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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
WHITEHALL LIMITED, INC.
----------------------------------------------
(Name of Small Business Issuer in its charter)
Florida 84-1092599
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
290 Cocoanut Avenue, Sarasota, Florida 34236
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number (941) 954-1181
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
----------------------------
(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Background
WHITEHALL LIMITED, INC. (the "Registrant") is a corporation which has
been domesticated and presently exists under Florida law effective June 24,
1999. Prior to June 24, 1999, the Registrant was known as Cambridge Universal
Corporation and was an inactively traded public company existing under Colorado
law. The Registrant was initially formed under Colorado corporate law in 1988
and conducted a public offering of its investment units, each unit being
comprised of one share of the Registrant's Common Stock and Class A and Class B
Common Stock Purchase Warrants, which Warrants have either been exercised or
have expired. The definitive prospectus containing the offer of such units bore
an effective date of December 8, 1988 and thereafter the Registrant voluntarily
filed the periodic and annual reports with the United States Securities and
Exchange Commission (the "Commission") under the Securities Exchange Act of
1934, as amended. For a period of time and in accordance with permissive
regulations, the Registrant suspended the filing of such periodic and annual
reports but such reports have been brought to a current status and the
Registrant believes that it is current with respect to such reports as of the
time of the filing of this Registration Statement.
As more fully described subsequently herein, the Registrant is
continuing the business activities conducted by a Florida corporate entity
known as Whitehall Homes II, Inc. ("Whitehall"), which now is a wholly-owned
corporate subsidiary of the Registrant. The business of the Registrant and of
Whitehall relates to the development of residential subdivisions and the
construction of residential dwelling units and the marketing thereof in the
geographic area of the West Coast of Florida.
The Business activities of the Registrant and Whitehall commenced in
1985 as a result of the efforts of Ronald Mustari, who is a member of the Board
of Directors and President and Chief Executive Officer of the Registrant. The
first corporate entity utilized by Mr. Mustari in such activities was Whitehall
Development Corporation. The Registrant estimates that the Whitehall Entities
have constructed approximately 1,400 residential dwelling units (principally
single family homes) in the Florida counties of Sarasota, Manatee, Charlotte
and Hillsborough, since 1985 to the time contemporaneous to the preparation of
this Registration Statement. As used herein, the term "Whitehall Entities"
means Whitehall and other affiliated entities which have been consolidated with
Whitehall as explained in the immediately following paragraph.
During the time of such construction and marketing activity, Mr.
Mustari conducted the Business of the Whitehall entities with another
principal. During the early part of 1999, Mr. Mustari negotiated a purchase of
such other principal's entire interest in the various Whitehall Entities and
such transaction has been consummated. As a result of the consummation of such
transaction, Mr. Mustari, with his wife Joanne Mustari, acquired all of the
other principal's interest in the Whitehall Entities identified in Note 1 to
the
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consolidated pro forma financial statements referenced in this paragraph. With
the exception of one entity, the acquisition transaction between Mr. and Mrs.
Mustari and the other principal resulted in 100% of the ownership of such
corporations being vested in Mr. and Mrs. Mustari. With respect to such entity,
70% of such ownership interest is now vested in Mr. and Mrs. Mustari with the
balance of 30% being owned by several other persons who are not active in the
business of Whitehall. Subsequent to the acquisition transaction between Mr.
and Mrs. Mustari and such other principal, all of such entities described in
this paragraph were consolidated with and into Whitehall. For additional
information concerning such Whitehall Entities, see Note 1 to the consolidated
pro forma financial statements of the Registrant and its wholly-owned
subsidiary, Whitehall, included as Part F/S of this Registration Statement.
Subsequent to the purchase transaction between such other principal
and Mr. and Mrs. Mustari, the Registrant concluded the exchange transaction
with Mr. and Mrs. Mustari whereby Whitehall (which included the Whitehall
Entities consolidated with and into Whitehall) became the wholly-owned
subsidiary of the Registrant. In such transaction, Mr. and Mrs. Mustari were
issued 4,608,268 shares of the Registrant's Common Stock, which Common Stock is
restricted and not free trading.
Development of the Registrant's Business and Present Activities
The Registrant maintains its corporate and administrative offices in a
facility owned by the Registrant which is located at 290 Cocoanut Avenue,
Sarasota, Florida 34236. The Registrant's telephone at such address is
941/954-1181 and the Registrant's FAX number is 941/954-3676. The Registrant's
web site is www.whitehallhomes.com.
Contemporaneous to the exchange transaction between the Registrant and
Mr. and Mrs. Mustari, the Registrant was domesticated under the Florida
Business Corporation Act and adopted its present corporate name, Whitehall
Limited, Inc. Also, at such time the Registrant effected the reverse split of
its outstanding Common Stock, whereby each three shares of the Registrant's
Common Stock became one share. All Common Stock share amounts set forth in this
Registration Statement, including the financial statements included herewith,
reflect such reverse stock split.
The Registrant, directly and through Whitehall, provides quality homes
with custom features at moderate prices and designed principally for the entry
level or "moving up" home buyers' market, as well as the retirement segment of
such market. Dwelling residences constructed and marketed by the Registrant
usually range in size from 1,200 to 3,500 square feet and have purchase prices
ranging from $120,000 to $400,000. The Registrant and Whitehall market the
residential dwelling unit inventories through commissioned employees and
independent real estate brokers in the Registrant's and Whitehall's market
area, which consists of the west coast of the State of Florida, primarily,
Sarasota, Manatee, Charlotte, Pasco and Hillsborough Counties. Residential
dwelling unit sales are usually conducted from sales offices located in
furnished models located in each subdivision where the
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Registrant and Whitehall are active. The Registrant and Whitehall also
typically will construct a limited number of speculative homes in each
residential subdivision in which they are active in order to enhance marketing
and sales activities.
At September 30, 1999, the Registrant and Whitehall had approximately
$1.57 million invested in land and development costs and approximately $1.4
million invested in homes under construction and furnished models.
Existing Projects. The Registrant, through Whitehall, is presently
engaged in residential real estate project development and the construction of
single family dwellings in four developments. These developments are the
Village at Beekman Place, Sarasota, Florida; the Estates at Beekman Place,
Sarasota, Florida; Governor's Green and Bermuda Club at Plantation Golf and
Country Club, Venice, Florida; Avalon at the Villages of Palm Aire, Sarasota,
Florida; Ibis/Heron Green Country Club and Pine Meadows/Heron Green Country
Club, North Port, Florida; Stillwater, Englewood, Florida; and Lake Jovita,
Tampa, Florida. All of the subdivisions where such development and construction
activity is being conducted contain appropriately zoned residential dwelling
unit building lots and construction permits are obtained prior to the
construction of a unit. The table set forth below presents summaries of
statistical data with respect to the identified real estate projects:
<TABLE>
<CAPTION>
Number of
Dwelling
Number Estimated Number of Contractors
of Build Average Dwelling in Devel- Estimated
ing Lots Selling Units Sold/ opment in Time of
Status of Avail- Price Per Number of Addition Develop-
Infrastructure able to Dwelling Units under to the ment
Identity of Development Development Registrant Unit Construction Registrant Build-Out
- ----------------------- -------------- ---------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Avalon at the Villages Complete 114 $175,000 47/67 4 36 months
of Palm Aire
Beekman Place & Village Complete 148 165,000 146/2 2 Fall, 1999
Bermuda Club Complete 30 200,000 20/4 0 Fall, 2000
Governor's Green Complete 16 250,000 14/2 1 Spring, 2000
Ibis/Heron Creek Complete 112 152,000 4/16 0 39 months
Country Club
Pine Meadows/Heron Complete 60 250,000 2/8 3 30 months
Green Country Club
Lake Jovita Complete 58 185,000 2/10 0 30 months
Stillwater Complete 197 235,000 2/6 2 48 months
</TABLE>
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Substantially all of the residential dwelling unit construction activities of
the Registrant and Whitehall are and will be conducted through utilization of
the services of experienced and reliable subcontractors who provide for
electrical, sewer, concrete slab, framing, roofing and similar matters. The
Registrant believes that there is an adequate supply of reliable and
experienced subcontractors available to the Registrant in the areas of its
construction activities and the Registrant believes that its relationships with
such subcontractors is good.
In its development and construction activities, the Registrant,
through Whitehall, endeavors to offer high quality homes with custom features
not usually found in dwelling units priced at the prices established by the
Registrant. Such units are designed principally for the entry level homeowner,
that market commonly referred to as the "move up" market and the retirement
segments of the community. Average dwelling unit sizes range from 1,200 to
3,500 square feet and range in price from $120,000 to $400,000. The plans for
the residential dwelling units constructed by the Registrant and Whitehall are
prepared by architects in order to maximize the aesthetic appeal of the units
to the buying public. In the construction process, while as indicated the
Registrant and Whitehall utilize the services of material and service
subcontractors, supervision is exercised by construction supervisors employed
directly by the Registrant.
Marketing. In such construction and residential dwelling unit
marketing activities, the Registrant and Whitehall continually monitor the
sales and margins achieved with respect to residential dwelling unit
construction costs, other related costs and the market price realized in the
sale of the unit to the purchaser. The Registrant generally offers five to ten
home designs in each of the developments in which it is active but is prepared
to provide to the interested home buyer additional building plans and further
options and variances from the standard plan. Additional customization of a
residential dwelling unit may also be provided by the Registrant and Whitehall
to the customer.
In its marketing activities, Whitehall attempts to maximize the affect
of its advertising expenditures by participating in promotional activities,
publications and newsletters sponsored by local real estate brokers, mortgage
companies, utility companies and trade associations and, in certain instances
where possible, by positioning its developments in locations that maximize the
exposure of the development to local traffic patterns. The Registrant and
Whitehall market the residential dwelling units through commissioned employees
and independent real estate brokers. Dwelling unit sales are typically
conducted from sales offices located in furnished model homes located within
each development. Registrant sales representatives and consultants assist
prospective home buyers by providing them with floor plans, price information,
tours of model homes and the selection of options and other custom features.
The management of the Registrant and Whitehall believe that their commissioned
employees are adequately trained in terms of their sales capability and it is
the policy of the Registrant and Whitehall to keep such persons informed as to
the availability of financing, construction schedules and future marketing and
advertising plans.
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In addition to using model homes, Whitehall typically builds a limited
number of speculative homes in each development in order to enhance its
marketing and sales activities. Construction of these speculative homes is also
considered necessary to satisfy the requirement of relocated personnel and
independent brokers who often represent home buyers requiring a completed
residential dwelling unit within 60 days or less. A majority of such
speculative homes are, in fact, sold before construction is completed or are
sold immediately following completion. The Registrant and Whitehall attempt to
limit the number of speculative homes contained in each of their developments.
In its marketing activities, the Registrant and Whitehall recognize
the importance of the availability of residential dwelling unit financing and
accordingly work with a variety of mortgage lenders and mortgage brokers who,
on a regular basis, make available to home buyers a range of conventional
mortgage financing, as well as FHA and VA mortgage programs. By assisting in
the financing of their residential dwelling units, the Registrant and Whitehall
believe that they are better able to coordinate and expedite the consummation
of the sales transaction.
Regulatory Factors. The development of residential real estate
projects and the construction of single family dwellings constitutes activity
which is subject to extensive regulation primarily by local governmental
authorities and agencies thereof, although Florida, on a statewide basis,
exercises significant regulation in terms of environmental concerns and other
matters. As a result of this extensive regulation, the Registrant and
Whitehall, as well as the subcontractors serving the Registrant and Whitehall,
are required to comply with various state and local laws and regulations,
including those relating to zoning, density requirements, the necessity of
obtaining building permits, matters relating to environmental considerations,
advertising, rules relating to the extension of credit and other subjects.
Regulatory factors also affect the specifications and quality of materials that
must be utilized on a minimum basis with respect to any constructed residential
dwelling unit, as well as the completion of the infrastructure required in any
development.
Property Acquisitions. The Registrant and Whitehall continually
inspect and determine the relative feasibility of real estate parcels for
future residential development projects and, accordingly, constantly inspect
available parcels of real estate in their operating area which is Sarasota,
Manatee, Charlotte and Hillsborough Counties, Florida. Real estate properties
possibly suitable for development will also be investigated which are not
located in such four county area. As of the date of this Memorandum, the
Registrant and Whitehall have contracted for the purchase of property in
Collier County, Florida (Naples) and have entered into a contract for the
acquisition of development real estate in the Mount Dora, Florida area. Mount
Dora is near Orlando, Florida (Orange County, Florida). The Registrant and
Whitehall also have under contract for acquisition a development tract of real
estate located in Pine Island, Florida, which is in Lee County. The Registrant
and Whitehall are also presently inspecting a property located in Lake County,
Florida. Generally the Registrant and Whitehall endeavor to acquire developed
building lots after all zoning and other governmental entitlements and
approvals have been obtained. In
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effecting purchases in this manner, the Registrant and Whitehall believe that
they may move into the particular market in a more rapid fashion from the time
of land acquisition, construction of the residential dwelling unit and the
ultimate sale thereof, thereby reducing the customary cycle experienced by most
home builders. In such acquisition activities, the Registrant and Whitehall
have and will continue to utilize lot options and similar contracts to secure
developed lots or to assure, upon option exercise, an adequate inventory of
such developed lots. Substantially all real estate purchased by the Registrant
and Whitehall will involve those properties which have obtained all necessary
permits and entitlements and complied with all regulatory factors, thereby
permitting the Registrant and Whitehall to immediately begin residential
dwelling construction activities.
Competition. The residential dwelling development and construction
industry is highly competitive throughout the United States and particularly in
the Registrant's geographic market area which is constituted by Southwest
Florida. In times of strong demand for residential building lots, entities such
as the Registrant are inclined to initiate a number of developments and the
construction of residential dwelling units at substantially the same time,
thereby potentially creating an oversupply of available residential dwelling
units. When demand for such residential dwelling units slackens, downward
pressure with respect to the pricing of inventory units usually occurs or the
acquisition on a pre-construction basis of residential dwelling units by home
buyers decreases significantly. Factors which will affect the relative
competitive position of the Registrant including, without limitation, its
project development activities, residential dwelling unit construction and the
marketing thereof, including the location of the Registrant's available
residential dwelling units and the project in which they are located, the
presence of competing entities in the Registrant's areas of operations and the
relative level of consumer acceptance of the Registrant's residential dwelling
units from an aesthetic, pricing and availability standpoint. The ultimate
pricing of the residential dwelling unit and the related lot will also be a
competitive factor. The Registrant believes that it is in competition with
development and construction entities which are vested with substantially
greater financial, managerial and other resources than those available to the
Registrant and Whitehall as of the time contemporaneous to the preparation of
this Registration Statement. The Registrant estimates that there are
approximately 12 major residential dwelling unit home contractors operating in
the area of Florida in which the Registrant and Whitehall operate. No assurance
can be given that the Registrant will effectively meet competition on a
continuing basis.
The Residential Home Building Industry
The residential home building industry which includes the development
of residential real estate projects has three primary components. These
components are land acquisition, land development and home construction and
sales. The Registrant and Whitehall believe that there is considerable overlap
among those who participate in one or more of the components of the industry.
Investors purchase undeveloped or under utilized real estate with a view to
realizing appreciation in value as a result of urban or suburban growth but
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such investors usually do not engage in development activities. Developers and
residential dwelling contractors such as the Registrant and Whitehall typically
purchase real property which is usually unimproved and unplatted but is
appropriately zoned for development and such entities develop such property
into subdivisions containing platted, semi-finished or finished lots for sale
to home builders. In some instances, developers like the Registrant and
Whitehall also engage in residential home construction. The Registrant and
Whitehall both acquire properly zoned real estate for further development and
constructs residential dwellings thereon as well as engaging in the activity of
residential dwelling construction in residential real estate subdivisions
containing lots which are fully developed and ready for construction activity.
In the home construction and sales component of the industry, there
are four major activities which are the construction of custom homes, building
production homes, building townhomes, condominiums and apartments and
remodeling. The Registrant concentrates on its residential dwelling activities
in the construction of single family custom homes which are in the medium price
range. The Registrant's geographic area of operation is estimated to contain
approximately 12 major developers and residential dwelling unit contractors,
some of whom conduct nationwide operations and engage in the building of
production homes. The management of the Registrant believes that within the
Registrant's area of operations, the Registrant ranks among the top ten of such
developers.
The development of residential real estate projects and the
construction of residential dwelling units in Florida has experienced dramatic
changes during the period 1975 to the present time. During the 1970's and early
1980's, Florida, particularly the southern West Coast thereof, was
characterized by rapid population growth and substantial residential real
estate project development and home construction activity. The period 1985
through a portion of 1989 was characterized by deteriorating economic
conditions resulting in a decrease in such activity. A meaningful factor in
such activity decrease was the demise of numerous financial institutions in the
mid to late 1980's which resulted in the imposition of stringent regulatory
restrictions on commercial banks and other financial institutions engaged in
real estate lending activities. As a result, sources of financing became more
limited and restricted. Other regulatory factors relating to environmental
concerns and urban growth and the pace thereof, in the opinion of the
management of the Registrant, had significantly increased the regulatory impact
which is presently experienced by entities such as the Registrant engaged in
the development of residential real estate projects and residential dwelling
unit construction.
Commencing in early 1990 and to the present time, industry conditions
improved and as of the date of this Memorandum, residential real estate project
development and residential dwelling unit construction activity are believed by
the management of the Registrant to be at an all time high. These conditions,
however, can have some adverse affects on the Registrant's condition such as
delays in receipt of required materials, the inability to procure the services
of competent, experienced subcontractors and other factors.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview and Background
As indicated in Item 1 of this Registration Statement, the Registrant
was formerly known as Cambridge Universal Corporation, which, during the time
that it utilized such corporate name, was an inactively traded public company
existing under Colorado law. Until the business combination described in Item 1
hereof, the Registrant conducted no business activity but engaged in activity
intended to identify a business activity and/or opportunity. As a result of the
business combination whereby the Registrant acquired all of the outstanding
common stock of Whitehall Homes II, Inc. ("Whitehall") which is now a
wholly-owned corporate subsidiary of the Registrant, the Registrant is engaged
in the business activity described in this Registration Statement. In
connection with such business combination, the Registrant changed its corporate
name to its present name, Whitehall Limited, Inc., and also became a
corporation domesticated under Florida law.
The business activities of Whitehall and the other entities identified
in this Registration Statement have been and are engaged in the residential and
dwelling construction business and related development activities. This
activity has been conducted since 1985. These activities have constituted the
sole activities of Whitehall, its affiliated predecessor entities and the
Registrant. See Note 1 of the pro forma consolidated financial statements
contained in Part F//S.
The Registrant and Whitehall derive their revenues principally from
the following activities:
1. Homes and lot sales;
2. Management fees;
3. Real estate commissions; and
4. Income categorized as Other Income which has been principally
derived from management fees, rentals, sales of furniture contained
in models and deposit forfeitures.
The Registrant and Whitehall's operating expenses are principally comprised of
the following categories:
1. Costs of homes and lot sales;
2. Selling and general administrative expenses;
3. Office costs consisting of salaries and general expenses;
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4. Real estate commissions paid; and
5. Interest.
Included in Part F/S of this Registration Statement are the pro forma
comparative balance sheets and the related pro forma combined statements of
income and of cash flows at December 31, 1998 and 1997 and for the 12 month
periods ended December 31, 1997 and 1998 which have been examined by the
independent certified public accountants of the Registrant and Whitehall as
indicated in their report thereon. Also included in such Part F/S are the same
financial statements for the comparative nine month periods ended September 30,
1998 and 1999, which financial statements are unaudited.
The fiscal year of the Registrant is and has been March 31. The fiscal
year of Whitehall and the affiliated entities of Whitehall now combined with
Whitehall is December 31. Although not finally determined, it is expected that
the Registrant will adopt December 31 as its fiscal year end commencing with
the partial fiscal year ending December 31, 1999.
Results of Operations Comparing the Nine Months Ended September 30, 1999 and
September 30, 1998
For the nine month period ended September 30, 1999, total income
realized by the Registrant and Whitehall was $5,184,781 compared to $3,257,284
for the nine month period ended September 30, 1998, an increase of $1,927,497.
Such increase is primarily attributable to homes and lot sales which for the
nine month period ended September 30, 1999 were $4,548,867 compared to
$2,573,622 for the nine month period ended September 30, 1998, a difference of
$1,975,245. The management of the Registrant and Whitehall attribute such
increase to the stronger demand for residential dwelling units which has
existed in the operating area of the Registrant and Whitehall during
substantially all of calendar 1999 and the existence of adequate residential
unit inventories held by the Registrant and Whitehall.
Total operating expenses also, however, increased to $5,496,736 for
the nine month period ended September 30, 1999 compared to total operating
expenses of $3,267,224 for the nine month period ended September 30, 1998, an
increase of $2,229,512. Such increase is principally attributable to increases
occurring in all operating expense categories with the largest being in cost of
homes and lot sales which was $3,997,457 for the nine month period ended
September 30, 1999 compared to $2,024,502 for the nine month period ended
September 30, 199, an increase of $1,972,955. Selling and general expenses also
increased during the comparative periods. Such expense category was $643,999
for the nine month period ended September 30, 1999 compared to $431,385 for the
nine month period ended September 30, 1998, an increase of $212,614. Interest
expense also significantly increased during the two comparative periods with
interest expense of $140,105 being reported for the nine month period ended
September 30, 1999 compared to $99,543 for the nine month period ended
September 30, 1998. Such general expense increase resulted from the efforts of
the Registrant and Whitehall to establish sufficient residential dwelling unit
inventories
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and the creation of new developments. Such expenditures preceded the ability of
the Registrant and Whitehall to realize revenues from such created inventories.
The only major expense category which reflected a decrease in the nine month
period ended September 30, 1999 was salaries, which expense category was
reported at $331,937 for the nine month period ended September 30, 1999
compared to $435,566 for the nine month period ended September 30, 1998, a
decrease of $103,629. Such decrease is attributable to a reduction in
managerial and administrative personnel during the most current nine month
period.
The net loss reported by the Registrant and Whitehall for the nine
month period ended September 30, 1999 substantially increased over the same
period in the prior year being reported at ($311,955) compared to a net loss of
($9,940) for the same period in 1998, an increase in such net loss of
($302,015). The management of the Registrant and Whitehall attribute such loss
to the significant increase in operating expenses experienced by the Registrant
and Whitehall for the nine month period ended September 30, 1999 ($5,496,736
for the nine month period ended September 30, 1999 compared to $3,267,224 for
the nine month period ended September 30, 1998), which expenses were reported
during the period in which the Registrant and Whitehall were establishing and
enhancing their residential dwelling unit inventories and creating new
developments. Such expense increases are in the categories described above. The
margins with respect to homes and lot sales and costs of homes and lot sales
remained fairly constant for the two nine-month periods, being 88% for the nine
month period ended September 30, 1999 and 79% for the nine month period ended
September 30, 1998.
Results of Operations Comparing the Years Ended December 31, 1997 and 1998
For the calendar year ended December 31, 1998, total income realized
by the Registrant and Whitehall was $3,831,673 compared to $6,384,834 for the
calendar year ended December 31, 1997, a decrease in the most current year of
$2,553,161. Such decrease is largely accounted for by the decrease in homes and
lot sales experienced during such calendar years, such revenues being
$3,290,486 for the calendar year ended December 31, 1998 compared to $5,762,271
for the calendar year ended December 31, 1997, a decrease in the current year
from the prior year of $2,471,785. Such decrease in the most current calendar
year is attributed by the management of the Registrant and Whitehall to
insufficient residential unit inventories. As indicated earlier in this
Analysis, such demand conditions have significantly improved during calendar
1999 and strong demand for the Registrant's homes and lots is also expected to
continue through calendar 2000. During the calendar year ended December 31,
1998 other revenue categories were substantially consistent with the calendar
year ended December 31, 1997 with the exception that the Registrant and
Whitehall did not experience joint venture income during the most current
calendar year. Other Income, however, during the most current calendar year was
reported at $208,638 compared to $161,910 for the calendar year ended December
31, 1997, an increase in the most current calendar year over the prior calendar
year of $47,728.
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Total operating expenses during the most calendar year ended December
31, 1998 were reported at $3,901,526 compared to $6,377,411 for the calendar
year ended December 31, 1997, a decrease in the most current calendar year over
the previous calendar year of $2,475,885. The principal reductions in net and
total operating expenses for the most current calendar year occurred in the
expense categories of costs of homes and lot sales ($2,247,198 for the calendar
year ended December 31, 1998 compared to $4,511,467 for the calendar year ended
December 31, 1997, a decrease of $94,781) which decrease results and relates to
the reduced home and lot sales for the calendar year ended December 31, 1998
which were reported at $3,290,486. For the calendar year ended December 31,
1998, other operating expense categories correspondingly decreased with the
exception of Interest Expense which increased from $117,789 for the calendar
year ended December 31, 1997 to $145,218 for the calendar year ended December
31, 1998, an increase of $27,429. Such increase in Interest Expense during the
most current calendar year results from the increase in loans and notes payable
which were reported at $2,326,936 at the conclusion of the calendar year ended
December 31, 1997 and $2,621,134 at the conclusion of the most current fiscal
year, an increase of $294,198. Such increase in indebtedness from the prior
calendar year has been utilized by the Registrant and Whitehall to finance work
in progress - homes and models which balance sheet item was reported at
$983,359 for the calendar year ended December 31, 1997 and at $1,956,207 for
the calendar year ended December 31, 1998, an increase of $975,848. Such
increase in indebtedness was also utilized to finance the increase in the
operating deficit experienced by Whitehall during the calendar year ended
December 31, 1998 which was reported at ($69,853) compared to a net income of
$7,423 for the calendar year ended December 31, 1997.
Expenses categories also reflecting a decrease during the most current
fiscal year over the previous fiscal year are reflected in the table below:
<TABLE>
<CAPTION>
Year Ended Year Ended
December December
Expense Category 31, 1997 31, 1998 Decrease
- ---------------- ---------- ---------- --------
<S> <C> <C> <C>
Selling and General Expenses $671,370 $576,589 $ 94,781
Salaries 692,615 583,447 100,168
General Expenses 167,441 147,989 19,452
</TABLE>
For the two fiscal years ended December 31, 1997 and 1998, margins
with respect to homes and lot sales and costs of homes and lot sales again
remained fairly constant, being 78% for the calendar year ended December 31,
1997 and 68% for the most current calendar year.
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Liquidity, Capital Resources and Cash Flow
During the years covered by the financial statements included with
this Registration Statement in Part F/S, the Registrant and Whitehall depended
primarily on proceeds received from homes and lot sales and loans as their
sources of liquidity, capital resources and cash flow. During the fiscal year
ended December 31, 1997, the Registrant and Whitehall also received significant
cash flow as a result of participation in joint ventures and in the amount of
$159,358. Such joint ventures related to Beekman Village and the Preserves at
Palm Aire. Both of these joint ventures have concluded. This compares with the
negative effect of $406,592 on cash flow for the calendar year ended December
31, 1998. This reported deficit cash flow resulted primarily from residential
unit inventories in the project known as Avalon at the Villages of Palm Aire.
For the nine month period ended December 31, 1998, the Registrant and Whitehall
experienced insignificant cash flows from investing activities but did
experience positive cash flow of $403,607 for the nine month period ended
September 30, 1999. This latter amount resulted from a capital contribution
made by the principal stockholders of the Registrant and Whitehall, Mr and Mrs.
Ronald Mustari.
Sources of liquidity during the years and periods covered by the
financial statements included herewith, as indicated, also included funds
provided by land and development loans, construction loans, loans made by
stockholders and miscellaneous notes payable which have been incurred. The
table set forth below reflects the net increase (decrease) in cash which was
available at the conclusion of each period indicated.
<TABLE>
<CAPTION>
Year Ended Year Ended Nine Months Nine Months
December December September September
31, 1997 31, 1998 30, 1998 30, 1999
----------- ----------- ----------- -----------
(Unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Increase (decrease)
in cash ($106,577) $ 72,967 $ 17,892 $ 256
</TABLE>
The Registrant and Whitehall anticipate that additional capital
resources and liquidity will be afforded by virtue of the successful conclusion
of a private placement of the equity securities of the Registrant anticipated
to occur during calendar 2000. No assurance can be given, however, that such
will be the case. Additionally, the Registrant and Whitehall have substantially
completed negotiations with certain lending banks located in Florida which are
expected to result in financing arrangements whereby an estimated aggregate
$8.7 million will be made available to the Registrant and Whitehall from
approximately six lending entities for use in the present projects of the
Registrant and Whitehall. Such financing arrangements will involve land loans
and construction loans and will be of a short and interim term nature.
12
<PAGE> 14
Year 2000 Matters
The Registrant and Whitehall do not expect adverse consequences as a
result of year 2000 concerns with respect to their own internal operations.
Disruption in the conduct of the business of the Registrant and Whitehall may
occur, however, as a result of system failure occurring in computer and
technology systems of entities with which the Registrant and Whitehall do
business, such as suppliers and other vendors. General year 2000 matters may
also affect operations from the standpoint of telephone service communications,
electrical power, exchange data services, accounting and other functions.
ITEM 3. DESCRIPTION OF PROPERTY
The principal properties of the Registrant, as consolidated with
Whitehall, are constituted by cash, investments, capitalized construction costs
including homes under construction and furnished models, property and
equipment, and miscellaneous other assets. As reflected in the consolidated
balance sheet of the Registrant at September 30, 1999, such principal property
items are as follows:
<TABLE>
<CAPTION>
Present Value
for financial
Category of Asset Reporting Purposes
----------------- ------------------
<S> <C>
Cash $ 276,769
Land and Development Costs 3,813,092
Homes Under Construction and Furnished
Models 4,079,220
Office Land and Administrative Building 398,144
Office Furniture and Fixtures 57,293
Construction Equipment
</TABLE>
With respect to such principal properties identified above, there exist at
September 30, 1999 various financing arrangements, the liens with respect to
which act as encumbrances to the asset categories reflected above. See Note 5
of the Notes to the Consolidated Financial Statements included in Part F/S of
this Registration Statement.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of November 30, 1999, there were outstanding 8,946,843 shares of
the Registrant's Common Stock. The table presented below reflects the record
and beneficial ownership of the directors and officers of the Registrant
individually and as a group and any other person known by the Registrant to be
the beneficial owner of more than 5% of the Registrant's outstanding Common
Stock as of November 30, 1999:
13
<PAGE> 15
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Owner of Class
- -------------- ------------------- ---------- --------
<S> <C> <C> <C>
Common Stock, $.10 par Ronald and Joanne Mustari, 4,608,268 51.51%
value Husband and Wife Shares Owned
888 Blvd. of the Arts of Record and
Sarasota, FL 34236 Beneficially
J. Robert Ground 100,000 1.12
Shares Owned
of Record and
Beneficially
Officers and Directors 4,708,268 52.63%
as a Group (two persons) Shares Owned
of Record and
Beneficially
</TABLE>
Persons identified in the foregoing table do not have any right to
acquire beneficial ownership of additional shares of the Registrant's Common
Stock. As of the date of the preparation of this Registration Statement and to
the knowledge of the Registrant, no person or group of persons is known to be
vested with beneficial ownership of 5% or more of the Registrant's outstanding
Common Stock as of November 30, 1999.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The business activities of the Registrant and Whitehall are governed
and supervised by the Board of Directors of the Registrant which, in turn, also
acts as the Board of Directors of Whitehall. The day-to-day operations of the
Registrant are carried out by the executive officers of the Registrant and
other managerial personnel. As indicated earlier in this Memorandum, Whitehall
is engaged in the development of residential real estate projects and
construction of residential dwelling units and the marketing thereof since
approximately 1985 through subsidiary and affiliated entities.
The directors and officers of the Registrant as of the date of this
Memorandum are as follows:
14
<PAGE> 16
<TABLE>
<CAPTION>
Name and Age of Director and/or Officer Positions Held with the Registrant
- --------------------------------------- ----------------------------------
<S> <C>
Harry Van Der Noord, age 58 Chairman of the Board of Direc
tors, Director
Ronald Mustari, age 58 Director, President and Chief
Executive Officer
J. Robert Ground, age 66 Director and Secretary
Joanne Mustari, age 53 Treasurer and Chief Financial
Officer
Gerald Howard Gould, age 75 Director
Robert E. Messick, Esq., age 48 Director
</TABLE>
Ronald and Joanne Mustari are husband and wife and should be considered as
control persons. All director terms expire in June 2000.
Information Concerning Directors and Officers
HARRY VAN DER NOORD resides in Bradenton, Florida and has engaged in
various aspects of real estate development and investment since 1968. In such
activities, Mr. Van Der Noord has constructed and operated approximately 350
rental units. Mr. Van Der Noord has also engaged in the development of mobile
home communities and has owned or owns mobile home communities in Lansing,
Peoria and Decatur, Illinois and in Hebron, Chesterton and Lafayette, Indiana,
as well as Jacksonville, Cocoa Beach and Tallahassee, Florida. Subsequent to
moving to Bradenton, Florida in 1985, Mr. Van Der Noord expanded his business
activities to include marinas located at Palmetto, Florida and in the Charlotte
Harbor, Florida area. Such marinas include Regatta Pointe and Stump Pass
Marina. Since July 1997 Mr. Van Der Noord has served as Chairman of The America
Companies which is a subsidiary of America Holdings Corporation. Such entities
engage in the management of real estate sales and rentals, real estate
development and construction management and manufactured goods design,
engineering, manufacturing, sales and marketing.
RONALD MUSTARI began his career in the construction industry in 1962
as a construction administrator for Liberty Builders, a large home remodeling
contractor located in the Chicago, Illinois area. At the time of his departure
from such company in 1968, Mr. Mustari held the position of General Manager of
Liberty Builders. In 1968 Mr. Mustari formed his own company, Trend Homes, a
home builder constructing medium priced residential dwelling units in Elmhurst,
Villa Park and Lombard, Illinois. Mr. Mustari sold
15
<PAGE> 17
Trend Homes in 1972 and relocated to South Carolina where he formed Colonial
Builders which engaged in the construction of new residential dwelling units
suitable for low income families who receive financial aid in the purchase of
residences from the United States government. Colonial Homes constructed over
1,000 residential dwelling units under these government programs. In 1976 Mr.
Mustari returned to Chicago, Illinois where he formed Trend Properties, which
specialized in the conversion of apartment buildings to condominium form, as
well as the renovation of older residential properties. Since moving to Florida
in 1985, Mr. Mustari has been active as the Chief Executive Officer or Managing
Partner of the various Whitehall entities.
J. ROBERT GROUND resides in Phoenix, Arizona. Mr. Ground is a founding
partner of Dillin, Ground and Associates, an advertising and public relations
firm which handled and handles a number of national accounts. Dillin, Ground
and Associates is located in Lake Wales, Florida. Mr. Ground also served as
Director of Advertising for Lehigh Acres Development Corporation, Lehigh,
Florida. Mr. Ground is a founder of Consolidated Agri- chemicals, Inc. which
became a significant producer of certain home and garden plant foods and
hydroponic nutrients. Mr. Ground was also a founder of National Battery
Corporation, an automobile battery manufacturing company which developed and
patented a system for inexpensively producing high quality lead acid batteries.
Mr. Ground has also served as the former Editor of the Florida Medical Journal
and as an Associate Editor for Cambridge Books, a publishing concern. Mr.
Ground holds a Ph.D. in Literature awarded by Brantridge University, Sussex,
England.
JOANNE MUSTARI is the wife of Ronald Mustari and is active in the
business of the Registrant and Whitehall. Prior to joining Whitehall, Mrs.
Mustari was an internal auditor with IBM Corporation for 18 years.
GERALD HOWARD GOULD resides in South Miami, Florida and has engaged in
real estate development and related activities for approximately 40 years. Mr.
Gould is presently a principal of Village Associates Inc., which engages in the
planning and development of adult communities in the State of Florida. The
first such project is under way in the Lehigh, Florida area and is anticipated
to involved 1,000 adult residential units scheduled to be constructed over the
next approximate four years. Prior to the described present activities, Mr.
Gould was associated with Lehigh Development Corporation, a firm engaged in
development activities on the West Coast of Florida (St. Petersburg and
Sarasota, Florida).
ROBERT E. MESSICK, ESQ. is a practicing attorney in Sarasota, Florida
and is presently a senior partner and shareholder of Icard Merrill Cullis Timm
Furen & Ginsburg, P.A. Mr. Messick's practice emphasis is real estate law,
banking and commercial transactional law, as well as a specialized litigation
practice in creditor bankruptcy rights as they relate to real estate interests.
Mr. Messick holds a Bachelor of Arts degree (with honors) awarded in 1975 and a
Juris Doctor degree (with honors) from the College of Law, University of
Florida.
16
<PAGE> 18
Key Employees of the Registrant and Whitehall
JOSEPH PUFTA, age 45, has been employed by the Registrant and
Whitehall for the last approximate six years and serves presently as General
Superintendent for all new home construction. Presently Mr. Pufta supervises
eight persons relating to the home construction and development activities of
the Registrant and Whitehall. Prior to becoming associated with the Registrant
and Whitehall, Mr. Pufta spent approximately eight years as the Project Manager
for one of the largest commercial construction companies in the United States
providing employment services to such entity in Georgia, South Carolina and
Florida. Mr. Pufta also has approximately five years experience as a custom
home builder and as a framing contractor.
DANIEL LUCAS, age 40, has been employed by the Registrant and
Whitehall for the past approximate six years as a new home sales
representative, project sales manager and is currently serving in the capacity
as Director of New Home Sales. In such present capacity, Mr. Lucas is
responsible for sales, marketing, planning and marketing and sales budgeting
for all of the developments of the Registrant and Whitehall and in such
capacity hires, trains and supervises the sales staff utilized by the
Registrant and Whitehall in their various developments. Mr. Lucas also provides
recommendations to the Registrant and Whitehall with respect to residential
unit redesign (with a view to enhancing buyer acceptance) and is responsible
for new home quality control as well as the sponsorship of homeowner
association matters.
Key Consulting Arrangements
The Registrant and Whitehall have utilized the consulting services of
Andrews & Associates, Inc., a Sarasota, Florida based consulting entity
("Andrews"). Such services have been utilized by the Registrant and Whitehall
for approximately two years. Such consulting services provided by Andrews
relate to the development of a comprehensive business plan which is intended to
govern the expansion and growth of the Registrant and Whitehall which is
intended to culminate a market position where the Registrant and Whitehall will
develop and endeavor to market approximately 400 new residential units during
each calendar year. Andrews, in the providing of its consulting services, has
been vested with the responsibility of managing sales and marketing, land
acquisitions, land development and the procurement of appropriate financing
arrangements whereby additional capital is provided to the Registrant and
Whitehall. The personnel of Andrews work directly with Ronald Mustari, the
President and Chief Executive Officer of the Registrant and Whitehall.
17
<PAGE> 19
ITEM 6. EXECUTIVE COMPENSATION.
For the 12 month period ended December 31, 1998, no executive officer
or other person received compensation from the Registrant in any amount.
The table presented below provides information relating to the amount
of compensation (of all types and from all sources) to be paid to the President
and Chief Executive Officer of the Registrant by the Registrant or by
Whitehall. Other than Ronald Mustari, no director, officer or other person
employed by the Company and/or Whitehall will receive during the 12 month
period ending December 31, 1999 compensation of any type from any source in
excess of $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
--------------------------------- ------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Name Annual Restricted Under- All Other
and Compen- Stock lying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- -------- --------- --------- -------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald Mustari, President twelve $144,000 (1) (2)
and Chief Executive Officer months
ending
December
31, 1999
</TABLE>
- --------------
(1) Mr. Mustari may be paid bonuses depending upon the performance and results
of operations of the Registrant and Whitehall during the 12 month period
ended December 31, 1999 if so determined by the Board of Directors of the
Registrant (with Mr. Mustari abstaining from any vote with respect to bonus
compensation or other additional compensation.
(2) Mr. Mustari receives health insurance benefits paid for by the Registrant
and Whitehall having a value of approximately $5,000 a year, as well as an
automobile allowance of $600 per month and reimbursement for all other
expenses incurred by him in the carrying out of the business operations of
the Registrant and Whitehall. At the present time, those are the only
benefits available to Mr. Mustari by the Registrant and Whitehall.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NOT APPLICABLE
ITEM 8. DESCRIPTION OF SECURITIES.
The Articles of Incorporation of the Registrant, as filed with the
Department of State, State of Florida, and under which the Registrant became a
Florida domesticated corporation subject to the Florida Business Corporation
Act, authorize an aggregate six
18
<PAGE> 20
hundred million (600,000,000) shares of capital stock divided into two classes.
Five hundred million (500,000,000) shares of such 600,000,000 shares are
allocated to Common Stock having a par value of $.10 per share and the
remaining one hundred millions (100,000,000) shares have been designated as
Preferred Stock issuable in series and also having a par value of $.10 per
share.
Common Stock
As of the date of this Memorandum, there are outstanding 8,946,843
shares of Common Stock taking into account the intended issuance to Homeowners,
Subcontractors and Employees. Voting control is and will continue to be vested
in Mr. and Mrs. Ronald Mustari.
Each holder of Common Stock is entitled to one vote for each share
owned of record. The holders of Common Stock do not and will not possess
cumulative voting rights which means that the holders of more than 50% of the
outstanding shares of Common Stock voting for the election of directors can
elect all of the directors and in such event, the holders of the remaining
shares of Common Stock will be unable to elect any of the Registrant's
directors. Action may be taken without a meeting of shareholders if a written
consent setting forth the action taken is signed by the holders of not less
than the minimum number of shares of Common Stock necessary to authorize such
action at a meeting where all shares of Common Stock entitled to vote were
present and, in fact, voted. Under Florida law, notice must be given to holders
of shares of Common Stock who did not so consent to the action taken by the
holders of a majority of shares of Common Stock within ten days after obtaining
such authorization to the action in question by written consent. Such
circumstances will continue to be the case until such time that the Registrant
becomes subject to the proxy solicitation rules of the United States Securities
and Exchange Commission (the "Commission"). When the Registrant is subject to
such rules and written action is intended to be taken by a majority of the
Common shareholders without a meeting of the shareholders, a notice and
information statement must be given to all holders of shares of Common Stock
within a specified number of days before the written action is intended to be
taken. Upon the effectiveness of this Registration Statement, the Registrant
will be subject to the proxy solicitation rules of the Commission. The
Registrant presently files, on a voluntary basis, the periodic and annual
reports required by the Securities Exchange Act of 1934, as amended.
Subject to any of the rights of the holders of the Registrant's
outstanding Preferred Stock which will include the Shares, holders of
outstanding shares of Common Stock are entitled to receive dividends out of
Registrant assets legally available therefor at such times and in such amounts
as the Board of Directors may from time to time determine. It is the
Registrant's present policy to reinvest substantially all of any earnings in
its business. Accordingly, cash dividends are not anticipated to be paid on
outstanding shares of Common Stock, at least in the near future time and may
not be paid with respect to any
19
<PAGE> 21
fiscal year unless and until the dividend entitlement attributable to the
Shares has been made.
Upon the liquidation, dissolution or winding up of the Registrant, the
assets legally available for distribution to the shareholders will be
distributable ratably among the holders of shares of Common Stock outstanding
at that time, again subject to any preferential rights of the holders of the
Registrant's then outstanding Preferred Stock, if any. Holders of shares of
Common Stock have no pre-emptive, conversion or subscription rights and shares
of Common Stock are not subject to redemption. All outstanding shares of Common
Stock are and will be fully paid and non-assessable. Such will also be the case
with respect to shares of Common Stock of the Registrant issued upon conversion
of the Shares and the exercise of the Class A and Class B Warrants.
Preferred Stock Issuable in Series
The Articles of Incorporation of the Registrant permit the Board of
Directors to authorize and issue various series of Preferred Stock on behalf of
the Registrant without shareholder approval or vote. Shareholder vote is
required in certain instances, however, where more than one series is proposed
to be outstanding and a series of Preferred Stock proposed by the Board of
Directors to be issued contains provisions and rights superior to those
provisions and rights attributable to the then presently outstanding series of
Preferred Stock.
Each series of Preferred Stock must incorporate the same rights and
provisions relating to dividends, voting rights, rights upon liquidation of the
Registrant, conversion into other securities of the Registrant and other
matters. The Board of Directors of the Registrant has only authorized the
issuance and sale of a series of Preferred Stock designated as the Registrant's
8.75% Convertible Preferred Stock, $.10 par value, 2,000,000 Shares of which
are intended to be privately offered and sold by the Registrant. No shares of
the 8.75% Convertible Preferred Stock of the Registrant has been sold, however.
The 8.75% Convertible Preferred Stock, $.10 par value, of the Registrant is
subsequently referred to in this Registration Statement as the "Shares".
The Shares are not entitled to voting rights except as required by the
Florida Business Corporation Act and do not have preferential rights in the
event of the liquidation of the Registrant. The Shares, when issued, will
constitute the only class of Preferred Stock of the Registrant outstanding
although the Board of Directors may authorize additional series of Preferred
Stock in connection with the conduct of the business of the Registrant. Each
outstanding Share will be entitled to receive a dividend with respect to each
fiscal year of the Registrant, which is March 31 of each year. Such dividend
entitlement provides that the holder of each Share shall receive a cash
dividend in the amount of $.44 per Share or, at the option of the Registrant,
such dividend entitlement may be paid in shares of Common Stock of the
Registrant and in such event, each share of Common Stock of the Registrant
utilized for such dividend entitlement shall be attributed a value of $1.67 per
share of
20
<PAGE> 22
Common Stock. Fractional shares of Common Stock will be issued with respect to
such dividend.
For a period of 60 months from date of issuance, each Share in the
hands of the holders thereof may be converted into shares of Common Stock of
the Registrant at the conversion ratio of three shares of Common Stock of the
Registrant for each Share converted. Such conversion will include fractional
shares of Common Stock rounded up to the next whole share of Common Stock.
Commencing the 61st month from date of issue through the 84th month from date
of issue, each Share may be converted into two shares of Common Stock. On the
first day of the 85th month from date of issue and for any period thereafter,
Shares outstanding and unconverted may be mandatorily converted at the option
of the Registrant into a like number of shares of Common Stock. Accordingly, if
all 2,000,000 Shares being privately offered by this Memorandum are sold, such
Shares may be converted into 6,000,000 shares of Common Stock if share
conversion occurs within the initial 60 month period. Anti-dilution provisions
will be incorporated in the terms of issuance of the Shares which will provide
for adjustment in the number of shares of Common Stock issued upon conversion
in the event of stock reclassifications, dividends or other events which relate
to an issuance of Common Stock for a consideration other than cash or property.
The number of shares of Common Stock of the Registrant issued upon conversion
will take into account and will include any fractional shares of Common Stock
which have been utilized by the Registrant to meet the annual dividend
entitlement attributable to the Shares. This means that the number of shares of
Common Stock issued upon conversion of Shares by any holder may be reduced by
the number of fractional shares of Common Stock received by such holder as a
result of the payment of the dividend entitlement utilizing Common Stock.
Upon issuance of any of the Shares as a result of the private and
limited sale thereof, each holder will also receive for each Share purchased a
Common Stock Purchase Warrant providing for the purchase of one share of Common
Stock of the Registrant at an exercise price of $2 (the "Class A Warrant") and
a second Common Stock Purchase Warrant providing, upon exercise thereof, for
the acquisition of one share of Common Stock of the Registrant at an exercise
price of $2.50 per share (the "Class B Warrant"). The exercise period for the
Class A Warrants is the 24 month period following Warrant issuance. Such
exercise period may be extended by the Registrant. The exercise period for the
Class B Warrants is 36 months from Warrant issuance. For a period of 90 days
from the date of Class A and B Warrant issuance, the Class A and B Warrants may
be called by the Registrant, in whole or in part, by providing notice of such
call and by paying a call fee of $.10 per Class A or Class B Warrant called.
Upon receipt of such notice of call, the affected Class A or B Warrant holder
will have a period of 30 days in which to exercise, in whole or in part, the
called Warrants.
21
<PAGE> 23
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The management of the Registrant believes that the market for the
Registrant's outstanding, unrestricted Common Stock has been centered in
Denver, Colorado and has been extremely sporadic with few buy-sell transactions
occurring over the past approximate five years. Management believes that there
is not an active trading market for its Common Stock and there is not available
to the Registrant information with respect to the high and low sales prices for
any calendar quarter during the five year period ended December 31, 1998 and
through September 30, 1999. The Registrant estimates that its outstanding
Common Stock is beneficially held by approximately 388 record holders.
ITEM 2. LEGAL PROCEEDINGS.
The Registrant and Whitehall are not involved in any material legal
proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
NOT APPLICABLE.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
As disclosed in Item 1 of this Registration Statement, the Registrant
exchanged 4,608,268 shares of its Common Stock for all of the outstanding
Common Stock of Whitehall. Such 4,608,268 shares of Common Stock was issued to
Mr. and Mrs. Ronald Mustari and such shares constituted restricted securities
and have not been registered under the Securities Act of 1933, as amended.
Additionally the shares in the hands of Mr. and Mrs. Mustari may be considered
control shares since Mr. and Mrs. Mustari may be viewed as control persons from
the standpoint of the Federal securities laws.
With respect to the foregoing-described transaction, an exemption from
the registration requirement of the Securities Act of 1933, as amended is
believed available to the Registrant pursuant to the provisions of Section 4(2)
thereof and Regulation D promulgated thereunder.
On July 1, 1999, the Board of Directors of the Registrant approved for
issuance shares of the Registrant's Common Stock to three categories of
issuees: 13 employees of the Registrant and Whitehall; 63 issuees who have
acted as service or material providers to the Registrant and/or Whitehall
(subcontractors); and 154 issuees who have purchased residential dwelling units
from the Registrant, Whitehall and the predecessor and affiliated entities of
Whitehall now combined with Whitehall and the Registrant. With respect to such
categories of issuees, an aggregate 57,500 shares of the Registrant's Common
Stock were
22
<PAGE> 24
issued to employees of the Registrant and Whitehall, 13,000 shares of the
Registrant's Common Stock were issued to subcontractors of the Registrant and
Whitehall; and 50,400 shares of the Registrant's Common Stock were issued to
those issuees classified as homeowners. In connection with such issuance, no
consideration was paid to the Registrant by any of the issuees in connection
with the issuance and receipt by such issuees of such shares. The Registrant
has been advised that in the light of the employment relationship existing
between the Registrant, Whitehall and those issuees categories as employees and
the probable on-going relationship between the Registrant, Whitehall and those
issuees categorized as subcontractors that the shares issued to such categories
of issuees, while issued without any requirement for consideration, may
nevertheless constitute restricted securities and the transfer agent for the
Registrant's Common Stock, American Securities Transfer & Trust, Inc., 12039
West Alameda Parkway, Lakewood, Colorado, has been so advised. With respect to
the 15,400 shares of the Registrant's Common Stock issued to the 154 homeowners
(some of whom are husband and wife), the Registrant has been advised that such
securities may be deemed unrestricted in the light of the position taken by the
staff of the Commission in Shaklee Corp. (August 6, 1977). See Part III of this
Registration Statement, Item 1. Index to Exhibits. With respect to those shares
of Common Stock issued to the employees of the Registrant and/or Whitehall and
to subcontractors of the Registrant and/or Whitehall, such issuance is believed
to be exempt from the registration requirements of the Securities Act of 1933,
as amended, since no sale of any security was involved in the issuance
transaction. The certificates issued to evidence the shares of the Registrant's
Common Stock issued to employees and to subcontractors bear a restrictive
endorsement relating to the unregistered and restricted character of such
shares so evidenced by the issued certificates.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Chapter 607.0850, Florida Statutes, as amended (the Florida Business
Corporation Act or the "Act") permits a corporation formed and existing under
such Act to have the power to indemnify any party who was or is a party to any
proceeding by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof. Such
power to indemnify is conditioned upon such indemnitee having acted in a good
faith manner and in a manner that such indemnitee reasonably believed to be in
or not opposed to the best interests of the corporation and with respect to any
criminal action or proceeding, the indemnitee had no reasonable cause to
believe that the indemnitee's conduct was unlawful.
The Act imposes certain conditions and requirements with respect to
the providing of such indemnification.
Article VIII of the Bylaws of the Registrant presently in force
provides as follows:
23
<PAGE> 25
ARTICLE VIII. INDEMNIFICATION
The following shall be the indemnification policy of the Corporation:
(a) The Corporation shall have power to indemnify any person
who was or is a party to any proceeding (other than an action
by, or in the right of, the Corporation) by reason of the
fact that he is or was a director, officer, employee, or
agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust,
or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of
the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful. The termination of any proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in, or not
opposed to, the best interests of the Corporation or, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) The Corporation shall have power to indemnify any person
who was or is a party to any proceeding, by or in the right
of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses and
amounts paid in settlement not exceeding, in the judgment of
the Board of Directors, the estimated expense of litigating
the proceeding to conclusion actually and reasonably incurred
in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in
good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Corporation,
except that no indemnification shall be made under this
subsection (b) in respect of any claim, issue, or matter as
to which such person shall have been adjudged to be liable
unless, and only to the extent that, the court in which such
proceeding was brought or any other court of competent
jurisdiction shall determine upon application that, despite
the adjudication of liability but in view of all
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
24
<PAGE> 26
(c) To the extent that a director, officer, employee, or
agent of the Corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in
subsection (a) or subsection (b), or in defense of any claim,
issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsection (a) or subsection
(b), unless pursuant to a determination by a court, shall be
made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in subsection (a) or subsection (b). Such
determination shall be made by:
(i) The Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to
such proceeding or by the shareholders by a majority
vote of a quorum consisting of shareholders who were
not parties to such action, suit, or proceeding;
(ii) If such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly
designated by the Board of Directors (in which
directors who are parties may participate) consisting
solely of two or more directors at the time parties to
the proceeding;
(iii) By independent legal counsel:
(A) Selected by the Board of Directors prescribed
in paragraph (i) or the committee described in
paragraph (ii); or
(B) If a quorum of the directors cannot be
obtained for paragraph (i) and the committee
cannot be designated under paragraph (ii),
selected by majority vote of the full Board of
Directors (in which Directors who are parties may
participate); or
(iv) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties
to such proceeding or, if no such quorum is obtainable,
by a majority vote of shareholders who were not parties
to such proceeding.
(e) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same
manner as the determination that indemnification is
permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by
sub- paragraph
25
<PAGE> 27
(d)(iii)(A) shall evaluate the reasonableness of expenses and
may authorize indemnification. Expenses incurred by an
officer or director in defending a civil or criminal
proceeding may be paid by the Corporation in advance of the
final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to
repay such amount if he is ultimately found not to be
entitled to indemnification by the Corporation pursuant to
this section. Expenses incurred by other employees and agents
may be paid in advance upon such terms or conditions that the
Board of Directors deems appropriate.
(f) The indemnification and advancement of such expenses
provided pursuant to the foregoing are not exclusive and the
Corporation shall have the power to make any other or further
indemnification or advancement of expenses on behalf of the
persons herein described, in the manner and consistent with
the provisions of the Florida General Corporation Act.
(g) Indemnification and advancement of expenses as provided
in this Article shall continue, unless otherwise provided
when authorized or ratified, 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.
(h) For purposes of this Article, the term "Corporation"
includes, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at
the request of a constituent corporation as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, is in
the same position under this section with respect to the
resulting or surviving corporation as he would have been with
respect to such constituent corporation if its separate
existence had continued. For purposes of this Article, the
term "other enterprises" includes employee benefit plans; the
term "expenses" includes counsel fees, including those for
appeal; the term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax
assessed with respect to any employee benefit plan), and
expenses actually and reasonably incurred with respect to a
proceeding; the term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal; the term
"agent" includes a volunteer; and the term "serving at the
request of the corporation" includes any service as a
director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to
an employee benefit plan and its participants or
beneficiaries; and the term "not opposed to the best interest
26
<PAGE> 28
of the corporation" describes the actions of a person who
acts in good faith and in a manner he reasonably believes to
be in the best interests of the participants and
beneficiaries of an employee benefit plan.
(i) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
(j) If any expenses or other amounts are paid by way of
indemnification otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation
shall, not later than the time of delivery to shareholders,
unless such meeting is held within three (3) months from the
date of such payment, and, in any event, within fifteen (15)
months from the date of such payment, deliver either
personally or by mail to each shareholder of record at the
time entitled to vote for the election of directors a
statement specifying the persons paid, the amounts paid, and
the nature and status at the time of such payment of the
litigation or threatened litigation.
27
<PAGE> 29
PART F/S
The pro forma comparative combined balance sheets and the related pro
forma combined statements of income and cash flows for the Registrant for the
calendar years ended December 31, 1998 and 1997 and the years ended December
31, 1998 and 1997 have been included in this Registration Statement in reliance
on the report of Alex N. Chaplan & Associates, independent accountants, given
on the authority of that firm as experts in accounting and auditing. With
respect to the unaudited interim financial information for the nine months
ended September 30, 1998 and 1998, the independent accountants have not
reviewed or audited such financial information and have not expressed an
opinion or any other form of assurance with respect to such financial
information.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
28
<PAGE> 30
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
AND WHITEHALL HOMES, INC.
AND AFFILIATED COMPANIES
FINANCIAL STATEMENTS
December 31, 1997 and 1998
ALEX N. CHAPLAN & ASSOCIATES
29
<PAGE> 31
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
AND WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
INDEX TO FINANCIAL STATEMENTS
December 31, 1997 and 1998
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ------------------------------------------------------------------------------------
<S> <C>
Opinion Letter 31
Pro Forma Comparative Combined Balance Sheets 32-33
Pro Forma Combined Statement of Income and Retained Earning 34
Pro Forma Comparative Combined State of Cash Flows 35
Pro Forma Consolidated Balance Sheet 36
Pro Forma Consolidated Statement of Stockholders' Equity 37
Notes to the Pro Forma Financial Statements 38-40
</TABLE>
ALEX N. CHAPLAN & ASSOCIATES
30
<PAGE> 32
ALEX N. CHAPLAN & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANT
ALEX N. CHAPLAN, C.P.A. 23622 CALABASAS ROAD MEMBER
SUITE 107A SOCIETY OF
CALABASAS, CALIFORNIA 91302 CALIFORNIA ACCOUNTANTS
(818) 591-1901 FAX (818) 222-0727
To the Board of Directors and Stockholders
of Whitehall Limited, Inc.
FKA - Cambridge Universal Corporation
and Whitehall Homes, Inc. and Affiliated Companies
In our opinion, the accompanying pro forma comparative combined balance sheets
and the related pro forma combined statements of income and of cash flows
present fairly, in all material respects, the financial position of Whitehall
Limited, Inc., FKA Cambridge Universal Corporation and Whitehall Homes, Inc.
and Affiliated Companies at December 31, 1997 and 1998, and the results of
their operations and their cash flows for each of the two year periods, in
conformity with generally accepted accounting principles. In addition, we have
included the pro forma consolidated balance sheet for Whitehall Limited, Inc.
and its wholly owned subsidiary, Whitehall Homes II, Inc., as of January 1,
1999 to reflect subsequent transactions effective January 1, 1999. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Alex Chaplan & Associates
- -----------------------------
Alex Chaplan & Associates
Calabasas, Ca 91302
ALEX N. CHAPLAN & ASSOCIATES
31
<PAGE> 33
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FORMA COMPARATIVE COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1998
AND (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------------- ---------------------------
1997 1998 1998 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Assets
Cash on hand and in banks $ 203,546 $ 276,513 $ 221,438 $ 276,769
Accounts and Notes Receivable
Affiliates 135,413 60,139 68,745 234,147
Others 724 0 1,200 0
Stockholders 98,725 278,833 80,097 452,380
Investments (Note 3) 752 403,609 2 0
Land and Development Costs 1,613,234 1,413,126 1,576,893 3,813,052
Work in Progress-Homes and Models 980,359 1,956,207 1,409,410 4,079,220
Property and Equipment (at cost)
Land 68,097 68,097 68,097 468,097
Buildings 398,144 398,144 398,144 398,144
Office Furniture and Equipment 57,253 57,253 57,253 57,253
Construction Equipment 78,880 78,880 78,880 78,880
Vehicles 17,976 13,713 22,000 37,368
----------- ----------- ----------- -----------
Total 620,350 616,087 624,374 1,039,742
Less: accumulated depreciation 189,371 218,458 187,068 28,024
----------- ----------- ----------- -----------
$ 430,979 $ 397,629 $ 437,306 $ 1,011,718
----------- ----------- ----------- -----------
Other Assets 92,710 111,911 93,773 210,882
----------- ----------- ----------- -----------
$ 3,556,442 $ 4,897,967 $ 3,888,864 $10,078,168
=========== =========== =========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
32
<PAGE> 34
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FORMA COMPARATIVE COMBINED BALANCE SHEETS (Page 2)
AS OF DECEMBER 31, 1997 AND 1998
AND (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
Liabilities and Stockholders' Equity DECEMBER 31, SEPTEMBER 30,
---------------------------- ----------------------------
1997 1998 1998 1999
---------- ---------- ----------- -----------
Liabilities (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Accounts Payable $ 291,999 $ 543,732 $ 344,313 $ 722,727
Customers' Deposits 438,930 736,963 677,811 1,014,577
Due to Stockholders' 199,115 331,987 205,487 133,982
Due to Affiliates Notes 0 299,397 0 185,500
Notes and Loans Payable:
Land and Development Loans 553,672 391,100 436,100 704,725
Construction Loans 558,642 1,168,203 1,046,896 1,979,337
Notes Payable 1,214,622 1,061,831 1,068,784 1,275,096
---------- ---------- ---------- ----------
Total Liabilities $3,256,980 $4,533,213 $3,779,391 $6,015,944
---------- ---------- ---------- ----------
Note Payable to Stockholders $ -- $ -- $ 0 $2,096,393
---------- ---------- ---------- ----------
Stockholders' Equity-Nine Corporations:
Common Stock-Par Value $1.00 per share
Issued and outstanding S Corporations,
6900 shares $ 6,900 6,900 $ 6,900
Additional Paid In Capital 986,935 1,678,148 1,263,169
Retained Earnings (Deficit) (694,373) (1,320,294) (1,160,596)
---------- ---------- ----------
Total Stockholders' Equity -
Nine Corporations $ 299,462 $ 364,754 $ 109,473
---------- ---------- ----------
Stockholders' Equity - Whitehall Limited, Inc.
Preferred stock-$.10 Par Value, Authorized
100,000,000 shares - none issued 0 0
Common Stock-$.10 Par Value, Authorized
500,000,000 shares; issued and outstanding
8,946,000 shares $ 190,448 $ 894,600
Paid In Capital in excess of Par Value 0 1,573,634
Retained Earnings (Deficit) (190,448) (502,403)
---------- -----------
Total Stockholders' Equity -
Whitehall Limited, Inc. $ 0 $ 1,965,831
---------- -----------
Total Liabilities and
Stockholders' Equity $3,556,442 $4,897,967 $3,888,864 $10,078,168
========== ========== ========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
33
<PAGE> 35
WHITEHALL LIMITED, INC.
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FORMA COMPARATIVE COMBINED STATEMENT OF INCOME AND RETAINED EARNING
FOR THE YEARS ENDING DECEMBER 31, 1997 AND 1998
AND (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31 SEPTEMBER 30,
------------------------------ -------------------------------
1997 1998 1998 1999
---------- ---------- ----------- -----------
Income: (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Homes and Lot Sales $5,762,271 $ 3,290,486 $2,573,622 $4,548,867
Management Fees 271,403 249,128 381,835 317,797
Real Estate Commissions 78,704 75,691 146,659 111,487
Interest 341 7,730 2,912 7,700
Joint Venture 110,205 0 0 1,750
Other 161,910 208,638 152,256 197,180
---------- ----------- ---------- ----------
Total Income $6,384,834 $ 3,831,673 $3,257,284 $5,184,781
---------- ----------- ---------- ----------
Operating Expenses:
Cost of Homes and Lot Sales $4,511,467 $ 2,247,198 $2,024,502 $3,997,457
Selling and General 671,370 576,589 431,385 643,999
Office Costs:
Salaries 692,615 583,447 435,566 331,937
General 216,729 201,085 158,053 276,816
Rent Estate Commissions 167,441 147,989 118,175 106,422
Interest 117,789 145,218 99,543 140,105
---------- ---------- ---------- ----------
Total Operating Expenses $6,377,411 $ 3,901,526 $3,267,224 $5,496,736
---------- ----------- ---------- ----------
Net Income (Loss) $ 7,423 $ (69,853) $ (9,940) $ (311,955)
========== ==========
Retained Earnings (Deficit):
Balance - Beginning of Period $ (578,288) $ (694,373)
Stockholder Distributions-Sub
Chapter "S" Corp. 123,508 556,068
---------- -----------
Total Retained Earnings-End
of Period (Deficit) $ (694,373) $(1,320,294)
========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
34
<PAGE> 36
WHITEHALL LIMITED, INC.
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FORMA COMPARATIVE COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDING DECEMBER 31, 1997 AND 1998
AND (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ --------------------------
1997 1998 1998 1999
--------- --------- ----------- -----------
Cash Flows from Operating Activities: (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Income (Loss) $ 7,423 $ (69,853) $ (9,940) $(311,955)
--------- --------- --------- ---------
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and Amortization 37,715 41,394 31,997 28,024
Increase/Decrease In:
Land and Development Costs 748,129 200,108 36,341 144,647
Work in Progress-Homes and Models 163,952 (975,848) (429,051) (823,013)
Customers' Deposits (249,051) 298,033 238,881 277,614
Accounts Payable (225,038) 251,733 52,314 178,995
Property and Equipment (71,449) (6,270) 9,550 (13,655)
Other Assets (4,331) (17,240) 1,063 (98,971)
Due From/To Affiliates 78,563 374,671 66,668 (287,855)
Accounts Receivable - Other (724) 724 (476) 0
--------- --------- --------- ---------
Total Adjustments $ 477,766 $ 167,305 $ 7,287 $(594,214)
--------- --------- --------- ---------
Net Cash Provided By Operating Activities $ 485,189 $ 97,452 $ (2,653) $(906,169)
--------- --------- --------- ---------
Cash Flows From Investing Activities:
Net (Increase) Decrease in Joint Ventures $ 159,358 $ (2,985) $ 750 $ 2
Net Investments From Stockholder 0 (403,607) 0 403,607
--------- --------- --------- ---------
Net Cash Flows From Investing Activities $ 159,358 $(406,592) $ 750 $ 403,609
--------- --------- --------- ---------
Net Borrowing Under:
Land and Development Loans $(175,785) $(162,572) $(117,572) $ 313,625
Construction Loans (393,351) 609,561 488,254 751,134
Notes Payable 139,003 (152,791) (145,838) 213,265
Notes Payable - Stockholders 0 0 0 (403,607)
Stockholders' Loans 281,334 (47,236) (25,000) (371,601)
Stockholders' Distributions (602,325) 135,145 (180,049) 0
--------- --------- --------- ---------
Net Cash Provided (Used) By
Financing Activities $(751,124) $ 382,107 $ 19,795 $ 502,816
--------- --------- --------- ---------
Net (Decrease)(Increase) In Cash (106,577) 72,967 17,892 256
Net Cash - Beginning of Year 310,113 203,546 203,546 276,513
--------- --------- --------- ---------
Net Cash - End of Year $ 203,536 $ 276,513 $ 221,438 $ 276,769
========= ========= ========= =========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
35
<PAGE> 37
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JANUARY 1, 1999
<TABLE>
<CAPTION>
Balance Increase Balance
December to Fair January
Assets 31, 1998 Value 1, 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash on hand and in banks $ 276,513 $ -- $ 276,513
Accounts and Notes Receivable:
Affiliates 60,139 -- 60,139
Stockholders 278,833 -- 278,833
Investments 403,609 -- 403,609
Land and Development Costs 1,413,126 2,544,573 3,957,699
Work in Progress -Homes and Models 1,956,207 1,250,000 3,206,207
Property and Equipment 616,087 400,000 1,016,087
Accumulated Depreciation (218,458) 218,458 0
----------- ----------- -----------
Total Property and Equipment $ 397,629 $ 618,458 $ 1,016,087
----------- ----------- -----------
Other Assets 111,911 -- 111,911
----------- ----------- -----------
Total Assets $ 4,897,967 $ 4,413,031 $ 9,310,998
=========== =========== ===========
Liabilities and Stockholders' Equity
Accounts Payable $ 543,732 $ -- $ 543,732
Customers' Deposits 736,963 -- 736,963
Due to Stockholder 331,987 -- 331,987
Due to Affiliates 299,397 -- 299,397
Note and Loans Payable -
Financial Institutions 2,621,134 -- 2,621,134
Notes Payable - Stockholder 0 2,500,000 2,500,000
----------- ----------- -----------
Total Liabilities $ 4,533,213 $ 2,500,000 $ 7,033,213
----------- ----------- -----------
Stockholders' Equity
Net Stockholders' Equity -
Whitehall Homes, Inc. and Related Companies
Common Stock Exchanged for the
Common Stock of Whitehall Homes II, Inc. 364,754
Cambridge Universal Corporation
Common Stock Exchanged for 100% of the
Common Stock of Whitehall Homes II, Inc.-
4,608,268 Shares 1,913,031 2,277,785
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 4,897,967 $ 4,413,031 $ 9,310,998
=========== =========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
36
<PAGE> 38
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
PRO FROMA CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AS OF JANUARY 1, 1999
<TABLE>
<CAPTION>
Number Amount Capital in Retained
of Common Common Excess of Earnings
Shares Shares Par Value (Deficit)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - January 1, 1999 7,100,000 $ 190,448 0 $ (190,448)
Less: Reverse stock split:
1 share issued for each
3 shares exchanged 4,733,333 0 0 0
----------- ----------- ----------- -----------
Balance - After Reverse Stock Split 2,366,667 190,448 0 (190,448)
Add: Common Stock Issued to
acquire Whitehall Homes,
II, Inc., whereby it became a
100% subsidiary of Whitehall
Limited, Inc. 4,608,268 $ 2,277,786
Common Stock issued to
complete acquisition of
Whitehall Homes II, Inc. 1,971,065 0
To set-up par value @.10
per share -- 704,152 (704,152)
----------- ----------- ----------- -----------
Balance - January 1, 1999 8,946,000 $ 894,600 $ 1,573,634 $ (190,448)
=========== =========== =========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
ALEX N. CHAPLAN & ASSOCIATES
37
<PAGE> 39
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION AND
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS:
NOTE 1 - ACCOUNTING PRINCIPLES
Principles of Combination:
Effective on January 1, 1999 the stockholders' of nine Florida
Corporations, as listed below, exchanged all of their outstanding common stock,
at fair value, for the common stock of Whitehall Homes II, Inc., resulting in
one Florida Corporation.
Effective also on January 1, 1999, the stockholders of Whitehall Homes
II, Inc., exchanged all of their common stock for 4,608,268 shares of the
common stock of Cambridge Universal Corporation, a Colorado Corporation,
thereby making it a wholly-owned subsidiary.
Subsequently, Cambridge Universal Corporation changed its domicile to
the state of Florida, and its name to Whitehall Limited, Inc. As a result of
the above, actions by the stockholders, Board of Directors and the
Corporation's activities, the financial statements were prepared as Pro Forma
Combined Financial Statements for the two calendar years ending December 31,
1998.
The Pro Forma Combined Financial Statements include the accounts of
the following listed companies after elimination of all significant
inter-company accounts and transactions:
<TABLE>
<CAPTION>
<S> <C>
Whitehall Homes, Inc. Fairway Lakes Homes, Inc.
U-Store It, Inc. Whitehall Homes At Maple Hammock, Inc.
Whitehall Homes At Avalon, Inc. Whitehall Management, Inc.
Bermuda Development Corporation Beekman Village Development Corporation
Whitehall Associates, Inc.
</TABLE>
NOTE 2 - DESCRIPTION OF THE BUSINESS
Whitehall Limited, Inc. was originally formed in 1985 by the major
stockholders to develop land and construct single family and/or multi-family
housing either in their own affiliated companies or in joint ventures with
others. Land costs are capitalized until subdivided and parceled for building.
All construction costs are recorded on a specific job basis. Certain overhead
costs are allocated to development costs and/or specific jobs. All properties
are carried at the lower of cost or net realizable values.
NOTE 3 - INVESTMENTS
As of December 31, 1998, the major stockholder of the Companies
contributed to the capital of Whitehall Homes, Inc. a security investment
account containing securities with a cost basis of $403,607. The fair market
value of these securities was in excess of $500,000 as represented by
management.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and Equipment is depreciated over the estimated useful lives
of the assets using the straight-line method. Expenditures for maintenance,
repairs, renewals and betterments, which do not materially prolong useful lives
of the assets are charged to income as incurred. The cost of property retired
or sold and the related accumulated depreciation is removed from the accounts
and any gain or loss from sales is recorded as income.
ALEX N. CHAPLAN & ASSOCIATES
38
<PAGE> 40
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION AND
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS:
NOTE 5 - DEBT
The companies were indebted to various lending institutions as
follows:
<TABLE>
<CAPTION>
December 31
1997 1998
---------- ----------
<S> <C> <C>
Land and Land Development Loans - secured by land and
land improvements prior to building activities:
Bermuda Development Corp-Interest
@ 1% to 1.50% over prime rate $ 553,672 $ 316,000
Whitehall Homes at Avalon, Inc.
Interest @1.00% over prime rate -0- 81,100
---------- ----------
$ 553,672 $ 391,100
========== ==========
Construction Loans - secured by specific homes under
construction, interest at 1.00% to 1.50% over prime rate,
maximum loans may net exceed $3,087,400 at
December 31, 1998. Payable upon sale of homes $ 558,642 $1,168,203
========== ==========
Notes Payable:
Secured by mortgage on land and buildings
Interest at 1.50% over prime rate. Payable on a 20 year
schedule, all due and payable on February 26, 2006 $ 377,393 $ 367,744
Installment Notes - secured by computer equipment and
loader, due April 2002 73,503 52,269
Secured by mortgage on U-Store It, Inc. land, payable to
three individuals upon sale. Interest @12.00% 300,000 300,000
Unsecured line of credit payable to bank, interest @1.50%
over prime rate guaranteed by stockholders 183,649 41,818
Unsecured note; interest @ 1% over prime rate 180,077 200,000
Unsecured note; interest @2.25% over prime rate; due
September 2, 1999 100,000 100,000
---------- ----------
$1,214,622 $1,061,831
========== ==========
</TABLE>
ALEX N. CHAPLAN & ASSOCIATES
39
<PAGE> 41
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION AND
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS:
NOTE 6 - INCOME TAXES
The former stockholders of the companies had elected to be taxed under
the provisions of Sub Chapter S of the United States Internal Revenue Code and
as a result, the Corporations were not liable for Federal Income Taxes for the
periods herein.
NOTE 7 - PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumption that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NOTE 8 - COMMITMENTS AND CONTINGENCY:
Whitehall Limited, Inc. and its nine former affiliated companies have
secured various lines of credit with financial institutions. The major
stockholders has guaranteed certain loans and/or assigned a life insurance
policy as security.
NOTE 9 - SUBSEQUENT EVENTS:
The stockholders meeting of June 17, 1999 approved the actions and
agreements of the Board of Directors as discussed in Note 1.
ALEX N. CHAPLAN & ASSOCIATES
40
<PAGE> 42
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
(2) Charter and Bylaws of the Registrant
(3) Not Applicable
(4) Not Applicable
(5) Not Applicable
(6) Not Applicable
(7) Not Applicable
(8) Agreement Providing for the Exchange of Capital Stock by and
Between Cambridge Universal Corporation, the holders of all
of the outstanding voting Common Stock of Whitehall Homes
II, Inc. and Whitehall Homes II, Inc. dated as of June 17, 1999
(without Schedules or Exhibits) with First Addendum thereto
(9) Not Applicable
(10) Not Applicable
(12) Opinion letter of William T. Kirtley, P.A. dated September
30, 1999 to American Securities Transfer & Trust, Inc.
</TABLE>
41
<PAGE> 1
===============================================================================
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Certificate of
Domestication and Articles of Incorporation for WHITEHALL LIMITED, INC., filed
on June 24, 1999 effective July 12, 1988, as shown by the records of this
office.
The document number of this corporation is P99000057455.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Twenty-fourth day of June, 1999
(Great Seal of the
State of Florida)
CR2E022 (1-99) Katherine Harris
----------------
Katherine Harris
Secretary of State
===============================================================================
<PAGE> 2
CERTIFICATE OF DOMESTICATION
The undersigned, GREGORY M. ANDREWS , VICE PRESIDENT ,
------------------------------ ------------------------------
(Name) (Title)
of CAMBRIDGE UNIVERSAL CORPORATION a foreign Corporation,
-----------------------------------------------------
(Corporation Name)
in accordance with Florida Statutes, section 607.1801 does hereby certify:
1. The date on which corporation was first formed was JULY 12 , 1988.
------------------ --
2. The jurisdiction where the above named corporations was first formed,
incorporated, or otherwise came into being was COLORADO .
----------------------------
3. The name of the corporation immediately prior to the filing of this
Certificate of Domestication was CAMBRIDGE UNIVERSAL CORPORATION .
-----------------------------------------
4. The name of the corporation, as set forth in its articles of incorporation,
to be filed pursuant to ss. 607.0202 and 607.0401 with this certificate is
WHITEHALL LIMITED, INC.
---------------------------------------------------------------------------
5. The jurisdiction that constituted the seat, siege, social principal place
of business or central administration of the corporation, or any other
equivalent thereto under applicable law immediately prior to the filing of
the Certificate of Domestication was COLORADO .
-------------------------------------
I am VICE PRESIDENT , of CAMBRIDGE UNIVERSAL CORPORATION
-------------------- ------------------------------------------------
and am authorized to sign this Certificate of Domestication on behalf of the
corporation and have done so this the day of JUNE , 1999.
---- --------------------- --
/s/ GREGORY M. ANDREWS
----------------------------------------
(Authorized Signature)
Filing Fee:
Certificate of Domestication $ 50.00
Articles of Incorporation and Certified Copy $ 78.75
-------
Total to domesticate and file $128.75
<PAGE> 3
ARTICLES OF INCORPORATION
OF
WHITEHALL LIMITED, INC.
ARTICLE I - Name
----------------
The name of the corporation is:
WHITEHALL LIMITED, INC.
ARTICLE II - Mailing Address
----------------------------
The mailing address of the corporation shall be:
290 Cocoanut Avenue
Sarasota, Florida 34236
ARTICLE III - Capital Stock
---------------------------
Section 1. The total number of shares of all classes of stock which
the corporation shall have authority to issue is six hundred million
(600,000,000) shares.
The corporation shall have authority to issue two (2) classes of
stock. Five hundred million (500,000,000) shares shall be common stock having a
par value of $.10 (hereinafter referred to as "Common Stock") and one hundred
million (100,000,000) shares shall be preferred stock issuable in series and
having a par value of $.10 (hereinafter referred to as "Preferred Stock").
Section 2. Statement of Preferences, Limitations and Relative Rights
in Respect of Shares of Each Class. A description of the different classes of
stock and a statement of the
<PAGE> 4
designation, preferences, voting rights, limitations and relative
rights of the holders of stock of such classes are as follows:
A. Preferred Stock.
(1) Shares of Preferred Stock may be issued from time to time in one
or more series. The preferences and relative, participating, optional and other
special rights of each of such series and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
already outstanding; and the Board of Directors of the corporation is hereby
expressly granted authority to fix, by resolution or resolutions adopted prior
to the issuance of any shares of a particular series of Preferred Stock, the
designations, preferences and relative, participating, optional and other
special rights, or the qualifications, limitations or restrictions thereof, of
such series, including without limiting the generality of the foregoing, the
following:
(a) The rate, if any, and times at which, and the terms and
conditions on which, dividends on the Preferred Stock of such series shall be
paid;
(b) The redemption price or prices, if any, and the times at
which, Preferred Stock of such series may be redeemed;
(c) The rights of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding up of the corporation;
(d) The terms of the sinking fund or redemption of purchase
account, if any, to be provided for the Preferred Stock of such series;
2
<PAGE> 5
(e) The right, if any, of the holders of Preferred Stock of
such series to convert the same into, or exchange the same for, other classes
of stock of the corporation and the terms and conditions of such conversion or
exchange; and
(f) The voting powers, if any, of the holders of the
Preferred Stock of such series.
(2) All shares of a particular series shall be identical in all
respects. The rights of the Common Stock of the corporation may be subject to
the preferences and relative, participating, optional and other special rights
of the Preferred Stock or each series as fixed from time to time by the Board
of Directors as aforesaid.
(3) The holders of the Preferred Stock, in preference to the holders
of the Common Stock of the corporation, may be entitled to receive, if and when
declared by the Board of Directors, dividends at the rate established by the
Board of Directors at the time of the issuance of the shares of each series.
Such dividends, when and if declared, may be cumulative so that if dividends
in respect to any dividend period shall not have been paid upon, or declared
and set apart for, the Preferred Stock the deficiency shall be fully paid or
declared and set apart before any dividends shall be paid upon, or declared or
set apart for the Common Stock.
B. Common Stock.
(1) After the requirements with respect to preferential dividends upon
the Preferred Stock shall have been met, if such preference be established by
the Board of Directors of the corporation, and after the corporation shall have
complied with all requirements, if any, with respect to the setting aside of
sums as a sinking fund or redemption or purchase
3
<PAGE> 6
account for the benefit of any series of Preferred Stock, then and not
otherwise, the holders of the Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount to be
distributed to the holders of all series of the Preferred Stock then
outstanding in the event of voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of the Common Stock shall be
entitled to receive all the remaining assets of the corporation available for
distribution to its stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Each holder of Common Stock shall have one (1) vote for each share
of Common Stock held by him in all matters submitted to a vote of the
stockholders. Cumulative voting in the election of directors will not be
allowed.
Section 3. There are 7,100,000 shares of common stock of the
corporation presently outstanding, no par value, which, with the filing of
these Articles of Incorporation shall be reclassified into 2,366,667 shares,
$.10 par value.
ARTICLE IV - Registered Office and Agent
----------------------------------------
The street address of the registered office of this corporation is 290
Cocoanut Avenue and the name of the registered agent of this corporation at
that address is J. S. ANDREWS.
4
<PAGE> 7
ARTICLE V - Incorporator
------------------------
The name and address of the person signing these Articles is: J. S.
ANDREWS, 290 Cocoanut Avenue, Sarasota, Florida 34236.
ARTICLE VI - Officers
---------------------
The following persons shall be the officers of the Company:
President Robert Ground
290 Cocoanut Avenue
Sarasota, Florida 34236
Vice President, Secretary and Gregory M. Andrews
Treasurer 290 Cocoanut Avenue
Sarasota, Florida 34236
ARTICLE VII - Bylaws
--------------------
The power to adopt, alter, amend or repeal Bylaws of this corporation
shall be vested in either the Board of Directors or shareholders; provided,
however, that the Board of Directors may not alter, amend or repeal any Bylaw
adopted by the shareholders if the shareholders specifically provide that the
Bylaw is not subject to alteration, amendment or repeal by the Board of
Directors.
ARTICLE VIII - Indemnification
------------------------------
The corporation shall indemnify any officer or director, or any former
officer or director, to the full extent permitted by law.
5
<PAGE> 8
ARTICLE IX - Affiliated Transactions
------------------------------------
The provisions of Chapter 607.0901, Florida Statutes, as amended,
shall NOT apply to this corporation.
WITNESS my hand and seal at Sarasota, Florida this 23rd day of June,
1999.
/s/ J. S. Andrews
----------------------------------------
J. S. ANDREWS, Incorporator
The undersigned, having been designated in the foregoing Articles of
Incorporation as Registered Agent, hereby agrees to accept said designation.
/s/ J. S. Andrews
----------------------------------------
J. S. ANDREWS
6
<PAGE> 9
BYLAWS
------
of
WHITEHALL LTD., INC.
A FLORIDA CORPORATION
ARTICLE I. OFFICES
------------------
Section 1. Business Offices. WHITEHALL LTD., INC. (hereinafter
referred to as the "Corporation"), may have such offices, either within or
without the State of Florida, as the Board of Directors may designate from time
to time.
Section 2. Registered Office. The Corporation shall maintain a
registered office in the State of Florida, which may be changed from time to
time by the Board of Directors.
ARTICLE II. SHAREHOLDERS
------------------------
Section 1. Annual Meeting. The Annual Meeting of Shareholders of the
Corporation shall be held subsequent to the end of each fiscal year of the
Corporation on such date and at such hour as the Board of Directors shall
annually determine.
Section 2. Special Meetings. Special meetings of the shareholders may
be called by the President or the Board of Directors, and shall be called upon
the written request of the holders of not less than one-tenth (1/10) of all
outstanding shares of the Corporation entitled to vote at the meeting. No
business shall be transacted at any special meeting unless such business is
stated in the notice of the meeting as one of the purposes of that special
meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Florida, as the place of meeting
for any annual meeting or for any special meeting of the shareholders.
Section 4. Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary, or the other person(s) calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
<PAGE> 10
shareholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been
transacted on the original date of the meeting.
Section 6. Waiver of Notice of Meetings of Shareholders. Whenever any
notice is required to be given to any shareholder of the Corporation under the
provisions of any statute or under the provisions of the Bylaws, 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 equivalent to the
giving of such notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, 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
annual or special meeting of the shareholders need be specified in any written
waiver of notice.
Section 7. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, sixty (60) 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
(10) 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 sixty (60) days and, in
the case of a meeting of shareholders, not less than ten (10) 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 declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders.
2
<PAGE> 11
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 adjourn ment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
All notice and record periods established herein shall be adjusted
where required to conform to any prescribed periods now or hereafter provided
by the Florida General Corporation Act.
Section 8. Shareholder Quorum and Action. A majority of the
outstanding shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless otherwise provided by law.
Section 9. Voting. Each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
Section 10. Proxies. Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent without a meeting or a
shareholder's duly authorized attorney-in-fact may authorize any other person
or persons to act for him by proxy.
Every proxy must be in writing and must be signed by the shareholder
or his attorney-in-fact. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided by law.
Section 11. Action by Shareholders Without a Meeting. Any action
required or permitted 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 the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Within ten (10) days after obtaining such authorization by written
consent, notice shall be given to those shareholders who have not consented in
writing. The notice shall fully summarize the material features of the
authorized action and, if the action be a merger, consolidation or sale or
exchange of assets for which dissenters' rights are provided by law, the notice
shall contain a clear statement of the right of shareholders dissenting
therefrom to be paid the fair value of their shares upon compliance with the
provisions of Florida law regarding the rights of dissenting shareholders.
3
<PAGE> 12
ARTICLE III. DIRECTORS
----------------------
Section 1. Powers. Except as otherwise provided by law or by the
Corporation's Articles of Incorporation, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, the Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors
of the Corporation shall initially be two. From time to time, the number of
directors may be increased or decreased (if the number of directors then
provided for is more than one) by shareholder action or by resolution of a
majority of the full Board of Directors. Each director shall hold office until
the next Annual Meeting of Shareholders and until his successor shall have been
elected and qualified. Directors need not be residents of the State of Florida
or shareholders of the Corporation.
Section 3. Duties of Directors. A director shall perform his duties as
a director, including his duties as a member of any committee of the Board of
Directors upon which he may serve, (a) in good faith, (b) in a manner he
reasonably believes to be in the best interest of the Corporation, and (c) with
such care as an ordinary prudent person in a like position would use under
similar circumstances. In performing his duties, a director shall be entitled
to rely on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by:
(a) One or more officers or employees of the Corporation whom
the director reasonably believes to be reliable and competent
in the matters presented,
(b) Counsel, public accountants or other persons as to
matters which the director reasonably believes to be within
such person's professional or expert competence, or
(c) A committee of the Board of Directors upon which he does
not serve, duly designated in accordance with a provision of
the Articles of Incorporation or the Bylaws, as to matters
within its designated authority, which committee the director
reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
Corporation.
Section 4. Election of Directors. At the Annual Meeting of
Shareholders, directors shall be elected by the affirmative vote of the
majority of the shares represented at the
4
<PAGE> 13
meeting and entitled to vote for the election of directors. If the election of
directors is not held on the day designated in these Bylaws for any Annual
Meeting of Shareholders, or at any adjournment thereof, the Board of Directors
may cause the election to be held at a special meeting of shareholders
specifically called for that purpose.
Section 5. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual election of directors. The Board of
Directors may, from time to time, by resolution appoint the time and place,
either within or without the State of Florida, for holding other regular
meetings of the Board, if by it deemed advisable; and such regular meetings
shall thereupon be held at the time and place so appointed, without the giving
of any notice with regard thereto. In case the day appointed for a regular
meeting shall fall upon a Saturday, Sunday or legal holiday in the State of
Florida, such meeting shall be held on the next succeeding day not a Saturday,
Sunday or legal holiday in the State of Florida, at the regularly appointed
hour.
Section 6. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman, the President or any
two directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Florida, as the place for holding any special meeting of the Board of Directors
called by him or them.
Section 7. Notice of Special Meeting. Notice to a director of any
special meeting may be given in writing by mailing the same to the residence or
place of business of the director as shown on the books of the Corporation not
later than three days before the day on which the meeting is to be held, or may
be given by (1) sending the same to him at such place by telegraph, (2)
delivering the same to him personally, (3) leaving the same for him at his
place of business, or (4) giving the same to him by telephone, not later than
the day before such day of meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail addressed to the director
at his residence or his place of business with postage thereon prepaid. If
notice be given by telegram or cablegram, such notice shall be deemed to be
delivered when the telegram or cablegram is delivered to the telegraph company.
Except as otherwise provided in the Bylaws or as may be indicated in the notice
thereof, any and all business may be transacted at any special meeting.
When a special meeting of the Board of Directors is adjourned to
another time and place, no notice of the adjourned meeting need be given if the
time and place to which the meeting is adjourned are announced at the meeting
at which the adjournment is taken.
Section 8. Waiver of Notice. A director may waive the requirement of
notice of a special meeting of the Board of Directors by signing a waiver of
notice either before or after the meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting and a waiver of any
and all objections to the place or time of such meeting or the manner in which
it has been called or convened, except when the director states, at
5
<PAGE> 14
the beginning of the meeting, any objection to the transaction of 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 9. Quorum and Action. A majority of the number of directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at the meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Directors shall be deemed present at a meeting of the Board of
Directors if a conference telephone or similar communications equipment, by
means of which all persons participating in the meeting can hear each other, is
used.
Except as otherwise required by statute, by the Articles of
Incorporation or by these Bylaws, the affirmative vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 10. Presumption of Assent. A director of the Corporation who
is present at a meeting of its Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless he votes against such action or abstains from voting in respect
thereto because of an asserted conflict of interest.
Section 11. Action Without a Meeting. Any action required or permitted
to be taken by the Board of Directors at a meeting 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 and filed in the minutes of the proceedings of
the Board of Directors.
Section 12. Director Conflicts of Interest. No contract or other
transaction between the Corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because
such director or directors are present at the meeting of the Board of Directors
or a committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which
authorizes, approves or ratifies the contract or transaction
by a vote or consent sufficient for the purpose without
counting votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they
authorize, approve or ratify such contract or transaction by
vote or written consent; or
6
<PAGE> 15
(c) The contract or transaction is fair and reasonable to the
Corporation at the time it is authorized by the Board of
Directors, a committee or the shareholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or a committee thereof which
authorizes, approves or ratifies such contract or transaction.
Section 13. Compensation of Directors. The Board of Directors may pay
each director a stated salary as such or a fixed sum for attendance at meetings
of the Board of Directors or any committee thereof, or both, and may reimburse
each director for his expenses of attendance at each such meeting. The Board of
Directors may also pay to each director rendering services to the Corporation
not ordinarily rendered by directors, as such, special compensation appropriate
to the value of such services, as determined by the Board of Directors from
time to time. None of these payments shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor. The
Board of Directors may determine the compensation of a director who is also an
officer for service as an officer as well as for service as a director.
Section 14. Resignations. Any director of the Corporation may resign
at any time either by oral tender of resignation at any meeting of the Board of
Directors or by giving written notice thereof to the Chairman, the President or
the Secretary. Such resignation shall take effect at the time specified
therefor, and unless otherwise specified with respect thereto, the acceptance
of such resignation shall not be necessary to make it effective.
Section 15. Removal. Any director may be removed with or without
cause, at any time, by the affirmative vote of the holders of record of a
majority of the shares then entitled to vote at an election of directors, at a
meeting of the shareholders called for the purpose. The vacancy on the Board of
Directors caused by the removal may be filled by the shareholders or, if the
shareholders fail to do so, by the affirmative vote of a majority of the
remaining directors.
Section 16. Vacancies. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders.
Section 17. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an executive committee and one or more other committees
each of which, to the extent provided in the resolution, shall have and may
exercise all the authority of the Board of Directors, except that no committee
shall have the authority to:
7
<PAGE> 16
(a) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders,
(b) designate candidates for the office of director, for the
purpose of proxy solicitation or otherwise,
(c) fill vacancies on the Board of Directors or any committee
of the Board,
(d) amend the Bylaws,
(e) authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the
Board of Directors, or
(f) authorize or approve the issuance or sale of, or any
contract to issue or sell, shares or designate the terms of a
series of a class of shares, except that the Board of
Directors, having acted regarding general authorization for
the issuance or sale of shares, or any contract for that
purpose, and, in the case of a series, its designation,
pursuant to a general formula or method specified by the
Board of Directors, by resolution or by adoption of a stock
option or other plan may authorize a committee to fix the
terms of any contract for the sale of the shares and to fix
the terms upon which these shares may be issued or sold,
including, without limitation, the price, the rate or manner
of payment of dividends, provisions for redemption, sinking
fund, conversion, voting or preferential rights, and
provisions for other features of a class of shares, or a
series of a class of shares, with full power in the committee
to adopt any final resolution setting forth all its terms and
to authorize the statement of the terms of a series for
filing with the Department of State.
The Board of Directors, by resolution adopted in accordance with this
section, may designate one or more directors as alternate members of any such
committee, who may act in the place and stead of any absent member or members
at any meeting of the committee.
ARTICLE IV. OFFICERS
--------------------
Section 1. Officers. The officers of the Corporation shall include a
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers, assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors from
time to time. Any two or more offices may be held by the same person.
8
<PAGE> 17
Section 2. Election and Term of Office. As far as practicable, the
officers of the Corporation shall be elected at the regular meeting of the
Board of Directors following the annual election of directors. If the election
of officers is not held at such meeting, the election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until the
regular meeting of the Board of Directors following the annual election of
directors in the next subsequent year and until his successor shall have been
duly elected and shall have qualified, or until his earlier resignation,
removal from office or both.
Section 3. Removal. Any officer or agent may be removed by the Board
of Directors whenever in its judgment the best interests of the Corporation
will be served thereby, but the removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of resignation,
removal, death or otherwise may be filled by the Board of Directors for the
unexpired portion of the term.
Section 5. Chairman. The Chairman shall preside, when available, at
all meetings of the shareholders and the Board of Directors. He shall have
general executive powers as well as the specific powers conferred by these
Bylaws and he shall also have and may exercise such further powers and duties
as from time to time may be conferred upon or assigned to him by the Board of
Directors.
Section 6. President. The President shall be the chief executive
officer of the Corporation and, under the direction of the Board of Directors,
shall have general responsibility for the management and direction of the
business, properties and affairs of the Corporation. He shall have general
executive powers, including all powers required by law to be exercised by a
president of a corporation as such, as well as the specific powers conferred by
these Bylaws or by the Board of Directors.
Section 7. Vice President. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President, if one has
been appointed or elected by the Board of Directors (or in the event there be
more than one Vice President, the Vice Presidents in the order designated at
the time of their appointment or election, or in the absence of any
designation, then in the order of their appointment or election), shall perform
the duties of the President and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
Each Vice President shall have general executive powers as well as the
specified powers conferred by these Bylaws. He shall also have such further
powers and duties as may from time to time be conferred upon, or assigned to,
him by the Board of Directors or the President.
9
<PAGE> 18
Section 8. Secretary. The Secretary shall (a) keep the minutes of the
proceedings of the Board of Directors and the shareholders in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) be
the registrar of the Corporation and keep a register of the post office
addresses of all shareholders which shall be furnished to the Secretary by the
shareholders; (e) have general charge of the stock transfer books of the
Corporation; and (f) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors.
Section 9. Treasurer. The Treasurer shall (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
receive and give receipts for monies due and payable to the Corporation from
any source whatsoever, and deposit all such monies in the name of the
Corporation in such banks, trust companies or other depositories as the Board
of Directors may elect; and (c) in general perform all of the duties as from
time to time may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V. CERTIFICATES FOR SHARES AND THEIR TRANSFER
-----------------------------------------------------
Section 1. Certificates for Shares. Certificates representing shares
of the Corporation shall be in such form as shall be determined by the Board of
Directors. The certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. Each certificate for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. No certificate shall be issued for any share until such share is
fully paid.
Section 2. Transfer of Shares. The Corporation or its duly authorized
agent shall register a certificate for shares presented to it for transfer if
(1) the certificate is indorsed by the appropriate person or persons, (2)
reasonable assurance is given that those endorsements are genuine and
effective, (3) the Corporation or its duly authorized agent has no duty to
inquire into adverse claims or has discharged any such duty, (4) any
10
<PAGE> 19
applicable law relating to the collection of taxes has been complied with and
(5) the transfer is in fact rightful or is to a purchaser for a value in good
faith and without notice of any adverse claim. The new certificate or
certificates shall be issued only upon surrender of the old certificate, which
shall be cancelled upon the issuance of the new certificate or certificates.
The person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
Section 3. Lost, Destroyed or Wrongfully Taken Stock Certificates. The
Corporation or its duly authorized agent shall issue a new certificate of
shares in the place of any certificate previously issued if the owner of that
certificate (1) claims by affidavit that it has been lost, destroyed or
wrongfully taken; (2) requests the issuance of a new certificate before the
Corporation or its duly authorized agent has notice that the certificate has
been acquired by a purchaser for value in good faith and without notice of any
adverse claim; (3) files with the Corporation or its duly authorized agent a
sufficient indemnity bond; and (4) satisfies any other reasonable requirements
imposed by the Corporation or its duly authorized agent.
ARTICLE VI. BOOKS, RECORDS AND REPORTS
--------------------------------------
Section 1. Books and Records. The Corporation shall keep correct and
complete books and records of accounts and shall keep minutes of the
proceedings of its Board of Directors and shareholders. The Corporation shall
also keep, at its registered office, a record of its shareholders, giving names
and addresses of all shareholders and the number of shares held by each.
Section 2. Shareholders' Inspection Rights. Any person who shall have
been a holder of record of one-quarter (1/4) of one percent (1%) of the
Corporation's outstanding shares at least six (6) months immediately preceding
his demand or shall be the holder of record of at least five percent (5%) of
the outstanding shares of the Corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, at any reasonable time or times, for any proper purpose its relevant
books and records of accounts, minutes and records of shareholders and to make
extracts therefrom.
Section 3. Annual Reports. The Corporation shall file with the
Department of State of the State of Florida, on or after January 1 and on or
before July 1 of each year, a sworn report, on such forms and containing such
information as the Department of State may prescribe. Similar reports shall be
filed as required by law in those jurisdictions other than the State of Florida
where the Corporation may be authorized to transact business.
11
<PAGE> 20
ARTICLE VII. MISCELLANEOUS
--------------------------
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors upon consultation with the Corporation's
accountants.
Section 2. Dividends. The Board of Directors may, from time to time,
declare and the Corporation may pay dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Articles of
Incorporation.
Section 3. Corporate Seal. The Board of Directors shall provide a
corporate seal which shall be circular in form and shall have inscribed thereon
the name of the Corporation and the state of incorporation.
Section 4. Execution of Instruments. All bills, notes, checks, other
instruments for the payment of money, agreements, indentures, mortgages, deeds,
conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered, or accepted on behalf
of the Corporation by the President, any Vice President, the Secretary or the
Treasurer. Any such instruments may also be signed, executed, acknowledged,
verified, delivered or accepted on behalf of the Corporation in such other
manner and by such other officers, employees or agents of the Corporation as
the Board of Directors may from time to time direct.
ARTICLE VIII. INDEMNIFICATION
-----------------------------
The following shall be the indemnification policy of the Corporation:
(a) The Corporation shall have power to indemnify any person
who was or is a party to any proceeding (other than an action
by, or in the right of, the Corporation) by reason of the
fact that he is or was a director, officer, employee, or
agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust,
or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of
the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful. The termination of any proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in, or not
12
<PAGE> 21
opposed to, the best interests of the Corporation or, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) The Corporation shall have power to indemnify any person
who was or is a party to any proceeding, by or in the right
of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses and
amounts paid in settlement not exceeding, in the judgment of
the Board of Directors, the estimated expense of litigating
the proceeding to conclusion actually and reasonably incurred
in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in
good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Corporation,
except that no indemnification shall be made under this
subsection (b) in respect of any claim, issue, or matter as
to which such person shall have been adjudged to be liable
unless, and only to the extent that, the court in which such
proceeding was brought or any other court of competent
jurisdiction shall determine upon application that, despite
the adjudication of liability but in view of all
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(c) To the extent that a director, officer, employee, or
agent of the Corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in
subsection (a) or subsection (b), or in defense of any claim,
issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsection (a) or subsection
(b), unless pursuant to a determination by a court, shall be
made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in subsection (a) or subsection (b). Such
determination shall be made by:
(i) The Board of Directors by a majority vote of a
quorum consisting of directors who were not parties
to such proceeding or by the shareholders by a
majority vote of a quorum consisting of shareholders
who were not parties to such action, suit, or
proceeding;
13
<PAGE> 22
(ii) If such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly
designated by the Board of Directors (in which
directors who are parties may participate) consist
ing solely of two or more directors at the time
parties to the proceeding;
(iii) By independent legal counsel:
(A) Selected by the Board of Directors
prescribed in paragraph (i) or the
committee described in paragraph (ii); or
(B) If a quorum of the directors cannot be
obtained for paragraph (i) and the
committee cannot be designated under
paragraph (ii), selected by majority vote
of the full Board of Directors (in which
Directors who are parties may participate);
or
(iv) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not
parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who
were not parties to such proceeding.
(e) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same
manner as the determination that indemnification is
permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by
sub- paragraph (d)(iii)(A) shall evaluate the reasonableness
of expenses and may authorize indemnification. Expenses
incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the Corporation in advance
of the final disposition of such proceeding upon receipt of
an undertaking by or on behalf of such director or officer to
repay such amount if he is ultimately found not to be
entitled to indemnification by the Corporation pursuant to
this section. Expenses incurred by other employees and agents
may be paid in advance upon such terms or conditions that the
Board of Directors deems appropriate.
(f) The indemnification and advancement of such expenses
provided pursuant to the foregoing are not exclusive and the
Corporation shall have the power to make any other or further
indemnification or advancement of expenses on behalf of the
persons herein described, in the manner and consistent with
the provisions of the Florida General Corporation Act.
(g) Indemnification and advancement of expenses as provided
in this Article shall continue, unless otherwise provided
when authorized or ratified,
14
<PAGE> 23
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.
(h) For purposes of this Article, the term "Corporation"
includes, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at
the request of a constituent corporation as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, is in
the same position under this section with respect to the
resulting or surviving corporation as he would have been with
respect to such constituent corporation if its separate
existence had continued. For purposes of this Article, the
term "other enterprises" includes employee benefit plans; the
term "expenses" includes counsel fees, including those for
appeal; the term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax
assessed with respect to any employee benefit plan), and
expenses actually and reasonably incurred with respect to a
proceeding; the term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal; the term
"agent" includes a volunteer; and the term "serving at the
request of the corporation" includes any service as a
director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to
an employee benefit plan and its participants or
beneficiaries; and the term "not opposed to the best interest
of the corporation" describes the actions of a person who
acts in good faith and in a manner he reasonably believes to
be in the best interests of the participants and
beneficiaries of an employee benefit plan.
(i) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
(j) If any expenses or other amounts are paid by way of
indemnification otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation
shall, not later than the time of delivery to shareholders,
unless such meeting is held within three (3) months from the
date of such payment, and, in any
15
<PAGE> 24
event, within fifteen (15) months from the date of such
payment, deliver either personally or by mail to each
shareholder of record at the time entitled to vote for the
election of directors a statement specifying the persons
paid, the amounts paid, and the nature and status at the time
of such payment of the litigation or threatened litigation.
ARTICLE IX. AMENDMENTS
----------------------
These Bylaws or any provisions thereof may be amended, altered, or
repealed in any particular, and new Bylaws or provisions, not inconsistent with
any provision of the Articles of Incorporation or any provisions of law, may be
adopted by the Board of Directors, at any meeting thereof, by the affirmative
vote of a majority of the whole number of directors, or by the shareholders of
the Corporation at any meeting of the shareholders, provided, however, that the
shareholders may prescribe in any Bylaw made by them that such Bylaw shall not
be altered, amended or repealed by the Board of Directors.
Adopted by the Board of Directors on June 17, 1999.
/s/ Robert Ground
----------------------------------------
ROBERT GROUND
/s/ Gregory M. Anderson
----------------------------------------
GREGORY M. ANDERSON
Constituting all of the members of
the Board of Directors of WHITEHALL
LTD., INC.
16
<PAGE> 1
AGREEMENT PROVIDING FOR THE EXCHANGE
OF CAPITAL STOCK
BY AND BETWEEN
CAMBRIDGE UNIVERSAL CORPORATION,
A COLORADO CORPORATION
AND
THE HOLDERS OF ALL OF THE OUTSTANDING VOTING COMMON STOCK
OF A FLORIDA CORPORATION KNOWN AS WHITEHALL HOMES II, INC.
AND
WHITEHALL HOMES II, INC.
DATED AS OF JUNE 17, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
BACKGROUND 1
ARTICLE I - Exchange of Common Stock 3
1.1 The Exchange Transaction 3
1.2 Reclassification of Acquiror Stock 3
1.3 Minimum Number of Shares of Acquiree Stock Exchanged 3
1.4 Issuance of Additional Acquiree Securities 4
ARTICLE II - Action Prior to Closing Date 4
2.1 Corporate Action of Acquiror 4
2.2 Corporate Action of Acquiree 4
2.3 Action by Holders 4
2.4 Acquiror Informational Filings 5
2.5 Financial Statements of Acquiree 5
2.6 Allocation and Responsibility of Transaction Costs and Expenses 5
2.7 Cooperation of Agreement Partes 5
ARTICLE III - Representations of Acquiree 6
3.1 Corporate Status 6
3.2 Corporate Action 6
3.3 Subsidiaries 6
3.4 Financial Condition 6
3.5 Capitalization of the Acquiree 7
3.6 Title to Properties 7
3.7 Business Activities of the Acquiree 7
3.8 Taxes and Tax Returns 7
3.9 Litigation 7
3.10 Material Contracts 8
3.11 Environmental Matters 8
3.12 Sale of Acquiree Securities 8
3.13 Accuracy of Provided Information 8
ARTICLE IV - Representations of the Acquiror 8
4.1 Corporate Status 8
4.2 Corporate Action 9
4.3 Subsidiaries 9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.4 Financial Condition 9
4.5 Capitalization of the Acquiror 10
4.6 Title to Properties 10
4.7 Taxes and Tax Returns 10
4.8 Litigation 10
4.9 Material Contracts 10
4.10 Environmental Matters 11
ARTICLE V - Pre-Closing Covenants of the Acquiree 11
5.1 No Change in Business 11
5.2 No Contracts 11
5.3 Issuance of Additional Securities 11
5.4 In General 11
ARTICLE VI - Pre-Closing Covenants of Acquiror 12
6.1 Basic Documents 12
6.2 No Contracts 12
6.3 Directors and Officers of Acquiror 12
6.4 Utilization of Net Operating Loss 13
ARTICLE VII - Closing of Agreement Transactions 13
7.1 Closing of Exchange Transaction 13
7.2 Time and Place of Closing 13
7.3 Deliveries at Closing 13
ARTICLE VIII - Conditions Precedent to Obligations of the Acquiror 14
8.1 No Adverse Development 14
8.2 No Breach of Representations, Warranties or Covenants of the
Agreement 14
8.3 Treatment of Transaction 15
ARTICLE IX - Conditions Precedent to Obligation of the Acquiree and
the Holders 15
9.1 No Adverse Development 15
9.2 Time of Consummation 15
9.3 No Breach of Representations, Warranties and Covenants 15
9.4 Treatment of Transaction 15
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.5 Deliveries in Connection with Acquiror Share Listing 16
9.6 Appointment to Acquiror Board of Directors 16
9.7 Assumption of Acquiree Liabilities/Contracts 16
ARTICLE X - Action of the Acquiror/Acquiree Contemporaneous to
Closing Date 16
ARTICLE XI - Indemnification, Survival of Representations and Warranties 17
11.1 Indemnification by the Acquiree 17
11.2 Indemnification by the Acquiror 17
11.3 Limitations Regarding Indemnification 17
11.4 Procedures for Third Party Indemnification 17
11.5 Survival of Representations, Warranties and Indemnities 18
ARTICLE XII - Miscellaneous Provisions 18
12.1 Notices 18
12.2 Successors and Assigns 18
12.3 Background Statement and Schedules 18
12.4 Entire Agreement 18
12.5 Publicity 18
12.6 Attorneys' Fees in Connection with Litigation 19
12.7 Cooperation 19
12.8 Applicable Law 19
</TABLE>
iii
<PAGE> 5
AGREEMENT PROVIDING FOR THE
EXCHANGE OF CAPITAL STOCK
THIS AGREEMENT PROVIDING FOR THE EXCHANGE OF CAPITAL STOCK (the
"Agreement") is made as of the 17th day of June, 1999 by and between the
following entities and natural persons:
<TABLE>
<CAPTION>
Agreement Party and Reference General Description of Agreement Party
- ----------------------------- --------------------------------------
<S> <C>
CAMBRIDGE UNIVERSAL CORPORA- A Colorado corporation presently having
TION ("Acquiror") its sole office in Denver, Colorado
WHITEHALL HOMES II, INC. ("Acquiree") A Florida corporation having its principal
office in Sarasota, Florida
RONALD and JOANNE MUSTARI, The record and beneficial holders of all of
Husband and Wife and residents of the outstanding Common Stock of Acquiree
Sarasota County, Florida ("Holders") $1 par value
</TABLE>
The foregoing-described entities and natural persons are sometimes described
herein collectively as the "Agreement Parties".
B A C K G R O U N D
-------------------
Acquiror is a Colorado corporation intending to become domesticated
pursuant to the Florida Business Corporation Act which, as of the date of this
Agreement, is publicly held by virtue of the filing and processing to
effectiveness of a Registration Statement which contained a definitive
Prospectus, which Prospectus is dated December 8, 1998 and relates to the
public offer and sale of 2,000,000 units, each unit comprised of one share of
Acquiror's common stock and Class A and Class B Common Stock Purchase Warrants.
The Acquiror has used the previous corporate names of OTISCO, INC., INCOME
IMPACT INVESTMENTS, INC. and FINANCIAL FREEDOM ENTERPRISES, INC. Presently the
Acquiror files the periodic and annual reports required by the Securities
Exchange act of 1934, as amended to date (the "Exchange Act") and as
represented herein, all of such periodic and annual reports have been filed by
the Acquiror through the conclusion of its most recent fiscal year, March 31,
1999. The Acquiror could, as of the date of this Agreement, be characterized as
a public shell. The Acquiror desires to acquire from the Holders all of the
outstanding voting common stock, $1 par value of the Acquiree, which consists
of 6,900 shares which are owned of record and beneficially by the Holders and
no others.
<PAGE> 6
The Acquiree is a party to this Agreement with respect to the making
of certain representations, warranties and undertakings, all as is set forth
herein.
The Acquiree is a Florida corporation which was formed and which is
the entity into which the operations of various entities, corporate and
otherwise, have carried out activities which relate to the construction of
residential dwellings and the development of residential subdivisions on the
West Coast of Florida. The Acquiree is presently vested with all of the
proprietary interest in the business previously carried on by the several
Whitehall Entities, all of which have been consolidated with and into the
Acquiree. The Holders and the Acquiree desire to become a publicly held entity
and in order to accomplish such purpose, desire to effect the exchange
transaction provided for in this Agreement.
The respective managements of the Acquiror and the Acquiree have
determined that the business combination provided for herein and which will
occur as a result of the consummation of the exchange transaction provided for
herein, will accomplish, among others, the business purposes of (i) permitting
the Acquiror to continue the business activity of the Acquiree, thereby
eliminating its public shell status and (ii) result in the Acquiree becoming,
in effect, publicly held which is anticipated to enhance the future business
activities of the Acquiror and the Acquiree as combined, including, without
limitation, the acquisition capability of the Acquiror and the Acquiree as
combined.
Accordingly, the Acquiror, the Acquiree and the Holders wish to
provide by means of this Agreement for the terms and conditions whereby (i) the
Holders will exchange all of their shares of the voting common stock of the
Acquiree for not less than 4,608,268 shares of the outstanding voting common
stock of the Acquiror, as such shares are adjusted for a reverse stock split
whereby each outstanding three shares of common stock of the Acquiror shall
become one share (the "Acquiror Shares" and the "Stock Split" respectively) and
(ii) the Acquiror shall change its corporate name to a name to be designated by
the Holders, which is anticipated to be WHITEHALL LIMITED, INC. and shall
become a corporation domesticated under and subject to the Florida Business
Corporation Act and as such, shall continue the business previously conducted
by the Acquiree and the affiliated entities of the Acquiree now consolidated
with and into the Acquiree.
This Agreement is that agreement contemplated by the document styled
Memorandum of Agreement entered into between the Acquiror (identified as
Whitehall Ltd., Inc.) and the Holders (identified as the Sellers).
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Agreement Parties agree as
follows:
2
<PAGE> 7
ARTICLE I
EXCHANGE OF COMMON STOCK
------------------------
Effective as of the Closing Date (which consummation of the
transactions on the Closing Date shall be deemed to have occurred for
accounting purposes on January 1, 1999), as established subsequently in this
Agreement, the following exchange transaction involving Acquiror Shares and
Acquiree Stock shall be consummated in conformance to the terms, conditions and
provisions of this Agreement.
1.1 The Exchange Transaction. On the Closing Date, as established
subsequently in this Agreement, the Acquiror will acquire all of the issued and
outstanding Acquiree Stock anticipated on the Closing Date to be 6,900 shares
of the $1 par value common stock of the Acquiree (the "Acquiree Stock"). Such
Acquiree Stock shall be acquired by the Acquiror from the Holders in exchange
for not less than 4,608,268 shares of Acquiror Stock which, upon consummation
of the exchange and other transactions contemplated by the Agreement Parties
with respect to the Acquiror, shall constitute not less than 52% of Acquiror
Stock outstanding subsequent to the exchange transaction and the contemplated
transactions. The shares of Acquiror Stock delivered at the Closing in exchange
for the shares of Acquiree Stock shall constitute Restricted Securities as that
term is defined in Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act"). It is intended that the exchange transaction, as provided
for in this Agreement, will constitute a transaction exempt from the
registration requirements of the Act and any state securities statute,
including, without limitation, the securities statutes of Florida and Colorado,
by reason of the provisions of Rule 506 as contained in Regulation D and any
other applicable Rules of such Regulation and to the extent not pre-empted by
section 18 of the Act, pursuant to the provisions of any state securities
statute and regulations and rules promulgated thereunder.
1.2 Reclassification of Acquiror Stock. In addition to effecting a
change of its corporate name from its present name to WHITEHALL LIMITED, INC.
and its domestication under the Florida Business Corporation Act, the Acquiror
shall initiate, conduct and conclude the requisite action required by Colorado
and/or Florida law in order to effect the reclassification of its outstanding
common stock, $.10 par value, whereby each three outstanding Acquiror Shares
shall become one Acquiror Share. The Acquiror Shares to be issued in the
exchange transaction between the Acquiror and the Holders shall reflect such
Stock Split.
1.3 Minimum Number of Shares of Acquiree Stock Exchanged. It is the
intent of the Acquiror, the Acquiree and the Holders that 100% of the
outstanding shares of Acquiree Stock outstanding on the Closing Date and as
adjusted for the reclassification described in Section 1.2 above, be exchanged
for 4,608,268 Acquiror Shares and such is a condition to the consummation of
the exchange transaction provided for herein. Such 4,608,268 Acquiror Shares
shall constitute not less than 52% of the Acquiror Shares
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outstanding subsequent to the consummation of the exchange transaction provided
for herein and the contemplated issuance of a maximum of 1,887,109 Acquiror
Shares (which shall be Restricted Stock) to certain individuals and/or entities
who have assisted the Agreement Parties in the transaction provided for herein
(herein sometimes referred to as the"Related Issuance Transactions"). Upon
consummation of the exchange transaction provided for herein and the Related
Issuance Transactions, there is anticipated to be outstanding 8,862,043
Acquiror Shares which reflects the Stock Split.
1.4 Issuance of Additional Acquiree Securities. The Agreement Parties
acknowledge that the Acquiror has initiated action which is intended to result
in the private offer, sale and issuance of additional securities of the
Acquiror, which additional issuances may occur prior to, on and subsequent to
the Closing Date. In such regard, the Acquiror contemplates privately offering
for sale to suitable and Accredited Investors its shares of convertible
preferred stock in maximum share amount of 1,000,000 shares, which shares of
convertible preferred stock are described in that certain Subscription
Agreement which is included with this Agreement as Exhibit A for informational
purposes. The Acquiree and the Holders acknowledge and agree that such capital
formation activity may take place in the immediate future time.
ARTICLE II
ACTION PRIOR TO CLOSING DATE
----------------------------
2.1 Corporate Action of Acquiror. From the date of this Agreement to
the Closing Date, the Acquiror shall undertake and complete all requisite
action, including all action required pursuant to the Colorado Corporation Act,
the Florida Business Corporation Act, the Act and applicable state securities
statutes, including, without limitation, the securities laws of Florida and
Colorado in order to permit the Acquiror to prepare for and to consummate the
action and transactions called for by this Agreement.
2.2 Corporate Action of Acquiree. From the date of this Agreement to
the Closing Date, the Acquiree shall undertake and complete all requisite
action, including all action required pursuant to the corporate law of Florida,
the Act and applicable state securities statutes including, without limitation,
the securities laws of Florida, in order to permit the Acquiree and the
Acquiror to consummate the transactions called for by this Agreement.
2.3 Action by Holders. From the date of this Agreement to the Closing
Date, the Holders, with the assistance of the Acquiree, shall undertake all
action as may be required under applicable law, including the laws of the State
of Florida, in order to permit Acquiree and the Holders to consummate the
transactions called for by this Agreement including, without limitation, the
conveyance of all of the outstanding shares of Acquiree Stock in exchange for
4,608,268 Acquiror Shares.
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2.4 Acquiror Informational Filings. In addition to the action
described and required by Section 2.1 of this Article II, the Acquiror, on and
before the Closing Date, shall effect such filings with the United States
Securities and Exchange Commission (the "Commission") in order to bring its
status as a voluntary reporting company under the provisions of the Exchange
Act current. In connection therewith, the Acquiror shall cause to be completed
its audited financial statements for the fiscal years ended March 31, 1999 and
March 31, 1998. Such financial statements will be prepared in accordance with
generally accepted accounting principles consistently applied and will meet, or
with minimal modification will meet, Commission financial reporting
requirements as set forth in Commission Regulation S-B. Such financial
statements shall be provided to the Holders immediately upon the availability
thereof as shall each of the informational filings made with the Commission
under the Exchange Act. In all events, the providing of such described filings
and financial statements shall occur on or before the Closing Date and the
receipt thereof by the Holders shall be a condition precedent to the
consummation of the exchange transaction herein provided for.
2.5 Financial Statements of Acquiree. On and before the Closing Date,
the Acquiree shall provide to the Acquiror its unaudited financial statements
for the fiscal year ended March 31, 1999. Such financial statements, which may
be prepared on a pro forma basis reflecting the combination of the Acquiror and
the Acquiree, will be prepared in accordance with generally accepted accounting
principles consistently applied and will meet, or with minimal modification and
upon audit (if necessary) will meet, Commission financial reporting
requirements as set forth in Commission Regulation S-B. The providing of such
Acquiree financial statements shall also be a condition precedent to the
consummation of the transactions provided for in this Agreement.
2.6 Allocation and Responsibility of Transaction Costs and Expenses.
Unless otherwise agreed by the Agreement Parties, the Agreement Parties shall
bear their respective costs and expenses in connection with the preparation for
the consummation of the transactions provided for in this Agreement.
2.7 Cooperation of Agreement Parties. The Agreement Parties
acknowledge and agree that the consummation of the transactions called for by
this Agreement shall be subject and conditioned upon the completion of the
conduct of such due diligence procedures as determined necessary by the
Agreement Parties and their respective legal counsel. In that regard, the
Agreement Parties agree to cooperate with each other with respect to the
conduct of such due diligence activities from the date of this Agreement to the
Closing Date and to promptly furnish, upon request, such documents, records,
corporate paraphernalia and other materials as may be requested by the Acquiror
or the Acquiree. The Acquiror and the Acquiree also agree to make their
respective executive officers available to respective legal counsel or other
representatives of the Acquiror or the Acquiree for information gathering and
due diligence purposes.
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ARTICLE III
REPRESENTATIONS OF ACQUIREE
---------------------------
The Acquiree represents to the Acquiror and all persons deemed to be
in a control relationship with the Acquiror, as such term is utilized in the
Act:
3.1 Corporate Status. As of the date of this Agreement and on the
Closing Date, the Acquiree is and will be a validly existing corporation
organized pursuant to the laws of the State of Florida and has and will have
all legal corporate authority and power to conduct its business activities, to
own its properties and possesses all necessary permits, licenses and other
documents or authorities required in connection with its business activities
and, assuming that the requisite corporate action contemplated by this
Agreement has been accomplished prior to the Closing Date, the consummation of
the transactions provided for by this Agreement will not constitute a violation
of any applicable law, including, without limitation, the Florida Business
Corporation Act or the securities statutes of Florida or a breach or event of
default under the terms of any contract or agreement to which the Acquiree is a
party or pursuant to which the Acquiree is bound or pursuant to which its
assets are subject or be in violation of its Articles of Incorporation as
amended to date or its Bylaws. The consummation of the transactions
contemplated and called for by this Agreement will not invalidate any required
permit, license or other document issued or to be issued to the Acquiree and
necessary for the conduct of its business activities as currently conducted or
as such business is contemplated to be conducted during the future time. Upon
consummation of the exchange transaction provided for in this Agreement, the
authority vested in the Acquiree by any of such licenses or permits shall be
transferrable or otherwise vested in the Acquiror. As used in this Article III,
the term "Acquiree" shall include all predecessor and affiliated entities and
persons of the Acquiree.
3.2 Corporate Action. Prior to the Closing Date, the Acquiree will
undertake and complete all required corporate action which may be required in
order to permit the consummation of the transactions called for by this
Agreement.
3.3 Subsidiaries. Except as indicated in Schedule I hereto, the
Acquiree has no corporate subsidiaries.
3.4 Financial Condition. The financial statements of the Acquiree
furnished to the Acquiror pursuant to the terms of this Agreement or which may
be furnished to the Acquiror in accordance with the terms of this Agreement or
for utilization or inclusion in any informational filing to be filed by the
Acquiror with the Commission pursuant to the provisions of the Exchange Act and
this Agreement at and for the fiscal years indicated or for such other periods
indicated, fairly present or will fairly present in all material respects the
financial condition of the Acquiree as of the date of such financial statements
(whether audited or unaudited), all to the best of the knowledge of the
Acquiree in accordance with generally accepted accounting principles
consistently applied except as may be indicated in
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such financial statements, the related notes thereto and other information
relating thereto. Except as set forth in Schedule II hereto, the Acquiree has
no liabilities or obligations of any nature which, in accordance with generally
accepted accounting principles, must be set forth in the described financial
statements except those liabilities which are incurred as a result of the
ordinary course of business of the Acquiree after the date of the most recent
financial statements furnished or to be furnished (which liabilities will be
reflected in an amendment to Schedule II on the Closing Date) or which are
incurred by the Acquiree in connection with the preparation undertaken by the
Acquiree to consummate the transaction provided for herein.
3.5 Capitalization of the Acquiree. Set forth as Schedule III to this
Agreement are the Articles of Incorporation of the Acquiree (as amended to
date), which reflect the capital structure of the Acquiree as of the date of
this Agreement. Schedule III also sets forth further information relating to
the capitalization of the Acquiree as of the date of this Agreement and as such
is contemplated to exist on the Closing Date. The shares of Acquiree Stock
outstanding as of the date of this Agreement and on the Closing Date constitute
the one class of voting securities of the Acquiree outstanding and to be
outstanding on the Closing Date.
3.6 Title to Properties. Except as indicated in the financial
statements described in Section 3.4 above, or in Schedule IV to this Agreement,
the Acquiree has good and valid title to the assets reflected in the financial
statements of the Acquiree at the periods indicated therein, as described in
this Article III.
3.7 Business Activities of the Acquiree. The business activities of
the Acquiree are and have been constituted by those business activities
described in the information providing documents which have been provided by
the Acquiree to the Acquiror prior to or as of the date of this Agreement and
as such may be provided to the Acquiror prior to the Closing Date.
3.8 Taxes and Tax Returns. Except as set forth in Schedule V to this
Agreement, the Acquiree has filed in a timely fashion all federal, state,
county and local tax returns relative to any taxes required to be paid by the
Acquiree and has timely paid any such taxes due pursuant to such returns, if
any, as of the date of this Agreement and on the Closing Date, is not and will
not be involved in any asserted contest with respect to any tax.
3.9 Litigation. Except as described on Schedule VI hereto, the
Acquiree and the members of the Board of Directors of the Acquiree are not, as
of the date of this Agreement by the Agreement Parties, involved as a party to,
nor are its assets the subject of, any judicial or administrative proceedings
before any court, governmental agency or other tribunal. Except as set forth
and described in such Schedule VI, the Acquiree is not aware of any factual
circumstances or situations which might reasonably be expected to result in the
assertion of any claim by way of litigation or administrative proceeding at any
time on and subsequent to the date of this Agreement and as of the Closing
Date.
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3.10 Material Contracts. Except as set forth in Schedule VII to this
Agreement, the Acquiree is not, with the exception of this Agreement, a party
to any material contract. The term "material contract" means any contract which
involves the future payment of a consideration by the Acquiree in an amount in
excess of $10,000 and a term of performance concluding 12 or more months from
the date of this Agreement. The Agreement parties acknowledge that the Acquiree
has or is expected to enter into one or more material contracts which will
govern and relate to the acquisition of various interests in real estate
properties, which properties will be utilized in the conduct of the business of
the Acquiree, which conduct shall be assumed and continued by the Acquiror and
that such material contracts are not required to be scheduled.
3.11 Environmental Matters. The Acquiree is not subject to any
governmental guidelines, laws or ordinances relating to hazardous materials as
of the date of this Agreement.
3.12 Sale of Acquiree Securities. All securities of the Acquiree
including, without limitation, shares of the Acquiree Stock and options and
warrants providing for the issuance of shares of Acquiree Stock, if any, which
have been privately offered and sold prior to the date of this Agreement, have
been offered and sold or will be offered and sold under circumstances which, to
the best of the knowledge of the Acquiree and based upon the receipt by the
Acquiree of advice believed expert by the Acquiree, have constituted or will
constitute transactions exempt from the registration requirements of the Act
and any state securities statute.
3.13 Accuracy of Provided Information. No representation or warranty
given or made by the Acquiree pursuant to this Agreement or any statement,
certificate or other document required to be furnished by the Acquiree to the
Acquiror pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
ARTICLE IV
REPRESENTATIONS OF THE ACQUIROR
-------------------------------
The Acquiror represents to the Acquiree and persons deemed to be in a
control relationship with the Acquiree as provided in the Act as follows:
4.1 Corporate Status. As of the date of this Agreement and on the
Closing Date, the Acquiror is and will be a validly existing corporation
organized pursuant to the laws of the State of Colorado (and has undertaken
action to become a corporation domesticated and existing under the Florida
Business Corporation Act) and has and will have all legal corporate authority
and power to conduct its business activities, to own its properties and
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possesses all necessary permits, licenses and other documents or authorities
required in connection with its business activities and, assuming that the
requisite corporate action contemplated by this Agreement has been accomplished
prior to the Closing Date, the consummation of the transactions provided for by
this Agreement will not constitute a breach or event of default under the terms
of any contract or agreement to which the Acquiror is a party or pursuant to
which the Acquiror is bound or by which its assets are subject or be in
violation of its Articles of Incorporation as amended to date and its Bylaws.
The consummation of the transactions contemplated and called for by this
Agreement will not invalidate any required permit, license or other document
issued or to be issued to the Acquiror and necessary for the conduct of its
business activities as currently conducted or as such business is contemplated
to be conducted during the future time.
4.2 Corporate Action. Prior to the Closing Date, the Acquiror will
undertake and complete all required corporate action which may be required in
order to permit the consummation of the transactions called for by this
Agreement.
4.3 Subsidiaries. The Acquiror has no corporate subsidiaries.
4.4 Financial Condition. The Acquiror has conducted no business
activities during the past approximate 48 months preceding the date of this
Agreement and may presently be described as a public shell entity. The present
business plan of the Acquiror provides for the investigation of various lines
of business to be initiated and/or the identification and consummation of a
business combination with an operating business entity such as the Acquiree.
The financial statements of the Acquiror, as certified by Chapman & Company,
independent certified public accountants, furnished to the Acquiree pursuant to
the terms of this Agreement or which may be furnished to the Acquiree in
accordance with the terms of this Agreement or for utilization in the annual
and current reports of the Acquiror to be filed with the Commission and
reflecting the financial conditions and results of operations of the Acquiror
at and for the fiscal years indicated or for such other periods indicated,
fairly present or will fairly present in all material respects the financial
condition of the Acquiror as of the date of such financial statements (whether
audited or unaudited), all to the best of the knowledge of the Acquiror in
accordance with generally accepted accounting principles consistently applied
except as may be indicated in such financial statements, the related notes
thereto and other information relating thereto. Except as set forth in Schedule
VIII hereto, the Acquiror has no liabilities or obligations of any nature
which, in accordance with generally accepted accounting principles, must be set
forth in the described financial statements except those liabilities which are
incurred as a result of the ordinary course of business of the Acquiror after
the date of the most recent financial statements (which liabilities will be
reflected in an amendment to Schedule VIII on the Closing Date), which are
incurred by the Acquiror in connection with the preparation and filing of the
annual and periodic reports to be filed by the Acquiror under the Exchange Act,
which are incurred in connection with the preparation of the Acquiror for the
consummation of the transaction provided for herein, or are liabilities which
would not either singularly or in the aggregate have a material adverse affect
on the Acquiror. Without the express written consent of the
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Acquiree, the Acquiror shall not incur any liability or obligation not
contemplated or permitted by this Agreement in excess of $20,000 from the date
of this Agreement to the Closing Date.
4.5 Capitalization of the Acquiror. Set forth as Schedule IX to this
Agreement are the Articles of Incorporation of the Acquiror intended to be
filed as the successor Articles of Incorporation of the Acquiror in connection
with its domestication under the Florida Business Corporation Act and which
reflect the capital structure of the Acquiror as of the date of this Agreement.
If provided with this Agreement, Schedule IX contains further information
relative to the capitalization of the Acquiror as of the date of this
Agreement. No changes shall occur with respect to such capital structure except
that on and after the Closing Date, the capitalization of the Acquiror shall be
as adjusted to reflect the exchange transaction with the Holders, the reverse
three for one stock split relating to the outstanding Acquiror Shares, and, on
a consolidated basis, the ownership of the Acquiree as a wholly or
substantially owned corporate subsidiary.
4.6 Title to Properties. Except as indicated in the financial
statements described in Section 4.4 above, or in Schedule X to this Agreement,
the Acquiror has good and valid title to the assets reflected in the financial
statements of the Acquiror at the periods indicated therein.
4.7 Taxes and Tax Returns. Except as set forth in Schedule XI to this
Agreement, the Acquiror has filed in a timely fashion all federal, state,
county and local tax returns relative to any taxes required to be paid by the
Acquiror and has timely paid any such taxes due pursuant to such returns. The
Acquiror, as of the date of this Agreement and on the Closing Date, is not and
will not be involved in any asserted contest with respect to any tax.
4.8 Litigation. Except as described on Schedule XII hereto, the
Acquiror and the members of the Board of Directors of the Acquiror are not, as
of the time of the complete execution of this Agreement by the Agreement
Parties, involved as a party to, nor are its assets the subject of, any
judicial or administrative proceedings before any court or governmental agency.
Except as set forth and described in such Schedule XII, the Acquiror is not
aware of any factual circumstances or situations which might reasonably be
expected to result in the assertion of any claim by way of litigation or
administrative proceeding at any time on and subsequent to the date of this
Agreement and as of the Closing Date. The prospectus contained in the
Registration Statement described in the Agreement section captioned BACKGROUND
did not contain as of the date thereof any misstatement of material fact or
information or fail to provide any material information necessary to be
provided in order that the information set forth in such prospectus be not
misleading.
4.9 Material Contracts. Except as set forth in Schedule XIII to this
Agreement, the Acquiror is not, with the exception of this Agreement, a party
to any material contract. The term "material contract" means any contract which
involves the future payment of a consideration by the Acquiror in an amount in
excess of $5,000 and a term of performance
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concluding 12 or more months from the date of this Agreement. The Acquiror and
the Acquiree acknowledged that the Acquiror has assumed and agreed to pay that
obligation undertaken by Andrews & Associates, Inc. as a result of the
consummation of the purchase of 2,290,000 Acquiror Shares (Pre-Stock Split) and
as governed by that certain agreement styled Agreement Providing for the
Purchase of Capital Stock which obligation is evidenced by promissory notes
given by Andrews & Associates, Inc. to the sellers of such 2,290,000 Acquiror
Shares. Other than those contracts described in Schedule XIII hereto, and with
the exception of any contractual arrangement existing between the Acquiror and
William T. Kirtley, P.A., any material contract intended to be created and of
which the Acquiror shall be a party shall be subject to the approval of the
Acquiree.
4.10 Environmental Matters. The Acquiror is not subject to any
governmental guidelines, laws or ordinances relating to hazardous materials as
of the date of this Agreement.
ARTICLE V
PRE-CLOSING COVENANTS OF THE ACQUIREE
-------------------------------------
5.1 No Change in Business. The Acquiree shall not materially modify or
change the operations or business as conducted by the Acquiree as of the date
hereof except as such changes are presently contemplated in the ordinary course
of business of the Acquiree and as is described in the Agreement section
captioned BACKGROUND and such other information documents as may be provided by
the Acquiree to the Acquiror.
5.2 No Contracts. Except as contemplated and described herein or any
Schedule hereto, the Acquiree shall not enter into any material agreement or
contract or make any material modifications to existing contracts or
agreements.
5.3 Issuance of Additional Securities. From the date of this Agreement
to the Closing Date, the Acquiree shall not undertake any action which will
cause the issuance of additional equity or debt securities of the Acquiree.
5.4 In General. Except as otherwise provided for in this Agreement:
a. No change will be made in the basic documents which provide for the
formation and existence of the Acquiree;
b. No distributions shall be effected by the Acquiree except as may be
contemplated by this Agreement and as is set forth in a Schedule hereto; and
c. The Acquiree shall use its best efforts to preserve intact the
business organization of the Acquiree, its business and goodwill, as well as
the availability to it of its
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executive management and other key employees and the goodwill of persons having
business relations with the Acquiree.
ARTICLE VI
PRE-CLOSING COVENANTS OF THE ACQUIROR
-------------------------------------
6.1 Basic Documents. Included herewith as Schedule IX are the Articles
of Incorporation (as earlier described) and Bylaws of the Acquiror as presently
in force. The Acquiror, by action of its Board of Directors and shareholders,
shall not effect any amendments to such Articles of Incorporation or Bylaws
from the date of this Agreement to the Closing Date without the express written
consent of the Holders. The Acquiror and the Acquiree acknowledge that such
Articles of Incorporation included herewith as Schedule IX are those Articles
intended to be filed with the Department of State, State of Florida, in order
to accomplish the domestication of the Acquiror under the Florida Business
Corporation Act. Such Articles of Incorporation also effect a change of the
name of the Acquiror to WHITEHALL LIMITED, INC. and effect the reclassification
of the outstanding Acquiror Shares whereby each outstanding three Acquiror
Shares becomes one Acquiror Share.
6.2 No Contracts. With the exception of this Agreement and those
contractual arrangements which must be established in order to facilitate and
consummate the transactions provided for in this Agreement, the Acquiror shall
not enter into any material contract as the term "material contract" is
described elsewhere in this Agreement. Excepted from this Section 6.2 will be
any contractual arrangements existing between the Acquiror and William T.
Kirtley, P.A. with respect to legal representation and services provided in
connection with the preparation by the Acquiror to consummate the transactions
provided for in this Agreement and other related professional services.
Excepted from this Section 6.2 is that action whereby the Acquiror will agree
to be obligated to pay jointly and severally with Andrews & Associates, Inc.
that obligation arising from the transaction between Andrews & Associates, Inc.
and certain sellers of Acquiror Shares as earlier described in Section 4.9 of
this Agreement.
6.3 Directors and Officers of Acquiror. From the date of this
Agreement to the Closing Date or until their resignations are accepted by the
Board of Directors of the Acquiror as constituted on and subsequent to the
Closing Date, those persons serving as members of the Board of Directors of the
Acquiror and as executive officers of the Acquiror shall remain in service and
shall use their best diligent efforts to facilitate the consummation of the
transactions provided for in this Agreement. No increase in any rate of
compensation shall occur with respect to the amount of director fees or officer
compensation presently being paid, if any, shall occur from the date of this
Agreement to the Closing Date.
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6.4 Utilization of Net Operating Loss. The Acquiror shall use its best
efforts to preserve intact and available for utilization by the Acquiror and
the Acquiree as combined the net operating losses which have been experienced
by the Acquiror and the Acquiree as a result of their respective business
operations as conducted since inception to the Closing Date and as have been
reported by the Acquiror and the Acquiree pursuant to the provisions of the
Internal Revenue Code of 1986, as amended to date.
ARTICLE VII
CLOSING OF AGREEMENT TRANSACTIONS
---------------------------------
7.1 Closing of Exchange Transaction. The Acquiror and the Acquiree
agree that the exchange of the Acquiror Shares and the Acquiree Stock provided
for by Articles I of this Agreement shall be consummated at a closing, the time
of which shall be established pursuant to Section 7.2 of this Article VII. With
respect to the consummation of the Agreement transactions, the Acquiror and the
Acquiree agree that an escrow procedure may be utilized in connection with the
consummation of the transaction provided for in this Agreement and in the event
that an escrow procedure is used, the services of an escrow agent which is
mutually satisfactory to the Acquiror and the Acquiree shall be utilized. If
the exchange transaction provided for in Article I of this Agreement is unable
to be consummated on the Closing Date as established by Section 7.2 hereof,
none of the transactions provided for in this Agreement shall be consummated
and this Agreement shall be null and void and have no effect, and the Agreement
Parties shall be released from any further obligations hereunder.
7.2 Time and Place of Closing. The Acquiror and the Acquiree shall
mutually determine the date and time of closing for the transactions called for
by this Agreement (the "Closing Date"). The place at which such closing and
consummation of the transactions called for by this Agreement shall be
conducted shall also be determined by the mutual agreement of the Acquiror and
the Acquiree. In no event shall the Closing Date be established on a date
subsequent to June 18, 1999 unless this Agreement is amended by a written
Addendum executed and delivered by the Acquiror and the Acquiree. The
facilities of the United States mail or other acceptable, publicly available
means of delivery, may be utilized to effect the closing of the transactions
called for by this Agreement.
7.3 Deliveries at Closing.
a. On the Closing Date, the Holders shall deliver instruments of
conveyance in form and content satisfactory to counsel for the Acquiror
conveying to the Acquiror good and valid title to all of the outstanding shares
of Acquiree Stock. The Holders shall make such additional deliveries and
provide such additional documents as may be reasonably required in order to
facilitate the consummation of the transactions called for by this Agreement.
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b. On the Closing Date, the Acquiree shall deliver to the Acquiror all
of its records, files and corporate paraphernalia which is required in
connection with the entity existence and conduct of the business of the
Acquiree.
c. On the Closing Date, the Acquiror shall deliver an aggregate
4,608,268 Acquiror Shares in such individual share amounts and certificates as
shall be instructed by the Holders immediately prior to the Closing Date. With
respect to any share certificates evidencing Acquiror Shares delivered to the
Holders, such certificates shall bear an appropriate restrictive endorsement
indicating the such shares have not been registered under the Act or applicable
state securities statutes. At the closing, the Acquiror shall also deliver the
written resignations of all of the members of the Board of Directors of the
Acquiror and all of the executive officers of the Acquiror, together with
written action dated as of the Closing Date by the Board of Directors of the
Acquiror as constituted immediately prior to the Closing Date appointing the
designees of the Holders as the members of the Board of Directors of the
Acquiror on and subsequent to the Closing Date. The resignations of the
directors and officers of the Acquiror shall be effective upon the acceptance
thereof by the Board of Directors of the Acquiror as constituted on and
subsequent to the Closing Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIROR
---------------------------------------------------
The obligations of the Acquiror pursuant to the terms and provisions
of this Agreement and the consummation of the transactions called for by this
Agreement are subject to the following conditions:
8.1 No Adverse Development. There shall have occurred no material,
adverse change in the business, financial condition or composition of the
assets of the Acquiree since the date of this Agreement and the Acquiree shall
not have sustained since the date of this Agreement any loss on account of
fire, flood, accident, strike or other calamity of such a character as to
interfere materially with the continuous operation of the Acquiree's business
or which materially adversely affects the financial position or business of the
Acquiree, regardless of whether any such loss shall have been insured.
8.2 No Breach of Representations, Warranties or Covenants of the
Agreement. The representations and warranties made by the Acquiree, as set
forth in this Agreement, shall be correct and complete in all material respects
when made and shall be deemed to have been made again on and as of the Closing
Date and shall then be true and correct in all material respects on and as of
the Closing Date. Additionally, the Acquiree shall have performed all of the
obligations required to be performed by it under this Agreement prior to and as
of the Closing Date.
14
<PAGE> 19
8.3 Treatment of Transaction. On or before the Closing Date, the
Acquiror shall receive the advisement of its counsel or other source of expert
advice with respect to Federal income tax matters to the effect that the
exchange transaction provided for in this Agreement will satisfy the conditions
and will be eligible for the treatment afforded pursuant to Section 351 and/or
Section 368 of the Internal Revenue Code of 1986, as amended to date.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATION OF THE ACQUIREE AND THE HOLDERS
------------------------------------------------------------------
The obligations of the Acquiree to consummate the transactions called
for by this Agreement and the obligation of the Holders to exchange their
shares of Acquiree Stock for a like number of Acquiror Shares are subject to
the following conditions:
9.1 No Adverse Development. There shall have occurred no material,
adverse change in the status, financial condition or asset composition of the
Acquiror since the date of this Agreement except as contemplated by this
Agreement.
9.2 Time of Consummation. The transactions called for by this
Agreement, specifically those transactions enumerated in Article I hereof,
shall be scheduled for consummation and closing and shall be consummated and
closed no later than June 18, 1999.
9.3 No Breach of Representations, Warranties and Covenants. The
representations and warranties made by the Acquiror in this Agreement shall be
correct and complete in all material respects when made and shall be deemed to
have been made again at and as of the Closing Date and shall then be true and
correct in all material respects on and as of that date. The Acquiror shall
have performed in all material respects the obligations required to be
performed by it under this Agreement prior to and as of the Closing Date
including, without limitation, the obligation of the Acquiror to prepare and
file all informational reports with the Commission as required by the Exchange
Act. The Acquiror shall have delivered to the Acquiree a certificate to the
effect contemplated by this Section 9.3 signed by the Chief Executive Officer
of the Acquiree and dated immediately prior to the Closing Date.
9.4 Treatment of Transaction. Unless waived by the Holders on or
before the Closing Date, the Holders shall receive the advisement of their
counsel in form and content satisfactory to it that the transactions called for
by this Agreement will satisfy the conditions and will be eligible for the
treatment afforded pursuant to Section 351 and/or 368 of the Internal Revenue
Code of 1986, as amended to date.
15
<PAGE> 20
9.5 Deliveries in Connection with Acquiror Share Listing. On the
Closing Date, the Acquiror, with the cooperation and assistance of the
Acquiree, shall be qualified to prepare and file the form(s) and other
information required by Commission Rule 15c2-11 ("Form 15c2-11"), which shall
be filed with the National Association of Securities Dealers, Inc. for the
purpose of continuing the listing of the Acquiror's Shares on the NASDAQ OTC
Bulletin Board.
9.6 Appointment to Acquiror Board of Directors. Immediately prior to
the Closing Date, corporate and board of Director action of the Acquiror shall
be in place appointing the designees of the Holders as the members of the Board
of Directors of the Acquiror, effective on and subsequent to the Closing Date.
At such time, the resignations submitted by the present members of the Board of
Directors of the Acquiror and the present officers of the Acquiror shall be
deemed effective.
9.7 Assumption of Acquiree Liabilities/Contracts. On the Closing Date,
the Acquiror shall assume and agree to pay and be bound by in accordance with
their respective terms, all obligations and liabilities of Acquiree existing on
the Closing Date, including, without limitation, any employment agreement or
agreements existing between the Acquiree and any executive officer or other
employee of the Acquiree. Such undertaking of the Acquiror shall be by written
instrument in form and content satisfactory to counsel to the Acquiree.
ARTICLE X
ACTION OF THE ACQUIROR/ACQUIREE CONTEMPORANEOUS TO CLOSING DATE
---------------------------------------------------------------
On the Closing Date or as soon thereafter as practicably possible, the
Acquiror, with the assistance of the Acquiree and the Holders, shall, utilizing
deliberate and diligent procedures and action, cause to be prepared and
completed Commission Form 15c2-11 which shall be in compliance with Commission
Rule 15c2-11, which Form shall thereafter be promptly filed and amended as
necessary with the National Association of Securities Dealers, Inc. for the
purpose of accomplishing or continuing the listing of the Acquiror Shares
(which are not restricted) on the OTC Bulletin Board listing facilities of the
National Association of Securities Dealers, Inc. Upon the successful
accomplishment of the foregoing, the Acquiror and the Acquiree, shall undertake
and expend their best efforts, within a reasonable and appropriate period of
time as determined by the Board of Directors of the Acquiror as constituted on
and subsequent to the Closing Date, to cause the Acquiror Shares which are not
restricted to be listed on the NASDAQ SmallCap Market.
16
<PAGE> 21
ARTICLE XI
INDEMNIFICATION, SURVIVAL OF REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------------
11.1 Indemnification by the Acquiree. The Acquiree agrees to and does
hereby indemnify and hold the Acquiror and persons controlling the Acquiror
harmless from and against any and all liability, loss, damage, expense, cost or
injury, including, without limitation, those resulting from any and all
actions, suits, proceedings, and judgments, together with reasonable costs and
expenses, including, without imitation, reasonable legal expenses relating
thereto (collectively "Losses") arising out of resulting from any breach of the
representations, warranties and covenants made by the Acquiree in this
Agreement.
11.2 Indemnification by Acquiror. The Acquiror agrees to and does
hereby indemnify and hold the Acquiree and the Holders harmless from and
against Losses arising out of or resulting from any breach of the
representations, warranties and covenants made by the Acquiror in this
Agreement.
11.3 Limitations Regarding Indemnification. The Acquiree shall not be
entitled to recover any Losses in respect of the representations and warranties
made by any Holder with respect to the sufficiency of the title vested in any
Holder and relating to such Holder's ownership of Acquiree Stock.
11.4 Procedures for Third Party Indemnification. If any action, suit
or proceeding shall be commenced against, or any claim or demand be asserted
against the Acquiror or its controlling persons or the Acquiree or its
controlling persons, as the case may be, in respect of which such party
proposes to demand indemnification under this Section 11.4, as a condition
precedent thereto, the party seeking indemnification ("Indemnitee") shall
promptly notify the other party ("Indemnitor") in writing to that effect, and
with reasonable particularity containing a reference to the provisions of this
Agreement. The Indemnitor shall have the right to assume the entire control of,
including the selection of counsel, subject to the right of the Indemnitee to
participate (at its expense and with the counsel of its choice) in the defense,
compromise or settlement thereof, and in connection therewith, the Indemnitee
shall cooperate fully in all respects with the Indemnitor in any such defense,
compromise or settlement thereof, and Indemnitee shall make available to
Indemnitor all pertinent information and documents under the control of the
Indemnitee. So long as the Indemnitor is defending in good faith any such claim
or demand asserted by a third party against the Indemnitee, the Indemnitee
shall not settle or compromise such claim or demand without the prior written
consent of the Indemnitor, which consent will not be unreasonably withheld or
delayed. If the Indemnitor shall fail to defend any such action, suit,
proceeding, claim or demand, then the Indemnitee may defend, through counsel of
its own choosing, such action, suit, proceeding, claim or demand and (so long
as Indemnitee gives the Indemnitor at least five (5) days written notice of the
terms of the proposed settlement thereof and permits the Indemnitor to then
undertake the defense thereof if
17
<PAGE> 22
Indemnitor objects to the proposed settlement) to settle such action, suit,
proceeding, claim or demand and to recover from the Indemnitor the amount of
such losses.
11.5 Survival of Representations, Warranties and Indemnities. The
representations and warranties of this Agreement, and indemnification in
respect of the same, shall survive the Closing Date for a period of two (2)
years, after which time such representations and warranties, and
indemnification in respect thereof, shall be of no further force and effect
unless prior to such time, the party claiming a breach has served on the other
written notice of such claim or breach.
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.1 Notices. All notices or other communications required or
permitted under this Agreement shall be in writing and shall be given by mail
or by facsimile transmission (in the event of facsimile transmission, a
conforming copy shall be mailed postage prepaid simultaneously therewith). If
notice is to be given to the Acquiror, such notice shall be deemed given when
provided in the manner provided herein to the Acquiror in care of William T.
Kirtley, Esq., William T. Kirtley, P.A., 2940 South Tamiami Trail, Sarasota,
Florida 34239, facsimile number 941/955-4027. If notice is to be given to the
Acquiree and the Holders, such notice shall be deemed given when provided in
the manner provided herein to the Acquiree in care of Ronald Mustari,
President, Whitehall Limited, Inc., 290 Cocoanut Avenue, Sarasota, Florida
34236, facsimile number 941/954-3676.
12.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and representatives.
12.3 Background Statement and Schedules. The BACKGROUND statement of
the Agreement and the Schedules shall be construed with and as an integral part
of this Agreement to the same extent as if such Background statement and
Schedules had been set forth verbatim herein.
12.4 Entire Agreement. This Agreement constitutes the entire
understanding on the part of the parties hereto, and all previous agreements
and understandings are superseded by this Agreement, including, without
limitation, that certain Memorandum of Agreement executed by the Agreement
Parties and dated June 17, 1999.
12.5 Publicity. No publicity, release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by the Acquiror, the
Acquiree and the Holders, which approval shall not be unreasonably withheld,
provided that this restriction shall not apply to normal
18
<PAGE> 23
communications of the parties with their employees. The Agreement Parties
shall, as soon as such is appropriate and in conformance with applicable law,
issue a notice or informational document to appropriate recipients, which shall
include the holders of Acquiror Shares as of the date of this Agreement, the
Holders and the public.
12.6 Attorneys' Fees in Connection with Litigation. In the event of
any litigation arising out of or in connection with this Agreement, the
prevailing party shall be entitled to recover from the other its reasonable
attorney's fees and costs.
12.7 Cooperation. The Acquiror and the Acquiree agree to execute such
instruments and take such other actions as contemplated by this Agreement to
effectuate closing.
12.8 Applicable Law. This Agreement shall be governed by the laws of
the State of Florida except in those instances where the laws of Colorado are
applicable to circumstances relating to the Acquiror or, with respect to the
informational filings to be prepared and filed with the Commission by the
Acquiror with respect to which the Act and the Exchange Act are applicable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
CAMBRIDGE UNIVERSAL CORPORATION,
a Colorado corporation
By /s/ Robert Ground
--------------------------------------
ATTEST: Robert Ground, President
/s/ Gregory M. Andrews
- ----------------------------------
Gregory M. Andrews, Secretary
19
<PAGE> 24
WHITEHALL HOMES II, INC.,
a Florida corporation
By /s/ Ronald Mustari
-----------------------------------
ATTEST: Ronald Mustari, President
/s/ Gregory M. Andrews
- ----------------------------------
Secretary
WITNESSES:
/s/ Myra A. Mallar /s/ Ronald Mustari
- ---------------------------------- -----------------------------------
RONALD MUSTARI
/s/ Myra A. Mallar /s/ Joanne Mustari
- ---------------------------------- -----------------------------------
JOANNE MUSTARI
20
<PAGE> 25
LIST OF SCHEDULES
-----------------
Exhibit A - Subscription Agreement to Preferred Stock
<TABLE>
<CAPTION>
Agreement
Schedules Section
- --------- ---------
<S> <C> <C>
I Subsidiaries of Acquiree 3.3
II Acquiree Liabilities 3.4
III Articles of Incorporation of Acquiree 3.5
IV Acquiree exception to good title to assets 3.6
V Acquiree tax return filings 3.8
VI Acquiree litigation 3.9
VII Acquiree material contracts 3.10
VIII Acquiror Liabilities 4.4
IX Articles of Incorporation and Bylaws of Acquiror 4.5
X Acquiror exception to good title to assets 4.6
XI Acquiror tax returns 4.7
XII Acquiror litigation 4.8
XIII Acquiror material contracts 4.9
</TABLE>
<PAGE> 26
FIRST ADDENDUM TO
AGREEMENT PROVIDING FOR THE EXCHANGE
OF CAPITAL STOCK
BY AND BETWEEN
CAMBRIDGE UNIVERSAL CORPORATION,
A COLORADO CORPORATION
AND
THE HOLDERS OF ALL OF THE OUTSTANDING VOTING COMMON STOCK
OF A FLORIDA CORPORATION KNOWN AS WHITEHALL HOMES II, INC.
AND
WHITEHALL HOMES II, INC.
DATED AS OF JUNE 17, 1999
<PAGE> 27
FIRST ADDENDUM TO
AGREEMENT PROVIDING FOR THE
EXCHANGE OF CAPITAL STOCK
THIS FIRST ADDENDUM is made as of June 17, 1999 to that certain
agreement styled AGREEMENT PROVIDING FOR THE EXCHANGE OF CAPITAL STOCK (the
"Agreement") which was entered into as of the 17th day of June 1999 by and
between the following entities and natural persons:
<TABLE>
<S> <C>
Agreement Party and Reference General Description of Agreement Party
- ----------------------------- --------------------------------------
CAMBRIDGE UNIVERSAL CORPORA- A Colorado corporation presently having
TION ("Acquiror") its sole office in Denver, Colorado
WHITEHALL HOMES II, INC. ("Acquiree") A Florida corporation having its principal
office in Sarasota, Florida
RONALD and JOANNE MUSTARI, The record and beneficial holders of all of
Husband and Wife and residents of the outstanding Common Stock of Acquiree
Sarasota County, Florida ("Holders") $1 par value
</TABLE>
The foregoing-described entities and natural persons are sometimes described
herein collectively as the "Agreement Parties". This FIRST ADDENDUM is referred
to herein as the "Addendum". All other capitalized terms have the definitions
and meanings attributed to such terms in the Agreement. The Agreement Parties
hereby adopt and reconfirm all of the provisions of the Agreement with the
exception that Section 9.7 of the Agreement shall be deleted in its entirety
and the following substituted therefore:
9.7 Assumption of Acquiree Liabilities/Contracts. On the Closing Date,
the Acquiror shall assume and agree to pay and be bound by and in accordance
with their respective terms, all obligations and liabilities of Acquiree
existing on the Closing Date, including, without limitation, that certain
promissory note given by Acquiree, as Maker, to Ronald and Joanne Mustari
("Holders") dated June 15, 1999, in the initial original principal amount of
$2,500,000.00, which may be paid at the option of the Holders thereof by the
issuance of the Common Stock, $.10 par value, of the Acquiror at an attributed
value per share of Common Stock to be determined by the mutual agreement of the
Holders and the Acquiror. Any such action by the Acquiror shall be by its Board
of Directors with Ronald Mustari abstaining from any vote. This undertaking
shall also relate to all obligations and liabilities of the Acquiree existing
on the Closing Date and existing on the Closing Date between the Acquiree and
any executive officer or any employee of the Acquiree. The
<PAGE> 28
undertaking of Acquiror hereunder shall be confirmed by written instrument in
form and content satisfactory to Acquiree and its counsel.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as
of the date and year first above written.
CAMBRIDGE UNIVERSAL CORPORATION,
a Colorado corporation
By /s/ Robert Ground
--------------------------------------
ATTEST: Robert Ground, President
/s/ Gregory M. Andrews
- ----------------------------------
Gregory M. Andrews, Secretary
WHITEHALL HOMES II, INC.,
a Florida corporation
By /s/ Ronald Mustari
--------------------------------------
ATTEST: Ronald Mustari, President
/s/ Gregory M. Andrews
- ----------------------------------
Secretary
WITNESSES:
/s/ Myra A. Mallar /s/ Ronald Mustari
- ---------------------------------- -------------------------------------
RONALD MUSTARI
/s/ Myra A. Mallar /s/ Joanne Mustari
- ---------------------------------- -------------------------------------
JOANNE MUSTARI
<PAGE> 1
WILLIAM T. KIRTLEY, P.A.
ATTORNEY AT LAW
TELEPHONE 2940 SOUTH TAMIAMI TRAIL
(941) 952-9750 SARASOTA, FLORIDA 34239
FAX
(941) 955-4027
September 30, 1999
Nicole Hunt
Legal Transfer Branch
American Securities Transfer
& Trust, Inc.
12039 West Alameda Parkway
Lakewood, Colorado 80228
Re: WHITEHALL LIMITED, INC.
Dear Ms. Hunt:
Under date of September 20, 1999, we advised that certain shares of
Common Stock being issued by WHITEHALL LIMITED, INC. ("Whitehall") should be
considered freely tradeable. In such referenced letter we cited a certain
no-action letter, Shaklee Corp. (August 6, 1977). Since submission of such
letter, we have had a telephone conference with AST's legal counsel, Patrick
Russell, Esq., of counsel to Vinton Nissler Allen & Vellone P.C., Denver,
Colorado.
As a result of such telephone conference and further considerations,
please consider the letter of September 20, 1999 withdrawn and this letter
substituted therefor. This letter may be deemed to have an effective date,
however, of September 20, 1999.
The purpose of this letter is to set forth the opinion of this firm
with respect to the restricted or free trading status of 15,400 shares of the
Common Stock of Whitehall approved for issuance to natural persons who have
purchased residential dwelling units from Whitehall or its affiliates and
successors since the inception of operations of Whitehall, its affiliates and
successors (collectively "Whitehall").
In providing the opinions herein expressed, the undersigned has
reviewed certain statutes, including, without limitation, the Securities Act of
1933, as amended (15 USC 77a et seq); rules and regulations promulgated
thereunder; and certain "no action" letters issued by the staff of the United
States Securities and Exchange Commission (the "SEC"), which no action letters
are considered by securities laws practitioners as expressing the view and/or
opinion of the SEC with respect to certain presented factual circumstances. We
have also consulted with the executive officers of Whitehall with respect to
certain factual matters and
<PAGE> 2
Nicole Hunt
Page 2
September 30, 1999
in expressing the opinions set forth herein have relied on the facts as
presented by such executive officers. The opinion herein set forth is based
upon the following factual circumstances:
1. The issuees of the Common Stock of Whitehall are persons
(primarily married homeowner couples) who have acquired
residential dwelling units from Whitehall since the inception of
Whitehall's operations. All of such homeowner-issuees, now owners
of Whitehall homes, acquired such residential dwelling units prior
to June 1, 1999, which is a date which precedes the business
combination of Whitehall Homes II, Inc. with Cambridge Universal
Corporation, formerly a Colorado corporation, now known as
Whitehall and domiciled as a Florida corporation.
2. None of such homeowner-issuees of such Common Stock have paid any
consideration whatsoever for the issuance of the Common Stock to
be issued to such homeowner-issuees. No element of the
consideration paid by such homeowner-issuees could be
characterized as a valuable consideration be paid by such
homeowner-issuees for the Common Stock to be issued to such
homeowner-issuees.
3. The aggregate number of shares of Common Stock of Whitehall to be
issued to such homeowner-issuees is 15,400 shares, constituting
less than one-half of 1% of the shares of Common Stock outstanding
of Whitehall as of September 20, 1999.
4. Whitehall has not engaged in any activity which could be
reasonably deemed to involve the offer to sell a security, as
constituted by its Common Stock, or the solicitation of an offer
to purchase any security of Whitehall, as constituted by its
Common Stock with respect to any of the homeowner-issuees.
5. The homeowner-issuees of such shares of Common Stock are not under
any present contractual commitments with Whitehall with respect to
the construction and/or acquisition of a new residential dwelling
unit.
6. The shares of Common Stock intended to be issued by Whitehall to
such homeowner-issuees will be issued from authorized but unissued
shares as opposed to any purchase of shares in the open market. In
this respect, the shares intended to be issued to such
homeowner-issuees have never been the subject of an effective
Registration Statement filed under the Securities Act of 1933, as
amended, as cited above.
<PAGE> 3
Nicole Hunt
Page 3
September 30, 1999
7. The undersigned is advised that Whitehall is presently
current with respect to its periodic and annual reporting
requirements under the Securities Exchange Act of 1934, as
amended (15 USC 78a et seq).
8. While jurisdictional means (as such term is utilized under
the cited statutes) are being utilized with respect to the
delivery of such shares of Common Stock of Whitehall to the
homeowner-issuees, such transaction does not constitute an
"offer" or "sale" transaction within the meanings of such
cited statutes.
9. The shares of Common Stock of Whitehall intended to be issued
to such homeowner-issuees, while acquired directly from
Whitehall as an issuer, constitute a one-time gift not
requiring the remittance of any consideration by the
homeowner-issuees.
In expressing the opinions herein set forth, it is noted that Section
5(a) of the Securities Act of 1933, as amended, provides in pertinent part that
Unless a Registration Statement is in effect as to a security, it shall
be unlawful for any person, directly or indirectly -
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or in the mails to
sell such security through the use or median of any prospectus
or otherwise; . . .
While the provisions of Rule 144(a)(3) as promulgated under the Securities Act
of 1933, as amended, provide in part that the term "restricted securities"
means securities that are acquired directly or indirectly from the issuer in a
transaction or chain of transactions not involving any public offering, the
staff of the SEC has recognized that in instances where gifts of an issuer's
securities such as common stock are made on a one-time basis to non-executive
employees and where the total amount of stock involved is very small in
comparison to the total amount of outstanding stock, the status of such
securities will not be restricted. In fact, such stock will constitute
unrestricted stock in the hands of the recipients. These positions were
expressed by the staff in Carmike Cinemas, Inc. (July 20, 1992); Intelligent
Elecs., Inc. (August 20, 1991); Total Assets Production, Inc. (March 30, 1999);
and Shaklee Corp. (September 6, 1997). The staff of the SEC has declined to
take such position in instances where shares of common stock are issued without
cost but are tied to certain conditional circumstances such as a stock option.
See Portage Industries Corp. (May 22, 1990). The facts in the present
circumstances are essentially the same as those found in Shaklee Corp. with the
exception that shares of common stock of Shaklee were
<PAGE> 4
Nicole Hunt
Page 4
September 30, 1999
intended to be issued to "sales leaders" of the issuer and such shares were to
be acquired in the open market through a registered broker-dealer. The
homeowner-issuees are certainly a class of persons more remote from the issuer
than the "sales leaders" of Shaklee Corp. and it is a fair interpretation of
the SEC staff's position in Shaklee Corp. that the acquisition of such shares
intended to be gift to the sales leaders did not become restricted by reason of
the acquisition of such shares in the open market by Shaklee Corp. with the
reissuance to such sales leaders. This intermediate step present in Shaklee
Corp. appears to be of no importance to the circumstances considered herein.
Accordingly, it is the opinion of the undersigned that the 15,400
shares of common stock of Whitehall intended to be issued to the
homeowner-issuees under the circumstances described herein will constitute
unrestricted securities and the certificates issued to evidence such shares
need not incorporate any restrictive legend.
Very truly yours,
/s/ William T. Kirtley
----------------------------------------
William T. Kirtley
WTK:cjs
cc: Patrick J. Russell, Esq.
Ronald Mustari
<PAGE> 5
SIGNATURES
----------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized.
WHITEHALL LIMITED, INC.
January 17, 2000 By /s/ Ronald Mustari
--------------------------------------
Ronald Mustari, President and
Chief Executive Officer
