<PAGE> 1
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 28, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ___________________
Commission File No. 333-5190-A
THRIFT MANAGEMENT, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
FLORIDA 65-0309540
- ------------------------------ ------------------------
State or Other Jurisdiction of I.R.S. Employer I.D. No.
Incorporation or Organization
3141 W. Hallandale Beach Boulevard
Hallandale, Florida 33009
- ----------------------------------------
(Address of Principal Executive Offices)
Issuer's telephone number, including area code: 954-985-8430
------------------
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practical date: At May 10, 1999, there were outstanding
2,185,700 shares of Common Stock, $.01 par value.
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE> 2
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 28, 1999 (unaudited) ........................ 3
Consolidated Statements of Operations for the Three Months ended March 28, 1999
and March 29, 1998 (unaudited) ..................................................... 4
Consolidated Statements of Cash Flows for the Three Months ended March 28, 1999
and March 29, 1998 (unaudited) ..................................................... 5
Notes to Consolidated Financial Statements (unaudited) ............................. 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................................. 8-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................................... 10
Signatures ......................................................................... 11
</TABLE>
2
<PAGE> 3
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 28, 1999
--------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 637,684
Merchandise inventories 472,991
Prepaid expenses 162,736
Refundable income taxes 110,351
Advances to stockholder 47,367
-----------
TOTAL CURRENT ASSETS 1,431,129
EQUIPMENT, FIXTURES AND IMPROVEMENTS, net 959,448
DEFERRED TAX ASSETS 349,573
OTHER ASSETS 105,695
-----------
TOTAL ASSETS $ 2,845,845
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 268,662
Accrued expenses 295,801
-----------
TOTAL LIABILITIES 564,463
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: $.01 par value, authorized 1,500,000
shares, issued and outstanding 250,000 shares 2,500
Common stock: $.01 par value, authorized 15,000,000
shares, issued and outstanding 2,185,700 shares 21,857
Additional paid-in capital 3,044,553
Accumulated deficit (787,528)
-----------
TOTAL STOCKHOLDERS' EQUITY 2,281,382
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,845,845
===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 28, 1999 March 29,1998
-------------- -------------
<S> <C> <C>
Net sales $ 2,536,624 $ 2,250,473
Cost of goods sold 1,566,129 1,240,550
----------- -----------
GROSS PROFIT 970,495 1,009,923
Selling, general and administrative
expenses 1,052,830 876,832
Officer's bonus incentive 25,858 22,501
----------- -----------
TOTAL OPERATING EXPENSES 1,078,688 899,333
----------- -----------
(LOSS) INCOME FROM OPERATIONS (108,193) 110,590
Interest expense -- 236
Interest income (6,957) (31,233)
----------- -----------
(LOSS) INCOME BEFORE INCOME
TAX (BENEFIT) EXPENSE (101,236) 141,587
Income tax (benefit) expense (38,095) 53,584
----------- -----------
NET (LOSS) INCOME $ (63,141) $ 88,003
=========== ===========
(Loss) Earnings per share:
Basic:
Net (loss) income $ (0.03) $ 0.04
=========== ===========
Diluted:
Net (loss) income $ (0.03) $ 0.04
=========== ===========
Weighted average number of shares:
Basic 2,185,700 2,145,000
=========== ===========
Diluted 2,185,700 2,193,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ending
-----------------------------
March 28, March 29,
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) Income $ (63,141) $ 88,003
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 41,097 24,298
Loss on sale of equipment -- 3,505
Deferred income tax (benefit) (38,095) --
Changes in current assets and liabilities
(Increase) in merchandise inventories (45,813) (6,287)
Decrease(Increase) in prepaid expenses and other assets 79,534 (128,090)
(Decrease) Increase in accounts payable (73,316) 107,638
Increase in accrued expenses 101,952 15,766
Increase in accrued income taxes 178 3,584
----------- -----------
Total adjustments 65,537 20,414
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,396 108,417
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (120,962) (60,347)
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (120,962) (60,347)
----------- -----------
Cash flows from financing activities:
Advances to stockholder, net 15,789 15,789
Warrants Exercised 16,050
Warrants Redeemed (148,930)
Principal payments on notes payable -- (1,221)
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (117,091) 14,568
----------- -----------
NET (DECREASE) INCREASE IN CASH (235,657) 62,638
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 873,341 2,202,540
----------- -----------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 637,684 $ 2,265,178
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ -- $ 236
=========== ===========
Income taxes $ -- $ 50,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. However, such
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three months ended March 28, 1999 are not
necessarily indicative of the results to be expected for the full year.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Form 10-KSB for the
year ended December 27, 1998 of Thrift Management, Inc. (the "Company").
(2) ORGANIZATION
The consolidated financial statements at March 28, 1999 and March 29, 1998
include the accounts of the Company, Hallandale Thrift Management, Inc.
("HTMI"), Thrift Shops of South Broward, Inc. ("TSSB"), Thrift Shops of
West Dade, Inc. ("TSWD"), Hallandale Thrift, Inc. ("HTI"), North Broward
Consignment, Inc. ("NBCI"), Thrift Shops of North Lauderdale, Inc.
("TSNL"), Thrift Retail, Inc. ("TRI"), Thrift Management Canada, Inc.
("TMCI"), Thrift Export, Inc., ("TEI"), and Thrift Holdings, Inc. ("THI"),
(HTMI, TSSB, TSWD ,HTI, NBCI, TSNL, TRI, TMCI, TEI AND THI are collectively
referred to herein as the "Subsidiaries"). All entities, except TSNL, TRI,
TMCI, TEI and THI (which were incorporated in March 1997, January 1998,
June 1998, July 1998, and July 1998 respectively), were wholly owned by a
common stockholder until May 31, 1996. As of May 31, 1996, HTMI, TSSB,
TSWD, HTI, and NBCI became wholly owned subsidiaries of the Company
pursuant to a reorganization plan. Accordingly, as of March 28, 1999 and
March 29, 1998 and for the periods then ended, the Company has presented
consolidated financial statements. All significant intercompany accounts
and transactions have been eliminated for financial statement presentation
purposes.
(3) STOCKHOLDERS' EQUITY
In December 1996, the Company consummated its initial public offering in
which it sold 615,000 units at a price of $5.75 per unit. Each unit
consisted of one share of common stock (the "Common Stock") and one warrant
to purchase one share of Common Stock for $5.00 per share.
During December 1998, the Company reduced the exercise price on its
1,500,000 redeemable warrants from $5.00 to $1.50 per warrant. A total of
10,700 warrants were exercised at $1.50 per share and the remaining
warrants were redeemed by the Company for the redemption price of $.10 per
warrant.
6
<PAGE> 7
On June 17, 1997 and June 15, 1998, the Company issued 30,000 shares of its
restricted Common Stock to a business consultant in payment for services
rendered to the Company. Such restricted Common Stock was valued at $33,500
and $30,374, respectively.
(4) CHANGE IN ACCOUNTING PERIODS
In 1998, the Company adopted a 52/53 week retail reporting calendar,
whereby all accounting periods end on a Sunday.
(5) CASH AND CASH EQUIVALENTS
At March 28, 1999, the Company had cash and investments in various bank
money market accounts and non-operating accounts with an aggregate value of
$637,684.
(6) STOCK OPTION PLAN
In 1999, the Company granted a total of 14,000 stock options to its
Directors under the Company's 1996 Stock Option Plan at an exercise price
equal to the fair market value of the Common Stock at the date of the
grant. These options generally vest over the next four years and expire not
later than 2009.
(7) COMMITMENTS
In April 1998, the Company entered into a five-year lease for a new store
location in Pompano Beach in Broward County, Florida. The lease provides
for minimum monthly rental payments of approximately $4,000 and contains
two renewal options for five years under substantially the same terms and
conditions.
In October 1998, the Company entered into a five year lease for a new store
location in Orlando in Orange County, Florida. The lease provides for
minimum monthly rental payments of approximately $8,550 and contains two
renewal options for five years under substantially the same terms and
conditions.
As part of the Company's program of operating manned donation trailers as a
new source of donated merchandise, the Company has entered into monthly
rental agreements to rent space in parking lots of shopping centers. In the
first quarter of 1999, the Company entered into ten monthly agreements with
monthly rental payments totaling approximately $2,000.
In January 1999, the Company's Board of Directors approved the prepayment
of up to $155,266 of future bonuses of the Company's President, subject to
the agreement of the President to pay interest on the amount prepaid at the
annual rate of 8.0% and to repay any balance remaining by December 31,
2000. Prepaid expenses as of March 28, 1999 include $104,408 in prepaid
bonus payments to the Company's President.
7
<PAGE> 8
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is an analysis of the results of operations of Thrift Management,
Inc. and Subsidiaries (collectively, the "Company") and its liquidity and
capital resources. The Company cautions readers that certain important factors
may affect the Company's actual results and could cause such results to differ
materially from any forward-looking statements which may be deemed to have been
made in this Report or which are otherwise made by or on behalf of the Company.
For this purpose, any statements contained in this Report that are not
statements of historical fact may be deemed to be forward-looking statements
which involve risks and uncertainties. Without limiting the generality of the
foregoing, words such as "may," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements.
Factors which may affect the Company's results include, but are not limited to,
dependence on sources of inventories, dependence on the resale market for unsold
goods, dependence on charitable donations and a limited number of charities,
reliance on management, changes in trends in buyer preferences, competition
with other retail sources, general economic conditions and seasonality of the
population in the Company's marker areas. The Company is also subject to other
risks detailed herein or detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the related notes thereto of the Company
included elsewhere herein.
GENERAL
The Company was organized in July 1991 for the purpose of managing the operation
of retail thrift stores that offer new and used articles of clothing, furniture,
miscellaneous household items and antiques. HTMI is registered with the State of
Florida as a professional solicitor. The Company obtains its merchandise
primarily from two sources: (i) purchase contracts with charitable
organizations; and (ii) various independent contract collectors from whom the
Company purchases merchandise in bulk.
Items from the stores that remain unsold are sold in bulk to exporters, which
ship the items to countries throughout the Caribbean, Central and South America,
and Eastern Europe. Through its subsidiaries, the Company currently operates
seven retail stores. HTMI is responsible for the solicitation of donations on
behalf of the charities through direct mailings, newspaper advertising and
telemarketing. HTMI is, in addition, responsible for the pickup of the donated
merchandise throughout the communities surrounding the Company's stores.
In January 1998, the Company adopted a 52/53 week retail reporting calendar,
whereby all accounting periods end on a Sunday.
8
<PAGE> 9
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED MARCH 28, 1999 AND MARCH 29,
1998.
Revenues for the first quarter ended March 28, 1999 and March 29, 1998 totaled
$2,536,624 and $2,250,473, respectively. Sales increased $286,151 or 12.7%, for
the 1999 quarter as compared to the 1998 quarter. The sales increase resulted
primarily from the opening of the Company's sixth store in Pompano Beach,
Florida in August 1998 and a seventh store in Orlando, Florida in February 1999.
The retail same-store sales for the quarter increased 4.2%, but rag sales for
the quarter decreased 34.7% resulting in an increase in total same store sales
of only 1.1% for the quarter. The Company's adoption of a 52/53 week reporting
calendar resulted in the first quarter of 1999 having three days more than the
first quarter of 1998.
Economic and political conditions in the overseas markets that purchase rags
have caused the export market for rags to remain relatively weak, although it
has somewhat improved since the end of 1998. As a result, the Company sold rags
in the first quarter for approximately $0.09 per pound as compared to
approximately $0.14 per pound in the first quarter of 1998. This 35.7% decline
in the market price for rags represented a 3.1% unfavorable variance in total
sales and a 2.9% unfavorable variance in same store sales compared to the first
quarter of the prior year. Although the average rag prices were $0.09 per pound
in this quarter and the last quarter of 1998, up from $0.08 per pound in the
third quarter of 1998, the Company believes that economic and political
conditions in the overseas markets that purchase rags will result in a continued
relatively weak export market for rags.
The Company's gross profit for the first quarter of 1999 decreased $39,428 or
3.9%, to $970,495 from $1,009,923 for the first quarter of 1998. This decrease
in gross profit dollars and the gross profit margin from 44.9% in the first
quarter of 1998 to 38.3% in the first quarter of 1999 is attributable to the
significant increase in the cost of goods sold. This increase was due primarily
to the increasing cost of expanding the Company's solicitation efforts with the
addition of attended donation trailers and a phone solicitation operation
combined with the relatively weak export market for rags. The expansion of the
Company's solicitation effort is beginning to show results as the Company
reduced its merchandise purchased from independent contract collectors by 15.6%
in the first quarter of 1999 as compared to the first quarter of 1998.
Cost of goods sold, as a percentage of sales, increased 6.6% points to 61.7% for
the first quarter of 1999 as compared to 55.1% for the first quarter of 1998.
The Company is continuing to accelerate its efforts to reduce its dependence on
purchased merchandise by continuing to develop its network of attended donation
trailers and by continuing to develop its phone solicitation division to
increase the Company's sources of donated merchandise.
Operating expenses for the first quarter of 1999 increased $179,355 or 19.9%, to
$1,078,688 from $899,333 for the first quarter of 1998. This increase is due
primarily to the $46,259 increase in operating expenses related to the Company's
sixth store in Pompano Beach, Florida, which opened in August 1998, and the
$78,792 operating expenses related to the Company's seventh store in Orlando,
Florida, which opened in February 1999. The $54,304 balance of the increase was
primarily due to higher corporate payroll related to the additional management
personnel added in the second half of 1998.
Although the Company had a $101,236 loss before income tax benefit for the first
quarter of 1999, the Company had a $57,772 income before income tax expense for
the month of March 1999. There can be no assurances, however, that this trend
will continue.
LIQUIDITY AND CAPITAL RESOURCES
At March 28, 1999, the Company had working capital of $866,666, as compared to
working capital of $2,424,180 at March 29, 1998.
Cash and cash equivalents at March 29, 1999 totaled $637,684, a decrease of
$235,657, as compared to $873,341 at December 27, 1998. Net cash provided by
operating activities totaled $2,396 for the three months ended March 28, 1999,
as compared to $108,417 provided by operating activities for the three months
ending March 29, 1998. The cash used in the purchase of property and equipment
was $120,962 and the cash used in financing activities totaled $117,091, which
was primarily for the redemption of common stock warrants. The Company believes
that its current capital resources, together with the expected cash flow from
its operations, will be sufficient to meet its anticipated working capital
requirements through 1999. There can be no assurances, however, that such will
be the case.
9
<PAGE> 10
INFLATION AND SEASONALITY
Although the Company cannot accurately determine precisely the effects of
inflation, management does not believe that inflation currently has a material
effect on the Company's sales or results of operations.
The Company's operations are located in South Florida, which has numerous
part-time residents during the winter. The Company's results of operations
reflect the seasonable nature of this market, with donations and sales of
merchandise being higher in the winter months.
YEAR 2000
The Company, using an outside consultant, believes that it has completed all of
the computer software upgrades for the year 2000 as instructed by the various
software vendors used by the Company. All computer hardware has been tested for
the year 2000. The Company currently believes its systems are year 2000
compliant, and does not believe this issue will have a significant effect on its
results of operations.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.1 1996 Stock Option Plan, as amended
10.2 Promissory Note dated January 1, 1999, from
Marc Douglas, as maker, to the Company
11 Statement re: computation of per share earnings
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
NONE
10
<PAGE> 11
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THRIFT MANAGEMENT, INC.
BY: /s/ Marc Douglas
-------------------------------------------
Marc Douglas, President and Chief Executive
Officer (Principal Executive Officer)
Date: May 11, 1999
/s/ Stephen L. Wiley
-------------------------------------------
Stephen L. Wiley, Chief Financial
Officer (Principal Financial Officer)
11
<PAGE> 12
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.1 1996 Stock Option Plan, as amended
10.2 Promissory Note dated January 1, 1999, from
Marc Douglas, as maker, to the Company
11 Statement re: computation of per share earnings
27 Financial Data Schedule (for SEC use only)
<PAGE> 1
Exhibit 10.1
THRIFT MANAGEMENT, INC.
1996 STOCK OPTION PLAN,
AS AMENDED ON DECEMBER 24, 1998
1. PURPOSE. The purpose of this Plan is to advance the interests of
THRIFT MANAGEMENT, INC., a Florida corporation (the "Company"), by providing an
additional incentive to attract, retain and motivate highly qualified and
competent persons who are key to the Company, including key employees,
consultants, independent contractors, Officers and Directors, and upon whose
efforts and judgment the success of the Company and its Subsidiaries is largely
dependent, by authorizing the grant of options to purchase Common Stock of the
Company to persons who are eligible to participate hereunder, thereby
encouraging stock ownership in the Company by such persons, all upon and subject
to the terms and conditions of this Plan.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean Board of Directors of the Company.
(b) "Cause" shall mean any of the following:
(i) a determination by the Company that there has
been a willful, reckless or grossly negligent failure by the Optionee to perform
his or her duties as an employee of the Company;
(ii) a determination by the Company that there has
been a willful breach by the Optionee of any of the material terms or provisions
of any employment agreement between such Optionee and the Company;
(iii) any conduct by the Optionee that either results
in his or her conviction of a felony under the laws of the United States of
America or any state thereof, or of an equivalent crime under the laws of any
other jurisdiction;
(iv) a determination by the Company that the Optionee
has committed an act or acts involving fraud, embezzlement, misappropriation,
theft, breach of fiduciary duty or material dishonesty against the Company, its
properties or personnel;
(v) any act by the Optionee that the Company
determines to be in willful or wanton disregard of the Company's best interests,
or which results, or is intended to result, directly or indirectly, in improper
gain or personal enrichment of the Optionee at the expense of the Company;
(vi) a determination by the Company that there has
been a willful, reckless or grossly negligent failure by the Optionee to comply
with any rules, regulations, policies or procedures of the Company, or that the
Optionee has engaged in any act, behavior or conduct demonstrating a deliberate
and material violation or disregard of standards of behavior that the Company
has a right to expect of its employees; or
<PAGE> 2
(vii) if the Optionee, while employed by the Company
and for two years thereafter, violates a confidentiality and/or noncompete
agreement with the Company, or fails to safeguard, divulges, communicates, uses
to the detriment of the Company or for the benefit of any person or persons, or
misuses in any way, any Confidential Information; PROVIDED, HOWEVER, that, if
the Optionee has entered into a written employment agreement with the Company
which remains effective and which expressly provides for a termination of such
Optionee's employment for "cause," the term "Cause" as used herein shall have
the meaning as set forth in the Optionee's employment agreement in lieu of the
definition of "Cause" set forth in this Section 2(b).
(c) "Change of Control" shall mean the acquisition by any
person or group (as that term is defined in the Securities Exchange Act of 1934
(the "Exchange Act"), and the rules promulgated pursuant to that act) in a
single transaction or a series of transactions of 30% or more in voting power of
the outstanding stock of the Company and a change of the composition of the
Board of Directors so that, within two years after the acquisition took place, a
majority of the members of the Board of Directors of the Company, or of any
corporation with which the Company may be consolidated or merged, are persons
who were not directors or officers of the Company or one of its Subsidiaries
immediately prior to the acquisition, or to the first of a series of
transactions which resulted in the acquisition of 30% or more in voting power of
the outstanding stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Committee" shall mean the stock option committee
appointed by the Board or, if not appointed, the Board.
(f) "Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.
(g) "Confidential Information" shall mean any and all
information pertaining to the Company's financial condition, clients, customers,
prospects, sources of prospects, customer lists, trademarks, trade names,
service marks, service names, "know-how," trade secrets, products, services,
details of client or consulting contracts, management agreements, pricing
policies, operational methods, site selection, results of operations, costs and
methods of doing business, owners and ownership structure, marketing practices,
marketing plans or strategies, product development techniques or plans,
procurement and sales activities, promotion and pricing techniques, credit and
financial data concerning customers and business acquisition plans, that is not
generally available to the public.
(h) "Director" shall mean a member of the Board.
(i) "Employee" shall mean any person, including officers,
directors, consultants and independent contractors employed by the Company or
any parent or Subsidiary of the Company within the meaning of Section 3401(c) of
the regulators promulgated thereunder.
(j) "Fair Market Value" of a Share on any date of reference
shall be the Closing Price of a share of Common Stock on the business day
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and uniform manner. For this purpose, the
"Closing Price" of the Common Stock on any business day shall
-2-
<PAGE> 3
be (i) if the Common Stock is listed or admitted for trading on any United
States national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last reported sale
price of the Common Stock on such exchange or reporting system, as reported in
any newspaper of general circulation, (ii) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System
("Nasdaq"), or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Common Stock on such system, or (iii) if
neither clause (i) nor (ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least five of the 10 preceding
days. If the information set forth in clauses (i) through (iii) above is
unavailable or inapplicable to the Company (E.G., if the Company's Common Stock
is not then publicly traded or quoted), then the "Fair Market Value" of a Share
shall be the fair market value (I.E., the price at which a willing seller would
sell a Share to a willing buyer when neither is acting under compulsion and when
both have reasonable knowledge of all relevant facts) of a share of the Common
Stock on the business day immediately preceding such date as the Committee in
its sole and absolute discretion shall determine in a fair and uniform manner.
(k) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Code.
(l) "Non-Statutory Stock Option" or "Nonqualified Stock
Option" shall mean an Option which is not an Incentive Stock Option.
(m) "Officer" shall mean the Company's chairman, president,
principal financial officer, principal accounting officer (or, if there is no
such accounting officer, the controller), any vice-president of the Company in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of Subsidiaries shall be deemed Officers of the Company if
they perform such policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include policy-making
functions that are not significant. Unless specified otherwise in a resolution
by the Board, an "executive officer" pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. ss.229.401(b)) shall be only such person designated as an "Officer"
pursuant to the foregoing provisions of this paragraph.
(n) "Option" (when capitalized) shall mean any stock option
granted under this Plan.
(o) "Optionee" shall mean a person to whom an Option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(p) "Plan" shall mean this 1996 Stock Option Plan of the
Company, which Plan shall be effective on May 31, 1996, upon approval by the
Board and shareholders of the Company.
-3-
<PAGE> 4
(q) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(r) "Share" or "Shares" shall mean a share or shares, as the
case may be, of the Common Stock, as adjusted in accordance with Section 10 of
this Plan.
(s) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to adjustment in accordance with Section
10 hereof, the Company may grant to Optionees from time to time Options to
purchase an aggregate of up to One Million, Seven Hundred Thousand (1,700,000)
from Shares held in the Company's treasury or from authorized and unissued
Shares. If any Option granted under this Plan shall terminate, expire, or be
canceled, forfeited or surrendered as to any Shares, the Shares relating to such
lapsed Option shall be available for issuance pursuant to new Options
subsequently granted under this Plan. Upon the grant of any Option hereunder,
the authorized and unissued Shares to which such Option relates shall be
reserved for issuance to permit exercise under this Plan. Subject to the
provisions of Section 14 hereof, an Option granted hereunder shall be either an
Incentive Stock Option or a Non-Statutory Stock Option as determined by the
Committee at the time of grant of such Option and shall clearly state whether it
is an Incentive Stock Option or Non-Statutory Stock Option. All Incentive Stock
Options shall be granted within 10 years from the effective date of this Plan.
4. LIMITATIONS. Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Code
Section 422(b) are exercisable for the first time by any individual during any
calendar year (under all stock option or similar plans of the Company and any
Subsidiary), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law. Optionees
shall be those persons selected by the Committee from the class of all regular
Employees of the Company or its Subsidiaries, including Employee Directors and
Officers who are regular or former regular employees of the Company, as well as
consultants to the Company. Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to receive any
Option under this Plan shall not be eligible to receive any Option under this
Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made, or is expected to make, to
the success of the Company or its Subsidiaries and such other factors as the
Committee shall determine. The Committee shall also
-4-
<PAGE> 5
have the authority to consult with and receive recommendations from Officers and
other personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under this Plan
prescribe such terms and conditions concerning such Options as it deems
appropriate, including, without limitation, (i) the exercise price or prices of
the Option or any installments thereof, (ii) prescribing the date or dates on
which the Option becomes and/or remains exercisable, (iii) providing that the
Option vests or becomes exercisable in installments over a period of time,
and/or upon the attainment of certain stated standards, specifications or goals,
(iv) relating an Option to the continued employment of the Optionee for a
specified period of time, or (v) conditions or termination events with respect
to the exercisability of any Option, provided that such terms and conditions are
not more favorable to an Optionee than those expressly permitted herein;
provided, however, that to the extent not cancelled pursuant to Section 9(b)
hereof, upon a Change in Control, any Options that have not yet vested, shall
vest upon such Change in Control.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither this
Plan nor any Option granted under this Plan shall confer upon any person any
right to employment or continuance of employment (or related salary and
benefits) by the Company or its Subsidiaries.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be
any price determined by the Committee but shall not be less than the par value
per Share; provided, however, that in no event shall the exercise price per
Share of any Incentive Stock Option be less than the Fair Market Value of the
Shares underlying such Option on the date such Option is granted and, in the
case of an Incentive Stock Option granted to a 10% shareholder, the per Share
exercise price will not be less than 110% of the Fair Market Value in accordance
with Section 14 of this Plan. Re-granted Options, or Options which are canceled
and then re-granted covering such canceled Options, will, for purposes of this
Section 6, be deemed to have been granted on the date of the re-granting.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company
has received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate option price of the Shares as to
which the Option is exercised has been made, (iii) the Optionee has agreed to be
bound by the terms, provisions and conditions of any applicable shareholders'
agreement, and (iv) arrangements that are satisfactory to the Committee in its
sole discretion have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company or the Subsidiary employing the
Optionee to withhold in accordance with applicable federal or state tax
withholding requirements. Unless further limited by the Committee in any Option,
the exercise price of any Shares purchased pursuant to the exercise of such
Option shall be paid in cash, by certified or official bank check, by money
order, with Shares or by a combination of the above; PROVIDED, HOWEVER, that the
Committee in its sole discretion may accept a personal check in full or partial
payment of any Shares. If the exercise price is paid in whole or in part with
Shares, the value of the Shares surrendered shall be their Fair Market Value on
the date the Option is exercised. The Company in its sole discretion may, on an
individual basis or pursuant to a general program established by the Committee
in connection with this Plan, lend money to an Optionee to exercise all or a
portion of the Option
-5-
<PAGE> 6
granted hereunder. If the exercise price is paid in whole or part with the
Optionee's promissory note, such note shall (i) provide for full recourse to the
maker, (ii) be collateralized by the pledge of the Shares that the Optionee
purchases upon exercise of such Option, (iii) bear interest at a rate no less
than the rate of interest payable by the Company to its principal lender, and
(iv) contain such other terms as the Committee in its sole discretion shall
require. No Optionee shall be deemed to be a holder of any shares subject to an
Option unless and until a stock certificate or certificates for such shares are
issued to the person(s) under the terms of this Plan. No adjustments shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 10 hereof.
(b) No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until a stock certificate or certificates for
such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals, upon such events or occurrences and upon such
other terms and conditions as shall be provided in an individual Option
agreement evidencing such Option, except as otherwise provided in Section 5(b)
or this Section 8.
(a) The expiration date(s) of an Option shall be determined by
the Committee at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise expressly provided in any Option as
approved by the Committee, notwithstanding the exercise schedule set forth in
any Option, each outstanding Option, may, in the sole discretion of the
Committee, become fully exercisable upon the date of the occurrence of any
Change of Control, but, unless otherwise expressly provided in any Option, no
earlier than six months after the date of grant, and if and only if Optionee is
in the employ of the Company on such date.
(c) The Committee may in its sole discretion accelerate the
date on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise expressly provided in any Option, the
unexercised portion of any Option shall automatically and without notice
immediately terminate and become forfeited, null and void at the time of the
earliest to occur of the following:
(i) three months after the date on which the
Optionee's employment is terminated for any reason other than by reason of (A)
Cause, (B) the termination of the Optionee's employment with the Company by such
Optionee following less than 90 days' prior written notice to the Company of
such termination (an "Improper Termination"), (C) a mental or
-6-
<PAGE> 7
physical disability (within the meaning of Section 22(e) of the Code) as
determined by a medical doctor satisfactory to the Committee, or (D) death;
(ii) immediately upon (A) the termination by the
Company of the Optionee's employment for Cause, or (B) an Improper Termination;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Code Section 22(e)) as determined by a medical doctor
satisfactory to the Committee; or
(iv) the later of (A) 12 months after the date of
termination of the Optionee's employment by reason of death of the employee, or
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one-year period specified in Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may, by giving
written notice ("cancellation notice"), cancel effective upon the date of the
consummation of any corporate transaction described in Subsection 10(d) hereof,
any Option that remains unexercised on such date. Such cancellation notice shall
be given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.
(c) Upon Optionee's termination of employment as described in
this Section 9, or otherwise, any Option (or portion thereof) not previously
vested or not yet exercisable pursuant to Section 8 of this Plan or the vesting
schedule set forth in such Option shall be immediately canceled.
10. ADJUSTMENT OF SHARES.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split, combination or exchange
of Shares (other than any such exchange or issuance of Shares through which
Shares are issued to effect an acquisition of another business or entity or the
Company's purchase of Shares to exercise a "call" purchase option), then and in
such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under this Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned;
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price; and
(iii) such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
-7-
<PAGE> 8
(b) Subject to the specific terms of any Option, the Committee
may change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsection 10(d) hereof, or otherwise.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into or exchangeable for shares of its capital stock of
any class, either in connection with a direct or unwritten sale or upon the
exercise of rights or warrants to subscribe therefor or purchase such Shares, or
upon conversion of shares of obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to the number of or exercise price of Shares
then subject to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under this Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, reclassifications, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company or to which the Company is a party; (iii)
any issuance by the Company of debt securities, or preferred or preference stock
that would rank senior to or above the Shares subject to outstanding Options;
(iv) any purchase or issuance by the Company of Shares or other classes of
common stock or common equity securities; (v) the dissolution or liquidation of
the Company; (vi) any sale, transfer, encumbrance, pledge or assignment of all
or any part of the assets or business of the Company; or (vii) any other
corporate act or proceeding, whether of a similar character or otherwise.
(e) The Optionee shall receive written notice within a
reasonable time prior to the consummation of such action advising the Optionee
of any of the foregoing. The Committee may, in the exercise of its sole
discretion, in such instances declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option.
11. TRANSFERABILITY OF OPTIONS. No Option granted hereunder shall be
sold, pledged, assigned, hypothecated, disposed or otherwise transferred by the
Optionee other than by will or the laws of descent and distribution, unless
otherwise authorized by the Board, and no Option shall be exercisable during the
Optionee's lifetime by any person other than the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
-8-
<PAGE> 9
(ii) (A) an agreement and undertaking to comply with
all of the terms, restrictions and provisions set forth in any then applicable
shareholders' agreement relating to the Shares, including, without limitation,
any restrictions on transferability, any rights of first refusal and any option
of the Company to "call" or purchase such Shares under then applicable
agreements, and
(B) any restrictive legend or legends, to be
embossed or imprinted on Share certificates, that are, in the discretion of the
Committee, necessary or appropriate to comply with the provisions of any
securities law or other restriction applicable to the issuance of the Shares.
13. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall be administered by the Committee, which
shall consist of not less than two Directors. The Committee shall have all of
the powers of the Board with respect to this Plan. Any member of the Committee
may be removed at any time, with or without cause, by resolution of the Board
and any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee
shall have the authority, in its sole discretion, to: (i) grant Options, (ii)
determine the exercise price per Share at which Options may be exercised, (iii)
determine the Optionees to whom, and time or times at which, Options shall be
granted, (iv) determine the number of Shares to be represented by each Option,
(v) determine the terms, conditions and provisions of each Option granted (which
need not be identical) and, with the consent of the holder thereof, modify or
amend each Option, (vi) defer (with the consent of the Optionee) or accelerate
the exercise date of any Option, and (vii) make all other determinations deemed
necessary or advisable for the administration of this Plan, including repricing,
canceling and regranting Options.
(c) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of this Plan. The Committee's
determinations and its interpretation and construction of any provision of this
Plan shall be final, conclusive and binding upon all Optionees and any holders
of any Options granted under this Plan.
(d) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting of the Committee or (ii) without a meeting by the unanimous written
approval of the members of the Committee.
(e) No member of the Committee, or any Officer or Director of
the Company or its Subsidiaries, shall be personally liable for any act or
omission made in good faith in connection with this Plan.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of this Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Code) at the date of grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its Subsidiary) at the date of grant unless the exercise price of such Option is
at least 110% of the Fair Market Value of the Shares subject to such Option on
the date the Option
-9-
<PAGE> 10
is granted, and such Option by its terms is not exercisable after the expiration
of 10 years from the date such Option is granted.
15. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that
all Incentive Stock Options granted under this Plan will qualify as Incentive
Stock Options under Section 422 of the Code. If any provision of this Plan
should be held invalid for the granting of Incentive Stock Options or illegal
for any reason, such determination shall not affect the remaining provisions
hereof, and this Plan shall be construed and enforced as if such provision had
never been included in this Plan.
(b) This Plan shall be governed by the laws of the State of
Florida.
(c) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan or affect the meaning
or interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time
periods specified for the giving of notices to the company hereunder, as well as
all time periods for the expiration and termination of Options in accordance
with Section 9 hereof (or as otherwise set forth in an option agreement).
16. AMENDMENT AND DISCONTINUATION OF THIS PLAN. Either the Board or the
Committee may from time to time amend this Plan or any Option without the
consent or approval of the shareholders of the Company; PROVIDED, HOWEVER, that,
except to the extent provided in Section 9, no amendment or suspension of this
Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
17. TERMINATION DATE. This Plan shall terminate 10 years after the date
of adoption by the Board of Directors.
-10-
<PAGE> 1
PROMISSORY NOTE
$155,265.90 Effective as of January 1, 1999
For value received, the undersigned, Marc Douglas, ("Borrower"),
promises to pay to the order of Thrift Management, Inc. ("Lender"), the
principal sum of One Hundred, Fifty-Five Thousand, Two Hundred, Sixty-Five
Dollars and Ninety Cents ($155,265.90) in lawful money of the United States of
America, together with interest accruing thereon from the date hereof at the
rate hereinafter provided, calculated on the daily outstanding principal
balances from time to time based on a 360-day year.
This Note shall bear interest at a rate of 8.0% per annum. Payments of
accrued interest on the principal balance outstanding from time to time on this
Note (which shall be reduced as the amount representing prepaid salary and bonus
for 1999 is earned by Borrower) shall commence on the 26th day of February,
1999, and on the same day of each month thereafter. The outstanding principal
balance of this Note, and all accrued but unpaid interest thereon, shall be
payable on or before December 31, 2000. Borrower hereby agrees that if not paid
as provided herein, the principal balance and any accrued but unpaid interest
thereon may be offset against and deducted from any amounts due to Borrower from
Lender.
So long as no default exists under this Note, Borrower shall have the
right to prepay the unpaid principal evidenced by this Note in whole or in part
without premium or penalty but with accrued interest to the date of such
prepayment on any amount prepaid.
All payments received hereunder shall be applied first to the payment
of any expenses or charges payable hereunder, then to interest due and payable,
with the balance applied to principal, or in such other order as Lender shall
determine at its option.
Notwithstanding any provision of this Note to the contrary, the parties
intend that no provision of this Note be interpreted, construed, applied or
enforced so as to permit or require the payment or collection of interest in
excess of the highest rate of interest permitted to be paid or collected by the
laws of the State of Florida (or federal law, in the event federal law preempts
Florida law or is otherwise applicable), with respect to this transaction
("Maximum Permitted Rate"). If the rate of interest charged by Lender under the
provisions of this Note exceeds the Maximum Permitted Rate, then Lender and any
holders of this Note, and Borrower and any endorsers and guarantors, do hereby
agree that the provisions of this Note automatically shall be deemed reformed
NUNC PRO TUNC so as to require payment only of interest at the Maximum Permitted
Rate; and if interest payments in excess of such Maximum Permitted Rate have
been received, the amount of such excess shall be deemed credited NUNC PRO TUNC
in reduction of the then-outstanding principal amount of this obligation,
together with interest at such Maximum Permitted Rate. In connection with all
calculations to determine the Maximum Permitted Rate, the parties intend: first,
that all charges be excluded to the extent they are properly excludable under
the usury laws of the State of Florida, as they from time to time are determined
to apply to this obligation; and, second, that all charges that may be "spread"
in the manner provided by Section 687.03(3), Florida Statutes, or any similar
successor law.
Any payment not made when due shall constitute a default. If default be
made in the payment of any installment under this Note, the entire principal sum
and accrued interest shall
<PAGE> 2
become due and payable without notice at the option of the Lender. Failure to
exercise this option shall not constitute a waiver of the right to exercise the
same at any other time. Upon such default, the unpaid principal balance of this
Note, and accrued and unpaid interest, if any, shall bear interest at 18% from
the date of default until the default is corrected. Lender's failure to exercise
this right with respect to any default shall not constitute a waiver of this
right as to any subsequent default. All parties liable for the payment of this
Note agree to pay the Lender hereof reasonable attorneys' fees for the services
and expenses of counsel employed after default to collect this Note (including
any appeals relating to such enforcement proceedings), whether or not suit be
brought.
The remedies of Lender as provided herein shall be cumulative and
concurrent, and may be pursued singly, successively or together, at the sole
discretion of Lender, and may be exercised as often as occasion therefor shall
arise. No act of omission or commission of Lender, including specifically any
failure to exercise any right, remedy or recourse, shall be effective as a
waiver thereof unless it is set forth in a written document executed by Lender
and then only to the extent specifically recited therein. A waiver or release
with reference to one event shall not be construed as continuing, as a bar to,
or as a waiver or release of, any subsequent right, remedy or recourse as to any
subsequent event.
Borrower and all sureties, endorsers and guarantors of this Note
hereby: (a) waive demand, presentment for payment, notice of nonpayment,
protest, notice of protest and all other notice, filing of suit and diligence in
collecting this Note, in enforcing any of its rights; (b) agree to any addition
or release of any party or person primarily or secondarily liable hereon; (c)
agree that Lender shall not be required first to institute any suit, or to
exhaust his, their or its remedies against Borrower or any other person or party
to become liable hereunder in order to enforce payment of this Note; (d) consent
to any extension, rearrangement, renewal or postponement of time of payment of
this Note and to any other indulgence with respect hereto without notice,
consent or consideration to any of the foregoing; (e) agree to the right to set
off against any deposits, funds or monies owing; and (f) agree that,
notwithstanding the occurrence of any of the foregoing (except the express
written release of Lender of any such person), they shall be and remain jointly
and severally, directly and primarily, liable for all sums due under this Note.
BORROWER KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ANY RIGHT
BORROWER HAS TO A TRIAL BY JURY IN CONNECTION WITH ANY MATTER DIRECTLY OR
INDIRECTLY RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR
ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
As used herein, the words "Borrower" and "Lender" shall be deemed to
include Borrower and Lender as defined herein and their respective heirs,
personal representatives, successors and assigns.
/s/ Marc Douglas
------------------------------
Marc Douglas
2
<PAGE> 1
EXHIBIT 11
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
The following table presents the computation of basic and diluted earns per
share:
<TABLE>
<CAPTION>
March 28, March 29,
1999 1998
----------- -----------
<S> <C> <C>
Numerator:
Net (loss) income $ (63,141) $ 88,003
----------- -----------
Denominator:
Denominator for basic earnings per
share-weighted-average shares 2,185,700 2,145,000
Effect of dilutive securities:
Employee stock options 48,000
----------- -----------
Denominator for diluted earnings per share 2,185,700 2,193,000
=========== ===========
(Loss) earnings per share:
Basic $ (0.03) $ 0.04
=========== ===========
Diluted $ (0.03) $ 0.04
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THRIFT MANAGEMENT, INC. FOR THE THREE MONTHS ENDED MARCH
28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> MAR-28-1999
<CASH> 637,684
<SECURITIES> 0
<RECEIVABLES> 320,454
<ALLOWANCES> 0
<INVENTORY> 472,991
<CURRENT-ASSETS> 1,431,129
<PP&E> 1,618,755
<DEPRECIATION> (204,039)
<TOTAL-ASSETS> 2,845,845
<CURRENT-LIABILITIES> 564,463
<BONDS> 0
0
2,500
<COMMON> 21,857
<OTHER-SE> 2,257,025
<TOTAL-LIABILITY-AND-EQUITY> 2,845,845
<SALES> 2,536,624
<TOTAL-REVENUES> 2,536,624
<CGS> 1,566,129
<TOTAL-COSTS> 1,566,129
<OTHER-EXPENSES> 1,078,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (101,236)
<INCOME-TAX> (38,095)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,141)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
