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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from___________________ to ______________________
COMMISSION FILE NUMBER 0-21825
STREICHER MOBILE FUELING, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0707824
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2720 N.W. 55TH COURT, FORT LAUDERDALE, FLORIDA 33309
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(Address of principal executive offices) (Zip Code)
(954) 739-3880
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON WHICH REGISTERED
- ----------------------------------------- ----------------------------
COMMON STOCK, $.01 PAR VALUE CHICAGO STOCK EXCHANGE
REDEEMABLE COMMON STOCK PURCHASE WARRANTS CHICAGO STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's Common Stock held by
non-affiliates as of April 22, 1998 was $5,806,875 computed by reference to the
closing bid price of the Common Stock on such date.
As of April 22, 1998 there were 2,575,000 shares of the registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into
the parts indicated: The registrant's definitive Proxy Statement to be filed
with the Securities and Exchange Commission not later than 120 days after the
end of the fiscal year covered by this report -- Part III.
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ITEM 1. DESCRIPTION OF BUSINESS
This Form 10-K contains "forward-looking statements" which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in Item 7, Management's Discussion and Analysis and
Plan of Operations under the caption "Certain Factors Affecting Future Operating
Results" and elsewhere in this Form 10-K.
The Company provides mobile fueling services, primarily to customers which
operate large fleets of vehicles (such as governmental agencies, utilities,
major trucking lines, hauling and delivery services and national courier
services). Company-owned custom fuel trucks deliver fuel on a regularly
scheduled or as needed basis directly to vehicles at customer locations,
assuring the Company's customers a dependable supply of fuel at competitive
rates. The Company utilizes its proprietary electronic fuel management system to
measure, record and track fuel dispensed to each vehicle fueled at a customer
location. This allows the Company to verify the amount of fuel delivered and
provides its customers with customized fleet fuel data for management analysis
and tax reporting. Additionally, the Company's fuel management system reduces
the risk of employee theft by dispensing fuel only to authorized vehicles. The
Company believes that mobile fueling provides several economic and other
advantages to its customers, including eliminating the costs and potential
environmental liabilities associated with equipping and maintaining fuel storage
and dispensing facilities, reducing labor and administrative costs associated
with fueling vehicles and providing centralized control over fuel inventories
and usage. The Company also believes that federal and state environmental
regulations have created opportunities for the Company to convert to mobile
fueling customers fleet operators that currently utilize underground storage
tanks.
Founded by Stanley H. Streicher, the Company's President and Chief Executive
Officer, the Company's predecessor commenced its mobile fueling operations in
1983. The Company presently has operations in seven locations throughout
Florida, Los Angeles and Hayward, California; Atlanta, Georgia; Chattanooga and
Kingsport, Tennessee; Dallas/Fort Worth, Texas and Kenner and Lake Charles,
Louisiana. During March 1998, the Company operated a fleet of 70 custom fuel
trucks and was delivering fuel at a rate of over 3.5 million gallons per month.
THE MOBILE FUELING INDUSTRY
Traditionally, business and other entities that operate large fleets of
vehicles have met their fueling requirements by either maintaining their own
supply of fuel in on-site storage tanks or fueling vehicles with credit card
purchases or other credit arrangements at local retail gas stations. On-site
storage tanks and fueling facilities can be expensive to construct and maintain
and expose the property owner and operator to potential liability associated
with fuel leaks or spills. In addition, increasingly stringent federal and state
environmental regulation of underground storage tanks will require businesses
that maintain their own fuel supplies to spend significant amounts to remove or
retrofit underground storage tanks to meet regulatory standards. For example,
federal regulations designed to protect the nation's soil and groundwater from
contamination by leaking underground petroleum storage tanks currently require
that all new storage tanks and, by December 1998, all existing storage tanks
comply with certain construction standards and contain leak detection systems.
Some states, including Florida, have promulgated their own detailed criteria for
new underground storage tanks and the retrofitting of older underground storage
tanks, and in some instances such criteria are more stringent than the federal
regulations. The Company believes that many fleet operators currently utilizing
underground storage tanks will choose to meet their fueling requirements by
other means, including mobile fueling, instead of investing in upgrading
existing facilities.
Fueling fleet vehicles at retail gas stations is an inefficient use of
employee time, creates a significant amount of unnecessary paperwork and exposes
the fleet operator to an increased risk of employee fraud. In addition, while
large users often are able to negotiate favorable fuel pricing from retail gas
stations, the labor time expended by having employees fuel their own vehicles as
well as the costs associated with management and administration of fuel
purchases can exceed the benefits associated with price discounts.
The Company believes that mobile fueling services, such as those provided by
the Company, offer several benefits over traditional fueling methods:
- Reduced Operating Costs and Increased Labor Productivity. Mobile
fueling enables businesses to reduce operating costs by eliminating the
need for company employees to fuel vehicles either on-site or at local
retail gas stations. Overnight fueling prepares fleet vehicles for
operation at the beginning of each work day and increases labor
productivity by allowing employees to use their
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vehicles during time that would otherwise be spent fueling. Mobile
fueling also reduces the administrative burden required to oversee and
administer fuel purchases and inventories.
- Provides Centralized Inventory Control and Management. The Company's
fuel management system provides customers with weekly reports detailing,
among other things, the location, description and daily and weekly fuel
consumption of each vehicle fueled by the Company. This eliminates
customers' need to invest working capital to maintain adequate fuel
supplies, and allows customers to centralize their fuel inventory
controls and track and analyze vehicle movement and fuel consumption for
management and tax reporting purposes.
- Provides Tax Reporting Benefits. The Company's fuel management
system's ability to track fuel consumption to specific vehicles and fuel
tanks provides tax benefits to customers who consume fuel in uses that
are tax-exempt, such as for off-road vehicles, government-owned vehicles
and fuel used to run refrigerator units on vehicles. For such uses, the
customers receive reports which provide them with the information
required to substantiate such tax exemptions.
- Eliminates Expenses and Liabilities of On-site Storage. Fleet
operators who previously satisfied their fuel requirements using on-site
storage tanks can eliminate the capital expenditures and operating costs
required to equip and maintain fuel storage and dispensing facilities
and inventory and to comply with increasingly stringent environmental
regulations. In addition, by removing on-site storage tanks and relying
on mobile fueling, customers avoid potential liabilities associated with
the handling and storage of fuel.
- Prevents Fuel Theft. Fleet operators that rely on employees to fuel
vehicles, whether at on-site facilities or at retail gas stations, often
experience shrinkage of fuel inventories or excess fuel purchases due to
employee fraud. The Company's fuel management system reduces the risk of
employee theft by dispensing fuel only to authorized vehicles. Utilizing
an independent contractor such as the Company for fueling services
rather than allowing employees to purchase fuel at local retail stations
also eliminates employee fraud due to credit card abuse.
- Emergency Fuel Supplies. Emergency preparedness, including fuel
availability, is critical to the operation of utilities, delivery
services and other fleet operators. The Company provides access to
emergency fuel supplies to allow customers to respond more effectively
to severe local weather conditions or other emergency situations.
MARKETING AND CUSTOMERS
The Company markets its services primarily to customers which operate large
fleets of vehicles in connection with their business (such as governmental
agencies, utilities, major trucking lines, hauling and delivery services and
national courier services). The Company also seeks to obtain the business of
smaller fleet operators which are in geographical proximity to its larger
customers. Once engaged to provide fueling services, the Company is usually the
exclusive service for the fueling of a customer's entire fleet or a particular
yard of vehicles. For potential customers with larger fleets, the Company
generally obtains approval from regional corporate offices to supply fuel within
a newly designated area. Whereas large fleet operators offer immediate market
penetration on a regional basis, small fleet operators are equally important
accounts because they provide geographic density which optimizes fuel delivery
efficiency and minimizes cost.
The Company's sales representatives focus their marketing efforts on fleet
operators within the Company's established service areas. The Company's sales
representatives identify and directly contact candidates for the Company's
services. Direct marketing, including telephone solicitation, has played a
primary role in the Company's development of new business. Another important
marketing source has been referrals from existing customers.
The Company distributes gas and diesel fuel to approximately 350 customers.
Three customers accounted for more than 30% of the Company's revenue in the
years ended January 31, 1998 and 1997. Although the Company has contracts to
provide mobile fueling services to several of its larger customers, generally
the Company does not obtain written agreements with its customers.
OPERATIONS
The Company currently operates from 15 locations in California, Florida,
Georgia, Tennessee, Louisiana and Texas. The Company delivers fuel utilizing its
own fleet of 70 custom fuel trucks, most of which are equipped with the
Company's proprietary electronic fuel tracking and reporting system. The
Company's vehicles have fuel capacities ranging from 2,800 to 4,400 gallons.
Generally, each vehicle services between five and 15 customer locations per day
or night, depending on size of the customers, market density and the individual
customers' fuel requirements. Generally, the custom fuel trucks acquire fuel
inventory daily at local port facilities or large wholesale gas
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distributor locations and are assigned to a specified delivery route. The
Company conducts all dispatch and billing functions from corporate headquarters.
Route drivers and service personnel operate from all the Company's offices.
The Company's fuel management system derives its data from the Fuel Tracking
Controller (the "FTC Computer"), which is a computer installed on a customized
fuel truck. The FTC Computer can be programmed to control a variety of truck
configurations; single, dual, or triple storage container trucks; and any number
of pumps and hoses attached to the fuel truck. The FTC Computer details fueling
from the Company's trucks to each vehicle in the customer's vehicle fleet to a
measurement of 1/100 of a gallon by reading the state-calibrated meter installed
on the fuel trucks. To accomplish this measurement, the FTC Computer interfaces
with hand-held devices operated by the Company's driver or operator. During
1997, the Company received a patent from the United States Patent and Trademark
Office for its proprietary electronic fuel management system.
To permit the Company's customers to track their use of fuel, each fleet
vehicle or piece of equipment fueled by the Company is electronically identified
from a list of the customer's asset number previously registered in the
Company's computer. For security and tracking purposes, the FTC Computer will
not permit fuel to be dispensed from the Company's truck unless both the fleet
yard and the individual vehicle to be fueled electronically correspond to the
FTC Computer registration. A hand-held radio connected to a scanning device
links the operator or driver of the fuel truck with the FTC Computer. Only after
verification of both the yard and the truck or piece of equipment will the FTC
Computer allow operation of the fuel pump on the fuel truck to dispense fuel.
All fuel dispensing from a fuel truck is recorded by the FTC Computer and
stored in a tamper free solid state memory cartridge ("SSC") for downloading at
an operations control center where the data is assimilated into reports and
invoices for the customer. The FTC Computer will not allow fuel to be dispensed
unless this removable SSC cartridge is inserted into the FTC Computer. The SSC
has no moving parts and is not susceptible to damage or data loss under normal
conditions. The SSC also is protected by a dual battery back-up system and a
dual disk system to protect data. The Company also maintains a backup computer
system in the event of failure of the primary system.
The Company also has adapted its FTC Computer for use with fixed site tanks.
Upon conversion of a customer tank, the Company services and manages fuel
delivery to the tank and provides the customer with reports detailing fuel
dispensed by the customer from the tank into each fleet vehicle.
FUEL SUPPLY
Gas and diesel fuel are commodities which are processed and sold by various
sources. The Company purchases fuel from several major suppliers at spot market
prices and often qualifies for volume discounts. The Company monitors fuel
prices and price trends in each of its markets on a daily basis and seeks to
purchase at the lowest available prices with the best terms satisfactory to the
Company.
CUSTOM FUEL TRUCK PURCHASES
The Company presently orders and purchases custom fuel trucks from several
manufacturers of trucks suitable for the Company's operations. These companies
provide their customers with the option of purchasing standard equipment fuel
trucks or custom designing a fuel truck to particular specifications. The
typical configuration of the Company's custom fuel trucks is a Kenworth or
International chassis with a 3,400 to 4,400 gallon multi-compartment aluminum
tank, a vapor recovery system and the Company's proprietary FTC Computer, which
records and regulates fuel flow from the storage compartments. For maintenance
of the fuel trucks, the Company relies upon equipment warranties, fixed fee
service contracts and on-site repairs. To date, the Company has not experienced
significant downtime on any of its customized fuel trucks due to maintenance
problems.
COMPETITION
The Company competes with other distributors of fuel, including several
regional distributors and numerous small independent operators. Some of the
Company's competitors have significantly greater financial or marketing
resources than the Company. The Company's competitors also could introduce
services that are superior to the Company's or that achieve greater market
acceptance. The Company also competes for customers whose drivers fuel their own
vehicles at retail gas stations. The Company also could encounter potential
competition from a number of well capitalized companies which distribute fuel
and other similar oil products, some of which are larger, more established and
have greater financial, marketing and other resources than the Company. In
addition, some of the Company's customers are capable of providing the same
services to their vehicles directly. The Company believes that its ability to
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compete depends on a number of factors, including price, reliability, credit
terms, name recognition, delivery time and service and support. There can be no
assurance that the Company will be able to continue to compete successfully with
respect to these factors.
EXECUTIVE OFFICERS
The executive officers of the Company as of April 24, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
STANLEY H. STREICHER............ 55 President, Chief Executive Officer, Director
and Founder
WALTER B. BARRETT .............. 40 Vice President, Finance; Chief Financial Officer;
and Treasurer
TIMOTHY W. KOSHOLLEK............ 34 Vice President, Marketing
STEVEN E. ALFORD................ 32 Vice President, Operations
</TABLE>
Mr. Streicher has served as President and Chief Executive Officer of the
Company since its inception. Mr. Streicher has also served as the President and
Chief Executive Officer of Streicher Enterprises, Inc. ("Enterprises"), the
Company's predecessor, since its inception in 1983. From 1979 to 1983, Mr.
Streicher operated a mobile fueling business which became the Company's
predecessor. From 1972 to 1979, Mr. Streicher served as supervisor of receiving
of AT&T's Montgomery Material Management Center, where he designed systems to
expedite material and equipment handling. From 1965 to 1972, Mr. Streicher
served to the rank of Captain in the United States Military in various
leadership capacities, including the command of an aviation division together
with the responsibility for scheduling aircraft and their refueling.
Mr. Barrett has served as Vice President, Finance and Chief Financial
Officer of the Company since July 1997. From 1991 to 1997 Mr. Barrett was Vice
President of Finance and Chief Financial Officer of Devcon International Corp.,
a supplier of construction materials and services throughout the Caribbean and
Southeastern Florida.
Mr. Koshollek has served as the Vice President of Marketing of the Company
since March 1998. From 1994 to February 1998, Mr. Koshollek served as Vice
President of Marketing and Operations of Enterprises and the Company. From 1991
to 1994, Mr. Koshollek was responsible for sales and management of a wholesale
seafood company. From 1989 to 1991, he was the operations manager of enterprises
responsible for its Southeast division fuel delivery operations.
Mr. Alford has served as Vice President, Operations of the Company since
March 1998. From December 1992 to February 1998, Mr. Alford was employed by
enterprises and the Company in various supervisory and managerial positions.
EMPLOYEES
At April 17, 1998, the Company had 182 full-time employees, of whom 36 were
involved in executive, managerial, supervisory and sales capacities, 122 were
route drivers and 24 served in various clerical and other capacities. None of
the Company's employees is covered by a collective bargaining agreement or is a
member of a union. The Company considers its relationship with its employees to
be good.
GOVERNMENTAL REGULATION
The Company's operations are affected by numerous federal, state and local
laws, including those relating to protection of the environment and worker
safety. The transportation of gasoline and diesel fuel is subject to regulation
by various federal, state and local agencies, including the U.S. Department of
Transportation ("DOT"). These regulatory authorities have broad powers, and the
Company is subject to regulatory and legislative changes that can affect the
economics of the industry by requiring changes in operating practices or
influencing the demand for, and the cost of providing, its services. The
regulations provide that, among other things, the Company's drivers must possess
a commercial drivers license with a hazardous materials endorsement thereon. The
Company is also subject to the rules and regulations of the Hazardous Materials
Transportation Act. For example, the Company's drivers and their equipment must
comply with DOT's pre-trip inspection rules, documentation regulations
concerning hazardous materials (i.e., certificates of shipments which describe
type and amount of product transported), and limitations on the amount of fuel
transported as well as driver time limitations. Additionally, the Company is
subject to DOT inspections which occur at random intervals. Any material
violation of DOT rules or the Hazardous Materials Transportation Act may result
in citations and/or fines upon the Company. In addition, the Company depends on
the supply of gasoline and diesel fuel from the oil and gas industry and,
therefore, is affected by changing taxes, price controls and other laws
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and regulations relating to the oil and gas industry generally. The Company
cannot determine the extent to which its future operations and earnings may be
affected by new legislation, new regulations or changes in existing regulations.
The technical requirements of these laws and regulations are becoming
increasingly expensive, complex and stringent. These laws may impose penalties
or sanctions for damages to natural resources or threats to public health and
safety. Such laws and regulations may also expose the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed. Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative or civil penalties and criminal
prosecution. Certain environmental laws provide for joint and several liability
for remediation of spills and releases of hazardous substances. In addition,
companies may be subject to claims alleging personal injury or property damage
as a result of alleged exposure to hazardous substances, as well as damage to
natural resources.
Although the Company believes that it is in substantial compliance with
existing laws and regulations, there can be no assurance that substantial costs
for compliance will not be incurred in the future. There could be an adverse
affect upon the Company's operations if there were any continuing substantial
violations of these rules and regulations. Moreover, it is possible that other
developments, such as stricter environmental laws, regulations and enforcement
policies thereunder, could result in additional, presently unquantifiable, costs
or liabilities to the Company.
ITEM 2. DESCRIPTION OF PROPERTY
The following table sets forth certain information concerning the property
and facilities that are owned or leased by the Company for use in its
operations:
<TABLE>
<CAPTION>
LEASE EXPIRATION
DESCRIPTION LOCATION WITH ALL OPTIONS NOTES
----------- -------- ---------------- -----
<S> <C> <C>
Principal executive offices, truck yard
and warehouse space Ft. Lauderdale, Florida 7/31/14 (1)
Truck yard and office Ft. Myers, Florida 1/1/00 (2)
Truck yard and office Jacksonville, Florida 8/31/15 (1)
Truck yard and office Orlando, Florida 1/31/00 (1)
Truck yard and office Tampa, Florida -- (3)
Truck yard Tallahassee, Florida Month to Month (2)
Truck yard and office Atlanta, Georgia 5/31/98 (2) (4)
Truck yard and office Kingsport, Tennessee 7/31/98 (2)
Truck yard and office Kenner, Louisiana 7/31/00 (1) (4)
Truck yard and office Lake Charles, Louisiana 9/30/98 (2)
Truck yard and office Ft. Worth, Texas Month to Month (2) (4)
Truck yard and office Gardena, California Month to Month (2)
Truck yard and office Hayward, California 10/1/98 (2)
<FN>
- ----------
(1) Leased from Stanley H. Streicher, Company President and Chief Executive Officer.
(2) Leased
(3) Property owned by the Company
(4) The Company is currently planning to purchase land parcels in Atlanta,
Georgia; Ft. Worth, Texas; and Kenner, Louisiana for its operations.
Leases in those locations will be terminated when the parcels are
purchased.
</FN>
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
The Company has no material legal proceedings pending. From time to time,
the Company may become a party to litigation incidental to its business. There
can be no assurance that any future legal proceedings will not have a material
adverse effect on the Company's business, reputation, financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, par value $.01 ("Common Stock") and Redeemable
Common Stock Purchase Warrants ("Warrants") have traded in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
Small-Cap Market under the symbols "FUEL" and "FUELW", respectively, since
December 11, 1996, the date of the Company's initial public offering. The
Company's securities are also traded on the Chicago Stock Exchange. The
following table sets forth, for the periods indicated, the high and low closing
bid quotations for the Common stock and Warrants, as reported by NASDAQ. The
NASDAQ quotations represent quotations between dealers without adjustment for
retail markups, markdowns or commissions and may not necessarily represent
actual transactions.
<TABLE>
<CAPTION>
COMMON STOCK WARRANTS
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YEAR ENDED JANUARY 31, 1998 HIGH LOW HIGH LOW
--------------------------- ---- ----- ----- ------
<S> <C> <C> <C> <C> <C>
1st quarter $ 11.00 $6.50 $4.50 $ 1.63
2nd quarter $ 8.25 $3.25 $2.50 $ .63
3rd quarter $ 4.75 $2.75 $1.38 $ .75
4th quarter $ 5.69 $2.75 $2.00 $ .38
YEAR ENDED JANUARY 31, 1997
---------------------------
4th quarter $8.625 $7.75 $3.25 $1.88
</TABLE>
As of April 22, 1998, there were 17 holders of record of the Company's
Common Stock. The Company believes there are in excess of 500 beneficial owners
of the Company's Common Stock. On April 22, 1998, the closing bid price of the
Common Stock was $4.75 per share and the closing bid price of the Warrants was
$1.25 per Warrant.
To date, the Company has not declared or paid any dividends on its Common
Stock. The payment of dividends, if any, is within the discretion of the Board
of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition and other relevant factors. The Board of
Directors does not intend to declare any dividends in the foreseeable future,
but instead intends to retain future earnings for use in the Company's business
operations.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of the Company and its consolidated
subsidiaries are qualified in their entirety by, and should be read in
conjunction with, the Consolidated Financial Statements and the notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations." The data for each of the 4 years in the period ended January 31,
1998, are derived from the Consolidated Financial Statements of the Company or
the financial statements of the Mobile Fueling Division of Streicher
Enterprises, Inc. audited by Arthur Andersen LLP, independent certified public
accountants. The Consolidated Financial Statements of the Company as of January
31, 1998 and 1997 and for each of the years in the three year period ended
January 31, 1998 and the report thereon appear elsewhere herein.
<TABLE>
<CAPTION>
EARNINGS STATEMENT DATA: 1998 1997 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total revenues $ 43,041,814 $ 33,844,969 $ 23,989,358 $ 16,663,371
Cost of sales 39,736,507 31,458,794 21,752,350 15,217,945
------------ ------------ ------------ ------------
Gross profit 3,305,307 2,386,175 2,237,008 1,445,426
Operating expenses 3,575,368 2,640,609 1,752,485 1,348,028
------------ ------------ ------------ ------------
Operating income (loss) (270,061) (254,434) 484,523 97,398
Loss on asset disposal (62,399) (5,928) -- --
Interest expense (474,923) (432,498) (343,967) (168,991)
Interest and other income 178,811 31,071 33,219 13,504
------------ ------------ ------------ ------------
Income (loss) before income taxes (628,572) (661,789) 173,775 (58,089)
Income tax benefit (expense) 153,146 232,551 (75,169) 7,915
------------ ------------ ------------ ------------
Basic and diluted net income (loss) $ (475,426) $ (429,238) $ 98,606 $ (50,147)
============ ============ ============ ============
Basic and diluted net income (loss) per share $ (.18) $ (.26) $ .0 $ (.03)
============ ============ ============ ============
Basic and diluted weighted average
common shares outstanding 2,575,000 1,631,250 1,500,000 1,500,000
============ ============ ============ ============
BALANCE SHEET DATA: 1998 1997 1996 1995
------------ ------------ ------------ ------------
Working capital $ 3,392,012 $ 2,495,181 $ 737,419 $ 267,132
Total assets $ 13,995,540 $ 11,402,970 $ 6,357,936 $ 4,352,732
Long term debt $ 5,915,049 $ 1,123,498 $ 3,172,737 $ 2,029,723
Total stockholders' equity $ 4,441,250 $ 4,961,413 $ 385,066 $ 280,140
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Plan of Operations contains "forward-looking statements" which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including those set forth under the caption "Certain Factors Affecting Future
Operating Results," below, and elsewhere in this Form 10-K. The following
discussion also should be read in conjunction with the Company's financial
statements and notes thereto included elsewhere in this Form 10-K.
GENERAL
The Company was incorporated in the State of Florida in October 1996. Prior to
the effective date of the Company's registration statement for its initial
public offering on December 11, 1996, the Company's business was conducted
through the Mobile Fueling Division of Streicher Enterprises, Inc., which began
mobile fueling operations in 1983. Streicher Enterprises, Inc. ("Enterprises")
completed a corporate reorganization as of such effective date, pursuant to
which the Mobile Fueling Division of Enterprises transferred its assets,
liabilities and operations to the Company. Enterprises is wholly owned by the
president of the Company and currently owns 52.4% of the outstanding common
stock of the Company. This corporate reorganization has been retroactively
reflected in the Company's Financial Statements and notes thereto as if such
transfer had occurred at inception of the former Mobile Fueling Division. See
Note 1 of Notes to the Company's Financial Statements included elsewhere in this
Form 10-K.
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The Company derives all of its revenue from selling fuel and providing mobile
fueling services. Revenue is comprised principally of sales of gasoline and
diesel fuel and related service charges. Cost of sales is comprised principally
of the cost of fuel and transportation costs (primarily payroll). Included in
both revenue and cost of sales are federal and state fuel taxes, which are
collected by the Company from its customers, when required, and remitted to the
appropriate taxing authority.
RESULTS OF OPERATIONS
COMPARISON OF FISCAL YEAR ENDED JANUARY 31, 1998 TO FISCAL YEAR ENDED JANUARY
31, 1997
REVENUES
Revenue increased $9.2 million, or 27.2%, for the year ended January 31, 1998
("fiscal 1998") compared to the year ended January 31, 1997 ("fiscal 1997"). The
Company delivered 33.3 million gallons of fuel to its customers in fiscal 1998,
an increase of 41.1% over the 23.6 million gallons delivered in fiscal 1997. The
increase in revenue resulted from a higher volume of fuel sales to existing
customers, acquisition of new customers in existing locations, and the
introduction of mobile fueling operations into additional metropolitan areas,
offset by declines in the wholesale price of gasoline and diesel fuel.
GROSS PROFIT
Gross profit increased $919,000 or 38.5% in fiscal 1998 compared to fiscal 1997,
primarily as a result of increases in revenue, fuel price increases and certain
cost reductions. The gross profit per gallon on fuel sold in fiscal 1998 was 4.3
cents per gallon compared to a gross profit in fiscal 1997 of 5.5 cents per
gallon. The Company achieved a gross profit on mobile refueling operations in
fiscal 1998 of 22.3% compared to a gross profit of 17.2% in fiscal 1997. The
decrease in fuel gross profit from fiscal 1997 to fiscal 1998 was due primarily
to reduction in markup on fuel sales, while the improvement in mobile refueling
gross profit was due primarily to certain cost reductions and improvements in
operating efficiency.
OPERATING EXPENSES
Operating expenses increased $935,000, or 35.4%, in fiscal 1998 compared to
fiscal 1997. As a percentage of revenue, operating expenses increased from 7.8%
in fiscal 1997 to 8.3% in fiscal 1998. The increase in operating expenses
primarily resulted from an increase in payroll and related administrative costs
associated with the addition of personnel to support expansion of the Company's
mobile fueling operations.
INTEREST EXPENSE
Interest expense increased $42,000, or 9.7%, in fiscal 1998 compared to fiscal
1997 as a result of increased borrowings to fund the Company's expansion into
new markets and to acquire new custom fuel trucks for existing and new
locations.
INCOME TAXES
The Company recorded an income tax benefit of $153,000 in fiscal 1998 compared
to an income tax benefit of $233,000 in fiscal 1997. Income taxes were recorded
at effective tax rates of 24.4% and 35.1% in fiscal 1998 and fiscal 1997,
respectively. The effective tax benefit rate reflects the Company's best
estimate of its annual tax rate for each fiscal year.
NET LOSS
The Company had a net loss of $475,000, or $.18 per share, in fiscal 1998 and a
net loss of $429,000, or $.26 per share, in fiscal 1997. The Company's net
losses in fiscal 1998 and 1997 resulted primarily from the Company's expansion
into new markets, underutilization of equipment in such markets and increases in
personnel, equipment and facilities to support current and future growth.
COMPARISON OF FISCAL YEAR ENDED JANUARY 31, 1997 TO FISCAL YEAR ENDED JANUARY
31, 1996
REVENUES
Revenue increased $9.9 million, or 41.1%, for fiscal 1997 compared to the
year ended January 31, 1996 ("fiscal 1996"). The Company delivered approximately
23.6 million gallons of fuel to its customers in fiscal 1997, an increase of
18.6% over the approximately 19.9 million gallons delivered in fiscal 1996. The
increase in revenue resulted from a higher volume of fuel sales and services to
existing customers, acquisition of new customers in existing locations, the
introduction of mobile fueling operations into additional metropolitan areas and
an overall increase in the wholesale price of gasoline and diesel fuel.
A-9
<PAGE>
GROSS PROFIT
Gross profit increased $149,000 or 6.7% in fiscal 1997 compared to fiscal
1996. This increase was due primarily to increases in revenues, improvements in
the gross margin on fuel sold, offset by a decline in the gross profit margin on
mobile refueling services. The gross profit per gallon of fuel sold in fiscal
1997 was 5.5 cents per gallon compared to a gross profit of 1.1 cents per gallon
in fiscal 1996. The Company achieved a gross profit on mobile refueling
operations of 17.2% in fiscal 1997 compared to a gross profit of 33.1% in fiscal
1996. The improvement in fuel gross margin from fiscal 1996 to fiscal 1997 was
due to a combination of price increases and improvements in purchasing. The
decline in mobile refueling gross margin from fiscal 1996 to fiscal 1997 is due
primarily to increases in driver payroll costs, repair and maintenance costs and
other costs associated with the Company's expansion into new markets in fiscal
1997.
OPERATING EXPENSES
Operating expenses increased $888,000, or 50.7%, in fiscal 1997 compared to
fiscal 1996. As a percentage of revenue, operating expenses increased from 7.3%
in fiscal 1996 to 7.8% in fiscal 1997. The increase in operating expenses
primarily resulted from an increase in payroll and related administrative costs
associated with the addition of personnel to support expansion of the Company's
mobile fueling operations.
INTEREST EXPENSE
Interest expense increased $88,500, or 25.7%, in fiscal 1997 compared to
fiscal 1996 as a result of increased borrowings to fund the Company's expansion
into new markets and to acquire new custom fuel trucks for existing and new
locations.
INCOME TAXES
The Company recorded an income tax benefit of $233,000 in fiscal 1997
compared to an income tax provision of $75,000 in fiscal 1996. Income taxes were
recorded at effective tax rates of 35.1% and 43.3% in fiscal 1997 and fiscal
1996, respectively. The effective tax benefit rate reflects the Company's best
estimate of its annual tax rate for each fiscal year.
NET INCOME (LOSS)
The Company had a net loss of $429,000, or $.26 per share, in fiscal 1997
and net income of $99,000, or $.07 per share, in fiscal 1996. The Company's net
loss in fiscal 1997 resulted primarily from the Company's expansion into new
markets, underutilization of equipment in such markets and increases in
personnel, equipment and facilities to support current and future growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business requires it to expend considerable amounts of funds
for fuel, labor and equipment costs before any payments are received from the
Company's customers. The fuel purchased by the Company for resale to its
customers must generally be paid for within 10 to 15 days of purchase, labor
costs and related taxes are funded bi-weekly and equipment related costs are
generally satisfied within 30 days. The Company bills its customers weekly and
generally collects its accounts within 35 to 40 days. Days sales outstanding at
January 31, 1998 totaled 41 days as compared to 48 days sales outstanding at
January 31, 1997.
Continued revenue growth for the Company is dependent on its ability to
obtain necessary working capital from bank borrowings, equity transactions and
retained earnings in order to fund increases in accounts receivable and provide
the funds necessary to acquire additional custom fuel delivery trucks. To date,
the Company has relied on bank borrowings and sales of equity securities to
finance its growth. At January 31, 1998, the Company had $1.7 million of
availability under its $5.0 million line of credit and $1.4 million of cash and
cash equivalents. The Company intends to seek the additional working capital it
needs to finance its growth by a combination of vendor financing, continued
expansion of its existing credit facility, and the use of its cash and cash
equivalents on hand. While the Company believes it can successfully obtain
additional vendor and bank financing to finance its growth, there is no
assurance that any such financing can be obtained or will be obtained on terms
acceptable to the Company. The Company anticipates, based on its current revenue
levels, that its existing cash and cash equivalents as well as existing lines of
credit will be adequate to meet its needs for working capital and capital
expenditures for at least the next twelve months.
The Company has outstanding borrowings of $3.3 million as of January 31,
1998 under its $5.0 million line of credit. Interest is payable monthly at .75%
over the prime rate (8.5% as of January 31, 1998). The line of credit matures on
October 31, 1999 and is secured by substantially all of the Company's assets.
The credit agreement contains customary covenants such as the maintenance of
certain financial ratios and minimum net worth and working capital requirements.
As of January 31, 1998, the Company was in compliance with these financial
covenants and restrictions.
Custom fuel trucks are ordered in advance of need and require a minimal down
payment with the balance due upon delivery. It is expected that this balance
will be funded through a combination of available cash and vendor financing. In
the past, the Company has financed approximately 85% to 95% of the purchase
price of fuel trucks. The Company is unable to estimate the amount of cash
required
A-10
<PAGE>
for the acquisition of fuel trucks as such amount is dependent upon the terms
and conditions of financing available, if any, to the Company at the time of
delivery. At January 31, 1998, the Company had purchase commitments for 27
custom fuel delivery vehicles aggregating approximately $3.0 million.
A significant portion of the Company's outstanding debt bears interest at
variable interest rates. The Company's financial results will be impacted by
significant increases or decreases in interest rates.
YEAR 2000 ISSUE
The Company has developed plans to address the possible exposures related to
the impact on its computer systems to be Year 2000 compliant. The plan provides
for the conversion efforts to be completed by the end of fiscal 1999. The year
2000 problem is the result of computer programs being written using two digits
rather than four to define the applicable year. Management does not expect the
financial impact of making the required system changes to be material to the
Company's consolidated financial position, results of operations or cash flows.
The Company is expensing all costs associated with these systems changes as the
costs are incurred.
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
The following important factors have affected, and may in the future
continue to affect, the Company's business, results of operations and financial
condition, and could cause the Company's operating results to differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company.
LOSSES FROM OPERATIONS; ACCUMULATED DEFICIT; NO ASSURANCES OF PROFITABILITY.
Although the Company operated profitably in the fiscal year ended January 31,
1996, the Company experienced net losses in the years ended January 31, 1998 and
1997 of $475,426 and $429,238, respectively, and there can be no assurance that
the Company will not incur net losses in the future. The Company's expansion
over the past several years and its negative cash flows from operating
activities have been financed by additional bank borrowings and, subsequent to
the Company's initial public offering, the net proceeds from the issuance of
Common Stock and Warrants in that offering. The Company's operating expenses
have increased as its business has grown and can be expected to increase as a
result of the Company's expansion efforts into new markets. There can be no
assurance that the Company will be able to generate sufficient revenue to meet
its operating expenditures or to operate profitably.
NEED FOR CAPITAL. The mobile fueling business is capital intensive and the
Company will continue to require substantial capital in order to operate and
expand its business. The Company's primary long-term and working capital
requirements have been to fund capital expenditures for custom fuel trucks and
related equipment and working capital for the financing of customer accounts
receivable. Historically, the Company has depended primarily on debt financing
for its purchases of custom fuel trucks. If the Company is unable to obtain
additional equity or debt financing in the future, the Company may have to limit
its growth. The Company expects that its debt will increase in the future as the
Company utilizes borrowed funds to acquire new vehicles, for acquisitions,
working capital or other corporate purposes.
GROWTH DEPENDENT UPON EXPANSION; RISKS ASSOCIATED WITH EXPANSION INTO NEW
MARKETS. A significant element of the Company's future growth strategy involves
the expansion of the Company's business into new markets. The Company intends to
expand its business into additional major metropolitan areas. Expansion of the
Company's operations will be dependent on, among other things, the Company's
ability to demonstrate the benefits of mobile fueling to potential new
customers; successfully establish and operate new locations; hire and retain
qualified management; marketing and other personnel; obtain adequate financing
for vehicle purchases and working capital purposes; secure adequate sources of
supply on a timely basis and on commercially reasonable terms and successfully
manage growth (including monitoring operations, controlling costs and
maintaining effective quality controls). The Company's growth prospects will be
largely dependent upon its ability to achieve greater penetration in new
markets. The Company may also seek to expand its operations through the
acquisition of existing companies or their customer bases. There can be no
assurance that the Company will be able to successfully expand its operations.
POTENTIAL ACQUISITIONS; DIFFICULTY IN ASSIMILATING ACQUISITIONS. The Company
intends to pursue acquisition opportunities as a means of achieving its growth
objectives, although there can be no assurance that the Company will be able to
locate or acquire suitable acquisition candidates on acceptable terms or that
future acquired operations will be effectively and profitably integrated into
the Company. Acquisitions involve a number of risks that could adversely affect
the Company's operating results, including diverting management attention, the
assimilation of the operations and personnel of the acquired operations, the
amortization of acquired intangible assets and the potential loss of key
employees of the acquired operations. Properly managing any growth through
acquisitions, avoiding the problems often attendant therewith, and continuing to
operate in the manner which has proven successful to the Company to date will be
important to the future success of the Company's business.
RISKS ASSOCIATED WITH CUSTOMER CONCENTRATION; ABSENCE OF WRITTEN AGREEMENTS.
Revenue from three major customers totaled approximately $13.8 million, $12.6
million, and $10.5 million in fiscal 1998, 1997 and 1996 respectively. Although
the Company has contracts to provide mobile fuel services to several of its
larger customers, most of the Company's customers do not have written agreements
with the Company and can terminate the Company's mobile fueling services at any
time and for any reason. As a result of this customer concentration and absence
of written agreements, the Company's business, results of operations and
financial condition could be materially adversely affected by the loss of one or
more of its major customers or if the Company were to experience a high rate of
contract terminations.
A-11
<PAGE>
LIMITED AVAILABILITY OF MANAGERIAL PERSONNEL. The Company has experienced
significant growth over the past several years. For the Company to be able to
continue to grow effectively it will need to continue to improve its
operational, financial and other internal systems, and to attract, train,
motivate, manage and retain its employees. If the Company is unable to manage
growth effectively, the Company's results of operations will be adversely
affected.
COMPETITION. The Company competes directly and indirectly with other
distributors of fuel, including several regional distributors and numerous small
independent operators. Some of the Company's competitors have significantly
greater financial or marketing resources than the Company. The Company's
competitors also could introduce services that are superior to the Company's or
that achieve greater market acceptance. The Company also competes for customers
whose drivers fuel their own vehicles at retail gas stations. The Company could
encounter potential competition from a number of well capitalized companies
which distribute fuel and other similar oil products, some of which are larger,
more established and have greater financial, marketing and other resources than
the Company. In addition, some of the Company's customers are capable of
providing the same services to their vehicles directly. The Company believes
that its ability to compete depends on a number of factors, including price,
reliability, credit terms, name recognition, delivery time and service and
support. There can be no assurance that the Company will be able to continue to
compete successfully with respect to these factors.
OPERATING RISKS MAY NOT BE COVERED BY INSURANCE. The Company's operations
are subject to all of the operating hazards and risks normally incidental to
handling, storing and transporting gasoline and diesel fuel, which are
classified as hazardous materials. The Company maintains insurance policies in
such amounts and with such coverages and deductibles as the Company believes are
reasonable and prudent. However, there can be no assurance that such insurance
will be adequate to protect the Company from liabilities and expenses that may
arise from claims for personal and property damage arising in the ordinary
course of business or that such levels of insurance will be maintained by the
Company or will be available at economical prices.
GOVERNMENTAL REGULATION. The Company's operations are affected by numerous
federal, state and local laws, including those relating to protection of the
environment and worker safety. The transportation of gasoline and diesel fuel is
subject to regulation by various federal, state and local agencies, including
the DOT. These regulatory authorities have broad powers, and the Company is
subject to regulatory and legislative changes that can affect the economics of
the industry by requiring changes in operating practices or influencing the
demand for, and the cost of providing, its services. The regulations provide
that, among other things, the Company's drivers must possess a commercial
drivers license with a hazardous materials endorsement thereon. The Company is
also subject to the rules and regulations of the Hazardous Materials
Transportation Act. For example, the Company's drivers and their equipment must
comply with DOT's pre-trip inspection rules, documentation regulations
concerning hazardous materials (i.e., certificates of shipments which describe
type and amount of product transported), and limitations on the amount of fuel
transported as well as driver time limitations. Additionally, the Company is
subject to DOT inspections which occur at random intervals. Any material
violation of DOT rules or the Hazardous Materials Transportation Act may result
in citations and/or fines upon the Company. In addition, the Company depends on
the supply of gasoline and diesel fuel from the oil and gas industry and,
therefore, is affected by changing taxes, price controls and other laws and
regulations relating to the oil and gas industry generally. The Company cannot
determine the extent to which its future operations and earnings may be affected
by new legislation, new regulations or changes in existing regulations.
The technical requirements of these laws and regulations are becoming
increasingly expensive, complex and stringent. These laws may impose penalties
or sanctions for damages to natural resources or threats to public health and
safety. Such laws and regulations may also expose the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed. Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative or civil penalties and criminal
prosecution. Certain environmental laws provide for joint and several liability
for remediation of spills and releases of hazardous substances. In addition,
companies may be subject to claims alleging personal injury or property damage
as a result of alleged exposure to hazardous substances, as well as damage to
natural resources.
Although the Company believes that it is in substantial compliance with
existing laws and regulations, there can be no assurance that substantial costs
for compliance will not be incurred in the future. There could be an adverse
affect upon the Company's operations if there were any continuing substantial
violations of these rules and regulations. Moreover, it is possible that other
developments, such as stricter environmental laws, regulations and enforcement
policies thereunder, could result in additional, presently unquantifiable, costs
or liabilities to the Company.
CHANGES IN ENVIRONMENTAL REQUIREMENTS. The Company expects to derive a
significant amount of its future business by converting to mobile fueling
customers fleet operators that currently utilize underground fuel storage tanks
for their fueling needs. Under current federal regulations, the owners of such
underground storage tanks are required, by December 1998, to remove or retrofit
such tanks to comply with technical requirements pertaining to their
construction and operation. If the date for compliance with such regulations is
extended, or if other, more economical means, of compliance are developed or
adopted by owners of underground storage tanks, the opportunity for the Company
to market its services to such persons may be adversely affected.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
A-12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company required by Form 10-K are attached
following Part III of this report, commencing on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement in connection with its 1998 Annual Meeting
of Shareholders to be filed with the Commission pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement in connection with its 1998 Annual Meeting
of Shareholders to be filed with the Commission pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement in connection with its 1998 Annual Meeting
of Shareholders to be filed with the Commission pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement in connection with its 1998 Annual Meeting
of Shareholders to be filed with the Commission pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this report.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBITS DESCRIPTION
3.1 Articles of Incorporation (1
3.2 By Laws (1)
4.1 Form of Common Stock Certificate (1)
4.2 Form of Redeemable Common Stock Purchase Warrant (1)
4.3 Underwriters' Purchase Option Agreement Between The Registrant
And Argent Securities, Inc. (1)
4.4 Warrant Agreement between the Registrant and American Stock
Transfer & Trust Company (1)
10.1 Employment Agreement between the RegistrantaAnd Stanley H.
Streicher (1)(2)
10.2 Registrant's Stock Option Plan (1)(2)
10.3 $5,000,000 Loan Agreement, dated December 31, 1997, between the
Registrant and Bank Atlantic (3)
A-13
<PAGE>
10.4 Master Security Agreement, dated July 24, 1997, between the
Registrant and General Electric Capital Corporation (3)
10.5 Form of Promissary Note with General Electric Capital
Corporation (3)
10.6 Form of Collateral Schedule with General Electric Capital
Corporation (3)
- --------------------------------------------------------------------------------
(1) Incorporated by reference to the exhibit of the same number filed with the
Company's Registration Statement on Form SB-2 (No. 333-11541)
(2) Management Contract or Compensatory Plan
(3) Filed herewith
(B) REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STREICHER MOBILE FUELING, INC.
Dated: April 24, 1998 By: /s/ STANLEY H. STREICHER
------------------------
Stanley H. Streicher, Chairman of the
Board and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Dated: April 24, 1998 By: /s/ STANLEY H. STREICHER
--------------------------
Stanley H. Streicher, Chairman of the
Board and Chief Executive Officer
(Principal Executive Officer)
Dated: April 24, 1998 By: /s/ WALTER B. BARRETT
--------------------------
Walter B. Barrett, Vice President,
Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
Dated: April 24, 1998 By: /s/ E. SCOTT GOLDEN
--------------------------
E. Scott Golden, Director
Dated: April 24, 1998 By: /s/ JOSEPH M. MURPHY
--------------------------
Joseph M. Murphy, Director
Dated: April 24, 1998 By: /s/ JOHN H. O'NEIL, JR.
--------------------------
John H. O'Neil, Director
Dated: April 24, 1998 By: /s/ L. PHILLIPS REAMES
--------------------------
L. Phillips Reames, Director
A-14
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets as of January 31, 1998 and 1997 F-3
Consolidated Statements of Operations for Each of the Years in the Three Year
Period Ended January 31, 1998 F-5
Consolidated Statements of Shareholders' Equity for Each of the Years in the Three
Year Period Ended January 31, 1998 F-6
Consolidated Statements of Cash Flows for Each of the Years in the Three Year
Period Ended January 31, 1998 F-7
Notes to Consolidated Financial Statements F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Streicher Mobile Fueling, Inc.:
We have audited the accompanying consolidated balance sheets of Streicher Mobile
Fueling, Inc. (a Florida corporation) and subsidiaries as of January 31, 1998
and 1997, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the years in the three year period ended
January 31, 1998. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits 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 of 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Streicher Mobile
Fueling, Inc. and subsidiaries as of January 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three year
period ended January 31, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
April 10, 1998.
F-2
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------- ------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,411,134 $ 2,848,000
Investments 69,227 115,751
Accounts receivable, net of allowance for doubtful
accounts of $148,000 and $51,000, respectively 5,065,437 4,352,761
Inventories 133,924 76,961
Prepaid expenses and other 351,531 254,548
------------ ------------
Total current assets 7,031,253 7,648,021
Property and Equipment:
Land 59,996 --
Leasehold improvements 152,664 91,070
Fuel trucks and automobiles 6,305,637 3,586,670
Machinery and equipment 799,858 613,583
Furniture and fixtures 66,139 37,250
Construction in process 173,797 6,280
------------ ------------
7,558,091 4,334,853
Less accumulated depreciation and amortization (1,357,368) (966,074)
------------ ------------
6,200,723 3,368,779
Deferred income tax assets (Note 8) 254,848 --
Note receivable from related party (Note 7) 451,806 319,043
Other assets 56,910 67,127
------------ ------------
Total assets $ 13,995,540 $ 11,402,970
============ ============
</TABLE>
(Continued)
F-3
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997
(CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
- ------------------------------------ ------------ ------------
<S> <C> <C>
Current Liabilities:
Bank line of credit payable $ -- $ 1,404,469
Current portion of long-term debt (Note 5) 790,101 740,852
Accounts payable 2,313,581 2,411,031
Accrued expenses 415,664 426,818
Customer deposits 119,895 169,670
------------ ------------
Total current liabilities 3,639,241 5,152,840
Long-term Liabilities:
Bank line of credit payable (Note 4) 3,269,713 --
Long-term debt, excluding current portion (Note 5) 2,645,336 1,123,498
Deferred income taxes (Note 8) -- 165,219
------------ ------------
Total liabilities 9,554,290 6,441,557
------------ ------------
Commitments and Contingencies (Note 9)
Shareholders' Equity: (Notes 3, 10 and 11)
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $.01 par value, 20,000,000 shares authorized,
2,575,000 shares issued and outstanding 25,750 25,750
Additional paid-in capital 5,195,758 5,220,758
Unrealized gain on investment -- 19,737
Accumulated deficit (780,258) (304,832)
------------ ------------
Total shareholders' equity 4,441,250 4,961,413
------------ ------------
Total liabilities and shareholders' equity $ 13,995,540 $ 11,402,970
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE YEARS IN THE THREE YEAR PERIOD ENDED JANUARY 31, 1998
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Fuel sales revenues 21,028,667 17,489,356 9,691,916
Mobile fueling service revenues 8,370,880 6,265,534 6,102,442
Fuel taxes 13,642,267 10,090,079 8,195,000
------------ ------------ ------------
Total revenues (Note 6) 43,041,814 33,844,969 23,989,358
Cost of fuel sales 19,588,275 16,182,039 9,473,738
Cost of mobile fueling service sales 6,505,965 5,186,676 4,083,612
Fuel taxes 13,642,267 10,090,079 8,195,000
------------ ------------ ------------
Total cost of sales 39,736,507 31,458,794 21,752,350
Gross profit 3,305,307 2,386,175 2,237,008
Operating expenses 3,575,368 2,640,609 1,752,485
------------ ------------ ------------
Operating income (loss) (270,061) (254,434) 484,523
Loss on asset disposal (62,399) (5,928) --
Interest expense (474,923) (432,498) (343,967)
Interest and other incomE 178,811 31,071 33,219
------------ ------------ ------------
Income (loss) before benefit (provision)
for income taxes (628,572) (661,789) 173,775
Income tax benefit (provision) 153,146 232,551 (75,169)
------------ ------------ ------------
Net income (loss) $ (475,426) $ (429,238) $ 98,606
============ ============ ============
Basic and diluted net income (loss) per share $ (0.18) $ (0.26) $ 0.07
============ ============ ============
Basic and diluted weighted average
common shares outstanding 2,575,000 1,631,250 1,500,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR EACH OF THE YEARS IN THE THREE YEAR PERIOD ENDED JANUARY 31, 1998
COMMON STOCK ADDITIONAL UNREALIZED RETAINED
-------------------------- PAID-IN GAIN ON (DEFICIT)
SHARES AMOUNT CAPITAL INVESTMENT EARNINGS TOTAL
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 31, 1995 1,500,000 $ 15,000 $ 238,588 $ 2,335 $ 25,800 $ 281,723
Net income -- -- -- -- 98,606 98,606
change in unrealized gain on investment -- -- -- 4,737 -- 4,737
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JANUARY 31, 1996 1,500,000 15,000 238,588 7,072 124,406 385,066
Net loss -- -- -- -- (429,238) (429,238)
change in unrealized gain on investment -- -- -- 12,665 -- 12,665
net proceeds from issuance of common
stock and common stock warrants 1,075,000 10,750 4,982,170 -- -- 4,992,920
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JANUARY 31, 1997 2,575,000 25,750 5,220,758 19,737 (304,832) 4,961,413
----------- ----------- ----------- ----------- ----------- -----------
Net loss -- -- -- -- (475,426) (475,426)
additional common stock offering expenses -- -- (25,000) -- -- (25,000)
change in unrealized gain on investment -- -- -- (19,737) -- (19,737)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JANUARY 31, 1998 $ 2,575,000 $ 25,750 $ 5,195,758 $ -- $ (780,258) $ 4,441,250
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE YEARS IN THE THREE YEAR PERIOD ENDED JANUARY 31, 1998
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (475,426) $ (429,238) $ 98,606
Adjustments to reconcile net income (loss) to net cash
used in operating activities-
Loss on disposal of equipment 62,399 5,928 --
Gain on sale of investments (44,621) -- --
Depreciation and amortization 510,901 391,894 304,796
Deferred income tax (benefit) provision (153,146) (208,540) 110,641
Provision for doubtful accounts 65,000 82,146 20,852
Changes in operating assets and liabilities:
Accounts receivable (777,676) (1,842,348) (1,126,012)
Inventories (56,963) 232 (9,119)
Prepaid expenses and other current assets (121,983) (153,758) (14,239)
Deferred income tax asset (266,921) -- --
Other assets 10,217 (31,265) (74,055)
Accounts payable and accrued expenses (108,604) 1,178,489 389,742
Customer deposits (49,775) 5,826 640
----------- ----------- -----------
Net cash used in operating activities (1,406,598) (1,000,634) (298,148)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment 74,933 100,657 --
Purchase of investment (3,525) -- (70,432)
Purchases of property and equipment (3,492,706) (694,919) (1,103,536)
Proceeds from disposal of equipment 87,462 54,301 --
Note receivable due from related party (132,763) (286,745) 85,852
Net cash used in investing activities (3,466,599) (826,706) (1,088,116)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under line of credit 1,865,244 (398,326) 768,230
Borrowings under long-term debt 4,322,594 1,499,655 1,009,433
Principal payments on long-term debt (2,751,507) (1,608,417) (460,033)
Net proceeds from issuance of common stock and common
stock warrants -- 4,992,920 --
----------- ----------- -----------
Net cash provided by financing activities 3,436,331 4,485,832 1,317,630
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,436,866) 2,658,492 (68,634)
CASH AND CASH EQUIVALENTS, beginning of year 2,848,000 189,508 258,142
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 1,411,134 $ 2,848,000 $ 189,508
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 453,786 $ 457,153 $ 326,661
=========== =========== ===========
Income taxes $ 234,296 $ 85,256 $ 53,916
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Capital lease obligations originated $ -- $ -- $ 96,323
=========== =========== ===========
Unrealized gain on investment $ -- $ 12,665 $ 4,737
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
(1) NATURE OF OPERATIONS
Streicher Mobile Fueling, Inc. (the "Company") was incorporated in the State of
Florida in October 1996. Prior to the effective date of the Company's
registration statement for its initial public offering on December 11, 1996, the
Company's business was conducted through the Mobile Fueling Division of
Streicher Enterprises, Inc. ("Enterprises"), which began mobile fueling
operations in 1983. Enterprises completed a corporate reorganization as of such
effective date, pursuant to which the Mobile Fueling Division of Enterprises
transferred its assets, liabilities and operations to the Company. Such
corporate reorganization has been retroactively reflected in the accompanying
financial statements and notes thereto as if such transfer had occurred at
inception of the former Mobile Fueling Division. Accordingly, retained deficit
includes the cumulative results of the former Mobile Fueling Division.
Enterprises is wholly owned by the president of the Company and currently owns
52.4% of the outstanding common stock of the Company.
The Company delivers mechanized mobile fleet fueling and electronic fuel
management primarily to customers that operate large fleets of vehicles (such as
governmental agencies, utilities, major trucking lines, hauling and delivery
services, and national courier services). The Company currently has operations
in Florida, Georgia, Louisiana, Tennessee, California and Texas.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Streicher Mobile
Fueling, Inc. and its wholly owned subsidiaries, Streicher West, Inc., Streicher
Realty, Inc., and Mobile Computer Systems, Inc. All significant intercompany
balances and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements include the operations of the
former Mobile Fueling Division of Enterprises on a retroactive basis as if the
transfer discussed in Note 1 had occurred at the date of inception of the former
Mobile Fueling Division.
(b) Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. Included in cash and cash
equivalents in the accompanying balance sheets is interest bearing cash of
approximately $1.4 million and $2.5 million as of January 31, 1998 and 1997,
respectively.
(c) Investments
Investments consist of a certificate of deposit, with a maturity of greater than
three months carried at cost which approximates market. The certificate of
deposit is collateral for an irrevocable letter of credit issued under an
agreement entered into with a vendor, on behalf of a customer, for the issuance
of credit instruments to purchase selected products and services. The letter of
credit and collateralized certificate of deposit are required until the credit
instruments are returned to the vendor for cancellation.
(d) Accounts Receivable
Accounts receivable are due from companies within a broad range of industries
and are generally unsecured. The Company provides for credit losses based on
management's evaluation of collectibility based on current and historical
performance of the customer.
F-8
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
(e) Inventories
Inventories, consisting of gasoline and diesel fuel, are carried at cost which
approximates the first-in, first-out method.
(f) Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and
amortization. Ordinary maintenance and repairs are expensed as incurred.
Improvements which significantly increase the value or useful life of property
and equipment are capitalized. Property and equipment is depreciated or
amortized using the straight-line method over the following estimated useful
lives:
YEARS
-----
Mobile fuel delivery trucks 10
Mobile fuel delivery tanks 25
Machinery and equipment 5
Furniture and fixtures 10
Leasehold improvements Lesser of lease
term or useful life
(g) Income Taxes
The Company provides Federal and state income taxes at the applicable Federal
and state statutory rates. Deferred income taxes are recorded to reflect the tax
consequences in future years of differences between the tax bases of assets and
liabilities and the amounts recorded for financial reporting purposes. Income
taxes are provided as if the Company had been a separate taxable entity since
inception of the former Mobile Fueling Division.
(h) Revenue Recognition
The Company recognizes revenue at the time services are performed and fuel is
delivered.
(i) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(j) Fair Value of Financial Instruments
The Company's financial instruments, primarily consisting of cash and cash
equivalents, investments, accounts receivable, note receivable from related
party, accounts payable, bank line of credit payable, and long-term debt,
approximate fair value due to their short-term nature or interest rates that
approximate market.
F-9
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
(k) Net Income (Loss) Per Share
Net income (loss) per share is determined by dividing net income (loss) by the
weighted average common shares outstanding. For all periods presented,
outstanding common shares reflect the reorganization of Enterprises discussed in
Note 1 and the initial issuance of common stock by the Company as if such
reorganization had occurred at inception of the former Mobile Fueling Division.
Common stock equivalents, consisting of employee stock options and common stock
warrants in fiscal 1998 and 1997, were antidilutive and accordingly, were not
included in the calculation of net loss per share in fiscal 1998 and 1997. No
common stock equivalents existed in fiscal 1996. In fiscal 1998, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share" which simplifies the accounting for earnings per share by presenting
basic earnings per share including only outstanding common stock and diluted
earnings per share including the effect of dilutive common stock equivalents.
The Company's basic and diluted earnings per share are the same, as the
Company's common stock equivalents are antidilutive. In addition, the Company's
basic and diluted earnings per share are the same as that computed under APB No.
15, "Earnings Per Share", as presented in the accompanying statements of
operations.
(l) Accounting for Long-Lived Assets
In fiscal 1997, the Company adopted SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121
establishes accounting standards to account for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used, and for long-lived assets and certain identifiable
intangibles to be disposed of. There was no effect on the Company's financial
position or results of operations upon the adoption of SFAS No. 121.
(m) Reclassifications
Certain prior years amounts have been reclassified to conform with the current
year presentation.
(3) STOCK OPTION PLAN
In December 1996, the Company adopted a Stock Option Plan (the "Plan"), under
which 100,000 shares of common stock are reserved for issuance upon exercise of
options. In June 1997 the shareholders of the Company increased the number of
shares available under the Plan to 250,000. The Plan is designed to serve as an
incentive for retaining qualified and competent employees. The Company's Board
of Directors administers the Plan and is authorized to grant options thereunder
to all eligible employees of the Company, including officers and directors
(whether or not employees) of the Company and consultants. The Plan provides for
the granting of both "incentive stock options" (as defined in Section 422A of
the Internal Revenue Code) and nonqualified stock options. Options are granted
under the Plan on such terms and at such prices as determined by the Board of
Directors, except that the per share exercise price of incentive stock options
cannot be less than the fair market value of the common stock on the date of
grant and the per share exercise price of nonqualified stock options will not be
less than 85% of the fair market value on the date of grant. Each option is
exercisable after the period or periods specified in the option agreement, but
no option can be exercised until six months after the date of grant or after the
expiration of 10 years from the date of grant. Options granted under the Plan
are not transferable other than by will or by the laws of descent and
distribution. The Plan also authorizes the Company to make loans to optionees to
enable them to exercise their options and to allow them to use common stock to
pay for the exercise of their options. Such loans must (i) provide for recourse
to the optionee, (ii) bear interest at a rate no less than the rate of interest
payable by the Company to its principal lender at the time the loan is made, and
(iii) be secured by the shares of common stock purchased. The following table
summarizes stock option activity for the periods indicated:
F-10
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
WEIGHTED AVERAGE
EXERCISE
SHARES PRICE
------ ----------------
Options granted as of 1/31/97 --
Granted 98,000 $3.34
=====
Exercised --
Expired --
--------
Balance as of 1/31/98 98,000 $3.34
======== =====
Exercisable 48,000 $3.69
======== =====
Available for future grant 152,000
========
An employment agreement with the Company's president provides for the issuance
of options to acquire 1,000,000 shares of common stock at $6 per share. The
timing of vesting of the stock options is contingent upon the Company achieving
either a specified earnings per share level or a specified stock price level
(the "performance threshold"), for the corresponding fiscal year end. Commencing
with fiscal year ending January 31, 1998 and at each of the four fiscal year
ends thereafter, 200,000 of such options will become exercisable if the Company
achieves earnings per share, as defined in the agreement, of $.36, $.43, $.52,
$.62 and $.74 for the fiscal years ending January 31, 1998, 1999, 2000, 2001 and
2002, respectively, (or cumulative earnings per share after fiscal 1998 of $.66,
$1.09, $1.61, $2.23 and $2.97, respectively), or the closing bid price of the
Company's common stock on any 20 consecutive trading days during such fiscal
year is $7.25, $8.75, $10.50, $12.50 and $15.00, respectively, or the Company
has cumulative net income of $2 million, $3 million, $4 million, $5 million and
$6 million, respectively, as defined. For the fiscal year ended January 31, 1998
the Company's stock closing price exceeded $7.25 for more than 20 consecutive
trading days and thus 200,000 of the options became excersiable. For any fiscal
year after January 31, 1998 in which the Company attains the foregoing earnings,
per share stock price or cumulative net income targets, any options eligible for
vesting in prior years which were not vested and exercisable because the targets
for such fiscal years were not achieved, shall become exercisable. In addition,
for any fiscal year in which the Company attains the earnings per share, stock
price or cumulative net income targets applicable to a subsequent fiscal year,
all options eligible for vesting in such subsequent fiscal year shall vest and
become exercisable. If any of the warrants are exercised, the options shall vest
and become exercisable pro rata (based on the number of warrants exercised) to
the extent not already vested in accordance with the foregoing. Regardless of
the Company's performance, all of the stock options granted to the president
shall vest and become exercisable ten years from the date of the grant.
Pro forma information required by SFAS No. 123 has been determined as if the
Company had accounted for its stock-based compensation plans under the fair
value method. The fair value of each option grant was estimated at the date of
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for all grants made to date: risk-free
interest rate of 7%, dividend yield of 0%, expected volatility of 50% and
expected life of 10 years. The Company's pro forma information for fiscal 1998,
1997 and 1996 is as follows:
1998 1997 1996
----------- ---------- --------
Net income (loss) - as reported $ (475,426) $ (429,238) $ 98,606
Pro forma net income (loss) $(1,450,911) $ (483,363) $ 98,606
Income (loss) per share - as reported (0.18) (0.26) $ 0.07
Pro forma net income (loss) per s$are (0.56) (0.30) $ 0.07
F-11
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
Pro forma net income (loss) reflects only options granted in 1998 and 1997. The
full impact of calculating compensation cost for stock options under SFAS No.
123 is not reflected in the pro forma loss amounts presented because
compensation cost is reflected over the expected life of the options.
(4) BANK LINE OF CREDIT PAYABLE
At January 31, 1998, the Company had borrowings of $3,269,713 under a $5,000,000
line of credit agreement with a bank. Interest is payable monthly at .75% over
the prime rate (8.5% as of January 31, 1998). The line of credit matures in
October 1999. Borrowings are secured by substantially all of the assets of the
Company. Under the terms of the credit agreement, the Company is required to
comply with certain financial covenants and restrictions. As of January 31,
1998, the Company was in compliance with these financial covenants and
restrictions.
(5) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JANUARY 31,
1998 1997
----------- -----------
<S> <C> <C>
Equipment loans payable (9.67% weighted average
fixed interest rate at January 31, 1998) due in monthly
installments with varying maturities through January 2003 $ 3,435,437 $ 1,311,883
Promissory notes payable refinanced
or repaid -- 552,467
Total long-term debt 3,435,437 1,864,350
Less: current portion (790,101) (740,852)
----------- -----------
Long-term debt, excluding current portion $ 2,645,336 1,123,498
=========== ===========
</TABLE>
Future principal payments on long-term debt are due as follows as of January 31,
1998:
YEAR ENDING JANUARY 31,
1999 $ 790,101
2000 815,772
2001 885,892
2002 770,432
2003 173,240
----------
$ 3,435,437
(6) MAJOR CUSTOMERS
Revenue from three major customers was approximately $13.8 million, $12.6
million and $10.5 million in fiscal 1998, 1997 and 1996 respectively.
F-12
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
(7) RELATED PARTY TRANSACTIONS
The Company engages in certain transactions with Enterprises. A note receivable
from Enterprises totaled $451,806 and $319,043 as of January 31, 1998 and 1997,
respectively, and bears interest at 8.25 percent annually. Such amounts
represent tax benefits of the Company used by Enterprises, cash advances to
Enterprises and certain expenses of Enterprises paid by the Company prior to its
initial public offering. Interest income includes approximately $25,000 in
fiscal 1998, $13,000 in fiscal 1997, and $16,000 in fiscal 1996 relating to the
note receivable from Enterprises. The repayment terms of the note receivable
from Enterprises require annual payments of interest only with a final payment
of all accrued interest and unpaid principal due on January 31, 2007. The
primary asset of Enterprises to support such repayment is its 52.4% ownership
interest in the Company's common stock, which is presently restricted from sale
or pledging through December 2001.
The Company has entered into four operating leases with the sole shareholder of
Enterprises for the lease of the Company's headquarters and three division
offices. These leases expire at varying times through August 2015. Total rent
expense under these leases will average approximately $83,000 for each of the
next five years and will total approximately $851,000 thereafter. Rent expense
totaling approximately $95,000, $70,000 and $64,000 for the years ended January
31, 1998, 1997 and 1996, respectively, was paid to the sole shareholder of
Enterprises.
(8) INCOME TAXES
Income taxes are determined as if the Company had been a separate tax paying
entity since inception of the former Mobile Fueling Division. Beginning in
December 1996, the Company became a separate tax paying entity. As of January
31, 1998, the Company also has net operating loss carryforwards of approximately
$1.1 million, relating to the period subsequent to the reorganization discussed
in Note 1, available to offset future taxable income through 2013. The benefit
(provision) for income taxes consists of the following for the years ended
January 31, 1998, 1997 and 1996:
1998 1997 1996
--------- --------- ---------
Federal $ 118,625 $ 198,767 $ (64,183)
State 34,521 33,784 (10,986)
--------- --------- ---------
$ 153,146 $ 232,551 $ (75,169)
========= ========= =========
Current $ -- $ 24,011 $ 35,472
Deferred 153,146 208,540 (110,641)
--------- --------- ---------
$ 153,146 $ 232,551 $ (75,169)
========= ========= =========
The actual tax benefit (provision) of the Company for the years ended January
31, 1998, 1997 and 1996 differs from the statutory Federal tax rate of 34% due
to the following:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Expected benefit (provision) for income
taxes at statutory Federal income tax rates $ 213,714 $ 225,008 $ (59,084)
State income taxes 22,783 22,297 (7,251)
Other (66,439) -- --
Nondeductible expenses (16,912) (14,754) (8,834)
--------- --------- ---------
Actual benefit (provision) for income taxe $ 153,146 $ 232,551 $ (75,169)
========= ========= =========
</TABLE>
F-13
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
The following table represents the significant components of deferred income tax
assets (liabilities) at January 31, 1998 and January 1997:
1998 1997
--------- ---------
Book/tax basis differences
of property and equipment $(196,860) $(680,225)
Net operating loss carryforwards 412,031 56,846
Asset basis adjustment from reorganization 433,947 433,947
Other, net (68,000) 24,213
--------- ---------
581,118 (165,219)
Valuation allowance (326,270) --
$ 254,848 $(165,219)
========= =========
Management has recorded a valuation allowance for the portion of the deferred
income tax asset that does not meet the "more likely than not" criteria of SFAS
No. 109. Realization of the remaining net deferred income tax asset has been
guaranteed by Enterprises, as it resulted from the reorganization of the Company
in fiscal 1997.
(9) COMMITMENTS AND CONTINGENCIES
(a) Operating Leases
In addition to the operating leases for property owned by the sole shareholder
of Enterprises discussed in Note 7, the Company has other operating leases from
third parties for division offices that expire through December 1999. Rent
expense under these operating leases for the fiscal years ended January 31,
1998, 1997 and 1996 was approximately $60,000, $56,000 and $40,000,
respectively. Remaining payments relating to these properties are approximately
$61,000, primarily payable over the next year.
(b) Governmental Regulation
The Company's operations are affected by numerous Federal, state and local laws,
including those relating to protection of the environment and worker safety. The
transportation of gasoline and diesel fuel is subject to regulation by various
Federal, state and local agencies. These regulatory authorities have broad
powers, and the Company is subject to regulatory and legislative changes that
can affect the economics of the industry by requiring changes in operating
practices or influencing the demand for, and the cost of providing, its
services. The Company is also subject to the rules and regulations of the
Hazardous Materials Transportation Act. In addition, the Company depends on the
supply of gasoline and diesel fuel from the oil and gas industry and, therefore,
is affected by changing taxes, price controls and other laws and regulations
relating to the oil and gas industry. The Company cannot determine the extent to
which its future operations and results may be affected by new legislation, new
regulations or changes in existing regulations.
The technical requirements of these laws and regulations are becoming
increasingly expensive, complex and stringent. These laws may impose penalties
or sanctions for damages to natural resources or threats to public health and
safety. Such laws and regulations may also expose the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed. Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative or civil penalties and criminal
prosecution. Certain environmental laws provide for joint and several liability
for redemption of spills and releases of hazardous substances. In addition,
companies may be subject to claims alleging personal injury or property damage
as a result of alleged exposure to hazardous substances, as well as damage to
natural resources. The Company carries liability insurance of $10,000,000 in the
event of such occurrences.
F-14
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
Although the Company believes that it is in substantial compliance with existing
laws and regulations, there can be no assurance that substantial costs for
compliance will not be incurred in the future. Moreover, it is possible that
other developments, such as stricter environmental laws, regulations and
enforcement policies thereunder, could result in additional, presently
unquantifiable, costs or liabilities to the Company.
(c) Employment Agreement
In December 1996, the Company entered into an employment agreement with its
president. The term of the agreement is five years and will automatically renew
for two successive two-year terms, unless notice of termination is given by the
Company prior to a renewal period. The agreement provides that if the
president's employment is terminated as a result of his death or disability, he
or his estate will receive for a period of six months, his base salary in effect
as of the date of such termination and a prorated amount of any bonuses. The
agreement also provides that in the event the president's employment is
terminated "without cause" the president will receive, in addition to any
salary, bonus and other compensation accrued through the date of termination, a
lump sum equal to the greater of the full amount of salary, bonuses and other
compensation due under the agreement for the remainder of the term or three
times the then-existing salary and most recent annual bonus. The agreement
further provides that the president will not compete with the Company while
employed by the Company and for a period of two years following termination of
employment. In the event that his employment is terminated without cause, as a
result of his death or disability, or upon a change of control (as defined in
the employment agreement), all options to purchase common stock held by the
president shall become immediately exercisable.
The agreement also provides for two percent per annum of the outstanding balance
of any Company debt personnally guaranteed by the president to be paid to the
president in quarterly installments. Such amounts approximated $76,000 for the
year ended January 31, 1998 and $8,000 for the year ended January 31, 1997. As
of January 31, 1998, all debts guaranteed by the president of the Company have
been repaid or the guarantees have been released by the lender.
The Company has also entered into written employment agreements with certain
other company officers. The agreements vary in term from one to three years and
automatically renew for successive one year periods unless notice of termination
is given by the Company prior to a renewal period.
(d) Absence of Written Agreements
Most of the Company's customers do not have written agreements with the Company
and can terminate the Company's mobile fueling services at any time and for any
reason. If the Company were to experience a high rate of terminations, the
Company's business and financial performance could be adversely affected.
(e) Litigation
The Company may be subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, no litigation or
claims exist that would have a material effect on the consolidated financial
position or results of operations of the Company as of January 31, 1998.
(f) Other Commitments
The Company has entered into a consulting agreement with a minority shareholder
for consulting services to be rendered to the Company. Payments for consulting
services rendered under the agreement totaled approximately $120,000 in fiscal
1998 and $124,000 in fiscal 1997. As of January 31, 1998, remaining payments due
under the consulting agreement totaled $40,000, which are payable at the rate of
$10,000 per month. The agreement also provides for the minority shareholder to
receive a fee of 2.5% of any merger transaction which he brokers for the
Company, as defined.
F-15
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
In August 1996, the Company entered into a consulting agreement with its
underwriter to provide financial and investor relations services, public
relations services and corporate communications services for a period of two
years. Total costs of $100,000 were paid from the net proceeds of the offering,
of which $49,300 was charged to expense in fiscal 1998 and $26,000 was expensed
in fiscal 1997.
At January 31, 1998, the Company had purchase commitments for 27 custom fuel
delivery vehicles aggregating approximately $3.0 million.
(10) SHAREHOLDERS' EQUITY
In October 1996, the Company amended its articles of incorporation to authorize
the issuance of 1,000,000 shares of preferred stock with such designations,
rights and preferences as may be determined by the Board of Directors of the
Company. At January 31, 1998, there were no preferred shares issued or
outstanding.
In December 1996, the Company completed an initial public offering of 1,075,000
shares of common stock and 1,150,000 common stock warrants providing net
proceeds to the Company of approximately $4,993,000.
(11) COMMON STOCK WARRANTS
The Company issued 1,150,000 common stock warrants in conjunction with its
initial public offering in December 1996. Each warrant entitles the holder to
purchase one share of common stock at a price of $6.90 per share for a period of
four years commencing in December 1997 (the "First Exercise Date"). Each warrant
is redeemable by the Company at a redemption price of $0.01 per warrant, at any
time after the First Exercise Date, upon thirty days' prior written notice to
the holders, if the average closing bid price of the common stock, as reported
on the principal exchange on which the common stock is traded, equals or exceeds
$10.50 per share for 20 consecutive trading days ending three days prior to the
date of the notice of redemption. Any warrant holder who does not exercise prior
to the redemption date, as set forth in the Company's notice of redemption, will
forfeit the right to purchase the common stock underlying the warrants, and
after the redemption date or upon conclusion of the exercise period any
outstanding warrants will become void and be of no further force or effect,
unless extended by the Board of Directors of the Company.
The number of shares of common stock that may be purchased is subject to
adjustment upon the occurrence of certain events including a dividend
distribution to the Company's shareholders, or a subdivision, combination or
reclassification of the outstanding shares of common stock. Further, the warrant
exercise price is subject to adjustment in the event the Company issues
additional stock or rights to acquire stock at a price per share that is less
than the current market price per share of common stock on the record date
established for the issuance of additional stock or rights to acquire stock. The
term "current market price," is defined as the average of the daily closing
prices, will not be adjusted in the case of the issuance or exercise of options
pursuant to the Company's stock option plans, the issuance or exercise of the
underwriter's warrants (or the warrants included therein) or any other options
or warrants outstanding as of December 1996. The warrant exercise price is also
subject to adjustment in the event of a consolidation or merger where a
distribution by the Company is made to its stockholders of the Company`s assets
or evidences of the indebtedness (other than cash or stock dividends) or
pursuant to certain subscription rights or other rights to acquire common stock.
The Company may at any time, and from time to time, extend the exercise period
of the warrants, provided that written notice of such extension is given to the
warrant holders prior to the expiration of the date then in effect. Also, the
Company may reduce the exercise price of the warrants for limited periods or
through the end of the exercise period in accordance with the terms of the
Company's warrant agreement with the transfer agent if deemed appropriate by the
Board of Directors. The Company does not presently contemplate any extension of
the exercise period nor does it contemplate any reduction in exercise price of
the warrants.
F-16
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.3 $5,000,000 Loan Agreement, dated December 31, 1997, between the
Registrant and Bank Atlantic
10.4 Master Security Agreement, dated July 24, 1997, between the
Registrant and General Electric Capital Corporation
10.5 Form of Promissary Note with General Electric Capital Corporation
10.6 Form of Collateral Schedule with General Electric Capital Corporation
EXHIBIT 10.3
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of the 30th day of
December, 1997, by and between STRETCHER MOBILE FUELING, INC., a Florida
corporation ("Stretcher Mobile"), STRETCHER REALTY, INC., a Florida corporation,
and STRETCHER WEST, INC., a California corporation (hereinafter collectively
referred to as "Borrower"), and BANKATLANTIC, a Federal Savings Bank
(hereinafter referred to as "Lender").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain a revolving line of credit from
Lender in the amount of up to Five Million and 00/100 Dollars ($5,000,000.00) in
order to provide working capital to the Borrower, and, Lender is willing to
extend such credit to the Borrower of up to such amount upon the terms and
conditions set forth herein (the "Revolving Loan" or the "Loan").
NOW, THEREFORE, for and in consideration of the sum of Ten and 00/100
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the loans
or extensions of credit heretofore, now or hereafter made or to be made for the
benefit of the Borrower by the Lender, the parties do hereby agree as follows:
Article 1
RECITALS AND DEFINITIONS
1.1 RECITALS. The foregoing recitals are acknowledged by the parties to
be true and correct, and are incorporated herein by reference.
1.2 DEFINITIONS. As used in this Agreement, the terms listed below
SHALL HAVE THE following meanings:
(a) "ADVANCE": A disbursement by the Lender of a portion of the
Revolving Loan proceeds in accordance with the terms and provisions of this
Agreement.
(b) "AGREEMENT" or "LOAN AGREEMENT": This Loan Agreement.
(c) "ASSIGNMENT OF LIFE INSURANCE POLICY": A collateral assignment
of the first Five Hundred Thousand and 00/100 Dollars ($500,000.00) of proceeds
of a life insurance policy in an amount of not less than Two Million and 00/100
Dollars ($2,000,000.00) on the life of Stanley H. Streicher in favor of Lender.
(d) "BORROWER": Collectively, STRETCHER MOBILE FUELING, INC., a
Florida corporation, STRETCHER REALTY, INC., a Florida corporation, and
STREICHERWEST, INC., a California corporation.
<PAGE>
(e) "BORROWER'S COUNSEL OPINION LETTER": A letter from Borrower's
Counsel, in form and substance satisfactory to Lender and Lender's Counsel,
opining as to certain matters concerning the Loan.
(f) "Business Days": Days upon which the Lender is open for normal
business.
(g) "CASH COLLATERAL ACCOUNT". A cash collateral account pledged by
Borrower in favor of Lender, into which Lender shall deposit after receipt
thereof, payments on Borrower's Receivables, to be applied against the Revolving
Loan facility balance.
(h) "CLOSING": The time of the execution and delivery of this
Agreement by Borrower and Lender.
(i) "Code": The Internal Revenue Code of 1986, as amended from time
to time, and applicable Department of Treasury regulations thereunder.
(j) "CREDIT FACILITV LETTER": That certain letter executed by and
between Lender and Borrower dated November 5, 1997, and all amendments thereto,
the terms and conditions of which are hereby incorporated by reference herein,
but in the event of any conflict or discrepancy between the terms of this
Agreement and the Credit Facility Letter, the terms of this Agreement shall
control.
(k) "Dollars" or "$": United States Dollars.
(l) "ELIGIBLE RECEIVABLES": Those Receivables which are Receivables
of Streicher Mobile arising out of sales of tangible personal property made by
Streicher Mobile or services rendered by Streicher Mobile in the ordinary course
of its business, which are no more than ninety (90) days old from the invoice
date, according to the original terms of sale, and, the payment of which is not
in dispute and in which the Lender has a first priority security interest,
provided however, that if fifty (50%) percent or more of the Receivables from
any account debtor are more than ninety (90) days old, all of said account
debtor's Receivables shall be deemed ineligible. The Lender may treat any
receivable as ineligible: (i) if any warranty contained in this or any related
agreement is breached with respect thereto; (ii) if the customer or account
debtor has disputed liability or made any claim with respect to the receivable
or the merchandise covered thereby or with respect to any other receivable due
from said customer to Streicher Mobile; (iii) if the customer or account debtor
has filed a petition for bankruptcy or any other application for relief under
the Bankruptcy Act, assigned for the benefit of creditors, or if any petition or
any other application for relief under the Bankruptcy Act has been filed against
the said customer or account debtor, or if the customer or account debtor has
failed, suspended business, become insolvent, or had or suffered a receiver or
trustee to be appointed for any of its assets or affairs; (iv) if the customer
or account debtor is located outside the United States; (v) if the receivable is
a government receivable in which the Lender will not be able to perfect its lien
under the
2
<PAGE>
Federal Assignment of Claims Act for any reason whatsoever, excepting for
receivables due and owing from the United States Post Office which shall
constitute eligible receivables subject to the other exclusions set forth in
this paragraph; (vi) if the Receivable is offset, in whole or in part, by a
credit due and owing from Streicher Mobile to that account debtor; (vii) if the
Receivable is due and owing from an account debtor who is also a creditor of
Streicher Mobile; (viii) if the Receivable represents sums due and owing for
work and/or service currently being rendered by Streicher Mobile but not yet
completed by Streicher Mobile; (ix) if the Receivable is due and owing from an
affiliate corporation or related entity of Streicher Mobile or represents an
intercompany account; (x) if the Receivable represents a consignment sale or
warranty work; (xi) if the Receivable represents a C.O.D. sale; (xii) if the
Receivable represents sums due and owing from an employee of Streicher Mobile;
(xiii) if the Receivable represents retainage due and owing to Streicher Mobile;
(xiv) if the Receivable represents a Bill and Hold Invoice for items which have
been billed and are not yet due and payable; (xv) if the Receivable represents
the billing for inventory which has not been delivered to said account debtor;
(xvi) if the Receivable arises from a progress billing for work not yet
completed and delivered to the customer; or (xvii) if the Lender believes, in
its credit judgment in Lender's reasonable discretion, that collection of such
Receivable is insecure or that it may not be paid by reason of financial
inability to pay or otherwise or that such Receivable is not suitable for use as
collateral hereunder.
(m) "ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
(n) "EVENT OF DEFAULT": The occurrence of any one or more of the
Events of Default described in Article 9 hereof.
(o) "FINANCINA STATEMENTS": Financing Statements from Borrower to
Lender to perfect Lender's security interest in the property described in the
Security Agreements.
(p) "Generally Accepted Accounting Principles" or "GAAP": Those
principles of accounting set forth in opinions of the Financial Accounting
Standards Board of the American Institute of Public Accountants or which have
other substantial authoritative support and are applicable in the circumstances
as of the date of any report required herein or as of the date of an anplication
of such orinciples as required herein.
(q) "GOVERNMENTAL AUTHORITV": Any federal, state, county, municipal
or other governmental department, commission, board, bureau, court, agency, or
any instrumentality of any other governmental entity.
(r) "GOVERNMENTAL REQUIREMENTS": Any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, writ, injunction, franchise, permit,
certificate, license, authorization. or other direction or renuirement of anY
Governmental Authority now existinn
3
<PAGE>
or hereafter enacted, adopted, promulgated, entered or issued applicable to the
Loan or to the Borrower.
(s) "INDEBTEDNESS": Collectively, all of each Borrowers' presently
existing or hereafter created or assumed obligations to the Lender, including
without limitation, obligations for borrowed money, notes payable and drafts
accepted representing extensions of credit (whether or not representing
obligations for borrowed money), obligations representing the Loan and any
modifications or renewals thereof, obligations representing indebtedness to the
Lender whether or not assumed, secured or unsecured, however and wherever
incurred, acquired or evidenced, whether primary or secondary, direct or
indirect, absolute or contingent, joint or several or due or to become due,
including without limitation all such obligations, liabilities and all
indebtedness and obligations now or hereafter owed by each Borrower to Lender,
its affiliates, successors and/or assigns.
(t) "INITIAL ADVANCE": The first Advance of the Revolving Loan
proceeds.
(u) "LANDLORD'S WAIVER OF LIEN AGREEMENT": Waiver Agreements from
all Landlords where any Borrower leases business properties waiving the
Landlord's lien at that location to the lien and effect of the Loan.
(v) "LEASES: Leases for all locations where each Borrower leases
property in connection with its business operations.
(w) "LIFE INSURANCE POLICV": A life insurance policy on the life of
Stanley H. Streicher in an amount not less than Two Million and 00/100 Dollars
($2,000,000.00).
(x) "LOAN ACCOUNT". Borrower's account on the books of the Lender
in which Advances will be recorded, as well as payments made on the Revolving
Loan and other appropriate debits and credits as provided in this Agreement.
(y) "LOAN DISBURSEMENT ACCOUNT". The account established pursuant
to Article 3, Section 3.4 herein, maintained with Lender under account no.
055927360.
(z) "LOAN DOCUMENTS": This Agreement, the Revolving Note, the
Security Agreements, the Assignment of Life Insurance Policy, the Security and
Cash Collateral Account Agreement, and all other associated loan documents
executed in connection with the making of the Loan (and any modification,
renewal or extension thereof).
(aa) "Maturity Date": As to the Loan as evidenced by the Nose,
October 31, 1999, upon which date the entire principal balance and accrued
interest and all other applicable charges under the Loan shall become due and
payable in full.
4
<PAGE>
(bb) "REVOLVING NOTE OR "NOTE": A Master Revolving Promissory Note
in the principal amount of Five Million and 00/100 Dollars ($5,000,000.00) from
Borrower to Lender dated as of even date herewith, and any modification,
amendment, renewal or extension thereof evidencine the Revolvinp Loan.
(cc) "Person": As the case may be, any corporation, natural person,
firm, joint venture, partnership, trust, unincorporated organization and
government, or any department or agency of any government.
(dd) "Plan": Any pension plan which is governed by the terms and
provisions of Title IV of ERISA and in respect of which the Borrower or a
commonly controlled entity of the Borrower is an "Employer" (as defined in
Section 407(d)(7) of ERISA.
(ee) "Prime Rate": The interest rate announced by the Lender from
time to time as its prime rate, which rate is purely discretionary and is not
necessarily the best or lowest rate charged borrowing customers of the Lender.
(ff) "RECEIVABLES": All accounts, accounts receivable, general
intangibles, contract rights and other obligations of any kind, whether now
owned or hereafter acquired by Streicher Mobile and all proceeds ofthe foregoing
and all rights now or hereafter existing in and to all security agreements,
leases and other contracts security or otherwise relating to any such accounts,
contract rights, chattel paper instruments, general intangibles and obligations
and all proceeds, profits, deposits, products and accessions of and to all of
the foregoing.
(gg) "REPORTABLE EVENT": Any ofthe events set forth in Section
4043(b) of ERISA or the regulations thereunder.
(hh) "SECURITY AGREEMENTS": Collectively, Security Agreements of
even date herewith executed by each Borrower in favor of Lender, securing the
Note and all other Indebtedness of Borrower to Lender, which is a valid first
lien on all of the Borrower's accounts, accounts receivables, inventory, chattel
paper, general intangibles, fixtures, furniture, instruments, equipment and
personal property now owned or hereafter acquired by Borrower and all proceeds
of the foregoing, subject only to the Permitted Encumbrances (as defined in the
Security Agreements).
(ii) "SECURITY AND CASH COLLATERAL ACCOUNT AGREEMENT". A Security
and Cash Collateral Account Agreement whereby and "hereunder payment of all of
Borrower's Receivables shall be deposited into the Cash Collateral Account, to
be applied against the Revolving Loan facility balance.
(j) "SOLVENT": That, at the time of determination, (i) the fair
market value of the Borrower's assets (both at fair valuation and at present
fair saleable value on an orderly
5
<PAGE>
basis) is in excess of the total amount of its liabilities, including contingent
obligations; (ii) it is then able and expects to be able to pay its debts as
they mature; and (iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
1.3 OTHER DEFINITIONAL PROVISIONS. (a) The terms "material" and
"materially" shall have the meanings ascribed to such terms under Generally
Accepted Accounting Principles as such would be applied to the business of the
Borrower, except as the context shall clearly otherwise set forth; (b) all of
the terms defined in this Agreement shall have such defined meanings when used
in other documents issued under, or delivered pursuant to, this Agreement,
unless the context shall otherwise require; (c) all terms defined in this
Agreement in the singular shall have comparable meanings when used in the
plural, and vice versa; (d) accounting terms to the extent not otherwise defined
shall have the respective meanings given them under, and shall be construed in
accordance with Generally Accepted Accounting Principles; (e) the words
"hereby", "hereto", "hereof", "herein", "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision ofthis Agreement; (f) the masculine and neuter genders
are used herein and whenever used shall include the masculine, feminine and
neuter as well; and (g) whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the heirs, personal
representatives, successors and assigns of such parties unless the context shall
expressly provide otherwise.
Article 2
THE LOAN
2.1 REVOLVING LOAN. Provided there does not exist an Event of Default,
and no event with which notice or lapse of time or both would become such an
Event of Default, and subject to the terms and provisions of this Agreement,
Lender will, under the Note, lend or advance for the account of Borrower from
time to time, and, Borrower may borrow, repay and re-borrow (provided that
unless Borrower intends to pay and satisfy the Loan in full, Borrower shall not
reduce the outstanding principal balance under the Loan to a sum of less than
One Thousand and 00/100 Dollars ($ 1,000.00)) such amounts as may be required
for the purpose of providing working capital to the Borrower, not exceeding in
the aggregate an amount equal to (i) eighty-five percent (85%) of Eligible
Receivables, less such reserves as Lender, in its sole discretion elects to
establish, provided further that a Receivable may be devalued in such amount as
shall be determined by Lender in its sole discretion due to "Dilution" which is
defined as and is the result of non-cash credits posted against the Receivable
which result in payment or other satisfaction of all or any portion of the
Receivable for reasons other than full payment of the Receivable in cash (the
"Borrowing Base"); or, the sum of Five Million and 00/100 Dollars
($5,000,000.00), whichever is less. It is acknowledged that the Borrowing Base
under the Loan may be adjusted during the term ofthe Loan by Lender at any time,
in its sole discretion, based upon the result of the audits and collateral
examinations conducted during the term ofthe Loan. The aggregate amounts
outstanding under the Loan shall not at any time exceed the amount provided
above, and in the event the amount outstanding at any time exceeds the permitted
amount, said excess amount shall bear interest at the rate set forth in the Note
and shall be due and payable in full on DEMAND.
6
<PAGE>
2.2 AUDIT FEES. The Audit Fee due and owing from Borrower to Lender in
connection with the audits set forth in Article 8, Section 8.5 herein shall be
based upon a charge of Four Hundred Twenty and 00/100 Dollars ($420.00) per day,
plus expenses, which per diem rate is subject to change at any time.
2.3 LOAN ACCOUNT. All Advances and paydowns hereunder and under the
Revolving Note shall be recorded by Lender in the Loan Account.
2.4 LOAN DOCUMENTS. Borrower's obligation to repay the Loan is
evidenced by the Note delivered simultaneously herewith, which sets forth the
method for payment, rates of interest, and such further terms as are therein set
forth. The repayment of the Note and the Indebtedness is to be secured by the
following documentation, which documents Borrower shall deliver, or cause to be
delivered, to Lender simultaneously with the delivery of the Note and which
documents must be received prior to any funding hereunder:
(a) The Security Agreements, in form and substance satisfactory to
Lender and Lender's counsel.
(b) Financing statements filed in such public off~ces as Lender and
Lender's counsel may deem necessary to perfect a security interest in any ofthe
Security Agreements.
(c) The Security and Cash Collateral Account Agreement, in form and
substance satisfactory to Lender and Lender's Counsel. It is acknowledged that
on or before July 1, 1998, Borrower and Lender shall enter into a Security, Cash
Collateral and Lockbox Agreement whereby and "hereunder Borrower shall direct
all account debtors to remit all payments to a lockbox to be maintained with and
administered by Lender, with such collections to be deposited into the Cash
Collateral Account, to be applied against the Loan facility balance.
(d) Borrower's Counsel Opinion Letter, in form and substance
satisfactory to Lender and Lender's Counsel, from Borrower's counsel opining as
to certain matters concerning the Loan.
(e) Such policies of liability insurance, worker's compensation
insurance and hazard insurance (with fire extended coverage, vandalism and
mischief protection) as the Lender may reasonably request, subject to a standard
loss-payee's and additional insured's endorsements, as applicable, in the
Lender's favor, and providing at least thirty (30) days prior written notice of
any cancellation, modification or non-renewal of the insurance coverage.
(f) Incumbency Certificate and Resolutions of the directors of each
Borrower authorizing the Loan, and the execution of all Loan Documents related
thereto.
7
<PAGE>
(g) Certificates of Good Standing evidencing that each Borrower is in
good standing under the laws ofthe State of Florida and the State of California,
as applicable, and in each other state in which it is required to be qualified
to conduct business.
(h) Certified copy of Articles of Incorporation and By-Laws of each
Borrower.
(I) Evidence of compliance by each Borrower with the Florida Fictitious
Name Act. if and as applicable.
(j) Certified copies of the Leases in connection with all leased
premises of each Borrower.
(k) Landlord's Waiver of Lien Agreement(s) executed by all landlords at
business locations of Borrower waiving the landlord's lien at such locations to
the lien and effect of the Loan.
(1) Life Insurance Policy in an amount of not less than Two Million and
00/100 Dollars ($2.000.000.00) on the life of Stanley H. Streicher.
(m) Collateral Assignment of Life Insurance Policy assigning the first
Five Hundred Thousand and 00/100 Dollars ($500,000.00) of proceeds under the
Life Insurance Policy to Lender.
(n) Consolidated financial statements of the Borrower, in form and
substance acceptable to Lender.
(o) Such other documentation as may be required by Lender or Lender's
Counsel.
Article 3
MANNER OF MAKING LOAN ADVANCES
3.1 ADVANCE REQUEST. Each Advance to the Borrower under the Revolving
Loan shall be made by the Lender upon Lender's initiation of said Advance or
upon written request of the Borrower stating the date on which the Advance is to
be made (the "Borrowing Date"), and the principal amount of the Advance
requested, delivered at least one (1) day prior to the date on which the Advance
is to be made. Any notice delivered under this sub-section shall be irrevocable
and bind the Borrower to consummate the Advance on the Borrowing Date.
3.2 INTENTIONALLY DELETED.
3.3 BORROWING BASE CERTIFICATE. Borrower shall provide to Lender a
Borrowing Base Certificate in form and content acceptable to Lender (the form of
said Borrowing Base Certificate
8
<PAGE>
being appended hereto and made a part hereof as Exhibit "A") not less than
monthly within fifteen (15) days of the end of each monthly period in each
fiscal year of Borrower.
3.4 LOAN DISBURSEMENT ACCOUNT. The proceeds of any Advance to the
Borrower shall, on the date of such Advance, be deposited in immediately
available funds in the Loan Disbursement Account, which shall be a demand
deposit account maintained with Lender.
Article 4
INTEREST
All interest under the Loan shall be computed on the basis of a year
containing three hundred sixty (360) days for the actual number of days elapsed.
Interest shall be due and payable in accordance with the terms and provisions
ofthe Note, and interest shall accrue at the rate of interest provided in the
Note for each Advance thereunder. Payments of principal, interest, fees or other
amounts made by the Borrower shall be made to the Lender at the Lender's of
fices located at 1750 East Sunrise Boulevard, Second Floor, Fort Lauderdale,
Florida 33304, for the account of Lender, in Dollars and in immediately
available funds before 2:00 p.m. (Florida time) on the date such payment is due.
The Lender shall deem any payment made by or on behalf of the Borrower that is
not made in immediately available funds and prior to 2:00 p.m. (Florida time) to
be a nonconforming payment, which shall not be deemed to be received by the
Lender until the later of (a) the time such funds become available funds or (b)
the next Business Day. Any non-conforming payment may constitute or become an
Event of Default hereunder. Interest shall continue to accrue on any principal
as to which a non-conforming payment is made until the later of (a) the date
such funds become available funds or (b) the next Business Day. All payments to
be made by the Borrower on account of principal, interest and/or fees, shall be
made without diminution, setoff, recoupment or counterclaim.
Article 5
CONDITIONS PRECEDENT TO FIRST ADVANCE AND ADDITIONAL ADVANCES
5.1 The obligations of Lender to make the Initial Advance and all
additional Advances under the Revolving Loan are subject to the following
conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations, covenants and
warranties made by Borrower in this Agreement shall be true and correct on and
as of the date of such Advance.
(b) NO DEFAULT. There shall be no default, and no event which with
notice or lapse of time or both would become an Event of Default, under this
Agreement, the Revolving Note, any of the Security Agreements, or any other Loan
Document.
(c) PRE-FUNDING AUDIT: A pre-funding audit ofthe Borrower's books,
records and accounts receivable, which must result in findings satisfactory to
Lender, in Lender's sole
9
<PAGE>
and absolute discretion. The pre-funding audit shall be at the sole cost and
expense of Borrower.
(d) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business or financial condition of any Borrower or in the
value ofthe Collateral (as said term is defined in the SecuritY Acreements)
since November 5, 1997.
(e) LIEN AND JUDGMENT SEARCHES. Lien and judgment searches of each
Borrower shall have been conducted with the Florida Secretary of State and in
any other state or jurisdiction as shall be required by Lender, which must
result in findings satisfactory to Lender, in Lender's sole discretion.
(f) CREDIT FACILITY LETTER. All terms and provisions of the Credit
Facility Letter shall have been complied with in full.
(g) DELIVERY OF LOAN DOCUMENTS. All of the Loan Documents shall have
been duly executed and delivered to Lender, and the Financing Statements shall
have been recorded in the appropriate public offices.
(h) DELIVERY OF OTHER DOCUMENTS. Borrower shall have delivered, or
caused to be delivered to Lender, the other documents required under Article 2
hereof, and shall have also delivered or caused to be delivered to Lender, the
followine:
(i) Annual reviewed financial statements of the Borrower, in form and
substance acceptable to the Lender, prepared in accordance with GAAP, by
certified public accountant(s) acceptable to the Lender.
(ii) Report on Receivables evidencing that there are adequate Eligible
Receivables to support the Initial Advance or additional Advances, as
applicable.
(iii) Such policies of liability insurance, worker's compensation
insurance and hazard insurance (with fire extended coverage, vandalism and
mischief protection) as Lender may reasonably request subject to a standard
loss-payee's and additional insured's endorsements, as applicable, in the
Lender's favor.
(iv) Such other certification or documentation to be executed by
Borrower as may be reasonably required by Lender or Lender's counsel pertaining
to the closing of the Initial Advance and all subsequent Advances of the
proceeds hereunder, it being understood that all such items shall be promptly
delivered prior to Lender's obligation to making further Advances hereunder.
Article 6
USE OF LOAN PROCEEDS; MARGIN STOCK
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<PAGE>
The proceeds of the Revolving Loan shall be used to support the
Borrower's general working capital requirements. Borrower does not own any
margin securities and no portion of any Advance and, no portion of the Loan,
will be used for the purpose of reducing or retiring any indebtedness which was
originally incurred by Borrower to purchase any margin securities, and neither
the making of any and all loans and Advances nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of Regulations G, T, U or X
of the Board of Governors of the Federal Reserve Systems of the United States.
Article 7
REPRESENTATIONS AND WARRANTIES
7.1 Borrower represents and warrants to Lender that, so long as credit
remains available to the Borrower or there is any outstanding balance due under
the Note, as secured by the Loan Documents:
(a) Borrower has the power to engage in all the transactions
contemplated by this Agreement and has full power, authority and legal right to
execute and deliver, and to comply with its respective obligations under the
Loan Documents, which documents constitute the legally binding obligations of
each Borrower enforceable against each Borrower in accordance with their
respective terms.
(b) To the best of its knowledge and belief, there is no suit,
action, or proceeding pending or threatened against or affecting any Borrower,
before or by any court, administrative agency or other Governmental Authority
which brings into question the validity of the transactions contemplated hereby
or would interfere with the ability of any Borrower to comply with the terms
hereof.
(c) Each Borrower is in good standing within the State in which it
is incorporated. Borrower, prior to closing, will deliver to Lender: (i)
resolutions certified as true by the secretary of each Borrower authorizing such
Borrower's participation in connection with the transactions contemplated herein
and execution of the Note and related Loan Documents, (ii) incumbency
certificates of each Borrower, (iii) certified copies of the Articles of
Incorporation and By-laws of each Borrower, and (iv) corporate Certificates of
Good Standing of each Borrower.
(d) Except as otherwise disclosed on Exhibit "B" appended hereto
and made a part hereof, during the one (1) year period preceding the date of
closing, no Borrower has been known as or used any corporate of fictitious names
other than the corporate name of such Borrower on the Closing date. All trade
names or styles under which the Borrower sells inventory or equipment or creates
receivables or to which instruments in payment of Receivables are made payable,
are set forth on Exhibit "B".
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(e) Each Borrower owns or possesses all intellectual property
required to conduct its businesses as now and presently planned to be conducted
without, to its knowledge, conflict with the rights of others.
(f) Each Borrower is Solvent after giving affect to the
transactions contemplated by the Loan Documents.
(g) Neither the execution nor delivery of any of the Loan
Documents, nor any other document relating hereto, will conflict with or result
in a breach of any of the provisions of the Charter, Articles of Incorporation
or By-Laws, where applicable, of any Borrower, or of any applicable law,
judgment, order, writ, injunction, decree, rule or regulation of any court,
administrative agency or other Governmental Authority, or of any agreement or
other instrument to which any Borrower is a party or by which any of them is
bound or constitute a default under any thereof, or result in the creation or
imposition of any lien, charge or encumbrance upon any property of any Borrower,
other than those created under this transaction in favor of Lender.
(h) No consent, approval or other authorization of or by any
Governmental Authority is required in connection with the execution or delivery
by Borrower of the Loan Documents, or compliance with the provisions hereof or
thereof.
(i) There are no actions, suits or proceedings pending or, to the
knowledge of Borrower, overtly threatened against or affecting the Borrower at
law or in equity, or before or by any Federal, State, Provincial, municipal or
other Governmental Authority, which involve any of the transactions herein
contemplated or the possibility of any judgment or liability which would result
in any material adverse change in the business, operations, properties or assets
or in the financial condition of any Borrower. No Borrower is in default with
respect to (a) any judgment, order, writ, injunction or decree or (b) any rule
or regulation of any court or Federal, State, municipal or other Governmental
Authority, which would have a material adverse effect on its business,
properties or condition (financial or otherwise).
(j) Subject to any limitation stated thereon or by any Borrower in
writing, all balance sheets, earnings statements and other financial data which
have been or shall hereafter be furnished to the Lender to induce it to enter
into this Agreement or otherwise in connection herewith, do or will fairly
represent the financial condition of the Borrower as of the dates and the
results of their operations for the period for which the same are furnished to
the Lender and have been or will be prepared in accordance with Lender's
requirements, and that all other information, reports and other papers and data
furnished to the Lender are or will be, at the time the same are so furnished,
accurate and correct in all material respects and complete insofar as
completeness may be necessary to give the Lender a true and accurate knowledge
ofthe subject matter. There are no material liabilities of any kind ofthe
Borrower as of the date of the most recent financial statements which are not
reflected
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therein. There have been no materially adverse changes in the financial
condition or operation of any Borrower since the date of such financial
statements. At Lender's request, Borrower shall provide financial statements
prepared in accordance with Lender's requirements, represented by Borrower that
said financial statements are fairly prepared and consistent with prior
statements provided to the Lender or certified by their respective accountants
that said financial statements are true and accurate, on an annual basis and
interim basis as more fully set forth herein.
(k) Borrower will pay all obligations, including tax claims, when
due, except such as the Borrower contests in an appropriate proceeding, in which
event Borrower shall furnish to Lender, if requested, a bond or other security
satisfactory to Lender in an amount sufficient to protect Lender and its
interest herein.
(l) There is no material uncured default on the part of any
Borrower under this Agreement, the Revolving Note, any of the Security
Agreements, or any of the other Loan Oocuments.
(m) The Borrower has dealt with no broker or finder in connection
with the Loan, and the Borrower hereby agrees to jointly and severally indemnify
the Lender and to jointly and severally hold the Lender harmless of and from any
and all claims for broker's or finder's fees or commissions in connection with
the Loan, and agrees to pay all expenses (including but not limited to
attorney's fees and expenses) incurred by the Lender in connection with the
defense of any action or proceeding brought to collect any such fees and
commissions, or otherwise relating to any such broker's claims resulting from or
arising out of any claim that the Borrower consulted, dealt or negotiated with
the person or entity making such brokerage claim.
(n) Each Plan, pension, profit sharing or other employee benefit
plan, maintained by each Borrower is in material compliance with ERISA, the
Code, and all applicable rules and regulations adopted by regulatory authorities
pursuant thereto. The Borrower has filed all material reports required to be
filed by ERISA, the Code and such rules and regulations. In addition, any
qualified Plans subject to the minimum funding standards, do not, as of the date
hereof, have a funding deficiency, as defined by ERISA. No Reportable Event
material in relation to the business operations, property, financial or other
conditions of the Borrower has occurred with respect to any Plan. No tax penalty
nor other liability in the aggregate material in relation to business
operations, property, or financial conditions of the Borrower has been assessed
acainst the Borrower with respect to a Plan.
(o) Each Borrower has filed or caused to be filed all tax returns,
which to the knowledge of the Borrower, are required to be filed, and has fully
paid all taxes shown to be due and payable on said returns or any assessments
made against it or its property, and all other taxes, fees, or other charges
imposed on it or any of its property by any Governmental Authority. No tax liens
have been filed and, to the knowledge of Borrower, no claims are
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being made or may hereafter be asserted with respect to any such taxes, fees or
other charges except for: (i) those, the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with Generally Accepted Accounting
Principles have been provided on the books of Borrower, as the case may be; and
(ii) such failures to file or pay such tax liens or claims as could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
business operations, property or financial or other condition of the Borrower,
and can not reasonably be expected to have an adverse effect on the ability of
the Borrower to perform any of its respective obligations in any material
respect under this Agreement, the other Loan Documents, or under any other
contractual obligation.
(p) All copies of all documents, reports, and statements heretofore
furnished by or on behalf of Borrower, or in connection with this Agreement to
the Lender, are, and those delivered subsequent to the date hereof, will be,
true and correct copies of the originals of such documents, reports and
statements. All matters stated or certified in any written statement,
certificate, report or other writing heretofore furnished pursuant to this
Agreement by or on behalf of the Borrower to the Lender are, and all matters
stated or certified subsequent to the date hereof, will be, true and correct as
of the date stated or certified. All such documents, reports, statements,
writings and certifications shall be in form and detail satisfactory to the
Lender.
(q) Each Borrower owns or leases all of its properties and assets
reflected on the balance sheets referred to in Section 7.1(j) hereof.
(r) All of the properties and assets set forth in Section 7.1 (q)
are free and clear of all mortgages, pledges, liens, charges and other
encumbrances of any nature whatsoever, excepting for the Permitted Encumbrances
(as defined and set forth in the Security Agreements).
(s) No Borrower is in default (subject to any applicable cure
periods) in the performance, observance of fulfillment of any of the
obligations, covenants or conditions contained in any lease for real or personal
property, which would have a material adverse affect on its business and all
such leases are valid and existing and in full force and effect.
(t) No Borrower is an "investment company" within the meaning of
the Investment Company Act of 1940 and any amendments thereto.
(u) None of the employees of any Borrower or any of its
subsidiaries are subject to any collective bargaining agreement and there are no
strikes, work stoppages, election or decertification petitions or proceedings,
unfair labor charges, equal opportunity proceedings, or other material
labor/employee related controversies or proceedings pending, or, to the best
knowledge of the Borrower, threatening any Borrower or any of its subsidiaries,
or between any Borrower (or any of its subsidiaries) and any of its employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected, individually or in the aggregate, to have a
materially adverse effect on the Borrower.
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Article 8
COVENANTS OF BORROWER
8.1 Each Borrower shall do, or cause to be done, all of the things
necessary to preserve, renew and keep in full force and effect its corporate
existence and its rights, licenses and permits shall comply with all laws
applicable to it, operate its business in a proper and efficient manner, and
substantially as presently operated or proposed to be operated, and at all times
shall maintain, preserve and protect all franchises and trade names and preserve
all property used or useful in the conduct of its business, and keep the same in
good repair, working order and condition, and from time to time make or cause to
be made any needed and proper repairs, renewals, replacements, betterments and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
8.2 Each Borrower shall at all times maintain true and correct books
and records and shall keep its books and records in accordance with Generally
Accepted Accounting Principles, and shall furnish the Lender with such financial
statements as may be required by Lender on a yearly and interim basis as set
forth in this paragraph and other parts of this Agreement.
8.3 Each Borrower shall properly pay and discharge: (a) all taxes,
assessments and governmental charges upon or against such Borrower or its assets
prior to the date on which penalties are attached thereto, unless, and to the
extent, such taxes are being diligently contested in good faith by appropriate
proceedings and appropriate reserves therefor have been established; and (b) all
lawful claims for labor, materials, supplies, services or anything else which
might or could, if unpaid, become a lien or charge upon the properties or assets
of such Borrower, unless and to the extent only that the same are transferred to
bond, being diligently contested in good faith, and by appropriate proceedings
and appropriate reserves therefor have been established.
8.4 The Borrower shall maintain the Cash Collateral Account, into which
all payments and other proceeds of Receivables will be deposited by Borrower. it
is acknowledged that on or before July 1, 1998, Borrower and Lender shall enter
into a Security, Cash Collateral and Lockbox Agreement whereby and "hereunder
Borrower shall direct all account debtors to remit all payments to a lockbox to
be maintained with and administered by Lender, with such collections to be
deposited into the Cash Collateral Account, to be applied against the Loan
facility balance.
8.5 The Borrower shall allow Lender to conduct audits of the Borrower's
books and records (and to make copies and extracts therefrom), including an
audit confirmation of accounts receivable balances and ownership interest in the
inventory, assets and business properties of Borrower. The above set forth
audits, examinations and inspections shall be conducted not less than four (4)
times in each fiscal year of Borrower. Said audits shall be performed at the
sole cost and expense of Borrower. The current per diem for said audits is Four
Hundred Twenty and 00/100 Dollars ($420.00) per day, plus expenses, subject to
change at any time. The foregoing ofthe audits may be adjusted by Lender at any
time in Lender's sole discretion.
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8.6 Streicher Mobile shall maintain a minimum net worth of not less
than Four Million Two Hundred Fifty Thousand and 00/100 Dollars ($4,250,000.00)
from the date of this Agreement until October 31, 1998, such requirement to be
tested at the end of each quarter of each fiscal year of Streicher Mobile. The
minimum net worth requirement shall be increased at the end of each quarter in
each fiscal year of Streicher Mobile thereafter in an amount to be determined by
Lender based upon Streicher Mobile's annual projections for the period in
question.
8.7 Streicher Mobile shall maintain a debt to worth ratio of not more
than 1.75 to 1 through October 31, 1998, such ratio to be tested at the end of
each quarter of each fiscal year of Streicher Mobile. The debt to worth ratio
shall be adjusted at the end of each quarter in each fiscal year of Streicher
Mobile thereafter based upon Streicher Mobile's annual projections for the
period in question.
NOTE: In connection with the above, all accounting terms used shall be
construed in accordance with GAAP.
8.8 Each Borrower shall, at its expense, comply with all of the
insurance requirements set forth in this Agreement and the Security Agreements
throughout the term of the Loan.
8.9 The Borrower shall jointly and severally indemnify and save
harmless Lender from any and all loss or damage of whatsoever kind and from any
suits, claims, or demands, including, without limitation, Lender's reasonable
legal fees and expenses, at all trial and appellate levels, on account of any
matter or thing arising out of this Agreement or in connection herewith, or on
account of any act or omission to act by Borrower in connection with this
Agreement and the Loan. The Borrower further agrees to pay any and all taxes
(other than taxes on or measured by net income of Lender) incurred or payable in
connection with the execution and delivery of this Agreement, the Loan and all
other loans from Lender to Borrower. Such obligation shall survive repayment of
the loan.
8.10 Lender shall have the right, from time to time hereafter and until
the maturity of the Loan, to publicize and advertise in any manner Lender's
participation as lender in connection with the l.oan.
8.1 1 The Borrower shall: (a) make full and timely payments of the
principal and interest due and owing under the Note and the Indebtedness of the
Borrower to the Lender, whether now existing or hereafter arising; (b) duly
comply with all of the terms and covenants contained in each of the Loan
Documents; and (c) at all times maintain the liens and security interests
provided for under or pursuant to this Agreement and all other applicable Loan
Documents as valid and perfected liens and security interests on the property
intended to be covered thereby.
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8.12 The Borrower shall promptly notify the Lender upon the
commencement of any material action, suit or claim or counter-claim or
proceeding against or investigation of any Rnrrnwer
8.13 The Borrower shall pay all indebtedness and obligations promptly
and in accordance with its respective terms and pay and discharge promptly all
taxes, assessments, and governmental charges or levies imposed upon it or in
respect of its property, before the same shall become in default, as well as all
lawful claims for labor, materials, and supplies or otherwise which, if unpaid,
might become a lien or charge upon such property or any part thereof, and timely
comply with all applicable laws and governmental rules and regulations.
8.14 The Borrower shall promptly notify the Lender in writing of: (a)
any material assessments by any taxing authorities for unpaid taxes as soon as
Borrower has knowledge thereof; and (b) any alleged default by any Borrower in
the performance of or any modification of any of the terms and conditions
contained in any agreement, mortgage or indenture or instrument to which any
Borrower is a party, or which is binding upon any Borrower, and upon any default
by any Borrower in the payment of any of its indebtedness.
8.15 The Borrower shall provide to Lender annual reviewed consolidated
financial statements of the Borrower, in form and substance acceptable to
Lender, prepared in accordance with GAAP, by certified public accountant(s)
acceptable to Lender, within one hundred twenty ( 120) days following the end of
each fiscal year of Borrower. Additionally, the Borrower shall provide to Lender
quarterly internally prepared consolidated financial statements of the Borrower,
represented by the Chief Financial Officer of the Borrower that said financial
statements are fairly prepared and consistent with prior statements provided to
the Lender or certified by their respective accountants as being true and
correct in all respects, and otherwise in form and substance acceptable to
Lender, within forty-five (45) days following the end of each quarterly period
in each fiscal year of Borrower, together with annual tax returns (with all
attached schedules) of each Borrower within fifteen (15) days of timely filing
of the same.
8.16 The Borrower shall provide to the Lender an aged analysis of all
outstanding accounts receivable of Borrower, in form and substance acceptable to
the Lender, within fifteen (15) days following the end of each monthly period in
each fiscal year of the Borrower. Lender reserves the richt to increase the
frequency of said aRing reports based upon the findings set forth in the audits.
8.17 The Borrower shall provide to the Lender an aged analysis of all
outstanding accounts payable of Borrower, in form and substance acceptable to
Lender, within fifteen (15) days following the end of each monthly period in
each fiscal year of the Borrower. Lender reserves the right to increase the
frequency of said aging reports based upon the findings set forth in the audits.
8.18 The Borrower shall provide to the Lender all information necessary
for the Lender to verify the credit standing of each Borrower during the term of
the Loan. Borrower shall additionally provide to Lender sales reports in form
and content acceptable to Lender (which reports shall include, without
limitation, copies of purchase orders), at such times as Lender shall require,
in Lender's sole discretion.
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8.19 The Borrower shall allow the Lender, or Lender's designated agent,
to enter upon the Borrower's premises and inspect the Borrower's property at all
reasonable times, which inspections shall be at Borrower's sole cost and
expense.
8.20 Any existing and future loans to Borrower from any shareholders,
of ficers or directors of each Borrower shall be subordinated to the lien and
effect of the Loan. Provided that no Event of Default has occurred under the
Loan, each Borrower shall be entitled to make scheduled payments (but not
prepayments) of interest (but not principal) under such subordinated debt.
8.21 No Borrower shall sell or convey any of its assets, except in the
normal and ordinary course of business, including any merger, consolidation or
reorganization, unless consented to in writing by lender. BORROWER SHALL NOT
CONVEY OR TRANSFER ANY CASH, ASSETS OR PROPERTY TO ANY AFFILIATE, SUBSIDIARY,
RELATED ENTITY OF THE BORROWER OR ANY ENTITY IN WHICH STANLEY H. STRETCHER HAS
ANY OWNERSHIP INTEREST, AT ANY TIME DURING THE TERM OF THE LOAN, EXCEPTING
HOWEVER, THAT BORROWER SHALL BE PERMITTED TO TRANSFER ASSETS AMONG THEMSELVES.
Additionally, there shall be no material change in the ownership or management
of any Borrower without the prior written consent of Lender. For purposes
hereof, (a) a material change in ownership shall occur when a change in
ownership occurs and Stanley H. Streicher no longer (directly or indirectly)
owns greater than fifty-one percent (51%) of the equity and voting stock of each
Borrower, and (b) a material change in management shall occur when Stanley H.
Streicher ceases to hold the of fices of President or Chief Executive Officer,
or is otherwise no longer actively engaged in the management, of Streicher
Mobile. Notwithstanding anything to the contrary set forth above, sales from
Streicher Mobile to affiliated entities shall be permitted provided that such
sales constitute arms length transactions with normal prices, terms and
conditions made in the normal and ordinary course of business.
8.22 There shall be no loans or other advances from Borrower to
affiliates or related entities of any Borrower during the term of the Loan.
8.23 Each Borrower shall maintain all of its business, company and
depository accounts with Lender during the term of the Loan. Notwithstanding the
foregoing, Borrower shall be entitled to maintain depository accounts with
financial institutions other than Lender in connection with Borrower's
operations in locations outside of the State of Florida. Additionally, Lender
acknowledges that Borrower currently maintains an investment account with Paine
Webber which shall be permitted.
8.24 The Borrower shall establish no additional employee benefit plans
of any nature without the prior written consent of the Lender, which consent
shall not be unreasonably withheld. Each pension, profit sharing, or other
employee benefit plan, at any time, maintained by each Borrower, shall be in
material compliance with ERISA, the Code, and all applicable rules and
regulations adopted by regulatory authorities, pursuant thereto. The Borrower
will
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cause to be filed all material reports required to be filed by erisa, the code,
and such rules and regulations.
8.25 The Borrower within ten ( 10) days after written request from the
Lender, will furnish a written statement in form satisfactory to the Lender,
duly acknowledged: (i) setting forth the unpaid principal balance of, and the
interest and other sums due on, the Indebtedness evidenced by the Note and/or
secured by any of the other Loan Documents; (ii) stating whether or not any
offsets or defenses exist against the payments due under the Note or any of the
other Loan Documents; (iii) stating the current maturity date of the Note; and
(iv) setting forth such other information as the Lender may request from time to
time.
8.26 The Borrower shall notify the Lender immediately of any change in
the name of any Borrower, the principal place of business of any Borrower, the
of fice where the books and records of any Borrower are kept or any change in
the registered agent of any Borrower for the purpose of service of process.
8.27 Borrower shall not incur any additional debt (other than
indebtedness incurred in connection with the financing of trucks, including all
equipment located on and attached to the trucks) without Lender's prior written
consent, which consent shall be in Lender's sole discretion.
8.28 Borrower shall provide to Lender a Borrowing Base Certificate in
form and content acceptable to Lender on a monthly basis within fifteen (15)
days of the end of each monthly period in each fiscal year of Borrower and at
such other times as shall be requested by Lender, in Lender's sole discretinn
8.29 The Borrower shall give Lender prompt written notice of any Event
of Default hereunder, or any event of default with respect any Borrower's
obligations under any of the other Loan Documents, indicating the nature and
status thereof and the action which it proposes to take with respect thereto.
8.30 No Borrower shall directly or indirectly engage in any business
activity which would represent a material change from the kind of business
activity currently engaged in by it, which in the aggregate would have a
substantial and material effect on the Borrower's business, without the prior
written consent of Lender, which consent shall be in Lender's sole discretion.
8.31 Borrower shall provide to Lender on a semi-annual basis, a
complete and updated listing of all of its customers and account debtors, which
listing shall include all of the customers' and account debtors' addresses and
phone numbers. In connection with the same, Lender shall use its best efforts to
insure that said lists are not released outside of the Bank, provided however,
that Lender shall incur no liability whatsoever in the event the same occurs.
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8.32 There shall be no subordinate financing ofthe collateral
encumbered by the Security Agreements and Financing Statements.
8.33 The Borrower shall use the funds borrowed by the borrower under
this agreement solely for general working capital requirements of the borrower.
Article 9
EVENTS OF DEFAULT
Each of the following is an Event of Default:
(a) If Borrower fails to pay any installment of interest or
principal under the Note within ten (10) days after the date the same shall
become due;
(b) If there occurs any default under any other term of this
Agreement, the Note, any of the Security Agreements or any of the other Loan
Documents relating hereto or thereto subject to any applicable cure period(s)
set forth therein;
(c) If any representation or warranty of Borrower hereunder shall
prove to be incorrect in any material respect;
(d) The dissolution, termination of existence, merger,
consolidation or reorganization of any Borrower;
(e) The commencement of levy, execution or attachment proceedings
in excess of Fifty Thousand and 00/100 Dollars ($50,000.00) against any Borrower
or, or the application for or appointment of a liquidator, receiver, custodian,
sequester, conservator, trustee, or other similarjudicial of ficer (and such
appointment continues for a period ofthirty (30) days in the case of an
involuntary proceeding), or the insolvency, in the bankruptcy or equity sense,
of any Borrower;
(f) The assignment for the benefit of creditors, or the admission
in writing of any inability to pay any debts generally as they become due, or
ordering the winding up or liquidation of its affairs, by any Borrower, or the
commencement of a case by or against any Borrower under any insolvency,
bankruptcy, creditor adjustment, debtor rehabilitation or similar law. state or
federal:
(g) The determination by any Borrower to request relief under any
insolvency, bankruptcy, creditor adjustment, debtor rehabilitation or similar
proceeding, state or federal, including without limitation the consent by any of
them to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official for it or for any
of its respective property or assets;
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(h) There shall have occurred any substantial adverse change in
the financial condition of any Borrower;
(i) If the Borrower shall have failed to comply with any other
agreement, covenant, condition, provision or term contained in this Agreement
and Borrower fails to cure said default within thirtY (30) days of the date of
the occurrence of said default;
(j) There shall be entered against any Borrower one (l) or more
judgments or decrees in excess of $50,000.00, or which are not satisfied or
transferred to bond within thirty (30) days of entry.
(k) There shall occur an Event of Default by any Borrower in the
performance of its obligations under the Indebtedness or under any other loan
agreement with the Lender and/or the occurrence of any monetary event of default
under any loan agreement and/or financina arrancement with any other lender; or
(l) If at any time Lender deems itself insecure for any reason
whatsoever (notwithstanding any grace period in any Loan Documents), or if any
change or event shall occur which in Lender's exclusive judgment impairs any
security for the Loan, increases Lender's risk in connection with the Loan, or
indicates that any Borrower may be unable to perform its respective obligations
under any Loan Document.
Article l0
SET-OFFS
In addition to any other rights the Lender may have at law or in
equity, if any Borrower becomes insolvent howsoever evidenced, or any Event of
Default occurs and is continuing, or if Lender deems itself insecure, any
indebtedness from the Lender to each Borrower, and any other property of each
Borrower held by the Lender, may be set-off and applied towards the payment of
the Indebtedness of the Borrower under this Agreement (including, but not
limited to all indebtedness evidenced by the Note) to the Lender, including,
without limitation, any note payable to the Lender, whether or not such
Indebtedness of the Borrower to the Lender on such note or any part thereof
shall then be due.
Article ll
LENDER'S REMEDIES IN EVENT OF DEFAULT
l1.l Upon any Event of Default, subject only to any cure period(s)
expressly provided in the Note or the Security Agreements, the Lender shall be
entitled to all of its rights or remedies hereunder, at law or in equity and
under the Note, the Security Agreements and any other Loan Document, including,
without limitation, the right to declare the outstanding principal balance ofthe
Note, the accrued interest thereon, and all other obligations ofthe Borrower to
the Lender under this Agreement or otherwise to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Note to the
contrary notwithstanding,
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and the Lender's obligation to make any additional Advances hereunder shall be
permanently terminated.
11.2 All of the remedies herein given to Lender or otherwise available
to it shall be cumulative and may be exercised concurrently. Failure to exercise
any of the remedies herein provided shall not constitute a waiver thereof by
Lender, nor shall use of any such remedies prevent the subsequent or concurrent
resort to any other remedy or remedies which shall be vested in Lender by this
Agreement or at law or in equity. To be effective, any waiver by Lender must be
in writing and such waiver shall be limited in its effect to the condition or
default specified therein; but no such waiver shall extend to any subsequent
condition or default or impair any right consequent thereon.
Article 12
TAX INDEMNIFICATION
Borrower hereby agrees to and does hereby jointly and severally
indemnify and hold harmless Lender of and from any and all liability in
connection with payment of any and all intangible, documentary stamp, transfer,
recording and other taxes due and owing to the State of Florida, the State of
Alabama, the State of California, the State of Louisiana, the State of
Tennessee, the State of Georgia, and all other applicable jurisdictions in
connection with the execution, delivery and/or enforcement of this Agreement,
the Revolving Note, the Security Agreements, and all associated Loan Documents,
together with all penalties and interest associated therewith, if any.
Accordingly, Borrower does hereby authorize Lender to reimburse itself for any
such taxes that Lender pays upon behalf of Borrower from the proceeds under the
Revolving Note, in the event Lender, at any time, in its sole discretion, deems
it necessary to pay such taxes, together with any penalties and interest
associated therewith. This indemnification and Borrowers' liability for payment
of all of the above set forth taxes shall survive repayment and/or satisfaction
of the Loan.
Article 13
MISCELLANEOUS
13.1 Any condition of this Agreement which requires the submission of
evidence of the existence or non-existence of a specified fact or facts implies
as a condition the existence or nonexistence, as the case may be, of such fact
or facts, and Lender shall, at all times, be free independently to establish to
its satisfaction and in its absolute discretion such existence or non-existence.
13.2 No part of the Loan will be, at any time, subject or liable to
attachment or levy at the suit of any creditor of Borrower or of any other
interested party, or at the suit of any contractor, subcontractor.
sub-subcontractors or materialman, or any of their creditors.
13.3 If performance of any provision hereof or any transaction related
hereto is limited by law, then the obligation to be performed shall be reduced
accordingly, and if any clause or provision
22
<PAGE>
herein contained operates or would operate to invalidate this Agreement in part,
then the invalid part of said clause or provisions only shall be held for naught
as though not contained herein, and the remainder of this Agreement shall remain
operative and in full force and effect.
13.4 If Lender shall waive any provisions of the Loan Documents, or
shall fail to enforce any of the conditions or provisions of this Agreement,
such waiver shall not be deemed to be a continuing waiver, and shall never be
construed as such, and Lender shall thereafter have the right to insist upon the
enforcement of such conditions or provisions. Furthermore, no provision of this
Agreement shall be amended, waived, modified, discharged or terminated except by
instrument in writing, signed by the parties hereto.
13.5 This Agreement and the documents expressly referred to herein
embody the entire agreement and understanding between the parties hereto with
respect to the subj ect matter hereof and supersedes all prior agreements and
understandings relating to the subject matter. This Agreement may be changed,
waived, discharged, or terminated only by an instrument in writing duly executed
by the party against which enforcement of such change, waiver, discharge, or
termination is sought.
13.6 Anything in this Agreement to the contrary notwithstanding, the
Lender shall not be obligated to extend credit to the Borrower in violation of
any limitation or prohibition provided by any applicable statute or regulation.
13.7 All notices given hereunder shall be in writing and addressed as
follows:
(a) Lender: BANKATLANTIC
1750 East Sunrise Boulevard
Fort Lauderdale, Florida 33304
Attention: Marcia K. Snyder,
Executive Vice President
with copy to: GARY S. SINGER, ESQ.
Mombach, Boyle & Hardin, P.A.
500 East Broward Boulevard
Suite 1950
Fort Lauderdale, Florida 33394
(b) Borrowers: STRETCHER MOBILE FUELING, INC.
STRETCHER REALTY, INC.
STRETCHER WEST, INC.
2720 N.W. 55th Court
Ft. Lauderdale, Florida 33309
Attn: Stanley H. Streicher, President
with copy to: E. SCOTT GOLDEN, ESQUIRE
644 S.E. 4th Avenue
Fort Lauderdale, Florida 33301
23
<PAGE>
13.8 This Agreement, the Loan Documents and all other documents
relating hereto or thereto may be reproduced by the Lender, and the Borrower
agrees and stipulates that any such reproduction shall be admissible in evidence
as the original itselfin anyjurisdiction or administrative proceeding (whether
or not the original is in existence and whether or not such reproduction was
made by the Lender in the regular course of business) and that any enlargement,
facsimile, or further reproduction of said document shall likewise be admissible
in evidence.
13.9 In no event shall the Lender's rights hereunder or under any of
the Loan Documents grant the Lender the right to or be deemed to indicate that
the Lender is in control of the business, management or properties of the
Borrower, or has power over the daily management functions and operating
decisions made by the Borrower. The Lender is the Lender only and shall not be
considered a shareholder, joint venturer or partner of the Borrower.
13.10 The headings preceding the text ofthe sections ofthis Agreement
are used solely for convenience of reference and shall not affect the meaning,
construction, or effect ofthis Agreement.
13.1 1 Lender shall have the right at any time to convey or assign the
Loan or any portion thereof, and, additionally, shall have the right to sell a
participation in the Loan to another lending institution at any time that the
Loan is outstanding, in any amount as solely determined by Lender. Lender is
hereby authorized to release all financial information of the Borrower to said
assignee or DarticiDatina lender(s).
13.12 Borrower shall not assign this Agreement without the prior
written consent of Lender, and any assignment in violation hereof shall be of no
force and effect and shall constitute an Event of Default herein. Subject to the
previous sentence, this Agreement shall extend to and bind the parties hereto,
and their respective successors and assigns.
13.13 Except as otherwise noted herein, all covenants, agreements,
representations and warranties made herein and in the Loan Documents shall
survive the respective dates of effectiveness thereof and shall continue in full
force and effect so long as the Loan Documents, or any of them, remain in effect
or any of the obligations evidenced thereby are outstanding and unpaid.
13.14 In the event of any conflict, inconsistency or ambiguity between
the provisions of this Agreement and the provisions of the Revolving Note, any
of the Security Agreements, the Security and Cash Collateral Account Agreement,
or any other Loan Documents, the provisions of this Apreement shall control and
prevail.
13.15 This Agreement may be executed in one or more counterparts, each
of which shall constitute an original, but all of which, when taken together,
shall constitute but one instrument. Any term used herein shall be equally
applicable to both the singular and plural forms.
24
<PAGE>
13.16 Borrower will pay all reasonable out-of-pocket expenses incurred
by Lender in connection with the preparation of the Loan Documents (whether or
not the transactions contemplated hereby shall be consummated), the making and
assumption ofthe Loan, as applicable, the enforcement and protection in any
legal or equitable proceeding of the rights of the Lender in connection with the
Loan Documents, and in connection with any action or claim under the Loan
Documents including the Revolving Note, or in any way related thereto,
including, without limitation, the reasonable fees and disbursements of counsel
of the Lender.
13.17 It is the intention of the parties hereto to comply with the
usury laws of applicable governmental authority(ies); accordingly, it is agreed
that, notwithstanding any provision to the contrary in the Revolving Note, this
Loan Agreement or any of the other documents securing payment thereof or
otherwise relating hereto, no such provision shall require the payment or permit
the collection of interest in excess ofthe maximum permitted by law. In
determining the maximum rate allowed, Lender may take advantage of any state or
federal law, rule or regulation in effect from time to time which may govern the
maximum rate of interest which may be charged. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for, in the
Revolving Note, the Loan Agreement or in any of the other documents securing
payment thereof or otherwise relating hereto, then in such event: (a) the
provisions of this paragraph shall govern and control; (b) neither Borrower nor
its heirs, personal representatives, successors or assigns or any other party
liable for the payment thereof, shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount permitted by
law; (c) any such excess which may have been collected shall be either applied
as a credit against the then unpaid principal amount of the Revolving Note or
refunded to Borrower; and (d) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under the
applicable usury laws.
13.18 Borrower hereby waives any right to require a proceeding first
against any other Borrower or other party providing collateral, or to exhaust
any security for the performance of the Indebtedness. The Borrower further
covenants that no security now or subsequently held by the Lender for the
payment of the Indebtedness evidenced by the Revolving Note made by Borrower
under the Agreement, or for the payment of any other Indebtedness of Borrower to
the Lender under this Agreement or the other Loan Documents, whether in the
nature of a security interest, pledge, lien, assignment, setoff, suretyship,
guaranty, indemnity, insurance or otherwise, and no act, omission or other
conduct of the Lender in respect of such security (excluding fraud, gross
negligence or willful misconduct), shall affect in any manner whatsoever the
unconditional obligation of the Borrower under this Agreement and the Revolving
Note, and the Lender may release, exchange, enforce, apply the proceeds of and
otherwise deal with any such security without affecting in any manner the
unconditional obligation of each of the Borrower under this Agreement and the
Note.
Without limiting the generality of the foregoing, such obligations, and
the rights of the Lender to enforce the same, by proceedings, whether by action
at law, suit in equity or otherwise, shall not be in any way affected by (i) any
insolvency, bankruptcy, liquidation, reorganization, readjustment. composition,
dissolution, winding up or other proceeding
25
<PAGE>
involving or affecting the Borrower or others, or (ii) any change in the
ownership of any of the capital stock of the Borrower or any other party
providing collateral for any of the Indebtedness, or any of their respective
affiliates.
Each Borrower hereby waives to the fullest extent possible under
applicable law:
i. any defense based upon the doctrine of marshalling of assets
or upon an election of remedies by the Lender, including,
without limitation, an election to proceed by nonjudicial
rather than judicial foreclosure;
ii. any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than
that of the principal;
iii. any other event or action (excluding the Borrower's compliance
with the provisions hereof) that would result in the discharge
by operation of law or otherwise of the Borrower from the
performance or observance of any obligation, covenant or
agreement contained in this Agreement, the Revolving Note, or
any other Loan Documents.
13.19 The Borrower shall jointly and severally indemnify and hold
harmless the Lender, and its directors, off~cers, employees and agents against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Lender is a party thereto) which it may pay or incur
arising out of or relating to, directly or indirectly, this Agreement, the
Revolving Note, the other Loan Documents, the transactions contemplated hereby
or the direct or indirect application or proposed application of the proceeds of
any Loan hereunder, excepting for gross negligence or willful misconduct on the
part of Lender.
13.20 This Agreement shall be governed by and construed in accordance
with the internal statutes and laws of the State of Florida (other than with
respect to conflicts of laws), but giving effect to federal laws applicable to
national banks to the extent applicable, and except to the extent that the
validity or perfection of the security interest created hereby, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of Florida
WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY MUTUALLY, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT TO ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO BE EXECUTED
IN CONJUNCTION HEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF ,
COURSE OF DEALING STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER
PARTY. THE BORROWER ACKNOWLEDGES
26
<PAGE>
THAT THIS CONDUCT WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO THE LENDER IN
ACCEPTING THIS AGREEMENT, AND, THAT THE LENDER WOULD NOT HAVE ACCEPTED THIS
AGREEMENT WITHOUT THIS JURY TRIAL WAIVER, AND, THAT THE UNDERSIGNED HAS BEEN
REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY
REGARDING THIS JURY TRIAL WAIVER, AND, UNDERSTANDS THE LEGAL EFFECT OF THIS JURY
TRIAL WAIVER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Signed, sealed and delivered in BORROWER:
the presence of:
STREICHER MOBILE FUELING, INC.,
a Florida corporation
_________________________ By: ______________________________
WALTER B. BARRETT
Vice President, Finance
_________________________
(Corporate Seal)
STREICHER REALTY, INC., a Florida
corporation
____________________________ By:: ______________________________
WALTER B. BARRETT
Vice President, Finance
____________________________
(Corporate Seal)
STREICHER WEST, INC., a California
corporation
____________________________ By:: ______________________________
WALTER B. BARRETT
Vice President, Finance
____________________________
(Corporate Seal)
27
<PAGE>
LENDER:
BANKATLANTIC, a Federal Savings
Bank
____________________________ By: __________________________
____________________________ Title: ________________________
28
EXHIBIT 10.4
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT, made as of ("AGREEMENT"), by and between
General Electric Capital Corporation, a New York corporation with an address at
44 Old Ridgebury Road, Danbury, CT ("SECURED PARTY"), and Streicher Mobile
Fueling, Inc., a corporation organized and existing under the laws of the state
of Florida with its chief executive offices located at 2720 N. W. 55th Court,
Fort Lauderdale. FL 33309("DEBTOR")
In consideration of the promises herein contained and of certain other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST.
Debtor hereby gives, grants and assigns to Secured Party, its successors and
assigns forever, a security interest in and against any and all property listed
on any collateral schedule now or hereafter annexed hereto or made a part hereof
("COLLATERAL Sehedule"), and in and against any and all additions, attachments,
accessories and accessions thereto, any and all substitutions, replacements or
exchanges therefor, and any and all insurance and/or other proceeds thereof (all
of the foregoing being hereinafter individually and collectively referred to as
the "COLLATERAL"). The foregoing security interest is given to secure the
payment and performance of any and all debts, obligations and liabilities of any
kind, nature or description whatsoever (whether primary, secondary, direct,
contingent, sole, joint or several, or otherwise, and whether due or to become
due) of Debtor to Secured Party, now existing or hereafter arising, including
but not limited to the payment and performance of certain Promissory Notes from
time to time identified on any Collateral Schedule (collectively "NOTES" and
each a "NOTE"), and any renewals, extensions and modifications of such debts,
obligations and liabilities (all of the foregoing being hereinafter referred to
as the AINDEBTEDNESS@). Notwithstanding the foregoing, and notwithstanding
anything to the contrary contained elsewhere in this Agreement, to the extent
that Secured Party asserts a purchase money security interest in any items of
Collateral ("PMSI COLLATERAL"): (i) the PMSI Collateral shall secure only that
portion of the Indebtedness which has been advanced by Secured Party to enable
Debtor to purchase, or acquire rights in or the use of such PMSI Collateral (the
"PMSI INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI
Indebtedness.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR
Debtor hereby represents, warrants and covenants as of the date hereof and as of
the date of execution of each Collateral Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing and in good standing
under the laws of the State set forth in the first paragraph of this Agreement,
has its chief executive off'ces at the location set forth in such paragraph, and
is, and will remain, duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into, and to perform its
obligations, under this Agreement, each Note and any other documents evidencing,
or given in connection with, any of the Indebtedness (all of the foregoing being
hereinafter referred to as the "DEBT DOCUMENTS");
(c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable under all applicable laws in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;
(d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by, Debtor of any of the Debt Documents, except such as may have
already been obtained;
(e) The entry into, and performance by, Debtor of the Debt Documents will not
(i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of,
constitute a default under, or result in the creation of any lien, claim or
encumbrance on any of Debtor's property (except for liens in favor of Secured
Party) pursuant to, any indenture mortgage, deed of trust, bank loan, credit
agreement, or other agreement or instrument to which Debtor is a party;
(f) There are no suits or proceedings pending or threatened in court or before
any commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents;
(g) All financial statements delivered to Secured Party in connection with the
Indebtedness have been prepared in accordance with generally accepted accounting
principles, and since the date of the most recent finamcial statement, there has
been no material adverse change;
(h) The Collateral is not, amd will not be, used by Debtor for personal,
family or household purposes;
(i) The Collateral is, and will remain, in good condition and repair amd
Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner, and in possession
of, the Collateral, and has the sole right and lawful authority to grant the
security interest described in this Agreement; and
<PAGE>
(k) The Collateral is, and will remain, free and clear of all liens, claims
and encumbrances of every kind, nature and description, except for (i) liens in
favor of Secured Party, (ii) liens for taxes not yet due or for taxes being
contested in good faith and which do not involve, in the reasonable judgment of
Secured Party, any risk of the sale, forfeiture or loss of any of the
Collateral, and (iii) inchoate materialmen's, mechanic's, repairmen's and
similar liens arising by operation of law in the normal course of business for
amounts which are not delinquent (all of such permitted liens being hereinafter
referred to as "PERMITTED LIENS").
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor sha11 remain in
possession of the Collateral; provided, however, that Secured Party shall have
the right to possess (i) any chattel paper or instrument that constitutes a part
of the Collateral, and (ii) any other Collateral which because of its nature may
require that Secured Party's security interest therein be perfected by
possession. Secured Party, its successors and assigns, and their respective
agents, shall have the right to examine and inspect any of the Collateral at any
time during normal business hours. Upon any request from Secured Party, Debtor
shall provide Secured Partv with notice of the then current location of the
Collateral.
(b) Debtor shall (i) use the Collateral only in its trade or business, (ii)
maintain all of the Collateral in good condition and working order, (iii) we and
maintain the Collateral only in compliance with all applicable laws, and (iv)
keep all of the Collateral free and clear of all liens, claims and encumbrances
(except for Permitted Liens).
(c) Debtor shall not, without the prior written consent of Secured Party, (i)
part with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, grant a security interest
in or otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral.
(d) Debtor shall pay promptly when due all taxes, license fees, assessments
and public and private charges levied or assessed on any of the Collateral, on
the use thereof, or on this Agreement or any of the other Debt Documents. At its
option, Secured Party may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral and may pay for the
maintenance, insurance and preservation of the Collateral or to effect compl
iance with the terms of this Agreement or any of the other Debt Documents.
Debtor shall reimburse Secured Party, on demand, for any and all costs and
expenses incurred by Secured Party in connection therewith and agrees that such
reimbursement obligation shall be secured hereby.
(e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party, its successors and assigns, and their respective
agents, shall have the right to examine, inspect, and make extracts from all of
Debtor's books and records relating to the Collateral at any time during normal
business hours.
(f) If agreed by the parties, Secured Party may, but shall in no event be
obligated to, accept substitutions and exchanges of property for property, and
additions to the property, constituting all or any part of the Collateral. Such
substitutions, exchanges and additions shall be accomplished at any time and
from time to time, by the substitution of a revised Collateral Schedule for the
Collateral Schedule now or hereafter annexed. Any property which may be
substituted, exchanged or added as aforesaid shall constitute a portion of the
Collateral and shall be subject to the security interest granted herein.
Additions to, reductions or exchanges of, or substitutions for, the Collateral,
payments on account of any obligation or liability secured hereby, increases in
the obligations and liabilities secured hereby, or the creation of additional
obligations and liabilities secured hereby, may from time to time be made or
occur without affecting the provisions of this Agreement or the provisions of
any obligation or liability which this Agreement secures.
(g) Any third person at any time and from time to time holding all or any
portion of the Collateral shall be deemed to, and shall, hold the Collateral as
the agent of, and as pledge holder for, Secured Party. At any time and from time
to time, Secured Party may give notice to any third person holding all or any
portion of the Collateral that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk, and Debtor shall
keep it insured against loss or damage by fire and extended coverage perils,
theft, burglary, and for any or all Collateral which are vehicles, for risk of
loss by collision, and where requested by Secured Party, against other risks as
required thereby, for the full replacement value thereof, with companies, in
amounts and under policies acceptable to Secured Party. Debtor shall, if Secured
Party so requires, deliver to Secured Party policies or certificates of
insurance evidencing such coverage. Each policy shall name Secured Party as loss
payee thereunder, shall provide for coverage to Secured Party regardless of the
breach by Debtor of any warranty or representation made therein, shall not be
subject to co-insurance, and shall provide for thirty (30) days written notice
to Secured Party of the cancellation or material modification thereof Debtor
hereby appoints Secured Party as its attorney in fact to make proof of loss,
claim for insurance and adjustments with insurers, and to execute or endorse all
documents, checks or drafts in connection with payments made as a result of any
such insurance policies. Proceeds of insurance shall be applied, at tbe option
of Secured Party, to repair or replace the Collateral or to reduce any of the
Indebtedness secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party in the event of (i) any change
in the name of Debtor, (ii) any relocation of its chief executive offtces, (iii)
uny relocation of any OF the Collateral, (iv) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or wom out, or (v) any lien,
claim or encumbrance attaching or being made against any of the Collateral other
than Permitted Liens.
(b) Debtor agrees to fumish its annual financial statements and such interim
statements as Secured Party may require in form satisfactory to Secured Party.
Any and all financial statements submitted and to be submitted to Secured Party
have and will have been prepared on a basis of generally accepted accounting
principles, and are and will be complete and correct and fairly present Debtor's
financial condition as at the date thereof. Secured Party may at any reasonable
time examine the books and records of Debtor and make copies thereof
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, fumish to Secured Party such
further information, execute and deliver to Secured Party such documents and
instruments (including, without limitation, Uniform Commercial Code financing
statements) and do such other acts and things, as Secured Party may at any time
reasonably request relating to the perfection or protection of the security
interest created by this Agreement or for the purpose of carrying out the intent
of this Agreement. Without limiting the foregoing, Debtor shall cooperate and do
all acts deemed necessary or advisable by Secured Party to continue in Secured
Party a perfected first security interest in the Collateral, and shall obtain
and fumish to Secured Party any subordinations, releases, landlord, lessor, or
mortgagee waivers, and similar documents as may be from time to time requested
by, and which are in form and substance satisfactory to, Secured Party.
<PAGE>
(b) Debtor hereby grants to Secured Party the power to sign Debtor's name and
generally to act on behalf of Debtor to execute and file applications for title,
transfers of title, financing statements, notices of lien and other documents
pertaining to any or all of the Collateral. Debtor shall, if any certificate of
title be required or pemmitted by law for any of the Collateral, obtain such
certificate showing the lien hereof with respect to the Collateral and promptly
deliver same to Secured Party.
(c) Debtor shall indemnify and defend the Secured Party, its successors and
assigns, and their respective directors, officers and employees, from and
against any and all claims, actions and suits (including, without limitation,
related attomeys' fees) of any kind, nature or description whatsoever arising,
directly or indirectly, in connection with any OF the Collateral.
7. EVENTS OF DEFAULT.
Debtor shall be in default under this Agreement and each of the other Debt
Documents upon the occurrence of any of the following AEvent(s) of Default:@
(a) Debtor fails to pay any installment or other amount due or coming due
under any of the Debt Documents within ten (10) days after its due date;
(b) Any attempt by Debtor, without the prior written consent of Secured Party,
to sell, rent, Iease, mortgage, grant a security interest in, or otherwise
transfer or encumber (except for Permitted Liens) any of thc Collateral;
(c) Debtor fails to procure, or maintain in effect at all times, any of the
insurance on the Collateral in accordance with Section 4 of this Agreement;
(d) Debtor breaches any of its other obligations under any of the Debt
Documents and fails to cure the same within thirty (30) days after written
notice thereof;
(e) Any warranty, representation or statement made by Debtor in any of thc
Debt Documents or otherwise in connection with any of the Indebtedness shall be
false or misleading in any material respect;
(f) Any of the Collateral being subjected to, or being threatened with,
attachment, execution, levy, seizure or confiscation in any legal proceeding or
otherwise:
(g) Any default by Debtor under any other agreement between Debtor and Secured
Party;
(h) Any dissolution, termination of existence, merger, consolidation, change
in controlling ownership, insolvency, or business failure of Debtor or any
guarantor or other obligor for any of the Indebtedness (collectively
"Guarantor"), or if Debtor or any Guarantor is a natural person, any death or
incompetency of Debtor or such Guarantor;
(i) The appointment of a receiver for all or of any part of the property of
Debtor or any Guarantor, or any assignment for the benefit of creditors by
Debtor or any Guarantor; or
(j) The filing of a petition by Debtor or any Guarantor under any bankruptcy,
insolvency or similar law, or the filing of any such petition against Debtor or
any Guarantor if the same is not dismissed within thirty (30) days of such
filing.
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this Agreement, the
Secured Party, at its option, may declare any or all of the Indebtedness,
including without limitation the Notes, to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. Thc obligations and
liabilities accelerated thereby shall bear interest (both before and after any
judgment) until paid in full at the lower of eighteen percent (18%) per annum or
the maximum rate not prohibited by applicable law.
(b) Upon such declaration of default, Sccured Party shall have all of the
rights and remedies of a Sccured Party under the Uniform Commercial Code, and
under any other applicable law. Without limiting the foregoing, Sccured Party
shall have thc right to (i) notify any account debtor of Dcbtor or any obligor
on any instrument which constitutes part of the Collateral to make payment to
the Secured Party, (ii) with or without legal process, enter any premises where
the Collateral may be and take possession and/or remove said Collateral from
said premises, (iii) sell the Collateral at public or private sale, in whole or
in part, and have the right to bid and purchase at said sale, and/or (iv) Iease
or otherwise dispose of all or part of thc Collateral, applying proceeds
therefrom to the obligations then in default. If requested by Secured Party,
Debtor shall promptly assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party which is reasonably
convenient to both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor's premises and may dispose of such Collateral
on such premises witbout liability for rent or costs. Any notice which Secured
Party is required to give to Debtor under the Uniform Commercial Code of the
time and place of any public sale or the time after which any private sale or
other intended disposition of thc Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address
of Debtor at least five (5) days prior to such action.
(c) Proceeds from any sale or lease or other disposition shall be applied:
first, to all costs of repossession, storage. and disposition including without
limitation attomeys', appraisers', and auctioneers' fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
Debtor to Secured Party, whether as obligor, endorsor, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt Documents are
placed in the hands of an attomey for collection of money due or to become due
or to obtain performance of any provision hereof, Debtor agrees to pay all
reasonable attorneys' fees incurred by Secured Party, and further agrees that
payment of such fees is secured hereunder. Debtor and Secured Party agree that
such fees to the extent not in excess of twenty percent (20%) of subject amount
owing after default (if Dcrmitted by law, or such lesser sum as may otherwise be
permitted by law) shall be deemed reasonable.
(e) Secured Party's rights and remedies hereunder or otherwise arising are
cumulative and may be exercised singularly or concurrently. Neither the failure
nor any delay on the part of the Secured Party to exercise any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any nght, power or privilege preclude any other or further
exercise thereof or tne exercise of any other right, power or privilege. Secured
Party shall not be deemed to have waived any of its rights hereunder or under
any other agreement, instrument or paper signed by Debtor unless such waiver be
in writing and signed by Secured Party. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future
<PAGE>
(f) DEBTOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY,
THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS lNTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
9. MISCELLANEOUS.
(a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor hereby waives any defense, counterclaim or cross-complaint by Debtor
against any assignee, agreeing that Secured Party should be soley responsible
therefor.
(b) All notices to be given in connection with this Agreement should be in
writing, should be addressed to the parties at their respective addresses set
forth hereinabove (unless and until 8 different address may be specified in a
written notice to the other party), and should be deemed given (I) on the date
of receipt if delivered in hand or by facsimile transmission, (ii) on the next
business day after being sent by express mail, and (iii) on the fourth business
day after being sent by regular, registered or certified mail. As used herein,
the term Abusiness day@ shall mean and include any day other than Saturdays,
Sundays or other days on which commercial banks in New York, New York are
required or authorized to be closed
(c) Secured Party may correct patent errors herein and fill in all blanks
herein or in any Collateral Schedule consistent with the agreement of the
parties.
(d) Time is of the essence hereof. This Agreement shall be binding, jointly
and severally, upon all parties described as the ADebtor@ and their respective
heirs, executors, representatives, successors and assigns, and shall inure to
the benefit of Secured Party, its successors and assigns.
(e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter hereof and
supercede all prior understandings (whether written, verbal or implied) with
respect thereto. This Agreement and its Collateral Schedules shall not be
changed or terminated orally or by course of conduct, but only by a writing
signed by both parties hereto. Section headings contained in this Agreement have
been included for convenience only, and shall not affect the construction or
interpretation hereof
(f) This Agreement shall continue in full force and effect until all of the
Indebtedness has been indefeasibly paid in full to Secured Party. The surrender,
upon payment or otherwise, of any Note or any of the other documents evidencing
any of the Indebtedness shall not affect the right of Secured Party to retain
the Collateral for such other Indebtedness as may then exist or as it may be
reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated in the event that Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though in such payment had never been made).
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound
hereby, have duly executed this Agneement in one or more counterparts, each of
which shall be deemed to be an original, as of the day and year first aforesaid.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL CORPORATION Streicher Mobile
Fueling, Inc.
By: ________________________________ By: ________________________________
Title: _____________________________ Title: _________________________
EXHIBIT 10.5
PROMISSORY NOTE
-------------------------------------
(Date)
2720 N.W. 55th Court, Fort Lauderdale, Broward County, FL 333069
-----------------------------------------------------------------------
(Address of Maker)
FOR VALUE RECEIVED, Streicher Mobile Fueling, Inc. ("MAKER") promises, jointly
and severally if more than one, to pay to the order of General Electric Capital
Corporation or any subsequent holder hereof (each, a "PAYEE") at its office
located at 44 OLD RIDGEBURY ROAD, DANBURY, CT 06810 or at such other place as
Payee or the holder hereof may designate, the principal sum of DOLLARS
($ ), with interest unpaid principal balance, from the date hereof through and
including the dates of payment, at a fixed, simple interest rate of Percent
( %) per annum, to be paid in lawful money of the United States, in Sixty (60)
consecutive monthly installments of principal and interest of Dollars ($ )
each ("PERIODIC INSTALLMENT") and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on And the following
Periodic Installments and the final installment shall be due and payable on the
same day of each succeeding period (each, a "PAYMENT DATE").
All payments shall be applied first to interest then to principal. The
acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full as such time or at any prior or subsequent
time. Interest shall be calculated on the basis of a 365 day year (366) day leap
year). The payment of any Periodic Installment prior to its due date shall
result in a corresponding increase in the portion of the Periodic Installment
credited to the remaining unpaid principal balance.
The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT.")
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (I) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default, or
fails to perform, under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of eighteen percent (18%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).
The Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon payment of an additional sum as a premium equal to the following
percentages of the original principal balance for the indicated Period:
<TABLE>
<CAPTION>
<S> <C> <C>
Prior to the first annual anniversary date of this Note: five percent (5%)
Thereafter and prior to the second annual anniversary date of this Note: four percent (4%)
Thereafter and prior to the third annual anniversary date of this Note: three percent (3%)
Thereafter and prior to the fourth annual anniversary date of this Note: two percent (2%)
Thereafter and prior to the fifth annual anniversary date of this Note: one percent (1%)
</TABLE>
and zero percent (0%) thereafter, plus all other sums due hereunder or under any
Security Agreement.
It is the intention of the parties thereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extend that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law or the United States of America.
The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "Obligor") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision or either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorney's
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.
<PAGE>
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAY7EE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OF MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supersedes all
prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.
STREICHER MOBILE FUELING, INC.
______________________________ By: ____________________________________ )L.S.)
(Witness) Signature)
______________________________ ________________________________________
(Print name) (Print name and title, if applicable)
65-0707824
______________________________ _____________________________
(Address) (Federal tax identification number
EXHIBIT 10.6
COLLATERAL SCHEDULE NO.6
THIS COLLATERAL SCHEDULE NO. 6 is annexed to and made a part of that
certain Master Security Agreement dated as of July 24, 1997 between GENERAL
ELECTRIC CAPITAL CORPORATION as Secured Party and STREICHER MOBILE FUELING, INC.
as Debtor and describes collateral in limitation that certain Promissory Note
dated __________________ in the original principal amount of $_______________.
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR/MODEL SERIAL NUMBER DESCRIPTION
1997 FLD120 1FVNDMDB9TP679022 Freightliner Tractor equipped with Davidson Fuel Tank,
S/N DE107976294029
Equipment immediately listed above at: 19109 Hamilton Avenue, Gardena,
California
SECURED PARTY: DEBTOR
GENERAL ELECTRIC CAPITAL CORPORATION STREICHER MOBILE FUELING, INC.
By: ___________________________________ By: _________________________________
Title: ________________________________ Title: ______________________________
Date: _________________________________ Date: _______________________________
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 1,480,361
<SECURITIES> 0
<RECEIVABLES> 5,213,437
<ALLOWANCES> (148,000)
<INVENTORY> 133,924
<CURRENT-ASSETS> 7,031,253
<PP&E> 7,558,091
<DEPRECIATION> (1,357,368)
<TOTAL-ASSETS> 13,995,540
<CURRENT-LIABILITIES> 3,639,241
<BONDS> 0
0
0
<COMMON> 25,750
<OTHER-SE> 4,415,500
<TOTAL-LIABILITY-AND-EQUITY> 4,441,250
<SALES> 43,041,814
<TOTAL-REVENUES> 43,041,814
<CGS> 39,736,507
<TOTAL-COSTS> 39,736,507
<OTHER-EXPENSES> 3,458,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 474,923
<INCOME-PRETAX> (628,572)
<INCOME-TAX> 153,146
<INCOME-CONTINUING> (475,426)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (475,426)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
