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Form 10-SB
SECURITIES EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
UNITED STATES PROPERTIES, INC.
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(Exact name of the registrant as specified in its charter)
PENNSYLVANIA 23-2846009
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE MONTAGE MOUNTAIN ROAD, MOOSIC, PENNSYLVANIA 18507
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number 717-348-1100
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
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(Title of class)
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TABLE OF CONTENTS
PART I
Item 1. Description of Business ....................................... 1
Item 2. Management's Discussion and Analysis or Plan of Operation ..... 7
Item 3. Description of Property ....................................... 9
Item 4. Security Ownership of Certain Beneficial Owners
and Management .............................................. 12
Item 5. Directors, Executive Officers, Promoters and Control Persons .. 14
Item 6. Executive Compensation ........................................ 16
Item 7. Certain Relationships and Related Transactions ................ 17
Item 8. Description of Securities ..................................... 17
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters ................................ 19
Item 2. Legal Proceedings .............................................. 19
Item 3. Changes in and Disagreements with Accountants .................. 19
Item 4. Recent Sales of Unregistered Securities ........................ 19
Item 5. Indemnification of Directors and Officers ...................... 21
Index to Financial Statements
Index to Exhibits
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
United States Properties, Inc. ("USPI"), a Pennsylvania Corporation, was
incorporated on May 28, 1996 and maintains its principal and operations office
at One Montage Mountain Road, Moosic, Pennsylvania, 18507. Its telephone number
at that office is (717) 348-1100 and its facsimile number is (717) 348-1188. In
addition the Company maintains an executive office at 126 E. 56th St., Tower 56,
17th Floor, New York, New York, 10022 where the telephone number is (212)
759-2025. The Company also maintains a branch office at 7028 W. Waters Avenue,
Tampa, Florida 33634 where the telephone number is (813) 884-0075.
USPI was formed for the purpose of acquiring surplus real estate (commercial
real property and commercial leases), portfolios of bad debt (greater than six
months past due) and other, similar non-performing assets held by major
corporations by means of cash and/or Countertrade. Countertrade, or commercial
barter, is a contractual business transaction in which a non-cash payment for
all or a portion of the transaction is in the form of a United States dollar
equivalent Trade Credit. The commercial real estate so acquired is generally
held for re-sale.
USPI derives its revenue from the difference between the cash portion of the
real estate acquisition price and the cash realized from the re-sale of the real
estate (less costs related to the Trade Credits, real estate commissions
etc.)and from a percentage participation in bad debt collections. To date USPI
has not yet derived any revenue from any real estate transaction involving
Countertrade (although it has acquired one property in a Countertrade
transaction which has not yet been disposed of) nor has it generated any
revenues from participation in bad debt collections.
Business Development
The Company solicits corporations to identify surplus real estate, bad debt
portfolios or other, similar assets. The Company then analyzes these assets and
proposes a financial transaction which creates economic value for the asset
substantially in excess of the cash market value of the asset. The financial
transactions proposed by the Company may provide that the Company: 1.) acquire
the asset, with payment on a part cash, part Trade Credit basis; or, 2.)
facilitate the transfer or sale of the asset to a third party utilizing Trade
Credits. As a secondary purpose, the Company proposed to acquire blocks of
accounts receivable in exchange for Trade Credits.
An example of a transaction to which the Company's primary business transaction
would be applicable would be as follows: a corporation owns real estate with a
current book value of $3,000,000. The current market value however, to a cash
buyer, in that market location, is only $1,700,000. The corporation, if it
elected to sell the property, would incur an economic and cash flow loss of
$1,300,000, the difference between the book value of the property and its cash
market value. To enable the corporation to avoid such loss, the Company agrees
to purchase the real estate from the corporation for $1,000,000 in cash plus
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$2,000,000 in Trade Credits. The Company then re-sells the property which may be
simultaneous with the Company's acquisition of the property from the seller or,
more typically, a period 3-6 months from the date of acquisition.
Upon the resale of the property to the cash buyer at $1,700,000, the Company
realizes gross revenue of $700,000, (the difference between the cash portion of
the acquisition price and the cash market value of the property). From this
gross revenue of $700,000, the Company pays the real estate commissions, the
agreed upon cost of the Trade Credits and those expenses related to the sale of
the property.
Contractual Relationships
To implement its business plan, the Company moved rapidly to secure contractual
relationships.
On June 12, 1996, the Company entered into an Agreement with Active Asset
Recovery, Inc., a wholly owned subsidiary of Active Media Services, Inc. d/b/a
as Active International, ("Active"). Active is a global trading company that
develops programs of Countertrade for primarily corporate clients through the
issuance of Trade Credits redeemable by such clients. Active Asset Recovery,
Inc. is the subsidiary which was formed to assist companies to sell, lease or
otherwise dispose of real estate whose values have been severely eroded by
economic conditions, saturation of the market place, or rendered surplus by
corporate restructuring. In the typical situation, real estate is carried on the
corporate books at values exceeding the current market values. Active offers to
buy such real estate for Trade Credits equal to the book values of fee simple
properties or equal to the remaining lease obligation for leased properties.
Under its Agreement, the Company acts as a finder for Active Asset Recovery,
Inc., with an agreement to distribute gross profits on all transactions accepted
by Active on an individual property-negotiated basis.
Currently the Company has selected Active as the sole supplier of any Trade
Credits used in the Company's transactions involving Trade Credits. Active is
the largest international Countertrade firm headquartered in the United States.
In part, the Company's decision to select Active as its sole supplier of Trade
Credits was based on Active's ability to insure its Trade Credits (which the
Company believes is unique in the Countertrade industry). In addition, for
qualified clients Active makes available a Trade Credit liquidity facility which
arranges a cash advance against a client's expected savings to be realized from
utilizing insured Trade Credits. Any cash advanced pursuant to the Trade Credit
liquidity facility is secured by the insurance policy insuring the Trade
Credits.
On June 27, 1996, the Company entered into an Agreement with Capital Credit
Corporation ("CCC"). CCC is a wholly-owned subsidiary of Union Corporation which
provides accounts receivable management and related services to a wide range of
institutional, commercial and government clients. CCC acquires accounts
receivable which are greater than six months past due. The arrangement
contemplated that the Company would use Trade Credits (supplied by Active wholly
or partially) to complete the purchase of portfolios of such accounts
receivable. Under the original Agreement, the Company was to contact Fortune
1000 companies to determine their bad debt portfolios, ascertain their interest
in selling such portfolios, and provide the data to CCC for analyses and
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pricing. Following closing of any transactions, the Company would receive 70% of
all funds collected from the purchased portfolio, while CCC would retain 30%.
Subsequently, it was determined that the sourcing of transactions could be
better managed by CCC, which would then refer to the Company those transactions
which could be facilitated through the use of Trade Credits.
To date there appears to be little interest by potential sellers of portfolios
of accounts receivable in receiving Trade Credits, either wholly or partially,
for the purchase price. While the Agreement with CCC remains in effect, and the
Company remains available to supply the Trade Credits, the Company is not itself
actively seeking transactions. Whether or not the use of Trade Credits to
facilitate transactions for CCC is a viable business remains uncertain.
Should USPI be successful in negotiating a Countertrade transaction for
portfolios of bad debt after they have been reviewed and priced by CCC it would
be contingent on USPI to have Active or another trading company enter into such
a negotiation to issue and redeem for merchandise any Trade Credits that may be
exchanged in consideration for the purchase of the bad debts. Currently such a
contingency is not part of the Agreement between USPI and Active nor is it known
if the Agreement can be amended or a new agreement developed between USPI and
Active, nor is it known if USPI can establish such a relation with another
trading company to effect such a transaction.
Real Estate Activities
The Company has steadily marketed its business concept. Through May 31, 1997,
the Company had contacted approximately 3,200 corporations to solicit surplus
commercial real estate. 206 potential sellers had responded by providing the
Company with a list of their surplus or underperforming real estate, including
individual or multiple properties.
Of the 206 responding sellers, the Company has rejected 30 (as a result of the
characteristics of the real estate, or the lack of suitability of the seller to
utilize Trade Credits or both) and has undertaken the review of the surplus real
estate of the remaining 176. Of these 176, 90 real estate properties or
portfolios are currently in review and 86 have been completed. Such review
includes an analysis of the property or properties, an analysis of the local
commercial real estate market in which the property or properties are located, a
general appraisal of the market value of the property or properties, a
projection of the marketability of the property or properties and an assessment
of the seller's ability to use Trade Credits.
The Company has submitted proposals to all 86 sellers where the reviews have
been completed. All 86 proposals to acquire or facilitate the disposition of the
surplus or underperforming properties involve a combination of cash and Trade
Credits. Of these 86 proposals, approximately 45 have been rejected, while 41
remain active and are undergoing further discussion or negotiation.
Management's evaluation as of June 3, 1997 is that of the 41 active proposals,
15 proposals appear promising for ultimate closing (with an estimated minimum
gross profit of $5,475,000), 13 appear to be possible (with an estimated minimum
gross profit of $4,637,000), while 13 may or may not proceed to further
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negotiations (with an estimated minimum gross profit of $5,037.000). These
estimates of minimum gross profits are net of estimated real estate operating
costs, commissions and the estimated costs of the Trade Credits. There is no
assurance that any of the potential transactions will close, since closings are
dependent upon securing approvals of various executives and departments of a
seller, (as discussed below). Furthermore, the proposed contract terms and
conditions are subject to change, which would effect the estimated gross
profits. Realization of any gross profits is dependent upon the ultimate
disposition of any properties purchased, while the costs and expenses of the
acquisitions and the subsequent dispositions will affect the gross and net
profits from the transactions. All of such information is anticipatory and is
based on the Company's projections, and therefore should not be relied upon as a
guarantee or an assurance that such results will be achieved.
The Company has determined that the closing of real estate transactions using
Trade Credits wholly or in part is a lengthy process as a result of the
following:
1. It is necessary to contact potential sellers of commercial real estate, in
order to identify property-specific transactions. To do this, the Company has
contracted with 8 independent contractor tele-marketers to solicit potential
sellers. Because Active's primary business relates to accepting Trade Credits as
partial payment for its client's media and advertising expenses, the Company
attempts to target those real estate sellers which have significant media and
advertising budgets.
2. It is necessary to determine whether or not the seller is a suitable
candidate to utilize the Trade Credits, and then to educate those suitable real
estate sellers about Trade Credits, their value, their use etc. This is done
with the assistance of Active.
3. Both Active and the Company have found that there is a distinct difference
between the real estate transactions and Active's usual inventory transactions.
Essentially, whereas the inventories are usually "dated" and subject to
relatively rapid declines in value, real estate transactions are not so time
sensitive and are more financially complex.
4. It is necessary to submit a proposal, followed by direct discussions with
various executives of a seller. The transaction structure which best suits the
seller is often negotiated based upon the seller's experience using Trade
Credits, the characteristics of the real estate and the amount of the cash
provided by the Company. To determine the optimum structure, it is often
necessary to work not only with a seller's real estate executives, but also with
its financial officers and its purchasing and media/advertising managers.
The involvement of the financial officers of a seller is critical as the
transaction relates to:
(a) The gross financial benefit of the transaction to the corporation.
(b) The impact on the loss reserves which may have been established for the
real estate.
(c) The timing of the cash flow benefit.
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The involvement of the purchasing and/or media/advertising managers
relates to the ultimate utilization of the Trade Credits, which are
normally spent as partial payment for the corporations' normal
corporate expenditures. Because of the disparate responsibilities of
the executives involved, substantial time may be expended in
explaining the proposal, providing support for the value of the
Trade Credits and securing the varying approvals of the different
departments.
The Company has determined that a proposal related solely to the real estate
aspects of a proposed transaction is not sufficient. Accordingly, the Company
employed Andreas V. Kissal as its President/CEO as of March 1, 1997. Mr. Kissal
was formerly a Senior Vice President - Trade Finance with Active from December
1993. In addition to his general real estate background (see Part I, Item 5,
"Directors, Executive Officers, Promoters and Control Persons"), Mr. Kissal
successfully structured and closed Trade Credit transactions involving major
corporations and higher value real estate (e.g. $6,000,000). As a result, he is
familiar with the financial, Trade Credit and real estate aspects of potential
transactions.
The Company believes that being responsive to the disparate needs of the various
departments of a seller will increase the potential for closing transactions and
will decrease the time expended in discussions and negotiations.
Completed Transaction
To date, the Company has completed one real estate transaction utilizing Trade
Credits. The transaction was closed on August 8, 1996 when the company acquired
all the outstanding stock of a corporation whose sole asset was real estate
located in Middletown, Ohio. The purchase price was $120,000 in Trade Credits
supplied by Active Asset Recovery, Inc. At Closing, USPI pledged all of the
shares to Active as security for Active's 50% interest in the profits to be
derived from a sale of the property. USPI anticipates selling the property in
the near term for approximately $45,000. In addition, the Company has acted as a
finder for a transaction by Active for an inventory of hotel, cruise space and
air transportation; USPI will receive a fee of 5% of the profit earned by Active
which is presently undeterminable.
Additional Real Estate Activities
In reviewing the lists of properties supplied by potential sellers, the Company
has noted that certain properties are developmental, i. e their full values can
only be realized by development, construction, subdivision, leasing or other
business activities. Under such circumstances, the Company has determined that
it is more likely to close a transaction involving such real estate if it
purchases such real estate and engages in the required developmental activities.
Furthermore, the Company is more apt to realize a greater profit through its
enhancement of the value of such properties.
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The Company has entered into a Letter of Intent to acquire certain residential
building lots in a residential community known as Highpoint Country Club. The
community includes a 150 acre lake, an 18 hole golf course, tennis courts,
Olympic-sized swimming pool, softball field, club house with two restaurants and
a golf pro shop. The community presently includes approximately 630 residential
units, including 570 homes. The Company is acquiring the remaining 285
residential building lots for a purchase price of $6,496,250 of which $2,608,362
is in the form of either assumption or payoff of existing debt, $1,514,138 is in
the form of a second mortgage to be held by the seller, and the balance of
$2,373,750 represented by as estimated 346,250 shares of the Company's Common
Stock, with the actual number of shares to be issued to be determined by using
the closing market price of the Common Stock as of the day immediately preceding
closing.
The Company plans to develop the 285 residential building lots by offering to
construct residential housing on the lots to prospective purchasers. The
prospective purchasers will select their homes from available plans which have
been pre-selected by the Company. The builder or builders which will construct
the homes selected by prospective purchasers will also be pre-approved by the
Company. The Company will construct a home on an individual building lot only
after the prospective purchaser has been qualified for permanent mortgage
financing by a third-party mortgage lender. The Company plans to sell all of the
285 residential building lots with housing constructed on them.
Closing of the purchase of the 285 residential building lots is dependent upon
the Company's ability to secure the funds and/or financial accommodations
required for the assumption and/or payoff of the $2,608,362 as well as an
estimated $400,000 in marketing and development costs. A pro forma balance sheet
showing the effect of this acquisition is attached. However, there is no
assurance that the Company will obtain the required funds or that the
transaction will be closed. This information is considered anticipatory and
therefore should not be relied upon as a guarantee or an assurance that such
transaction will be completed.
The Company has entered into a relationship with New America Network, Inc. ("New
America") which is a full service international commercial real estate brokerage
association with approximately 165 affiliated members staffed with approximately
3,000 real estate professionals. New America has been in business for
approximately twenty years and has developed a clientele of national and
international companies. Under the relationship with the Company, New America
will identify surplus commercial real estate properties which can be purchased
through the use of cash and/or Trade Credits as contemplated in the Company's
Business Plan. The Company will analyze such surplus commercial real estate
properties in its normal course of business and propose transactions to the
corporate sellers as appropriate. The Company believes that the access to the
approximately 3,000 New America real estate professionals will significantly
augment the sourcing activities of the Company's 8 independent contractors and
will therefore greatly increase the Company's access to surplus commercial real
estate properties.
In addition, New America will also perform certain real estate due diligence
functions requested by the Company for those properties the Company is
considering purchasing. Such real estate due diligence functions include
property inspections, market analyses, identification of comparable sales etc.
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The New America member commercial real estate firm local to the location of the
property will perform these functions. The Company believes that having a
competent, local commercial real estate brokerage firm assist in performing
these real estate due diligence functions will enable the Company to more
precisely structure its proposed transactions to sellers, which will increase
the potential closing of the transactions.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The period from its organization, on May 28, 1996 to December 31, 1996 was an
organizational and developmental one for the Company. Based upon
pre-organizational work, the Company immediately (June 1996) secured contracts
with Active Asset Recovery, Inc. and Capital Credit Corporation, as described in
Part I, Item 1, above. This enabled the Company promptly to proceed with
implementation of its Business Plan.
In order to understand the significance of the Company's achievements in 1996,
it is necessary to know the status of Countertrade as applied to real estate and
accounts receivable portfolios as of May, 1996, when the Company was organized.
For most of its business history, the Countertrade Industry (including Active)
was engaged in purchasing aging, distressed and/or obsolete inventories for
Trade Credits which were primarily used as partial payment for its client's
media and advertising expenses. In the early 1990s, various Countertrade firms
began to expand their use of Countertrade to surplus and underperforming real
estate. Active, for example, established Active Asset Recovery, Inc. as a
separate operating company specifically to address surplus real estate
opportunities using Countertrade. Active also hired Andreas V. Kissal (now the
Company's President/CEO) to expand its real estate-related Countertrade
business.
As a result, however, of closing relatively few real estate transactions (as
compared to their traditional inventory-related Countertrade business),
Countertrade firms began to include real estate as part of their surplus
inventory-related Countertrade business, de-emphasizing real estate as a
separate Countertrade business line. Active, for example, has substantially
reduced the personnel solely dedicated to potential real estate business and
currently primarily relies on two real estate brokerage firms (neither of which
is New America) to source, structure and price potential real estate-related
Countertrade transactions.
However, the Company was organized in the belief that there is significant
potential revenue to be realized from its business of applying cash and
Countertrade to solve the problem of achieving full book value for a
corporation's surplus real estate. The Company believes that it is uniquely
positioned to successfully compete for a seller's surplus real estate as a
result of:
1. Its relationship with New America wherein New America sources surplus
real estate for the Company and assists in the real estate due diligence
process.
2. Its relationship with Active wherein Active, as the largest
international Countertrade firm headquartered in the United States, is
the sole supplier of Trade Credits for the Company's proposed
transactions. Active is aware
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of the Company's decision to select them as the Company's sole Trade Credit
supplier and consequently, in certain potential transactions, Active
invites the Company to participate in the structuring and closing of real
estate transactions where the individual real estate property or portfolio
has been sourced or identified by Active.
The Company believes that such invitation by Active of the Company into certain
real estate Countertrade transactions is also, in part, based on:
(a) Active's recognition of the Company's real estate expertise including
access to New America.
(b) The Company's thorough understanding of Trade Credits and the
capabilities of Active. This understanding of Trade Credits enables
the Company to more precisely structure transactions to sellers of
surplus real estate which the Company believes will increase the
potential closing of the transactions.
(c) The personal relationships of Andreas V. Kissal, President/CEO of the
Company, who was employed at Active from December, 1993 to February,
1997 as Senior Vice President - Trade Finance, with key executives and
salesman at Active.
In addition, the Company believes that Active's ability (unique to the
Countertrade industry) to insure its Trade Credits and to provide a liquidity
facility secured by its insured Trade Credits has substantial financial value to
sellers of surplus real estate and will enhance the Company's ability to close
its transactions.
3. Its internal real estate experience and expertise which enable the Company to
better understand and address the needs of the sellers of surplus commercial
real estate.
4. Its ability to offer cash as part of the consideration in the purchase of
surplus real estate. The amount of cash offered by the Company is generally 60%
or less of the Company's estimated current market value of the real estate
property. The Company sources such cash from commercial real estate lending
institutions selected by the Company primarily based on the characteristics of
the real estate property purchased. The cash secured from such commercial real
estate lending institutions and paid by the Company as part of the purchase
consideration is secured by a first mortgage on the property.
By providing cash to the sellers of surplus commercial real estate, the Company
minimizes the amount of the Trade Credits necessary to complete a proposed
transaction.
5. Its ability to take title to the real estate property pending final re-sale
which eliminates the on-going cost of the property ownership to the seller.
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6. Its ability to structure a cash and Countertrade transaction for surplus real
estate property which enables the seller to realize an economic value
substantially in excess of the property's current market value.
The Company also believes that its ability to successfully develop, sub-divide
or operate the surplus real estate it acquires pursuant to its cash and
Countertrade transactions will enable the Company to close additional
transactions.
Cash Requirements for the Next Twelve Months
The Company believes that 15 proposed real estate transactions currently in
negotiation appear promising for ultimate closing (with an estimated minimum
gross profit of $5,475,000)(see Item I "Description of the Business", "Real
Estate Activities" above). The Company forecasts that of these 15 promising
transactions, a minimum of one-half of these will close within a 12 month period
generating a minimum gross profit of approximately $2,500,000 and a minimum of 3
such transactions will close by the end of the third quarter, 1997. These 3
closed transactions are forecasted to generate $750,000 in gross profits.
Forecasted gross profits, however, are realized only when the acquired real
estate is re-sold to a third party purchaser. In that regard, the Company
anticipates that the $750,000 in gross profits forecasted pursuant to the 3 real
estate transactions will not be realized until a minimum of 3 months after the
closing of the transactions.
In addition, the Company also forecasts the closing of its acquisition of the
285 residential building lots in the community known as Highpoint Country Club
(see Item I "Description of the Business", "Additional Real Estate Activities"
above). Assuming such closing, the Company forecasts in the next 12 months that
a minimum of 80 of the 285 residential building lots with the homes erected by
the Company on the lots will be sold to qualified purchasers. The Company
forecasts that the sale of these 80 lots all with completed home will generate a
minimum of $800,000 in gross profits.
As of June 6, 1997, the Company has sufficient operating capital to fund its
current business operations for approximately 4 months or through the end of the
third quarter, 1997. While the company does forecast the acquisition of 3
surplus commercial real estate properties pursuant to proposed transactions
currently in negotiation, there is no assurance that the Company will be able to
re-sell the respective real estate properties in a time frame sufficient for the
Company to continue its operations. In that regard, the Company anticipates an
additional public offering will be filed pursuant to Form SB-2 to generate
additional funds for operating capital.
ITEM 3. DESCRIPTION OF PROPERTY
Real Estate
Except as has resulted from its business activities to date, the Company does
not own any real estate. The Company maintains three offices, all in leased
premises. The Company's operational offices are located at One Montage Mountain
Road, Moosic, Pennsylvania 18507 where the Company leases approximately 1,775
sq. ft. from a non-related third party. The rental rates are:
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Rental Period Monthly Rent
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6/1/96 - 5/31/97 $1,500
6/1/97 - 5/31/98 $1,575
6/1/98 - 5/31/99 $1,654
The Company considers the premises adequate for its purposes for the foreseeable
future. The Company leases substantially all of its office furniture and
equipment from nonrelated third parties.
The Company leases its current executive office in New York City, which consists
of approximately 1,000 sq. ft., from a nonrelated third party at a rental rate
of $4,000 per month for a term through December 31, 1998. The office furniture
and certain equipment are included in the sublease; the Company owns a computer,
printer and fax machine.
The Company's branch office in Tampa, Florida is operated by a representative
(independent contractor) of the Company at her expense, subject to reimbursement
by the Company of office expenses.
As noted, under the Company's original business plan, it did not intend to
develop or operate real estate. Rather its business was to acquire surplus real
estate, where the current market value was less than the current book value, by
means of cash and/or Trade Credits and then to immediately sell the acquired
real estate. The Company recognized that it might not have an immediate buyer
for every property and therefore could be required to hold property as
"inventory" pending re-sale. In the absence of development or operation plans,
such property was not to be regarded as "Plant, Property and Equipment" but only
as assets held for sale. As of May 28, 1997 the Company was holding as
"inventory" a 45,360 sq. ft. office building located in Middletown, Ohio. In
addition, the Company was in the process of closing the acquisition of an 11,220
sq. ft. manufacturing building located in Clarissa, Minnesota.
Recently, the Company adjusted its business plan in recognition that it could
develop more transactions if it were willing to acquire surplus or
underperforming real estate in the absence of a current purchaser, even if this
meant that the Company would have to develop, sub-divide, or operate such real
estate for an indeterminate period. Based upon this additional business line,
the Company has entered into a Letter of Intent to acquire 285 residential
building lots in a gated Country Club community known as "Highpoint Country
Club" located in Montague, New Jersey. The Company is acquiring the property for
$6,496,250. Management projects building out such property within approximately
three years and realizing an estimated $30,000,000 in gross revenues, with an
expected gross profit of $6,000,000 or 20% of the estimated gross revenues.
Closing of the transaction is dependent upon the Company's ability to secure
approximately $3,000,000 required for the purchase price and marketing and
development costs. The estimate of the gross revenues is based upon current
market conditions, using current estimated market values for the residential
building lots including golf course and lake front lots, is anticipatory and is
based on the Company's projections and therefore should not be relied upon as an
assurance or guarantee that such results will be achieved.
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Real Estate. Except under special circumstances, the Company does not intend to
develop or operate real estate. Rather its business is to acquire surplus real
estate, where the current market value was less than the current book value, by
means of cash and/or Trade Credits and then to immediately sell the acquired
real estate. However, the Company may not have an immediate buyer for every
property and therefore may be required to hold property in "inventory" pending
re-sale. In the absence of development or operation plans, such property should
not be regarded as "Plant, Property and Equipment" but only as assets held for
sale. As of June 4, 1997 the Company was holding the office building located in
Middletown, Ohio in inventory pending re-sale. In addition, the Company was in
the process of closing of a manufacturing facility located in Clarissa,
Minnesota which will be held in inventory pending re-sale.
As noted above, however, the Company has adjusted its Business Plan to include
the development and operation of real estate where the full value can only be
realized from such business operations, as contrasted with simply holding the
property in inventory for immediate re-sale. The Company has entered into a
Letter of Intent for the acquisition of 285 residential building lots as
discussed above. The Company expects to "build out" such property and,
accordingly, such property will be considered as "Plant, Property and Equipment"
of the Company.
Contractual Assets
Agreement with Active Asset Recovery, Inc. The Agreement with Active is
essential to USPI generating any revenues from real estate transactions. The
Terms of the Agreement stipulate that relationship between USPI and Active will
commence on June 12, 1996 and extend for a period of three years. The terms
further state that after May 1, 1997 either party to the Agreement may terminate
the Agreement by providing the other party with sixty (60) days prior notice of
termination. Should the Agreement between USPI and Active be terminated it would
be detrimental to the Company's ability to generate revenue from real estate
transactions. For USPI to remain a viable enterprise it would be necessary for
USPI to establish a similar relationship with another trading company. USPI
currently has no such similar relationship nor does it anticipate any in the
near future.
Agreement with Capital Credit Corporation. The Agreement with Capital Credit
Corporation is essential to USPI generating any revenues from portfolios of bad
debt. The Terms of the Agreement stipulate that the relationship between USPI
and CCC will commence on June 24, 1996 and allows for a percentage of the debt
Collected. For USPI to generate revenues from the participation in bad debt
collections will require that either USPI enter into a new agreement with
Active, modify the existing Agreement with Active, or enter into a similar
agreement with another trading company for the issuance and redemption of Trade
Credits. Active has not yet consented to participate in the collection of bad
debts as a trading company and the issuer and redeemer of Trade Credits, nor is
USPI aware if Active would consent to such a new agreement or consider a
modification of the existing Agreement. Should Active not participate in bad
debt collections as the trading company it would be necessary for USPI to
establish a similar relationship with another trading company. USPI currently
has no such similar relationship nor does it anticipate any in the near future.
11
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) The following table sets forth certain information with respect to the
beneficial ownership of the Company's voting securities by each person who,
to the knowledge of the Company, on May 28, 1997 was the owner of 5% or more
of the outstanding shares on that date:
(3) Amount
(2) Name and and nature (4) Per-
(1) Title address of of beneficial Cent of
of Class beneficial owner ownership Class
- --------- ---------------- ------------- ---------
Common Jeffrey R. Pirhalla 386,050 shs. L&B(1) 8.7%(2,3)
2419 N. Main Ave.
Scranton, PA 18508
Common Kathryn K. Berman 879,000 shs. L&B(1) 19.8%(2,3,4)
R.R.#1, Box 1153
Carbondale, PA 18407
Common Richard R. Rozzi 560,000 shs. L&B(1) 12.6%(2)
86 Pancake Hollow Road
Highland, New York 12528
Common Richard C. Fox 45,000 shs. L&B(1) 12.3%(2,5,6)
P.O. Box 1097 500,000 shs. B1
Pecos, New Mexico 87552
Common InvestAmerica Fund, Inc. 500,000 shs. L&B(1) 11.3%(2,7)
P.O. Box 1097
Pecos, New Mexico 87552
Common First Equitable
Properties, Inc. 300,000 shs. L&B(1) 6.8%(2,8)
295 Greenwich Street, #208
New York, New York 10007
Common Rod L. Munyon 200,000 shs. L&B(1) 4.5%(2,8)
180 Washington Avenue
Nutley, New Jersey 07110
(1) "L" means legal ownership; "B" means beneficial ownership.
(2) Based upon 4,440,000 shares issued and outstanding as of May 28, 1997.
(3) Originally, upon incorporation of the Company, Mr. Pirhalla and Mrs. Berman
received 1,110,000 shares each. Since, however, they have transferred a
portion of their shares to persons whom they believe can assist the Company
in achieving its business plans. The shares shown are the balances held as
of May 28, 1997.
(4) Mrs. Berman disclaims any interest in the 20,000 shares held by her
daughter, two stepsons, stepdaughter and for the benefit of her six
grandchildren.
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(5) This percentage includes the 500,000 shares owned by InvestAmerica Fund,
Inc. of which Mr. Fox is the major shareholder.
(6) Mr. Fox disclaims any interest in the 5,000 shares held by his brother.
(7) This percentage represents the 500,000 shares also included in the
percentage shown for Mr. Fox.
(8) Mr. Munyon originally received 500,000 shares, of which 300,000 shares were
transferred to First Equitable Properties, Inc.
(b) The following table sets forth certain information with respect to the
beneficial ownership of the Company's voting securities by each director,
each executive officer, and all directors and executive officers as a group
as of May 28, 1997:
(3) Amount
(2) Name and and nature (4) Per-
(1) Title address of of beneficial Cent of
of Class beneficial owner ownership Class
- --------- ---------------- ------------- --------
Common Jeffrey R. Pirhalla 386,050 shs. L&B(1) 8.7%(2,3)
2419 N. Main Ave.
Scranton, PA 18508
Common Kathryn K. Berman 879,000 shs. L&B(1) 19.8%(2,3,4)
R.R.#1, Box 1153
Carbondale, PA 18407
Common Thomas J. Bell 20,000 shs. L&B(1) .5%(2)
1034 Electric Street
Scranton, PA 18509
Common Andreas V. Kissal -0- -0-
426 85th Street, #3A
New York, New York 10028
Common All officers and
directors as a
group (4) 1,285,050 shs. L&B(1) 29.0%(2)
(1) "L" means legal ownership; "B" means beneficial ownership.
(2) Based upon 4,440,000 shares issued and outstanding as of May 28, 1997.
(3) Originally, upon incorporation of the Company, Mr. Pirhalla and Mrs. Berman
received 1,110,000 shares each. Since, however, they have transferred a
portion of their shares to persons whom they believe can assist the Company
in achieving its business plans. The shares shown are the balances held as
of May 28, 1997.
(4) Mrs. Berman disclaims any interest in the 20,000 shares held by her
daughter, two stepsons, stepdaughter and for the benefit of her six
grandchildren.
(c) Changes in Control. There are no arrangements, known to the Company, which
may at a subsequent date result in a change in control of the Company.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(a) Founders. The Company was founded by Mr. Jeffrey R. Pirhalla and Mrs.
Kathryn K. Berman, who may be considered the promoters of the Company.
(b) Directors and Executive Officers. The directors and executive officers of
the Company are:
Name Age Office
---- --- ------
Andreas V. Kissal 51 President/Chief Executive Officer
Jeffrey R. Pirhalla 32 Chief Operating Officer, Treasurer, Director
Kathryn K. Berman 51 Secretary, Director
Thomas J. Bell 53 Director
Mr. Pirhalla and Mrs. Berman have been directors since the incorporation of the
Company. Mr. Bell became a director in November, 1996. The directors hold office
until the next annual meeting of shareholders of the Company or until successors
are elected and qualified. Company officers hold office until the first meeting
of directors following the annual meeting of shareholders and until their
successors are elected and qualified, subject to earlier removal by the Board of
Directors.
Andreas V. Kissal. Mr. Kissal is President and Chief Executive Officer of United
States Properties, Inc., having joined the Company on March 1, 1997. Prior to
joining the Company, Mr. Kissal was Senior Vice-President of Trade Finance with
Active International from December, 1993. Mr. Kissal has a long background in
real estate and real estate financing, including most recently, prior to joining
Active, having been Vice President - Real Estate and Mortgage-Backed Securities
for Citibank, N.A. from 1989 to December 1993. From 1986 to 1989 he headed
Bankers Asset Exchange, which he had founded, which worked with AT&T to provide
a technology-based market for community banks to originate residential and
commercial mortgages for distribution to institutional investors. From 1981 to
1986 he headed The First Boston Capital Group, Inc., which he had founded, which
developed "SHELTERNET" (a nationwide network applying technology to the
residential real estate market) into an annual volume in excess of $1.2 billion
in mortgages.
Jeffrey R Pirhalla. Mr. Pirhalla is Chief Operating Officer, Treasurer and a
Director of United States Properties, Inc. is a Pennsylvania Licensed Real
Estate Broker and also a Pennsylvania State Certified General Appraiser, with
over ten years of real estate management, brokerage and valuation experience. In
1984, Mr. Pirhalla was employed by Hilton Hotels and became experienced in the
Food and Beverage Division, Rooms Division, and hotel audit procedures. In 1987,
Mr. Pirhalla joined S & A Restaurant Corp., a subsidiary of Pillsbury, Inc.,
where he was responsible for corporate property management, accounting,
reconciliation of profit and loss statements, and unit productivity, with
management responsibility for multiple locations in North Carolina, New Jersey,
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California, New York, Florida and Pennsylvania. In 1989, Mr. Pirhalla joined an
affiliate (franchisee) of Holiday Inn, for which he developed the Streamers
Night Club concept. Also in 1989, Mr. Pirhalla secured real estate licenses in
New Jersey and New York and joined ERA Curabba in New York, where he was
responsible for U.S. and international cooperative real estate sales and
development contracts. In 1991, Mr. Pirhalla was named Vice President of
Scranton Appraisal Group, an appraisal and consulting firm specializing in
property analysis, special-use and condemnation. In September, 1992 Mr. Pirhalla
was contracted as a Field Inspector to perform disaster inspections for the
Federal Emergency Management Agency (FEMA) in Florida, following Hurricane
Andrew. In 1994, Scranton Appraisal Group formed two affiliates, Scranton
Development Group, a commercial real estate brokerage firm, and Environmental
Lead Services, Inc., an environmental consulting firm specializing in federal
compliance environmental site assessments, especially lead paint analysis, and
Mr. Pirhalla was named Vice President of both affiliates. Mr. Pirhalla resigned
from those companies in May 1996 to join United States Properties, Inc.
Kathryn K. Berman. Mrs. Berman is Secretary and a director, has been employed as
an Executive Assistant by the CPA firm, Parente, Randolph, Orlando and Carey, in
Scranton, Pennsylvania from 1989 to November 1993 and again from May, 1994 to
the present. From November, 1993 to May, 1994 she was a housewife. In 1992, she
became President of Keough-Kirkbride, Inc., a management consulting firm in
Scranton specializing in purchasing and auctioning real estate for RTC, FDIC,
and REO properties held by banks nationally. Keough-Kirkbride, Inc. is retained
as a consultant to the Company and Mrs. Berman receives compensation from the
consulting fees paid to her corporation.
Thomas J. Bell. Mr. Bell, age 53, is a Director of the Company. He has spent his
career in the insurance industry and holds Pennsylvania licenses as a broker and
as an excess and surplus broker. He currently serves as Managing Partner of
Joyce, Jackman & Bell Insurors, a commercial and corporate insurance company
based in Scranton, Pennsylvania, which he joined as a general partner in 1988.
From 1973 to 1988, Mr. Bell was President of Thomas J. Bell Insurance, a
full-service insurance agency. Since May, 1996, he has also provided business
consulting services to clients, including the Company.
(c) Advisory Board of Directors. The current members of the Company's Advisory
Board of Directors are:
Beryl Wolk, Chairman of CPNM (Cable/Print/Network Marketing, Inc.), a
leading multi-media marketing firm. Mr. Wolk was an innovator in the use of
newspapers for the distribution of advertising inserts, with over 175
national accounts. Mr. Wolk also co-founded cable television's largest
circulation magazine.
William Grimes, President of Zenith Media, USA (Cordiant, PLC). Mr. Grimes
was President and CEO of ESPN (1982-1988), President and CEO of Univision
Holdings, Inc. (1988-1992), President/COO and President/CEO of Multimedia,
Inc. (1991-1983).
15
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Herman Rush, Executive Producer of the Montel Williams Show. Mr. Rush has
spent over thirty years in executive, production and sales positions in the
entertainment industry. Mr. Rush was CEO of the Columbia Pictures Television
Group and a member of the Board of Directors of Columbia Pictures
Industries, Inc., Chairman and CEO of Coca Cola Tele-Communications, Inc.
and Sr. Vice President of the Entertainment Business Sector of The Coca-Cola
Company.
Robert Cort, a principal in the Cort-Madden Company. Mr. Cort has produced
over forty motion pictures in the last decade and served as President of
Interscope Communications and as Executive Vice President of Columbia Motion
Pictures.
(d) Employees. As of June 4, 1997, the Company had four employees, Mr. Kissal,
Mr. Pirhalla, an office manager and a secretary. Mrs. Berman (through her
corporation, Keough-Kirkbride, Inc., which is retained as a consultant) receives
compensation.
(e) Independent Contractors. Commencing in August, 1996, the Company recruited
independent contractor telemarketers who would contact corporations which were
potential sellers of surplus and/or underperforming real estate and solicit the
opportunity to participate in the disposition of such real estate. As
compensation, such independent contractors will receive approximately 15% of the
net profit derived by the Company from any transaction sourced by such
independent contractor. As of June 4, 1997, the Company had 8 such independent
contractors. Seven of these operate from the operations office in Moosic,
Pennsylvania and one operated from the Tampa, Florida branch office. Because of
the relationship with New America Network, Inc. (see Part I, Item 1, "Business
of the Company"), the Company is not presently seeking additional independent
contractors to source potential transactions.
ITEM 6. EXECUTIVE COMPENSATION.
Officer/Employee Compensation
As of May 28, 1997 the Company has an employment agreement only with its
President/Chief Executive Officer, Andreas V. Kissal. Both Mr. Pirhalla and Mrs.
Berman have been employed under oral, at will, agreements since the organization
of the Company.
During 1996, Mr. Pirhalla and Mrs. Berman were each to receive compensation at
the rate or $1,384 per week for 33 weeks, or a total of $45,672. However, due to
a shortage of working capital during 1996, Mr. Pirhalla received only $33,216,
while $12,456 was accrued and Mrs. Berman received only $34,600, while $11,072
was accrued.
Mr. Kissal was employed as of March 1, 1997 at an annual salary of $150,000
payable bi-weekly.
None of Mr. Pirhalla, Mrs. Berman, or Mr. Kissal has any stock options, stock
appreciation rights ("SAR") or deferred compensation. However, the Company's
Board of Directors has adopted an Incentive Stock Option Plan which was approved
16
<PAGE>
by the stockholders at the Annual Meeting held June 4, 1997 and it is
anticipated that options under such plans will be issued to various persons,
including the officers and directors.
Director Compensation
None of the directors receives compensation for services as a director.
ITEM 7. CERTAIN RELATIONSHIPS AND TRANSACTIONS.
The Company was incorporated in Pennsylvania on May 28, 1996 by Jeffrey R.
Pirhalla and Kathryn K. Berman who were the initial directors and officers and
who continue as directors and officers of the Company. Upon incorporation, Mr.
Pirhalla and Mrs. Berman each received 1,110,000 shares of Common Stock for
investments of $1,100 each. As of May 28, 1997, Mr. Pirhalla is a Director,
Chief Operating Officer and Treasurer of the Company and Mrs. Berman is a
Director and Secretary of the Company. Shortly after its incorporation, the
Company issued 1,050,000 shares of its Common Stock to Richard C. Fox (50,000
shares), InvestAmerica Fund, Inc. (500,000 shares) and Rod L. Munyon (500,000
shares) at a price of $.001 per share, for total consideration of $1,050.
These investments provided the initial capitalization of the Company.
Following its organization, the Company made an offering, under Rule 504 of
Regulation D, of 160,000 shares of its Common Stock to two individuals, Richard
R. Rozzi and John L. Patten at a price of $.25 per share, and secured total
proceeds of $40,000.
In early December, 1996, the Company entered into a Warrant Agreement with
certain investors (unrelated except for First Equitable Properties, Inc.) for
the issuance of Common Stock Purchase Warrants for the purchase of up to
1,000,000 shares of its Common Stock at a price of $.50 per share. On May 20,
1997 the remaining unexercised Warrants were canceled; as of that date 870,000
Warrants had been exercised, providing the Company with total proceeds of
$435,000.
Since incorporation, Mr. Pirhalla and Mrs. Berman have solicited the assistance
of various individuals to develop and expand the Company's business. In this
connection, both have transferred shares to such individuals from their personal
holdings, reducing their original holdings of 1,110,000 shares each to 386,050
and 879,000 respectively as of May 28, 1997.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's Articles of Incorporation, as amended, provide for the issuance of
20,000,000 shares of Common Stock having a par value of $.001 per share and
5,000,000 shares of undesignated Preferred Stock having a par value of $.001 per
share.
17
<PAGE>
Common Stock
As of May 28, 1997 there were 4,440,000 shares of the Company's Common Stock
issued and outstanding. Common Stock shareholders are entitled to cast one vote
for each share at all shareholders' meetings for all purposes, including the
election of directors. Holders share equally on a per share basis in dividends
that may be declared by the Board of Directors out of funds legally available
after dividend distributions to holders of Preferred Stock. Upon liquidation or
dissolution, any assets remaining after payment of creditors and after
distribution of accrued and unpaid dividends to holders of Preferred Stock will
be available for distribution to holders of the Company's Common Stock. Shares
of Common Stock are not redeemable, and have no conversion rights. The Common
Stock does not have cumulative voting rights, which means that the holders of
more than fifty percent of the Common Stock voting for election of directors can
elect one hundred percent of the directors of the Company if they choose to do
so. The Company has not paid any dividends on its Common Stock and it is not
anticipated that any dividends will be paid in the foreseeable future. Dividends
upon Preferred Shares must have been paid in full for all past dividend periods
before distribution can be made to the holders of Common Stock; no dividends on
the Preferred Shares have been declared, however. In the event of a voluntary or
involuntary liquidation, all assets and funds of the Company remaining after
payments to the holders of Preferred Stock will be divided and distributed among
the holders of Common Stock according to their respective shares. No holder of
Common Stock has any preemptive or other right to subscribe for or purchase any
part of any new or additional issue of Common Stock or securities convertible
thereunto.
Preferred Stock
To date, the Company has not designated or issued any of the 5,000,000
authorized shares of Preferred Stock. If and when designated, the shares of
Preferred Stock will have such limitations, rights and preferences as the Board
of Directors may designate in an authorizing resolution. Approval of Common
Stockholders for the designation and issuance of shares of the Preferred Stock
is not required.
Dividend Policy
The Company has had only limited operations, has had no earnings or net profits,
and has not paid any cash dividends on its Common Stock and the Board of
Directors has no present intention of declaring any cash dividends. The
declaration and payment of dividends in the future will be determined by the
Board of Directors in light of conditions then existing, including the Company's
earnings, financial condition, capital requirements, and other factors.
18
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
(a) The Company's Common Stock is traded on the NASDAQ Bulletin Board.
(b) The Company's Common Stock was listed on approximately January 13, 1997,
first traded on January 16, 1997 with the opening regular quotations also on
January 16, 1997 when the Common Stock was priced at $2.00 bid, $2.50 asked.
(c) During 1997 its high and low bid and asked prices were as follows:
High Bid Low Bid High Ask Low Ask
-------- ------- -------- -------
First Quarter $6.00 $2.00 $6.50 $2.50
Second Quarter $6.50 $3.00 $7.25 $4.9275
On June 5, 1997 the closing prices of the Company's Common Stock were $6.00 bid
and $6.375 asked, as quoted on the NASDAQ Bulletin Board.
To date no dividends have been declared or paid on the Common Stock. (See
Part I, Item 8, "Dividend Policy")
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings. The Company is not
aware of any legal proceedings pending, threatened or contemplated against any
of its officers or directors, respectively, in their capacities as such.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Company's auditor for interim periods of 1996 was James A. Rosa, CPA. The
Company's auditor for the fiscal year ended December 31, 1996 is Marks Shron &
Company, LLP. The change was due to the desire to obtain a larger firm, with
real estate accounting experience, and there have been no disagreements with
respect to accounting and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
As of May 28, 1997 the Company had 4,440,000 shares of its Common Stock issued
and outstanding, of which 3,350,000 shares were issued in transactions exempt by
19
<PAGE>
reason of Section 4(2) of the Securities Act of 1933, as amended, and 1,090,000
were issued in transactions exempt by reason of Rule 504 of Regulation D
promulgated pursuant to Section 3(b) of the Securities Act of 1933, as amended.
On May 28, 1996, in connection with its formation, the Company issued 1,110,000
to each of its two founders, Jeffrey R. Pirhalla and Kathryn K. Berman at the
par value of $.001, for total consideration of $2,220. The issuance was exempt
by reason of Section 4(2) of the Securities Act of 1933, as amended.
Following its formation, the Company made a private placement of 1,050,000
shares to Richard C. Fox (50,000 shares), InvestAmerica Fund, Inc. (500,000
shares) and Rod L. Munyon (500,000 shares) at the par value of $.001 per share
for total proceeds of $1,050. The issuance was exempt by reason of Section 4(2)
of the Securities Act of 1933, as amended.
On June 27, 1996, the Company engaged in a Rule 504 offering of 160,000 shares
of its Common Stock to two individuals (Richard R. Rozzi - 80,000 shares and
John L. Patten - 80,000 shares) at a price of $.25 per shares for total proceeds
of $40,000. The issuance was exempt by reason of Rule 504 of Regulation D
promulgated pursuant to Section 3(b) of the Securities Act of 1933, as amended.
Commencing approximately August 28, 1996, the Company engaged in a second Rule
504 offering of 25,000 shares of its Common Stock to residents of New York,
where the offering was registered. The offering price was $2.00 per share; all
25,000 shares were sold for total proceeds of $50,000. The issuance was exempt
by reason of Rule 504 of Regulation D promulgated pursuant to Section 3(b) of
the Securities Act of 1933, as amended.
On or about December 6, 1996, the Company authorized the issuance of Common
Stock Purchase Warrants for the sale of up to 1,000,000 Warrants, exercisable to
purchase up to 1,000,000 shares of the Company's Common Stock at an exercise
price of $.50 per share. Commencing approximately January 26, 1997 the Company
engaged in a further Rule 504 offering of such Warrants and the underlying
Common Stock to various investors, which offering was registered in New York
State. All Warrants were issued and as of May 20, 1997 Warrants for 870,000
shares had been exercised, providing the Company with total proceeds of
$435,000. On May 20, 1997 the Company canceled the outstanding unexercised
Warrants. The issuances of the Warrants and the underlying Common Stock were
exempt by reason of Rule 504 of Regulation D promulgated pursuant to Section
3(b) of the Securities Act of 1933, as amended.
Also on or about December 6, 1996, the Company issued 50,000 shares in
connection with a loan agreement. Of the total shares issued, 5,000 shares were
issued to the lender and 45,000 shares were held in escrow pending future loans.
As of May 27, 1997 the balance of the loan agreement was canceled and the 45,000
shares being held in escrow were being returned for cancellation. The issuance
of the shares was exempt by reason of Section 4(2) of the Securities Act of
1933, as amended.
20
<PAGE>
On January 17, 1997 two creditors converted their debts of $20,000 and $15,000
respectively into shares of the Company's Common Stock at a price of $1.00 per
share in an offering made under Rule 504 of Regulation D. The issuance of the
35,000 shares was exempt by reason of Rule 504 of Regulation D promulgated
pursuant to Section 3(b) of the Securities Act of 1933, as amended.
On May 13, 1997, the Company issued 30,000 shares for the acquisition of certain
real estate valued at $150,000 located in Clarissa, Minnesota. However, the
shares are being held in escrow pending closing of the transaction.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Pennsylvania law and the Company's Articles of Incorporation and
By-laws, officers and directors of the Company (and former officers and
directors) are entitled to indemnification from the Company to the full extent
permitted by law. The Company's Articles of Incorporation and By-laws generally
provide for such indemnification for claims arising out of the acts or omissions
of the Company's officers and directors in their capacity as such, undertaken in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
The conditions and extent of indemnification are set forth in the Articles of
Incorporation and By-laws of the Company and in the Indemnity Agreements between
the Company and each officer and director. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
officers, directors or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
Limitation On Liability
As permitted by Pennsylvania law, the Company's Articles of Incorporation, as
amended, provide that a director of the Company shall not be personally liable
for monetary damages for a breach of fiduciary duty as such, except for
liability for which such exculpation is proscribed by the Pennsylvania Business
Corporation Law. This provision is intended to afford the Company's directors
additional protection from, and limit their potential liability from, suits
alleging a breach of their duty of care. As a result of the inclusion of such a
provision, shareholders may be unable to recover monetary damages against
directors for actions taken by them which constitute negligence or gross
negligence or which are in violation of their fiduciary duties although it may
be possible to obtain injunctive or other equitable relief with respect to such
actions. If equitable remedies are found not to be available to shareholders for
any particular case, shareholders may not have any effective remedy against the
challenged conduct.
21
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Indemnity Agreement
In order to induce and encourage highly experienced and capable persons to serve
as directors and officers, the Company has entered into an Indemnity Agreement
with each director and officer presently serving the Company and will provide
the same agreement to future directors and officers as well as certain agents
and employees. The Agreement provides that the Company shall indemnify the
director and/or officer, or other person, when he or she is a party to, or
threatened to be made a party to, a proceeding by, or in the name of, the
Company. Expenses incurred by the indemnified person in any proceeding are to be
paid to the fullest extent permitted by applicable law. The Agreement may at
some time require the Company to pay out funds which might otherwise be utilized
to further the Company's business objectives, thereby reducing the ability of
the Company to carry out its projected business plans.
Director's and Officer's Liability Insurance
At present, the Company does not have any liability insurance for the benefit of
its officers and directors. It is probable that the Company does not currently
meet the underwriting requirements to obtain such insurance. In any event,
because of the expected cost of such insurance the Company has no present plans
to obtain such insurance.
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
UNITED STATES PROPERTIES, INC.
Date: June 9, 1997
By: /s/ Andreas V. Kissal
---------------------------------------------------------
Andreas V. Kissal, President and Chief Executive Officer
22
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INDEX TO FINANCIAL STATEMENTS
F. 1 Audited Financial Statements as of December 31, 1996
F.11 Compiled Financial Statements as of March 31, 1997
F.21 Proforma Balance Sheet
<PAGE>
AUDITED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
<PAGE>
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Financial Statements
For the Period from May 28, 1996 (inception)
to December 31, 1996
<PAGE>
Marks Shron
& CompanyLLP
- --------------------------------------------------------------------------------
Certified Public Accountants
To the Shareholders of
United States Properties Incorporated
We have audited the accompanying balance sheet of United States Properties, Inc.
(a Development Stage Company) as of December 31, 1996 and the related statements
of operations, cash flows and retained earnings for the period from May 28, 1996
(inception) to December 31, 1996, in accordance with standards established by
the American Institute of Certified Public Accountants. All information included
in these financial statements is the representation of the management of United
States Properties, Inc. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted the audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United States Properties, Inc.
as of December 31, 1996, and the results of its operations and its cash flows
for the period then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has experienced operating losses since
inception. The Company's financial position and operating results raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Marks Shron & Company LLP
-----------------------------
April 24, 1997
INAA --------------------------------------------------------------------------
G R O U P 111 Great Neck Road 275 Madison Avenue
INTERNATIONAL Great Neck, New York 11021 New York, New York 10016
NETWORK OF 516/466-6550 Fax: 516/466-5649 212/252-1600 Fax: 212/252-1515
ACCOUNTANTS
AND AUDITORS
<PAGE>
Page 2
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Balance Sheet
December 31, 1996
ASSETS
CASH $ 1,183
INVENTORY 8,545
FIXED ASSETS
Furniture, fixtures and equipment 3,093
Less: Accumulated depreciation 309
----------
2,784
ORGANIZATION COSTS - net of accumulated
amortization of $60 540
----------
$ 13,052
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts and accrued expenses payable $ 110,983
Payroll taxes payable 19,587
Loans from stockholders 24,000
----------
154,570
----------
STOCKHOLDERS' EQUITY
Common stock, .001 par value, authorized 20,000,000 shares,
3,505,000 shares issued and outstanding $ 3,505
Additional paid-in capital 83,702
Deficit accumulated during the development stage (228,725)
----------
(141,518)
----------
$ 13,052
==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 3
(Concluded)
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statement of Operations
For the Period from May 28, 1996 (Inception) to
December 31, 1996
REVENUES $ -
----------
EXPENSES
Salaries 53,828
Consulting fees 41,520
Professional fees 66,218
Payroll taxes 4,108
Rent 11,000
Travel and entertainment 16,755
Telephone 12,469
Postage and office expenses 3,470
Miscellaneous expenses 18,988
Depreciation 309
Amortization 60
----------
NET LOSS $( 228,725)
==========
LOSS PER SHARE $ (.07)
==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 4
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period from May 28, 1996 (Inception) to
December 31, 1996
<TABLE>
<CAPTION>
Number of Additional
Date Preferred Stock Common Shares Common Stock Paid in Capital
---- --------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
05/28/96 - 2,220,000 $ 2,220 $ -
05/28/96 - - - 350 (1)
06/27/96 - 160,000 160 39,840
08/08/96 - 1,000,000 1,000 -
08/20/96 - 50,000 50 -
09/25/96 - 25,000(2) 25 49,975
12/06/96 - 50,000 50 -
12/31/96 - - - (6,463)(3)
----- --------- -------- --------
12/31/96 - 3,505,000 $ 3,505 $ 83,702
===== ========= ======== ========
(1) Contribution of equipment
(2) Offering under SEC rule 504
(3) Fees paid to raise capital
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 5
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
For the Period from May 28, 1996 (Inception) to
December 31, 1996
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net loss $ (228,725)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 309
Amortization 60
Changes in operating assets and liabilities:
Increase in inventory (8,545)
Increase in organization costs (600)
Increase in accounts and accrued expenses payable 110,983
Increase in payroll taxes payable 19,587
-----------
Net Cash Used in Operating Activities (106,931)
-----------
INVESTING ACTIVITIES
Expenditures for furniture, fixtures and equipment (3,093)
-----------
Net Cash Used in Investing Activities (3,093)
-----------
FINANCING ACTIVITIES
Common stock issued 87,207
Loans from stockholders 24,000
-----------
Net Cash Provided by Financing Activities 111,207
-----------
CASH - December 31, 1996 $ 1,183
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 6
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
December 31, 1996
NOTE 1: ORGANIZATION
United States Properties Incorporation, ("The Company") was
organized in Pennsylvania in May, 1996 for the purpose of using
countertrade (commerced barter transactions) as a vehicle for
trading excesses in corporate real estate, portfolios of bad debts
and other, similar non-performing assets held by major
corporations. Corporate real estate refers to commercial real
property and commercial leases owned by major corporations.
Portfolios of bad debts refers to the accounts receivable of major
corporations, banks and credit card companies that are greater than
six months past due. The Company will derive revenue through the
generation of fees when transacting real estate and through a
percentage participation in bad debt collections. To date the
Company has not yet derived any fees from any countertrade
transactions involving real estate nor has it generated any
revenues from participation in bad debt collections.
Since its organization, the Company has established its business
offices, developed a network of agents to discover excesses in
corporate real estate and bad debt portfolios and related assets
and is negotiating a number of real estate transactions.
On June 12, 1996 the Company entered into an agreement
("Agreement") with Active Asset Recovery, Inc., ("Active") a wholly
owned subsidiary of Active International, Inc. Active
International, Inc. is a global trading company that develops
programs of countertrade for clients through the issuance of trade
credits redeemable by such clients. The Agreement stipulates that
the Company will be engaged as an independent contractor to act as
a finder to locate potential clients to enter into countertrade
with Active. Countertrade in this Agreement refers to a transaction
in which real property, interests in real property or other assets
are sold or leased to Active or the designee of Active in return
for, in whole or in part, trade credits issued and redeemed by
Active. The Agreement provides, among other things, that Active
shall have the right to pre-approve whether it desires to enter
into a proposed countertrade transaction with any potential client
at the time the Company first proposes a transaction with such
client. In the event that Active closes a corporate trading
transaction with a pre-approved client, as a direct result of
meetings caused by the Company, the Company will receive a finders
fee.
On June 27, 1996, the Company entered into an Agreement with
Capital Credit Corporation ("CCC"). CCC is a wholly owned
subsidiary of the Union Corporation which provides accounts
receivable management and related services to institutional,
commercial and government clients.
<PAGE>
Page 7
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
December 31, 1996
NOTE 1: ORGANIZATION (continued)
The agreement between the Company and CCC provides for the Company
to contact the chief financial officers of Fortune 1,000 companies
to ascertain the extent of their bad debt portfolios and to
determine if any of these companies have an interest in selling the
portfolios, or portions thereof, in a countertrade transaction
involving full or partial consideration for the debts in trade
credits. CCC will evaluate the portfolios of debt, or portions
thereof, and advise the Company of the bid that should be offered
for the portfolios or portions thereof. If such a countertrade
proposal is accepted CCC will agree to the collection of such debt.
CCC will receive 30% and the Company will receive 70% of the funds.
Should the Company be successful in negotiating a countertrade
transaction for portfolios of bad debt after they have been
reviewed and priced by CCC it would be contingent on the Company to
have Active or another trading company enter into such a
negotiation to issue and redeem for merchandise any trade credits
that may be exchanged in consideration for the purchase of the bad
debts. Currently such a contingency is not part of the Agreement
between the Company and Active nor is it known if the Agreement can
be amended or a new agreement developed between the Company and
Active, nor is it known if the Company can establish such a
relation with another company to effect such a transaction.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Reporting
------------------
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. Since inception,
the Company has sustained operating losses. Management is
continuing its efforts to negotiate and consummate countertrade
transactions. The ability of management to successfully complete
these transactions will significantly affect the Company's ability
to continue as a going concern. At this time, it cannot be
determined if these efforts will be successful. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
Recognition of Revenue
----------------------
The Company will recognize revenue when the transactions it
participates in are completed.
Fixed Assets
------------
Fixed assets are stated at cost. Deprecation is provided using the
straight-line method over the estimated asset lives.
Use of Estimates
------------------
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
<PAGE>
Page8
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
December 31, 1996
NOTE 3: RELATED PARTY TRANSACTIONS
Consulting Fees
---------------
The Company has engaged Keough-Kirkbide as a real estate
consultant. The firm will attempt to solicit real estate sellers'
interested in barter transactions at an annual retainer of $72,000,
and may be canceled at any time by either party. Keough-Kirkbide is
wholly owned by Kathryn Berman, a principal shareholder of the
Company.
Loans from Stockholders
-----------------------
Various stockholders have advanced funds to the Company. $10,000 of
this debt bears interest at 9.25% per annum payable monthly, with
the principal due on December 5, 1997. In 1997 the remaining
$14,000 of the debt was converted to 35,000 shares of common stock.
NOTE 4: INVENTORY
On August 8, 1996, the Company entered into an agreement with
Active whereby (1) the Company acquired 100% of the issued and
outstanding shares of United States Properties Ten, Inc. (formerly
Bull and Bear Properties, Inc.), a wholly owned subsidiary of Bull
and Bear, Inc. (the Seller) and (2) Active supplied the Seller with
$120,000 in trade credits. The principal purpose of the acquisition
was to acquire control of the corporation's major asset, a
commercial building located in Middletown, Ohio. The agreement
provides for the Company and Active to share equally in the
proceeds to be derived from the sale of the stock, and the Company
has pledged all the shares to collateralize Active's 50% interest
in these proceeds.
NOTE 5: CAPITAL STOCK
Common Stock
------------
On December 3, 1996 the Board of Directors authorized and issued
warrants to purchase 1,000,000 shares of the Company's common
stock. The warrants carry an exercise price of .50 per share and
expire December 1, 1997. At December 31, 1996 no warrants had been
exercised (see Note 8).
<PAGE>
Page 9
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
December 31, 1996
NOTE 6: CAPITAL STOCK (continued)
Preferred Stock
---------------
The Company is authorized to issue up to 5,000,000 shares of
Preferred Stock, no par value. The Preferred Stock may be issued in
series, each of which may vary, as determined by the Board of
Directors, as to the designation and number of shares in each
series, voting power of the holders thereof, dividend rate,
redemption terms and prices, voluntary and involuntary liquidation
preferences, and conversion rights and sinking fund requirements,
if any, of each series.
OTC Bulletin Board
------------------
On January 13, 1997 the Company received clearance of quotations on
the OTC Bulletin Board.
NOTE 7: INCOME TAXES
At December 31, 1996, the Company has net operating loss carry
forwards of approximately $228,000 available to reduce Federal
income taxes in years through 2011. The Company will not record a
tax benefit until realized.
NOTE 8: SUBSEQUENT EVENT
In 1997, 570,000 common stock warrants were exercised resulting in
proceeds of $285,000.
<PAGE>
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Financial Statements
March 31, 1997 and the Period
May 28, 1996 (Inception) to March 31, 1997
<PAGE>
[MARKS SHRON & COMPANY LETTERHEAD]
To the Shareholders of
United States Properties Incorporated
We have compiled the accompanying balance sheet of United States Properties
Incorporated (a development stage company) ("the Company") as of March 31, 1997
and the related statements of operations, cash flows and stockholders equity for
the three months then ended, and for the period from May 28, 1996 (Inception) to
March 31, 1997, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, the Company
has experienced operating losses since inception. The Company's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
May 20, 1997
/S/ MARKS SHRON & COMPANY, LLP
<PAGE>
Page 2
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Balance Sheet
March 31, 1997
ASSETS
CASH $ 60,430
INVENTORY 8,545
FIXED ASSETS
Furniture, fixtures and equipment 3,640
Less: Accumulated depreciation 464
----------
3,176
SECURITY DEPOSITS 3,483
ORGANIZATION COSTS -- net of accumulated
amortization of $90 510
----------
$ 76,144
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts and accrued expenses payable $ 104,220
Payroll taxes payable 29,545
Loans from stockholders 10,000
----------
143,765
----------
STOCKHOLDERS' EQUITY
Common stock, .001 par value, authorized
20,000,000 shares, 3,880,000 shares
issued and outstanding 3,880
Additional paid-in capital 274,663
Deficit accumulated during the development stage (346,164)
----------
(67,621)
----------
$ 76,144
=========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 3
(Concluded)
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statements of Operations
For the Three Months Ended March 31, 1997 and
for the Period from May 28, 1996 (Inception) to March 31, 1997
Three Months May 28, 1996
Ended (Inception) to
March 31, 1997 March 31, 1997
-------------- --------------
REVENUES
Interest income $ 140 $ 140
--------- --------
EXPENSES
Salaries 36,299 90,127
Consulting fees 19,376 60,896
Professional fees 7,152 73,371
Payroll taxes 2,614 6,723
Rent 14,000 25,000
Travel and entertainment 10,505 27,260
Telephone 6,712 19,181
Postage and office expenses 7,704 11,174
Filing fees 5,000 5,000
Miscellaneous expenses 8,030 27,018
Depreciation 155 464
Amortiztion 30 90
--------- ---------
117,577 346,304
--------- ---------
NET LOSS $(117,437) $(346,164)
========= =========
LOSS PER SHARE s $ (.03) $ (.09)
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 4
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period from May 28, 1996 (Inception) to
March 31, 1997
Number of Additional
Date Preferred Stock Common Shares Common Stock Paid in Capital
- ---- --------------- ------------- ------------ ---------------
05/28/96 - 2,220,000 $ 2,220 $ -
05/28/96 - - - 350(1)
06/27/96 - 160,000 160 39,840
08/08/96 - 1,000,000 1,000 -
08/20/96 - 50,000 50 -
09/25/96 - 25,000(2) 25 49,975
12/06/96 - 50,000 50 -
12/31/96 - - - (6,463)(3)
01/24/97 - 100,000 100 49,900 (5)
01/26/97 - 35,000 35 23,985 (4)
02/10/97 - 80,000 80 39,920 (5)
02/11/97 - 10,000 10 4,990 (5)
02/18/97 - 10,000 10 4,990 (5)
03/04/97 - 60,000 60 29,940 (5)
03/07/97 - 20,000 20 9,980 (5)
03/14/97 - 60,000 60 29,940 (5)
03/31/97 - - - (2,684)(3)
----------- --------- ------- --------
03/31/97 - 3,880,000 $ 3,880 $274,663
=========== ========= ======= ========
(1) Contribution of equipment
(2) Offering under SEC rule 504
(3) Expenses paid to raise capital
(4) Debt conversion
(5) Exercise of warrants
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 5
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
For the Three Months Ended March 31, 1997 and
for the Period from May 28, 1996 (Inception) to March 31, 1997
Three Months May 28, 1996
Ended (Inception) to
March 31, 1997 March 31, 1997
-------------- --------------
OPERATING ACTIVITIES
Net loss $ (117,437) $ (346,164)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 155 464
Amortization 30 90
Changes in operating assets and
liabilities:
Increase in inventory - (8,545)
Increase in organization costs - (600)
(Decrease) Increase in accounts and
accrued expenses payable (6,765) 104,220
Increase in payroll taxes payable 9,958 29,545
Increase in security deposits (3,483) (3,483)
---------- -----------
Net Cash Used in Operating
Activities (117,542) (224,473)
---------- -----------
INVESTING ACTIVITIES
Expenditures for furniture, fixtures
and equipment (547) (3,640)
---------- -----------
Net Cash Used in Investing
Activities (547) (3,640)
---------- -----------
FINANCING ACTIVITIES
Common stock issued 191,336 278,543
Loans from stockholders (14,000) 10,000
---------- -----------
Net Cash Provided by
Financing Activities 177,336 288,543
---------- -----------
NET INCREASE IN CASH 59,247 60,430
CASH - at beginning of period 1,183 -
---------- -----------
CASH - at end of period $ 60,430 $ 60,430
========== ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 6
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1997
NOTE 1: ORGANIZATION
United States Properties Incorporation ("The Company") was organized in
Pennsylvania in May, 1996 for the purpose of using countertrade
(commerced barter transactions) as a vehicle for trading excesses in
corporate real estate, portfolios of bad debts and other, similar
non-performing assets held by major corporations. Corporate real estate
refers to commercial real property and commercial leases owned by major
corporations. Portfolios of bad debts refers to the accounts receivable
of major corporations, banks and credit card companies that are greater
than six months past due. The Company will derive revenue through the
generation of fees when transacting real estate and through a
percentage participation in bad debt collections. To date the Company
has not yet derived any fees from any countertrade transactions
involving real estate nor has it generated any revenues from
participation in bad debt collections.
Since its organization, the Company has established its business
offices, developed a network of agents to discover excesses in
corporate real estate and bad debt portfolios and related assets and is
negotiating a number of real estate transactions.
On June 12, 1996 the Company entered into an agreement ("Agreement")
with Active Asset Recovery, Inc. ("Active") a wholly owned subsidiary
of Active International, Inc. Active International, Inc. is a global
trading company that develops programs of countertrade for clients
through the issuance of trade credits redeemable by such clients. The
Agreement stipulates that the Company will be engaged as an independent
contractor to act as a finder to locate potential clients to enter into
countertrade with Active. Countertrade in this Agreement refers to a
transaction in which real property, interests in real property or other
assets are sold or leased to Active or the designee of Active in return
for, in whole or in part, trade credits issued and redeemed by Active.
The Agreement provides, among other things, that Active shall have the
right to pre-approve whether it desires to enter into a proposed
countertrade transaction with any potential client at the time the
Company first proposes a transaction with such client. In the event
that Active closes a corporate trading transaction with a pre-approved
client, as a direct result of meetings caused by the Company, the
Company will receive a finders fee.
On June 27, 1996, the Company entered into an Agreement with Capital
Credit Corporation ("CCC"). CCC is a wholly owned subsidiary of the
Union Corporation which provides accounts receivable management and
related services to institutional, commercial and government clients.
<PAGE>
Page 7
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1997
NOTE 1: ORGANIZATION (continued)
The agreement between the Company and CCC provides for the Company to
contact the chief financial officers of Fortune 1000 companies to
ascertain the extent of their bad debt portfolios and to determine if
any of these companies have an interest in selling the portfolios, or
portions thereof, in a countertrade transaction involving full or
partial consideration for the debts in trade credits. CCC will evaluate
the portfolios of debt, or portions thereof, and advise the Company of
the bid that should be offered for the portfolios or portions thereof.
If such a countertrade proposal is accepted CCC will agree to the
collection of such debt. CCC will receive 30% and the Company will
receive 70% of the funds. Should the Company be successful in
negotiating a countertrade transaction for portfolios of bad debt after
they have been reviewed and priced by CCC it would be contingent on the
Company to have Active or another trading company enter into such a
negotiation to issue and redeem for merchandise any trade credits that
may be exchanged in consideration for the purchase of the bad debts.
Currently such a contingency is not part of the Agreement between the
Company and Active nor is it known if the Agreement can be amended or a
new agreement developed between the Company and Active, nor is it known
if the Company can establish such a relation with another company to
effect such a transaction.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Reporting
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. Since inception, the
Company has sustained operating losses. Management is continuing its
efforts to negotiate and consummate countertrade transactions. The
ability of management to successfully complete these transactions will
significantly affect the Company's ability to continue as a going
concern. At this time, it cannot be determined if these efforts will be
successful. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Recognition of Revenue
The Company will recognize revenue when the transactions it
participates in are completed.
Fixed Assets
Fixed assets are stated at cost. Deprecation is provided using the
straight-line method over the estimated useful lives.
Use of Estimates
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
<PAGE>
Page 8
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1997
NOTE 3: RELATED PARTY TRANSACTIONS
Consulting Fees
The Company has engaged Keough-Kirkbide as a real estate consultant.
The firm will attempt to solicit real estate sellers' interested in
barter transactions at an annual retainer of $72,000, and may be
canceled at any time by either party. Keough-Kirkbride is wholly owned
by Kathryn Berman, a principal shareholder of the Company.
Loans from Stockholders
Various stockholders have advanced funds to the Company. $10,000 of
this debt bears interest at 9.25% per annum payable monthly, with the
principal due on December 5, 1997. On January 26, 1997, $35,000 of the
debt was converted to 35,000 shares of common stock.
NOTE 4: INVENTORY
On August 8, 1996, the Company entered into an agreement with Active
whereby (1) the Company acquired 100% of the issued and outstanding
shares of United States Properties Ten, Inc. (formerly Bull and Bear
Properties, Inc.), a wholly owned subsidiary of Bull and Bear, Inc.
(the Seller) and (2) Active supplied the Seller with $120,000 in trade
credits. The principal purpose of the acquisition was to acquire
control of the corporations major asset, a commercial building located
in Middletown, Ohio. The agreement provides for the Company and Active
to share equally in the proceeds to be derived from the sale of the
stock, and the Company has pledged all the shares to collateralize
Active's 50% interest in these proceeds.
NOTE 5: CAPITAL STOCK
Common Stock
On December 3, 1996 the Board of Directors authorized and issued
warrants to purchase 1,000,000 shares of the Company's common stock.
The warrants carry an exercise price of .50 per share and expire
December 1, 1997. At March 31, 1997, 340,000 warrants had been
exercised.
<PAGE>
Page 9
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
March 31, 1997
NOTE 6: CAPITAL STOCK (continued)
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock, no par value. The Preferred Stock may be issued in series, each
of which may vary, as determined by the Board of Directors, as to the
designation and number of shares in each series, voting power of the
holders thereof, dividend rate, redemption terms and prices, voluntary
and involuntary liquidation preferences, and conversion rights and
sinking fund requirements, if any, of each series.
OTC Bulletin Board
On January 13, 1997 the Company received clearance of quotations on the
OTC Bulletin Board.
NOTE 7: INCOME TAXES
At December 31, 1996, the Company has net operating loss carry forwards
of approximately $228,000 available to reduce Federal income taxes in
years through 2011. The Company will not record a tax benefit until
realized.
<PAGE>
UNITED STATES PROPERTIES INCORPORATED
(A Development Stage Company)
Proforma Balance Sheet
March 31, 1997
<PAGE>
Marks Shron
& Company LLP
- --------------------------------------------------------------------------------
Certified Public Accountants
To the Board of Directors
United States Properties, Inc.
Mossic, Pennsylvania
We have compiled the accompanying proforma balance sheet of United States
Properties, Inc. ("Company") as of March 31, 1997.
The objective of this proforma financial information is to show what the
significant effects on the historical financial information might have been had
the Company purchased residential building lots known as High Point Country Club
on or before March 31, 1997. However, the proforma financial statement is not
necessarily indicative of the effects on financial position that would have been
attained had the above-mentioned transaction actually occurred on or before
March 31, 1997.
The accompanying presentation and this report were prepared for inclusion in SEC
Form 10-SB filing and should not be used for any other purpose.
A compilation is limited to presenting in the form of proforma financial
statements information that is the representation of management and does not
include evaluation of the support for the assumptions underlying the proforma
transactions. We have not examined or reviewed the accompanying proforma
financial statement and, accordingly, do not express an opinion or any other
form of assurance on them.
Marks Shron & Company LLP
June 11, 1997
<PAGE>
UNITED STATES PROPERTIES, INC.
Proforma Balance Sheet
March 31, 1997
(Unaudited)
This proforma Balance Sheet is presented as if United States Properties, Inc.
had purchased the residential building lots known as High Point Country Club on
March 31, 1997. It should be read in conjunction with the Financial Statements
and Notes thereto included in SEC Form 10-SB filing. In management's opinion,
all adjustments necessary to reflect the effects of the Purchase as of March 31,
1997 have been made. These adjustments have not been audited.
This proforma Balance Sheet is not necessarily indicative of what the actual
financial position would have been at March 31,1997, nor does it purport to
represent the future financial position of the Company.
Historical Adjustments Proforma
---------- ----------- -----------
(Unaudited)
Assets
Cash $ 60,430 $ -- $ 60,430
Security deposits 3,483 -- 3,483
Inventory 8,545 6,496,250(A) 6,504,795
Fixed assets 3,176 -- 3,176
Organization costs 510 -- 510
----------- ----------- -----------
$ 76,144 $ 6,496,250 $ 6,572,394
=========== =========== ===========
Liabilities
Accounts and accrued expenses
payable $ 104,220 $ -- $ 104,220
Payroll taxes payable 29,545 -- 29,545
Mortgages payable -- 4,122,500(B) 4,122,500
Loans from stockholders 10,000 -- 10,000
----------- ----------- -----------
143,765 4,122,500 4,266,265
----------- ----------- -----------
Stockholder Equity
Common stock 3,880 396(C) 4,276
Paid in capital 274,663 2,373,354(C) 2,648,017
Deficit accumulated during the
development stage (346,164) -- (346,164)
----------- -----------
(67,621) 2,373,750 2,306,129
----------- ----------- -----------
$ 76,144 $ 6,496,250 $ 6,572,394
=========== =========== ===========
See accountant's compilation report.
<PAGE>
UNITED STATES PROPERTIES, INC.
Proforma Balance Sheet
March 31, 1997
(Unaudited)
Notes:
(A) Represents the purchase price of the residential building lots pursuant to
the letter of intent from Highpoint Country Club Golf Associates Inc. dated
May 19, 1997 which is expected to close on or about June 30, 1997.
(B) Represents a mortgage assumed and a mortgage taken back by the seller on
the residential building lots.
(C) Represents stock issued of approximately $6.00 per share totaling
$2,373,750 issued at date of purchase.
<PAGE>
INDEX TO EXHIBITS
3.1 Articles of Incorporation of United States Properties, Inc.
3.2 Articles of Amendment of United States Properties, Inc.
3.3 By-Laws of United States Properties, Inc.
10.1 Contract of June 12, 1996 with Active Asset Recovery, Inc.
10.2 Contract of June 27, 1996 with Capital Credit Corporation
10.3 Indemnification Agreement with Jeffrey R. Pirhalla
10.4 Indemnification Agreement with Kathryn K. Berman
10.5 Indemnification Agreement with Richard C. Fox
10.6 Indemnification Agreement with Thomas J. Bell
10.7 Employment Agreement with Andreas V. Kissal
10.8 Indemnification Agreement with Andreas V. Kissal
21.1 Subsidiaries of the Registrant
23.1 Consent of Marks Shron & Company, LLP
23.2 Consent of Marks Shron & Company, LLP
27.1 Financial Data Schedule - May 28, 1996 to December 31, 1996
27.2 Financial Data Schedule - May 28, 1996 to March 31, 1997
<PAGE>
ARTICLES OF INCORPORATION OF
UNITED STATES PROPERTIES, INC.
<PAGE>
Commonwealth of Pennsylvania
----------------------------
ARTICLES OF INCORPORATION
(restated)
OF
UNITED STATES PROPERTIES, INC.
The undersigned, desiring to restate its Articles of Incorporation
under the laws of the Commonwealth of Pennsylvania, hereby adopts the following
amendment to its Articles of Incorporation, which supersedes the original
Articles of Incorporation and all amendments thereto:
1. The name of this corporation shall be:
UNITED STATES PROPERTIES, INC.
2. The initial registered office of the corporation is located at:
1 Montage Mountain Road
Moosic, Pennsylvania 18507
3. The corporation is incorporated under the provisions of the Business
Corporation Law of 1988.
4. This corporation may engage in any activity or business permitted under the
Business Corporation Law of 1988, and shall enjoy all the rights and privileges
of a corporation granted by the laws of the Commonwealth of Pennsylvania.
5. The aggregate number of shares which the corporation shall have authority to
issue is Twenty-five Million (25,000,000) shares, each having a par value of
one-tenth of a cent ($.001) per share, divided into:
5,000,000 Preferred Shares
and
20,000,000 Common Shares
A statement of the preferences, privileges, and restrictions granted to
or imposed upon the respective classes of shares or the holders thereof is as
follows:
A. Common Shares. The terms of the 20,000,000 Common Shares of the
corporation shall be as follows:
(1) Dividends. Whenever cash dividends upon the Preferred
Shares of all series thereof at the time outstanding, to the extent of the
preference to which such shares are entitled, shall have been paid in full for
all past dividend periods, or declared and set apart for payment, such
dividends, payable in cash, stock, or otherwise, as may be determined by the
Board of Directors, may be declared by the Board of Directors and paid from time
to time to the holders of the Common Shares out of the remaining net profits or
surplus of the corporation.
1
<PAGE>
(2) Liquidation. In the event of any liquidation, dissolution, or
winding up of the affairs of the corporation, whether voluntary or involuntary,
all assets and funds of the corporation remaining after the payment to the
holders of the Preferred Shares of all series thereof of the full amounts to
which they shall be entitled as hereinafter provided, shall be divided and
distributed among the holders of the Common Shares according to their respective
shares.
(3) Voting rights. Each holder of a Common Share shall have one vote
in respect of each share of such stock held by him. There shall not be
cumulative voting.
B. Preferred Shares. Prior to the issuance of any of the Preferred
Shares, the Board of Directors shall determine the number of Preferred Shares to
then be issued from the Five Million (5,000,000) shares authorized, and such
shares shall constitute a series of the Preferred Shares. Such series shall have
such preferences, limitations, and relative rights as the Board of Directors
shall determine and such series shall be given a distinguishing designation.
Each share of a series shall have preferences, limitations, and relative rights
identical with those of all other shares of the same series. Except to the
extent otherwise provided in the Board of Directors' determination of a series,
the shares of such series shall have preferences, limitations, and relative
rights identical with all other series of the Preferred Shares. Preferred Shares
may have dividend or liquidation rights which are prior (superior or senior) to
the dividend and liquidation rights and preferences of the Class B Preferred
Shares. Also, any series of the Preferred Shares may have voting rights.
6. The corporation is to have perpetual existence.
7. So long as all the shares of this corporation are owned beneficially and of
record by only one or two shareholders, the business and property of the
corporation shall be managed by a Board of not fewer than the number of
shareholders. At such time as the shares are owned beneficially and of record by
more than three or more shareholders, the business and property of the
corporation shall be managed by a Board of not fewer than three (3) nor more
than twenty-one (21) directors, who shall be natural persons of full age, and
who shall be elected annually by the shareholders having voting rights, for the
term of one year, and shall serve until the election and acceptance of their
duly qualified successors. In the event of any delay in holding, or adjournment
of, or failure to hold an annual meeting, the terms of the sitting directors
shall be automatically continued indefinitely until their successors are elected
and qualified. Directors need not be residents of the Commonwealth of
Pennsylvania nor shareholders. Any vacancies, including vacancies resulting from
an increase in the number of directors, may be filled by the Board of Directors,
though less than a quorum, for the unexpired term. The Board of Directors shall
have full power, and it is hereby expressly authorized, to increase or decrease
the number of directors from time to time without requiring a vote of the
shareholders.
2
<PAGE>
The name(s) and address(es) of the member(s) of the first Board of
Directors, who, subject to the provisions of the Articles of Incorporation, the
By-Laws, and the corporation laws of the Commonwealth of Pennsylvania, shall
hold office for the first year of the corporation's business and existence, or
until their successors are elected and have qualified are:
NAME ADDRESS
---- -------
Jeffrey R. Pirhalla 2419 N. Main Ave.
Scranton, Pennsylvania 18508
Kathryn K. Berman RR 1, Box 1153
Carbondale, Pennsylvania 18407
8. This corporation, and any or all of the shareholders of this corporation, may
from time to time enter into such agreements as they deem expedient relating to
the shares of stock held by them and limiting the transferability thereof; and
thereafter any transfer of such shares shall be made in accordance with the
provisions of such agreement, provided that before the actual transfer of such
shares on the books of the corporation, written notice of such agreement shall
be given to this corporation by filing a copy thereof with the secretary of the
corporation and a reference to such agreement shall be stamped, written or
printed upon the certificate representing such shares, and the By-Laws of this
corporation may likewise include provisions for the making of such agreement, as
aforesaid.
9. The private property of the shareholders of the corporation shall not be
subject to the payment of the corporation's debts to any extent whatever.
10. The following indemnification provisions shall be deemed to be contractual
in nature and not subject to retroactive removal or reduction by amendment.
(a) This corporation shall indemnify any director who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil or criminal, judicial, administrative
or investigative, by reason of the fact that he/she is or was serving at the
request of this corporation as a director or officer or member of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by him/her in connection with such
action, suit or proceeding, including any appeal thereof, if he/she acted in
good faith or in a manner he/she reasonably believed to be in, or not opposed
to, the best interests of this corporation, and with respect to any criminal
action or proceeding, if he/she had no reasonable cause to believe his/her
conduct was unlawful. However, with respect to any action by or in the right of
3
<PAGE>
this corporation to procure a judgment in its favor, no indemnification shall be
made in respect of any claim, issue, or matter as to which such person is
adjudged liable for negligence or misconduct in the performance of his/her duty
to the corporation unless, and only to the extent that, the court in which such
action or suit was brought determines, on application, that despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity in view of all the circumstances of the case. Termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or in a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the party did not meet the applicable standard of conduct.
Indemnification hereunder may be paid by the corporation in advance of the final
disposition of any action, suit or proceeding, on a preliminary determination
that the director, officer, employee or agent met the applicable standard of
conduct.
(b) The corporation shall also indemnify any director or officer who
has been successful on the merits or otherwise, in defense of any action, suit,
or proceeding, or in defense of any claim, issue, or matter therein, against all
expenses, including attorneys' fees, actually and reasonably incurred by him/her
in connection therewith, without the necessity of an independent determination
that such director or officer met any appropriate standard of conduct.
(c) The indemnification provided for herein shall continue as to any
person who has ceased to be a director or officer, and shall inure to the
benefit of the heirs, executors, and administrators of such persons.
(d) In addition to the indemnification provided for herein, the
corporation shall have power to make any other or further indemnification,
except an indemnification against gross negligence or willful misconduct, under
any resolution or agreement duly adopted by the Board of Directors, or duly
authorized by a majority of the shareholders.
11. No director of the corporation shall be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director; provided, that the foregoing clause shall not apply to any liability
of a director for any action for which the Business Corporation Law of 1988
proscribes this limitation and then only to the extent that this limitation is
specifically proscribed.
12. In furtherance, and not in limitation, of the powers conferred by the laws
of the Commonwealth of Pennsylvania, the Board of Directors is expressly
authorized:
(a) To make, alter, amend, and repeal the By-Laws of the corporation,
subject to the power of the holders of stock having voting power to alter,
amend, or repeal the By-Laws made by the Board of Directors.
(b) To determine and fix the value of any property to be acquired by
the corporation and to issue and pay in exchange therefore, stock of the
corporation; and the judgment of the directors in determining such value shall
be conclusive.
4
<PAGE>
(c) To set apart out of any funds of the corporation available for
dividends, a reserve or reserves for working capital or for any other lawful
purposes, and also to abolish any such reserve in the same manner in which it
was created.
(d) To determine from time to time whether and to what extent, and at
what time and places, and under what conditions and regulations the accounts and
books of the corporation, or any of the books, shall be open for inspection by
the shareholders and no shareholder shall have any right to inspect any account
or book or document of the corporation except as conferred by the laws of the
Commonwealth of Pennsylvania, unless and until authorized to do so by resolution
of the Board of Directors or of the shareholders.
(e) The Board of Directors may, by resolution, provide for the issuance
of stock certificates to replace lost or destroyed certificates.
13. If the By-Laws so provide, the shareholders and the Board of Directors of
the corporation shall have the power to hold their meetings, to have an office
or offices, and to keep the books of the corporation, subject to the provisions
of the laws of the Commonwealth of Pennsylvania, outside of said state at such
place or places as may be designated from time to time by the Board of
Directors.
The corporation may, in its By-Laws, confer powers upon the Board of
Directors in addition to those granted by these Articles of Incorporation, and
in addition to the powers and authority expressly conferred upon them by the
laws of the Commonwealth of Pennsylvania.
Election of directors need not be by ballot unless the By-Laws so
provide.
Directors shall be entitled to reasonable fees for their attendance at
meetings of the Board of Directors.
14. In case the corporation enters into contracts or transacts business with one
or more of its directors, or with any firm of which one or more of its directors
are members, or with any other corporation or association of which one or more
of its directors are shareholders, directors, or officers, such contracts or
transactions shall not be invalidated or in any way affected by the fact that
such director or directors have or may have an interest therein which is or
might be adverse to the interest of this corporation, provided that such
contracts or transactions are in the usual course of business.
In the absence of fraud, no contract or other transaction between this
corporation and any other corporation or any individual or firm, shall in any
way be affected or invalidated by the fact that any of the directors of this
corporation is interested in such contract or transaction, provided that such
interest shall be fully disclosed or otherwise known to the Board of Directors
5
<PAGE>
in the meeting of such Board at which time such contract or transaction was
authorized or confirmed, and provided, however, that any such directors of this
corporation who are so interested may be counted in determining the existence of
a quorum at any meeting of the Board of Directors of this corporation which
shall authorize or confirm such contract or transaction, and any such director
may vote thereon to authorize any such contract or transaction with the like
force and effect as if he were not such director or officer of such other
corporation or not so interested.
15. The corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein upon
shareholders, directors and officers are subject to this reserved power.
IN TESTIMONY WHEREOF, the undersigned corporation, has caused this
restatement of the Articles of Incorporation to be signed by a duly authorized
officer thereof this 21st day of August, 1996.
UNITED STATES PROPERTIES, INC.
By: /s/ JEFFREY R. PIRHALLA
------------------------------
Jeffrey R. Pirhalla, President
6
<PAGE>
ARTICLES OF AMENDMENT
UNITED STATES PROPERTIES, INC.
<PAGE>
Microfilm Number: ________
Filed with the Department of State on: AUG 23 1996
-----------
Entity Number: 2697327 /s/ Yvette Kandis
------------------ ----------------------------------
Secretary of the Commonwealth
COMMONWEALTH OF PENNSYLVANIA
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
UNITED STATES PROPERTIES, INC.
Pursuant to the provisions of 15 Pa.C.S. Section 1915 (relating to Articles
of Amendment) the undersigned business corporation, desiring to amend its
Articles, hereby states that:
1. The name of the corporation is:
UNITED STATES PROPERTIES, INC.
2. The address of this corporation's current registered office in this
Commonwealth (the Department is hereby authorized to correct the following
information to conform to the records of the Department):
1 Montage Mountain Road, Moosic, PA 18507
3. The statute by or under which it is incorporated is:
15 Pa.C.S. Section 1308
4. The date of its incorporation is May 28, 1996.
5. The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
6. The amendment was adopted by the shareholders pursuant to 15 Pa.C.S.
Section 1914(c).
7. The amendment adopted by the corporation is set forth in full in
Exhibit A attached hereto and made a part hereof.
8. The amendment restates the Articles of Incorporation and
1
<PAGE>
supersedes the original Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
21st day of August 1996.
UNITED STATES PROPERTIES, INC.
By: /s/ JEFFREY R. PIRHALLA
------------------------------
JEFFREY R. PIRHALLA, President
<PAGE>
BY-LAWS OF
UNITED STATES PROPERTIES INC.
<PAGE>
BY-LAWS
-------
UNITED STATES PROPERTIES INC.
-----------------------------
ARTICLE I
---------
SHARES
------
1. Every stockholder of record shall be entitled to a stock certificate
representing the shares owned by him, but a stock certificate shall not be
issued to any stockholder until the shares represented thereby have been fully
paid. No note or obligation given by a stockholder, whether secured by pledge or
otherwise, shall be considered as payment in whole or in part, of any shares.
2. Share certificates of the corporation shall be in such form as the
Board of Directors may from time to time determine. Stock certificates shall be
issued to each holder of fully-paid shares, in numerical order, from the stock
certificate books, signed by the President or Vice-President, countersigned by
the Secretary or Treasurer, and sealed with the corporate seal. Facsimile
signatures may be used as permitted by law. Share certificates restricted as to
transfer or resale shall bear an appropriate restriction legend. A record of
each certificate issued shall be kept on the stub thereof.
3. Transfers of shares shall be made only upon the books of the
corporation and, before a new certificate is issued, the old certificate must be
surrendered for cancellation. The corporation shall not be bound by any
restrictions on the transferability of shares imposed by any agreement to which
it is not a party unless both written notice of such agreement or restriction is
given to the Secretary and notice of such agreement or restriction has been put
upon the stock certificate(s) so restricted. No transfer shall be made where
such transfer is restricted by law or governmental regulation. The corporation
shall be entitled to delay or refuse only transfer pending adequate proof of
entitlement to transfer.
4. In case a stock certificate is lost or destroyed, the claimant
thereof shall make an affirmation or affidavit of the fact and advertise the
same in such manner as the Board of Directors may require, and shall give the
corporation a bond of
<PAGE>
indemnity in form and amount acceptable to the Board, and with one or more
sureties satisfactory to the Board and upon satisfactory proof being produced to
the Board of Directors of such loss or destruction, a anew certificate may be
issued of the same tenor and for the same number of shares as the one alleged to
be lost or destroyed, but always subject to the approval of the Board of
Directors.
5. The holder of record of any share or shares shall be entitled to be
treated by the corporation as the holder in fact thereof, and the corporation
accordingly shall not be bound to recognize any equitable claim to, or interest
in, such share on the part of any other person, whether or not the corporation
shall have express or other notice thereof, save as expressly provided by
applicable laws.
6. A stockholder shall not be personally liable for any debt or
liability of the corporation, except as may be imposed by law.
7. The treasury stock of the corporation shall consist of such issued
and outstanding shares of the corporation as may be donated to the corporation
or otherwise acquired, and shall be held subject to disposal by the Board of
Directors. Such shares shall neither vote nor participate in dividends while
held by the corporation.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
1. The annual meeting of the stockholders of this corporation shall be
held at such place either within or without the Commonwealth of Pennsylvania, on
such date, and at such time, as may be designated by the Board of Directors.
Failure to hold an annual meeting at the designated time shall not work any
forfeiture or dissolution of the corporation.
2. Special meetings of the stockholders may be called to be held at the
registered office of the corporation, or at such other place designated in the
call, at any time, (a) by the President or (b) by resolution of the Board of
Directors, or (c)
2
<PAGE>
upon written request of the stockholders holding a majority of the outstanding
shares having voting rights. Upon written request of the stockholder or
stockholders entitled to call a special meeting, the Secretary shall give notice
of such special meeting, to be held at such time as the Secretary my fix, not
less than ten (10) nor more than sixty (60) days after the receipt of such
request. Upon neglect or refusal of the Secretary to issue such call the person
or persons making the request may do so.
3. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of share or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record
3
<PAGE>
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
4. At least ten days before each meeting of stockholders, the officer
having charge of the transfer books for shares shall make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list shall be
kept on file at the principal office of the corporation and shall be subject to
inspection by any stockholder at any time during usual business hours. Such list
shall be produced and kept open at the time and place of meeting, subject to the
inspection of any stockholders during the whole time of the meeting. The
preparation of such list may be dispensed with by oral or written agreement of
all stockholders.
5. Except as herein otherwise provided, notice of meeting, written or
printed for every regular or special meeting of the stockholders, shall be
prepared and mailed to the last known post office address of each stockholder
having voting rights, not less than five days before any such meeting, and if
for a special meeting, such notice shall also state the object or objects
thereof. No failure of or irregularity in notice of any regular meeting shall
invalidate such meeting or any proceeding thereat. Notice of a meeting may be
waived by written waiver signed by persons entitled to vote. Attendance at a
meeting shall constitute waiver of notice of place, date, time and purpose.
6. A quorum at any meeting of the stockholders shall consist of a
majority of the voting shares of the corporation, represented in person or by
proxy. A majority of such quorum shall decide any question that may come before
the meeting unless such question is by statute required to be decided by a
majority of the outstanding shares or otherwise.
7. At any meeting duly called and held for the election of directors at
which a quorum is present, directors shall be elected by a plurality of the
votes cast by the holders (acting
4
<PAGE>
as such) of shares of stock of the corporation entitled to elect such directors.
8. Removal of directors. Notwithstanding any other provisions of the
Certificate of Incorporation or the By-Laws of the corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
the Certificate of Incorporation or the By-laws of the corporation), any
director or the entire board of Directors of the corporation may be removed at
any time, but only for cause and only by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called for that
purpose.
9. The order of business at the annual meeting and, as far as possible,
at all other meetings of the stockholders, shall be:
(a) Call to order
(b) Proof of due notice of meeting
(c) Call of roll, filing of proxies, and determination of a
quorum
(d) Reading and disposal of any unapproved minutes
(e) Unfinished business
(f) Amendments of Articles of Incorporation or By-laws
(g) Fixing the number of directors and election of
directors
(h) Reports of officers and committees
(i) New business
(j) Adjournment
Any agenda item may be waived. Robert's Rules of Order shall determine
any question or dispute regarding procedure.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all stockholders
entitled to vote are present and consent.
5
<PAGE>
10. Stockholders shall have the right to be represented and vote by
proxy at any meeting of stockholders. Proxies shall be filed with the Secretary
prior to the meeting and failure to do so file shall preclude exercise thereof
by the proxy holder at such meeting.
11. Any action which may be taken at a meeting of stockholders may be
taken without a meeting, if a consent in writing, setting forth the action so
taken, shall be signed by all of the stockholders who would be entitled to vote
at a meeting for such lesser percentage of shares as shall be set by the
Articles, and the consent shall be field with the Secretary of the corporation.
ARTICLE III
-----------
DIRECTORS
---------
1. So long as all the shares of this corporation are owned beneficially
and of record by only one or two stockholders, the business and property of the
corporation shall be managed by a Board of not fewer than the number of
stockholders. At such time as the stocks are owned beneficially and of record by
three (3) or more stockholders, the business and property of the corporation
shall be managed by a Board of not fewer than three (3) nor more than twenty-one
(21) directors, who shall be natural persons of full age, and who shall be
elected annually be the stockholders having voting rights, for the term of one
year, and shall serve until the election and acceptance of their duly qualified
successors. In the event of any delay in holding, or adjournment of, or failure
to hold an annual meeting, the terms of the sitting directors shall be
automatically continued indefinitely until their successors shall be duly
elected and qualified. Directors need not be stockholders. Any vacancies,
including vacancies resulting from an increase in the number of directors, may
be filled by the Board of Directors, though less than a quorum for the unexpired
term. The Board of Directors shall have full power, and it is hereby expressly
authorized, to increase or decrease the number of directors from time to time
without requiring a vote of the stockholders.
6
<PAGE>
2. The annual meeting of the Board of Directors shall be held at the
offices of the corporation within thirty (30) days following the annual meeting
of stockholders. At such meeting, the Board may elect a Chairman of the Board
(who shall thereafter chair meetings of the Board), a Secretary (who shall
thereafter keep the minutes of the meetings of the Board), and such other
officials as the Board may deem desirable.
3. Special meetings of the Board of Directors, may be called at any
time by the President, or by a majority of the members of the Board, and may be
held at any time and place, either within or without the Commonwealth of
Pennsylvania, either with notice as provided in Section 4 or without if by
written consent of all the absent members any by the presence of all other
members at such meeting.
4. Notice of special meetings shall be given by any means of
communication by the Secretary to each member of the Board not less than
twenty-four (24) hours before any such meeting, and notice of such special
meetings shall include a general statement of the purposes thereof. Notice of
such meetings may be waived by written waiver.
5. A quorum at any meeting shall consist of a majority of the entire
membership of the Board. A majority of such quorum shall decide any question
that may come before the meeting, unless otherwise provided by statute.
6. Executive Committee. The Board of Directors may, by resolution
adopted by a majority of the whole Board, delegate not less than two of its
number to constitute an Executive Committee which, to the extent provided in
such resolution, shall have and exercise the authority of the Board of Directors
in the management of the business of the corporation. Written minutes shall be
kept of all actions taken by the Executive Committee between intervals of the
regular meetings of the Board of Directors, and these minutes must be reported
at the next regular meeting of the Board.
7. Special Committees. The Board of Directors may, by specific
resolution adopted by a majority of the whole Board,
7
<PAGE>
delegate not less than two of its number to constitute a special committee
which, to the extent and scope provided in such resolution, shall have and
exercise authority in such matters as the Board shall declare. Written minutes
shall be kept of all actions taken by any such special committee between the
intervals of the regular meetings of the Board of Directors, and those minutes
must be reported at the next regular meeting of the Board.
8. One or more directors may participate in a meeting of the Board or
of an Executive or other committee of the Board by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other.
9. Any action which may be taken at a meeting of the Board or of any
committee thereof 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 who
would be entitled to vote at a meeting for such purposes and shall be filed with
the Secretary of the Corporation.
10. Officers of the corporation, including the President, shall be
elected by ballot, by the Board of Directors, at its first meeting after the
election of directors each year. If any office becomes vacant, including the
office of the President, during the year, the Board of Directors shall fill it
for the unexpired term. The President need not be chosen from the Board of
Directors.
11. The order of business at any regular or special meeting of the
Board of Directors shall be:
(a) Call to order a call of roll
(b) Reading and disposal of any unapproved minutes
(c) Unfinished business
(d) Reports of officers and committees
8
<PAGE>
(e) New business
(f) Adjournment
Any agenda item may be waived. Robert's Rules of Order shall determine
any question or dispute regarding procedure.
12. Compensation. Directors as such, shall not receive any stated
salary for their services, but by resolution of the Board, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board provided, that nothing herein contained shall be
construed to preclude any director from servicing the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
----------
OFFICERS
--------
1. The officer of the corporation shall be a President, a Secretary and
a Treasurer. In addition, there may be one or more Vice Presidents and such
other officers, assistant officers, and agents as the Board of Directors may
determine. All officers and agents shall be elected for the term of one year and
shall hold office until their successors are elected and qualified. Any two or
more offices may be held by the same person including the offices of President
and Secretary.
2. The President shall be the chief executive officer of the
corporation; shall preside at all meetings of the stockholders and directors;
shall have general supervision of the affairs of the corporation; shall sign or
countersign certificates, contracts, and other instruments of the corporation,
as authorized by the Board of Directors; shall make reports to the directors and
stockholders; and shall perform all such other duties as are incident to his
office or are properly required of him by the Board of Directors.
3. The Secretary shall issue notices for all meetings; shall keep
minutes, shall have charge of the seal and the books
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of the corporation; shall sign with the President of affix the seal to such
instruments as require such signature or seal and attest to the signature of the
President by affixation of the seal thereto; and shall make such reports and
perform such other duties as are incident to his office, or are properly
required of him by the Board of Directors.
4. The Treasurer shall have the custody of all monies and securities of
the corporation and shall keep regular books of account. He shall sign or
countersign such documents and instruments as required his signature, shall
perform all duties incident to his office or that are properly required of him
by the Board of Directors, and if required by the Board of Directors, shall give
bond for the faithful performance of his duties in such sum and with such
sureties as may be required by the Board of Directors. He shall have the sole
and exclusive power, responsibility, and authority to determine the priority and
order of payment of liabilities of this corporation, to calculate and pay all
payrolls, to withhold all required taxes including federal, state, and local
income taxes and F.I.C.A.. to regularly and timely deposit such withheld sums in
the manner required by law or regulation, and to prepare, execute, and file, on
a timely basis, all federal, state, and local tax reports and/or returns and to
transmit therewith all sums due and owing.
6. All other officers, assistant officers, and agents shall perform
such duties as may be required of them by the Board of Directors. All officers,
assistant officers, and agents of the corporation shall be subject to removal by
the Board of Directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person removed. Any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise shall
be filled by the Board of Directors.
7. All officers, assistant officers, and agents of the Corporation
shall be subject to removal by the Board of Directors whenever in its judgment
the best interests of the Corporation will be serviced thereby, but such removal
shall be
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without prejudice to the contract rights, if any, of the person removed.
8. Compensation. The Board of Directors shall have power to fix the
compensation of all officers and assistant officers of the corporation. It may
authorize any officer, upon whom the power of appointing subordinate officers
may have been conferred, to fix the compensation of such subordinate officers.
9. Disallowed Compensation. Any payments made to an officer or employee
of the corporation such as a salary, commission, bonus, interest, rent, travel
or entertainment expense incurred by him, which shall be disallowed in whole or
in part as a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer or employee to the corporation to the full extent of
such disallowance. It shall be the duty of the directors, as a Board, to enforce
payment of each such amount disallowed, In lieu of payment by the officer or
employee, subject to the determination of the directors, proportionate amounts
may be withheld from his future compensation payments until the amount owed to
the corporation has been recovered.
10. Resignations. Any director or other officer may resign at anytime,
such resignation to be in writing, and to take effect from the time of its
receipt by the corporation, unless some time be fixed in the resignation and
then from that date. The acceptance of a resignation shall not be required to
make it effective.
ARTICLE V
---------
DIVIDENDS AND FINANCE
---------------------
1. Dividends shall be declared as provided by law at such times as the
Board of Directors shall direct, and no dividend shall be declared that will
impair the capital of the corporation.
2. The monies of the corporation shall be deposited in the name of the
corporation, in such banks, savings and loan
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associations or trust companies as the Board of Directors shall designate, and
shall be drawn out only by check or other negotiable instrument signed as
directed by the Board of Directors. Funds in excess of current working capital
needs may be invested in such certificates of deposit, mutual funds government
securities, money market funds, and similar liquid investments.
3. Financial Reports. The officers of the corporation shall tender to
the Board of Directors such financial reports of the condition of the
corporation as may be required by the Board of Directors. The directors and
officers shall be required to forward to the stockholders an annual financial
report within one hundred eighty (180) days after the close of each fiscal year.
No report of the financial condition of the corporation need be prepared or
verified by a certified public accountant, unless directed to be so prepared by
an order of the Board of Directors.
4. A fiscal year basis may be established for the operations of the
corporation by the Board of Directors and may be changed, from time to time, as
desirable to the extent permitted by applicable tax laws or regulations.
5. The Treasurer, with the approval of the President, may make
charitable contributions out of the funds of the corporation for purposes
permitted by law, without the consent of the stockholders or directors, to the
extent that such contributions shall be deductible by the corporation for income
tax purposes; provided, however, that full report of such contributions shall be
made to the Board of Directors at its next meeting.
ARTICLE VI
----------
SEAL
----
1. The corporate seal of the corporation shall consist of two
concentric circles, between which is the name of the corporation, and the word,
"Pennsylvania",
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and in the circle shall be inscribed the words "Corporate Seal" together with
the year of incorporation, and such seal is impressed on the margin hereof and
is hereby adopted as the corporate seal of the corporation.
ARTICLE VII
-----------
CONFLICT OF INTEREST
--------------------
1. No contract or transaction between the corporation and one or more
of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for such reason, or solely because
the director or officer is present at or participates in the meeting of the
Board which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if:
(a) The material facts as to his (their) interest and as to the
contract or transaction are disclosed to or are known by the Board of Directors,
and the Board, in good faith, authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested directors; or
(b) The material facts as to his (their) relationship or interest and
as to the contract or transaction are disclosed to or are known by the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors or the
stockholders.
2. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board
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<PAGE>
of Directors which authorizes a contract or transaction specified in Section 1
of the Article.
3. This provision shall be in addition to, and not in limitation of,
any applicable provisions of law validating contracts in situations involving
interested directors, officers and stockholders.
ARTICLE VIII
------------
LIMITATION OF LIABILITY
-----------------------
1. No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that the foregoing clause shall not apply to any
liability of a director for any action for which the Business Corporation Law of
1988 of the Commonwealth of Pennsylvania proscribes this limitation and then
only to the extent that this limitation is specifically proscribed.
2. It is the intent that this Article be interpreted to provide the
maximum protection against liability afforded to directors under the
Pennsylvania Business Corporation Law of 1988 as it may be amended from time to
time.
ARTICLE IX
----------
INDEMNIFICATION
---------------
1. The corporation shall, to the fullest extent permitted by applicable
law as then in effect, indemnify each director, each officer and each other
person who may have acted as a representative of the corporation at its request,
and his heirs, executors, and administrators. Any such person shall be
indemnified by the corporation against:
(a) any costs and expenses, including counsel fees, reasonably incurred
in connection with any civil, criminal, administrative or other claim, action,
suit or proceeding, in which he may become involved or with which he may be
threatened,
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by reason of his being or having been a director or officer of the corporation
or by reason of his serving or having served any corporation, trust, committee,
firm or other organization as director, officer, employee, trustee, member or
otherwise at the request of this corporation, and
(b) any payments in settlement of any such claim, suit, action, or
proceeding or in satisfaction of any related judgment, fine, or penalty, except
costs, expenses or payments in relation to any matter as to which he shall be
finally adjudged derelict in the performance of his duties to the corporation,
unless the corporation shall receive an opinion from independent counsel that
such director, officer, or representative has not so been derelict. In the case
of a criminal action, suit, or proceeding, a conviction or judgment (whether
after trial or based on a plea of guilty or nolo contendere or its equivalent)
shall not be deemed an adjudication that the director, officer or representative
was derelict in the performance of his duties to the corporation of he acted in
good faith in what he considered to be the best interests of the corporation and
with no reasonable cause to believe the action was illegal.
The foregoing right of indemnification shall not be exclusive of other
rights to which directors, officers and others may be entitled under the
Certificate of Incorporation as a matter of law or otherwise.
2. It is the intent that this Article be interpreted to provide the
maximum indemnification permitted under the Pennsylvania Business Corporation
Law of 1988 as it may be amended from time to time.
3. This corporation shall have the power to purchase and maintain
insurance on behalf of any person who (1) is or was a director, officer,
employee or agent of the corporation, or (2) 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
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<PAGE>
not the corporation would have the power to indemnify him against such
liability.
ARTICLE X
---------
EMERGENCY BY-LAWS
-----------------
1. Emergency Powers. During any emergency resulting from warlike
damage, including civil disorder, or an attack on the United States or any
nuclear or atomic disaster, the regular by-laws shall be suspended to the extent
necessary under the circumstances and the Board of Directors may make any
emergency by-law that may be practical or necessary for the circumstances of the
emergency, even though inconsistent with the regular by-laws. No director,
officer, or employee acting in accordance with any such emergency by-laws shall
be liable, except for willful misconduct.
2. Meeting. A meeting of the Board of Directors may be called by any
officer or director with no prescribed period of notice, so long as an attempt
is made to notify each director as soon as conditions may permit. Such notice
may be given by any feasible means at the time, including publication or radio.
3. Quorum. The director or directors in attendance at the meeting of
the Board shall constitute a quorum.
4. Emergency Directors. Prior to such an emergency, the Board of
Directors may designate officers or other persons who shall serve as directors
in emergency meetings in the event that the elected directors shall for any
reason be rendered incapable of discharging their duties.
5. Lines of Succession. The Board of Directors, either before or during
any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all officers or
agents of the corporation shall for any reason be rendered incapable of
discharging their duties.
6. Termination. Upon termination of the emergency, as declared by the
Board of Directors or other person discharging
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their duties, the emergency by-laws shall cease to be operative. Termination
shall not affect the legality of actions taken hereunder.
ARTICLE XI
----------
AMENDMENTS
----------
1. These by-laws may be amended, repealed or altered in whole or in
part, by a majority vote of the outstanding stocks of the corporation, at any
regular or special meeting of the stockholders. Written notice shall, not less
than five (5) days before a stockholders' meeting called by the Board of
Directors for the purpose of considering proposed amendments, be given to each
stockholder of record entitled to vote. Such notice shall set forth the proposed
amendment or a summary of the changes to be effected thereby.
2. These By-laws may also be amended, repealed, or altered, in whole or
in part, by a majority vote of the Board of Directors, at any meeting, without
prior notice. However, such by-laws, or any provision thereof, made, altered,
amended, or repealed by the Board of Directors, shall from time to time be
submitted to the stockholders for approval, and may be further altered, amended
or repealed by the stockholders at any annual meeting or, upon notice, at any
special meeting, and when so altered, amended or repealed, the Board of
Directors' changes disapproved by the stockholders shall not be re-established
by the Board of Directors without the prior approval of the stockholders.
CERTIFICATION OF ADOPTION
The undersigned, being the sole officers of the corporation, hereby
certify that the foregoing By-Laws were adopted as the By-Laws of the
corporation the 21st day of August, 1996:
/s/ JEFFREY R. PIRHALLA
-----------------------
/s/ KATHRYN K. BERMAN
-----------------------
17
<PAGE>
CONTRACT OF JUNE 12, 1996 WITH
ACTIVE ASSET RECOVERY, INC.
<PAGE>
CONFORMED COPY
AGREEMENT
THIS AGREEMENT ("Agreement") dated June 12, 1996 is by and
between Active Asset Recovery, Inc., a New York corporation ("Active") with an
office at One Blue Hill Plaza, Suite 900, Pearl River, New York 10965, and
United States Properties, Inc., a Pennsylvania corporation ("U.S. Properties")
with an office at 127 North Washington Avenue, Connell Building, Suite One,
Scranton, Pennsylvania 18503-1511.
Background
Whereas, Active is engaged in the business of entering into
corporate trading transactions with clients pursuant to which in exchange for
merchandise or other assets Active issues trade credits redeemable by such
clients (with or without additional cash) to purchase from Active media, goods
and/or services;
Whereas, subject to the terms and conditions set forth in this
Agreement, U.S. Properties desires to assist Active in locating potential
clients to enter into corporate trading transaction.
Terms
IN CONSIDERATION of the foregoing premises, mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Engagement as a Finder. Subject to the terms and conditions
set forth herein, Active hereby engages U.S. Properties, and U.S. Properties
hereby accepts such engagement, as an independent contractor to act as a finder
in connection with possible corporate trading transactions for media, goods
and/or services (collectively, "Services") involving ACTIVE and third parties
who are preapproved by ACTIVE in writing as prospective clients (hereinafter
"Preapproved Client(s)").
2. Preapproval of Clients; Duties of Finder.
2.1 Active shall have the right (exercisable in its sole
discretion) to (i) preapprove or to decline preapproval of any third party
identified by U.S. Properties hereunder, and/or
<PAGE>
(ii) decline to pursue any corporate trading transaction. All preapprovals of
Active must be in writing. In declining to preapprove any third party or to
pursue a proposed corporate trading transaction, Active will not incur any
liability for fees or compensation to U.S. Properties.
2.2 With respect to any Preapproved Client, U.S.
Properties covenants to (i) cause meetings to occur between Active and the
Preapproved Client (and will attend such meetings if requested), (ii) provide
Active with information concerning the Preapproved Client in the manner that
Active from time to time may request, and (iii) perform such other reasonable
services as Active may reasonably request in connection with closing any
corporate trading transaction with a Preapproved Client (e.g. follow-up phone
calls, letters, introductions, etc.).
2.3 U.S. Properties covenants that it shall not utilize
the services of any other persons or entities in introducing any third party as
a potential client to ACTIVE without first receiving ACTIVE's prior written
consent to such utilization.
3. Relationship of Parties. U.S. Properties on the one hand, and
Active on the other, acknowledge and agree that (i) this Agreement does not
create a principal/agent relationship, and neither U.S. Properties nor Active
shall have the right, power or authority, whether express or implied, to bind
the other; (ii) each party is independent of the other, will utilize its own
employees and work during the hours it determines, at its own place of business,
or such other place of its choice; and (iii) neither party will be covered under
the other party's benefit plans nor will either party be subject to any
withholding for any taxes, insurance or benefit plans of the other entity.
4. Compensation.
------------
4.1 Subject to the terms and conditions of this Agreement,
in the event that Active closes a corporate trading transaction, with a
Preapproved Client as a direct result of meetings caused by U.S. Properties,
U.S. Properties shall receive a finders fee ("Finders Fee") equal to five
percent (5%) of "Divisible Profits", as defined and calculated in accordance
with Section 4.2 below. The Finders Fee shall be the sole compensation payable
to U.S. Properties for services rendered hereunder.
4.2 For purposes of this Agreement, "Divisible Profits"
shall be calculated on a transaction by transaction basis based on whether a
corporate trading transaction is a (i) trade for trade transaction (a
transaction in which a Preapproved Client remits merchandise or other assets
(collectively referred
2
<PAGE>
to herein as "Merchandise")) to Active for remarketing in return for trade
credits usable to pay for Services without the Preapproved Client being
obligated to spend additional cash for such Services), or (ii) a cash blend
transaction (a transaction in which a Preapproved Client remits Merchandise in
return for trade credits usable to partially pay for Services in addition to a
partial cash expenditure).
In the case of a trade for trade transaction, Active shall
calculate Divisible Profits by subtracting from the proceeds actually received
by Active from remarketing a Preapproved Client's Merchandise: (i) the
out-of-pocket costs incurred by Active relating to such remarketing and the
transaction; (ii) any cash payments required to be made by Active to the
Preapprove Client or otherwise; and (iii) an estimate of the cost of the
Services which Active will be required to provide the Preapproved Client as a
result of the transaction. To the extent Active's estimate of the cost of
Services is in excess of the actual cost of Services incurred in connection with
a trade for trade transaction, Active will make an additional payment to U.S.
Properties to adjust the amount of the Finders Fee previously paid to U.S
Properties so that such payment plus the additional payment results in U.S.
Properties receiving total Finders Fee payments equal to what U.S. Properties
would have initially received had the original estimate of the cost of Services
been accurate. In a trade for trade transaction, U.S. Properties shall be paid
it's Finders Fee payment within thirty (30) days of Active actually receiving
the cash proceeds from the remarketing of the Preapproved Client's Merchandise.
In the case of a cash blend transaction, Active shall initially
calculate Divisible Profits by subtracting from the cash proceeds actually
received from the remarketing of the Preapproved Client's Merchandise: (i) the
out of pocket costs and expenses incurred by Active relating to remarketing and
the transaction; (ii) any cash payments required to be made by Active to the
Preapproved Client or otherwise; and (iii) if applicable in Active's sole
judgment, an estimate of the amount by which the cost of Services is expected to
exceed cash payments by the Preapproved Client for Services. Active will make an
adjustment payment to U.S. Properties after the Preapproved Client has utilized
all or its total trade credits if Active's estimate of the cost of Services
turns out to be in excess of the actual cost of Services incurred by Active in
connection with a cash blend transaction. In a cash blend transaction, U.S.
Properties shall be paid its initial Finders Fee payment within thirty (30)
days of Active actually receiving the cash proceeds from remarketing of the
Preapproved Client's Merchandise.
Further Divisible Profits in a cash blend transaction shall be
calculated by Active in each month that the Preapproved Client utilizes the
trade credits issued by Active to purchase Services
3
<PAGE>
and Active is paid (and actually receives) the required cash amount by the
Preapproved Client for the Services rendered. This portion of Divisible Profits
shall be equal to the difference between the cash revenue actually received by
Active from the Preapproved Client in connection with the purchase of Services
minus the cost of such Services and any out of pocket costs and expenses
incurred by Active. If Active's costs and expenses exceed the related revenue
actually received by Active, Active will have suffered a "Divisible Loss". This
Divisible Loss will be offset against future Divisible Profits and will result
in eliminating or reducing futures until such Divisible Loss is fully offset
against future Divisible Profits. Any Finders Fee payments based on further
Divisible Profits in a cash blend transaction shall be paid within thirty (30)
days of Active actually receiving payment for the Services purchased by the
Preapproved Client if there is no unapplied Divisible Loss.
5. Confidentiality
5.1 Active an the one hand, and U.S.
Properties on the other hand, acknowledge, covenant and agree that any and all
information shared in connection with the others' business as a result of this
Agreement and the performance of the obligations hereunder including, without
limitation, client lists, supplier lists, financing techniques and sources and
financial statements is confidential and proprietary information of the
disclosing party. Notwithstanding anything to the contrary contained herein, the
ongoing communications of Active or any of its affiliates with a Preapproved
Client covered by the terms of this Agreement shall not be deemed a breach of
this confidentiality provision.
Each party agrees that it will not permit the
duplication, use or disclosure of any such confidential and proprietary
information to any person (other than an employee, officer, director, agent or
representative of the receiving party or an affiliate of the receiving party who
must have such information for the performance of its obligations hereunder),
unless such duplication, use or disclosure is specifically authorized by the
other party. Each party shall take all reasonable precautions to prevent such
disclosures.
For the purposes of the Agreement, the term
"confidential and proprietary information" is not meant to include (i) any
information which, at the time of disclosure is, or thereafter through no fault
of the other party becomes, generally known by the public; (ii) any information
disclosed to the other party by any third party and the disclosure of which does
not violate any legal obligation of any such third party to either Active (or
any affiliate of Active) or U.S. Properties; and (iii) any information which is
known to the other party prior to the disclosure.
4
<PAGE>
5.2 U.S. Properties acknowledges that all originals
and copies of materials, records and documents provided to it by Active (or any
of its affiliates, including, without limitation, Active Media Services, Inc.
("AMS")) or coming into its possession or under its control during the Term of
this Agreement which pertain to Active's (or any of its affiliates, including,
without limitation, AMS') business whether or not confidential information, are,
and shall at all time remain, the sole property of Active (or its respective
affiliate), respectively. Upon the termination of this Agreement, or upon
request by Active at any time, U.S. Properties shall promptly deliver all copies
of such materials to Active or destroy copies of such material in accordance
with Active's written instructions.
5.3 Active acknowledge that all originals and copies
of materials, records and documents provided to it by U.S. Properties or coming
into its possession or under its control during the term of this Agreement which
pertain to U.S. Properties' business whether or not confidential information,
are, and shall at all time remain, the sole property of U.S. Properties. Upon
the termination of this Agreement, or upon request by U.S. Properties at any
time, Active shall promptly deliver all copies of such materials to U.S.
Properties or destroy the copies of such material in accordance with U.S.
Properties written instructions.
6. Indemnification.
6.1 U.S. Properties hereby releases Active and its
affiliates (including, without limitation, AMS), and their officers, directors,
and employees from any and all claims, costs, damages, expenses and/or other
liabilities of any kind or nature, including, without limitation any
environmental liabilities, arising in connection with any real property or
interests in real, property purchased by U.S. Property or by any affiliate or
related entity of U.S. Property in connection with any corporate trading
transaction. U.S. Properties hereby indemnifies and agrees to hold harmless
Active, its affiliates (including, without limitation, AMS), their officers,
directors, and employees and/or each of them (collectively the "Active
Indemnified Party") from any and all costs, claims, expenses, judgments or
otherwise including, without limitation, reasonable attorney's fees and
disbursements, incurred by any Active Indemnified Party in any action or
proceeding between an Active Indemnified Party and U.S. Properties or between
any Active Indemified Party and any third party or otherwise, arising from,
related to, or incident to: (i) any breach or alleged breach of any warranty,
representation, agreement or inducement herein made by U.S. Properties; (ii) any
and all acts, omissions or representations of U.S. Properties, any of its
affiliates, or any of their respective officers, directors, employees,
shareholders or other agents made or taken under this Agreement, including,
5
<PAGE>
without limitation, any agreement to purchase or the purchase of real property
or interests in real property by U.S. Properties or any affiliate or related
entity of U.S. Properties in connection with a corporate trading transaction; or
(iii) any environmental or other liability relating to any real property or
interests in real property purchased by U.S. Properties in connection with a
corporate trading transaction.
6.2 Active hereby indemnifies and agrees to hold harmless
U.S. Properties, its affiliates, their officers, directors, and employees and/or
each of them (collectively, the "U.S. Properties Indemnified Party") from any
and all costs, claims, expenses, judgments or otherwise including, without
limitation, reasonable attorney's fees and disbursements, incurred by any U.S.
Properties Indemnified Party in any action or proceeding between a U.S.
Properties Indemnified Party and Active or between any U.S. Properties
Indemnified Party and any third party or otherwise, arising from, related to, or
incident to (i) any breach or alleged breach of any warranty, representation,
agreement or inducement herein made by Active, or (ii) any and all acts,
omissions or representations of Active, any of its affiliates, or any of their
respective officers, directors, employees, or shareholders made or taken under
this Agreement.
7. Term. The term ("Term") of this Agreement shall commence on
the date first written above and shall terminate three (3) years thereafter,
provided, however, that after May 1, 1997, either party hereto may terminate
this Agreement by providing the other party with sixty (60) days' prior written
notice of termination.
8. Nonsolicitation; Noncompetition. During the Term of this
Agreement and for one (1) year thereafter, U.S. Properties shall not, directly
or indirectly:
(i) introduce any Preapproved Client, introduced to
Active hereunder, to any person or entity, except Active (or an affiliate of
Active or AMS), who or which engages in transactions and provides services
similar to that provided by Active or any affiliate of Active (including without
limitation AMS); or
(ii) solicit, induce or attempt to induce any
Preapproved Client, client or other business relation of Active or any affiliate
thereof (including without limitation AMS) to cease doing business with Active,
AMS and/or any affiliate thereof or in any way interfere with the relationship
between Active, AMS and/or any affiliate thereof and any such Preapproved
Client, client or other business relation thereof.
6
<PAGE>
9. Non-Circumvention. During the Term of this Agreement and for
a period of one (1) year after its termination, Active shall not engage in any
corporate trading transactions with any Preapproved Client introduced to Active
by U.S. Properties without paying the Finders Fee which would have been required
hereunder if the activity had occurred during the Term of this Agreement;
provided that U.S. Properties shall have caused the meetings to have occurred
which directly resulted in the corporate trading transaction, shall have
fulfilled its responsibilities under this Agreement, and shall not be in default
in the due observance of any covenant or term of this Agreement.
10. Miscellaneous.
-------------
10.1 U.S. Properties represents and warrants that it is not a
party to any agreement with any other corporate trading company or any other
agreement with any other party that would prohibit U.S. Properties from entering
into this Agreement or from performing its duties or obligations hereunder.
10.2 In the event that any covenant contained herein shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too long a period of time or over too large a geographical
area or by reason of it being too extensive in any other respect, it shall be
deemed reformed to extend only over the longest period of time for which it may
be enforceable, and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court in such action.
10.3 If any term or provision of this Agreement shall be
invalid or unenforceable to any extent or in any application, the remainder of
this Agreement shall not be affected thereby, and each and every term and
provision of this Agreement shall be valid and enforceable to the fullest extent
and in the broadest application permitted by law.
10.4 The terms and provisions of this Section 10 and Sections
5, 6, 8 and 9 together with all subsections contained therein, shall survive the
termination of this Agreement.
10.5 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of choice of laws. The parties further agree that the exclusive forum
for resolving any disputes relating to this Agreement shall be New York.
10.6 No modification or waiver of the terms of this Agreement
shall he enforceable unless in writing and executed by both parties. No delay or
omission by either party in exercising
7
<PAGE>
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof. No waiver of any provision of this Agreement
shall be deemed or shall constitute a continuing waiver of such provision or a
waiver of any other provision, unless otherwise expressly provided for in a
writing signed by both parties. U.S. Properties shall not be permitted to assign
its rights or delegate its duties under this Agreement, without the prior
written consent of ACTIVE, and any assignment or delegation in violation of this
Agreement shall be void. This Agreement shall inure to the benefit of, and be
enforceable by each of the respective parties hereto and/or its successors and
permitted assigns.
10.7 All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, when mailed by United States
certified or registered mail, postage prepaid, or if telecopied (with delivery
confirmed), or sent by overnight mail (with delivery confirmed), to the parties
at their respective addresses first written above (or at such other address as
shall he given in writing by one party to the other).
10.8 If a party hereto prevails in a proceeding for
damages or injunctive relief, that party, in addition to other relief, shall be
entitled to reasonable attorneys' fees, costs and the expenses of litigation
incurred by such party in securing the relief granted by the court.
10.9 This Agreement contains the entire agreement between
the parties hereto and supersedes all prior oral or written agreements,
commitments or understandings between the parties hereto with respect to the
matters provided herein. No modification of this Agreement shall be binding on
the parties affected, unless set forth in writing and duly executed by the
parties affected.
10.10 This Agreement may be executed in any number of
counterparts by facsimile, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument. The section
headings of this Agreement are for
8
<PAGE>
convenience of reference and shall not affect the construction or interpretation
of any the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date set forth above.
ACTIVE ASSET RECOVERY, INC.
By: /C/ ALAN S. ELKIN
------------------------------
Name: Alan S. Elkin
Title: Chief Executive Officer
UNITED STATES PROPERTIES, INC.
By: /C/ JEFFREY R. PIRHALLA
----------------------------
Name: Jeffrey R. Pirhalla
Title: President
9
<PAGE>
CONTRACT OF JUNE 27, 1996
WITH CAPITAL CREDIT CORPORATION
<PAGE>
UNITED STATES PROPERTIES, INC.
NATIONAL REAL ESTATE ACQUISITIONS
Commercial - Industrial - Investment Properties
- --------------------------------------------------------------------------------
June 24, 1996
MR. ANDY TRICULES
CAPITAL CREDIT CORP
8000 ARLINGTON EXPRESSWAY
JACKSONVILLE FL 32211
Dear Andy:
Pursuant to your telephone conversation with Irwin Berman, we mutually agree to
the following arrangements between United States Properties, Inc. (USP) and
Capital Credit Corporation (CCC).
1. USP will contact CFOs of the Fortune 1000 companies to obtain their bad
debt portfolio.
2. CCC will help evaluate the banking, retail, utilities, telecommunications,
bad checks and sales finance portfolios and advise USP of the bidding
process to the best of their knowledge and ability.
3. CCC will handle the collection operations of the accounts acquired.
4. In most cases, CCC will receive 30% and USP will receive 70% of the funds
collected from these accounts. However, from time to time, there may be
certain portfolios that will warrant lower or higher contingency rates based
on the age of the portfolio and the complexity of receivables CCC attempts
to collect. Therefore, each prospect will be rated individually.
5. CCC will provide USP with joint marketing strategies when required and also
provide USP with corporate marketing information to assist in obtaining bad
debt portfolios from its prospective clients.
If the above represents our mutual understanding, kindly sign as indicated
below. We look forward to a long and mutually profitable relationship.
Very truly yours,
UNITED STATES PROPERTIES, INC.
/s/ Jeffrey R. Pirhalla
- ------------------------------
Jeffrey R. Pirhalla
President
JRP/ceb
ACCEPTED AND AGREED:
/s/ Andy Tricules
--------------------------
Andy Tricules
Capital Credit Corporation
--------------------------------------------------------------
one montage mountain road, moosic, pennsylvania 18507
phone 717-348-1100 fax 717-348-1188
<PAGE>
INDEMNIFICATION AGREEMENT
WITH JEFFREY R. PIRHALLA
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of August 21, 1996,
by and between UNITED STATES PROPERTIES, INC., a Pennsylvania corporation
("Company"), and JEFFREY R. PIRHALLA ("Indemnitee"), a director and/or officer
or key executive, employee or consultant of the Company, or a person serving at
the request of the Company as a director, officer, employee or agent of another
enterprise.
RECITALS
A. The Indemnitee is currently serving or has agreed to serve as a
director and/or officer of the Company and in such capacity has rendered and/or
will render valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and applicable statutory indemnification provisions to
provide its directors and officers with adequate protection against various
legal risks and potential liabilities to which such individuals are subject due
to their positions with the Company and has concluded that such insurance may be
unavailable or too costly, and even if purchased it, and the statutory
provisions, may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and/or officers.
C. It is essential to the Company that it attract and retain as
officers and directors the most capable persons available and in order to induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve or continue to serve as a director and/or officer of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of the Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof,that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
1
<PAGE>
NOW, THEREFORE, in consideration of the services or continued services
of the Indemnitee and in order to induce the Indemnitee to serve or continue to
serve as director and/or officer, the Company and the Indemnitee do hereby agree
as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed inquiry, hearing, investigation, action, suit, arbitration
or other alternative dispute resolution mechanism or proceeding, formal or
informal, whether brought in the name of the Company or otherwise and whether of
a civil, criminal or administrative or investigative nature, by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he/she is serving in such
capacity at the time any liability or expense is incurred for which
indemnification or reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation:
attorneys' fees, costs, disbursements and retainers; accounting and witness
fees; fees of experts; travel and deposition costs; transcript costs, filing
fees, telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred in connection
with any investigations, judicial or administrative proceedings and appeals,
amounts paid in settlement by or on behalf of Indemnitee, and any expenses of
establishing a right to indemnification, pursuant to this Agreement or
otherwise, including reasonable compensation for time spent by the Indemnitee in
connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which he/she is not otherwise compensated by the Company
or any third party. The term "Expenses" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
2
<PAGE>
2. Agreement to Serve. The Indemnitee agrees to serve or to continue to
serve as a director and/or officer of the Company for so long as he/she is duly
elected or appointed or until such time as he/she tenders his/her resignation in
writing or is removed as a director and/or officer. However, nothing contained
in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company, any subsidiary or any other person.
3. Indemnification in Third Party Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding (other that a Proceeding by or in
the name of the Company to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, against all Expenses, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation; provided that any settlement of a Proceeding be
approved in writing by the Company.
4. Indemnification in Proceedings by or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or is otherwise involved in any Proceeding by
or in the name of the Company to procure a judgment in its favor by reason of
the fact that the Indemnitee was or is a director and/or officer of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, against all Expenses, judgments, fines
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and
3
<PAGE>
the Company's Articles of Incorporation.
5. Conclusive Presumption Regarding Standards of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable corporate law, for indemnification
pursuant to this Agreement, unless a determination is made that the Indemnitee
has not met such standards (i) by the Board of Directors by a majority vote of a
quorum thereof consisting of directors who were not parties to the Proceeding
due to which a claim is made under this Agreement, (ii) by the shareholders of
the Company by majority vote of a quorum thereof consisting of shareholders who
are not parties to the Proceeding due to which a claim is made under this
Agreement, (iii) in a written opinion by independent counsel, selection of whom
has been approved by the Indemnitee in writing, or (iv) by a court of competent
jurisdiction.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of the Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice or the settlement of a Proceeding without an
admission of liability, the Indemnitee shall be indemnified against all Expenses
incurred in connection therewith to the fullest extent permitted by applicable
corporate law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable corporate law; provided that the
Indemnitee shall undertake in writing to repay any advances if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
8. Partial Indemnification. If the Indemnitee is entitled under any
provision of the Agreement to indemnification by the
4
<PAGE>
Company for a portion of the Expenses, judgments, fines, penalties or ERISA
excise taxes actually and reasonably incurred by him/her in the investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount of his/her Expenses, judgments, fines, penalties or ERISA excise taxes,
the Company shall nevertheless indemnify the Indemnitee for the portion of
Expenses, judgments, fines, penalties or ERISA excise taxes to which the
Indemnitee is entitled.
9. Indemnification Procedure; Determination of Right to
Indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify the
Company, however, shall not relieve it from any liability which it may have to
the Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this
Agreement is not paid by the Company within thirty (30) days of receipt of
written notice, the rights provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual determination by the
directors or shareholders of the Company or independent legal counsel that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to
the action or create a presumption for the purpose of an action that the
Indemnitee has not met the applicable standard of conduct.
(c) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his/her right to indemnification or
5
<PAGE>
advances in whole or part pursuant to this Agreement shall also be indemnified
by the Company regardless of the outcome of such Proceeding.
(d) With respect to any Proceeding for which indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee for any Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, other than as provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employee his/her counsel in any Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company
of its assumption of the defense of the Proceeding shall be at the expense of
the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be advances by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which the Indemnitee has concluded that
there may be a conflict of interest between the Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to
this Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for
expenses with respect to a Proceeding initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to Proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute
6
<PAGE>
or law or otherwise as required under applicable corporate law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgment,
fines, penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment
under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgment,
fines, and/or penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, the rules and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local statutory law; and
(d) If a court of competent jurisdiction finally determines
that any indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
the Indemnitee continues to serve as a director and/or officer of the Company
and thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) In all D&O insurance policies, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors and/or officers.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines, in its
sole discretion, that such insurance is not reasonably available, the premium
costs for such insurance is
7
<PAGE>
so limited by exclusions that it provides an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company.
12. Indemnification Hereunder Not Exclusive. The indemnification provided by
this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under the Articles of Incorporation, Bylaws, any
agreement, vote of shareholders or disinterested directors, provision of
applicable corporate law, or otherwise, both as to action in his/her official
capacity and as to action in another capacity on behalf of the Company while
holding such office.
13. Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of the Indemnitee and his/her heirs, executors,
administrators and assigns, whether or not Indemnitee has ceased to be a
director or officer, and the Company and its successors and assigns.
14. Severability. Each and every paragraph, sentence, term and provision
hereof is separate and distinct so that if any paragraph, sentence, term or
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term or provision of this
Agreement shall be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable corporate law.
15. Savings Clause. If this Agreement or any paragraph, sentence, term or
provision hereof is invalidated on any ground by any court of competent
jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any
Expenses, judgments, fines, penalties for ERISA excise taxes incurred with
respect to any Proceeding to the full extent permitted by any
8
<PAGE>
applicable paragraph, sentence, term or provision of this Agreement that has not
been invalidated or by any other applicable provision of applicable corporate
law.
16. Interpretation; Governing Law. This Agreement shall be construed as a
whole and in accordance with its fair meaning. Headings are for convenience only
and shall not be used in construing meaning. This Agreement shall be governed
and interpreted in accordance with the laws of the Commonwealth of Pennsylvania.
17. Amendments. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Articles of Incorporation,
Bylaws, or by other agreements, including D&O Insurance policies.
18. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each party and
delivered to the other.
19. Notices. Any notice required to be given under this Agreement shall be
directed:
TO: UNITED STATES PROPERTIES, INC.
1 Montage Mountain Road
Moosic, Pennsylvania 18507
With a copy to:
Richard C. Fox, Esq.
3401 Lakeview Drive
Delray Beach, FL 33445
and;
9
<PAGE>
TO: JEFFREY R. PIRHALLA
2419 N. Main Avenue
Scranton, Pennsylvania 18508
or to such other address as either shall designate in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement
as of the date first written above.
INDEMNITEE:
/s/ JEFFREY R. PIRHALLA
-------------------------------
JEFFREY R. PIRHALLA
UNITED STATES PROPERTIES, INC.
By: /s/ JEFFREY R. PIRHALLA
-------------------------------
President
10
<PAGE>
INDEMNIFICATION AGREEMENT
WITH KATHRYN K. BERMAN
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement"; is made as of August 21, 1996,
by and between UNITED STATES PROPERTIES, INC., a Pennsylvania corporation
("Company"), and KATHRYN K. BERMAN ("Indemnitee"), a director and/or officer or
key executive, employee or consultant of the Company, or a person serving at the
request of the Company as a director, officer, employee or agent of another
enterprise.
RECITALS
A. The Indemnitee is currently serving or has agreed to serve as a
director and/or officer of the Company and in such capacity has rendered and/or
will render valuable services to the Company.
B. The Company has investigated the availability and sufficiency
liability insurance and applicable statutory indemnification provisions to
provide its directors and officers with adequate protection against various
legal risks and potential liabilities to which such individuals are subject due
to their position--, with the Company and has concluded that such insurance may
be unavailable or too costly, and even if purchased it, and the statutory
provisions, may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and/or officers.
C. It is essential to the Company that it attract and retain as
officers and directors the most capable persons available and in order to induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve or continue to serve as a director and/or officer of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of the Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof, that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
1
<PAGE>
NOW, THEREFORE, in consideration of the services or continued services
of the Indemnitee and in order to induce the Indemnitee to serve or continue to
Serve as director and/or officer, the Company and the Indemnitee do hereby agree
as follows:
1. Definitions. As used In this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed inquiry, hearing, investigation, action, suit, arbitration
or other alternative dispute resolution mechanism or proceeding, formal or
informal, whether brought in the, name of the Company or otherwise and whether
of a civil, criminai or administrative or investigative nature, by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he/she is serving in such
capacity at the time any liability or expense incurred for which indemnification
or reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation:
attorneys' fees, costs, disbursements and retainers; accounting and witness
fees; fees of experts; travel and deposition costs; transcript costs, filing
fees, telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatever paid or incurred in connection
with any investigations, judicial or administrative proceedings and appeals,
amounts paid in settlement by or on behalf of Indemnitee, and any expenses of
establishing a right to indemnification, pursuant to this Agreement or
otherwise, including reasonable compensation for time spent by the Indemnitee in
connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which he/she is not otherwise compensated by the Company
or any third party. The term "Expenses" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
2
<PAGE>
2. Agreement to Serve. The Indemnitee agrees to serve or to continue to
serve as a director and/or officer of the Company for long as he/she is duly
elected or appointed or until such time as he/she tenders his/her resignation in
writing or is removed as a -director and/or officer. However, nothing contained
In this, Agreement'. shall be construed as giving Indemnitee any right: to be
retained in the employ of the Company, any subsidiary or any other person.
3. Indemnification in Third Party Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding (other that a proceeding by or in
the name of the Company to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, against all expenses, judgments, fines,
penalties, and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation; provided that any settlement of a Proceeding be
approved in writing by the Company.
4. Indemnification in Proceedings by or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a, party to or is otherwise involved in any Proceeding by
or in the name of the Company to procure a judgment in its favor by reason of
the fact that the Indemnitee was or is a director and/or officer of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, against all Expenses, judgments, fines
penalties and ERISA excise taxes actually and reasonably incurred by the
Indermnitee in connection with the defense or settlement of such a Proceeding,
to the fullest extent permitted by applicable corporate law and
3
<PAGE>
the Company's Articles of Incorporation.
5. Conclusive Presumption Regarding Standards of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable corporate law, for indemnification
pursuant to this Agreement, unless a determination is made that the Indemnitee
has not met such standards (i) by the Board of Directors by a Majority vote of a
quorum thereof consisting of directors who were not parties to the Proceeding
due to which a claim is made under this Agreement, (ii) by the shareholders of
the Company by majority vote of a quorum thereof consisting of shareholders who
are not parties to the Proceeding due to which a claim is made under this
Agreement, (iii) in a written opinion by independent counsel, selection of whom
has been approved by the Indemnitee in writing, or (iv) by a court of competent
jurisdiction.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of the Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
mat-ter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prenjdice or the settlement of a Proceeding without an
admission of liability, the Indemnitee shall be indemnified against all Expenses
incurred in connection therewith to the fullest extent permitted by applicable
corporate law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable corporate law; provided that the
Indemnitee shall undertake in writing to repay any advances if it is ultimately
determined that the Indemnitee is not entitled to Indemnification.
8. Partial Indemnification. If the Indemnitee is entitled under any
provision of the Agreement to indemnification by the
4
<PAGE>
Company for a portion of the Expenses, judgments, fines, penalties or ERISA
excise taxes actually and -reasonably incurred by him/her in the investigation,
defense, appeal or settlement of any Prcceeding but not, however, for the total
amount of his/her Expenses, judgements, fines, penalties or ERISA excise taxes,
the Company shall nevertheless indemnify the Indemnitee for the portion of
Expenses, judgments, fines, penalties or ERISA excise taxes tc which the
Indemnitee is entitled.
9. indemnification Procedure; Determination of Right to
indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify the
Company, however, shall not relieve it from any liability which it may have to
the Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this
Agreement is not paid by the Company within thirty (30) days of receipt of
written notice, the rights provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual detemination by the
directors or shareholders of the Company or independent legal counsel that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to
the action or create a presumption for the purpose of an action that the
Indemnitee has not met the applicable standard of conduct.
(c) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his/her right to indemnification or
<PAGE>
advances in whole or part pursuant to this Agreement shall also he indemnified
the Company regardless of the Outcome of such Proceeding.
(d) With respect to any Proceeding for which Indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee for any Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, other than as provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right, to employee his/her counsel any Proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense of the Proceeding shall be at the expense of the
Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be advances by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which the Indemnitee has concluded that
there may be a conflict of interest between the Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to this
Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for
expenses with respect to a Proceeding initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to Proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute
6
<PAGE>
or law or otherwise as required under applicable corporate law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases of the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgment,
fines, penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment
under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgment,
fines and/or penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, the rules and regulations; promulgated thereunder and amendments thereto
or similar provisions of any federal, state or local statutory law; and
(d) If a court of competent jurisdiction finally determines
that any indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
the Indemnitee continues to serve as a director and/or officer of the Company
and thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) In all D&O insurance policies, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors and/or officers.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines, in its
sole discretion, that such insurance is not reasonably available, the premium
costs for such insurance is
7
<PAGE>
so limited by exclusions that it provides an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company.
12. Indemnification Hereunder Not Exclusive. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Indemnitee may be entitled under the Articles of Incorporation,
Bylaws, any agreement, vote of shareholders or disinterested directors,
provision of applicable corporate law, or otherwise, both as to action in
his/her official capacity and as to action in another capacity on behalf of the
Company while holding such office.
13. Successors and Assigns. This Agreement shall, be binding upon, and
shall inure to the benefit of the Indemnitee and his/her heirs, executors,
administrators and assigns, whether or not Indemnitee has ceased to be a
director or officer, and the Company and its successors and assigns.
14. Severability. Each and every paragraph, sentence, term and
provision hereof is separate and distinct so that if any paragraph, sentence,
term or provision hereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term, or provision of this
Agreement shall be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable corporate law.
15. Savinqs Clause. If this Agreement or any paragraph, sentence, term
or provision hereof is invalidated on any ground by any court of competent
jurisdiction, the Company shall nevertheless, indemnify the Indemnitee as to any
Expenses, judgments, fines, penalties for ERISA excise taxes incurred with
respect to any Proceeding to the full extent permitted by any
8
<PAGE>
applicable paragraph, sentence, term or provision of this agreement that has not
been invalidated or by any other applicable provision of applicable corporate
law.
16. Interpretation; Governing Law. This Agreement shall be construed as
a whole and in accordance with its fair meaning. Headings are for convenience
only and shall not be used in construing meaning. This Agreement shall be
governed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania.
17. Amendments. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sougtht. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Articles of Incorporation,
Bylaws, or by other agreements, including D&O insurance policies.
18. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
19. Notices. Any notice required to be given under this Agreement shall
be directed:
TO: UNITED STATES PROPERTIES, INC.
1 Montage Mountain Road
Moosic, Pennsylvania 18507
With a copy to:
RICHARD C. FOX, ESQ.
3401 Lakeview Drive
Delray Beach, FL 33445
and;
9
<PAGE>
TO; KATHRYN K. BERMAN
RR #1, Box 1153
Carbondale, Pennsylvania 18407
or to such other address as either shall desire in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement
as of the date first written above.
INDEMNITEE:
/s/ KATHRYN K. BERMAN
-----------------------------
KATHRYN K. BERMAN
UNITED STATES PROPERTIES, INC.
By: /s/ JEFFREY R. PIRHALLA
-----------------------------
President
10
<PAGE>
IDEMNIFICATION AGREEMENT
WITH RICHARD C. FOX
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of August 21, 1996,
by and between UNITED STATES PROPERTIES, INC., a Pennsylvania corporation
("Company"), and RICHARD C. FOX ("Indemnitee"), a director and/or officer or key
executive, employee or consultant of the Company, or a person serving at the
request of the Company as a director, officer, employee or agent of another
enterprise.
RECITALS
A. The Indemnitee is currently serving or has agreed to serve as a
director and/or officer of the Company and in such capacity has rendered and/or
will render valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and applicable statutory indemnification provisions to
provide its directors and officers with adequate protection against various
legal risks and potential liabilities to which such individuals are subject due
to their positions with the Company and has concluded that such insurance may be
unavailable or too costly, and even if purchased it, and the statutory
provisions, may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and/or officers.
C. It is essential to the Company that it attract and retain as
officers and directors the most capable persons available and in order to induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve or continue to serve as a director and/or officer of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of the Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof,that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
1
<PAGE>
NOW, THEREFORE, in consideration of the services or continued services
of the Indemnitee and in order to induce the Indemnitee to serve or continue to
serve as director and/or officer, the Company and the Indemnitee do hereby agree
as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed inquiry, hearing, investigation, action, suit, arbitration
or other alternative dispute resolution mechanism or proceeding, formal or
informal, whether brought in the name of the Company or otherwise and whether of
a civil, criminal or administrative or investigative nature, by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he/she is serving in such
capacity at the time any liability or expense is incurred for which
indemnification or reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation:
attorneys' fees, costs, disbursements and retainers; accounting and witness
fees; fees of experts; travel and deposition costs; transcript costs, filing
fees, telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred in connection
with any investigations, judicial or administrative proceedings and appeals,
amounts paid in settlement by or on behalf of Indemnitee, and any expenses of
establishing a right to indemnification, pursuant to this Agreement or
otherwise, including reasonable compensation for time spent by the Indemnitee in
connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which he/she is not otherwise compensated by the Company
or any third party. The term "Expenses" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
2
<PAGE>
2. Agreement to Serve. The Indemnitee agrees to serve or to continue to
serve as a director and/or officer of the Company for so long as he/she is duly
elected or appointed or until such time as he/she tenders his/her resignation in
writing or is removed as a director and/or officer. However, nothing contained
in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company, any subsidiary or any other person.
3. Indemnification in Third Party Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding (other that a Proceeding by or in
the name of the Company to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, against all Expenses, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation; provided that any settlement of a Proceeding be
approved in writing by the Company.
4. Indemnification in Proceedings by or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or is otherwise involved in any Proceeding by
or in the name of the Company to procure a judgment in its favor by reason of
the fact that the Indemnitee was or is a director and/or officer of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, against all Expenses, judgments, fines
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and
3
<PAGE>
the Company's Articles of Incorporation.
5. Conclusive Presumption Regarding Standards of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable corporate law, for indemnification
pursuant to this Agreement, unless a determination is made that the Indemnitee
has not met such standards (i) by the Board of Directors by a majority vote of a
quorum thereof consisting of directors who were not parties to the Proceeding
due to which a claim is made under this Agreement, (ii) by the shareholders of
the Company by majority vote of a quorum thereof consisting of shareholders who
are not parties to the Proceeding due to which a claim is made under this
Agreement, (iii) in a written opinion by independent counsel, selection of whom
has been approved by the Indemnitee in writing, or (iv) by a court of competent
jurisdiction.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of the Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice or the settlement of a Proceeding without an
admission of liability, the Indemnitee shall be indemnified against all Expenses
incurred in connection therewith to the fullest extent permitted by applicable
corporate law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable corporate law; provided that the
Indemnitee shall undertake in writing to repay any advances if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
8. Partial Indemnification. If the Indemnitee is entitled under any
provision of the Agreement to indemnification by the
4
<PAGE>
Company for a portion of the Expenses, judgments, fines, penalties or ERISA
excise taxes actually and reasonably incurred by him/her in the investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount of his/her Expenses, judgments, fines, penalties or ERISA excise taxes,
the Company shall nevertheless indemnify the Indemnitee for the portion of
Expenses, judgments, fines, penalties or ERISA excise taxes to which the
Indemnitee is entitled.
9. Indemnification Procedure; Determination of Right to
Indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify the
Company, however, shall not relieve it from any liability which it may have to
the Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this
Agreement is not paid by the Company within thirty (30) days of receipt of
written notice, the rights provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual determination by the
directors or shareholders of the Company or independent legal counsel that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to
the action or create a presumption for the purpose of an action that the
Indemnitee has not met the applicable standard of conduct.
(c) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his/her right to indemnification or
5
<PAGE>
advances in whole or part pursuant to this Agreement shall also be indemnified
by the Company regardless of the outcome of such Proceeding.
(d) With respect to any Proceeding for which indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee for any Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, other than as provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employee his/her counsel in any Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company
of its assumption of the defense of the Proceeding shall be at the expense of
the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be advances by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which the Indemnitee has concluded that
there may be a conflict of interest between the Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to
this Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for
expenses with respect to a Proceeding initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to Proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute
6
<PAGE>
or law or otherwise as required under applicable corporate law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgment,
fines, penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment
under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgment,
fines, and/or penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, the rules and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local statutory law; and
(d) If a court of competent jurisdiction finally determines
that any indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
the Indemnitee continues to serve as a director and/or officer of the Company
and thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) In all D&O insurance policies, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors and/or officers.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines, in its
sole discretion, that such insurance is not reasonably available, the premium
costs for such insurance is
7
<PAGE>
so limited by exclusions that it provides an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company.
12. Indemnification Hereunder Not Exclusive. The indemnification provided by
this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under the Articles of Incorporation, Bylaws, any
agreement, vote of shareholders or disinterested directors, provision of
applicable corporate law, or otherwise, both as to action in his/her official
capacity and as to action in another capacity on behalf of the Company while
holding such office.
13. Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of the Indemnitee and his/her heirs, executors,
administrators and assigns, whether or not Indemnitee has ceased to be a
director or officer, and the Company and its successors and assigns.
14. Severability. Each and every paragraph, sentence, term and provision
hereof is separate and distinct so that if any paragraph, sentence, term or
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term or provision of this
Agreement shall be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable corporate law.
15. Savings Clause. If this Agreement or any paragraph, sentence, term or
provision hereof is invalidated on any ground by any court of competent
jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any
Expenses, judgments, fines, penalties for ERISA excise taxes incurred with
respect to any Proceeding to the full extent permitted by any
8
<PAGE>
applicable paragraph, sentence, term or provision of this Agreement that has not
been invalidated or by any other applicable provision of applicable corporate
law.
16. Interpretation; Governing Law. This Agreement shall be construed as a
whole and in accordance with its fair meaning. Headings are for convenience only
and shall not be used in construing meaning. This Agreement shall be governed
and interpreted in accordance with the laws of the Commonwealth of Pennsylvania.
17. Amendments. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Articles of Incorporation,
Bylaws, or by other agreements, including D&O Insurance policies.
18. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each party and
delivered to the other.
19. Notices. Any notice required to be given under this
Agreement shall be directed:
TO: UNITED STATES PROPERTIES, INC.
1 Montage Mountain Road
Moosic, Pennsylvania 18507
With a copy to:
Richard C. Fox, Esq.
3401 Lakeview Drive
Delray Beach, FL 33445
and;
9
<PAGE>
TO: RICHARD C. FOX
3401 Lakeview Drive
Delray Beach, FL 33445
or to such other address as either shall designate in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement
as of the date first written above.
INDEMNITEE:
/s/ RICHARD C. FOX
------------------------------
RICHARD C. FOX
UNITED STATES PROPERTIES, INC.
By: /s/ JEFFREY R. PIRHALLA
--------------------------
President
10
<PAGE>
INDEMNIFICATION AGREEMENT
WITH THOMAS J. BELL
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of November 22, 1996,
by and between UNITED STATES PROPERTIES, INC., a Pennsylvania corporation
("Company"), and THOMAS J. BELL ("Indemnitee"), a director and/or officer or key
executive, employee or consultant of the Company, or a person serving at the
request of the Company as a director, officer, employee or agent of another
enterprise.
RECITALS
A. The Indemnitee is currently serving or has agreed to serve as a
director and/or officer of the Company and in such capacity has rendered and/or
will render valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and applicable statutory indemnification provisions to
provide its directors and officers with adequate protection against various
legal risks and potential liabilities to which such individuals are subject due
to their positions with the Company and has concluded that such insurance may be
unavailable or too costly, and even if purchased it, and the statutory
provisions, may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and/or officers.
C. It is essential to the Company that it attract and retain as
officers and directors the most capable persons available and in order to induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve or continue to serve as a director and/or officer of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of the Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof,that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
<PAGE>
NOW, THEREFORE, in consideration of the services or continued services
of the Indemnitee and in order to induce the Indemnitee to serve or continue to
serve as director and/or officer, the Company and the Indemnitee do hereby agree
as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed inquiry, hearing, investigation, action, suit, arbitration
or other alternative dispute resolution mechanism or proceeding, formal or
informal, whether brought in the name of the Company or otherwise and whether of
a civil, criminal or administrative or investigative nature, by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he/she is serving in such
capacity at the time any liability or expense is incurred for which
indemnification or reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation:
attorneys' fees, costs, disbursements and retainers; accounting and witness
fees; fees of experts; travel and deposition costs; transcript costs, filing
fees, telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred in connection
with any investigations, judicial or administrative proceedings and appeals,
amounts paid in settlement by or on behalf of Indemnitee, and any expenses of
establishing a right to indemnification, pursuant to this Agreement or
otherwise, including reasonable compensation for time spent by the Indemnitee in
connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which he/she is not otherwise compensated by the Company
or any third party. The term "Expenses" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
2
<PAGE>
2. Agreement to Serve. The Indemnitee agrees to serve or to continue to
serve as a director and/or officer of the Company for so long as he/she is duly
elected or appointed or until such time as he/she tenders his/her resignation in
writing or is removed as a director and/or officer. However, nothing contained
in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company, any subsidiary or any other person.
3. Indemnification in Third Party Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding (other than a Proceeding by or in
the name of the Company to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, against all Expenses, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation; provided that any settlement of a Proceeding be
approved in writing by the Company.
4. Indemnification in Proceedings by or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or is otherwise involved in any Proceeding by
or in the name of the Company to procure a judgment in its favor by reason of
the fact that the Indemnitee was or is a director and/or officer of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, against all Expenses, judgments, fines
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation.
3
<PAGE>
5. Conclusive Presumption Regarding Standards of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable corporate law, for indemnification
pursuant to this Agreement, unless a determination is made that the Indemnitee
has not met such standards (i) by the Board of Directors by a majority vote of a
quorum thereof consisting of directors who were not parties to the Proceeding
due to which a claim is made under this Agreement, (ii) by the shareholders of
the Company by majority vote of a quorum thereof consisting of shareholders who
are not parties to the Proceeding due to which a claim is made under this
Agreement, (iii) in a written opinion by independent counsel, selection of whom
has been approved by the Indemnitee in writing, or (iv) by a court of competent
jurisdiction.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of the Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice or the settlement of a Proceeding without an
admission of liability, the Indemnitee shall be indemnified against all Expenses
incurred in connection therewith to the fullest extent permitted by applicable
corporate law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable corporate law; provided that the
Indemnitee shall undertake in writing to repay any advances if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
8. Partial Indemnification. If the Indemnitee is entitled under any
provision of the Agreement to indemnification by
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the Company for a portion of the Expenses, judgments, fines, penalties or ERISA
excise taxes actually and reasonably incurred by him/her in the investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount of his/her Expenses, judgments, fines, penalties or ERISA excise taxes,
the Company shall nevertheless indemnify the Indemnitee for the portion of
Expenses, judgments, fines, penalties or ERISA excise taxes to which the
Indemnitee is entitled.
9. Indemnification Procedure; Determination of Right to
Indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify the
Company, however, shall not relieve it from any liability which it may have to
the Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this
Agreement is not paid by the Company within thirty (30) days of receipt of
written notice, the rights provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual determination by the
directors or shareholders of the Company or independent legal counsel that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to
the action or create a presumption for the purpose of an action that the
Indemnitee has not met the applicable standard of conduct.
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(c) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his/her right to indemnification or advances in whole or
part pursuant to this Agreement shall also be indemnified by the Company
regardless of the outcome of such Proceeding.
(d) With respect to any Proceeding for which indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee for any Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, other than as provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employee his/her counsel in any Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company
of its assumption of the defense of the Proceeding shall be at the expense of
the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be advances by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which the Indemnitee has concluded that
there may be a conflict of interest between the Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to this
Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for
expenses with respect to a Proceeding initiated or brought
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voluntarily by the Indemnitee and not by way of defense, except with respect to
Proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
applicable corporate law, but such indemnification or advancement of expenses
may be provided by the Company in specific cases if the Board of Directors finds
it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgment,
fines, penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment
under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgment,
fines, and/or penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, the rules and regulations promulgated thereunder and amendments thereto
or similar provisions of any federal, state or local statutory law; and
(d) If a court of competent jurisdiction finally determines
that any indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
the Indemnitee continues to serve as a director and/or officer of the Company
and thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) In all D&O insurance policies, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors and/or officers.
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(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines, in its
sole discretion, that such insurance is not reasonably available, the premium
costs for such insurance is so limited by exclusions that it provides an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
12. Indemnification Hereunder Not Exclusive. The indemnification provided by
this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under the Articles of Incorporation, Bylaws, any
agreement, vote of shareholders or disinterested directors, provision of
applicable corporate law, or otherwise, both as to action in his/her official
capacity and as to action in another capacity on behalf of the Company while
holding such office.
13. Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of the Indemnitee and his/her heirs, executors,
administrators and assigns, whether or not Indemnitee has ceased to be a
director or officer, and the Company and its successors and assigns.
14. Severability. Each and every paragraph, sentence, term and provision
hereof is separate and distinct so that if any paragraph, sentence, term or
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term or provision of this
Agreement shall be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable corporate law.
15. Savings Clause. If this Agreement or any paragraph,
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sentence, term or provision hereof is invalidated on any ground by any court of
competent jurisdiction, the Company shall nevertheless indemnify the Indemnitee
as to any Expenses, judgments, fines, penalties for ERISA excise taxes incurred
with respect to any Proceeding to the full extent permitted by any applicable
paragraph, sentence, term or provision of this Agreement that has not been
invalidated or by any other applicable provision of applicable corporate law.
16. Interpretation; Governing Law. This Agreement shall be construed as a
whole and in accordance with its fair meaning. Headings are for convenience only
and shall not be used in construing meaning. This Agreement shall be governed
and interpreted in accordance with the laws of the Commonwealth of Pennsylvania.
17. Amendments. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Articles of Incorporation,
Bylaws, or by other agreements, including D&O Insurance policies.
18. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each party and
delivered to the other.
19. Notices. Any notice required to be given under this Agreement shall be
directed:
TO: UNITED STATES PROPERTIES, INC.
1 Montage Mountain Road
Moosic, Pennsylvania 18507
With a copy to:
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Richard C. Fox, Esq.
P. O. Box 1097
Pecos, New Mexico 87552
and;
TO: THOMAS J. BELL
1034 Electric Street
Scranton, Pennsylvania 18509
or to such other address as either shall designate in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement
as of the date first written above.
INDEMNITEE:
/s/ THOMAS J. BELL
-------------------------
THOMAS J. BELL
UNITED STATES PROPERTIES, INC.
By: /s/ Jeffrey R. Pirhalla
--------------------------
President
<PAGE>
UNITED STATES PROPERTIES, INC.
ONE MONTAGE MOUNTAIN ROAD
MOOSIC, PA 18507-1777
February 18, 1997
Andreas V. Kissal
426 East 85th Street, #3A
New York, New York 10028
Dear Mr. Kissal:
As used in this Agreement, you are hereinafter called the
Employee, and we are hereinafter called the Employer.
You have indicated that you wish to be employed by us, and we
have indicated a willingness to employ you, under the terms and conditions
hereinafter set forth. It is therefore agreed as follows:
1. Employment. The Employer hereby employs the Employee and
the Employee hereby accepts employment upon the terms and conditions hereinafter
set forth.
2. Term. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall begin on March 1, 1997,
and shall terminate on February 28, 1999.
3. Compensation. For all services rendered by the Employee
under this Agreement, the Employer shall pay the Employee on hundred-fifty
thousand ($150,000.00) dollars per annum, payable in bi-weekly installments of
$5,769.23, during the full term of the Employee's employment. In addition, the
Employer shall pay the Employee 10% of the Employer's pre-tax profits above the
sum of $1,000,000 per each 12 month period earned by the Employer during the
term of this Agreement, as determined by the Employer's accountants in
accordance with generally accepted accounting principles, and such amounts of
incentive and bonus compensation under any present or future incentive or bonus
plan of the Employer as may in the judgment of its Board of Directors be deemed
appropriate. No compensation shall be payable to the Employer under any of the
following conditions: a) the Employee is in default under the terms of this
Agreement; b) the Employee resigns from the employ of the Employer; c) the
Employee is absent from his employment for a continuous period of more than four
(4) weeks; or d)the Employee is terminated for cause pursuant to paragraph 11 of
this Agreement. Compensation provided for herein is in lieu of all other
compensation and benefits. The Employee shall not be entitled to any health,
insurance, or other fringe benefits from the Employer except for such that the
Employee's Board of Directors deems appropriate in the future pursuant to formal
board resolution. In addition to the foregoing, the Employee is hereby granted
the option to purchase 22,500 share of the Employer's common stock pursuant to
paragraph 4 of the Employer's "Key Employee Incentive Stock Option Plan".
<PAGE>
4. Duties. The Employee is engaged a President and Chief
Executive Officer of the Employer. The precise services of the Employee may be
extended or curtailed, from time to time, at the direction of the Employer. If
the Employee is elected or appointed a director of the Employer during the term
of this Agreement, the Employee will serve in such capacity without further
additional compensation, but nothing herein shall be construed as requiring the
Employer, or anybody else, to cause the election or appointment of the Employee
as such director. The Employee's job description is more particularly set forth
in Exhibit 1 annexed hereto.
5. Extent of services. The Employee shall devote his entire
time, attention, and energies to the business of the Employer, and shall not
during the term of this Agreement be engaged in any other business activity
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage.
6. Working facilities. The Employee shall be furnished with a
computer and such facilities and services in the City of New York as the
Employer may determine is suitable to the Employee's position and adequate for
the performance of the Employee's duties.
7. Disclosure of information. The Employee recognizes and
acknowledges that the Employer's confidential sales, brokerage, and marketing
methods, and the confidential list of the Employer's customers, suppliers, and
business contacts, as same may exist from time to time, are valuable, special,
and unique assets of the Employer's business. The Employee will not, during or
after the term of his employment, disclose the Employer's confidential sales,
brokerage, or marketing methods, or the confidential list of the Employer's
customers, suppliers, or business contacts, or any part thereof to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever.
8. Expenses. Subject to the Employer's prior written approval,
the Employee may be authorized to incur reasonable expenses for promoting the
business of the Employer, including expenses for entertainment, travel, and
similar items. The Employer will reimburse the Employee for all such approved
expenses upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures.
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9. Vacations. The Employee shall be entitled each year to four
(4) weeks of vacation in accordance with the Employer's present or future
vacation program now or hereinafter in effect for executive personnel, during
which time the Employee's salary shall be paid in full.
10. Disability. Notwithstanding anything herein to the
contrary, the Employer may terminate this Agreement at any time after the
Employee shall be absent from his employment, for whatever cause, for a
continuous period of more than four (4) weeks, and all obligations of the
Employer hereunder shall cease upon any such termination.
11. Termination for Cause. The Employer may terminate this
Agreement without liability (other than for payments accrued to the date of
termination) if the Employee's employment is terminated "for cause". The term
"for cause" shall mean, for the purposes of this Agreement (i) a material breach
by Employee of the provisions of this Agreement, (ii) the commission by Employee
of a fraud against the Employer or the conviction of Employee for committing,
aiding, or abetting a felony, a fraud, a crime involving a moral turpitude or a
business crime, or (iii) the knowing possession or use of illegal drugs or
prohibited substances, unless pursuant to a prescription authorized by a
licensed medical practitioner, the excessive drinking of alcoholic beverages
which impairs the Employee's ability to perform his duties hereunder, or the
appearance (reasonably determined) during hours of employment of being under the
influence of such drugs, substances or alcohol.
12. Employee Covenants. The Employee further agrees as
follows:
(a) That it is a material inducement for the Employer to enter
into this Agreement that the Employee shall not compete with the Employer as
hereinafter provided. Accordingly, during this term of this Agreement, or any
extensions thereof, the Employee shall not (1) engage in any barter, brokerage,
sales, or sales promotion activity (whether or not resulting in the consummation
of such activities) that concerns products or services of the same or similar
type and use hereinbefore or hereafter sold, marketed, brokered, or bartered by
the Employer, when such sales, sales promotion, brokerage or bartering activity
directly or indirectly involves any solicitation effort by the Employee directed
to any prospective party which has dealt with the Employer at any time during
the term of this Agreement, or who dealt with the Employer at any time prior to
the execution of this Agreement, and (2) directly or indirectly, alone or as a
member of a partnership or as an officer, director, agent or employee of an
other person, firm or corporation, own, manage, operate, join, control, be
employed by, broker, or participate in the ownership, management operation or
control of, or be
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connected in any manner with any business of developing, producing, brokering,
bartering, or marketing products or services which are competitive with the
business of the Employer.
(b) The Employee shall notify the Employer of business
contacts or improvements to the methods of the Employer developed by him during
the term of this Agreement. All such improvements or business contacts shall be
the exclusive property of the Employer.
(c) The Employee expressly agrees and acknowledges that any
breach or threatened breach by the Employee of paragraph 7, or of this paragraph
12, will cause irreparable damage to the Employer for which monetary damages
will be an inadequate remedy, and that the damages flowing from such breach are
not readily susceptible to be measured in monetary terms. Accordingly, in
addition to all of the Employer's rights and remedies under this Agreement,
including but not limited to the right of recovery of monetary damages from the
Employee, the Employer shall be entitled, and the Employee hereby consents to
issuance by any court of competent jurisdiction of temporary, preliminary and
permanent injunctions, without bond, enjoining any such breach or threatened
breach by the Employee. The Employee's sole remedy in the event of any
injunction or order shall be dissolution thereof, if warranted, upon duly held
hearing in a court of competent jurisdiction.
13. Waiver. No provisions of this Agreement shall be or be
deemed to be waived or modified unless the same be in writing and in each
waiver, if any, shall be a waiver only with respect to the specific instance
involved.
14. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of their respective heirs, legal representatives,
successors, and assigns of Employer and Employee.
Please be kind enough to confirm the foregoing by signing and
returning the enclosed copy of this Agreement, thereby making this Agreement a
binding legal agreement between us.
Yours truly,
United States Properties, Inc.,
Employer
By: /s/ Jeffrey R. Pirhalla
---------------------------------
Jeffrey R. Pirhalla, President
ACCEPTED AND AGREED:
/s/ Andreas V. Kissal
- ---------------------------
Andreas V. Kissal, Employee
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<PAGE>
POSITION RESPONSIBILITIES:
1. Manage USP by promoting and assuring success of USP's business goals:
a. The creation of a national network for the disposal of real estate and
other financial assets through corporate trading, cash investments of a
combination thereof.
b. The ability to make opportunistic cash investments related to the
disposal of real estate and other financial assets.
c. The sourcing of commodity trading opportunities which enhance the
ability of Active International to close transactions sourced by USP.
2. Work with ownership to establish key operating goals including: revenues,
expense targets, pre-tax profits, growth and related activities.
3. Manage all operating functions within USP to assure meeting operating goals.
a. Recommend/approve all staff changes/hires.
4. Create/Assist in the Creation of/Manage a nationwide commercial real estate
network to source transactions for investment/trade finance solutions.
a. Establish/help establish operating systems and working guidelines.
b. Set transaction success criteria.
c. Create/review national marketing presence including the preparation of
materials and managing media relations.
d. Manage/monitor transactions to assure timely closing.
5. Manage the interface with Active International as the sole source of any
trade finance structure brought to any real estate transactions sourced by USP.
Perform all functions necessary to assure timely closings to realize goals for
this segment of the business.
a. Work with AI's senior management and assigned salesman to assure timely
closing.
b. Interface with broker/client to assure trust and confidence in USP's
ability to close transactions in a timely manner.
6. Identify and assist in the sourcing of strategic trading opportunities which
expedite the closing of trade finance transactions with Active International
and which help meet key strategic business goals.
a. Manage interface with/monitor Trade Finance activities at Active: (sales,
commodity trading and new initiatives) and at Global Countertrade.
b. Screen initiatives and manage progress and performance of Active (in
short, avoid PECO-type confusion).
<PAGE>
POSITION RESPONSIBILITIES
(Continued)
7. Source investment opportunities appropriate to USP business goals.
a. Source investment opportunities consistent with USP's business goals.
b. Recommend new initiatives/investments as appropriate to ownership which
enhance USP's ability to close transactions.
<PAGE>
INDEMNITY AGREEMENT
WITH ANDREAS V. KISSAL
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of March 1, 1997, by
and between UNITED STATES PROPERTIES, INC., a Pennsylvania corporation
("Company"), and ANDREAS V. KISSAL ("Indemnitee"), a director and/or officer or
key executive, employee or consultant of the Company, or a person serving at the
request of the Company as a director, officer, employee or agent of another
enterprise.
RECITALS
A. The Indemnitee is currently serving or has agreed to serve as a
director and/or officer of the Company and in such capacity has rendered and/or
will render valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and applicable statutory indemnification provisions to
provide its directors and officers with adequate protection against various
legal risks and potential liabilities to which such individuals are subject due
to their positions with the Company and has concluded that such insurance may be
unavailable or too costly, and even if purchased it, and the statutory
provisions, may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and/or officers.
C. It is essential to the Company that it attract and retain as
officers and directors the most capable persons available and in order to induce
and encourage highly experienced and capable persons such as the Indemnitee to
serve or continue to serve as a director and/or officer of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of the Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof,that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
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NOW, THEREFORE, in consideration of the services or continued services
of the Indemnitee and in order to induce the Indemnitee to serve or continue to
serve as director and/or officer, the Company and the Indemnitee do hereby agree
as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed inquiry, hearing, investigation, action, suit, arbitration
or other alternative dispute resolution mechanism or proceeding, formal or
informal, whether brought in the name of the Company or otherwise and whether of
a civil, criminal or administrative or investigative nature, by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he/she is serving in such
capacity at the time any liability or expense is incurred for which
indemnification or reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation:
attorneys' fees, costs, disbursements and retainers; accounting and witness
fees; fees of experts; travel and deposition costs; transcript costs, filing
fees, telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred in connection
with any investigations, judicial or administrative proceedings and appeals,
amounts paid in settlement by or on behalf of Indemnitee, and any expenses of
establishing a right to indemnification, pursuant to this Agreement or
otherwise, including reasonable compensation for time spent by the Indemnitee in
connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which he/she is not otherwise compensated by the Company
or any third party. The term "Expenses" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
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2. Agreement to Serve. The Indemnitee agrees to serve or to continue to
serve as a director and/or officer of the Company for so long as he/she is duly
elected or appointed or until such time as he/she tenders his/her resignation in
writing or is removed as a director and/or officer. However, nothing contained
in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company, any subsidiary or any other person.
3. Indemnification in Third Party Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding (other than a proceeding by or in
the name of the Company to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director and/or officer of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, against all Expenses, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation; provided that any settlement of a Proceeding be
approved in writing by the Company.
4. Indemnification in Proceedings by or In the Name of the Company. The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or is otherwise involved in any Proceeding by
or in the name of the Company to procure a judgment in its favor by reason of
the fact that the Indemnitee was or is a director and/or officer of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another enterprise, against all Expenses, judgments, fines
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such a Proceeding, to
the fullest extent permitted by applicable corporate law and the Company's
Articles of Incorporation.
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5. Conclusive Presumption Regarding Standards of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable corporate law, for indemnification
pursuant to this Agreement, unless a determination is made that the Indemnitee
has not met such standards (i) by the Board of Directors by a majority vote of a
quorum thereof consisting of directors who were not parties to the Proceeding
due to which a claim is made under this Agreement, (ii) by the shareholders of
the Company by majority vote of a quorum thereof consisting of shareholders who
are not parties to the Proceeding due to which a claim is made under this
Agreement, (iii) in a written opinion by independent counsel, selection of whom
has been approved by the Indemnitee in writing, or (iv) by a court of competent
jurisdiction.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of the Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice or the settlement of a Proceeding without an
admission of liability, the Indemnitee shall be indemnified against all Expenses
incurred in connection therewith to the fullest extent permitted by applicable
corporate law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable corporate law; provided that the
Indemnitee shall undertake in writing to repay any advances if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
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<PAGE>
8. Partial Indemnification. If the Indemnitee is entitled under any
provision of the Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties or ERISA excise taxes actually and
reasonably incurred by him/her in the investigation, defense, appeal or
settlement of any Proceeding but not, however, for the total amount of his/her
Expenses, judgments, fines, penalties or ERISA excise taxes, the Company shall
nevertheless indemnify the Indemnitee for the portion of Expenses, judgments,
fines, penalties or ERISA excise taxes to which the Indemnitee is entitled.
9. Indemnification Procedure; Determination of Right to
Indemnification.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify the
Company, however, shall not relieve it from any liability which it may have to
the Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this
Agreement is not paid by the Company within thirty (30) days of receipt of
written notice, the rights provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual determination by the
directors or shareholders of the Company or independent legal counsel that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to
the action or create a presumption for the purpose of an action that the
Indemnitee has not met the applicable standard of conduct.
5
<PAGE>
(c) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his/her right to indemnification or advances in whole or
part pursuant to this Agreement shall also be indemnified by the Company
regardless of the outcome of such Proceeding.
(d) With respect to any Proceeding for which indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee for any Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, other than as provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employee his/her counsel in any Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company
of its assumption of the defense of the Proceeding shall be at the expense of
the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be advances by the Company. The
Company shall not be entitled to assume the defense of any Proceeding brought by
or on behalf of the Company or as to which the Indemnitee has concluded that
there may be a conflict of interest between the Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to this
Agreement shall be made by the Company:
6
<PAGE>
(a) To indemnify or advance funds to the Indemnitee for
expenses with respect to a Proceeding initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to Proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under applicable corporate law,
but such indemnification or advancement of expenses may be provided by the
Company in specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgment,
fines, penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment
under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgment,
fines, and/or penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934, the rules and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local statutory law; and
(d) If a court of competent jurisdiction finally determines
that any indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, as long as
the Indemnitee continues to serve as a director and/or officer of the Company
and thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) In all D&O insurance policies, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors and/or officers.
7
<PAGE>
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines, in its
sole discretion, that such insurance is not reasonably available, the premium
costs for such insurance is so limited by exclusions that it provides an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
12. Indemnification Hereunder Not Exclusive. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Indemnitee may be entitled under the Articles of Incorporation,
Bylaws, any agreement, vote of shareholders or disinterested directors,
provision of applicable corporate law, or otherwise, both as to action in
his/her official capacity and as to action in another capacity on behalf of the
Company while holding such office.
13. Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of the Indemnitee and his/her heirs, executors,
administrators and assigns, whether or not Indemnitee has ceased to be a
director or officer, and the Company and its successors and assigns.
14. Severability. Each and every paragraph, sentence, term and
provision hereof is separate and distinct so that if any paragraph, sentence,
term or provision hereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof. To
the extent required, any paragraph, sentence, term or provision of this
Agreement shall be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable corporate law.
8
<PAGE>
15. Savings Clause. If this Agreement or any paragraph, sentence, term
or provision hereof is invalidated on any ground by any court of competent
jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any
Expenses, judgments, fines, penalties for ERISA excise taxes incurred with
respect to any Proceeding to the full extent permitted by any applicable
paragraph, sentence, term or provision of this Agreement that has not been
invalidated or by any other applicable provision of applicable corporate law.
16. Interpretation; Governing Law. This Agreement shall be construed as
a whole and in accordance with its fair meaning. Headings are for convenience
only and shall not be used in construing meaning. This Agreement shall be
governed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania.
17. Amendments. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Articles of Incorporation,
Bylaws, or by other agreements, including D&O Insurance policies.
18. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
9
<PAGE>
19. Notices. Any notice required to be given under this Agreement shall
be directed:
TO: UNITED STATES PROPERTIES, INC.
1 Montage Mountain Road
Moosic, Pennsylvania 18507
With a copy to:
Richard C. Fox, Esq.
P. O. Box 1097
Pecos, New Mexico 87552
and;
TO: ANDREAS V. KISSAL
426 E. 85TH Street, #3A
New York, NY 10028
or to such other address as either shall designate in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement
as of the date first written above.
INDEMNITEE:
/s/ ANDREAS V. KISSAL
------------------------------------
ANDREAS V. KISSAL
UNITED STATES PROPERTIES, INC.
By: /s/ ANDREAS V. KISSAL
--------------------------------
President
10
<PAGE>
Exhibit 21.1
Subsidiaries of the Registrant
- ------------------------------
_____________________________________________________
UNITED STATES PROPERTIES, INC.
_____________________________________________________
\
\
\
\
_____________________________________________________
United States Properties Ten, Inc.
_____________________________________________________
<PAGE>
Exhibit 23.1
CONSENT OF
MARKS SHRON & COMPANY, LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
United States Properties, Inc.
We hereby consent to the inclusion of our audit report dated April 24, 1997 and
audited financial statements as of December 31, 1996 of United States
Properties, Inc. We also consent to the reference to our Firm in Form 10-SB.
/s/ Marks Shron & Company, LLP
- ----------------------------------
Marks Shron & Company, LLP
Certified Public Accountants
Great Neck, New York
June 11, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
United States Properties, Inc.
We hereby consent to the inclusion of our compilation report dated May 20, 1997
and compiled financial statements as of March 31, 1997 of United States
Properties, Inc. We also consent to the reference to our Firm in Form 10-SB
/s/ Marks Shron & Company, LLP
- --------------------------------
Marks Shron & Company, LLP
Certified Public Accountants
Great Neck, New York
June 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
United State Properties Incorporated (A Development Stage Company) for the
period from May 28, 1996 (Inception) to December 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-28-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,183
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 8,545
<CURRENT-ASSETS> 0
<PP&E> 3,093
<DEPRECIATION> 309
<TOTAL-ASSETS> 13,052
<CURRENT-LIABILITIES> 154,570
<BONDS> 0
0
0
<COMMON> 3,505
<OTHER-SE> (145,023)
<TOTAL-LIABILITY-AND-EQUITY> 13,052
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 228,725
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (228,725)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,725)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
United States Properties Incorporated (A Development Stage Company). March 31,
1997 and the period May 28, 1996 (inception) to March 31, 1997.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 10-MOS
<FISCAL-YEAR-END> JAN-1-1998 MAY-28-1998
<PERIOD-START> JAN-1-1997 MAY-28-1996
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 60,430 60,430
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 8,545 8,545
<CURRENT-ASSETS> 0 0
<PP&E> 3,640 3,640
<DEPRECIATION> 464 464
<TOTAL-ASSETS> 76,144 76,144
<CURRENT-LIABILITIES> 143,765 143,765
<BONDS> 0 0
0 0
0 0
<COMMON> 3,880 3,880
<OTHER-SE> (71,501) (71,501)
<TOTAL-LIABILITY-AND-EQUITY> 76,144 76,144
<SALES> 0 0
<TOTAL-REVENUES> 140 140
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 117,577 346,304
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (117,437) (346,164)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (117,437) (346,164)
<EPS-PRIMARY> (.03) (.09)
<EPS-DILUTED> 0 0
</TABLE>
