):
DATE NUMBER OF OPTIONS
4. ADMINISTRATION. The Plan is administered by a committee of the Board
consisting solely of two or more Non-Employee directors (the "Committee") and if
there shall not be at least two Non-Employee Directors, the Plan shall be
administered by the entire Board and all references herein to the Committee
shall be deemed to refer to the entire Board. All determinations and acts of the
Committee as to any matters concerning the Plan, including interpretations or
constructions of this Option and of the Plan, shall be conclusive and binding on
the Optionee and any parties claiming through the Optionee.
5. EXERCISE. The right of the Optionee to purchase Shares hereunder,
subject to any installment requirements set forth above, may be exercised in
whole or in part at any time after the accrual of such respective installment
and prior to the Termination Date, except as otherwise provided herein. The
Option may not be exercised for a fraction of a share.
6. NOTICE OF EXERCISE. The Option shall be exercisable by written
notice (the "Notice") which shall state the election to exercise the Option and
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the
<PAGE> 2
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company. The written notice shall be accompanied by payment in full of
the exercise price in cash, or in any other manner approved by the Committee,
including payment by surrender of shares of Common Stock of the Company at their
fair market value on the date of delivery.
7. DELIVERY OF CERTIFICATES. As soon as practicable after receipt of
the Notice and payment, and subject to the next two paragraphs, the Company
shall, without transfer or issue tax or other incidental expense to the
Optionee, deliver to the Optionee a certificate or certificates for the shares
of Common Stock so purchased. Such delivery shall be made (a) at the offices of
the Company at 410 17th Street, Suite 400, Denver, Colorado 80202, (b) at such
other place as may be mutually acceptable to the Company and the Optionee, or
(c) by certified mail addressed to the Optionee at the Optionee's address shown
in the records of the Company.
8. WITHHOLDING. The Company shall have the right to withhold an
appropriate number of shares of Common Stock (based on the fair market value
thereof on the date of exercise) for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all tax withholding obligations.
9. COMPLIANCE WITH LAWS. The Company may postpone the time of delivery
of certificate(s) for shares of Common Stock for such additional time as the
Company shall deem necessary or desirable to enable it to comply with the
requirements of any securities exchange upon which the Common Stock may be
listed, or the requirements of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any rules or regulations of the
Securities and Exchange Commission promulgated thereunder, or any applicable
state laws relating to the authorization, issuance or sale of securities.
10. NON-TRANSFERABLE OPTIONS. During the Optionee's lifetime, this
Option shall be exercisable only by the Optionee and neither this Option nor any
right hereunder may be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner otherwise than by will or by the laws of descent or
distribution on the terms set forth in Section 11 or otherwise with the consent
of the Committee. The terms of this Option Agreement shall be binding upon the
executors, administrator, heirs, successors and assigns of Optionee.
11. DEATH OF OPTIONEE. In the event of the death of Optionee during the
term of the Option, the Option may be exercised, at any time within twelve (12)
months following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that had accrued at the date of death. If
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise such portion of Optionee's Option which
has vested and which the Optionee was entitled to exercise in the time specified
herein, the Option shall terminate.
12. FAILURE TO PAY. If, upon tender of delivery thereof, the Optionee
fails to accept delivery of and pay or have paid for all or any part of the
number of shares of Common
3
<PAGE> 3
Stock specified in the Notice, the Optionee's right
to exercise this Option with respect to such undelivered and unpaid for shares
may be terminated by the Company.
13. NO RIGHTS OF SHAREHOLDER. Neither the Optionee nor any person or
persons entitled to exercise the Optionee's rights under this Option in
accordance herewith shall have any rights to dividends or to Common Stock
subject to this Option, except to the extent that a certificate for such shares
shall have been issued upon the exercise of this Option as provided herein.
14. NOTICES. Each notice relating to this Option shall be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Company shall be addressed to it at its offices at 410 17th Street, Suite
400, Denver, Colorado 80202 , attention of the Committee, c/o the Company's
Secretary. All notices to the Optionee or other person or persons then entitled
to exercise any rights with respect to this Option shall be addressed to the
Optionee or such other person or persons at the Optionee's address shown in the
records of the Company or the location at which the Optionee is employed by the
Company. Anyone to whom a notice may be given under this Option may designate a
new address by notice to that effect.
15. GOVERNING LAW. This Option and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Internal
Revenue Code of 1986, as amended from time to time, or the securities laws of
the United States, shall be governed by and construed under the laws of the
State of Colorado.
IN WITNESS WHEREOF, Consolidated Capital of North America, Inc.
has caused this Option to be executed by its officers as of the ______ day
of _________________.
Consolidated Capital of North America, Inc.
By:
----------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
- --------------------------
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 356,660
<SECURITIES> 0
<RECEIVABLES> 2,324,233
<ALLOWANCES> 194,741
<INVENTORY> 1,062,049
<CURRENT-ASSETS> 3,740,295
<PP&E> 2,246,015
<DEPRECIATION> 161,925
<TOTAL-ASSETS> 8,291,909
<CURRENT-LIABILITIES> 5,199,899
<BONDS> 3,577,114
0
0
<COMMON> 1,586
<OTHER-SE> (486,690)
<TOTAL-LIABILITY-AND-EQUITY> 8,291,909
<SALES> 14,618,684
<TOTAL-REVENUES> 14,618,684
<CGS> 12,068,261
<TOTAL-COSTS> 12,068,261
<OTHER-EXPENSES> 3,915,350
<LOSS-PROVISION> 56,331
<INTEREST-EXPENSE> 397,379
<INCOME-PRETAX> (1,731,501)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,731,501)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,731,501)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
