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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
AMENDMENT NO. 1 TO
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended Commission File Number
December 31, 1998 0-5613
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REXX ENVIRONMENTAL CORPORATION
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(Exact name of registrant as specified in its charter)
New York 13-2625545
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
350 Park Avenue, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 750-7755
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $. 02
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(Title of Class)
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Item 10. Directors and Executive Officers of the Registrant
Directors
The following table gives certain information as of April 15,
1999 concerning the Company's directors.
<TABLE>
<CAPTION>
Director Number Percent of
Name Age Biographical Information Since of Shares Outstanding
- ---- --- ------------------------ -------- --------- -----------
<S> <C> <C> <C> <C>
Arthur L. 57 Chairman of the Board of Directors and Chief 1979 535,951(1) 21.2%(1)
Asch Executive Officer of the Company, and member of
the Executive and Nominating Committees.
Chairman of the Oak Hill Sportswear Division of
Donnkenny Apparel, Inc. from July 1995 through
December 1997.
Michael A. 32 President and Chief Operating Officer and Treasurer 1996 103,333(2) 4.1%(2)
Asch of the Company since January 1997 and Chief
Financial Officer since March 1994. Member of the
Executive, Compensation and Nominating
Committees. From March 1994 through December
1996, Vice President of the Company. From July
1995 through December 1996, Vice President and
Chief Financial Officer of the Oak Hill Sportswear
Division of Donnkenny Apparel, Inc. Since February
1992, President and principal of Anniston Capital,
Inc. (investment banking). Michael A. Asch is the
son of Arthur L. Asch.
Joseph 63 Secretary of the Company and member of the 1979 -- --
Greenberger Executive, Nominating, Audit, and Stock Option
Committees. Practitioner at his New York law office.
James L. 55 Member of the Audit, Compensation and Stock 1997 10,000(3) *(3)
Hochfelder Option Committees. President of Beldoch Industries
Corporation, Inc. (women's apparel) for more than
10 years.
</TABLE>
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<TABLE>
<CAPTION>
Director Number Percent of
Name Age Biographical Information Since of Shares Outstanding
- ---- --- ------------------------ -------- --------- -----------
<S> <C> <C> <C> <C>
Brian A. 33 Member of the Audit, Compensation and Stock 1997 5,000(3) *(3)
Wasserman Option Committees. Managing Member of the
Whitestone Group, LLC (investment and merchant
banking, venture capital) and affiliates since
December 1997. Treasurer of Engex, Inc. (closed end
mutual fund), Chief Financial Officer of American
Investors Advisors, Inc. (Investment advisor),
Investment Analyst of Kinder Investments, LP, Chief
Financial Officer of D. H. Blair Investment Banking
Corp. (investment banking), Investment Analyst of
Venturetek, LP (venture capital limited partnership)
and Investment Analyst of Sutton Partners, LP (venture
capital limited partnership)from April 1992 to
December, 1997. Founder and Chief Financial Officer of
First Lawrence Capital Corp. (investment banking) from
March 1996 to December, 1997. Director of Heuristic
Development Corp. (formerly a developer of computer
integrated systems) since December 1997.
</TABLE>
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* Less than 1%.
(1) See Note 1 to Item 12, "Security Ownership of Certain Beneficial Owners
and Management."
(2) Includes 6,000 shares held as custodian for minor children. Mr. Asch
disclaims beneficial ownership of these shares. Includes 67,333 shares
underlying stock options exercisable within 60 days, and excludes
16,667 shares underlying options not exercisable within 60 days.
(3) Includes 5,000 shares underlying stock options exercisable within 60
days, and excludes 10,000 shares underlying stock options not
exercisable within 60 days.
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Executive Officers
The Company has two corporate executive officers, Arthur L.
Asch and Michael A. Asch. See "Directors," above. Its Watkins Contracting, Inc.
("WCI") operating subsidiary has three executive officers, Greg S. Watkins,
Daren J. Barone and John Sullivan, III. Their ages, business experience over the
last five years and the number of shares of the Company's Common Stock
beneficially owned by each of them as of April 15, 1999, are set forth below:
<TABLE>
<CAPTION>
Number Percent of
Age Business Experience of Shares Outstanding
--- ------------------- --------- -----------
<S> <C> <C> <C> <C>
Greg S. Watkins 34 President of WCI since January 100,000(1) 4.1%(1)
President of WCI 1995. Secretary and Treasurer of
WCI from July 1991 to January 1995 and
Vice President from June 1992 to January
1995.
Daren J. Barone 34 CEO of WCI since November 1997 200,000(1) 8.1%(1)
CEO of WCI and Secretary and Treasurer since
January 1995. Sales manager of
WCI from February 1992 to January
1995.
John Sullivan, III 32 CFO of WCI since April 1998. Prior 2,500(2) *(2)
CFO of WCI thereto, CFO of TC Construction Co.
for more than five years.
</TABLE>
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* Less than 1%.
(1) Excludes 20,000 shares underlying stock options not exercisable within
60 days.
(2) Includes 2,500 shares underlying stock options exercisable within 60
days and excludes 17,500 shares underlying stock options not
exercisable within 60 days.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more that ten percent
of the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the American Stock
Exchange, the exchange on which the Common Stock is listed for trading.
Officers, directors and more than ten percent stockholders are required by
regulations promulgated under the Exchange Act to furnish the Company with
copies of all Section 16(a) reports filed. Based on the Company's review of such
reports filed for its fiscal year ended December 31, 1998, it believes that all
reporting requirements applicable to its officers, directors, and more than ten
percent stockholders were complied with for the year ended December 31, 1998.
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Item 11. Executive Compensation
The following table summarizes for the Company's fiscal year
ended December 31, 1998 and for the two prior fiscal years, the compensation
earned by its Chief Executive Officer and by the other executive officers in its
fiscal year ended December 31, 1998 whose total annual compensation exceeded
$100,000 in the fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
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Annual Compensation Securities
Name and ------------------- Other Annual Underlying All Other
Position Year Salary ($) Bonus ($) Compensation (1) ($) Option (#) Compensation(2)
- -------- ---- ---------- --------- -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. 1998 $ 225,000(3) --- $ --- --- ---
Asch 1997 $ 50,000(3) $120,000 $ --- --- $1,820
(Chief 1996 $ 50,000(3) --- $ --- 30,000 $2,400
Executive
Officer)
Michael A. 1998 $215,000(4) --- $ --- --- ---
Asch 1997 $215,000(4) --- $ --- --- $8,400
(Chief 1996 $ 25,000(4) --- $ --- 50,000 $ 900
Operating
and Chief
Financial
Officer)
Greg S. 1998 $180,000 (5) --- $ --- 20,000 $1,415
Watkins
(President of
WCI)
Daren J. 1998 $180,000 (5) --- $ --- 20,000 $1,500
Barone
(CEO of
WCI)
</TABLE>
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(1) No executive officer's perquisites equaled or exceeded 10% of his cash
compensation and bonus.
(2) Represents amounts paid under the Company's defined contribution
pension and profit sharing plans in 1996 and 1997 and under WCI's
401(k) Plan in 1998.
(3) Until July 24, 1995, when the sale of the Company's Sportswear Division
was consummated, Arthur L. Asch was compensated by the Company at the
rate of $500,000 per year, and he was compensated by the new owner of
the Sportswear Division from July 25, 1995 through December 31, 1997 at
the rate of $450,000 per year. As negotiated in connection with the
sale of the Sportswear Division, from July 25, 1995 through December
31, 1997 he was paid regular compensation by the Company at the rate of
$50,000 per year. Although on January 22, 1998, the Board's
Compensation Committee authorized compensation to Mr. A. Asch at the
rate of $325,000 per year, on March 19, 1999 he and the Committee
reduced his rate of
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compensation to $225,000 a year for 1998 through February 28, 1999, and
agreed that he would be paid no compensation by the Company from March
1, 1999 until further Compensation Committee action.
(4) Until July 24, 1995, the Company compensated Michael A. Asch at the
rate of $215,000 per year, and he was compensated by the new owner of
the Sportswear Division from July 25, 1995 through December 31, 1996 at
the rate of $165,000 per year. As negotiated in connection with the
sale of the Sportswear Division, from July 25, 1995 through December
31, 1996 he was compensated by the Company at the rate of $25,000 per
year. Although on January 22, 1998, the Board's Compensation Committee
authorized compensation to Mr. M. Asch at the rate of $215,000 per
year, on March 19, 1999 he and the Committee agreed that he would be
paid no compensation by the Company from March 1, 1999 until further
Compensation Committee action.
(5) See Item 13, "Certain Relationships and Related Transactions."
Stock Options
The following table sets forth information concerning the
number of options granted and the potential realized value of the Stock Options
granted to each of the Company's executive officers during its fiscal year ended
December 31, 1998:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation For
Individual Grant Option Terms
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Percent of
Number of Total
Securities Options
Underlying Granted to Exer-
Options Employees cise
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) date 5% ($) 10% ($)
---- ------------ ---------- ------ ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Daren J. Barone 20,000 16.8% $2.00 12/17/03 $20,600 $36,200
John Sullivan, III 10,000 8.4% $5.00 4/26/03 --- ---
John Sullivan, III 10,000 8.4% $2.00 12/17/03 $10,300 $18,100
Greg S. Watkins 20,000 16.8% $2.00 12/17/03 $20,600 $36,200
</TABLE>
The following table sets forth information concerning options exercised
during the fiscal year ended December 31, 1998 and the number of unexercised
options and the computed value thereof held by the Company's executive officers
at the end of such fiscal year:
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Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Year-End (#) Fiscal Year-End($)
On Value ----------------------------- -----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur L. Asch --- --- 60,000 10,000 $7,500 $3,750
Michael A. Asch --- --- 67,333 16,667 $12,500 $6,250
Daren J. Barone --- --- --- 20,000 --- $7,500
John Sullivan, III --- --- --- 20,000 --- $3,750
Greg S. Watkins --- --- --- 20,000 --- $7,500
</TABLE>
Deferred Compensation Plans
The Company has non-contributory defined contribution pension
and profit sharing plans covering certain employees (including executive
officers ) of the Company, and WCI, the Company's wholly-owned operating
subsidiary, has a matching contribution 401(k) retirement plan covering certain
employees (including its executive officers) of WCI. Neither the Company nor WCI
has a defined benefit or actuarial plan.
Compensation of Directors
As directors who are not also officers or employees of the
Company, Mr. Hochfelder and Mr. Wasserman are each paid a director's fee at the
rate of $10,000 a year.
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following are believed by the Company to be the beneficial
owners of more than 5% of its outstanding Common Stock and by all directors and
executive officers as a group, as of April 15, 1999:
<TABLE>
<CAPTION>
Number of Percent of
Name and Address Shares Outstanding
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<S> <C> <C>
Arthur L. Asch 535,951(1) 21.2%(1)
350 Park Avenue
New York, New York 10022
Daren J. Barone 200,000(2) 8.1%(2)
c/o Watkins Contracting, Inc.
8690 Aero Drive, Suite M327
San Diego, CA 92123
All directors and executive officers 956,784(1) 36.7%(1)(2)(3)
as a group (8 persons)
</TABLE>
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(1) Includes 25,000 shares held by Mr. Asch's wife in which he disclaims
beneficial ownership. Also includes 60,000 shares underlying options
which become exercisable within 60 days, and excludes 10,000 additional
shares underlying options not exercisable within 60 days.
(2) Excludes 20,000 shares underlying options not exercisable within 60
days.
(3) For information regarding beneficial ownership of the Company's Common
Stock by each of its directors and executive officers, see Item 10,
"Directors and Executive Officers of the Registrant."
Item 13. Certain Relationships and Related Transactions
Greg S. Watkins and Daren J. Barone are executive officers of
WCI. The Company acquired WCI from them on October 21, 1997. The consideration
given to Mr. Watkins and Mr. Barone for the acquisition included rights
entitling each of them to sell back to the Company, at $5.00 per share, up to
25,000 shares of such common stock per quarter, starting April 1, 2000, if WCI
earns in excess of $2,700,000 pretax income (as defined therein) during 1999.
Employment Agreements, dated October 21, 1997, between Mr. Watkins and WCI and
Mr. Barone and WCI, were executed pursuant to the Stock Purchase Agreement,
dated October 21, 1997, between the Company, as buyer, and Mr. Watkins and Mr.
Barone, as sellers, pursuant to which said acquisition was consummated. Said
Employment Agreements entitle Mr. Watkins and Mr. Barone to each receive from
WCI a salary, until December 31, 2000, at the rate of $180,000 a year, incentive
compensation equal to 5% of the annual pretax income (as defined in the
Employment Agreements) of WCI above $2,700,000, and additional incentive
compensation equal to 2.5% of the annual pretax income of WCI above the greater
of WCI's previous year's pretax income or $2,700,000.
Anniston Capital, Inc., a corporation controlled by Michael A.
Asch, a director and executive office, paid the Company $6,600 in 1998 for its
use of Company office facilities and other office expenses.
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Joseph Greenberger, a director, is legal counsel to the
Company. He was paid approximately $75,000 for his regular legal services in
1998 and for legal services during the year in connection with a proposed
acquisition with respect to which the Company terminated negotiations. The
Company expects to incur fees to him in excess of $60,000 for his regular legal
services and for legal services in connection with a proposed transaction in
1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
REXX ENVIRONMENTAL CORPORATION
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(Registrant)
By /s/ Arthur L. Asch
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Arthur L. Asch, Chairman of the Board
Date: April 29, 1999
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