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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 000-22681
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FINANTRA CAPITAL, INC.
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(Name of Small Business Issuer in Its Charter)
DELAWARE 13-3571419
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
150 SOUTH PINE ISLAND ROAD, SUITE 500
PLANTATION, FLORIDA 33324
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(Address of Principal Executive Offices) (Zip Code)
(954) 577-9225
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(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
None
SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
Common Stock, $.01 par value
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(Title of Class)
Common Stock Purchase Warrants
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Items Amended
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Items 9 and 13
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and non disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $9,734,940
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $11,374,443
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 5,987,528 shares of Common
Stock, $.01 par value per share, at March 29,1999.
Transitional Small Business Disclosure Format (Check One):
YES [ ] NO [X]
DOCUMENTS INCORPORATED BY REFERENCE:
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None
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-KSB may contain certain "forward-looking
statements" relating to the Company which represent the Company's current
expectations or beliefs, including, but not limited to, statements concerning
the Company's operations, performance, financial condition and growth. For this
purpose, any statements contained in this Annual Report on Form 10-KSB that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", "believe", "anticipate", "intend", "could", "estimate",
or "continue", or the negative or other variation thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, such as
credit losses, dependence on management and key personnel and variability of
quarterly results, ability of the Company to continue its growth strategy and
competition, certain of which are beyond the Company's control. Should one or
more of these risks or uncertainties materialize or should the underlying
assumptions prove incorrect, actual outcomes and results could differ materially
from those indicated in the forward looking statements.
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PART I
ITEM 1. BUSINESS
GENERAL
Finantra Capital, Inc. (f/k/a Medley Credit Acceptance Corp.) (the
"Company") is a specialty finance company engaged, principally, in accounts
receivable financing (factoring), equipment leasing and traditional financing
business lines. Since the consummation, during late December 1997 and early
1998, of the Company's initial public offering of securities (the "IPO"), the
Company's operations have focused primarily on growing an operation base and
establishing a market present in each of the aforementioned businesses. The
Company's primary strategy for achieving its necessary growth and market
presence has been, among other things, to pursue acquisitions of existing
enterprises which, in the Company's opinion, have management experience and
earnings potential and long-term growth possibilities, and obtaining
institutional lines of credit for each financing business line.
While the Company has only a limited operating history in the accounts
receivable financing and traditional financing business lines, the Company has
more seasoned experience in the equipment leasing business. Prior to the
consummation of the Company's IPO, the Company's business and affairs focused
on the financing of (i) dry cleaning equipment to small dry cleaning businesses
throughout the eastern United States and (ii) refrigeration equipment sold or
leased by an affiliate. The Company has made a business decision to orderly
wind down its dry cleaning and refrigeration equipment financing operations.
In an effort to grow its accounts receivable financing, equipment
leasing and traditional financing business lines, while establishing a market
presence for the same, the Company, during the fiscal year ended December 31,
1998 ("Fiscal 1998"), consummated several significant transactions. Principal
among these were (i) the Company's formation of its American Factors Group,
Inc. subsidiary ("AFG"), which specializes in accounts receivable financing,
(ii) the Company's acquisition of a majority interest in American Investment
Management ("AIM"), a marketer and a manager of a variety of financial and
insurance related services, (iii) the Company's acquisition of Medical Billing
Service Systems, Inc. ("Medical Billing") and Premier Provider Services, Inc.
("Premier"; Medical Billing and Premier are sometimes hereinafter collectively
referred to as the "Medical Billing Subsidiaries"), which provide back office
accounting and other financial administrative services principally to the
medical industry, (iv) the Company's acquisition of a majority interest in MFC
Financial Corp. ("MFC"), which is engaged in the equipment leasing industry
and, principally, medical equipment financing, and (v) the Company's
acquisition of a majority interest in Ameritrust Holdings, Inc. ("Ameritrust"),
a licensed mortgage lender.
The Company has formed wholly-owned subsidiaries to act as holding
companies for certain of its current and future operating entities based upon
business lines. Ameri-Cap Factors Group ("Ameri-Cap Factors") controls AFG,
Ameri-Cap Leasing Corp. ("Ameri-Cap Leasing") controls MFC, Ameri-Cap Mortgage
Group ("Ameri-Cap Mortgage") controls Ameritrust and Ameri-Cap Finance Group,
to the extent the Company elects to enter the sub-prime automobile finance
industry (the "Sub-Prime Auto Business"), will control the Sub-Prime Auto
Business.
The Company was incorporated under the laws of the State of Delaware
on May 2, 1990 under the name Premier Lease Concepts Inc. In September 1993,
the Company, as part of its merger into a subsidiary of Medley Group, Inc.,
changed its name to Medley Credit Acceptance Corp. In August 1998, the Company
further changed its name to Finantra Capital, Inc. The Company's principal
executive offices are located at 150 South Pine Island Road, Suite 500,
Plantation, Florida 33324, and its telephone number is (954) 577-9225.
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AMERI-CAP FACTORS GROUP OPERATIONS
Ameri-Cap Factors' business focuses on the discounted purchase of
approved accounts receivable. These receivables are limited, principally, to
credit insured and other relatively low-risk accounts receivables. On occasion,
however, Ameri-Cap Factors has, and in the future intends to, expand its
operations to include traditional factoring, i.e., providing small-to-medium
sized companies with capital through the discounted purchase of their accounts
receivable. From time to time, Ameri-Cap Factors may also make advances to its
factoring clients collateralized by inventory, equipment, real estate and other
assets ("Collateralized Advances").
Ameri-Cap Factors' business consists, generally, of Ameri-Cap Factors,
through AFG, entering into an accounts receivable factoring and security
agreement with a client which obligates the client to sell AFG a minimum amount
of accounts receivable each month (or a minimum amount of receivables during
the term of the agreement), usually has a term of not less than six months and,
more likely, one year, and is automatically renewable. When making a
Collateralized Advance, AFG enters into such additional agreements with the
client, and, if appropriate, third parties, as AFG deems necessary or desirable
based on the type of collateral securing the Collateralized Advance. AFG
purchases accounts receivable from its clients at a discount from face value
and usually requires the client's customers to make payment on the receivables
directly to AFG. AFG, generally, also takes a lien on all accounts receivable
of the client and, whenever available, blanket liens on all of the client's
other assets (some or all of which liens may be subordinate to other liens) to
secure the client's obligations. When making a Collateralized Advance, AFG
generally takes a first lien on the specific collateral securing the
Collateralized Advance. AFG almost always requires personal guaranties (either
unlimited or limited to the validity and collectibility of purchased accounts
receivable) from each client's principals. Although AFG obtains, when
available, credit insurance underwritten by credible insurance companies, and
as much collateral as possible and usually full recourse rights (subject to
fraud) against clients, clients (and account debtors) may fail. Accordingly,
there can be no assurance that the collateral obtained and the recourse rights
retained (together with any credit insurance and personal guaranties) will be
sufficient to protect AFG against loss.
In connection with the formation of AFG, the Company entered into
employment agreements with two experienced finance professionals. Further, for
purposes of providing AFG with the capital necessary to finance its factoring
operations, AFG entered into a $4 million credit facility (the "AFG Facility")
with FINOVA Capital Corporation ("FINOVA"). Advances under the AFG Facility are
secured by the pledge to FINOVA of AFG's factored receivables and the guaranty
of the Company. AFG two seasoned finance professionals have also been granted
the right to exchange their 20% interest in AFG (the Company owns the remaining
80% of AFG) for shares of the Company's Common Stock (aggregating approximately
2% of the Company's outstanding shares) upon AFG's achieving certain financial
performance levels. These two individuals are also entitled to established cash
bonuses based upon AFG's future financial performance.
AMERI-CAP LEASING CORP. OPERATIONS
Ameri-Cap Leasing is engaged, generally, in the equipment leasing
business, i.e., the business of acquiring, originating, selling and servicing
equipment leases. Through MFC, Ameri-Cap Leasing's operations have focused
principally on medical equipment financing. The equipment leased by MFC
generally has a purchase price of less than $250,000. As such, MFC's leases are
commonly referred to as "small ticket leases." MFC currently funds the
acquisition or origination of its leases from its working capital. MFC has
established strategic alliances with a network of independent leasing
companies, lease brokers and equipment vendors,
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each of which acts as a source from which MFC obtains access to equipment
leases. MFC customizes lease financing products to meet the specific equipment
financing needs of its sources.
The Company believes that the small ticket segment of the equipment
leasing business is a rapidly growing industry due, in part, to (i) the
consolidation of the banking industry, which has eliminated many of the smaller
community banks that traditionally provided equipment financing for small to
mid-size businesses, forcing these businesses to seek alternative financing
rather than deal with the approval process of large commercial banks; (ii)
stricter lending requirements of commercial banks; (iii) a trend toward instant
approvals at the point of sale made possible by improved technology; (iv) the
decline in the price of computer hardware and software and increasing demand
therefor; and (v) the adoption of accounting pronouncements concerning the
accounting treatment of transactions with captive finance company subsidiaries,
which has caused a number of manufacturers to eliminate their finance
companies, resulting in an increased demand for independent financing.
Substantially all equipment leases acquired or originated by MFC are
non-cancelable. During the term of the lease, MFC generally receives scheduled
payments sufficient, in the aggregate, to cover MFC's borrowing costs and the
costs of the underlying equipment, and to provide MFC with an appropriate
profit margin. The initial non-cancelable term of the lease is equal to or less
than the equipment's estimated economic life and a small portion of MFC's
leases provide MFC with additional revenues based on the residual value of the
equipment financed at the end of the initial term of the lease. Initial terms
of the leases in the MFC's portfolio generally range from 12 to 60 months.
In consideration for its purchase of MFC, the Company issued to Mr.
Henry Koche and the then two other stockholders of MFC, an aggregate of 10,000
shares of the Company's Common Stock. The Company has agreed, on each of the
first three anniversaries of the initial closing of this acquisition, to
acquire from these individuals the remaining 20% of the capital stock of MFC.
The consideration payable for such remaining 20% interest shall be, on the
first anniversary, an aggregate number of shares of the Company's Common Stock
equal to two and one-half times the net pre-tax income of MFC for its first
year of operations, on the second anniversary, an aggregate number of shares of
the Company's Common Stock equal to three times the net pre-tax income of MFC
for its second year of operations and on the third anniversary, an aggregate
number of shares of the Company's Common Stock equal to four times the net
pre-tax income of MFC for its third year of operations. Shares of the Company's
Common Stock will be valued at the closing sale price on the date of their
issuance.
In connection with the MFC acquisition, the Company entered into a
three year employment agreement with Mr. Koche. This agreement, among other
things, entitles Mr. Koche to be granted incentive stock options pursuant to
the Company's 1997 Stock Option Plan (the "Option Plan") based upon MFC's
annual financial performance and to participate in a discretionary cash bonus
pool for MFC's employees if MFC's financial performance justifies the same.
This employment agreement is terminable by the Company for cause, including if,
among other things, after the six month period immediately following the
Company's initial purchase of its controlling interest in MFC, MFC's net
monthly sales volume (defined as the total amount of all leases written in any
calendar month) is less than $500,000 per month in any consecutive three month
period. Through the date of this Annual Report, MFC's net monthly sales volume
has exceeded $500,000 every month.
For purposes of providing MFC with available funds to acquire
commercial equipment leases, the Company and Heller Financial, Inc. ("Heller")
have entered into a proposal pursuant to which, among other things, Heller has
indicated its interest, subject to the completion of its due diligence
investigation and final legal documentation, in providing MFC with a $15
million revolving credit facility. It is contemplated that
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this facility will bear interest at rates ranging from the 30-day
LIBOR rate plus 2.50% to the 30-day LIBOR rate plus 2.80%, depending upon then
outstanding principal balances under this facility. Pursuant to this proposed
credit line, MFC may receive advances up to the lesser of 97% of the borrowing
base (the present value of the contractual cash flows of eligible leases
discounted at the interest rate) or 104% of the original equipment cost in
question. No assurance can be given that the Company and Heller will enter into
this proposed credit facility. If this facility is not consummated, the Company
would be required to seek alternative funding sources for its Ameri-Cap Leasing
operations. No alternative sources have been identified by the Company and
there can be no assurance that such funding sources will be available to the
Company on acceptable terms, or at all.
AMERI-CAP MORTGAGE GROUP OPERATIONS
The Company's Ameritrust subsidiary is a licensed mortgage lender
engaged in both residential and commercial lending. Ameritrust's operations
focus primarily on non-conforming loans, sub-prime credits, home improvement
loans, sales finance contracts and debt consolidations.
In consideration for its acquisition of its approximate 91% interest
in Ameritrust, the Company issued an aggregate of 381,000 shares of its Common
Stock to Ameritrust's then stockholders. The remaining capital stock of
Ameritrust not originally acquired by the Company may be exchanged for shares
of the Company's Common Stock at annual intervals during the period ending June
30, 2002, at exchange rates based upon Ameritrust's financial performance
during such period.
In connection with the Ameritrust acquisition, the Company assumed the
employment agreements of Ameritrust's three principals, Larry Schwartz, Larry
S. Sazant and Bruce Lazarus. Mr. Schwartz's employment agreement expires in
2003 (subject to annual renewal), entitles Mr. Schwartz to an annual base
salary of $75,000 through 2001, increasing $5,000 per year thereafter, an
override commission on each residential mortgage transaction made by Ameritrust
of 4% of the gross revenues derived by Ameritrust from such transaction, a
bonus, terminable upon the satisfaction of certain financial obligations of Mr.
Schwartz, equal to 10% of Ameritrust's pre-tax net profits, if any, and the
grant of stock options, conditioned upon Ameriturst's financial performance,
pursuant to the Company's Stock Option Plan. Mr. Schwartz's employment
agreement is terminable by the Company for cause, including if, among other
things, after the four month period immediately following the Company's initial
purchase of its controlling interest in Ameritrust, Ameritrust's net monthly
sales volume is less than 75% of its projected sales goals for any consecutive
three month period or Ameritrust's annual sales volume is less than 75% of its
projected annual sales. To date, Ameritrust's net monthly sales volume has
satisfied this criteria. Mr. Schwartz has further agreed not to compete with
the Company in Dade and Broward Counties, Florida, for the two year period
following termination of his employment with the Company.
Mr. Sazant's employment agreement expires in 2002, entitles Mr. Sazant
to an annual base salary of $45,000, an override commission on each commercial
loan generate by Mr. Sazant of 10% of the gross commission earned by
Ameritrust's commercial loan division with respect to such commercial loan, an
override commission generated by Ameritrust's commercial loan division equal to
the difference between any commission paid to any loan officer or consultant
and 50% of the total commission paid by Ameritrust and a bonus equal to 5% of
Ameritrust's Residential Financial Services' division pre-tax income, if any.
Mr. Sazant has further agreed not to compete with the Company for the five year
period following the termination of his employment agreement.
Mr. Lazarus' employment agreement expires in 2002 and entitles Mr.
Lazarus to an annual base salary of $75,000, a bonus equal to 5% of
Ameritrust's Residential Financial Services' division pre-tax
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income, if any, and such commissions as Ameritrust customarily remits to brokers
and co-brokers on a transactional basis. Mr. Lazarus has further agreed not to
compete with the Company for the five year period following the termination of
his employment agreement.
In order to provide Ameritrust with the financial capacity to
originate its mortgage loans, the Company is currently negotiating to obtain a
warehouse line of credit in the amount of $10 million. It is anticipated that
this line will be utilized for residential and commercial mortgages. There can
be no assurance that the Company will consummate this line or that it will
successfully identify other funding sources if necessary, or procure the credit
facility required for Ameri-Cap Mortgage Group's operations to proceed.
BACK OFFICE OPERATIONS
The Company's AIM subsidiary, which operated independently for over 20
years prior to its acquisition by the Company, markets a variety of financial
and insurance related services. In consideration for the Company's purchase of
AIM, the Company agreed to issue to the principal of AIM shares of the
Company's Common Stock on the first, second and third anniversaries of the AIM
acquisition (representing, in the aggregate, less than 1% of the outstanding
shares of Common Stock of the Company) in exchange for the remaining 20% of AIM
capital stock not originally acquired by the Company, and incentive stock
options pursuant to the Company's Option Plan to acquire additional shares of
Common Stock of the Company based upon AIM's future operating performance. In
addition, the principal of AIM entered into a three year employment contract.
This principal also has been granted the right, exercisable at any time on or
prior to March 13, 2000, to repurchase all of the outstanding capital stock of
AIM. The purchase price payable by this principal to the Company should he
exercise this right will be the product of (i) an amount equal to AIM's gross
sales during the 12 months immediately preceding the exercise of this right
multiplied by (ii) .10 multiplied by (iii) 2.3.
The Company's Medical Billing Subsidiaries, which each operated
independently for more than two years prior to their acquisition by the
Company, provide back office accounting and other financial administrative
services principally to the medical industry. These entities enable the
Company, among other things, to save the costs and expenses associated with
either building internally, or outsourcing, such back office and administrative
services. In consideration for the Company's purchase of the Medical Billing
Subsidiaries, the Company agreed to issue to the principals of the Medical
Billing Subsidiaries an aggregate of 585,000 shares of Common Stock, each share
valued at $4.50, one-half of which were issued upon the closing of the
acquisitions, with the remaining one-half of such shares being issuable on the
first anniversary of such acquisitions. In addition, the Company agreed to
issue to the principals of the Medical Billing Subsidiaries incentive stock
options pursuant to the Company's Option Plan to acquire, through December 31,
2001, under certain circumstances, up to an aggregate of 150,000 additional
shares of Common Stock based upon the Medical Billing Subsidiaries' future
financial performance. Further, the principals of the Medical Billing
Subsidiaries entered into three year employment contracts.
DISCONTINUED OPERATIONS
Prior to the IPO, the Company's operations focused primarily on the
dry cleaning and refrigeration equipment leasing businesses. Dry cleaning
equipment leasing would typically involve a total cost of between $60,000 to
$70,000 per lease for a five-year term, with the lessee having the option to
buy the equipment at the end of the lease term for the fair market value
thereof. The internal rate of return of such leases was generally attractive to
the Company. Such leases could be refinanced or sold at discount rates
substantially less than the return implicit in the lease itself. Such finance
discounting was, in most instances, accomplished on a full nonrecourse basis.
Due to the decrease, commencing in 1995, of dry cleaning
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equipment financing opportunities, and the general reduction in risk
associated with the financing of refrigeration equipment as compared to dry
cleaning equipment (primarily due to the significantly reduced cost of
refrigeration equipment as compared to dry cleaning equipment), the Company,
during 1996, began de-emphasizing its dry cleaning equipment business and began
concentrating marketing efforts on the refrigeration equipment leasing
business.
The Company's refrigeration equipment leasing business focused on the
Company's financing refrigeration equipment sold or leased by affiliates of
Medley Group, Inc. ("Medley Group"), the Company's largest stockholder,
collectively doing business under the name "Medley Refrigeration"
("Refrigeration"). Refrigeration was principally engaged in the provision of
refrigeration equipment and services to the food service and hospitality
industries and other businesses throughout central and southeastern Florida.
During December 1996, Refrigeration assigned to the Company (the "Assignment")
all of Refrigeration's rights to receive revenues from, and rights of
collection with respect to, a majority of the refrigeration equipment leases
entered into by Refrigeration with its customers. Prior to the Assignment, the
Company historically would lend Refrigeration the capital necessary for
Refrigeration to either purchase or manufacture refrigeration equipment for its
customers. Refrigeration, in turn, would lease this refrigeration equipment to
its customers who, as a condition to the lease, would grant the Company a
security interest in the leased equipment to collateralize the customer's
payment obligations under the equipment lease. As a result of the Assignment,
lease payments with respect to a majority of the equipment leases extended to
Refrigeration's customers became payable directly to the Company.
The Company has made a business decision, effective during the year
ended December 31, 1997 ("Fiscal 1997"), to orderly wind down its dry cleaning
and refrigeration equipment financing operations.
COMPETITION
The factoring, finance and equipment leasing businesses are highly
fragmented. The Company competes, and in the future, will compete, for
customers with a number of national, regional and local finance and factoring
companies, including those which, like the Company, specialize in particular
segments of the overall market. In addition, the Company's competitors include,
and will include, those equipment manufacturers which finance the sale or lease
of their products themselves, other traditional types of financial services
companies, such as commercial banks and savings and loan associations, and
conventional leasing and factoring companies. The Company's future
profitability will be directly related to the Company's ability to access
capital funding and to obtain favorable funding rates as compared to the
capital and costs of capital available to its competitors. Accordingly, there
can be no assurance that the Company will be able to continue to compete
successfully in its targeted markets.
EMPLOYEES
The Company, on a consolidated basis, currently employs approximately
40 full-time employees. The Company believes that this workforce is adequate to
meet the Company's reasonably foreseeable requirements.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company currently owns no real property and conducts its business
from facilities leased to it by an unaffiliated third party. Pursuant to this
lease, which has an initial term expiring in 2004, the Company rents
approximately 9,800 square feet of office space in consideration for annual
rents currently set at approximately $16,750 per year, gradually escalating
over the lease term to approximately $18,850 during the last year of the
initial lease term. The Company is also obligated to pay the landlord for these
premises
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the Company's proportionate share of all operating costs, expenses and
taxes. The Company believes these premises are well maintained and adequate to
meet the Company's needs for the foreseeable future.
The Company's subsidiaries do not own any real property and conduct
their respective businesses from facilities leased to them, at market rates, by
unaffiliated persons. The Company believes that such leased facilities are
adequate for its subsidiaries' reasonably foreseeable operations.
ITEM 3. LEGAL PROCEEDINGS
At this time, the Company is not involved in any pending or threatened
legal proceeding involving it or any of its assets.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
through the solicitation of proxies or otherwise during the fourth quarter of
Fiscal 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since January 1998, the Company's Common Stock and Common Stock
Purchase Warrants (the "Warrants") have been quoted on the Electronic Bulletin
Board maintained by NASDAQ under the symbols "FANT" and "FANTW", respectively.
Each Warrant entitles the holder thereof to purchase one share of Common Stock
at a price of $5.75 at any time until July 22, 2002.
The following table set forth the monthly high and low bid quotations
on the Electronic Bulletin Board for the Common Stock of the Company. These
quotations represent prices between dealers and do not include retail mark-up,
mark-down or commissions or necessarily represent actual transactions.
COMMON STOCK HIGH LOW
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1998
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January $6.88 $4.88
February 7.25 4.00
March 5.50 2.75
April 5.13 4.00
May 2.25 1.01
June 3.50 1.00
July 2.44 1.63
August 2.88 1.63
September 2.50 1.94
October 2.63 2.00
November 3.00 2.00
December 3.00 2.25
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1999
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January 3.13 2.88
February 3.75 2.75
March (through March 29) 3.63 2.75
At March 29, 1999, there were approximately 150 holders of record of
the Company's Common Stock and approximately 35 holders of record of Warrants.
Since a substantial percentage of the Company's Common Stock and Warrants are
held in street name, the Company believes that there are substantial additional
beneficial holders of the Common Stock and Warrants.
Since the Company ceased being treated as an "S corporation," the
Company has not declared any cash dividends with respect to its shares of
Common Stock and does not anticipate that dividends will be declared in the
foreseeable future, as all available cash will be utilized for use in the
Company's business.
During the fourth quarter of Fiscal 1998, management of the Company
learned that certain circumstances relating to the manner in which the
Company's securities were offered in its initial public offering (the "IPO") in
Texas and Florida may have been inconsistent with such states' respective blue
sky laws. In addition, management of the Company concluded that various
procedural and administrative matters relating to the IPO should have been
disclosed during the period that the IPO was being marketed, rather than
following the consummation of the IPO, as the Company did. These disclosures,
relating principally to non-cash IPO subscriptions and subscription loans made
by an affiliate of the Company, were made by the Company in the Liquidity and
Capital Resources subsection to the Managements' Discussion and Analysis of
Financial Condition and Results of Operations section to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997. As a consequence
thereof, the Company, during the 30-day period ended January 22, 1999, provided
the purchasers of the Company's securities in the IPO with the opportunity to
rescind their IPO purchase in consideration for, generally, their IPO
investment price (the "Rescission Offer"). At the expiration of the Rescission
Offer, the Company had received valid written acceptances from the holders of
approximately 54,000 shares of Common Stock and approximately 20,000 Warrants
acquired in the IPO, resulting in a maximum cash redemption obligation to the
Company of approximately $300,000. The Company anticipates repurchasing the
shares of Common Stock and Warrants properly tendered to it pursuant to the
Rescission Offer shortly. The Company intends to fund this redemption
obligation out of its working capital.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is a specialty finance company engaged, principally, in
accounts receivable financing (factoring), equipment leasing and traditional
financing business lines. Since the consummation of the Company's IPO, the
Company's operations have focused primarily on growing an operation base and
establishing a market presence in each of the aforementioned businesses. The
Company's primary strategy for achieving its necessary growth and market
presence has been, among other things, to pursue acquisitions of existing
enterprises which, in the Company's opinion, have management experience and
earnings potential and long-term growth possibilities, and obtaining
institutional lines of credit for each financing business line.
While the Company has only a limited operating history in the accounts
receivable financing and traditional financing business lines, the Company has
more seasoned experience in the equipment leasing business. Prior to the
consummation of the Company's IPO, the Company's business and affairs focused
on
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the financing of dry cleaning equipment to small dry cleaning businesses
throughout the eastern United States and refrigeration equipment sold or leased
by an affiliate. The Company has made a business decision to orderly wind down
its dry cleaning and refrigeration equipment financing operations.
In an effort to grow its accounts receivable financing, equipment
leasing and traditional financing business lines, while establishing a market
presence for the same, the Company, during Fiscal 1998 consummated several
significant transactions. Principal among these were (i) the Company's
formation of AFG, an entity specializing in accounts receivable financing, (ii)
the Company's acquisition of a majority interest in AIM, a marketer and manager
of a variety of financial and insurance related services, (iii) the Company's
acquisition of the Medical Billing Subsidiaries, companies engaged, generally,
in providing back office accounting and other financial administrative services
principally to the medical industry, (iv) the Company's acquisition of a
majority interest in MFC, an entity engaged, generally, in the equipment
leasing industry and, principally, medical equipment financing, and (v) the
Company's acquisition of approximately 91% of the outstanding capital stock of
Ameritrust, a licensed mortgage lender engaged in both residential and
commercial lending.
RESULTS OF OPERATIONS
Fiscal 1998 Compared to Fiscal 1997
For Fiscal 1998, the Company generated revenues of $9,734,940, as
compared to revenues of $292,536 for Fiscal 1997. This significant increase in
revenues was the result of the Company's commencement, during Fiscal 1998, of
its accounts receivable financing (factoring), equipment leasing and financial
services businesses. These operations are principally conducted through the
Company's Ameri-Cap Factors, Ameri-Cap Leasing and Ameri-Cap Mortgage
subsidiaries. During Fiscal 1997, the Company's operations were limited,
principally, to winding down the Company's prior dry cleaning and refrigeration
equipment leasing operations and consummating its IPO.
For Fiscal 1998, the Company incurred costs and expenses arising out
of its accounts receivable financing (factoring), equipment leasing and
financial services businesses of $9,376,685, all of which were ordinary course
business expenses, and recorded a provision for bad debts of $1,107,269. The
Company recorded this bad debt provision in order to insulate itself from any
adverse effects resulting from existing loans and leases, and loans and leases
written by the Company during Fiscal 1999 and thereafter, becoming delinquent or
uncollectible. Management of the Company reasonably believes that the Company
will generate approximately $100 million in loans and leases during Fiscal
1999. As such, this bad debt provision constitutes approximately 1% of the
Company's estimated Fiscal 1999 loan and lease totals.
Without giving effect to the Company's recording of its provision for
bad debts, the Company generated income from operations for Fiscal 1998 of
$358,255, as compared to incurring a loss from operations for Fiscal 1997 of
$(416,873). After giving effect to the Company's recording of its provision for
bad debts, however, the Company incurred a loss from operations for Fiscal 1998
of $(749,014). When combined with the provision for dividends with respect to
shares of the Company's Series A Preferred Stock (and after giving effect to
the recording of the $1,107,269 bad debt provision), the Company incurred
losses applicable to common shareholders for Fiscal 1998 of $(1,192,685) or
$(.32) per common share, as compared to losses applicable to common
shareholders for Fiscal 1997 of $(992,179) or $(.58) per common share.
Fiscal 1997 Compared to Year Ended December 31, 1996
For Fiscal 1997, the Company generated revenues of $292,536, a
decrease of $156,763, or approximately 35%, from revenues of $449,299 for the
fiscal year ended December 31, 1996 ("Fiscal 1996"). This decrease in revenues
was primarily attributable to the Company's decision to orderly wind down its
dry cleaning and refrigeration equipment leasing operations beginning in Fiscal
1997, and the Company's expending significant time and resources to consummate
the IPO.
During Fiscal 1997, the Company incurred an approximate $180,000, or
approximately 25%, increase in general and administrative expenses over Fiscal
1996 figures, principally as a result of satisfying obligations incident to the
consummation of the IPO. As a consequence thereof, coupled with the
aforementioned decrease in revenues during Fiscal 1997, the Company generated
losses from operations during Fiscal 1997 of $416,873, a $140,233, or
approximate 51%, increase in losses from operations from Fiscal 1996. When
combined with the one-time $600,000 reversal of estimate for uncollectible
advances to an affiliate recorded during Fiscal 1996, and the provision for
dividends with respect to shares of the Company's Series A Preferred Stock (the
"Series A Preferred Stock"), the Company generated net losses applicable to
common shareholders for Fiscal 1997 of $992,179, or losses of $.58 per common
share, as compared to net income applicable to common shareholders of $90,638,
or income of $.05 per common share, for Fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company had total assets of $13,618,188, as
compared to total assets of $4,944,831 at December 31, 1997. This significant
increase in total assets is primarily the result of the Company's acquisition
of AIM, the Medical Billing Subsidiaries, MFC and Ameritrust during Fiscal
1998, and the commencement of operations of AFG's accounts receivable financing
(factoring) business. At December 31, 1998, a finance receivable arising
predominantly from AFG's operations in the amount of $4,632,875 was recorded on
the Company's balance sheet. The $2,684,175 of goodwill, net, recorded on the
Company's balance sheet at December 31, 1998 represents the premium over net
equity
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paid by the Company in connection with its acquisitions of AIM, the Medical
Billing Subsidiaries, MFC and Ameritrust. The Company anticipates that its
future earnings (assuming its acquired subsidiaries continue to generate
earnings) will offset the amortization associated with the recording of this
goodwill. The $868,377 asset due from related parties included on the Company's
balance sheet at December 31, 1998 is comprised, substantially, of receivables
due from, and prepaid consulting expenses with respect to, Medley Group. The
Company and Medley Group have entered into an agreement pursuant to which,
among other things, Medley Group has agreed to satisfy this obligation by
December 31, 2004.
At December 31, 1998, the Company had total liabilities of $6,102,015,
as compared to total liabilities of $751,211 at December 31, 1997. This
increase in total liabilities was primarily due to the incurrence of borrowings
under the accounts receivable credit facility established for AFG, the
Company's recording of amounts due, in the ordinary course of business, to its
factoring clients, and the Company's incurring other ordinary course
liabilities in connection with its Ameri-Cap Mortgage and Ameri-Cap Leasing
operations.
At December 31, 1998, the Company had total stockholders' equity of
$7,499,084, as compared to total stockholders' equity of $4,204,620 at December
31, 1997. The significant increase in stockholders' equity is attributable
directly to the earnings generated by the Company from operations, values
associated with the Company's formation of AFG and acquisition, utilizing
primarily shares of the Company's Common Stock, of AIM, the Medical Billing
Subsidiaries, MFC and Ameritrust.
The Company's experience in the specialty finance business has
historically been conducted with a smaller capital base than currently is
available to the Company. As a consequence of the consummation of the IPO, the
Company believes that it is positioned to secure additional lines of credit and
traditional bank financings for the purpose of expanding and developing its
business lines. There can be no assurance, however, that the Company will
successfully implement all or a portion of this anticipated expansion.
During the fourth quarter of Fiscal 1998 and the first quarter of the
year ending December 31, 1999 ("Fiscal 1999"), the Company consummated a
private placement of 150 units (the "Units") which raised net proceeds to the
Company (after giving effect to the payment of all offering commissions and
expenses) of approximately $2,773,125. Each Unit was comprised of 10,000 shares
of the Company's Common Stock and 10,000 warrants (the "Private Placement
Warrants"). Each Private Placement Warrant entitles the holder to purchase one
share of Common Stock for $3.25 at any time through November 9, 2001. The
Private Placement Warrants are redeemable by the Company upon notice of not
less than 30 days at a price of $0.25 per Private Placement Warrant, provided
that the closing bid quotation for shares of the Company's Common Stock on all
20 of the trading days ending on the third day prior to the day on which the
Company gives notice of redemption has been at least 150% of the exercise price
of the Private Placement Warrants (currently $4.875, subject to adjustment).
The Company utilized the net proceeds from this private placement to, among
other things, expand Ameri-Cap Leasing's marketing base, provide working
capital for Ameri-Cap Factors' operations, augment capital committed to
Ameri-Cap Mortgage's operations and fund, generally, the Company's business and
operations.
During December 1998, the Company issued and sold to an investor, in
an isolated, privately negotiated transaction, 500,000 shares of the Company's
Series B Preferred Stock (the "Series B Preferred Stock"). Each share of Series
B Preferred Stock was issued and sold for $1.00. The Series B Preferred Stock
is subordinate to shares of the Company's Series A Preferred Stock in the event
of the liquidation, dissolution or winding up of the Company, and is
convertible, at any time at the option of the holder, into shares of the
Company's Common Stock at the rate of one share of Common Stock for every 2.125
shares of Series B Preferred Stock. The Company applied the proceeds from the
sale of the Series B Preferred Stock to its working capital.
During the fourth quarter of Fiscal 1998, management of the Company
learned that certain circumstances relating to the manner in which the
Company's securities were offered in its IPO in Texas and Florida may have been
inconsistent with such states' respective blue sky laws. In addition,
management of the Company concluded that various procedural and administrative
matters relating to the IPO should have been disclosed during the period that
the IPO was being marketed, rather than following the consummation of the IPO,
as the Company did. These disclosures, relating principally to non-cash IPO
subscriptions and subscription loans made by an affiliate of the Company, were
made by the Company in the Liquidity and Capital Resources subsection to the
Managements' Discussion and Analysis of Financial Condition and Results of
Operations section to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997. As a consequence thereof, the Company, during the
30-day period ended January 22, 1999, provided the purchasers of the Company's
securities in the IPO with the opportunity to rescind their IPO purchase in
consideration for, generally, their IPO investment price. At the expiration of
this Rescission Offer, the Company had received valid written acceptances from
the holders of approximately 54,000 shares of Common Stock and approximately
20,000 Warrants acquired in the IPO, resulting in a maximum cash redemption
obligation to the Company of approximately $300,000. The Company anticipates
repurchasing the shares of Common Stock and Warrants properly tendered back to
it pursuant to the Rescission Offer shortly. The Company intends to fund this
redemption obligation out of its working capital.
<PAGE>
The Company anticipates, based on its current proposed plans and
assumptions relating to its .operations and expansion, that it will be able to
satisfy its currently contemplated cash requirements for approximately the next
12 months from working capital and cash flow. In the event that the Company's
plans change or its assumptions prove to be inaccurate, or working capital and
cash flow prove to be insufficient to fund the Company's operations and
expansion (due to unanticipated expenses, delays, problems or otherwise), the
Company would be required to seek additional funding. Depending upon the
Company's financial strength and the state of the capital markets, the Company
may also determine that it is advisable to raise additional equity capital.
Except as set forth in this Annual Report on Form 10-KSB, the Company has no
current arrangements with respect to, or sources of, any additional capital,
and there can be no assurance that such additional capital will be available to
the Company, if needed, on commercial reasonable terms, or at all. The
inability of the Company to obtain additional capital would have a material
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adverse effect on the Company and could cause the Company to be unable to
implement its business strategy or proposed expansion.
YEAR 2000 COMPLIANCE
The inability of business processes to continue to function correctly
after the beginning of the Year 2000 could have serious adverse effects on
companies and entities throughout the world. In order to minimize the
possibility that the Company will suffer any adverse effects resulting from
system failures on January 1, 2000, the Company, over the last 18 months, has
purchased new software and hardware systems for itself and its subsidiaries.
These new systems all come with manufacturers' representations and warranties
concerning Year 2000 compliance. No assurance can be given, however, that the
Company's software and hardware systems will not fail after the beginning of
the Year 2000. In such event, the Company will be forced to expend such amounts
of its working capital as may be necessary to correct its software and hardware
systems and implement contingency plans. The Company continues to attempt to
assess the Year 2000 compliance and readiness of its lenders and material
customers. Such attempts include written inquiries as to their Year 2000
certification of compliance.
ITEM 7. SELECTED FINANCIAL DATA
The selected historical financial information of the Company set forth
below should be read in conjunction with the audited financial statements of
the Company and notes thereto contained elsewhere in this Annual Report on Form
10-KSB.
The statement of operations data for the year ended December 31, 1998
and 1997, and the balance sheet data as of December 31, 1998 and 1997, are
derived from, and are qualified by reference to, the audited financial
statements of the Company which are included elsewhere in this Annual Report on
Form 10-KSB. No cash dividends have ever been declared or paid on shares of the
Company's Common Stock.
The required financial statements of the Company are included as part
of this Annual Report on Form 10-KSB beginning on page F-1.
STATEMENT OF OPERATIONS DATA :
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997
---------- ----------
Total Revenues............................ $ 9,734,940 $ 292,536
Total Costs and Expenses.................. 10,483,954 709,409
Loss from Operations...................... (749,014) (416,873)
Total Other Expenses ..................... (203,278) (279,197)
Net Loss ................................. (898,081) (696,070)
Net Loss Applicable
to Common Shareholders................... (1,192,685) (992,179)
Net Loss Per
Common Share............................ (.32) (.58)
BALANCE SHEET DATA:
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997
---------- ----------
Working Capital .......................... $ 1,619,045 $2,408,166
Total Assets.............................. 13,618,188 4,955,831
Total Liabilities......................... 6,102,015 751,211
Stockholders' Equity ..................... 7,499,084 4,204,620
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
Robert D. Press 35 President, Chief Executive Officer and
Chairman of the Board
Maynard Hellman 53 Director
Arthur J. Press 70 Director
Evaldo F. Dupuy 55 Director
Thomas W. Dwyer 38 Director
Alyce B. Schreiber 34 Vice President and Director
Robert D. Press has served as Chairman of the Board of the Company
since August 1997 and as President, Chief Executive Officer and a Director of
the Company since its inception in September 1993. Mr. Press devotes all of his
business time and efforts to the affairs of the Company. From June 1990 to
August 1993, Mr. Press served as President of Premier Lease Concepts, Inc., the
Company's predecessor. In addition, from 1989 to 1997, Mr. Press served as
President of Performance Capital Management, Inc., a holding company controlled
by Messrs. Press and Steven L. Edelson, the former Chairman of the Board of the
Company, which had interests in brokerage and investment management, and as
President of Group since October 1992. Mr. Press also served, from 1991 to July
1997, as a licensed registered representative of PCM Securities Limited, L.P.,
an NASD registered broker-dealer. Mr. Press holds a B.A. degree in Economics
from Brandeis University. From 1984 to 1986, Mr. Press worked as a full-time
trading systems consultant to several major Wall Street firms, including The
Longview Group. In 1986, Mr. Press joined Chemical Bank, N.A. ("Chemical Bank")
as an internal consultant in trading and capital markets, and later in 1986,
Mr. Press joined in the formation of Chemical Bank's Interest Rate Arbitrage
trading group, of which Mr. Press became the principal trader responsible for
the global trading and investment decisions of a multi-billion dollar
portfolio. Mr. Press holds a Series 7 and 63 professional securities licenses.
Mr. Press is the son of Arthur J. Press, a Director of the Company.
Maynard J. Hellman has served as a Director of the Company since
January 1997. Since January 1988, Mr. Hellman has served as managing partner of
the Coral Gables, Florida based law firm of Hellman & Mass. From 1983 until
1988, Mr. Hellman was engaged in the private practice of law and prior thereto,
Mr. Hellman served as a partner in the Miami, Florida law firm of Gilbert,
Silverstein and Hellman. Mr. Hellman holds a J.D. degree from the University of
Miami School of Law and a B.B.A degree in Accounting from the University of
Miami School of Business Administration.
Arthur J. Press has served as a Director of the Company since January
1998. Prior to his retirement in 1987, Mr. Press served as the Vice President
of Commercial Lending for Chemical Bank. Mr. Press is the father of Robert D.
Press, the Chairman of the Board, President and Chief Executive Officer of the
Company.
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Evaldo F. Dupuy has served as a Director of the Company since July
1998. Since 1989, Mr. Dupuy has served as a principal of Coast Partners
Securities, Inc., a boutique investment banking firm specializing in asset
backed and debt related facilities for its clients. Mr. Dupuy is a member of
the Florida Premium Finance Association, Florida Automobile Dealers
Association, Florida Mortgage Brokers Association and the Asset Based Lender
Association.
Thomas W. Dwyer has served as a Director of the Company since March
1999. Since 1994, Mr. Dwyer has served as Vice President of Fuji Capital
Markets Corp., a derivatives trading house owned by Fuji Bank Tokyo. In
addition, since 1998, Mr. Dwyer has served as a director of Securities
Arbitrage Consulting Group, a Chicago based risk software company.
Alyce B. Schreiber has served as a Director of the Company since March
1999, Secretary of the Company since November 1997 and as Vice President of the
Company since 1990. Prior to Ms. Schreiber's becoming associated with the
Company, Ms. Schreiber served as a tax specialist for Laventhol and Horwath, a
certified public accounting firm.
The Company and Charles Litt have entered into an agreement pursuant
to which, among other things, Mr. Litt has agreed to serve as President of the
Company commencing May 15, 1999. At the time Mr. Litt begins his tenure as
President of the Company, Mr. Robert D. Press will continue as Chairman of the
Board of the Company. Since 1996, Mr. Litt has served as Vice President and
General Counsel for First Sierra Financial, Inc. ("First Sierra"), a publicly
held specialty finance company. Mr. Litt's responsibilities at First Sierra
include the negotiation of vendor program agreements and the structuring of
major leasing and finance transactions. From 1993 to 1996, Mr. Litt served as
President of Kinnard Capital Corporation, a subsidiary of Kinnard Investments,
a Minneapolis based investment company with broker dealer and financial focused
operating subsidiaries. Prior to 1993, Mr. Litt served in various positions for
Banc One Leasing Corporation.
During Fiscal 1998, none of the Company's executive officers,
Directors or beneficial owners of more than 10% of the Company's outstanding
shares of Common Stock failed to file on a timely basis reports required by
Section 16(a) of the Securities Exchange Act of 1934, as amended.
The Company's Board has Audit and Compensation Committees. The Audit
Committee meets with management to consider the adequacy of the internal
controls of the Company and the objectivity of the Company's financial
reporting. The Audit Committee also meets with the Company's independent
accountants and with appropriate Company financial personnel about these
matters. The Compensation Committee administers the Company's Option Plan and
makes recommendations to the Board of Directors with respect to the
compensation of management. The Audit and Compensation Committees are comprised
of Messrs. Dupuy and Dwyer and Ms. Schreiber.
The Company's Directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
Each non-employee Director receives a fee of $500 for each meeting (or
committee meeting) attended, together with reimbursement of reasonable expenses
incurred in attending such meeting.
OTHER KEY EMPLOYEES
Irwin Gross serves as the principal of AIM, a marketer and manager of
a variety of financial and insurance related services. Mr. Gross served as the
President of AIM for more than five years preceding AIM's acquisition by the
Company.
Frederick Horwin serves as one of the principals of AFG. AFG is
engaged, generally, in accounts receivable financing. Mr. Horwin served as
Executive Vice President and Executive Director of First Capital Services,
Inc., an entity engaged, generally, in accounts receivable financing ("First
Capital"), for more than five years preceding his affiliation with AFG.
Henry Koche serves as the principal of Ameri-Cap Leasing. Ameri-Cap
Leasing owns 80% of the outstanding capital stock of MFC. Mr. Koche served as
one of the principals of MFC from February 1997 until its acquisition by
Ameri-Cap Leasing. From May 1996 to January 1997, Mr. Koche served as President
of Carolina Capital, Inc., an independent brokerage firm specializing in
medical equipment leasing. From January 1995 to April 1996, Mr. Koche served as
an independent broker. Prior thereto, Mr. Koche served as Northeastern Regional
Manager of DVI Financial Services, an equipment leasing concern.
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W. Dennis Prouty serves as one of the principals of Premier. Premier
is engaged, generally, in providing back office accounting and other financial
administrative services principally to the medical industry. From 1996 until
its acquisition by the Company, Mr. Prouty served as President of Premier.
Prior thereto, Mr. Prouty served as Controller for Rx for Fleas, Inc., an
entity engaged in the sale of distributorships and the operation of flea
elimination services.
Joanne Telmosse serves as the principal of Medical Billing. Ms.
Telmosse was one of the founders of Medical Billing in 1994 and served as its
principal until the Company's acquisition of Medical Billing. Prior to 1994,
Ms. Telmosse served as Director of Finance for Recovery Management, Inc., a
bookkeeping concern.
Tom Wheatley serves as one of the principals of AFG. From March 1995
until the commencement of Mr. Wheatley's affiliation with AFG, Mr. Wheatley
served as Vice President of Marketing of First Capital. Prior thereto, Mr.
Wheatley owned and operated Connect Communications, Inc., a telecommunications
company.
ITEM 10. EXECUTIVE COMPENSATION
During Fiscal 1998, the Company paid to Robert D. Press, the Company's
Chairman of the Board, President and Chief Executive Officer, cash remuneration
of $225,000. Mr. Press is the sole executive officer of the Company. During
Fiscal 1998, Mr. Press, in accordance with the terms of his employment agreement
with the Company, as amended, was also issued an aggregate of 120,000 shares of
the Company's Common Stock. Mr. Press, however, waived his right to receive a
minimum cash bonus of $45,000 relating to Fiscal 1998. No other form of
remuneration was paid by the Company to Mr. Press during, or on account of,
Fiscal 1998. The following table summarizes the aggregate annual compensation
payable by the Company to Mr. Press and Maynard J. Hellman, General Counsel and
a Director of the Company, for Fiscal 1999:
NAME OF INDIVIDUAL CAPACITIES TO SERVE AGGREGATE COMPENSATION
- ------------------ ------------------- ----------------------
Robert D. Press President, Chairman of the $275,000
Board and Chief Executive Officer
Maynard J. Hellman General Counsel $180,000
Pursuant to Mr. Press' employment agreement with the Company, as
amended, Mr. Press has agreed to serve as President, Chairman of the Board and
Chief Executive Officer of the Company. This employment agreement expires on
December 31, 2004 (subject to earlier termination for cause). Mr. Press'
employment agreement further provides for Mr. Press' salary to increase to
$350,000 per annum during the year beginning January 1, 2000, with such annual
salary increasing 10% per annum thereafter. In addition, Mr. Press is entitled
to receive minimum cash bonuses of $60,000 and $75,000, respectively, for
Fiscal 1999 and the year ending December 31, 2000 ("Fiscal 2000"). Mr. Press is
also entitled to receive 40,000 shares of the Company's Common Stock following
the close of each calendar quarter during Fiscal 1999, 50,000 shares of Common
Stock following the close of each calendar quarter during Fiscal 2000 and
25,000 shares of Common Stock following the close of each calendar quarter
therafter. Mr. Press' employment agreement also provides for the annual grant
to him of 100,000 incentive stock options. These options are exercisable over
the five year period following their grant at a price equal to 110% of the fair
market value for shares of the Company's Common Stock at the date of grant. Mr.
Press is entitled to participate in all medical, stock option, pension and
other benefit plans that the Company may establish from time to time for the
benefit of its senior management generally.
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<PAGE>
Mr. Press' employment agreement is terminable by the Company for cause
(i.e., conviction of a felony, willful misconduct, dishonesty or material
breach of the agreement) at any time or in the event that Mr. Press becomes
disabled and, as a result, is unable to perform his duties under his employment
agreement for more than 60 consecutive days or for more than 90 days during any
12-month period.
Pursuant to Mr. Hellman's employment agreement with the Company, Mr.
Hellman has agreed to serve as General Counsel, giving and rendering legal
services, to the Company. This employment agreement expires on December 31,
2004 (subject to (i) automatic annual extensions unless written notice of
expiration is provided by Mr. Hellman or the Company and (ii) earlier
termination for cause or disability). Mr. Hellman's salary for Fiscal 1999
under this agreement is $180,000. Commencing with Fiscal 2000, Mr. Hellman's
annual salary shall be increased annually by the lesser of the then cost of
living increase, if any, or 5%. Mr. Hellman was granted 75,000 incentive stock
options in connection with the execution of his employment agreement and,
pursuant to his employment agreement, is entitled to receive an aggregate of
75,000 incentive stock options during each year of his employment agreement.
All such incentive stock options are exercisable over the five year period
following their grant at a price equal to the fair market value for shares of
the Company's Common Stock at the date of grant. Subject to eligibility rules,
Mr. Hellman is entitled to participate in all medical, stock option, pension
and other benefit plans maintained by the Company.
In connection with the formation of AFG , the Company, through AFG,
entered into three-year employment agreements (which automatically renew for
additional one-year periods unless AFG provides 30 days' prior notice of
cancellation) with each of Frederick Horwin and Tom Wheatley, seasoned finance
professionals. Pursuant to these agreements, Messrs. Horwin and Wheatley agreed
to serve as the operating officers of AFG in consideration for base salaries of
$120,000 and $96,000 per annum, respectively. Messrs. Horwin and Wheatley have
agreed not to compete with the Company or AFG during the term of their
employment with AFG and for the two-year period immediately thereafter.
In connection with the acquisition of AIM, the Company, through AIM,
entered into a three year employment agreement (which automatically renews for
additional one year periods unless AIM provides 30 days' prior notice of
cancellation) with Irwin Gross, the principal of AIM. Pursuant to this
agreement, Mr. Gross agreed to serve as the operating officer of AIM in
consideration for a draw against commissions of $125,000 per annum, increasing
over the term of the agreement to $150,000 per annum, a base salary during the
second and third year of the agreement in the amount of $50,000 per annum and
commissions equal to 70% of all net commission income generated and paid to AIM
from accounts developed by Mr. Gross and 50% of all net commission income
generated and paid to AIM from accounts referred to AIM from sources other than
Mr. Gross. Mr. Gross has agreed not to compete with the Company or AIM during
the term of his employment with AIM.
In connection with the acquisition of Medical Billing, the Company,
through Medical Billing, entered into three year employment agreements with
each of Joanne Telmosse, Jennifer Makula and Jamie Silva, the principals of
Medical Billing. Pursuant to these agreements, Mss. Telmosse, Makula and Silva
agreed to serve as the operating officers of Medical Billing in consideration
for base salaries of $125,000, $75,000 and $75,000, respectively. Mss.
Telmosse, Makula and Silva have each agreed not to compete with the Company or
Medical Billing during the term of her employment with Medical Billing.
In connection with the acquisition of Premier, the Company, through
Premier, entered into three year employment agreements with each of W. Dennis
Prouty and Laura C. Sotera, the principals of Premier. Pursuant to these
agreements, Mr. Prouty and Ms. Sotera agreed to serve as the operating officers
of Premier in consideration for base salaries of $110,000 and $72,000,
respectively. Mr. Prouty and Ms. Sotera have each agreed not to compete with
the Company or Premier during the term of his or her employment, as the case
may be, with Premier.
In connection with the Company's acquisition of MFC, the Company,
through Ameri-Cap Leasing, entered into a three year employment agreement with
Mr. Henry Koche. Pursuant thereto, Mr. Koche agreed to serve as the operating
officer of Ameri-Cap Leasing in consideration for an annual base salary of
$100,000. This agreement also entitles Mr. Koche to be granted incentive stock
options pursuant to the Company's Option Plan based upon Ameri-Cap Leasing's
annual financial performance and to participate in a discretionary cash bonus
pool for Ameri-Cap Leasing's employees if Ameri-Cap Leasing's financial
performance justifies the same. This employment agreement is terminable by the
Company for cause, including if Ameri-Cap Leasing's net monthly sales volume
(defined as the total amount of all leases written in any calendar month) is
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less than $500,000 per month in any consecutive three month period or in a three
month aggregate in any 12 month period.
In connection with the Ameritrust acquisition, the Company assumed the
employment agreements of Ameritrust's three principals, Larry Schwartz, Larry
S. Sazant and Bruce Lazarus. Mr. Schwartz's employment agreement expires in
2003 (subject to annual renewal), entitles Mr. Schwartz to an annual base
salary of $75,000 through 2001, increasing $5,000 per year thereafter, an
override commission on each residential mortgage transaction made by Ameritrust
of 4% of the gross revenues derived by Ameritrust from such transaction, a
bonus, terminable upon the satisfaction of certain financial obligations of Mr.
Schwartz, equal to 10% of Ameritrust's pre-tax net profits, if any, and the
grant of stock options, conditioned upon Ameritrust's financial performance,
pursuant to the Company's Stock Option Plan. Mr. Schwartz's employment
agreement is terminable by the Company for cause, including if Ameritrust's net
monthly sales volume is less than 75% of its projected sales goals for any
consecutive three month period or Ameritrust's annual sales volume is less than
75% of its projected annual sales. Mr. Schwartz has further agreed not to
compete with the Company in Dade and Broward Counties, Florida, for the two
year period following termination of his employment with the Company.
Mr. Sazant's employment agreement expires in 2002, entitles Mr. Sazant
to an annual base salary of $45,000, an override commission on each commercial
loan generated by Mr. Sazant of 10% of the gross commission earned by
Ameritrust's commercial loan division with respect to such commercial loan, an
override commission with respect to other commissions generated by Ameritrust's
commercial loan division equal to the difference between any commission paid to
any loan officer or consultant and 50% of the total commission paid by
Ameritrust, and a bonus equal to 5% of Ameritrust's Residential Financial
Services' division pre-tax income, if any. Mr. Sazant has further agreed not to
compete with the Company for the five year period following the termination of
his employment agreement.
Mr. Lazarus' employment agreement expires in 2002 and entitles Mr.
Lazarus to an annual base salary of $75,000, a bonus equal to 5% of
Ameritrust's Residential Financial Services' division pre-tax income, if any,
and such commissions as Ameritrust customarily remits to brokers and co-brokers
on a transactional basis. Mr. Lazarus has further agreed not to compete with
the Company for the five year period following the termination of his
employment agreement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 29, 1999,
based on information obtained from the persons named below, with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding shares of Common Stock, (ii) each director, (iii) each
executive officer and (iv) all directors and executive officers of the Company
as a group:
- 18 -
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF OF BENEFICIAL OUTSTANDING
BENEFICIAL OWNER OWNERSHIP(1) SHARES OWNED
---------------- ------------ ---------------
<S> <C> <C>
Medley Group, Inc.
150 South Pine Island Road
Suite 500
Plantation, FL 33324 1,064,290(2) 17.78%
Robert D. Press
150 South Pine Island Road
Suite 500
Plantation, FL 33324 1,877,309(2)(3) 29.87%
Arthur J. Press
1268 Hemlock Farms
Hawley, PA 18428 37,336(4) *
Maynard Hellman
150 South Pine Island Road
Suite 500
Plantation, FL 33324 768,750(5) 11.68%
Carol Edelson
421 West 54th Street
New York, NY 10019 537,226(6) 8.32%
Evaldo F. Dupuy
3911 Riviera Drive
Coral Gables, FL 33134 60,000(7) *
Thomas W. Dwyer
2 Hathaway Drive
Princeton Junction, NJ 08550 36,240(8) *
Alyce B. Schreiber
150 South Pine Island Road
Suite 500
Plantation, FL 33324 53,500(9) 1.01%
All directors and officers
as a group (six persons) 2,833,135(3)(4)(5)(6) 40.26%
(7)(8)(9)
Represents less than 1%.
</TABLE>
- --------------
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Memorandum upon
the exercise or conversion of options, warrants or other convertible
securities. Each beneficial owner's percentage ownership is determined by
assuming that options, warrants or other convertible securities that are
held by such person (but not those held by any other person) and that are
exercisable or convertible within 60 days from the date of this Memorandum
have been exercised or converted. Unless otherwise
- 19 -
<PAGE>
noted, the Company believes that all persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
beneficially owned by them.
(2) Mr. Robert D. Press, the President, Chairman of the Board and Chief
Executive Officer of the Company, may be deemed to control Medley Group.
As such, Mr. Press may be deemed to own beneficially all Common Stock of
the Company beneficially owned by Medley Group.
(3) Includes 129,351 shares of Common Stock issuable upon the conversion of
604,717 shares of the Company's Series A Preferred Stock owned by Mr.
Press. Also includes 142,500 shares of Common Stock issuable upon the
exercise of certain warrants; these warrants are exercisable at any time
on or prior to September 30, 2000 at an exercise price of $1.50 per share,
and 25,000 shares of Common Stock issuable upon the exercise of certain
options; these options are exercisable at any time on or prior to December
31, 2004 at an exercise price of $2.88 per share. Robert D. Press is the
son of Arthur J. Press. Robert Press disclaims beneficial ownership over
all shares of Common Stock beneficially owned by Arthur J. Press.
(4) These shares are owned by an affiliate of Mr. Press. Includes 21,925 shares
of Common Stock issuable upon the conversion of 102,500 shares of the
Company's Series A Preferred Stock owned by an affiliate of Mr. Press.
Peggy Press, the wife of Arthur J. Press and the mother of Robert D. Press,
beneficially owns 29,168 shares of Common Stock. Each of Mr. Arthur J.
Press and Robert D. Press disclaims beneficial ownership over all shares of
Common Stock of the Company owned by Mrs. Press. Arthur J. Press is the
father of Robert D. Press. Mr. Press disclaims beneficial ownership owner
all shares of Common Stock beneficially owned by Robert D. Press.
(5) Includes 10,000 shares of Common Stock beneficially owned by an affiliate
of Mr. Hellman. Also includes 500,000 shares of Common Stock issuable upon
the exercise of certain warrants owned by Mr. Hellman; these warrants are
exercisable at any time through December 2002 at an exercise price of $2.50
per share, 75,000 shares of Common Stock issuable upon the exercise of
certain options; these options are exercisable at any time on or prior to
December 16, 2003 at an exerise price of $2.13 per share, and 18,750 shares
of Common Stock issuable upon the exercise of certain other options; these
other options are exercisable at any time on or prior to December 31, 2004
at an exercise price of $2.88 per share. Does not include an additional
510,000 shares of Common Stock the Company is contractually obligated to
issue to Mr. Hellman in annual installments through 2003 arising out of Mr.
Hellman's sale to the Company of his interests in certain of the Company's
subsidiaries and a Florida based title insurance company.
(6) Includes 327,728 shares of Common Stock issuable upon the conversion of
1,532,127 shares of the Company's Series A Preferred Stock owned by Ms.
Edelson. Also includes 142,500 shares of Common Stock issuable upon the
exercise of certain warrants; these warrants are exercisable at any time
on or prior to September 30, 2000 at an exercise price of $1.50 per share.
(7) Includes 50,000 shares of Common Stock issuable upon the exercise of
certain options; these options are exercisable at any time on or prior to
June 8, 2001 at an exercise price of $1.50 per share.
(8) Represents shares of Common Stock issuable upon the conversion of 169,419
shares of Series A Preferred Stock owned by Mr. Dwyer.
(9) Includes 10,000 shares of Common Stock issuable upon the exercise of
certain options; these options are exercisable at any time on or prior to
May 31, 2000 at an exercise price of $1.20 per share, and 40,000 shares of
Common Stock issuable upon the exercise of certain other options; these
other options are exercisable, as to 20,000 shares, at any time on or prior
to August 30, 2000, and as to the other 20,000 shares, at any time on or
prior to October 31, 2000, each at an exercise price of $2.00 per share.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During January 1997, intercompany receivable owing by Refrigeration
was reduced by $237,000 as a result of Refrigeration paying the Company
$200,000 in cash and transferring to the Company $37,000 of refrigeration
equipment. The Company used this refrigeration equipment to directly enter into
new refrigeration equipment leases with customers of Refrigeration. This direct
lease financing was essentially accomplished by the Company purchasing the
equipment to be leased from Refrigeration. The Company, in turn, then leased
this equipment to creditworthy Refrigeration customers who were required to
make lease payments with respect to such equipment directly to the Company.
- 20 -
<PAGE>
In connection with the closing of the Company's IPO, Medley Group
remitted to the Company, on behalf of Refrigeration, the $1,100,000 in proceeds
generated from Medley Group's sale of 200,000 shares of Common Stock in the IPO
to satisfy, in their entirety, all intercompany receivables then outstanding
from Refrigeration to the Company.
On July 31, 1997, Steven L. Edelson resigned as Chairman of the Board
of the Company. Simultaneously therewith, Mr. Edelson transferred to his wife,
Carol Edelson, a principal stockholder of the Company, all of Mr. Edelson's
right, title, and interest in and to all securities of the Company then owned
by Mr. Edelson. Mr. Edelson's resignation was not the result of any
disagreement between Mr. Edelson and the Company on any matter relating to the
Company's operations, policies or practices. Subsequent thereto, Mr. Edelson
granted Robert D. Press, President, Chairman of the Board and Chief Executive
Officer of the Company, an option to purchase, through December 31, 2002, all
of Mr. Edelson's interest in Medley Group (approximately 8% of Medley Group's
outstanding capital stock as of the date of this Annual Report on Form 10-KSB)
for $750,000. In connection with this grant, Mr. Press received an irrevocable
proxy to vote all such Medley Group stock on all matters submitted to Medley
Group stockholders for a vote.
During June 1996, the Company offered Robert Press, the President and
Chairman of the Board of the Company, and Steven L. Edelson, the then Chairman
of the Board of the Company, the opportunity to exchange their shares of 13 1/2%
preferred stock of the Company then owned by them, having an aggregate
liquidation value of $1,643,726, into shares of Series A Preferred Stock.
Messrs. Press and Edelson exchanged all of their shares of 13 1/2% preferred
stock for an aggregate of 2,136,844 shares of Series A Preferred Stock (604,717
shares to Mr. Press and 1,532,127 shares to Mr. Edelson). Mr. Edelson
subsequently transferred these shares to Carol Edelson.
From June 1, 1996 through December 20, 1997, Messrs. Press and Edelson
loaned the Company $131,738 and $48,745, respectively, in order to permit the
Company to satisfy its operating expenses in connection with, and in
anticipation of, its IPO. Interest accrued on these loans at the rate of 12%
per annum and required balloon payments of principal and accrued interest by
August 2, 1999. (Mr. Edelson transferred his right to receive payment under his
loan to Carol Edelson.) The Company repaid these loans as part of the IPO by
issuing Mr. Press and Ms. Edelson approximately 23,952 and 8,863 shares of
Common Stock from the IPO (the "Conversion Shares"), respectively. These
Conversion Shares were valued at the IPO price of $5.50 per share. In connection
with these loans, the Company issued to each of Messrs. Press and Edelson
warrants to purchase up to 142,500 shares of Common Stock (Mr. Edelson
transferred these warrants to Carol Edelson). These warrants are exercisable at
any time on or prior to September 30, 2000 at an exercise price of $1.50 per
share.
In December 1996, the Company sold Maynard Hellman, a director of the
Company, in consideration for $100,000, warrants to purchase up to 1,000,000
shares of Common Stock of the Company (the "1996 Warrants"). The 1996 Warrants
were exercisable until July 22, 2002 at an exercise price of $5.00 per share. In
October 1998, Mr. Hellman provided the Company with a $150,000 bridge loan. The
current outstanding principal balance of $100,000 under this bridge loan is
payable on June 30, 1999. In connection with this bridge loan, the Company and
Mr. Hellman agreed to terminate the 1996 Warrants and the Company issued Mr.
Hellman warrants to purchase, at any time through December 2002, up to 500,000
shares of Common Stock at an exercise price of $2.50 per share.
In connection with the IPO, the Company issued 15,000 Conversion Shares
to each of Mr. Press and Ms. Edelson in satisfaction of certain redemption
obligations of the Company owing to them with respect to 15,000 other shares of
Common Stock owned by each of them. These shares of Common Stock were originally
transferred and assigned by Group to Messrs. Press and Edelson (who subsequently
transferred them to Carol Edelson) in January 1996 in consideration for services
performed by Messrs. Press and Edelson on behalf of the Company. Also, in
connection with the IPO, the Company issued Mr. Robert D. Press, Ms. Carol
Edelson and an affiliate of Mr. Arthur J. Press approximately 13,740, 41,785 and
2,880 Conversion Shares, respectively, in satisfaction of approximately $75,590,
$230,000 and $15,860 of declared but unpaid Series A Preferred Stock dividends
owing them.
During the second quarter of 1998, the Company provided a financial
accommodation to Medley Group for a fee equal to $150,000 per annum. This fee is
payable each year the Company continues to extend such financial accommodation.
Specifically, the Company posted a $1.475 million standby letter of credit on
behalf of Medley Group. This letter of credit was posted for the purpose of
securing the
- 21 -
<PAGE>
performance of certain equipment leases sold by Medley Group to an unrelated
party. The Company's financial exposure under this letter of credit has been
collateralized by the pledge by Medley Group to the Company of 750,00 shares of
the Company's Common Stock owned by Meldey Group, which Common Stock, for
purposes of the pledge, has an agreed upon value of $2.50 per share.
During December 1998, the Company agreed to forgive an outstanding loan
in the then outstanding amount of $68,000 made to Mr. Robert D.Press, the
Company's Chairman of the Board, President and Chief Executive Officer, at the
rate of 20% per year beginning during Fiscal 1999.
During January 1999, the Company, through its Ameri-Cap Mortgage
subsidiary, acquired from Mr. Maynard Hellman, a director of the Company, 80% of
the outstanding capital stock of Suncoast Title Company, Inc., a Florida title
insurance company ("Suncoast"), for 50,000 shares of the Company's Common Stock.
The Company has agreed, through 2002, to acquire the remaining 20% of the
outstanding capital stock of Suncoast from Mr. Hellman for an aggregate of
50,000 additional shares of the Company's Common Stock.
During February 1999, the Company, through its Ameri-Cap Factors
subsidiary, acquired from Mr. Hellman, .6% of the outstanding capital stock of
Ameri-Med Financial Services, Inc., a Florida medical receivables financing
business ("Ameri-Med Financial"), for 35,000 shares of the Company's Common
Stock. Ameri-Cap Factors previously owned 80% of the outstanding capital stock
of Ameri-Med Financial. The Company has agreed, through 2003, to acquire an
additional 2.4% of the capital stock of Ameri-Med Financial owned by Mr. Hellman
for an aggregate of 140,000 additional shares of the Company's Common Stock.
Also during February 1999, the Company acquired from Mr.Hellman 1.4% of
the outstanding capital stock of Ameri-Cap Mortgage for 80,000 shares of the
Company's Common Stock. The Company previously owned 80% of the outstanding
capital stock of Ameri-Cap Mortgage. The Company has agreed, through 2003, to
acquire an additional 5.6% of the capital stock of Ameri-Cap Mortgage owned by
Mr. Hellman for an aggregate of 320,000 additional shares of the Company's
Common Stock.
On December 31, 1998, the Company and Medley Group entered into an
agreement pursuant to which, among other things, the manner in which the then
$633,089.24 outstanding inter-company debt owing to the Company by Medley Group
was scheduled for repayment. Specifically, Medley Group paid the Company
$50,000 upon the execution of this agreement and agreed to pay the Company the
remaining balance by December 31, 2004.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following are filed as part of this Report:
(i) FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report F-1
Balance Sheets at December 31, 1998 and 1997 F-2
Statements of Operations for the Years Ended
December 31, 1998 and 1997 F-4
Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1998 and 1997 F-5
Statements of Cash Flows for the Years Ended
December 31, 1998 and 1997 F-6
Notes to Financial Statements F-8
(ii) FINANCIAL STATEMENT SCHEDULES
None
(iii) EXHIBITS
3.1 Amended and Restated Certificate of Incorporation of the Company
(the "Restated Certificate") (Incorporated by reference to Exhibit
3.1 to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form SB-2 (File No. 333-24937)).
3.2 Certificate of Amendment to the Restated Certificate (Incorporated
by reference to Exhibit 3.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1998).
3.3 Certificate of Designation, Rights and Preferences relating to
shares of the Company's Series A 10% Convertible Preferred Stock
(Incorporated by reference to Exhibit 3.2 to Post-Effective
Amendment No. 2 to the Company's Registration Statement on Form
SB-2 (File No. 333-24937)).
3.4 Certificate of the Powers, Designations, Preferences and Rights of
the Company's Series B Preferred Stock.
3.5 By-Laws of the Company (Incorporated by reference to Exhibit 3.3
to Post-Effective Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (File No. 333-24937)).
4.1 Specimen Common Stock Certificate (Incorporated by reference to
Exhibit 4.1 to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form SB-2 (File No. 333-24937)).
- 22 -
<PAGE>
4.2 Specimen Warrant Certificate (included as Exhibit A to Exhibit
4.3) (Incorporated by reference to Exhibit 4.2 to Post-Effective
Amendment No. 2 to the Company's Registration Statement on Form
SB-2 (File No. 333-24937)).
4.3 Warrant Agency Agreement, dated December 1997, between the Company
and American Stock Transfer & Trust Company (Incorporated by
reference to Exhibit 4.3 to Post-Effective Amendment No. 2 to the
Company's Registration Statement on Form SB-2 (File No. 333-
24937)).
10.1 Employment Agreement, dated as of March 1, 1998 between Robert D.
Press and the Company (Incorporated by reference to Exhibit 10.1
to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.2 Amendment, dated December 31, 1998, to Employment Agreement
between Robert D. Press and the Company.
10.3 Agreement, dated March 4, 1998, among the Company, Frederick
Horwin and Tom Wheatley (Incorporated by reference to Exhibit 10.2
to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.4 Employment Agreement, dated as of March 4, 1998, between AFG and
Frederick Horwin (Incorporated by reference to Exhibit 10.3 to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.5 Employment Agreement, dated as of March 4, 1998, between AFG and
Tom Wheatley (Incorporated by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.6 Stock Purchase Agreement, dated March 13, 1998, between the
Company and Irwin Gross (Incorporated by reference to Exhibit 10.5
to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.7 Employment Agreement, dated March 13, 1998, between AIM and Irwin
Gross (Incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-KSB for the year ended December 31,
1997).
10.8 Stock Purchase Agreement, dated March 30, 1998, among the Company,
Joanne Telmosse, Jamie Silva, Jennifer Makula and Medical Billing
(Incorporated by reference to Exhibit 10.7 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997).
10.9 Employment Agreement, dated March 30, 1998, between Medical
Billing and Joanne Telmosse (Incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997).
10.10 Employment Agreement, dated March 30, 1998, between Medical
Billing and Jennifer Makula (Incorporated by reference to Exhibit
10.9 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997).
10.11 Employment Agreement, dated March 30, 1998, between Medical
Billing and Jamie Silva (Incorporated by reference to Exhibit
10.10 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997).
- 23 -
<PAGE>
10.12 Stock Purchase Agreement, dated March 30, 1998, among the Company,
W. Dennis Prouty, Laura C. Sotera, Garry R. Spear, Esq., YNC
General Partnership and Premier (Incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997).
10.13 Employment Agreement, dated April 1, 1998, between Premier and W.
Dennis Prouty (Incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.14 Employment Agreement, dated April 1, 1998, between Premier and
Laura C. Sotera (Incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.15 Promissory Note, dated December 26, 1997 issued by Advantage Life
Products, Inc. to the Company in the principal amount of $500,000
(Incorporated by reference to Exhibit 10.14 to the Company's
Annual Report on Form 10-KSB for the year ended December 31,
1997).
10.16 Stock Pledge Agreement, dated December 26, 1997, between Advantage
Life Products, Inc. and the Company (Incorporated by reference to
Exhibit 10.15 to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997).
10.17 Syndication Agreement, dated February 1, 1998, among the Company,
Barry Goldstein and Randy Wool (Incorporated by reference to
Exhibit 10.23 to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997).
10.18 Loan and Security Agreement, dated May 8, 1998, between AFG and
FINOVA (Incorporated by reference to Exhibit 10.28 to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.19 Continuing Corporate Guaranty, dated May 8, 1998 issued by the
Company to FINOVA (Incorporated by reference to Exhibit 10.29 to
the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.20 Stock Pledge Agreement, dated December 24, 1997, between Medley
Group and the Company (Incorporated by reference to Exhibit 10.30
to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997).
10.21 Letter Agreement, dated December 24, 1997, between Medley Group
and the Company (Incorporated by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-KSB for the year ended December
31, 1997).
10.22 The Company's 1997 Stock Option Plan (Incorporated by reference to
Exhibit 10.06 to Post-Effective Amendment No. 2 to the Company's
Registration Statement on Form SB-2 (File No. 333-24937)).
10.23 Promissory Note, dated February 4, 1998, issued by Robert D. Press
to the Company in the principal amount of $60,000 (Incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 1999).
- 24 -
<PAGE>
10.24 Promissory Note, date March 9, 1998, issued by Tract 4, Inc. to
the Company in the principal amount of $200,000 (Incorporated by
reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 1999).
10.25 Stock Purchase Agreement, dated June 30, 1998, among Ameri-Cap,
Ron Epstein, Elliot Kalus, Henry Koche and the Company
(Incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30,
1998).
10.26 Employment Agreement, dated June 30, 1998, between Ameri-Cap and
Henry Koche (Incorporated by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998).
10.27 Stock Exchange Agreement, dated July 20, 1998, among Ameri-Cap
Finance Group, Inc., certain individuals named therein, the
Company and Ameritrust (Incorporated by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998).
10.28 Amendment, dated October 21, 1998, to Stock Exchange Agreement
between Ameri-Cap Finance Group, Inc., the Company and Ameritrust
(Incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September
30, 1998).
10.29 Employment Agreement, dated November 1998, between Ameritrust and
Larry Schwartz (Incorporated by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998).
10.30 Employment Agreement, dated as of November 14, 1997, between
Residential Financial Services, Inc. and Bruce Lazarus
(Incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September
30, 1998).
10.31 Employment Agreement, dated as of November 14, 1997, between
Residential Financial Services, Inc. and Larry Sazant
(Incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September
30, 1998).
10.32 Addendum, dated as of July 1, 1998, to Employment Agreement dated
as of November 14, 1998, between Residential Financial Services,
Inc. and Larry Sazant (Incorporated by reference to Exhibit 10.5
to the Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998).
10.33 Employment Agreement, dated December 23, 1998, between the Company
and Maynard J. Hellman.
10.34 Stock Purchase Agreement, dated December 31, 1998, between
Ameri-Cap Mortgage, Maynard J. Hellman and the Company.
10.35 Stock Exchange Agreement, dated December 16, 1998, between Maynard
J. Hellman, Ameri-Cap Factors and the Company.
10.36 Stock Exchange Agreement, dated December 16, 1998, between Maynard
J. Hellman and the Company.
10.37 Warrant for 500,000 shares of Common Stock, dated October 16,
1998, issued by the Company to Maynard J. Hellman.
10.38 Agreement, dated December 31, 1998, between the Company and Medley
Group.
10.39 Lease Agreement, dated November 4, 1998, between SKW II Real
Estate Partnership and the Company.
21 Subsidiaries of the Company
23 Consent of Daszkal, Bolton & Manela
27 Financial Data Schedule
---------------------
* To be filed by amendment.
- 25 -
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the Registrant caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
FINANTRA CAPITAL, INC.
Date: April 4, 1999 By: /s/ Robert D. Press
--------------------------------
Robert D. Press, President
In accordance with the Securities Exchange Act of 1934, as amended, this
Amendment has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert D. Press President, Chairman of the Board April 4, 1999
- ------------------------ of Directors and Chief Executive
Robert D. Press Officer
/s/ Maynard Hellman Director April 4, 1999
- ------------------------
Maynard Hellman
/s/ Arthur J. Press Director April 4, 1999
- ------------------------
Arthur J. Press
/s/ Evaldo F. Dupuy Director April 4, 1999
- ------------------------
Evaldo F. Dupuy
/s/ Thomas W. Dwyer Director April 4, 1999
- ------------------------
Thomas W. Dwyer
/s/ Alyce B. Schreiber Director April 4, 1999
- ------------------------
Alyce B. Schreiber
- 26 -
<PAGE>
CERTIFICATE OF THE POWERS. DESIGNATIONS.
PREFERENCES AND RIGHTS OF THE SERIES B
PREFERRED STOCK PAR VALUE 0.001 PER SHARE
OF FINANTRA CAPITAL. INC.
FINANTRA CAPITAL, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), pursuant to the Business
Corporation Act of the State of Delaware, certifies that the Board of Directors
of the Corporation at a meeting thereof, duly called and held on December 29,
1998, as which meeting a quorum was present and acting throughout, duly adopted
the following resolutions:
WHEREAS, the Board of Directors of the Corporation is authorized,
within the limitations and restrictions stated in the Amended and Restated
Certificate of Incorporation, as amended ("Articles of Incorporation"), to fix
by resolution or resolutions the designation of each series of preferred stock,
$0.001 par value per share ("Preferred Stock"), the number of shares
constituting such series and the relative rights, preferences and limitations
thereof, including, without limiting the generality of the foregoing, such
provisions as may be desired concerning voting, redemption, dividends,
conversion or exchange and such other subjects or matters as may be fixed by
resolution or resolutions of the Board of Directors under the Articles of
Incorporation and law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the Corporation
to authorize a series of preferred stock to be designated Series B Preferred
Stock and fix the terms of the Series B Preferred Stock and the number of
shares constituting such series.
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<PAGE>
NOW, THEREFORE, be it resolved that pursuant to the authority vested
in the Board of Directors by the Articles of Incorporation, there is created a
series of preferred stock consisting of 500,000 shares of Series B Preferred
Stock, par value $0.001 per share.
1. DESIGNATION AND NUMBER OF SHARES: The designation of such series of
preferred stock, par value $0.001 per share (the "Preferred Stock"), authorized
by this resolution shall be Series B Preferred Stock (the "Series B Preferred
Stock"). The number of shares of the Series B Preferred Stock shall be 500,000
and no more.
2. RANK: The Series B Preferred Stock shall with respect to rights
upon liquidation, winding up in dissolution, ranks second to the Series A
Preferred Stock and shall be senior to any other series or classes of Preferred
Stock hereto or hereafter created by the Corporation and all other equity
securities of the Corporation, including the common stock of the Corporation.
3. LIQUIDATION PREFERENCE: MERGER: CONSOLIDATION: ETC.:
3.1 In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Series B
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stock holders, an amount equal to
$1.00 per share.
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<PAGE>
3.2 In case the Corporation shall effect any statutory share exchange
or other capital reorganization or reclassification of its common stock (other
than a change in par value, or from par value to no par value or from no par
value or to par value) or shall consolidate or merge with or into any other
corporation (other than a merger in which the Corporation is the surviving
corporation and each share of common stock outstanding immediately prior to such
merger is to remain outstanding immediately after such merger) or shall sell or
transfer all or substantially all of its assets to any other corporation, lawful
provisions shall be made as part of the terms of such transaction whereby the
holder of the Series B Preferred Stock shall, at its option, be entitled to
receive on the effective date of any such transaction, with the respect to each
share, a share of Preferred Stock in the surviving entity which will have the
same rights and value as described herein.
4. CONVERSION: At any time following the execution of this Agreement
the holder of Series B Preferred Stock of the Corporation may convert same to
shares of common stock of the Corporation by giving written notice to the
Corporation and exchange 2 and 1/8 shares of Series B Preferred Stock for each
share of common stock being exchanged. The Company shall not be required to
issue fractions of common stock in furtherance of the conversion. Any shares of
Series B Preferred Stock converted pursuant to the rights contained herein shall
be deemed retired and shall be cancelled and may not hereafter be reissued.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
signed as of this 29th day of December, 1998.
Signed, sealed and delivered
in the presence of:
FINANTRA CAPITAL, INC.
By:
------------------------
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<PAGE>
- -----------------------------
Signature
- -----------------------------
Print Name
- -----------------------------
Signature
- -----------------------------
Print Name
STATE OF FLORIDA )
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 29 day of
December, 1998 by ROBERT D. PRESS, President of FINANTRA CAPITAL, INC.., a
Delaware corporation, on behalf of corporation. He is personally known to me or
has produced ________________ as identification.
--------------------------------
Notary Public - State of Florida
My Commission Expires:
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<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement is made and entered into this
____ day of December, 1998 by and between FINANTRA CAPITAL, INC., a Delaware
corporation (the "Company") and ROBERT D. PRESS ("Employee"). (Throughout this
agreement the Company and Employee may be referred to collectively as "Parties"
for convenience.)
WITNESSETH:
WHEREAS, the Parties entered into an Employment Agreement on March 1,
1998, and
WHEREAS, various events have taken place subsequent to the effective
date of the Employment Agreement which requires amendments.
NOW, THEREFORE, in consideration of the promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
1. RECITALS: The above and foregoing recitals are true and correct
and are incorporated herein.
2. AMENDMENTS: The amendments to the Employment Agreement between the
Parties are as follows:
2.1 Term: The term of the agreement is hereby modified to
extend same for a period of five (5) years commencing January 1, 1999.
2.2 Incentive Stock Options: Paragraph 6D is deleted in its
entirety and amended as follows: Commencing in the calendar year, 1999 and each
year thereafter during the term of this agreement the Company shall grant to
Employee 100,000 stock options in quarterly installments commencing on January
l s' and each quarter thereafter at a price equal to 1 10% of fair market
value. The options may exercised over a period of sixty (60) months from its
date of issuance.
2.3 Stock Grants: In addition to the stock grants in years
one, two and three. commencing in the calendar year beginning January 1, 2001
the Company shall grant to the Employee common stock in the Company for each
quarter of employment completed 25,000 shares of its common stock.
2.4 Increases in Compensation: Commencing with the calendar
year beginning January 1, 2001 and in each succeeding calendar year thereafter
during the Employees' employment with the Company, the Employee's compensation
set forth in paragraph 5 shall
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<PAGE>
increase beginning January lst of each calendar year by an amount equal to ten
percent (10%) of the previous year's compensation.
3. FORGIVENESS OF DEBT: The Employee and Company acknowledge that as
of the date of this amendment the Employee has a loan from the Company in the
amount of Sixty Eight Thousand and 00/100 Dollars ($68,000.00). The Company
agrees to forgive twenty percent (20%) of said loan in each calendar year
during the term of this agreement beginning with the calendar year 1999.
4. RATIFICATION: That except for the modifications and amendments set
forth herein all of the terms and agreements contained in the Employment
Agreement between Employee and the Company are hereby ratified and confirmed
and are incorporated herein.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals this ____ day of December, 1998.
FINANTRA CAPITAL, INC.
By:
------------------------------
ROBERT D. PRESS, President
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<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into this 23rd day of December, 1998 by and between FINANTRA CAPITAL,
INC., a Delaware corporation (the Company") and MAYNARD J. HELLMAN (UHellman
or "Employee).
WITNESSETH:
WHEREAS, Hellman is an attorney licensed to practice law in the state
of Florida, and
WHEREAS, Hellman has been representing the Company in various matters
over the last 24 months, and
WHEREAS, the Company desires to employ Hellman as its general counsel
and
WHEREAS, the Company and Hellman desire to memorialize their employment
agreement into a written instrument.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for such other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. RECITALS: The above and foregoing recitals are true and correct
and are incorporated herein.
2. EMPLOYMENT: The Company hereby employs, hires and engages Hellman
as its general counsel for the purpose of giving and rendering legal services
to the Companv as may be necessary including but not limited to the overseeing
of outside legal counsel employed by the company on specific matters.
3. TERM OF AGREEMENT: The term of this agreemen: shall commence on
January 1, 1999 and shall continue thereafter for a term of five (5) years,
subject to the termination provisions
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<PAGE>
set forth in this agreement. The term of this agreement shall automatically be
extended for additional one (1I ) year terms unless either party to this
agreement gives written notice to the other no later than thirty (30) days
prior to the expiration of any term stating that said party declines such
exension.
4. COMPENSATION: The Company in consideration of the services to be
performed and provided by Hellman shall pay to Hellman during the first twelve
months of the term of this agreement the sum of Fifteen Thousand Dollars ($
15,000.00) per month commencing on February 1, 1999. Commencing on each annual
anniversary date of this agreement during the term hereof Hellman's
compensation shall be increased by the lesser of cost of living or 5.0%.
Compensation to be paid to Hellman shall be paid gross without deductions and
Hellman shall be responsible for any and all withholding taxes or FICA taxes
applicable to said compensation.
5. BENEFITS: In addition to the compensation set forth in paragraph 5
above Hellman shall be entitled to receive the following benefits during the
term of this agreement:
5.1 Medical Insurance: Hellman and his family shall be
entitled to medical health and life insurance benefits as are made available by
the Company to the Company's executives during the term of this agreement.
5.2 Reimbursement of Expenses: Hellman shall be entitled to
reimbursement of all reasonable expenses actually paid or incurred by Hellman
in the course of and pursuant to the performance of his duties under this
agreement.
5.3 Vacation: Employee shall be entitled to three weeks
vacation time annually. Any vacation time not utilized or taken in a given year
shall accrue to the following vear(s) during the term hereof. Paid vacation
shall be prorated in any calendar year during which the Employee is
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<PAGE>
employed under this Agreement for less than an entire year. The Employee shall
also be entitled to all paid holidays given by the Company to its executives or
employees.
6. Incentive Stock Option Program (ISO): Employee shall be entitled to
participate in Incentive Stock Option Program of the Company on an annual basis
during the term of this agreement as follows:
6.1 Initial Grant of Options: Upon the execution of this
agreement the Employee shall receive 75,000 stock options to purchase the
common shares of the Company at an exercise price equal to the Fair Market
Value of the share price on the day the option is granted less the maximum
allowable discount allowed by law which will not create income to the Employee
or expense to the Company.
6.2 Annual Grant of Options: Commencing in the calendar year
1999 and each calendar year during the term of this agreement, the Employee
shall be granted 75,000 stock options at an exercise price equal to those
described in Section 6.1 above. The options shall be ranted quarterly in each
year (January is', April is', July Is', October ls').
6.3 The ISO's shall have an exercise period of 60 months from
the date of issuance.
6.4 Piggy Back Registration Rights: If at any time following
the date of this Agreement Finantra proposes to register any of its securities
under the Security Act of 1933. as amended, and further provided consultant is
the owner of any of the common shares of Finantra Finantra will give written
notice by registered mail. at least thirty (30) days prior to the filing of any
such registration statement of its intention to file a registration statement.
Emplovee shall have
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<PAGE>
twenty (20) days after receipt of such notice to notify Finantra to register
the common shares owned by Employee under such registration statement. Finantra
shall pay all costs and expenses in connection vith the registration of the
shares described herein. Notwithstanding this provision, should the
registration of shares be in furtherance of a secondary offering of common
shares to the public and the underwriter engaged by Finantra have reasonable
grounds to request that all shares of Employee not be registered but only a
portion thereof. Employee agrees to only register so many of its shares as the
underwriter may allow.
7. INDEMNIFICATION AND WAIVER OF PROFESSIONAL LIABILITY COVERAGE: The
Corporation recognizes that Hellman is a director of the Company and a
shareholder. The Company agrees that it will indemnify Hellman against any and
claims, suits, actions, debts, darnages, costs. charges and expenses including
court costs and attomey's fees arising from any and all liability. Iosses and
damages of any nature whatsoever as a result of the services being rendered to
the Corporation by Hellman as general counsel or as director. Its is understood
by the Company that Hellman will no longer carry errors and omissions Insurance
which would cover the Company for Professional Liability.
8. DISABILITY: In the event Hellman shall become incapacitated by
reason of mental or physical disability during the temm of this agreement such
that he is substantially prevented from performing his duties and services
hereunder for a period of 90 days or for such shorter periods aggregating 90
days during any twelve month period. the Company thereafter shall have the
right to terminate this agreement bv sending written notice of termination to
Hellman or his legal representative and thereupon his employment shall
hereunder immediately terminate. Upon such termination Hellman shall be
entitled to receive and shall be paid by the Company all compensation
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<PAGE>
due him to the date of termination plus an additional twelve months or the
amount remaining under the term of this agreement, whichever is shorter. In
addition, during said twelve month period. Hellman shall be entitled to receive
his benefits described in this agreement through the date of termination.
9. Termination:
9.1 Cause: The Company shall have the right to terminate the
employment of Employee hereunder at any time for cause (as used herein.
"cause"N if:
9.1.1 Employee shall be convicted by a court of
competent and final jurisdiction of any crime (whether or not involving the
Company) which constitutes a felony in the jurisdiction involved or otherwise
commit acts of moral turpitude in such a manner as to adversely reflect upon
the reputation of the Company; or
9.1.2 Employee shall commit any act of
embezzlement or similar material dishonest and injurious conduct against the
Company; or
9.1.3 Employee shall demonstrate reckless
disregard or grossly negligent and injurious conduct in connection with the
performance of. or a gross disregard for. his duties and responsibilities
under, or assigned pursuant to this Agreement; or
9.1.4 Employee is in default in the performance
of his obligations, services or duties under this agreement and such default
continues for a period of fifteen (15) days after written notice to Employee.
Notwithstanding the foregoing, the Company agrees that it will not be
arbitrary or capricious in terminating Employee s employment hereunder for
other than good and valid cause which results in material damage to the
Company. In the event there is any dispute between the Company and the
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<PAGE>
Employee concerning the validity of such termination, such matter shall be
resolved by binding arbitration in Miami. Florida in accordance with the rules
of the American Arbitration Association. The Employee shall continue to receive
his regular salary and benefits until such termination has been determined. If
the termination was determined to be valid the employee shall reimburse the
Company all compensation and benefits received from the date of the
termination.
9.2 Mutual Agreement: Company and Employee may mutually agree
to terminate this agreement.
9.3 In the event that the employment of Employee shall be
terminated by the Company, Employee shall be entitled to receive his salary
then in effect through the date of such termination. Employee shall accept the
payments pursuant to this paragraph in full discharge and release of the
Company of and from any further obligations under this Agreement. Nothing
contained in this paragraph shall constitute a waiver or release by the Company
of any rights or claims it may have against the Employee, including, but not
limited to, any claims or rights pursuant to the provisions set forth in this
Agreement.
10. Best Efforts of Employee: The Employee agrees that Employee will.
at all times, faithfully, industriously and to the best of his ability,
experience and talents, perform all of the express and implicit terms hereof.
to the reasonable satisfaction of the Company. It is understood that the
Employee shall devote so much of his time and effort to the business of the
Company as is necessary. The Employee may render legal services to other
Company subsidiaries and others including business entities and corporations in
which Employee has an equity interest so long as the rendering of said services
do not unreasonably interfere with the services being provided to the Company.
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<PAGE>
11. Covenants. Representations and Warranties of Hellman: Hellman
represents and warrants to the Company as follows:
11.1 He has the power and authority to enter into this
Agreement and perform its duties hereunder.
11.2 He shall use his best efforts to comply with all
laws. regulations, rules and ordinances pertaining to the Company's business.
12. Restrictive Covenants:
12.1 Employee recognizes and acknowledges that as a
consequence of his duties hereunder, Employee will be provided access to or
will come in contact with confidential information of or regarding the Company.
Accordingly, Employee agrees that he will not, during or for a period of 18
months after the term of his employment except with prior written consent of
the Company' disclose any confidential information relating to the Company The
provisions of this section shall not apply to information which Employee is
required to disclose by law or by order a court of competent jurisdiction but
only to the extent required by law or by order and when reasonably possible.
only if Employee shall give he Company prior notice of such intended disclosure
so that the Company has the opportunity to seek a protective order if it deems
such appropriate.
12.2 As used in this Agreement, "confidential information"
shall mean and include studies, plans, reports, records, promotional materials,
agreements, memoranda documents, information related to Company activities,
systems, finances, client lists, research data, personnel data, financing
sources and such other related information not of a public knowledge.
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<PAGE>
12.3 It is agreed by the Employee that should he violate the
provisions of this section, the Company shall have the right to obtain an Order
from a court of competent jurisdiction enjoining him from violating any and all
of the provisions of this section or of this Agreement and the Company's
application for such a writ of injunction shall be deemed without prejudice to
any all other rights, remedies or actions which may accrue in favor of the
Company as a result of the Employee's breach of this provision or of the terms
of this Agreement. In the event the Companv is required to institute any
litigation concerning the terms and conditions of this section or of this
Agreement, the prevailing party shall be entitled to reimbursement of all
reasonable attorney's fees and costs at both the trial and the appellate court
level. The Employee further agrees that in the event of litigation venue shall
only be proper in Broward County, Florida.
13. Notices: All notices, requests, demands, waivers, consents,
approvals or other communications required or permitted hereunder shall be in
writing and shall be deemed to have been given when received if delivered
personally or by recognized overnight carrier. or three (3) days after being
sent if sent by certified or registered mail, postage prepaid, return receipt
requested, to the following addresses:
If to the Company: Finantra Capital, Inc.
Attention: Robert D. Press
Westside Corporate Center
150 S. Pine Island Road, Suite 500
Plantation, Florida 33324
If to the Employee: Maynard J. Hellman
1100 Ponce de Leon Blvd.
Coral Gables, Fl. 33134
Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
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<PAGE>
14. Miscellaneous Provisions:
14.1 Captions and Paragraph Headings: Captions and paragraph
headings contained in this Contract are for convenience and reference only and
in no way define, describe. extend or limit the copy or intent of this Contract
nor the intent of any provision hereof.
14.2 Counterparts: This Contract may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same Contract.
14.3 Binding Effect: This Contract shall enurc to the benefit
of and shall be binding upon the parties hereto and their respective heirs,
personal representatives, successors and assigns. However, under no
circutnstances shall this Contract be assignable by Employee.
14.4 Entire Agreement: This Contract constitutes the entire
understanding agreement between the parties and may not be changed. altered or
modified, except by an instrument in writing signed by all parties against whom
and enforcement of such Contract would be sought. In the event any provision of
this Contract shall be determined by appropriate judicial authority to be
illegal or otherwise invalid. such provision, shall be given its nearest legal
meaning or be construed or deleed as such authority determines. The remainder
of this Contract shall be construed to be in full force and effect. This
Contract shall not be modified unless said modification is in writing and
signed by the party to be charged.
14.5 Governing Law and Venue: This Contract shall be consmued
and interpreted according to the laws of the State of Florida. Venue for any
litigation hereunder shall be in Broward County, Florida.
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<PAGE>
14.6 Attorney's Fees: In the event of any litigation arising
out of or relating to this Contract. the unsuccessful party in such litigation
shall pay to the successful party all costs and expenses incurred therein by
the successful party, including, without limitation. reasonable attorney's fees
and costs at the trial and appellate court level.
IN WITNESS WHEREOF. the parties have hereunto set theirs hands and
seals this 23rd day of December, 1998.
FINANTRA CAPITAL, INC.
By:
---------------------------------
ROBERT D. PRESS, President
- ------------------------------------
MAYNARD J. HELLMAN
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<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement dated this 31 day of December. 1998 is
made and entered into by and between AMERI-CAP MORTGAGE GROUP, INC. ("Buyer").
MAYNARD J. HELLMAN ("Seller"), and FINANTRA CAPITAL, INC., a Delaware
corporation (Finantra")
WITNESSETH:
WHEREAS, the Seller owns 100% of the authorized, issued and outstanding
common shares of Suncoast Title Company, Inc. (the "Corporation"), consisting
of 100 shares (the Shares"), and
WHEREAS. The Corporation is organized under the laws of the state of
Florida and is engaged in providing title insurance and closing services, and
WHEREAS, the Buyer is desirous of purchasing from the Seller 80% of the
authorized, issued and outstanding shares of the Corporation and the Seller is
desirous of selling same to the Buyer, and
WHEREAS, the Buyer desires to retain the right subsequent to closing to
acquire the balance of the common shares of the Corporation retained by the
Seller, and
WHEREAS, the Buyer is a subsidiary of Finantra and Finantra is a
publicly traded over-the counter company, and
WHEREAS, the Parties desire to document their representations,
warranties, covenants, agreements and conditions relating to the purchase of the
Shares in a written instrument.
NOW, THEREFORE, in consideration of the mutual promises covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
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<PAGE>
1. RECITALS: The above and foregoing recitals are true and correct and
are incorporated herein.
2. SALE AND PURCHASE OF SHARES: The Seller shall sell. transfer and
convey to the Buyer and the Buyer shall purchase and acquire from the Seller 80%
of the authorized. issued and outstanding common shares of the Corporation
consisting of 80 shares.
3. PURCHASE PRICE AND METHOD OF EXCHANGE OF SHARES: The purchase price
for the Shares shall be Fifty Thousand (50,000) shares of the common stock of
Finantra. The Finantra shares will be transferred on the closing date to the
Seller. The Seller acknowledges that THE FINANTRA COMMON STOCK BEING EXCHANGE
HAVE not been registered UNDER THE SECURITIES ACT OF 1933 as amended (the "Act")
for resale and may not be offered or sold except pursuant to an effective
registration under the Act or to the extent applicable, Rule 144 under the Act
or such other exemption from registration as may be given in an opinion of
counsel acceptable to counsel for Finantra.
4. BUYER'S ACQUISITION OF BALANCE OF SELLER'S SHARES. The balance of
the Seller's shares in the Corporation not conveyed on the closing date shall be
retained in the possession of the Seller and the Buyer shall acquire the balance
of the Seller's shares annually as follows:
A. Period One: The year ending December 3 l, 1999. The Seller shall
exchange 5 of his remaining issued and outstanding shares of the Corporation for
12.500 shares of common stock of Finantra.
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<PAGE>
B. Periods Three and Four: For the calendar years ending December 31.
2000. 2001 and 2002 the Seller shall exchange 5 shares of his remaining issued
and outstanding common shares of the Corporation for 12.500 shares of the common
stock of Finantra.
5. DUE DILIGENCE PERIOD AND RIGHT OF TERMINATION: The Seller and Buyer
hereby acknowledge that the Buyer, as of the effective date of this Agreement.
has not had the opportunity to review and evaluate all aspects of the
Corporations, as represented by the Sellers. Therefore, the Buyer shall have.
from the effective date of this Agreement through the end of business 10 days
thereafter (Due Diligence Period) to inspect and assess all aspects of the
Corporations, financial and otherwise, and to make such investigations as the
Buyer deems necessary in the Buyer's sole discretion. The Seller agrees to
assist the Buyer in reviewing all records of the Corporations and to aid and
assist the Buyer in arranging meetings and providing documents. records. and/or
information reasonably required by the Buyer or the Buyer's attorneys or other
agents including accountants, in order that the Buyer may determine the
viability of the transaction contemplated by this Agreement. During the Due
Diligence Period, Sellers shall advise the Buyer of any negative information
learned by the Sellers which would have a material, financial impact upon the
Corporations. In the event the Buyer determines in its sole and absolute
discretion that the business of the Sellers is not satisfactory or suitable for
the Buyers acquisition for any reason, the Buyer may notify the Seller in
writing by facsimile delivery, mail or hand delivery, prior to the termination
of the Due Diligence Period and the Buyer may at the Buyer s sole discretion
terminate this Agreement. The Buyer's failure to provide written notice of
termination within the time period set forth in this section shall be deemed
conclusive evidence that the Buyer has waived its right to terminate as
contained herein.
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<PAGE>
6. CLOSING DATE: The Closing under this Agreement shall take place on
or before January 15, 1999 at the Law Offices of Maynard J. Hellman, Esquire,
1100 Ponce de Leon Boulevard, Coral Gables, Florida 33134 or at such other time
and place as shall be set forth in a writing signed by the Parties hereto.
7. REPRESENTATIONS AND WARRANTIES OF SELLER: The Seller represents and
warrants to the Buyer as follows:
A. The Corporation is a validly existing Corporation in good standing
under the laws of the State of Florida.
B. The Seller and the Corporation have the power to enter into and
carry out their obligations under this Agreement.
C. The Corporation on the closing date will hold all licenses necessary
to conduct the business of the Corporation and will comply with all laws, rules
and regulations presently established by all governmental agencies in connection
with same.
D. The Shares being exchanged by the Seller to the Buyer are fully paid
and non assessable.
E. The aggregate number of shares that the Corporation is authorized to
have outstanding as of the date hereof is 100 shares of common stock of which
100 shares are presently issued and outstanding and held in the name of the
Seller.
F. The only stock authorized to be outstanding by the Corporation is
one class of common stock represented by the shares owned by the Seller.
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<PAGE>
G. The Seller is and will be on the closing date the sole owners of all
of the authorized. issued. and outstanding shares of the common stock of the
Corporation. free and clear of any and all liens and encumbrances.
H. That as of the date of executing this Agreement. as well as on the
date of closing, the Corporation shall have no debts, liabilities, or
obligations for which payment needs to be made except for those debts,
liabilities. and obligations disclosed on balance sheet as of the Corporations
as of February 1, 1999 and those debts incurred thereafter in the ordinary
course of business.
I. The Seller does not have any knowledge or any basis for the
assertion of any material liability against the Corporation not disclosed in the
financial statements
J. The Corporation is not subject to any order, judgment, decree,
stipulation, or any other agreements with any governmental body or agency with
respect to the Corporation unless specifically set forth in this Agreement.
K. The Corporation is not a party to any long-term contract or
commitment.
L. Neither the Seller nor the Corporation has received notice nor have
any claims been made against the Corporation or the Seller by any governmental
authority to the effect that the Corporation or the business of the Corporation
fails to comply in any material respect to any law. rule, regulation, or
ordinance or that a license, permit, or order which is not in the possession of
the Corporation is necessary for the Corporation to conduct its business.
Neither the Seller's or the Corporation is aware of any pending or
threatened claims against the Corporation from any person. firm or Corporation
as of the date hereof and shall promptly notify the Buyer prior to closing
should any material claims be made against them or the Corporation other
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<PAGE>
than non-material claims arising out of the ordinary course of business or as
disclosed in this agreement.
M. On the day of closing, the Seller will have the full and
unrestrictive legal and equitable title to the shares being sold to the Buyer,
free and clear of all liens and encumbrances.
N. Any action required to be taken by the Corporation in order to
complete the transaction contemplated in this Agreement has been or will be by
the closing date duly approved by the Board of Directors and Shareholder of the
Corporation.
O. The Seller represents that there are no liabilities, including but
not limited to liabilities for federal, state, and local taxes, penalties,
assessments, lawsuits or claims against the Corporations, whether such
liabilities, suits, or claims are contingent or absolute, direct or indirect,
matured or unmatured, which could in any way affect the assets of the
Corporation, or the Corporation's ability to conduct its business.
P. The Articles of Incorporation and By-Laws attached to this Agreement
as Exhibit "A" are complete and accurate as of the date hereof and contain all
amendments through the date hereof. The Minute Book; of the Corporation are
complete and accurate and reflects all proceedings of Shareholders and Directors
of the Corporations through the date of this Agreement.
Q. The transfer and delivery of the Shares to the Buyer, pursuant to
this Agreement, will be valid and will vest title to the Shares in the Buyer
free and clear of all liens. encumbrances, conditions and restrictions of any
kind.
R. The Corporation will not issue any additional shares of its common
stock prior to the closing. There are no outstanding options, contracts,
commitments. warrants or other rights of any character affecting or relating in
any manner to the common stock of the Corporation.
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<PAGE>
S. The documents, agreements. and materials delivered or to be
delivered by the Seller to the Buyer in furtherance of the Buyer s Due Diligence
examination of the Corporation shall be complete and accurate in all material
respects and will not have been amended or modified by any oral agreements.
T. Financial Statements: The Corporation has furnished the Buyer with
Financial Statements of the Corporation as of February I, 1999. The Financial
Statements fairly present the financial condition of the Corporations on such
date. To the best of the Seller's knowledge. there are no matters pending which
would have an adverse or material affect on the Financial Statements of the
Corporations.
The representations and warranties set forth above shall survive the
closing for a period of six (6) year following the Closing Date except that and
Federal or State tax liability pursuant shall survive for a period of three (3)
years subsequent to the Closing Date.
8. REPRESENTATIONS AND WARRANTIES OF THE BUYER: The Buyer represents
and warrants to the Sellers as follows:
A. The Buyer is a Corporation. duly organized and validly existing in
good standing under the laws of the State of Florida with full power and
authority to carry on its business.
B. The execution, delivery, and performance of this Agreement has been
duly approved or will be duly approved by all requisite corporate actions by the
closing date.
C. The Buyer has the power to enter into and carry out its obligations
under this agreement.
D. The common stock of Finantra being transferred to the Seller will be
fulls paid and non-assessable.
- 7 -
<PAGE>
E. The Buyer is not subject to any order. judgment. decree. stipulation
or other agreement which would prohibit the transaction contemplated under this
agreement.
F. Any action required to be taken by the Buyer in order to complete
the transaction contemplated in this agreement has been or will be by the
closing date duly approved by the Board of Directors of the Buyer.
G. The transfer and delivery of the Finantra shares contemplated under
this agreement will vest title to said shares in the Sellers free of all liens,
encumbrances conditions and restrictions except those pertaining to the Federal
Securities Act of 1933, as amended and such State Securities laws as may be
applicable.
9. REPRESENTATIONS AND WARRANTIES OF FINANTRA: Finantra represents and
warrants to the Seller as follows:
A. Finantra is a duly organized and existing corporation under the laws
of the State of Delaware and is authorized to conduct business in the state of
Florida.
B. Finantra has the power and authority to enter into this agreement
and the execution. delivery and performance of this agreement has been duly
approved or will be duly approved by all requisite corporate actions by the
closing date.
C. The authorized capital stock of Finantra consists of the following:
(1) 15 million shares of Common Stock having a par value of $.001 per
share of which 4,500,000 shares are issued and outstanding.
(2) five million shares of Preferred Stock of which .959.817 shares are
issued and outstanding
- 8 -
<PAGE>
(3) five million Warrants of which as of the present date approximately
2.8 million have been granted.
D. Finantra is a publicly traded company. whose registered shares trade
in the over the counter market and to the best of its knowledge all filings with
the Security and Exchange Commission or other public and private governing
bodies were accurate as of the date of their filing and all reports required by
1934 Securities Act have been filed.
E. The documents. agreements and materials delivered to the Seller in
furtherance of the Seller's due diligence of Finantra and the Buyer are complete
and accurate in all material respects.
F. Finantra does not have any knowledge or any basis for the assertion
of any material liability against Finantra.
G. Finantra is not subject to any order, judgment, decree, stipulation,
or any other agreements with any governmental body or agency with respect
Finantra unless specifically set forth in this Agreement.
H. On the day of closing, Finantra will have the full unrestrictive
legal and equitable title to the shares being exchanged, free and clear of all
liens and encumbrances.
I. The transfer and delivery of the Exchanged Shares to the Sellers,
pursuant to this Agreement. will vest title to the shares in the Sellers free
and clear of all liens and encumbrances.
J. Financial Statements: Finantra has furnished the Sellers with
audited financial statements as of December 31. 1997 and unaudited statements as
of June 30, 1998. The financial statements fairly present the financial
condition of Finantra on such date. To the best of the Sellers
- 9 -
<PAGE>
knowledge. there are no matters pending which would have an adverse or material
affect on the financial statements of Finantra.
K. Guaranty of Obligations: The performance of all of the obligations
of the Buyer as contained in this Agreement are guarantied by Finantra.
10. CONDITIONS PRECEDENT TO CLOSING: The Buyer s obligation to close
the transaction contemplated by this Agreement is subject to the following
conditions:
A. The Buyer has not terminated this Agreement during its Due Diligence
Period
B. The representations and warranties of the Parties contained in this
Agreement are true and correct in all material respects on the closing date.
C. Any and all agreements to be performed by the Parties prior to the
closing date have been performed.
In the event any of the conditions precedent to closing have not be
fulfilled by the closing date. the Buyer may extend the closing date in order
for the Seller to fulfill the condition or may terminate this agreement.
whereupon all parties will be relieved from their obligations hereunder.
11. INDEMNIFICATION:
A. By Seller: Subject to the items disclosed in this Agreement. the
Seller shall defend, indemnify, and hold the Buyer, the Corporations, or
Finantra and any of the Buyer's or Finantra's successors and assigns
("Indemnified Party"), harmless against all damages, losses. costs, or expenses
[including reasonable attorney's fees at all levels of trial or appeal incurred
in defending any claim for such damage, loss. cost, or expense incurred by the
Buyer or Finantra resulting from or in respect to:
- 10 -
<PAGE>
(1) Any breach of the Seller s representations. warranties. or
covenants in this Agreement or any untruth or inaccuracy thereof.
(2) Any claim by a broker, agent, or finder alleged to be employed by.
representing, or otherwise involved with the Corporation or the Sellers relating
to this transaction.
B. By Buyer: Subject to the items disclosed in this Agreement, the
Buyer shall defend. indemnify, and hold the Seller. his successors and assigns
("Indemnified Party"), harmless against all damages, losses. costs. or expenses
(Including reasonable attorney s fees at all levels of trial or appeal incurred
in defending any claim for such damages. Loss, cost. or expense incurred by the
Seller resulting from or in respect to:
(1) Any breach of the Buyer's representations, warranties, or covenants
in this Agreement or any untruth or inaccuracy thereof.
(2) Any claim by a broker, agent, or finder alleged to be employed by.
representing, or otherwise involved with the Corporation or the Buyer relating
to this transaction.
12. Notice of claims: In the event the Indemnified Party shall receive
any written notice of any claim or proceeding against them the Indemnified Party
shall give the Indemnifying Party written notice of any such clam or demand and
the Indemnifying Party shall have the right to contest or defend any action
brought against the Indemnified Party at the Indemnifying Party s own expense,
provided, that should the Indemnifying Party fail to notify the Indemnified
Party of the assumption of the defense of any action within 10 days of the
Indemnified Party giving written notice to the Indemnifying Party. then the
Indemnified Party shall have the right to take any such action it deems
reasonable to defend. contest. settle or compromise any action or claim made
against the Indemnified Party. If the Indemnifying Party defends any action for
which indemnification is claimed, the
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<PAGE>
Indemnified Party shall be entitled to participate at its own expense in the
defense of such action; provided. however. that the Indemnifying Party shall
bear the fees and e:cpenses of the Indemnified Party's counsel should there
exist a conflict of interest between Indemnified Party and Indemnifying Party
which would render it inappropriate for counsel selected by the Indemnifying
Party to represent the Indemnified Party.
The indemnification set forth above shall survive the closing of this
transaction and shall enure to the benefit of the heirs, successors and assigns
of the parties to this agreement.
In no event shall a claim for indemnification be made by the
Indemnified Party until the aggregate total of all claims under this Section
exceeds $10,000.00 and then only to the extent that such claims in the aggregate
exceed $10,000.00.
13. INSTRUMENTS TO BE DELIVERED AT CLOSING: At the Closing, the
following instruments shall be executed and delivered, if required.
A. Certificates representing the Shares of the Corporation being
exchanged. duly endorsed by the Seller in favor of the Buyer with all required
transfer tax stamps affixed.
B. A Resolution of the Board of Directors of the Corporation
authorizing the execution and delivery of this agreement and the consummation of
the transactions contemplated hereby certified as of the closing date by an
officer of the Corporation as having been adopted being in full force and effect
and unmodified on the closing date.
C. An affidavit by the Seller affirming that the warranties and
representations of the Seller are true and correct on the closing date.
- 12 -
<PAGE>
D. A certificate by the Board of Directors of the Corporation to the
effect that the representations and warranties of the Corporation are true and
correct in all material respects as of the closing date.
E. Certificates representing the shares of Finantra being duly
endorsed. being transferred to the Seller.
F. A resolution of the Board of Directors of the Buyer authorizing the
transaction.
G. A resolution of the Board of Directors of Finantra authorizing the
transaction.
H. A certificate by the Board of Directors of the Buyer to the effect
that the representations and warranties of the Corporation are true and correct
in all material respects as of the closing date.
I. A certificate by the Board of Directors of Finantra to the effect
that the representations and warranties of the Corporation are true and correct
in all material respects as of the closing date.
J. Such other documents as may reasonably be requested by either party
or their counsel.
14. COVENANT OF FURTHER ASSURANCES: After the closing, each party to
this agreement shall, at the reasonable request of the other party and without
further consideration. furnish, executed and deliver such documents,
instruments, certificates, notices or other further assurances as the requesting
party shall reasonably request as necessary or desirable to effect complete
consummation of this agreement and the transaction contemplated herein.
- 13 -
<PAGE>
15. NOTICES: Except as otherwise provided for herein, all notices,
requests. demands and other communications hereunder shall be in writing and
will be deemed to have been duly given if personally delivered, or when
transmitted by facsimile with confirmation of receipt from one party to the
other or when received if mailed by the United States first class certified or
registered mail. postage prepaid, with return receipt requested and marked
delivered or refused, or via an overnight delivery service with proof of
delivery or refusal of delivery, to the other parties at the following
addresses:
Finantra and Buyer: Robert D. Press
1100 Ponce De Leon Blvd.
Coral Gables, Florida 33134
Seller: Maynard J. Hellman
1100 Ponce de Leon Blvd.
Coral Gables, Fl. 33134
16. TERMINATION:
A. This agreement may be terminated upon written notice by either party
in the event the closing of the transaction contemplated by this agreement does
not take place on or before March l, 1999 unless extended by a written
instrument executed by all of the parties hereto.
B. A breach of the representations and warranties of either party not
cured by the closing date or extended closing date. if applicable.
17. MISCELLANEOUS PROVISIONS:
A. Assignment: No party may assign its obligations or rights under this
agreement without the written consent of the other parties.
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<PAGE>
B. Modification: There are no other agreements, promises or
undertakings between the parties except as specifically set forth herein. No
alteration. change, modification or amendment to this agreement shall be made
except in writing and signed by the parties hereto.
C. Severability: If any provision or paragraph of this agreement is
deemed to be unlawful or unenforceable by any court. administrative agency or
statute, law or ordinance, the said provision or paragraph shall be severed from
this agreement without affecting the enforceability of the remainder of this
agreement. The parties shall make a good faith effort to redraft the severed
provision or paragraph consistent with the party s original intention but in
such a way as to be lawful and enforceable.
D. Binding Effect: This agreement supersedes and cancels any and all
other agreements referring to the subject matter herein. This agreement shall be
binding upon and inure to the benefit of the respective parties, their
successors and assigns, if applicable as well as to the heirs and legal
representatives of the parties hereto, if applicable.
E. Construction: This agreement shall be construed and enforced under
the laws of the state of Florida.
F. Counterparts: This agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument representing the
agreement between the parties.
G. Captions and Headings: The captions and headings of each section or
subsection in this agreement are for convenience of reference only and shall in
no manner or way whatsoever effect the interpretation or meaning of such section
or subsection.
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<PAGE>
H. Exhibits: The exhibits attached hereto together with all documents
incorporated by reference herein form an integral part of this agreement and are
hereby incorporated herein wherever reference is made to them to the same extent
as if they were set out in full at the point at which such reference is made.
I. Attorney's Fees: The prevailing party in any litigation arising out
of the terms of this agreement shall be entitled to reimbursement of reasonable
attorney s fees and costs at the trial and appellate court level.
IN WITNESS WHEREOF, the parties have hereunto executed this agreement
the date above written.
AMERI-CAP MORTGAGE GROUP, INC.
By:
----------------------------------
MAYNARD J. HELLMAN, Vice President
- -------------------------------------
MAYNARD J. HELLMAN
FINANTRA CAPITAL, INC.
By:
---------------------------------
ROBERT D. PRESS, President
- 16 -
<PAGE>
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement is made and entered into by and between
MAYNARD J. HELLMAN, hereinafter referred to as "Hellman" and AMERI-CAP FACTORS
GROUP, INC., a Florida corporation. hereinafter referred to as "Arneri-Cap" and
FINANTRA CAPITAL. INC.. hereinafter referred to as "Finantra". (Throughout this
agreement Hellman and Ameri-Cap may be referred to collectively as "Parties" for
convenience.)
WITNESSETH:
WHEREAS, Ameri-Cap is a subsidiary of Finantra Capital, Inc., a
Delaware corporation publicly traded pursuant to the Securities Act of 1933, and
WHEREAS, Ameri-Cap is the owner of 80% of the authorized, issued and
outstanding common shares of Ameri-Med Financial Services, Inc., a Florida
corporation engaged in the business of medical receivable financing, and
WHEREAS, Hellman is the owner of three percent (3%) of the authorized.
issued and outstanding common stock of Ameri-Med, and
WHEREAS Ameri-Cap desires to acquire Hellman's stock ownership in
Ameri-Med in exchange for shares of common stock of Finantra, which exchange has
been approved and authorized by the Board of Directors of Finantra, and
WHEREAS, the Parties to this agreement desire to set forth in a written
document the terms and conditions of their exchange.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for such other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledge, the Parties agree as follows:
1. RECITALS: The above and foregoing recitals are true and correct and
are incorporated herein.
2. Commencing on February 1, 1999 and the l s' day of February in the
calendar years 2000 2001. 2002. 2003 Hellman will exchange a portion of his
shares in Ameri-Med representing .06% of the authorized, issued and outstanding
shares of Ameri-Med for 5.000 shares of Finantra s authorized common stock.
3. NON-TRANSFER OF SHARES BY HELLMAN: Hellman agrees that he will not
offer to sell transfer, or otherwise dispose of the common shares owned by him
in Ameri-Med during the term hereof except to a trust or entity controlled by
him so that said shares shall always be available to complete the exchange set
forth in paragraph 2 above.
- 1 -
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF HELLMAN: Hellman represents and
warrants as follows:
4.1 Hellman has the power to enter into and carry out his obligations
under this agreement.
4.2 The shares being exchanged by Hellman are fully paid and
non-assessable.
4.3 Hellman is and shall continue to be the owner of the shares subject
to the exchange set forth herein, free and clear of all liens and encumbrances.
4.4 Hellman is not subject to any order, judgment, decree, stipulation
or agreement of any kind which will prohibit the exchange described in this
agreement.
4.5 Hellman acknowledges that the common stock of Finantra being
exchanged for his shares in Ameri-Med have not been registered under the
Securities Act of 1933, as amended for resale and may not be offered or sold
except pursuant to an effective registration under the Act or to the extent
applicable, Rule 144 under the Act or such other exemption from registration as
may be given in an opinion of counsel acceptable to counsel for Finantra.
5. REPRESENTATIONS AND WARRANTIES OF AMERI-CAP: Ameri-Cap represents
and warrants to Hellman as follows:
5.1 Ameri-Cap is a corporation duly organized and validly existing in
good standing under the laws of the state of Florida with full power and
authority to enter into this agreement.
5.2 The execution, delivery and performance of this agreement has been
duly approved by all requisite corporate actions.
5.3 The common stock of Finantra being exchanged will be fully paid and
non assessable.
5.4 The transfer and delivery of the Finantra shares contemplated under
this agreement will vest title to said shares in Hellman free of all liens.
encumbrances, conditions and restrictions except those pertaining to the
Securities Act of 1933. as amended and such state securities laws as may be
applicable.
6. REPRESENTATIONS AND WARRANTIES OF FINANTRA: Finantra represents and
warrants to Hellman as follows:
- 2 -
<PAGE>
6.1 Finantra is a duly organized and existing corporation under the
laws of the state of Delaware and is authorized to conduct business in the state
of Florida.
6.2 Finantra has the power and authority to enter into this agreement
and the execution, delivery and performance of this agreement has been duly
approved by all requisite corporate actions of Finantra.
6.3 The transfer and delivery of the exchanged shares pursuant to this
agreement will vest title to the shares in Hellman free and clear of all liens
and encumbrances.
7. TRANSFERABILITY RESTRICTIONS ON FINANTRA SHARES: The Finantra shares
exchanged or issued pursuant to this agreement shall be subject to all
restrictions on transfer imposed by Federal and State securities laws. Further,
the holder of the Finantra shares agrees that even if not applicable, the holder
will not transfer any shares which would exceed the number of shares authorized
to be transferred under Rule 144 of the Securities and Exchange Commission
Rules. The holder of the Finantra shares named herein further consents to the
imposition upon the Finantra shares any reasonable transfer or other "lock up"
restrictions required by the underwriters for Finantra in connection with a
public offering of securities.
8. RIGHT OF FIRST REFUSAL: The holder of Finantra shares described
herein will not transfer any Finantra shares without giving to Finantra prior
notice and the opportunity to purchase such shares at a price equal to the value
of the consideration offered by a prospective transferee. or the bid share price
on the day of transfer, whichever is lower. Upon receipt of any such notice,
Finantra shall have 3 days to exercise its first refusal right and 30 days
thereafter to close the purchase. Failure of Finantra to exercise its right of
first refusal shall authorize holder to sell the shares offered and Finantra's
first refusal right shall expire as to the shares contained in the notice.
9. NOTICES: Except as otherwise stated, all notices, requests, demands
and other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
given by prepaid first class mail, registered or certified or by duly recognized
overnight carrier as follows:
To Hellman Maynard J. Hellman
1100 Ponce De Leon Blvd.
Coral Gables. FL 33134
To Ameri-Cap: Arneri-Cap Factors Group. Inc.
Westside Corporate Center
150 S. Pine Island Road. Suite 500
Plantation, FL 33324
10. MISCELLANEOUS PROVISIONS:
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<PAGE>
10.1 Assignment: No party may assign its obligations or rights under
this agreement without the written consent of the other parties.
10.2 Modification: There are no other agreements, promises or
undertakings between the parties except as specifically set forth herein. No
alteration. change, modification or amendment to this agreement shall be made
except in writing and signed by the parties hereto.
10.3 Severability: If any provision or paragraph of this agreement is
deemed to be unlawful or unenforceable by any court, administrative agency or
statute, law or ordinance, the said provision or paragraph shall be severed from
this agreement without affecting the enforceability of the remainder of this
agreement. The parties shall make a good faith effort to redraft the severed
provision or paragraph consistent with the party's original intention but in
such a way as to be lawful and enforceable.
10.4 Binding Effect: This agreement supersedes and cancels any and all
other agreements referring to the subject matter herein. This agreement shall be
binding upon and inure to the benefit of the respective parties, their
successors and assigns, if applicable as well as to the heirs and legal
representatives of the parties hereto, if applicable.
10.5 Construction: This agreement shall be construed and enforced under
the laws of the state of Florida.
10.6 Counterparts: This agreement may be executed in several
counterparts. each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument representing the
agreement between the parties.
10.7 Captions and Headings: The captions and headings of each section
or subsection in this agreement are for convenience of reference only and shall
in no manner or way whatsoever effect the interpretation or meaning of such
section or subsection.
10.8 Exhibits: The exhibits attached hereto together with all documents
incorporated by reference herein form an integral part of this agreement and are
hereby incorporated herein wherever reference is made to them to the same extent
as if they were set out in full at the point at which such reference is made.
10.9 Attorney's Fees: The prevailing party in any litigation arising
out of the terms of this agreement shall be entitled to reimbursement of
reasonable attorney's fees and costs at the trial and appellate court level.
(SIGNATURES ON FOLLOWING PAGE)
- 4 -
<PAGE>
IN WITNESS WHEREOF, the Parties have hereunto set their hands and seals
this 16 day of December, 1998.
- -----------------------------------
MAYNARD J. HELLMAN
AMERI-CAP FACTORS GROUP, INC.,
a Florida corporation
By:
--------------------------------
ROBERT D. PRESS, President
FINANTRA CAPITAL, INC.
By:
--------------------------------
ROBERT D. PRESS, President
- 5 -
<PAGE>
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement is made and entered into by and between
MAYNARD J. HELLMAN, hereinafter referred to as "Hellman" and FINANTRA CAPITAL,
INC.. hereinafter referred to as "Finantra". (Throughout this agreement Hellman
and Finantra may be referred to collectively as "Parties" for convenience.)
WITNESSETH:
WHEREAS, Finantra Capital, Inc., is a Delaware corporation, publicly
traded pursuant to the Securities Act of 1933, and
WHEREAS, Finantra is the owner of 80% of the authorized, issued and
outstanding common shares of Ameri-Cap Mortgage Group, Inc., a Florida
corporation (the "Corporation), and
WHEREAS, Hellman is the owner of seven percent (7%) of the authorized,
issued and outstanding common stock of the Corporation, and
WHEREAS. Finantra desires to acquire Hellman's stock ownership in the
Corporation in exchange for shares of common stock of Finantra, which exchange
has been approved and authorized by the Board of Directors of Finantra. and
WHEREAS, the Parties to this agreement desire to set forth in a written
document the terms and conditions of their exchange.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for such other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledge. the Parties agree as follows:
1. RECITALS: The above and foregoing recitals are true and correct and
are incorporated herein.
2. Commencing on February 1, 1999 and the 1st day of February in the
calendar years 2000, 2001, 2002. 2003 Hellman will exchange 14,000 of his shares
in the Corporation for 80.000 shares of Finantra s authorized common stock.
3. NON-TRANSFER OF SHARES BY HELLMAN: Hellman agrees that he will not
offer to sell, transfer, or otherwise dispose of the common shares owned by him
in the Corporation during the term hereof except to a trust or entity controlled
by him so that said shares shall always be available to complete the exchange
set forth in paragraph 2 above.
4. REPRESENTATIONS AND WARRANTIES OF HELLMAN: Hellman represents and
warrants as follows:
- 1 -
<PAGE>
4.1 Hellman has the power to enter into and carry out his obligations
under this agreement.
4.2 The shares being exchanged by Hellman are fully paid and
non-assessable.
4.3 Hellman is and shall continue to be the owner of the shares subject
to the exchange set forth herein, free and clear of all liens and encumbrances.
4.4 Hellman is not subject to any order, judgment, decree, stipulation
or agreement of any kind which will prohibit the exchange described in this
agreement.
4.5 Hellman acknowledges that the common stock of Finantra being
exchanged for his shares in Ameri-Med have not been registered under the
Securities Act of 1933, as amended for resale and may not be offered or sold
except pursuant to an effective registration under the Act or to the extent
applicable. Rule 144 under the Act or such other exemption from registration as
may be given in an opinion of counsel acceptable to counsel for Finantra.
5. REPRESENTATIONS AND WARRANTIES OF FINANTRA: Finantra represents and
warrants to Hellman as follows:
5.1 Finantra is a duly organized and existing corporation under the
laws of the state of Delaware and is authorized to conduct business in the state
of Florida.
5.2 Finantra has the power and authority to enter into this agreement
and the execution, delivery and performance of this agreement has been duly
approved by all requisite corporate actions of Finantra.
5.3 The transfer and delivery of the exchanged shares pursuant to this
agreement will vest title to the shares in Hellman free and clear of all liens
and encumbrances.
5.4 The common stock of Finantra being exchanged w-ill be fully paid
and non assessable.
5.5 The transfer and delivery of the Finantra shares contemplated under
this agreement will vest title to said shares in Hellman free of all liens.
encumbrances, conditions and restrictions except those pertaining to the
Securities Act of 1933. as amended and such state securities laws as may be
applicable
6. TRANSFERABILITY RESTRICTIONS ON FINANTRA SHARES: The Finantra shares
exchanged or issued pursuant to this agreement shall be subject to all
restrictions on transfer imposed by Federal and State securities laws. Further.
the holder of the Finantra shares agrees that even if not applicable, the holder
will not transfer any shares which would exceed the number of
- 2 -
<PAGE>
shares authorized to be transferred under Rule 144 of the Securities and
Exchange Commission Rules. The holder of the Finantra shares named herein
further consents to the imposition upon the Finantra shares any reasonable
transfer or other "lock up" restrictions required by the underwriters for
Finantra in connection with a public offering of securities.
7. RIGHT OF FIRST REFUSAL: The holder of Finantra shares described
herein will not transfer any Finantra shares without giving to Finantra prior
notice and the opportunity to purchase such shares at a price equal to the value
of the consideration offered by a prospective transferee, or the bid share price
on the day of transfer, whichever is lower. Upon receipt of any such notice,
Finantra shall have 3 days to exercise its first refusal right and 30 days
thereafter to close the purchase. Failure of Finantra to exercise its right of
first refusal shall authorize holder to sell the shares offered and Finantra's
first refusal right shall expire as to the shares contained in the notice.
8. NOTICES: Except as otherwise stated, all notices, requests, demands
and other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally.
given by prepaid first class mail, registered or certified or by duly recognized
overnight carrier as follows:
To Hellman Maynard J. Hellman
1100 Ponce De Leon Blvd
Coral Gables. FL 33134
To Finantra: Finantra Capital, Inc.
Westside Corporate Center
150 S. Pine Island Road, Suite 500
Plantation. FL 33324
9. MISCELLANEOUS PROVISIONS:
9.1 Assignment: No party may assign its obligations or rights under
this agreement without the written consent of the other parties.
9.2 Modification: There are no other agreements. promises or
undertakings between the parties except as specifically set forth herein. No
alteration change. modification or amendment to this agreement shall be made
except in writing and signed by the parties hereto.
9.3 Severability: If any provision or paragraph of this agreement is
deemed to be unlawful or unenforceable by any court, administrative agency or
statute, law or ordinance, the said provision or paragraph shall be severed from
this agreement without affecting the enforceability of the remainder of this
agreement. The parties shall make a good faith effort to redraft the severed
provision or paragraph consistent with the party's original intention but in
such a way as to be lawful and enforceable.
- 3 -
<PAGE>
9.4 Binding Effect: This agreement supersedes and cancels any and all
other agreements referring to the subject matter herein. This agreement shall be
binding upon and inure to the benefit of the respective parties, their
successors and assigns, if applicable as well as to the heirs and legal
representatives of the parties hereto, if applicable.
9.5 Construction: This agreement shall be construed and enforced under
the laws of the state of Florida.
9.6 Counterparts: This agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument representing the
agreement between the parties.
9.7 Captions and Headings: The captions and headings of each section or
subsection in this agreement are for convenience of reference only and shall in
no manner or way whatsoever effect the interpretation or meaning of such section
or subsection.
9.8 Exhibits: The exhibits attached hereto together with all documents
incorporated by reference herein form an integral part of this agreement and are
hereby incorporated herein wherever reference is made to them to the same extent
as if they were set out in full at the point at which such reference is made.
9.9 Attorney's Fees: The prevailing party in any litigation arising out
of the terms of this agreement shall be entitled to reimbursement of reasonable
attorney's fees and costs at the trial and appellate court level.
IN WITNESS WHEREOF, the Parties have hereunto set their hands and seals
this 16th day of December, 1998.
- -------------------------------
MAYNARD J. HELLMAN
FINANTRA CAPITAL, INC.
By:
-----------------------------
ROBERT D. PRESS, President
- 4 -
<PAGE>
WARRANT TO PURCHASE
500.000 SHARES OF COMMON STOCK
FINANTRA CAPITAL. INC.
(A DELAWARE CORPORATION)
THIS CERTIFIES THAT Maynard J. Hellman or his assigns (the Holder") is
entitled to purchase from Finantra Capital, Inc. (the Company"), 500,000 shares
of the Company's common stock (the "Common Stock"), at an initial exercise of
$2.50 per share (the "Exercise Price").
1. Term of Exercise: The rights represented by this Warrant shall be
exercised at the Exercise Price at any time on or prior to December 1, 2002.
After December 1. 200. the Holder shall have no right to purchase any shares
hereunder and this Warrant shall expire thereon effective at ::00 p.m., New York
time.
2. Procedures for Exercise: The rights represented by this Warrant may
be exercised at any time within the period above specified, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); and (ii) payment to the Company of the Exercise Price then in effect
for the number of shares specified in the above mentioned purchase form together
with applicable stock transfer fee and/or taxes and registration fees. if any.
This W arrant shall be deemed to have been exercised. in whole or in part to the
extent specified. immediately prior to the close of business on the date this
Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 2, and the person or persons in whose name or names
the certificates for shares shall be issuable upon such exercise shall become
the holder or holders of record of such shares at that time and date. The
certificates for the shares so purchased shall be delivered to the Holder within
a reasonable time, not exceeding 10 business days, after the rights represented
by this Warrant shall be have been so exercised.
3. Transfer or .Assignrnent of Warrant: This Warrant shall not be
transferred. sold. assigned or hypothecated except in compliance with the
Securities Act of 19 (the "Act"). Any permitted transfer or assignment shall be
effected by the Holder (i) completing and executing the form of assignment at
the end hereof and (ii) surrendering this Warrant with such duly completed and
executed assignment form for cancellation. accompanied by funds sufficient to
pay any transfer fee and/or tax or registration fees. at the office or agency of
the Company referred to in Paragraph 2 hereof. accompanied by an opinion of the
Holder s counsel reasonable satisfactory to the Company to the effect that such
transfer or assignment is exempt from registration under the Act, and
accompanied by the written representation from each such transferee or assignee
addressed to the Company stating that such transferee or assignee agrees to be
bound by the terms of this Warrant; whereupon the Company shall issue. in the
name or names specified by the Holder (including the Holder) a new W arrant or
Warrants of like tenor with appropriate legends restricting transfer under the
Act and representing in the aggregate rights to purchase the same number of
shares as are purchasable hereunder.
- 1 -
<PAGE>
4. Due Issuance. etc.: The Company covenants and agrees that all shares
purchased hereunder will, upon issuance, be duly and valid!`; issued, fully paid
and non-assessable and no personal liability will attach to the Holder thereof.
The Company further covenants and agrees that during the period within which
this Warrant may be exercised, the Company will at times have authorized and
reserved a sufficient number of Common Stock shares to provide for the exercise
of this Warrant.
5. No Rights as Stockholder: This Warrant shall not entitle the Holder
to any voting rights or other rights as a stockholder of the Company, either at
law or in equity, and the rights of the Holder are limited to those expressed in
this Warrant and are not enforceable against the Company except to the extent
set forth herein.
6. Registration and Other Fees: Any and all fees or costs associated
with the transfer or registration of this Warrant or with the issuance of the
stock upon exercise of the option to convert the Warrant to Common Stock, shall
be paid for and filed by the Company.
7. Reclassification. Reorganization or Merger: In case of any
reclassification. capital reorganization or other change of outstanding Common
Stock (other than a change in par value, or from no par value to par value as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger with
a subsidiary in which merger of the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of the outstanding Common Stock issuable upon exercise of the Warrant) of
in case of any sale, lease or conveyance to another corporation of the property
of the Company as an entirety, the Company shall, as a condition precedent to
such transaction, cause effective provisions to be made so that the Holders
shall have the right thereafter by exercising this Warrant, to purchase the kind
and amount of shares of stock and other securities and property receivable upon
such reclassification, capital reorganization and other change, which might have
been purchased upon exercise of this Warrant immediately prior to such
reclassification. change, consolidation, merger, sale or conveyance. Any such
provision shall include provision for adjustments provided for in this Warrant.
The foregoing provisions of this Paragraph 7 shall similarly apply to successive
reclassification, capital reorganizations and changes of the Common Stock and to
successive consolidations, mergers, sales or conveyances.
8. No Fractional Shares: The Company shall not be required to issue
fractions of Common Stock on the exercise of this Warrant. 1 he Holder of this
Warrant. b acceptance hereon expressly waives the right to receive any
fractional share of Common Stock or with the law upon exercise hereof.
9. Governing Law: This Agreement shall be governed by and construed in
accordance with the law of the State of Florida.
- 2 -
<PAGE>
IN WITNESS WHEREOF, Finantra Capital, Inc. has caused this Warrant to
be signed by its duly authorized officer and this Warrant to be dated October
16, 1998.
FINANTRA CAPITAL, INC.
By:
-------------------------------------
ROBERT D. PRESS, President
- 3 -
<PAGE>
AGREEMENT
This agreement is made and entered into by and between FINANTRA
CAPITAL, INC., a Delaware corporation ("Finantra") ad MEDLEY GROUP, INC., a
Delaware corporation (Medley"). (Throughout this agreement Finantra and Medley
may be referred to as "Parties" for convenience.)
WITNESSETH:
WHEREAS, prior to Finantra's public offering in 1997, Finantra was a
subsidiary of Medley, and
WHEREAS, as of the date of this agreement Medley is indebted to
Finantra as a result of inter-company transactions in the sum of Six Hundred
Thirty Three Thousand Eighty Nine and 241100 Dollars ($633,089.24), and
WHEREAS, the Partes desire to document said Inter-company debt and
provide for the payment of same.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and for the sun of Ten Dollars and such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. RECITALS: The above and foregoing recitals are true aud correct and
are incorporated herein.
2. INDEBTEDNESS: The panics acknowledge that as of the date of this
agreement Medley is indebted to Finantra in the sum of Six Hundred Thirty Three
Thousand Eighty Nine and 24/100 Dollars ($633,089.24). The indebtedness shall be
paid as follows:
2.1 Upon the execution of this agreement Medley shall pay to Finantra
the sum of Fifty Thousand and 00/100 Dollars ($50,000.00).
2.2 On or before 180 days from the date hereof Medley shall pay to
Finantra the sum of Fifty Thousand and 00/100 Dollars ($50,000.00).
2.3 Medley shall execute a Promissory Note in favor of Finantra in the
amount of Three Hundred Thirty Three Thousand Eighty Nine and 24/100 Dollars
($333,089.24), which Note shall be payable in equal monthly installments of
principal in the amount of Three Thousand Seven Hundred Fifty Three and 89/100
Dollars ($3,753.89) plus accrued interest at five (%) percent per annum with a
balloon installment in the sum of One Hundred Thousand and 00/100 Dollars
($100,000.00) plus accrued interest being due and payable in the 60th month. The
first payment to become due under the Promissory Note shall begin July 1, 1999.
- 1 -
<PAGE>
2.4 Credit for Consulting Services: The sum of Two Hundred Thousand and
00/100 Dollars ($200,000.00) shall be in the form of a credit for the services
to be provided by the Medley subsidiary, Business Development Resources, Inc.
who will provide an employee to perform business development in locating and
identifying target companies which can be acquired on terms acceptable to
Finantra.
3. MISCELLANEOUS .PROVISIONS:
3.1 Assignment: No party may assign its obligations or rights under
this agreement without the written consent of the other parties.
3.2 Modification: There are no other agreements, promises or
undertakings between the parties except as specifically set forth herein. No
alteration, change, modification or amendment to this agreement shall be made
except in writing and signed by the parties hereto.
3.3 Severability: If any provision or paragraph of this agreement is
deemed to be unlawful or unenforceable by any court, administrative agency or
statute, law or ordinance, the said provision or paragraph shall be severed from
this agreement without affecting the enforceability of the remainder of this
agreement. The parties shall make a good faith effort to redraft the severed
provision or paragraph consistent with the party's original intention but in
such a way as to be lawful and enforceable.
3.4 Binding Effect: This agreement supersedes and cancels any and all
other agreements referring to the subject matter herein. his agreement shall be
finding upon and inure to the benefit of the respective parties, their
successors and assigns, if applicable as well as to the heirs and legal
representatives of the parties hereto, if applicable.
3.5 Construction: This agreement shall be construed and enforced under
the laws of the state of Florida.
3.6 Counterparts: This agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument representing the
agreement between the parties.
3.7 Captions and Headers: The captions and headings of each section or
subsection in this agreement are for convenience of reference only and shall in
no manner or way whatsoever effect the interpretation or meaning of such section
or subsection.
3.8 Exhibits, The exhibits attached hereto together with all documents
incorporated by reference herein form an integral part of this agreement and are
hereby incorporated herein wherever reference is made to them to the same extent
as if they were set out in full at the point at which such reference is made.
- 2 -
<PAGE>
3.9 Attorney's Fees: The prevailing party in any litigation arising out
of the terms of this agreement shall be entitled to reimbursement of reasonable
attorney's fees and costs at the trial and appellate court level.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this 31st day of December, 1998.
MEDLEY GROUP, INC.
By:
--------------------------------
ROBERT D. PRESS, President
FINANTRA CAPITAL, INC.
By:
--------------------------------
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<PAGE>
LEASE AGREEMENT BETWEEN
SKW II REAL ESTATE PARTNERSHIP, AS LANDLORD,
AND
FINANTRA CAPITAL, INC., AS TENANT
DATED _______________________________, 1998
FLORIDA
______________________________________________________________________________
<PAGE>
LEASE
THIS LEASE AGREEMENT (this "Lease") is entered into as of
_____________, 19___, between SKW II REAL ESTATE LIMITED PARTNERSHIP, a
Delaware limited partnership ("Landlord"), and FINANTRA CAPITAL, INC., a
Florida corporation ("Tenant").
1. Lease Grant. Subject to the terms of this Lease, Landlord leases to
Tenant, and Tenant leases from Landlord, Suite No. 500 (the "Premises.) in the
office building (the "Building") located at 150 South Pine Island Road,
Plantation, Florida 33324. The land on which the Building is located and the
Premises are described on Exhibit A. The term "Building" includes the related
land, driveways, parking facilities, and similar improvements.
2. Term. The term of this Lease (the "Term", which definition shall
include all renewals of the initial Term) shall be for a period, unless
extended or sooner terminated as herein provided, commencing on the
commencement date (the "Commencement Date") and expiring at 5:00 p.m. on the
last day of the sixty (60) full month thereafter. The Commencement Date shall
be the earlier to occur of (i) the date Tenant moves into the Premises or any
portion thereof for the commencement of business; or (ii) the ninety-first day
following the full execution of this Lease. Tenant and Tenant's Agents shall be
granted immediate access to the Building and the Premises upon the full
execution of the Lease in order to commence construction. Tenant agrees to use
due diligence in obtaining all permits and completion of all construction so as
to ready the Premises for occupancy.
3. Rent.
(a) Basic Rent. "Basic Rent" (herein so called) shall be the
following amounts for the following periods of time:
Months Monthly Basic Rent
01-12 $16,750.21
13-24 $17,252.71
25-36 $17,770.30
37-48 $18,303.40
49-60 $18,852.51
(b) Payment. Tenant shall timely pay to Landlord Basic Rent and all
additional sums to be paid by Tenant to Landlord under this Lease
(collectively, the "Rent"), without deduction or set off, at Landlord's address
provided for in this Lease or as otherwise specified by Landlord. Basic Rent,
adjusted as herein provided, shall be payable monthly in advance, and shall be
accompanied by all applicable state and local sales or use taxes. The first
monthly installment of Basic Rent shall be payable contemporaneously with the
execution of this Lease; thereafter, Basic Rent shall be payable on the first
day of each month beginning on the
<PAGE>
first day of the second full calendar month of the Term. The monthly Basic Rent
for any partial month at the beginning of the Term shall equal the product of
1/365 of the annual Basic Rent in effect during the partial month and the
number of days in the partial month from and after the Commencement Date, and
shall be due on the Commencement Date.
(c) Operating Expenses.
(1) During each calendar year after the 1999
calendar year, year which includes the Lease Commencement Date, Tenant shall
pay an amount (per each rentable square foot in the Premises) ("Additional
Rent") equal to the difference between the Operating Costs (defined below) per
rentable square foot in the Building and the actual Operating Costs for the
calendar year 1999 (the "Expense Stop"). Landlord may collect such amount in a
lump sum, which shall be due within 30 days after Landlord furnishes to Tenant
the Operating Costs and Tax Statement (defined below). Alternatively, Landlord
may make a good faith estimate of the Additional Rent to be due by Tenant for
any calendar year subsequent to the 1999 calendar year which includes the
Commencement Date or part thereof during the Term ,and Tenant shall pay to
Landlord, commencing January 1, 2000 and on the first day of each calendar
month thereafter in advance, an amount equal to the estimated Additional Rent
for such calendar year or part thereof divided by the number of months therein.
From time to time, Landlord may estimate and re-estimate the Additional Rent
to be paid by Tenant and deliver a copy of the estimate or re-estimate to
Tenant. Thereafter, the monthly installments of Additional Rent payable by
Tenant shall be appropriately adjusted tn accordance with the estimations so
that, by the end of the calendar year in question, Tenant shall have paid all
of the Additional Rent as estimated by Landlord. Any amounts paid based on such
an estimate shall be subject to adjustment as herein provided when actual
Operating Costs are available for each calendar year.
(2) The term "Operating Costs" shall mean all
expenses and disbursements (subject to the limitations set forth below) that
Landlord incurs in connection with the ownership, operation, and maintenance of
the Building, determined in accordance with sound accounting principles
consistently applied, including, but not limited to, the following costs: (A)
wages and salaries (including management fees) of all employees engaged in the
operation, maintenance, and security of the Building, including taxes,
insurance and benefits relating thereto; (B) all supplies and materials used in
the operation, maintenance, repair, replacement, and security of the Building;
(C) costs for improvements made to the Building which, although capital in
nature, are expected to reduce the normal operating costs of the Building, as
well as capital improvements made in order to comply with any law hereafter
promulgated by any governmental authority, as amortized over the useful
economic life of such improvements as determined by Landlord in its reasonable
discretion; (D) cost of all utilities, except the cost of utilities
reimbursable to Landlord by the Building's tenants other than pursuant to a
provision similar to this Section 3.(c); (E) insurance expenses; (F) repairs,
replacements, and general maintenance of the Building, and (G) service or
maintenance contracts with independent contractors for the operation,
maintenance, repair, replacement, or security of the Building (including,
without limitation, alarm service, window cleaning, and elevator maintenance).
-2-
<PAGE>
Operating Costs shall not include costs for (i) capital improvements made to
the Building, other than capital improvements described in Section 3.(c)(2)(C)
and except for items which are generally considered maintenance and repair
items, such as painting of common areas, replacement of carpet in elevator
lobbies. and the like; (ii) repair, replacements and general maintenance paid
by proceeds of insurance or by Tenant or other third parties; (iii) interest,
amortization or other payments on loans to Landlord; (iv) depreciation; (v)
leasing commissions; (vi) legal expenses for services, other than those that
benefit the Building tenants generally (e.g., tax disputes); (vii) renovating
or otherwise improving space for occupants of the Building or vacant space in
the Building; (viii) Taxes (defined below), and (ix) federal income taxes
imposed on or measured by the income of Landlord from the operation of the
Building.
(3) During each calendar year after the 1999
calendar year Tenant shall also pay a proportionate share of the increase in
Taxes for each year and partial year falling within the Term over and above the
1999 Taxes. Tenant's proportionate share shall be determined by multiplying the
aggregate Taxes by a fraction, the numerator of which is the number of rentable
square feet in the Premises and the denominator of which is thc number of
rentable square feet in the Building. Tenant shall pay its proportionate share
of Taxes in the same manner as provided above for Additional Rent with regard
to Operating Costs. "Taxes" shall mean taxes, assessments, and governmental
charges whether federal, state, county or municipal and whether they be by
taxing districts or authorities presently taxing or by others, subsequently
created or otherwise, and any other taxes and assessments attributable to the
Building (or its operation), excluding, however, penalties and interest thereon
and federal and state taxes on income (if the present method of taxation
changes so that in lieu of the whole or any part of any Taxes, there is levied
on Landlord a capital tax directly on the rents received therefrom or a
franchise tax assessment, or charge based, in whole or in part, upon such rents
for the Building, then all such taxes, assessments, or charges, or the part
thereof so based, shall be deemed to be included within the term "Taxes" for
purposes hereof);
(4) By April 1 of each calendar year, or as soon
thereafter as practicable, Landlord shall furnish to Tenant a statement of
Operating Costs for the previous year, adjusted as provided in Section 3.(c)6),
and of the Taxes for the previous year (the "Operating Costs and Tax
Statement"). If the Operating Costs and Tax Statement reveals that Tenant paid
more for Operating Costs than the actual amount for the year for which such
statement was prepared, or more than its actual share of Taxes for such year,
then Landlord shall promptly credit or reimburse, at Landlord s option, Tenant
for such excess; likewise, if Tenant paid less than the actual Additional Rent
or share of Taxes due, then Tenant shall promptly pay Landlord such deficiency.
(5) As used herein, Tenant's "Proportionate Share"
shall be 9.78%, which is the percentage obtained by dividing the rentable
square feet of area in the Premises, which is stipulated to be 9805 rentable
square feet by the total number of square feet of area in the Building, which
is stipulated to be 100,303 rentable square feet.
-3-
<PAGE>
(6) Notwithstanding anything contained herein this
Article 3.(d) to the contrary, it is mutually understood and agreed, Tenant's
payments as set forth herein this Article 3.(d) shall not increase greater than
six percent (6%) per annum from prior lease years . However, said limitation
shall be exclusive of Real Estate Taxes, Insurance, Utilities, and expenses or
costs which increase as a result of federal minimum wage standards. For
purposes of this provision, the actual 1999 Operating Costs, as calculated by
Landlord and as set forth herein this Article 3.(d) shall be utilized as the
basis for establishing said limitation.
4. Delinquent Payment; Handling Charges. All payments not paid within
five (5) days when due required of Tenant hereunder shall bear interest from
the date due until paid at the greater of one and one-half (1 1/2) percent per
month or the maximum lawful rate of interest; alternatively, Landlord may
charge Tenant a fee equal to 5% of the delinquent payment to reimburse Landlord
for its cost and inconvenience incurred as a consequence of Tenant's
delinquency. In no event, however, shall the charges permitted under this
Section 4 or elsewhere in this Lease, to the extent they are considered to be
interest under law, exceed the maximum lawful rate of interest.
5. Security Deposit. Contemporaneously with the execution of this
Lease, Tenant shall pay to Landlord $16,750.21 (the "Security Deposit"), which
shall be held by Landlord to secure Tenant's performance of its obligations
under this Lease. The Security Deposit is not an advance payment of Rent or a
measure or limit of Landlord's damages upon an Event of Default (defined in
Section 16). Landlord may, from time to time and without prejudice to any other
remedy, use all or a part of the Security Deposit to perform any obligation
Tenant fails to perform hereunder. Following any such application of the
Security Deposit, Tenant shall pay to Landlord on demand the amount so applied
in order to restore the Security Deposit to its original amount. Provided that
Tenant has performed all of its obligations hereunder, Landlord shall within 30
days after the Term ends, return to Tenant the portion of the Security Deposit
which was not applied to satisfy Tenant's obligations. The Security deposit may
be commingled with other funds, and no interest shall be paid thereon. If
Landlord transfers its interest in the Premises and the transferee assumes
Landlord's obligations under this Lease, then Landlord may assign the Security
Deposit to the transferee and Landlord thereafter shall have no further
liability for the return of the Security Deposit.
6. Landlord's Obligations.
(a) Services. Landlord shall furnish to Tenant (1) water at
those points of supply provided for general use of tenants of the Building and
if applicable to the Premises, provided plumbing is agreed to as part of the
Working Drawings, as set forth in Exhibit C of this Lease; (2) heated and
refrigerated air conditioning as appropriate, at such temperatures and in such
amounts as are standard for comparable buildings in the vicinity of the
Building; (3) janitorial service to the Premises on weekdays, other than
holidays, for Building-standard installations and such window washing as may
from time to time be reasonably required;
-4-
<PAGE>
(4) elevators for ingress and egress to the floor on which the Premises are
located, in common with other tenants, provided that Landlord may reasonably
limit the number of operating elevators during non-business hours and holidays;
and (5) electrical current during normal business hours for equipment that does
not require more than 110 volts and whose electrical energy consumption does
not exceed normal office usage. Landlord shall maintain the common areas of the
Building in reasonably good order and condition, except for damage caused by
Tenant, or its employees, agents or invitees. If Tenant desires any of the
services specified in this Section 6.(a) at any time other than (A) between
7:00 am. and 7:00 p on weekdays, (B) 7:00 am. to 1:00 p.m. on Saturday, or (C)
on Sunday or holidays, then such services shall be supplied to Tenant upon the
written request of Tenant delivered to Landlord before 3:00 p.m. on the
business day preceding such extra usage, and Tenant shall pay to Landlord the
cost of such services, currently stipulated to be $25.00 per hour within ten
days after Landlord has delivered to Tenant an invoice therefor.
(b) Excess Utility Use. Landlord shall not be required to
furnish electrical current for equipment that requires more than 110 volts or
other equipment whose electrical energy consumption exceeds normal office usage
. If Tenants requirements for or consumption of electricity exceed the electric
to be provided by Landlord as described in Section 6.(a), Landlord shall, at
Tenant's expense, make reasonable efforts to supply such service through the
then- existing feeders and risers serving the Building and the Premises. and
Tenant shall pay to Landlord the cost of such service within ten days after
Landlord has delivered to Tenant an invoice therefor. Landlord may determine
the amount of such additional consumption and potential consumption by any
verifiable method, including installation of a separate meter in the Premises
installed, maintained, and read by Landlord, at Tenant's expense. Tenant shall
not install any electrical equipment requiring special wiring or requiring
voltage in excess of 110 volts or otherwise exceeding Building unless approved
in advance by Landlord. The use of electricity in the Premises shall not exceed
the capacity of existing feeders and risers to or wiring in the Premises. Any
risers or wiring required to meet Tenant's excess electrical requirements
shall, upon Tenant's written request, be installed by Landlord at Tenant's
cost, if in Landlord's judgment, the same are necessary and shall not cause
permanent damage to the Building or the Premises, cause or create a dangerous
or hazardous condition, entail excessive or unreasonable alterations, repairs,
or expenses, or interfere with or disturb other tenants of the Building. If
Tenant uses machines or equipment in the Premises which affect the temperature
otherwise maintained by the air conditioning system or otherwise overload any
utility, Landlord may install supplemental air conditioning units or other
supplemental equipment in the Premises, and the cost thereof, including the
cost of installation, operation, use, and maintenance, shall be paid by Tenant
to Landlord within ten days after Landlord has delivered to Tenant an invoice
therefor.
(c) Restoration of Services; Abatement. Landlord shall use
reasonable efforts to restore any service required of it that becomes
unavailable; however, such unavailability shall not meter Landlord liable for
any damages caused thereby, be a constructive eviction of Tenant, constitute a
breach of any implied warranty, or, except as provided in the next sentence,
entitle Tenant to any abatement of Tenant's obligations hereunder. If, however,
Tenant
-5-
<PAGE>
is prevented from using the Premises for more than 15 consecutive business days
because of the unavailability of any such service, then Tenant shall, as its
exclusive remedy be entitled to a reasonable abatement of Rent for each
consecutive day (after such 15 day period) that Tenant is so prevented from
using the Premises.
7. Improvements; Alterations; Repairs; Maintenance.
(a) Improvements; Alterations. Improvements to the Premises
shall be installed at Tenant's expense only in accordance with plans and
specifications which have been previously submitted to and approved in writing
by Landlord. No alterations or physical additions in or to the Premises may be
made without Landlord's prior written consent, which shall not be unreasonably
withheld or delayed; however, Landlord may withhold its consent to any
alteration or addition that would affect the Building's structure or its HVAC,
plumbing, electrical or mechanical systems. Tenant shall not paint or install
lighting or decorations, sign, window or door lettering, or advertising media
of any type on or about the Premises without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed; however,
Landlord may withhold its consent to any such painting or installation which
would affect the appearance of the exterior of the Building or of any common
areas of the Building. All alterations, additions, or improvements made in or
upon the Premises shall remain on the Premises at the end of the Term without
compensation to Tenant. All alterations, additions, and improvements shall be
constructed, maintained, and used by Tenant, at its risk and expense, in
accordance with all laws; Landlord's approval of the plans and specifications
therefor shall not be a representation by Landlord that such alterations
additions, or improvements comply with any law.
(b) Repairs; Maintenance. Tenant shall maintain the Premises
in a clean, safe, and operable condition and shall Dot permit or allow to
remain any waste or damage to any portion of the Premises. Tenant shall repair
or replace, subject to Landlord's direction and supervision, any damage to the
Building caused by Tenant, Tenant's transferees, or their respective agents,
contractors, or invitees. If Tenant fails to make such repairs or replacements
within 15 days after the occurrence of such damage, then Landlord may make the
same at Tenant's cost. If any such damage occurs outside of the Premises, then
Landlord may elect to repair such damage at Tenant's expense, rather than
having Tenant repair such damage. The cost of all repair or replacement work
performed by Landlord under this Section 7 shall be paid by Tenant to Landlord
within ten days after Landlord has invoiced Tenant therefor.
(c) Performance of Work. All work described in this Section 7
shall be performed only by Landlord or by contractors and subcontractors
approved in writing by Landlord. Tenant shall cause all contractors and
subcontractors to procure and maintain insurance coverage naming Landlord as an
additional insured against such risks, in such amounts, and with such companies
as Landlord may reasonably require. All such work shall be performed in
accordance with all legal requirements and in a good and workmanlike manner so
as not to damage the Premises, the Building, or the components thereof.
-6-
<PAGE>
(d) Mechanic's Liens. Tenant shall not permit any mechanic's
liens to be filed against the Premises or the Building for any work performed,
materials furnished, or obligation incurred by or at the request of Tenant. If
such a lien is filed, then Tenant shall, within ten days after Landlord has
delivered notice of the filing thereof to Tenant, either pay the amount of the
lien or diligently contest such lien and deliver to Landlord a bond or other
security reasonably satisfactory to Landlord. If Tenant fails to timely take
either such action, then Landlord may pay the lien claim, and any amounts so
paid, including expenses and interest, shall be paid by Tenant to Landlord
within ten days after Landlord has invoiced Tenant therefor.
8. Use. Tenant shall occupy and use the Premises only for General
Office Use (the "Permitted Use") and shall comply with all laws, orders, rules,
and regulations relating to the use, condition, access to, and occupancy of the
Premises. The Premises shall not be used for any use which is disreputable,
creates extraordinary fire hazards, or results in an increased rate of
insurance on the Building or its contents, or for the storage of any hazardous
materials or substances If, because of Tenant's acts, the rate of insurance on
the Building or its contents increases, then such acts shall be an Event of
Default, Tenant shall pay to Landlord the amount of such increase on demand,
and acceptance of such payment shall not waive any of Landlord's other rights
Tenant shall conduct its business and control its agents, employees, and
invitees in such a manner as not to create any nuisance or unreasonably
interfere with other tenants or Landlord in its management of the Building.
9. Assignment and Subletting.
(a) Transfers; Consent. Tenant shall not, without the prior
written consent of Landlord. (1) assign, transfer, or encumber this Lease or
any estate or interest herein, whether directly or by operation of law, (2)
permit any other entity to become Tenant hereunder by merger, consolidation, or
other reorganization, (3) if Tenant is an entity other than a corporation whose
stock is publicly traded, permit the transfer of an ownership interest in
Tenant so as to result in a change in the current control of Tenant, (4) sublet
any portion of the Premises (5) grant any license, concession, or other right
of occupancy of any portion of the Premises, or (6) permit the use of the
Premises by any parties other than Tenant (any of the events Listed in Section
9.(a)(l) through 9.(a)(4), 9.(a)(5), 9.(a)(6) being a "Transfer"). However, the
foregoing, specifically as noted in 9(a)(6) above shall not apply to Tenant's
affiliated companies, provided (1) in Landlord's sole and absolute discretion
the proposed transferee's use is consistent with the nature and operation of
the Building, (2) is of a creditworthiness equal to or greater than Tenant, (3)
operates the same business as Tenant and does not conflict with any exclusive
use rights which may exist in the Building, and (4) Tenant provides the
documentation relative to the proposed transferee as provided in the next
sentence of this Article 9(a). If Tenant requests Landlord's consent to a
Transfer, then Tenant shall provide Landlord with a written description of all
terms and conditions of the proposed Transfer, copies of the proposed
documentation, and the following information about the proposed transferee:
name and address; reasonably satisfactory information about its business and
business history, its proposed use of the Premises;
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banking, financial. and other credit information; and general references
sufficient to enable Landlord to determine the proposed transferee's
creditworthiness and character. Landlord shall not unreasonably withhold its
consent to any assignment or subletting of the Premises, provided that the
proposed transferee (A) is creditworthy, (B) has a good reputation in the
business community, (C) does not engage in business similar to those of other
tenants in the Building, and (D) is not another occupant of the Building;
otherwise, Landlord may withhold its consent in its sole discretion.
Concurrently with Tenants notice of any request for consent to a Transfer,
Tenant shall pay to Landlord a fee of $75.00 to defray Landlord's expenses in
reviewing such request, and Tenant shall also reimburse Landlord immediately
upon request for its attorneys' fees incurred in connection with considering
any request for consent to a Transfer. If Landlord consents to a proposed
Transfer, then the proposed transferee shall deliver to Landlord a written
agreement whereby it expressly assumes the Tenants obligations hereunder,
however, any transferee of less than all of the space in the Premises shall be
liable only for obligations under this Lease that are properly allocable to the
space subject to the Transfer for the period of the Transfer. Landlord's
consent to a Transfer shall not release Tenant from its obligations under this
Lease, but rather Tenant and its transferee shall be jointly and severally
liable therefor. In the event, however, Tenant assigns this Lease to a
non-related 3rd party, acceptable to Landlord, in Landlord's sole and absolute
discretion, Landlord at is option may elect to release Tenant from this Lease.
Landlord's consent to any Transfer shall not waive Landlord's rights as to any
subsequent Transfers. If an Event of Default occurs while the Premises or any
part thereof are subject to a Transfer, then Landlord, in addition to its other
remedies, may collect directly from such transferee all rents becoming due to
Tenant and apply such rents against Rent. Tenant authorizes its transferees to
make payments of rent directly to Landlord upon receipt of notice from Landlord
to do so.
(b) Cancellation. Landlord may, within 30 days after
submission of Tenant's written for Landlord's consent to an assignment or
subletting, cancel this Lease as to the portion of the Premises proposed to be
sublet or assigned as of the date the proposed Transfer is to be effective. If
Landlord cancels this Lease as to any portion of the Premises, then this Lease
shall cease for such portion of the Premises and Tenant shall pay to Landlord
all Rent accrued through the cancellation date relating to the portion of the
Premises covered by the proposed Transfer. Thereafter, Landlord may lease such
portion of the Premises to the prospective transferee (or to any other person)
without liability to Tenant.
(c) Additional Compensation. Tenant shall pay to Landlord,
immediately upon receipt thereof, the excess of (1) all compensation received
by Tenant for a Transfer less the costs reasonably incurred by Tenant with
unaffiliated third parties in connection with such Transfer (i.e., brokerage
commissions, tenant finish work, and the like) over (2) the Rent allocable to
the portion of the Premises covered thereby.
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10. Insurance; Waivers; Subrogation; Indemnity.
(a) Insurance. Tenant shall maintain throughout the Term the
following insurance policies: (1) comprehensive general liability insurance in
amounts of not less than a combined single limit of $2,000,000 or such other
amounts as Landlord may from time to time reasonably require, insuring Tenant,
Landlord. Landlord's agents and their respective affiliates against all
liability for injury to or death of a person or persons or damage to property
arising from the use and occupancy of the Premises,(2) insurance covering the
full value of Tenant's property and improvements, and other property (including
property of others) in the Premises, (3) contractual liability insurance
sufficient to cover Tenant's indemnity obligations hereunder, (4) worker's
compensation insurance, containing a waiver of subrogation endorsement
acceptable to Landlord, and (5) business interruption insurance. Tenant's
insurance shall provide primary coverage to Landlord when any policy issued to
Landlord provides duplicate or similar coverage, and in such circumstance
Landlord's policy will be excess over Tenant's policy. Tenant shall furnish to
Landlord certificates of such insurance and such other evidence satisfactory to
Landlord of the maintenance of all insurance coverages required hereunder, and
Tenant shall obtain a written obligation on the part of each insurance company
to notify Landlord at least 30 days before cancellation or a material change of
any such insurance policies. All such insurance policies shall be in form, and
issued by companies, reasonably satisfactory to Landlord. but in no event,
however, shall said insurance company(ies) which have a policy holders' rating
of no less than a B+ in the most recent edition of Best Insurance Reports. The
term "Affiliate" shall mean any person or entity, directly or indirectly,
controlling, controlled by, or under common control with the party in question.
(b) Waiver of Negligence; No Subrogation. Landlord and Tenant
each waives any claim it might have against the other for any injury to or
death of any person or persons or damage to or theft, destruction, loss, or
loss of use of any property (a "Loss"), to the extent the same is insured
against under any insurance policy that covers the Building, the Premises,
Landlord's or Tenant's fixtures, personal property, leasehold improvements, or
business, or, in the case of Tenant's waiver, is required to be insured against
under the terms thereof, regardless of whether the negligence of the other
party caused such loss; however, Landlord's waiver shall not include any
deductible amounts on insurance policies carried by Landlord or to any
coinsurance penalty which Landlord may sustain. Each party shall cause its
insurance carrier to endorse all applicable policies waiving the carrier's
rights of recovery under subrogation or otherwise against the other party.
(c) Indemnity. Tenant hereby indemnifies and holds Landlord
harmless from and against any and all claims, demands, liabilities and
expenses, including reasonable attorney's fees, arising from Tenant's use of
the Premises or from any negligent act or omission to act or willful
misconduct, in or about the Premises or the Building by Tenant or its agents,
employees or contractors, or from any breach or default by Tenant of this
Lease, except to the extent caused by Landlord's gross negligence or willful
misconduct. In the event any action or proceeding shall
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be brought against Landlord by reason of any such claim, Tenant shall defend
the same at Tenant's expense by counsel reasonably satisfactory to Landlord,
(though to the extent such claim is covered by insurance maintained by Tenant,
Landlord shall not unreasonably withhold its approval with respect to any
counsel selection by the insurance company to defer such claim.
11. Subordination Attornment; Notice to Landlord's Mortgagee.
(a) Subordination. This Lease shall be subordinate to any
deed of trust mortgage, or other security instrument, or any ground lease,
master lease, or primary lease, that now or hereafter covers all or any part of
the Premises (the mortgagee under any such mortgage or the lessor under any
such lease is referred to herein as a "Landlord's Mortgagee"). Any Landlord's
Mortgagee may elect, at any time, unilaterally, to make this Lease superior to
its mortgage, ground lease, or other interest in the Premises by so notifying
Tenant in writing.
(b) Attornment. Tenant shall attorn to any party succeeding
to Landlord's interest in the Premses, whether by purchase, foreclosure, deed
in lieu of foreclosure, power of sale, termination of lease, or otherwise. upon
such party's request, and shall execute such agreements confirming such
attornment as such party may reasonably request. If requested by Tenant,
Landlord shall agree to use reasonable effort to obtain a non-disturbance
agreement from all mortgagees encumbering the Building, however, the failure of
Landlord to obtain such agreement shall not affect the validity of this Lease
or Tenant's obligation hereunder.
(c) Notice to Landlord's Mortgagee. Tenant shall not seek to
enforce any remedy it may have for any default on the part of the Landlord
without first giving written notice by certified mail, return receipt
requested, specifying the default in reasonable detail to any Landlord's
Mortgagee whose address has been given to Tenant, and affording such Landlord's
Mortgagee a reasonable opportunity to perform Landlord's obligations hereunder.
(d) Landlord's Mortgagee's Protection Provisions. If
Landlord's Mortgagee shall succeed to the interest of Landlord under this
Lease, Landlord's Mortgagee shall not be: (1) liable for any act or omission of
any prior lessor (including Landlord); (2) bound by any rent or additional rent
or advance rent which Tenant might have paid for more than the current month to
any prior lessor (including Landlord), and all such rent shall remain due and
owing, notwithstanding such advance payment; (3) bound by any security or
advance rental deposit made by Tenant which is not delivered or paid over to
Landlord's Mortgagee and with respect to which Tenant shall look solely to
Landlord for refund or reimbursement; (4) bound by any termination, amendment
or modification of this Lease made without Landlord's Mortgagee's consent and
written approval except for those terminations, amendments and modifications
permitted to be made by Landlord without Landlord's Mortgagee's consent
pursuant to the terms of the loan documents between Landlord and Landlord's
Mortgagee; (5) subject to the defenses which Tenant might have against any
prior lessor (including Landlord); and (6) subject to the offsets which Tenant
might have against any prior lessor (including Landlord) except for those
offset rights which (A) are expressly provided in this Lcase, (B) relate to
periods of time
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following the acquisition of the Building by Landlord's Mortgagee, and (C)
Tenant has provided written notice to Landlord's Mortgagee and provided
Landlord's Mortgagee a reasonable opportunity to cure the event giving rise to
such offset event Landlord's Mortgagee shall have no liability or
responsibility under or pursuant to the terms of this Lease or otherwise after
it ceases to own an interest in the Building. Nothing in this Lease shall be
construed to require Landlord's Mortgagee to see to the application of the
proceeds of any loan, and Tenant's agreements set forth herein shall not be
impaired on account of any modification of the documents evidencing and
securing any loan.
12. Rules and Regulations. Tenant shall comply with the rules and
regulations of the Building which are attached hereto as Exhibit B. Landlord
may, from time to time, change such rules and regulations for the safety, care,
or cleanliness of the Building and related facilities, provided that such
changes are applicable to all tenants of the Building and will not unreasonably
interfere with Tenant's use of the Premises. Tenant shall be responsible for
the compliance with such rules and regulations by its employees, agents, and
invitees.
13. Condemnation.
(a) Total Taking. If the entire Building or Premises are
taken by right of eminent domain or conveyed in lieu thereof (a "Taking"), this
Lease shall terminate as of the date of the Taking.
(b) Partial Taking - Tenant's Rights. If any part of the
Building becomes subject to a Taking and such Taking will prevent Tenant from
conducting its business in the Premises in manner reasonably comparable to that
conducted immediately before such Taking for a period of more than 180 days,
then Tenant may terminate this Lease as of the date of such Taking by giving
written notice to Landlord within 30 days after the Taking, and Rent shall be
apportioned as of the date of such Taking. If Tenant does not terminate this
Lease, then Rent shall be abated on a reasonable basis as to that portion of
the Premises rendered untenantable by the Taking.
(c) Partial Taking - Landlord's Rights. If any material
portion, but less than all, of the Building becomes subject to a Taking, or if
Landlord is required to pay any of the proceeds received for a Taking to a
Landlord's Mortgagee, then Landlord may terminate this Lease by delivering
written notice thereof to Tenant within 30 days after such Taking, and Rent
shall be apportioned as of the date of such Taking. If Landlord does not so
terminate this Lease, then this Lease will continue, but if any portion of the
Premises has been taken, Rent shall abate as provided in the last sentence of
Section 13.(b).
(d) Award. If any Taking occurs, then Landlord shall receive
the entire award or other compensation for the land on which the Building is
situated, the Building, and other improvements taken, and Tenant may separately
pursue a claim (to the extent it will not reduce Landlord's award) against the
condemnor for the value of Tenant's personal property which
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Tenant is entitled to remove under this Lease, moving costs, loss of business,
and other claims it may have.
14. Fire or Other Casualty.
(a) Repair Estimate. If the Premises or the Building are
damaged by fire or other casualty (a "Casualty"), Landlord shall, within 90
days after such Casualty, deliver to Tenant a good faith estimate (the "Damage
Notice") of the time needed to repair the damage caused by such Casualty.
(b) Landlord's and Tenant's Rights. If a material portion of
the Premises or the Building is damaged by Casualty such that Tenant is
prevented from conducting its business in the Premises in a manner reasonably
comparable to that conducted immediately before such Casualty and Landlord
estimates that the damage caused thereby cannot be repaired within 180 days
after the Casualty, then Tenant may terminate this Lease by delivering written
notice to Landlord of its election to terminate within 30 days after the Damage
Notice has been delivered to Tenant. If Tenant does not so timely terminate
this Lease, then (subject to Section 14 (c)) Landlord shall repair the Building
or the Premises, as the case may be, as provided below, and Rent for the
portion of the Premises rendered untenantable by the damage shall be abated on
a reasonable basis from the date of damage until the completion of the repair,
unless Tenant caused such damage, in which case, Tenant shall continue to pay
Rent without abatement.
(c) Landlord's Rights. If a Casualty damages a material
portion of the Building, and Landlord makes a good faith determination that
restoring the Premises would be uneconomical or if Landlord is required to pay
any insurance proceeds arising out of the Casualty to a Landlord's Mortgagee,
then Landlord may terminate this Lease by giving written notice of its election
to terminate within 30 days after the Damage Notice has been delivered to
Tenant, and Basic Rent and Additional Rent shall be abated as of the date of
the Casualty.
(d) Repair Obligation. If neither party elects to terminate
this Lease following a Casualty, then Landlord shall, within a reasonable time
after such Casualty, begin to repair the Building and the Premises and shall
proceed with reasonable diligence to restore the Building and Premises to
substantially the same condition as they existed immediately before such
Casualty; however, Landlord shall not be required to repair or replace any of
the furniture, equipment, fixtures, and other improvements which may have been
placed by, or at the request of, Tenant or other occupants in the Building or
the Premises, and Landlord's obligation to repair or restore the Building or
Premises (including tenant improvements which existed at the time the Lease was
executed) shall be limited to the extent of the insurance proceeds actually
received by Landlord for the Casualty in question.
15. Personal Property Taxes. Tenant shall be liable for all
taxes levied or assessed agaist personal property, furniture, or fixtures
placed by Tenant in the Premises. If any taxes for which Tenant is liable are
levied or assessed against Landlord or Landlord's property and
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Landlord elects to pay the same, or if the assessed value of Landlord's
property is increased by inclusion of such personal property, furniture or
fixtures and Landlord elects to pay the taxes based on such increase, then
Tenant shall pay to Landlord, upon demand, the part of such taxes for which
Tenant is primarily liable hereunder, however, Landlord shall not pay such
amount if Tenant notifies Landlord that it will contest the validity or amount
of such taxes before Landlord makes such payment, and thereafter diligently
proceeds with such contest in accordance with law and if the non-payment
thereof does not pose a threat of loss or seizure of the Building or interest
of Landlord therein or impose any fee or penalty against Landlord.
16. Events of Default. Each of the following occurrences shall be an
"Event of Default":
(a) Tenant's failure to pay Rent within five days after
Landlord has delivered notice to Tenant that the same is due; however, an Event
of Default shall occur hereunder without any obligation of Landlord to give any
notice if Landlord has given Tenant written notice under this Section 16.(a) on
more than one occasion during the twelve (12) month interval preceding such
failure by Tenant;
(b) Tenant (1) abandons and has defaulted in the payment of
Rent for the Premises or any substantial portion thereof;
(c) Tenant fails to provide any estoppel certificate within
the time period required under Section 24.(e) and such failure shall continue
for days after written notice thereof from Landlord to Tenant;
(d) Tenant's failure to perform, comply with, or observe any
other agreement or obligation of Tenant under this Lease and the continuance of
such failure for a period of more than 30 days after Landlord has delivered to
Tenant written notice thereof; and
(e) The filing of a petition by or against Tenant (the term
"Tenant" shall include, for the purpose of this Section 16.(e), any guarantor
of Tenant's obligations hereunder) (1) in any bankruptcy or other insolvency
proceeding; (2) seeking any relief under any state or federal debtor relief
law; (3) for the appointment of a liquidator or receiver for all or
substantially all of Tenant's property or for Tenant's interest in this Lease;
or (4) for the reorganization or modification of Tenant's capital structure;
however, if such a petition is filed against Tenant, then such filing shall not
be an Event of Default unless Tenant fails to have the proceedings initiated by
such petition dismissed within 90 days after the filing thereof.
Any notice periods provided for under this Section 16 shall run
concurrently with any statutory notice periods and any notice given hereunder
may be given simultaneously with or incorporated into any such statutory
notice.
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17. Remedies. Upon any Event of Default, Landlord may, in addition to
all other rights and remedies afforded Landlord hereunder or by law or equity,
take any of the following actions:
(a) Terminate this Lease by giving Tenant written notice
thereof, in which event Tenant shall pay to Landlord the sum of (1) all Rent
accrued hereunder through the date of termination, (2) all amounts due under
Section 18.(a) and (3) an amount equal to the total Rent than Tenant would have
been required to pay for the remainder of the Term.
(b) Terminate Tenant's right to possess the Premises without
terminating this Lease by giving written notice thereof to Tenant, in which
event Tenant shall pay to Landlord (1) all Rent and other amounts accrued
hereunder to the date of termination, (2) all amounts due from time to time
under Section 18.(a) and (3)all Rent and other net sums referred hereunder to
be paid by Tenant during the remainder of the Term, diminished by any net sums
thereafter received by Landlord through reletting the Premises during such
period, after deducting all costs incurred by Landlord in reletting the
Premises. Landlord shall use reasonable efforts to relet the Premises on such
terms as Landlord in its sole discretion may determine (including a term
different from the Term, rental concessions, and alterations to, and
improvement of, the Premises);however, Landlord shall not be obligated to relet
the Premises before leasing other portions of the Building. Landlord shall not
be liable for, nor shall Tenant's obligations hereunder be diminished because
of, Landlord's failure to relet the Premises or to collect rent due for such
reletting. Tenant shall not be entitled to the excess of any consideration
obtained by reletting over the Rent due hereunder. Reentry by Landlord in the
Premises shall not affect Tenant's obligations hereunder for the unexpired
Term, rather, Landlord may, from time to time, bring an action against Tenant
to collect amounts due by Tenant, without the necessity of Landlord's waiting
until the expiration of the Term. Unless Landlord delivers written notice to
Tenant expressly stating that it has elected to terminate this Lease, all
actions taken by Landlord to dispossess or exclude Tenant from the Premises
shall be deemed to be taken under this Section 17.(b). If Landlord elects to
proceed under this Section 17(b), it may at any time elect to terminate this
Lease under Section 17.(a).
18. Payment by Tenant; Non-Waiver.
(a) Payment by Tenant. Upon any Event of Default, Tenant
shall pay to Landlord all reasonable and customary costs incurred by Landlord
(including court costs and reasonable attorneys' fees and expenses) in
(1) obtaining possession of the Premises, (2) removing and storing Tenant's or
any other occupant's property, (3) repairing, restoring, altering, remodeling,
or otherwise putting the Premises into condition acceptable to a new tenant,
(4) if Tenant is dispossessed of the Premises and this Lease is not terminated,
reletting all or any part of the Premises (including brokerage commissions,
cost of tenant finish work, and other costs incidental to such reletting), (5)
performing Tenant's obligations which Tenant failed to perform, and (6)
enforcing, or advising Landlord of, its rights, remedies, and recourse arising
out of the Event of Default. To the full extent permitted by law, Landlord and
Tenant agree the federal and
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state courts of Florida shall have exclusive jurisdiction over any matter
relating to or arising from this Lease and the parties, rights and obligations
under this Lease.
(b) No Waiver. Landlord's acceptance of Rent following an
Event of Default shall not waive Landlord's rights regarding such Event of
Default except with respect to a monetary Event of Default where such payment
fully cures such Event of Default. No waiver by Landlord of any violation or
breach of any of the terms contained herein shall waive Landlord's rights
regarding any future violation of such term. Landlord's acceptance of any
partial payment of Rent shall not waive Landlord's rights with regard to the
remaining portion of the Rent that is due, regardless of any endorsement or
other statement on any instrument delivered in payment of Rent or any warning
delivered in connection therewith; accordingly, Landlord's acceptance of a
partial payment of Rent shall not constitute an accord and satisfaction of the
full amount of the Rent that is due.
19. Landlord's Lien. Landlord shall have all lien and distress rights
against Tenant's property as provided by Florida law.
20. Surrender of Premises. No act by Landlord shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender of the Premises shall be valid unless it is in writing and signed by
Landlord. At the expiration or termination of this Lease, Tenant shall deliver
to Landlord the Premises with all improvements located therein in good repair
and condition, broom-clean, reasonable wear and tear (and condemnation and
Casualty damage not caused by Tenant. as to which Sections 13 and 14 shall
control) excepted, and shall deliver to Landlord all keys to the Premises.
Provided that Tenant has performed all of its obligations hereunder, Tenant may
remove all unattached trade fixtures, furniture, and personal property placed
in the Premises by Tenant, and shall remove such trade fixtures, personal
property, equipment, wiring, and furniture as Landlord may request. Tenant
shall repair all damage caused by such removal. All items not so removed shall
be deemed to have been abandoned by Tenant and may be appropriated, sold,
stored, destroyed, or otherwise disposed of by Landlord without notice to
Tenant and without any obligation to account for such items. The provisions of
this Section 20 shall survive the end of the Term.
21. Holding Over. If Tenant fails to vacate the Premises at the end of
the Term, then Tenant shall be a tenant at will and, in addition to all other
damages and remedies to which Landlord may be entitled for such holding over.
Tenant shall pay, in addition to the other Rent. a daily Basic Rent equal to
the greater of (a) 150% of the daily Basic Rent payable during the last month
of the Term, or (b) 125%of the prevailing rental rate in the Building for
similar space. The provisions of this Section 21 shall not be deemed to limit
or constitute a waiver of any other rights or remedies of Landlord provided
herein or at law. If Tenant fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any other liabilities
to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and
hold Landlord harmless from all loss, costs (including reasonable attorneys'
fees) and liability resulting from such failure, including, without limiting
the generality of the foregoing, any claims made by any
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succeeding tenant founded upon such failure to surrender, and any lost profits
to Landlord resulting therefrom.
22. Certain Rights Reserved by Landlord. Provided that the exercise of
such rights does not unreasonably interfere with Tenant's occupancy of the
Premises, Landlord shall have the following rights:
(a) To decorate and to make inspections, repairs,
alterations, additions, changes, or improvements, whether structural or
otherwise, in and about the Building, or any part thereof, to enter upon the
Premises and, during the continuance of any such work, to temporarily close
doors, entryways, public space, and corridors in the Building; to interrupt or
temporarily suspend Building services and facilities; to change the name of the
Building; and to change the arrangement and location of entrances or
passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or
other public parts of the Building;
(b) To take such reasonable measures as Landlord deems
advisable for the security of the Building and its occupants; evacuating the
Building for cause, suspected cause, or for drill purposes; temporarily denying
access to the Building; and closing the Building after normal business hours
and on Sundays and holidays, subject, however, to Tenant's right to enter when
the Building is closed after normal business hours under such reasonable
regulations as Landlord may prescribe from time to time; and
(c) To enter the Premises at reasonable hours to show the
Premises to prospective purchases, lenders, or, during the last 12 months of
the Term, tenants.
23. Miscellaneous.
(a) Landlord Transfer. Landlord may transfer any portion of
the Building and any of its rights under this Lease. If Landlord assigns its
rights under this Lease, then Landlord shall thereby be released from any
further obligations hereunder, provided that the assignee assumes Landlord's
obligations hereunder in writing.
(b) Landlord's Liability. The liability of Landlord to Tenant
for any default by Landlord under the terms of this Lease shall be recoverable
only from the interest of Landlord in the Building, and Landlord shall not be
personally liable for any deficiency. This Section shall not limit any remedies
which Tenant may have for Landlord's defaults which do not involve the personal
liability of Landlord.
(c) Force Majeure. Other than for Tenant's obligations under
this Lease that can be performed by the payment of money (e g., payment of Rent
and maintenance of insurance), whenever a period of time is herein prescribed
for action to be taken by either party hereto, such party shall not be liable
or responsible for, and there shall be excluded from the computation of any
such period of time, any delays due to strikes, riots, acts of God, shortages
of
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labor or materials, war, governmental laws, regulations, or restrictions, or
any other causes of any kind whatsoever which are beyond the control of such
party.
(d) Brokerage. Neither Landlord nor Tenant has dealt with any
broker or agent in connection with the negotiation or execution of this Lease,
other than Insignia/ESG, Inc. and Scott Minchew & Co., whose commission shall
be paid by Landlord. Tenant and Landlord shall each indemnify the other against
all costs, expenses, attorneys' fees, and other liability for commissions or
other compensation claimed by any broker or agent claiming the same by,
through, or under the indemnifying party.
(e) Estoppel Certificates. From time to time, Tenant shall
furnish to any party designated by Landlord, within ten days after Landlord has
made a request therefor, a certificate signed by Tenant confirming and
containing such factual certifications and representations as to this Lease as
Landlord may reasonably request.
(f) Notices. All notices and other communications given
pursuant to this Lease shall be in writing and shall be (1) mailed by first
class, United States Mail, postage prepaid, certified, with return receipt
requested, and addressed to the parties hereto at the address specified next to
their signature block, (2) hand delivered to the intended address, or (3) sent
by prepaid telegram, cable, facsimile transmission, or telex followed by a
confirmatory letter. All notices shall be effective upon delivery to the
address of the addressee. The parties hereto may change their addresses by
giving notice thereof to the other in conformity with this provision.
(g) Separability. If any clause or provision of this Lease is
illegal, invalid, or unenforceable under present or future laws, then the
remainder of this Lease shall not be affected thereby and in lieu of such
clause or provision, there shall be added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid, or unenforceable clause
or provision as may be possible and be legal valid, and enforceable.
(h) Amendments; and Binding Effect. This Lease may not be
amended except by instrument in writing signed by Landlord and Tenant. No
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord, and no custom or practice which
may evolve between the parties in the administration of the terms hereof shall
waive or diminish the right of Landlord to insist upon the performance by
Tenant in strict accordance with the terms hereof. The terms and conditions
contained in this Lease shall inure to the benefit of and be binding upon the
parties hereto, and upon their respective successors in interest and legal
representatives, except as otherwise herein expressly provided. This Lease is
for the sole benefit of Landlord and Tenant, and, other than Landlord's
Mortgagee, no third party shall be deemed a third party beneficiary hereof.
(i) Quiet Enjoyment. Provided Tenant has performed all of its
obligations hereunder, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without
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hindrance from Landlord or any party claiming by, through, or under Landlord,
but not otherwise, subject to the terms and conditions of this Lease.
(j) No Merger. There shall be no merger of the leasehold
estate hereby created with the fee estate in the Premises or any part thereof
if the same person acquires or holds, directly or indirectly this Lease or any
interest in this Lease and the fee estate in the leasehold Premises or any
interest in such fee estate.
(k) No Offer. The submission of this Lease to Tenant shall
not be construed as an offer, and Tenant shall not have any rights under this
Lease unless Landlord executes a copy of this Lease and delivers it to Tenant.
(l) Entire Agreement. This Lease constitutes the entire
agreement between Landlord and Tenant regarding the subject natter hereof and
supersedes all oral statements and prior writings relating thereto. Except for
those set forth in this Lease, no representations, warranties, or enforcement
have been made by Landlord or Tenant to the other with respect to this Lease or
the obligations of Landlord or Tenant in connection therewith.
(m) Waiver of Jury Trial. To the maximum extent permitted by
law, Landlord and Tenant each waive right to trial by jury in any litigation
arising out of or with respect to this Lease.
(n) Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State in which the Premises are
located.
(o) Joint and Several Liability. If Tenant is comprised of
more than one party, each such party shall be jointly and severally liable for
Tenant's obligations under this Lease.
(p) Financial Reports. Within 15 days after Landlord's
request, Tenant will furnish Tenant's most recent audited financial statements
(including any notes to them) to Landlord, or, if no such audited statements
have been prepared, such other financial statements (and notes to them) as may
have been prepared by an independent certified public accountant or, failing
those, Tenant's internally prepared financial statements. Tenant will discuss
its financial statements with Landlord. Landlord will not disclose any aspect
of Tenant's financial statements that Tenant designates to Landlord as
confidential except (a) to Landlord's lenders or perspective purchasers of the
project, (b) in litigation between Landlord and Tenant, and (c) if required by
court order.
(q) Landlord's Fees. Whenever Tenant requests Landlord to
take any action or give any consent required or permitted under this Lease,
Tenant will reimburse Landlord for Landlord's reasonable costs incurred in
reviewing the proposed action or consent, including without limitation
reasonable attorneys', engineers' or architects' fees, within 10 days after
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Landlord's delivery to Tenant of a statement of such costs. Tenant will be
obligated to make such reimbursement without regard to whether Landlord
consents to any such proposed action.
(r) Telecommunications. Tenant and its telecommunications
companies, including but not limited to local exchange telecommunications
companies and alternative access vendor services companies shall have no right
of access to and within the Building, for the installation and operation of
telecommunications systems including but not limited to voice, video, data, and
any other telecommunications services provided over wire, fiber optic,
microwave, wireless and any other transmission systems' for part or all of
Tenant's telecommunications within the Building and from the Building to any
other location without Landlord's prior written consent, which consent shall
not be unreasonably withheld.
(s) Confidentiality. Tenant acknowledges that the terms and
conditions of this Lease are to remain confidential for the Landlord's benefit,
and may not be disclosed by Tenant to anyone, by any manner or means directly
or indirectly, without Landlord's prior written consent. The consent by the
Landlord to any disclosures shall not be deemed to be a waiver on the part of
the Landlord of any prohibition against any future disclosure.
(t) Notice Concerning Radon Gas. Radon is a naturally
occurring radioactive gas that, when rt has accumulated in a structure in
sufficient quantities, may present health risks to persons who are exposed to
it. Levels of radon that exceed Federal and State guidelines have been found in
buildings in the State of Florida. Additional information regarding radon and
radon testing may be obtainable from the county public health unit. Landlord
makes no representation to Tenant concerning the presence or absence of radon
gas in the Premises or the Building at any time or in any quantity. By
executing this Lease, Tenant expressly releases Landlord from any loss, claim,
liability, or damage now or hereafter arising from or relating to the presence
at any time of such substances in the Premises or the Building.
(u) No Right to Terminate. Tenant hereby waives the remedies
of termination and rescission and hereby agrees that Tenant's sole remedies for
Landlord's default hereunder and for breach of any promise or inducement shall
be limited to a suit for damages and/or injunction.
(v) No Liability for Crimes. The Landlord makes no
representations or warranties with respect to crime in the area, undertakes no
duty to protect against criminal acts and shall not be liable for any injury,
wrongful death or property damage arising from any criminal act. The Landlord
may, from time to time, employ security personnel and equipment, however, such
personnel and equipment are only for the protection of Landlord's property.
Landlord reserves the right, in its sole discretion, to start, alter or
terminate any such security services without notice. The Tenant is urged to
provide security for its invitees, its own personnel, and property as it deems
necessary. The Tenant is urged to obtain insurance to protect against criminal
acts.
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(w) List of Exhibits. All exhibits and attachments attached
hereto are incorporated herein by this reference.
Exhibit A - Outline of Premises/Legal Description
Exhibit B - Building Rules and Regulations
Exhibit C - Tenant Finish-Work: "Allowance"
Exhibit D - Parking
Exhibit E - Guaranty
Exhibit F - Agency Disclosure
Exhibit G - Tenant Estoppel Certificate
Exhibit H - Right of First Offer
(x) Corporate Tenancy. If Tenant is a corporation, the
undersigned officer of Tenant hereby warrants and certifies to Landlord that
Tenant is a corporation in good standing and authorized to do business in the
State of Florida. The undersigned officer of Tenant hereby further warrants and
certifies to Landlord that he or her, as such officer, is authorized and
empowered to bind the corporation to the terms of this Lease by his or her
signature thereto. Landlord, before it accepts and delivers this Lease, may
require Tenant to supply it with a certified copy of the corporate resolution
authorizing the execution of this Lease by Tenant.
(y) General Definitions. The following terms shall have the
following meanings: "Laws" means all federal, state, and local laws, rules and
regulations, all court orders, all governmental directives and governmental
orders, and all restrictive covenants affecting the Property, and "Law" means
any of the foregoing; "Affiliate" means any person or entity which, directly or
indirectly, controls, is controlled by, or is under common control with the
party in question; "Tenant Party" shall include Tenant, any assignees claiming
by, through, or under Tenant, any subtenants claiming by, through, or under
Tenant, and any agents, contractors, employees, invitees of the foregoing
parties; and "including" means including, without limitation.
(z) Hazardous Materials. The term "Hazardous Material" means
any substance, material or waste which is now or hereafter classified or
considered to be hazardous, toxic, or dangerous under any Law relating to
pollution or the protection or regulation of human health, natural resources or
the environment, or poses or threatens to pose a hazard to the health or safety
of persons on the Premises or in the Building. Tenant shall not use, generate,
store, or dispose of, or permit the use, generation, storage or disposal of
Hazardous Materials on or about the Premises or the Building except in a manner
and quantity necessary for the ordinary performance of Tenant's business, and
then in compliance with all Laws. If Tenant breaches its obligations under this
Section 24.(x), Landlord may immediately take any and all action reasonably
appropriate to remedy the same, including talcing all appropriate action to
clean up or remediate any contamination resulting from Tenant's use,
generation, storage or disposal of Hazardous Materials. Tenant shall defend,
indemnify, and hold harmless Landlord and its representatives and agents from
and against any and all claims, demands, liabilities, causes of
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action, suits" Judgments, damages and expenses (including attorneys' fees and
cost of clean up and remediation) arising from Tenant's failure to comply with
the provisions of this Section 23.(z). This indemnity provision shall survive
termination or expiration of the Lease.
24. Other Provisions.
(a) LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL
PURPOSE, A TENANTS OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE
CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS
HEREUNDER AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT SHALL
CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, SETOFF OR DEDUCTION.
NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER,
WHETHER EXPRESS OR IMPLIED.
(b) Lease Subject to Certain Option Rights. The parties agree
that this Lease is subject to specific option rights (e.g. right of first
refusal and expansion option) of existing tenant(s) at the Building, and the
terms and conditions, as set forth herein this Lease shall only be binding upon
the Landlord and Tenant, upon Landlord's receipt of any applicable notices from
said existing tenant(s), thereby releasing said option rights and/or declining
the exercise of said option(s).
(c) Disposition of Existing Tenant. Tenant recognizes that
the Premises is currently occupied pursuant to a Lease with American Telnet,
Inc., (ATN), dated May 15, 1997. This Lease is accordingly subject to Landlord
obtaining possession of the Premises from ATN in a mutually agreed upon manner.
Notwithstanding any provision herein to the contrary, if for any reason
Landlord is unable to terminate the Lease with ATN and deliver exclusive
possession of the Premises to Tenant within fifteen (15) business days
following the full execution of this Lease, then at any time thereafter, (until
such lease with ATN is terminated and exclusive possession of the Premises
delivered to Tenant), either party shall have the right to terminate this Lease
by written notice to the other party, and both parties shall thereafter be
released from all obligation hereunder, except as otherwise provided herein.
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[THIS SPACE INTENTIONALLY LEFT BLANK]
Dated as of the date first above written.
TENANT:
FINANTRA CAPITAL. INC., Address:
a Florida corporation 1100 Ponce de Leon Blvd.
Coral Gables, FL 33134
By:__________________________ Witnesses:
Name:________________________ ____________________________
Title:_______________________ ____________________________
LANDLORD:
SKW II REAL ESTATE LIMITED Address:
PARTNERSHIP, 600 East Las Colinas Blvd., Suite 1900
a Delaware limited Partnership Irving, Texas 75039
By: SKW II GEN-PAR, INC.,
a Delaware corporation
Its: general partner Witnesses:
By:__________________________ ____________________________
____________________________
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Lease Grant.......................................................................................................1
Term..............................................................................................................1
Rent..............................................................................................................1
(a) Basic Rent......................................................................................1
(b) Payment.........................................................................................1
(c) Operating Expenses..............................................................................2
Delinquent Payment; Handling Charges..............................................................................4
Security Deposit..................................................................................................4
Landlord's Obligations............................................................................................4
(a) Services........................................................................................5
(b) Excess Utility Use..............................................................................5
(c) Restoration of Services; Abatement..............................................................5
Improvements; Alterations; Repairs; Maintenance...................................................................6
(a) Improvements; Alterations.......................................................................6
(b) Repairs; Maintenance............................................................................6
(c) Performance of Work.............................................................................6
(d) Mechanic's Liens................................................................................7
Use...............................................................................................................7
Assignment and Subletting.........................................................................................7
(a) Transfers; Consent..............................................................................7
(b) Cancellation....................................................................................8
(c) Additional Compensation.........................................................................8
Insurance; Waivers; Subrogation; Indemnity........................................................................9
(a) Insurance.......................................................................................9
(b) Waiver of Negligence; No Subrogation............................................................9
(c) Indemnity.......................................................................................9
Subordination Attornment; Notice to Landlord's Mortgagee.........................................................10
(a) Subordination..................................................................................10
(b) Attornment.....................................................................................10
(c) Notice to Landlord's Mortgagee.................................................................10
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(d) Landlord's Mortgagee's Protection Provisions...................................................10
Rules and Regulations............................................................................................11
Condemnation.....................................................................................................11
(a) Total Taking...................................................................................11
(b) Partial Taking - Tenant's Rights...............................................................11
(c) Partial Taking - Landlord's Rights.............................................................11
(d) Award..........................................................................................11
Fire or Other Casualty...........................................................................................12
(a) Repair Estimate................................................................................12
(b) Landlord's and Tenant's Rights 12
(c) Landlord's Rights..............................................................................12
(d) Repair Obligation..............................................................................12
Taxes............................................................................................................12
Events of Default................................................................................................13
Remedies.........................................................................................................14
Payment by Tenant; Non-Waiver....................................................................................14
(a) Payment by Tenant..............................................................................14
(b) No Waiver......................................................................................15
Landlord's Lien..................................................................................................15
Surrender of Premises............................................................................................15
Holding Over.....................................................................................................15
Certain Rights Reserved by Landlord..............................................................................16
Miscellaneous....................................................................................................16
(a) Landlord Transfer..............................................................................16
(b) Landlord's Liability...........................................................................16
(c) Force Majeure..................................................................................16
(d) Brokerage......................................................................................17
(e) Estoppel Certificates..........................................................................17
(f) Notices........................................................................................17
(g) Separability...................................................................................17
(h) Amendments; and Binding Effect.................................................................17
(i) Quiet Enjoyment................................................................................17
(j) No Merger......................................................................................18
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(k) No Offer.......................................................................................18
(l) Entire Agreement...............................................................................18
(m) Waiver of Jury Trial...........................................................................18
(n) Governing Law..................................................................................18
(o) Joint and Several Liability....................................................................18
(p) Financial Reports..............................................................................18
(q) Landlord's Fees................................................................................18
(r) Telecommunications.............................................................................19
(s) Confidentiality................................................................................19
(t) Notice Concerning Radon Gas....................................................................19
(u) No Right to Terminate..........................................................................19
(v) No Liability for Crimes........................................................................19
(w) List of Exhibits...............................................................................20
(x) Corporate Tenancy..............................................................................20
(y) General Definitions............................................................................20
(z) Hazardous Materials............................................................................21
Other Provisions.................................................................................................21
LIST OF DEFINED TERMS
Additional Rent...................................................................................................2
Affiliate.........................................................................................................7
AS-IS............................................................................................................21
Basic Rent........................................................................................................1
Building..........................................................................................................1
Casualty..........................................................................................................9
Commencement Date.................................................................................................1
Construction Allowance...........................................................................................22
Damage Notice.....................................................................................................9
Event of Default.................................................................................................10
Expense Stop......................................................................................................2
Hazardous Materials..............................................................................................15
including........................................................................................................15
Landlord..........................................................................................................1
Landlord's Mortgage...............................................................................................8
Law..............................................................................................................15
Laws.............................................................................................................15
Lease.............................................................................................................1
Loss..............................................................................................................7
Office Space.....................................................................................................29
Office Notice....................................................................................................29
Operating Costs...................................................................................................2
Operating Costs and Tax Statement.................................................................................3
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Parking Area.....................................................................................................23
Permitted Use.....................................................................................................5
Premises..........................................................................................................1
Proportionate Share...............................................................................................3
Rent..............................................................................................................1
Security Deposit..................................................................................................3
Taking............................................................................................................8
Taxes.............................................................................................................3
Tenant............................................................................................................1
Tenant Party.....................................................................................................15
Term..............................................................................................................1
Total Construction Costs.........................................................................................22
Transfer..........................................................................................................6
Work.............................................................................................................21
Working Drawings.................................................................................................21
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</TABLE>
