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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 28, 1998
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WEITZER HOMEBUILDERS INCORPORATED
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(Exact name of registrant as specified in its charter)
Florida 33-89076 65-0502494
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(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification
of incorporation) No.)
5901 N.W. 151st Street, Suite 120
Miami Lakes, Florida 33014
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(Address of principal executive offices)
Registrant's telephone number, including area code: 305-819-4663
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Item 1. Changes in Control of Registrant
On July 28, 1998, Weitzer Homebuilders Incorporated, a Florida corporation
(the "Registrant" or the "Company") received subscriptions from Chai Capital,
Ltd., a Florida limited partnership (the "Partnership") for an aggregate of
$5,000,000 to purchase an aggregate $4,000,000 principal amount 14% Convertible
Subordinated Debentures (the "Debentures") of the Company and 1,785,714 shares
of the Company's authorized and unissued Class A Common Stock, $.01 par value
per share, valued at $.56 per share. The Debentures are for a term of three
years and bear interest at the rate of 14% per annum and are convertible at the
option of the holder into shares of the Company's Class A Common Stock at a
conversion price of $.56 per share. The conversion price of the Debentures and
the purchase price per share for the Company's Class A Common Stock was based
upon a 30-day average of the market price of the Company's Class A Common Stock.
The proceeds of the financing will be used by the Company primarily to repay the
outstanding principal amount plus accrued interest of the Company's outstanding
10% bonds issued in 1994 that are currently due. The private financing was
effectuated in three tranches with the first tranche being consummated on July
29, 1998, the second tranche on July 30, 1998, and the third tranche on July 31,
1998. The consummation of each tranche represented the date that the Company
received cleared funds from the Partnership in accordance with the terms of the
executed subscription for the investment described above.
Among the limited partners of the Partnership are Harry Weitzer, Chairman
of the Board and Chief Executive Officer of the Company and a trust (the
"Trust") for the benefit of the wife of Mr. Michael Ambrosio, a Director of the
Company. Mr. Ambrosio disclaims beneficial ownership of the limited partnership
interest held by the Trust. In addition, Mr. Weitzer contributed to the
Partnership $1,000,000 and an aggregate 1,500,000 shares of the Company's Class
B Common Stock owned of record by him, constituting all of the issued and
outstanding shares of Class B Common Stock of the Company.
The general partner of the Partnership is Chai Capital Corp., a Florida
corporation ("Chai Capital"), of which Messrs. Weitzer and Ambrosio are Officers
and Directors. Mr. Weitzer owns 49.5% of the issued and outstanding shares of
capital stock of Chai Capital, the Trust owns 1% of the issued and outstanding
shares of capital stock of Chai Capital, and certain other parties, who are also
limited partners of the Partnership, own in the aggregate 49.5% of the issued
and outstanding shares of the capital stock of Chai Capital.
Assuming full conversion of the Debentures, and assuming the conversion of
the Class B Common Stock, described above, into a like number of shares of the
Company's Class A Common Stock, the Partnership will beneficially own 10,428,571
shares of the Company's Class A Common Stock, constituting 81.54% of the
Company's outstanding shares of Class A Common Stock. Said percentage is based
upon the 4,145,968 shares of the Company's Class A Common Stock outstanding
(including the 1,785,714 shares issued to the Partnership), and 7,142,857 shares
of the Company's Class A Common Stock issuable upon conversion, as described
above, and assumes that the anti-dilution protection afforded the holders of the
Debentures in the event of, among other
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things, the recapitalization or reorganization of the Company's capital stock,
is not triggered prior to any such conversion. Each share of Class A and Class B
Common Stock of the Company entitles the holder thereof to vote on all matters
submitted to the Company's shareholders, as a single class, except as otherwise
provided by the Company's Articles of Incorporation, as amended, or except as
required by applicable law. In addition, pursuant to the terms of the
Debentures, the Company may not incur debt in excess of $200,000 per annum and
may not issue any securities in the future (other than securities issuable upon
exercise and/or conversion of currently outstanding derivative securities)
without the prior consent of the Partnership.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
(1) Form of Debenture
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WEITZER HOMEBUILDERS INCORPORATED
By: /s/ Harry Weitzer
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Harry Weitzer
Chairman of the Board and Chief
Executive Officer
Date: August 3, 1998
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Form 8-K Exhibit - "FORM OF DEBENTURE"
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION THEREUNDER UNLESS THE
COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH
SALE, ASSIGNMENT, OR TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
No. ______________________ $____________________
WEITZER HOMEBUILDERS INCORPORATED
(A Florida Corporation)
14% Convertible Subordinated Debenture
Due _____________________, 2001 (Three years from Issuance)
______________________________________________________, a __________
corporation, (the "Company") promises to pay to
________________________________, the registered holder hereof (the "Holder" or
the "Partnership"), or his registered assigns, the principal sum of
$_______________________(________________________ Dollars ) on
______________________________, 2001, together with accrued and unpaid interest,
if any. Interest on the principal amount of this Debenture (the "Debenture")
shall accrue at the rate of 14% percent per annum from the date of issuance of
this Debenture. Interest payments shall be payable quarterly on the first day of
January, April, July, and October of each year from the date of issuance,
commencing ______________________________, 1998. Interest on the Debenture will
accrue from the most recent date of which interest has been paid or, if no
interest has been paid, from the date of issuance. Interest will be computed on
the basis of a 365-day year. Payments of interest to the Holder hereunder shall
be made in lawful money of the United States of America and shall be made to the
person who is a registered holder of the Debenture at the close of business on
the fifteenth day of the month immediately preceding the interest payment date
even though the Debenture may have been canceled, converted or redeemed, after
the record date and on or before the interest payment date. Holders must
surrender the Debenture or provide an appropriate affidavit of lost Debenture to
the Company to collect principal payment thereof. The Company may pay principal
and interest by mailing a check to the Holder's registered address, which is
_____________________________________________________.
The Holder may convert all or any part of the then outstanding principal
amount of this Debenture, plus accrued interest, into shares of the Company's
Class A Common Stock, $_______ par value, (the "Common Stock") at any time after
issuance and prior to ___________________________, 2001 (three years after
issuance of the Debenture), at an initial conversion price of $_____________ per
share (the
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"Conversion Price"). No fractional shares of the Company's Common Stock will be
issuable upon conversion of any part of this Debenture. In lieu of any
fractional share, the Company will deliver the cash equivalent of such
fractional share to the Holder, based upon the then current Market Price, as
defined below, of such shares of Common Stock as of the date of any such
conversion. Notwithstanding anything in this Debenture to the contrary, the per
share Conversion Price and the number of shares of the Company's Common Stock
purchasable and issuable upon conversion shall be adjusted from time to time as
follows:
In case of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock, or in case of any consolidation or merger of
the Company with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock), or in case of any sale or conveyance to
another corporation of the property of the Company as, or substantially as, an
entirety (other than a sale/leaseback, mortgage or other financing transaction),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by converting this Debenture, to purchase the kind
and number of shares of stock or other securities or property (including cash)
received upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that might have been acquired upon conversion of this Debenture
immediately prior to such reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
If and whenever the Company shall grant to the holders of Common Stock, as
such, rights or warrants to subscribe for or to purchase, or any options for the
purchase of, Common Stock or securities convertible into or exchangeable for or
carrying a right, warrant or option to purchase Common Stock, the Company shall
concurrently therewith grant to the Holder of this Debenture all of such rights,
warrants or options to which each such holder would have been entitled if, on
the date of determination of shareholders entitled to the rights, warrants or
options being granted by the Company, such Holder were the holder of record of
the number of whole shares of Common Stock then issuable upon exercise.
In the event the Company shall issue additional shares of its Class A
Common Stock in a stock dividend, stock distribution or subdivision, the
conversion price in effect immediately prior to such stock dividend, stock
distribution or subdivision shall, concurrently with the effectiveness of such
stock dividend, stock distribution or subdivision, be proportionately decreased.
In the event the outstanding shares of Class A Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Class A Common Stock, the Conversion Price in effect immediately prior to
such combination or consolidation shall,
- Form of Debenture Page 2 -
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concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
The term "Market Price" as used herein with respect to a share of Common
Stock shall mean the reported closing sales price, or, if there was no closing
sales price on such day, then the average of the reported closing bid and asked
prices, in either case, on the principal securities exchange on which the Common
Stock is then listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, on the Nasdaq National Market
System or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market System, the
average of the closing bid and asked prices in the over-the-counter market, as
reported by Nasdaq or any other inter-dealer quotation system or exchange, or as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for such purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the Board of Directors of
the Company in good faith.
The Company shall deliver a certificate or certificates for that number of
shares of the Company's Common Stock issuable on conversion as soon as
practicable after surrender of this Debenture for conversion, but the person or
persons to whom such certificates are issuable shall be considered the holder of
record of such shares from the time this Debenture is surrendered. Except as
described above, this Debenture is not otherwise convertible into any other
shares of the Company's Common Stock. The Company has not and shall not be
required to establish any sinking fund for the repayment of this Debenture.
Prior to the issuance of any shares of Common Stock upon conversion hereof, the
holder of this Debenture hereby agrees to provide the Company with any and all
documentation requested by the Company, including any representations, regarding
the issuance of said shares of Common Stock with respect to any conversion.
The Debentures will be subordinated to all Institutional Debt, purchase
money obligations of the Company, and debt (incurred or to be incurred by the
Company), which debt is secured by security interests granted and to be granted
by the Company. Institutional Debt is the principal of and premium, if any, and
interest on, and any other payment due pursuant to the terms of instruments
creating or evidencing indebtedness of the Company outstanding as of the date of
initial issuance hereof or indebtedness thereafter created, assumed, incurred,
or guaranteed by the Company and its affiliates, and all renewals, extensions,
and refinances thereof, which is payable to banks, or other traditional long-
term institutional lenders such as insurance companies and pension funds. For
purposes of the Debentures, "indebtedness" means any indebtedness, contingent
or otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of the Company and/or its affiliates or
only to a portion thereof), as evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property or interest thereon, of and to the
extent such indebtedness would appear as a liability upon the balance sheet of
the Company prepared on a consolidated basis in accordance with generally
accepted accounting principles, consistently applied. In addition, the
Debentures will also be subordinated to debt incurred in the ordinary course of
business in connection with purchase money obligations currently existing or
hereafter created, or to currently
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outstanding or future indebtedness for which the Company and/or its affiliates
has or will grant a priority security interest, and to the extent of any such
security interest. A purchase money obligation is an obligation which would
enable the Company to acquire rights in or the use of a product or collateral.
The Company will not issue any securities of the Company subsequent to the
date hereof, except with respect to securities which are issuable upon exercise
and/or conversion of currently outstanding derivative securities, without the
prior written approval of the Partnership. In addition, the Company will not
incur any additional debt subsequent to the date hereof, in excess of an
aggregate $200,000 per fiscal year of the Company, without the prior written
consent of the Partnership. Said restrictions will remain outstanding until
such time as the Partnership ceases to own any of the securities of the Company
being acquired hereunder.
The registered holder of a Debenture may be treated as its owner for all
purposes.
The terms of the Debenture may be amended with the consent of the holders
of a majority in principal amount of the Debentures then outstanding, and any
existing default may be waived with the consent of the holders of seventy
percent (70%) of the principal amount of the Debentures then outstanding.
Without the consent of any holder, the Debenture may be amended to cure any
ambiguity, defect or inconsistency, or to make any change that does not
adversely effect the rights of the holder.
An Event of Default is: (a) a default for 45 days in payment of interest on
the Debenture; (b) a default for 30 days in payment of principal of Debentures,
when the same becomes due and payable at maturity or upon redemption; (c) the
Company, pursuant to the U.S. Bankruptcy Code (i) commences a voluntary case;
(ii) consents to an entry of an order for relief against it in an involuntary
case; (d) the Company consents to the appointment of a custodian of it or for
all or substantially all of its property; (e) the Company makes a general
assignment for the benefit of creditors; (f) a court of competent jurisdiction,
enters an order or decree under any Bankruptcy Law (i) against the Company in an
involuntary case; (ii) appoints a custodian of the Company or for all or
substantially all of its property; or (iii) orders the liquidation of the
Company, and the order or decree remains unstayed and in effect for 90 days; or
(g) the Company is in default under and pursuant to then existing and
outstanding loan and/or credit agreements. If an Event of Default occurs and is
not cured within fifteen days thereof and is continuing, then the Holders of
thirty percent (30%) of the principal amount of Debentures then outstanding may
declare the Debentures to be due and payable immediately.
A director, officer, employee or shareholder, as such, of the Company shall
not have any liability for any obligation of the Company under the Debenture or
for any claim based on, in respect of or by reason of such obligation or the
creation thereof. Each Holder by accepting a Debenture waives and releases all
of the aforesaid persons from such liability. The waiver and release are part
of the consideration for the issuance of the Debenture.
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The registered owner of this Debenture shall be deemed to be the owner of
this Debenture for all purposes and the full payment of interest and principal
under this Debenture to such registered owner shall constitute the full and
complete discharge of the Company for such purposes.
This Debenture shall be governed by and construed in accordance with the
laws of the State of Florida applicable to agreements made and to be performed
in the State of Florida, without application to the principles of conflicts of
laws and the terms of this Debenture cannot be changed orally.
IN WITNESS WHEREOF, the Company has signed and sealed this 14% Convertible
Subordinated Debenture due ___________________________, 2001 as of this
______________ day of _________________________, 1998.
By:
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By:
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Name:
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Title :
ATTEST:
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