<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1997
REGISTRATION NO. 333-09831
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GENERAL CREDIT CORPORATION
(Name of small business issuer in its charter)
---------------------
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<S> <C> <C>
NEW YORK STATE 6099 13-3895072
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
211 EAST 70TH STREET
NEW YORK, NEW YORK 10021
(212) 861-2867
(Address and telephone number of principal executive offices)
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211 EAST 70TH STREET
NEW YORK, NEW YORK 10021
(Address of principal place of business or intended principal place of business)
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IRWIN ZELLERMAIER
211 EAST 70TH STREET
NEW YORK, NEW YORK 10021
(212) 861-2867
(Name, address, and telephone number of agent for service)
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Copies to:
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CHARLES J. RENNERT DAVID A. CARTER, P.A.
BERMAN WOLFE & RENNERT, P.A. 355 WEST PALMETTO PARK ROAD
INTERNATIONAL PLACE, SUITE 3500 BOCA RATON, FLORIDA 33432
100 SOUTHEAST SECOND STREET (561) 750-6999
MIAMI, FLORIDA 33131-2130 FAX: (561) 367-0960
(305) 577-4177 (COUNSEL FOR THE UNDERWRITERS)
FAX: (305) 373-6036
(COUNSEL FOR THE COMPANY)
</TABLE>
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
(Continued on next page)
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(Continued from previous page)
CALCULATION OF REGISTRATION FEE
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PROPOSED AMOUNT OF
AMOUNT TO PROPOSED MAXIMUM MAXIMUM AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED BE REGISTERED OFFERING PRICE(1) OFFERING PRICE(1) FEE
- -------------------------------------------------- ------------- ----------------- ----------------- ------------
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Units, each consisting of three shares of Common
Stock, $.001 par value ("Common Stock"), and six
Warrants to acquire six shares of Common
Stock(2)........................................ 1,035,000 $10.00 $10,350,000 $ 3,137
Common Stock included as part of the Units........ 3,105,000 -- -- --
Warrants included as part of the Units(3)......... 6,210,000 -- -- --
Common Stock underlying the Warrants.............. 6,210,000 $3.375 $20,958,750 $ 6,352
Representative Options(3)(4)...................... 90,000 $ .0011 $ 10 $ .33
Representative Units.............................. 90,000 $16.50 $ 1,485,000 $ 450
Common Stock included as part of the
Representative Units............................ 270,000
Warrants included as part of the Representative
Units(3)........................................ 540,000
Common Stock underlying the Warrants included as
part of the Representative Units................ 540,000 $3.375 $ 1,822,500 $ 553
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Total............................................. $10,492.33*
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(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
registration fee.
(2) Includes a total of 135,000 Units, which consist of 405,000 shares of Common
Stock and 810,000 Warrants, subject to an over-allotment option granted by
the Company to Barron Chase Securities, Inc., the representative of the
several underwriters identified elsewhere herein. See "Underwriting."
(3) This Registration Statement also covers any additional securities that may
become issuable pursuant to anti-dilution provisions of the Warrants and
the Representative Options.
(4) The Representative Options allow the holder to purchase 90,000 Units, each
Unit consisting of three shares of Common Stock and six Warrants to acquire
an additional six shares of Common Stock.
* Of which $6,065.75 has been previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 20, 1997
PROSPECTUS
(LOGO) GENERAL CREDIT CORPORATION
900,000 UNITS
(EACH UNIT CONSISTS OF THREE SHARES OF COMMON STOCK AND
SIX WARRANTS TO PURCHASE AN ADDITIONAL SIX SHARES OF COMMON STOCK)
General Credit Corporation (the "Company") is offering hereby 900,000 units
(the "Units"), each Unit consisting of three shares (the "Shares") of common
stock, par value $.001 per share (the "Common Stock") and six warrants, each
exercisable to purchase an additional share of Common Stock at $3.375 per share,
subject to adjustment in certain circumstances, exercisable during the five year
period commencing on the date of this Prospectus (the "Purchase Warrants"). The
Units, the Shares and the Purchase Warrants are sometimes collectively referred
to as (the "Securities"). The Purchase Warrants offered hereby are not
exercisable unless, at the time of exercise, the Company has a current
prospectus covering the shares of Common Stock issuable upon exercise of the
Purchase Warrants and such shares have been registered, qualified or deemed to
be exempt under the securities laws of the states of residence of the exercising
holders of the Purchase Warrants. Commencing after the date of this Prospectus
(the "Effective Date"), the Purchase Warrants are subject to redemption by the
Company, at the option of the Company, at $0.25 per Purchase Warrant, upon 30
days' prior written notice, if the closing bid price, as reported on The Nasdaq
SmallCap Market ("Nasdaq"), or the closing sale price, as reported on a national
or regional securities exchange, as applicable, of the shares of the Common
Stock for 30 consecutive trading days ending within ten days of the notice of
redemption of the Purchase Warrants averages in excess of $6.00 per share,
subject to adjustment. The Company is required to maintain an effective
registration statement with respect to the Common Stock underlying the Purchase
Warrants prior to redemption of the Purchase Warrants. Prior to the first
anniversary of the Effective Date, the Purchase Warrants will not be redeemable
by the Company without the written consent of the Underwriter. Upon issuance of
the Units, the Shares and the Purchase Warrants included in the Units will be
immediately detachable and separately tradeable. See "RISK
FACTORS -- Non-Registration in Certain Jurisdictions of Shares Underlying the
Purchase Warrants."
Prior to this Offering, there has been no public market for the Units, the
Common Stock or the Purchase Warrants. The Units, Common Stock and Purchase
Warrants have been approved for listing on Nasdaq under the symbols " ,"
" " and " ," respectively. There is no assurance that an active trading
market in the Units, the Common Stock or Purchase Warrants will develop or that,
if developed, any such market will be sustained. The offering price of the
Units, Shares and Purchase Warrants, as well as the exercise price and other
terms of the Purchase Warrants, have been determined by negotiation between the
Company and Barron Chase Securities, Inc. (the "Representative"), acting as
representative of the several underwriters identified elsewhere herein (the
"Underwriters") and bear no relationship to the Company's asset value, net worth
or other established criteria of value. THE CLOSING OF THIS OFFERING ("CLOSING")
IS SUBJECT TO THE SIMULTANEOUS ACQUISITION BY THE COMPANY OF THE BUSINESS OF NEW
YORK PAYROLL FACTORS, INC., A NEW YORK CORPORATION (THE "NYPF BUSINESS
COMBINATION"). See "RISK FACTORS" and "UNDERWRITING."
---------------------
THE SECURITIES ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. IN ADDITION, PURCHASERS OF THE SECURITIES WILL SUFFER IMMEDIATE
SUBSTANTIAL DILUTION IN THAT THE BOOK VALUE PER SHARE OF THE COMMON STOCK AFTER
THIS OFFERING WILL BE SUBSTANTIALLY LESS THAN THE PUBLIC OFFERING PRICE OF THE
COMMON STOCK. SEE "RISK FACTORS" AND "DILUTION" AT PAGES 6 AND 16.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO PUBLIC UNDERWRITING DISCOUNTS(1) PROCEEDS TO COMPANY(2)
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Per Unit............................ $10.00 $1.00 $9.00
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Total(3)............................ $9,000,000 $900,000 $8,100,000
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See footnotes on page 2 of Prospectus
(LOGO) Barron Chase Securities
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 4
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(1) Does not include additional underwriting compensation in the form of (i) a
non-accountable expense allowance (the "Non-Accountable Expense Allowance")
equal to 3% of the total public offering price for the Securities ($.30 per
Unit); (ii) purchase options (the "Representative Options" or
"Representative Warrants" or "Underwriter Warrants"), for nominal
consideration, to purchase up to 90,000 Units at an exercise price of
$16.50 per Unit (165% of the initial public offering price), exercisable
during a five-year period commencing on the Effective Date, and (iii)
engagement by the Company of the Representative as a non-exclusive
financial advisor to the Company for a period of three years from the
Closing at a fee of $108,000, payable at the Closing. The Company has
registered the Representative Options and the securities underlying the
Representative Options (the "Underlying Securities") and has agreed to
certain additional registration rights with respect to the Representative
Options and the Underlying Securities under the Securities Act of 1933, as
amended (the "Securities Act"). In addition, the Company has agreed to
indemnify the Underwriters against certain civil liabilities, including
liabilities under the Securities Act. See "UNDERWRITING."
(2) Before deducting expenses of this Offering payable by the Company (excluding
the Underwriting Discount), including the Non-Accountable Expense
Allowance, federal and state registration and filing fees and taxes, and
listing, printing, legal, accounting and transfer agent fees (collectively,
the "Offering Costs"). The net proceeds to the Company, after deducting all
commissions and the Offering Costs (the "Net Proceeds"), are estimated to
be $7,344,500 (approximately 81.6% of the gross proceeds of this Offering),
or $8,519,000 (approximately 82.3% of the gross proceeds of this Offering)
if the Over-Allotment Option (as hereinafter defined) is exercised in full.
(3) The Company has granted to the Representative an option, exercisable within
45 days after the Effective Date, to purchase up to 135,000 additional
Units on the same terms and conditions as set forth above, solely to cover
over-allotments, if any (the "Over-Allotment Option"). If the
Over-Allotment Option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company for Securities will be
increased to $10,350,000, $1,035,000 and $9,315,000. See "UNDERWRITING."
The Securities are offered subject to prior sale, when, as and if delivered
to and accepted by the Underwriters and subject to the approval of certain legal
matters by counsel and certain other conditions. It is expected that delivery of
the certificates representing the Securities will be made at the offices of
Barron Chase Securities, Inc., 7700 West Camino Real, Suite 200, Boca Raton,
Florida 33433, on or about , 1997.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act") and, in accordance therewith,
is required to file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Upon the Closing, the
Securities will be listed on Nasdaq. Accordingly, such reports, proxy statements
and other information can be inspected and copied at the Commission's principal
office, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549; the Northeast Regional Office of the Commission at 7 World Trade Center,
Suite 1300, New York, New York 10048; and the Midwest Regional Office of the
Commission, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained upon payment of the fees
prescribed by the Commission from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Such documents may
also be obtained through the website maintained by the Commission at
http://www.sec.gov. In addition, reports and other information concerning the
Company are available for inspection and copying at the offices of Nasdaq, 1735
K Street, N.W., Washington, D.C. 20006.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE REGISTERED
SECURITIES ISSUED IN THIS OFFERING AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON NASDAQ OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INVESTORS SHOULD CAREFULLY REVIEW THE FINANCIAL STATEMENTS WHICH ARE AN
INTEGRAL PART OF THIS PROSPECTUS.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety.
THE COMPANY
Since its inception as a New York corporation in February 1995, the
Company's activities have been limited to administrative activities and, in
February 1996, entering into an agreement to purchase the business of New York
Payroll Factors, Inc., a New York corporation organized in January 1989
("NYPF"). To date, the Company has not generated any revenues nor engaged in any
operations. THE CLOSING IS SUBJECT TO THE SIMULTANEOUS CLOSING OF THE NYPF
BUSINESS COMBINATION.
Since the purchase of its current business in January 1992, NYPF has
provided working capital financing to its customers (the "NYPF Customers")
through the discounted purchase of checks (commonly referred to as "check
factoring"), generally on a non-recourse basis with respect to the NYPF
Customers except to the extent of forged signatures on and stop payments of the
purchased checks. The NYPF Customers are small-and medium-sized independent
contracting firms located in the New York City metropolitan area and northern
New Jersey area, some of which provide goods and services to labor intensive
businesses such as apparel manufacturers (commonly referred to as "garment
industry" firms) and construction firms. Included among the NYPF Customers are
sewing contractors, wholesale distributors, independent trucking companies,
printing companies, converters, healthcare providers, insurers and commercial
real estate owners. The makers of the checks are manufacturers, construction
firms and other businesses paying for goods or services purchased from the NYPF
Customers. Occasionally, NYPF purchases checks directly from the manufacturers,
construction firms and other businesses themselves. The NYPF Customers, typical
of garment industry contractors and other small- and medium-sized vendors
generally, face extraordinary periodic short-term cash requirements. By
factoring checks, the NYPF Customer can realize cash more quickly.
For the fiscal years ended December 31, 1995 and 1996, NYPF generated net
income of $288,601 and $465,269, respectively, from the negotiation by it of
checks purchased from NYPF Customers. See Financial Statements of NYPF.
Management of NYPF estimates that as of March 1, 1997, there were over 1,800
NYPF Customers (900 of which were active on a monthly basis), approximately
1,350 of which were predominantly Asian sewing contractors (650 of which were
active on a monthly basis).
Management of NYPF estimates that NYPF typically purchases checks for
between 98% and 99% of the face amount of the check, depending on the amount of
the check, the historical volume of checks purchased by NYPF from each NYPF
Customer, whether the checks are presented directly by the NYPF Customer or
through a broker, whether the checks actually have been presented to NYPF at the
time of NYPF's payment to the NYPF Customer, and whether those checks are
post-dated. (Management of NYPF believes that the dollar amount of checks
purchased before they are presented to NYPF, and post-dated checks, is not
material.) The weighted average discounted purchase price is 98.9% of the face
amount of the check. The difference between the face amount of the check and
NYPF's purchase price for the check is known as the "discount." The discount is
negotiated on a case by case basis. The Company believes that the NYPF Customers
prefer NYPF as opposed to more conventional financial institution financing as a
source of funds because (i) NYPF does not require complex credit agreements,
credit evaluation of NYPF Customers, guarantees or other credit enhancement,
financial statements, collateral or a minimum borrowing base of receivables or
inventory, all or some of which would typically be required by a financial
institution prior to establishing an accounts receivable or asset based line of
credit, and (ii) NYPF provides liquidity virtually upon demand of the NYPF
Customers, in larger amounts daily than most financial institutions are able to
supply. Management of NYPF estimates that during the year ended December 31,
1996, the average face amount of a check purchased by NYPF was approximately
$3,600 (unaudited). In an attempt to limit its exposure arising from a purchased
check not being collectible, NYPF's policy is rarely to purchase any check the
face amount of which is in excess of $50,000. See "RISK FACTORS -- Credit
Losses; Recessionary Environment" and "PROPOSED BUSINESS."
3
<PAGE> 6
The Company's office is located at 211 East 70th Street, New York, New York
10021 and its telephone number is (212) 861-2867.
THE OFFERING
Securities offered......... 900,000 Units, each Unit consisting of three shares
of Common Stock and six Purchase Warrants. Each
Purchase Warrant entitles the holder to purchase
one share of Common Stock at $3.375 per share,
subject to adjustment, at any time prior to
expiration and before the fifth anniversary of
the date of this Prospectus. The Purchase
Warrants offered hereby are not exercisable
unless, at the time of exercise, the Company has
a current prospectus covering the shares of
Common Stock issuable upon exercise of the
Purchase Warrants and such shares have been
registered, qualified or deemed to be exempt
under the securities laws of the states of
residence of the exercising holders of the
Purchase Warrants. Commencing after the Effective
Date, the Purchase Warrants are subject to
redemption by the Company, at the option of the
Company, at $0.25 per Purchase Warrant, upon 30
days prior written notice, if the closing bid
price, as reported on Nasdaq, or the closing sale
price, as reported on a national or regional
securities exchange, as applicable, of the shares
of the Common Stock for 30 consecutive trading
days ending within ten days of the notice of
redemption of the Purchase Warrants averages in
excess of $6.00 per share, subject to adjustment.
The Company is required to maintain an effective
registration statement with respect to the Common
Stock underlying the Purchase Warrants prior to
redemption of the Purchase Warrants. Prior to the
first anniversary of the Effective Date, the
Purchase Warrants will not be redeemable by the
Company without the written consent of the
Underwriter. See "DESCRIPTION OF SECURITIES" and
"UNDERWRITING."
Shares of Common Stock
Outstanding Prior to this
Offering................. 560,000 shares
After this Offering(1)..... 3,385,000 shares
Estimated Net Proceeds..... $7,344,500 (or $8,519,000 if the Over-Allotment
Option is exercised in full)
Use of Proceeds............ Approximately $4,275,000 (58.2%, or 50.1% if the
Over-Allotment Option is exercised in full) of
the Net Proceeds will be used to consummate the
NYPF Business Combination. $518,000 will be used
to retire Company indebtedness to certain
individuals (the "Private Debt") and $2,551,500
(34.7%) of the estimated Net Proceeds of
$7,344,500 (or $3,726,000 or 43.7% of the
estimated Net Proceeds of $8,519,000 if the
Over-Allotment Option is exercised in full) in
the aggregate will be used for the discounted
purchase of checks, the payment of operating
expenses and other working capital purposes. See
"USE OF PROCEEDS" and "PROPOSED BUSINESS."
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PURCHASE
UNITS COMMON STOCK WARRANTS
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Proposed Nasdaq Symbols(2).........................
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4
<PAGE> 7
RISK FACTORS AND DILUTION
The Securities involve a high degree of risk and immediate substantial
dilution and should not be purchased by investors who cannot afford the loss of
their entire investment. See "RISK FACTORS," "DILUTION" and "USE OF PROCEEDS."
Purchasers of the Units will incur immediate substantial dilution of their
investment. The unaudited net tangible book value of the Common Stock as of
December 31, 1996 was $(783,433) or ($.45) per share. Immediately after the
issuance of an aggregate of 125,000 shares of the Common Stock in connection
with the closing of the NYPF Business Combination and the Closing (assuming that
a value of $0.125 is ascribed to the Purchase Warrants) and application of the
Net Proceeds, estimated to be $7,344,500, assuming no exercise of the
Over-Allotment Option, the pro forma net tangible book value will be $2,494,259
or $.74 per share, reflecting an immediate dilution of $2.34 per share (which
represents approximately 76% of the public offering price of the Shares). See
"DILUTION" and Financial Statements of the Company.
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(1) Includes the issuance of an aggregate of 125,000 shares of the Common Stock
to Gerald Nimberg, an affiliate of NYPF, in connection with the closing of
the NYPF Business Combination. The numbers of Shares stated in the above
table assume no exercise of the Over-Allotment Option and do not include
5,400,000 shares of Common Stock reserved for issuance upon exercise of the
Purchase Warrants, 810,000 shares of Common Stock reserved for issuance
upon exercise of the Representative Options, and the Purchase Warrants
included in the Representative Options, 198,000 shares of Common Stock
reserved for issuance upon exercise of options (the "Lender Options")
granted by the Company to certain individuals who have loaned funds to the
Company or up to 50,000 shares of Common Stock, reserved for issuance in
the event the Company prepays an aggregate amount of $300,000 of debt
incurred in February 1997 (the "February 1997 Debt"). The Lender Options
are exercisable immediately and continuing through the first anniversary of
the Closing at an exercise price of $1.00 per share. See "USE OF PROCEEDS."
(2) The inclusion of the Units, the Shares and the Purchase Warrants on Nasdaq
does not imply that an established public trading market will develop
therefor or, if developed, that such market will be sustained. See "RISK
FACTORS -- No Assurance of Public Market; Arbitrary Determination of
Offering Price," "USE OF PROCEEDS," "PROPOSED BUSINESS -- The NYPF Business
Combination," "PRINCIPAL SHAREHOLDERS," and "UNDERWRITING."
5
<PAGE> 8
RISK FACTORS
The Securities are speculative, and involve immediate substantial dilution
and a high degree of risk, including, but not necessarily limited to, the
several factors described below. Each prospective investor should consider
carefully the following risk factors inherent in and affecting the business of
the Company and this Offering before making an investment decision.
RECENTLY ORGANIZED COMPANY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES
The Company was incorporated on February 10, 1995 and is in the development
stage. THE CLOSING IS SUBJECT TO THE SIMULTANEOUS CLOSING OF THE NYPF BUSINESS
COMBINATION. Since its inception, the Company's activities have been limited to
administrative activities and, in February 1996, entering into an agreement to
purchase the business of NYPF. The Company, to date, has not generated any
revenues nor engaged in any operations. There can be no assurances that NYPF, at
the time of the NYPF Business Combination, or at any time thereafter, will
derive any material revenues from its operations or operate on a profitable
basis.
GOING CONCERN
The Company's financial statements includes an explanatory paragraph to the
effect that THE COMPANY'S ABILITY TO COMMENCE OPERATIONS IS DEPENDENT ON THE
SALE OF THE SECURITIES OR OTHER FUNDRAISING, WHICH RAISES SUBSTANTIAL DOUBTS
ABOUT ITS ABILITY TO CONTINUE AS A GOING CONCERN, and that the financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern. See "PROPOSED BUSINESS," "EXPERTS" and Financial Statements of
the Company.
ELIMINATION OF LIABILITY FOR DIRECTORS
In accordance with New York law, the Company's Certificate of
Incorporation, as amended (the "Charter"), provides that a director of the
Company shall not be personally liable to the Company or its shareholders for
damages for any breach of duty in his/her capacity as a director, unless a
judgment or other final adjudication adverse to him/her establishes that (i)
his/her acts or omissions were in bad faith or involved intentional misconduct
or a knowing violation of law, or (ii) he/she personally gained in fact a
financial or other advantage to which he/she was not legally entitled or (iii)
his/her acts constituted the declaration of any dividend or other distribution,
approval of the purchase of shares of the Common Stock, the distribution of
assets to shareholders after dissolution of the Company or the making of any
loan to directors, in violation of the New York Business Corporation Law
("Corporate Law"). As a result of such Charter provisions, the rights of the
Company shareholders to recover monetary damages from directors of the Company
for breaches of directors' fiduciary duties may be significantly limited. See
"DESCRIPTION OF SECURITIES -- Charter and By Laws."
COMPETITION
NYPF competes in its check factoring business with firms that provide
working capital financing to small- and medium-sized businesses. Those competing
firms include banks, financial institutions, commercial finance companies and
factoring companies, some of which may have substantially greater financial and
other resources than NYPF. NYPF believes, based on an informal study conducted
by it, that, including NYPF, there are approximately 20 check factoring firms
operating in the New York City "garment district" generating, in the aggregate,
approximately $26,000,000 gross proceeds (amounts collected from the negotiation
of checks purchased) weekly. See "PROPOSED BUSINESS -- Competition." There can
be no assurance that the Company can continue to compete successfully with its
competitors.
GOVERNMENT REGULATION
Under the Bank Secrecy Act and the Financial Recordkeeping and Currency and
Foreign Transactions Reporting Act regulations of the U.S. Department of the
Treasury, each financial institution, including check cashers such as NYPF, must
file a Currency Transaction Report ("CTR") for each deposit, withdrawal,
6
<PAGE> 9
exchange of currency, or other payment or transfer, by, through, or to the
financial institution which involves a transaction in currency of more than
$10,000. Any series of transactions within any calendar day that total more than
$10,000, and that NYPF has knowledge were effected by or on behalf of the same
person, must also be reported. In addition, NYPF is required to report any
"suspicious or unusual activity" to its Bank Secrecy Act examiner, the Internal
Revenue Service. The civil penalty imposed upon NYPF and any director, officer
or employee of NYPF willfully violating these requirements is not more than the
greater of the amount (not to exceed $100,000) involved in the transaction (if
any) or $25,000. Criminal penalties for intentional violations include fines of
up to $500,000, and up to ten years imprisonment, or both.
During a typical week, approximately 25 of NYPF's check factoring
transactions require the filing of a CTR. The Company believes that NYPF's
computerized daily transaction reports, its staff training and supervision and
its diligence and persistence in obtaining from the NYPF Customers the
information required to be reported assist NYPF in complying with these
reporting requirements, but there can be no assurance that all information
reported by NYPF is accurate, complete, and in accordance with such statute and
regulations.
Although some states, including New York, have established limits on
check-cashing fees, management of NYPF has advised the Company that these limits
are not applicable to its business and that, in any event, NYPF's discount of
the face amount of checks that it purchases is within these limits. NYPF is
subject to all local laws and ordinances relating to weapons carried by its
security guards, messengers and other employees.
There can be no assurance that the Company will not be materially adversely
affected by legislation or regulations enacted in the future. See "PROPOSED
BUSINESS -- Regulation."
INHERENT RISKS OF CASH BUSINESS
The check factoring business requires cash availability, which presents a
certain degree of risk of cash shortages from employee error and theft. NYPF has
implemented controls and security procedures to minimize this risk, including a
policy requiring cash counting, before delivery to a NYPF Customer, by two
employees and daily cash activity reconciliation and monthly reconciliation of
cash with bank statements; however, the risk cannot be completely eliminated.
NYPF maintains insurance to cover losses from theft in the amount of $500,000
per occurrence on a claims made basis. In addition, NYPF is subject to losses
from returned checks. See "-- Credit Losses; Recessionary Environment,"
"PROSPECTUS SUMMARY -- The Company," "MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION" and "PROPOSED BUSINESS -- Security."
CREDIT LOSSES; RECESSIONARY ENVIRONMENT
The financial failure or dishonesty of the NYPF Customers or the makers of
the checks presented to the NYPF Customers and ultimately purchased by NYPF may
adversely affect the Company's ability to recover fully amounts due on checks
purchased by the Company. Accordingly, the Company will make provisions for
credit losses. The allowance for credit losses is determined after evaluating
the outstanding checks, current economic conditions, changes in the nature and
the volume of the outstanding checks, past loss experience and other pertinent
considerations. Many of these considerations involve significant estimation and
are subject to rapid changes which may be unforeseen by management and could
result in immediate increased losses and material adjustments to the allowance.
As a result, ultimate losses could be significant and may vary from current
estimates and the amount of provisions for credit losses may be either greater
or less than actual future charge-offs of the bad checks relating to these
provisions. Additionally, NYPF's results of operations could be materially and
adversely affected if NYPF were to experience a loss as a result of the purchase
of fraudulent or otherwise uncollected checks. NYPF's historical credit losses
have been immaterial. See "PROPOSED BUSINESS." Moreover, the risks to which
NYPF's business will be subject become more acute in an economic slowdown or
recession because less business activity is generated by the NYPF Customers,
resulting in decreased factoring fees and financial ability of NYPF Customers
and makers of checks to pay outstanding checks, and in increased credit losses.
Some of the NYPF Customers and their customers are start-up or less
7
<PAGE> 10
mature ventures that may be more susceptible to economic slowdowns or
recessions. See "-- Inherent Risks of Cash Business."
ABILITY OF THE COMPANY TO CONTINUE ITS GROWTH STRATEGY
The Company's growth strategy is dependent upon its ability to increase
NYPF's factored check volume by purchasing checks which are fully collectible.
NYPF experiences turnover in its NYPF Customer base over approximately a
five-year period as a result primarily of credit issues. Therefore, NYPF's
ability to further implement its strategy for continued growth of factored check
volume is largely dependent upon NYPF's ability to attract and retain quality
NYPF Customers in a competitive market and on the business growth of NYPF
Customers, which may be affected by a number of factors not within NYPF's
control. Historical growth rates are not necessarily indicative of future
results. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION -- Results of Operations -- NYPF."
DEPENDENCE ON AVAILABILITY OF FUNDING SOURCES
To date, NYPF has obtained substantially all of its funds for its check
factoring activities from unsecured loans from individuals, including its
officer, Gerald Schultz, and from three financial institutions and three
financial services firms, all of which liabilities are anticipated to be
extinguished upon the closing of the NYPF Business Combination. While the
Company expects to have continued access to credit after expiration of these
facilities, there is no assurance that such financing will be available, or if
available, that it will be on terms as favorable. Although the Company's
management currently is discussing with several lending institutions, including
among others NYPF's current lenders, potential financing arrangements after the
closing of the NYPF Business Combination, no agreements or understandings in
principle exist. In the event the Company were not able to renew or find
alternative financing for its activities, the Company would be forced to curtail
or cease its check factoring business. See "-- Possible Use of Debt Financing;
Debt of NYPF" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --
Liquidity and Capital Reserves -- NYPF."
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company has had no revenues to date and is dependent upon the proceeds
of this Offering to consummate the NYPF Business Combination. Although the
Company believes that the proceeds of this Offering will be sufficient to effect
the NYPF Business Combination, the Company cannot ascertain with any degree of
certainty the capital requirements of NYPF's operations after the Closing. In
the event that the Net Proceeds prove to be insufficient for such purposes, the
Company will be required to seek additional financing. The failure by the
Company to secure such additional financing could have a material adverse effect
on the continued development or growth of the Company. See "-- Dependence on
Availability of Funding Sources," "-- Possible Use of Debt Financing; Debt of
NYPF" and "PROPOSED BUSINESS."
POSSIBLE USE OF DEBT FINANCING; DEBT OF NYPF
There are currently no limitations relating to the Company's or NYPF's
ability to borrow funds to increase the amount of capital available to the
Company to finance the operations of NYPF. The amount and nature of any
borrowings by the Company will depend on numerous considerations, including the
Company's capital requirements, the Company's perceived ability to meet debt
service on any such borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. Although the
Company's management currently is discussing with several lending institutions,
including among others NYPF's current lenders, potential financing arrangements
after the closing of the NYPF Business Combination, no agreements or
understandings in principle exist. There can be no assurances that debt
financing, if required or otherwise sought, would be available on terms deemed
to be commercially acceptable and in the best interests of the Company. The
inability of the Company to borrow funds required to continue its operations or
to provide funds for an additional infusion of capital may have a material
adverse effect on the Company's financial condition and future prospects.
Additionally, to the extent that debt funding ultimately proves to be available,
any borrowings may subject the Company to various risks traditionally associated
with
8
<PAGE> 11
incurring of indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest. As of December 31,
1996, NYPF had available to it (i) financing in the form of informal,
uncollateralized relationships with financial institutions, as well as (ii)
working capital loans made by individuals not affiliated with NYPF in the
aggregate amount outstanding at December 31, 1996 of $1,235,334, acquisition
debt (from the 1992 acquisition by NYPF of its current business) of $98,117, and
loans from an officer of NYPF, Mr. Schultz, in the amount of $689,650. All
amounts outstanding under the relationships, line and loans are anticipated to
be extinguished upon the closing of the NYPF Business Combination. See
"-- Secured Creditor of NYPF," "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION -- Liquidity and Capital Resources -- NYPF" and Notes 3 and 4 to
Financial Statements of NYPF.
SECURED CREDITOR OF NYPF
In June 1996, a Working Capital Management Account Line of Credit Agreement
between NYPF and a financial services firm was activated whereby the maximum
principal amount outstanding at any time would be $300,000, which is
collateralized by most of the assets of NYPF. There can be no assurance that
NYPF will satisfy its obligations under the current agreement and, accordingly,
that the lender will not acquire all or any portion of NYPF's assets in
satisfaction of those obligations. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION -- Liquidity and Capital Resources -- NYPF" and Note 3 to
Financial Statements of NYPF.
EFFECTS OF INFLATION
The Company believes that the results of its operations subsequent to the
NYPF Business Combination could be materially impacted by inflation if inflation
materially adversely affected the operations of the NYPF Customers and their
customers, and if inflation materially increased NYPF's costs of obtaining
working capital (e.g., if the Company entered into larger lines of credit in
lieu of its maintaining some of the current bank deposits against which it
negotiates checks purchased by it).
DEPENDENCE UPON KEY PERSONNEL
The operations of the Company largely depend upon the efforts of Irwin
Zellermaier, the Company's Chairman, Chief Executive Officer and director, and,
until the closing of the NYPF Business Combination, President, David Bader, the
Company's Vice President, Secretary, Treasurer, Chief Financial Officer and
director, and Gerald Nimberg, who, upon the closing of the NYPF Business
Combination, will become the Company's President, Chief Operating Officer and
director. See "MANAGEMENT." It is anticipated that Messrs. Zellermaier, Nimberg
and Bader are the only persons whose activities will be material to the
operations of the Company subsequent to the NYPF Business Combination. Each of
them is or will be, as of the closing of the NYPF Business Combination, a party
to an employment agreement with the Company. The Company has obtained "key man"
life insurance on the lives of Messrs. Zellermaier and Nimberg, each policy
being in the amount of $1,000,000. Although the Company anticipates it will
maintain this "key man" life insurance for at least five years from the
Effective Date, no assurances can be given that such insurance can be maintained
at reasonable rates, if at all. The loss of the services of any of Messrs.
Zellermaier, Bader or Nimberg before suitable replacements are obtained could
have a material adverse effect on the Company's capacity to successfully achieve
its business objectives. See "MANAGEMENT -- Employment Agreements/Executive
Compensation."
CONFLICT OF INTEREST
It is anticipated that Mr. Zellermaier will devote approximately 75% of his
business time to the affairs of the Company and, accordingly, may have conflicts
of interest in allocating his management time among the Company's operations and
various real estate-related activities that will not be in conflict with the
Company's business. See "MANAGEMENT -- Conflicts of Interest."
9
<PAGE> 12
VOTING CONTROL BY INSIDERS
Following the Closing, the officers and directors of the Company, including
Mr. Nimberg, will own in the aggregate approximately 15.9% of the Company's
outstanding Common Stock, assuming no exercise of the Purchase Warrants, the
Over-Allotment Option, the Representative Options, the Lender Options or the
shares issued in the event of the Company's prepayment of the February 1997
Debt, (the "Prepayment Shares"), and approximately 6.0% of the Company's
outstanding Common Stock if the Purchase Warrants are exercised in full but
assuming no exercise of the Over-Allotment Option, the Representative Options,
the Prepayment Shares, or the Lender Options. In the election of directors,
shareholders are not entitled to cumulate their votes for nominees. As a result,
the officers and directors of the Company are in a position to have a
significant impact on the outcome of substantially all matters on which
shareholders are entitled to vote, including the election of directors. See
"PRINCIPAL SHAREHOLDERS" and "DESCRIPTION OF SECURITIES."
DIVIDEND POLICY
The Company has not paid any dividends on its capital stock to date and
does not currently intend to pay cash dividends in the foreseeable future. The
payment of dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition
subsequent to the NYPF Business Combination. The payment of any dividends
subsequent to the NYPF Business Combination will be within the discretion of the
Company's then Board of Directors. It is the current intention of the Board of
Directors to retain all earnings, if any, for use in the Company's business
operations and, accordingly, the Board does not anticipate paying any cash
dividends in the foreseeable future. See "DESCRIPTION OF
SECURITIES -- Dividends."
USE OF PROCEEDS TO REPAY DEBT
$518,000 (7.0%) of the estimated Net Proceeds will be applied to repay the
Private Debt. There is no assurance that the remaining Net Proceeds, together
with the actual cash flow from the Company's operations, will be sufficient to
meet its working capital requirements. See "USE OF PROCEEDS" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -- Liquidity and Capital
Resources -- NYPF."
NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE
Prior to this Offering, there has been no public market for the Units, the
Shares or the Purchase Warrants. It is anticipated that, upon the Closing,
trading of the Securities will be conducted on Nasdaq. There is no assurance
that an active trading market in the Units, the Shares or the Purchase Warrants
will develop or that, if developed, any such market will be sustained. The
liquidity of the Company's shareholders in its securities depends upon the
development and continuation of that market. The offering price of the Units,
Shares and the Purchase Warrants, as well as the exercise price and other terms
of the Purchase Warrants, have been determined by negotiation between the
Company and the Representative and bear no relationship to the Company's asset
value, net worth or other established criteria of value. There can be no
assurance that the market price of those securities will be sustained at the
offering price. See "DESCRIPTION OF SECURITIES -- Certain Market Information"
and "UNDERWRITING."
IMMEDIATE SUBSTANTIAL DILUTION; DISPARITY OF CONSIDERATION
New investors will incur an immediate and substantial dilution of
approximately $2.34 per share (assuming no exercise of the Purchase Warrants,
the Over-Allotment Option, the Representative Options or the Lender Options, or
the issuance of the Prepayment Shares.) The existing shareholders of the Company
acquired their shares of Common Stock at a nominal price. Accordingly, new
investors will bear virtually all of the risks inherent in an investment in the
Company. See "DILUTION" and "PROPOSED BUSINESS."
10
<PAGE> 13
SHARES ELIGIBLE FOR FUTURE SALE
All of the 685,000 shares of Common Stock issued and outstanding before
giving effect to the Securities purchased in this Offering (which amount, for
this purpose, includes an aggregate of 125,000 shares to be issued to Gerald
Nimberg in connection with the closing of the NYPF Business Combination),
referred to in this Prospectus as the "Current Shares," as well as the 198,000
shares of Common Stock issuable upon exercise of the Lender Options and the
Prepayment Shares, if issued, are "restricted securities," as that term is
defined under Rule 144 ("Rule 144"), promulgated under the Securities Act, and
may only be sold pursuant to a registration statement under the Securities Act,
in compliance with Rule 144, or pursuant to another exemption therefrom. For a
description of Rule 144, see "DESCRIPTION OF SECURITIES -- Certain Market
Information." None of such shares will be eligible for sale under Rule 144 prior
to April 25, 1998. Furthermore, the holders of all of the Current Shares and all
of the Lender Options and the Prepayment Shares, if issued, have agreed not to
sell, transfer or otherwise dispose of any shares of Common Stock or any Lender
Options for a period of 24 months from the Effective Date, or any longer period
required by the law of any state. The Company is unable to predict the effect
that any subsequent sales of the Company's securities by its existing
shareholders, under Rule 144 or otherwise, may have on the then-prevailing
market price of the Common Stock, although such sales could have a depressive
effect on such market price. Nevertheless, the possibility that substantial
amounts of Common Stock may be sold in the public market may adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through the sale of its equity securities. See
"PROPOSED BUSINESS -- The NYPF Business Combination," "PRINCIPAL SHAREHOLDERS"
and "DESCRIPTION OF SECURITIES -- Shares Eligible for Future Sale."
NASDAQ ELIGIBILITY AND MAINTENANCE; POSSIBLE DELISTING OF SECURITIES FROM NASDAQ
Under the current rules relating to the listing of securities on Nasdaq, a
company must have at least $4,000,000 in total assets, at least $2,000,000 in
stockholders equity, and a minimum bid price of $3.00 per share. For continued
listing, a company must maintain at least $2,000,000 in total assets, at least
$1,000,000 in stockholders equity, and a minimum bid price of $1.00 per share.
The Units, the Shares and the Purchase Warrants (the "Listed Securities")
are expected to be eligible for initial listing on Nasdaq under these rules upon
the Closing. If at any time after issuance the Units, Shares and Purchase
Warrants are not listed on Nasdaq, and no other exclusion from the definition of
a "penny stock" under the Exchange Act were available, transactions in the
Listed Securities would become subject to the penny stock regulations which
impose additional sales practice requirements on broker-dealers who sell such
securities. See "-- Risk of Low-Priced Stocks."
If the Company should experience losses from operations, it may be unable
to maintain the standards for continued listing and the Listed Securities could
be subject to delisting from Nasdaq. Trading, if any, in the Listed Securities
would thereafter be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet the Nasdaq listing
requirements or in what are commonly referred to as the "pink sheets." As a
result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, the Listed Securities.
RISK OF LOW-PRICED STOCKS
If the Listed Securities were delisted from Nasdaq, and no other exclusion
from the definition of a "penny stock" under applicable Commission regulations
were available, such Listed Securities would be subject to the penny stock rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally defined as investors with net worth in excess of $1,000,000
or annual income exceeding $200,000, or $300,000 together with spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase and must have received the
purchaser's written consent to the transaction prior to sale. Consequently,
delisting from Nasdaq, if it were to occur, could materially adversely affect
the ability of
11
<PAGE> 14
broker-dealers to sell the Listed Securities and the ability of purchasers in
this Offering to sell their Securities in the secondary market. See "DESCRIPTION
OF SECURITIES -- Certain Market Information."
REPRESENTATIVE'S INFLUENCE ON THE MARKET
A significant amount of the Securities may be sold to customers of the
Representative. Such customers subsequently may engage in transactions for the
sale or purchase of such Securities through or with the Representative. Although
it has no obligation to do so, the Representative has indicated to the Company
that it intends to make a market in the Securities. Such market-making activity
may be discontinued at any time. The price and liquidity of the Common Stock and
Purchase Warrants may be significantly affected by the degree, if any, of the
Representative's participation in such market. If the Representative ceases
making a market, the market and market prices for such Securities may be
adversely affected and the holders thereof may be unable to sell the Securities.
See "DESCRIPTION OF SECURITIES -- Certain Market Information."
NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE PURCHASE
WARRANTS
The Purchase Warrants are not exercisable unless, at the time of exercise,
the Company has a current prospectus covering the shares of Common Stock
issuable upon exercise of the Purchase Warrants and such shares have been
registered, qualified or deemed to be exempt under the securities laws of the
states of residence of the exercising holders of the Purchase Warrants. Although
the Company will use its best efforts to have all of the shares of Common Stock
issuable upon exercise of the Purchase Warrants registered or qualified on or
before the exercise date and to maintain a current prospectus relating thereto
until the expiration of the Purchase Warrants, there is no assurance that it
will be able to do so.
Although the Purchase Warrants will not knowingly be sold to purchasers in
jurisdictions in which the Securities are not registered or otherwise qualified
for sale, purchasers may buy Purchase Warrants in the after-market or may move
to jurisdictions in which the shares underlying the Purchase Warrants are not so
registered or qualified during the period that the Purchase Warrants are
exercisable. In this event, the Company would be unable to issue shares of
Common Stock to those persons desiring to exercise their Purchase Warrants
(whether in response to a redemption notice or otherwise), unless and until the
shares could be qualified for sale in the jurisdictions in which such purchasers
reside, or exemptions exist in such jurisdictions from such qualification.
Purchase Warrant holders would have no choice but to attempt to sell the
Purchase Warrants or allow them to expire unexercised. See "DESCRIPTION OF
SECURITIES -- Purchase Warrants."
NON-EXERCISE OF PURCHASE WARRANTS CALLED FOR REDEMPTION
Commencing after the Effective Date, the Purchase Warrants are subject to
redemption by the Company, at the option of the Company, at $0.25 per Purchase
Warrant, upon 30 days prior written notice, if the closing bid price, as
reported on Nasdaq, or the closing sale price, as reported on a national or
regional securities exchange, as applicable, of the shares of the Common Stock
for 30 consecutive trading days ending within ten days of the notice of
redemption of the Purchase Warrants averages in excess of $6.00 per share,
subject to adjustment. Prior to the first anniversary of the Effective Date, the
Purchase Warrants will not be redeemable by the Company without the written
consent of the Underwriter. The Company is required to maintain an effective
registration statement with respect to the Common Stock underlying the Purchase
Warrants prior to redemption of the Purchase Warrants. In the event the Company
elects to redeem the Purchase Warrants, such Purchase Warrants will be
exercisable until the close of business on the date for redemption fixed in such
notice. If any Purchase Warrant called for redemption is not exercised by such
time, it will cease to be exercisable and the holder will be entitled only to
the redemption price. Redemption of the Purchase Warrants could force Purchase
Warrant holders either to (i) exercise the Purchase Warrants and pay the
exercise price thereof at a time when it may be less advantageous economically
to do so, or (ii) accept the redemption price in consideration for cancellation
of the Purchase Warrants, which could be substantially less than the market
value thereof at the time of redemption. See "DESCRIPTION OF SECURITIES --
Purchase Warrants."
12
<PAGE> 15
REPRESENTATIVE OPTIONS
In connection with this Offering, the Company has agreed to sell to the
Representative and/or persons related to the Representative, for nominal
consideration, the Representative Options. See note (1) to the table on the
cover page of this Prospectus. The holders of the Representative Options will
have certain registration rights with respect to the Representative Options and
the Underlying Securities. See "UNDERWRITING." In addition, the sale, or even
the possibility of sale, of the Underlying Securities could have an adverse
effect on the market price for the Company's securities or on the Company's
ability to obtain future public financing. If and to the extent the
Representative Options are exercised, shareholders may experience dilution in
the book value of their holdings. See "DILUTION."
13
<PAGE> 16
USE OF PROCEEDS
The Net Proceeds to the Company, after the Offering Costs of approximately
$755,500 from the sale of the Units and the Underwriting Discount, are estimated
to be $7,344,500. If the Over-Allotment Option is exercised in full, the
Offering Costs would be $796,000 and the Net Proceeds would be $8,519,000.
Approximately $4,275,000 of such Net Proceeds will be used to consummate
the NYPF Business Combination. Of the remaining Net Proceeds, $518,000 will be
used to retire the aggregate amount of the Private Debt. The Private Debt
includes $330,000 of Lender Options bearing simple interest at an annual rate of
12% and $40,000 of debt bearing simple interest at an annual rate of 12%. The
holders of the Private Debt are persons unaffiliated with the Company. The
proceeds of the Private Debt provided interim working capital, were used to pay
a portion of the Offering Costs and were used to fund an initial portion of the
purchase price for the NYPF Business Combination. Approximately $2,551,500
(approximately $3,726,000 if the Over-Allotment Option is exercised in full) of
such Net Proceeds will be retained by the Company for working capital purposes
primarily utilized for the discounted purchase of checks. See "PROPOSED
BUSINESS," "MANAGEMENT -- Employment Agreements/Executive Compensation."
The foregoing estimates of uses of the Net Proceeds are summarized in the
following table:
<TABLE>
<CAPTION>
IF THE OVER-ALLOTMENT OPTION IS IF THE OVER-ALLOTMENT OPTION IS
NOT EXERCISED EXERCISED IN FULL
------------------------------------ ------------------------------------
AMOUNT PERCENTAGE TOTAL AMOUNT PERCENTAGE TOTAL
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Proceeds.......... $7,344,500 $8,519,000
Uses of Net Proceeds:
Payable to
Consummate the NYPF
Business
Combination...... $4,275,000 58.2% $4,275,000 50.2%
Payable to
Retire the Private
Debt............. 518,000 7.0% 518,000 6.0%
Used for Discounted
Purchase of
Checks.............. 1,969,000 26.8% 2,919,097 34.3%
Used for Operating
Expenses, Including
Salaries,
Commissioned Agent
Fees, Rent and Other
Office Expenses..... 349,500 4.8% 484,142 5.7%
Used for Other Working
Capital............. 233,000 3.2% 322,761 3.8%
Total
Uses...... $7,344,500 $8,519,000
</TABLE>
The Net Proceeds not immediately required for the purposes set forth above
will be invested in United States Government securities or other minimum risk,
short-term interest-bearing investments; provided, however, that the Company
will attempt not to invest the Net Proceeds in a manner which may result in the
Company being deemed to be an investment company under the Investment Company
Act of 1940.
14
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of the Company at
December 31, 1996, as adjusted on a pro forma basis to give effect to the
redemption during February 1997 by the Company of an aggregate of 1,198,000
shares of Common Stock (the "February Redemption"), the issuance of an aggregate
of 125,000 shares of the Common Stock to Gerald Nimberg, an affiliate of NYPF,
in connection with the closing of the NYPF Business Combination as part of the
consideration for NYPF's assets having an aggregate value of $50,928, the sale
of 900,000 Units being offered hereby and the application of the estimated Net
Proceeds from the sale of securities as set forth under "USE OF PROCEEDS." See
"PROPOSED BUSINESS -- The NYPF Business Combination" and "PRINCIPAL
SHAREHOLDERS." This table should be read in conjunction with the Company's
financial statements and the notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THIS
OUTSTANDING OFFERING
----------- -----------
<S> <C> <C>
Common Stock, $.001 par value: 20,000,000 shares authorized;
560,000 shares issued; 3,385,000 as adjusted for
redemptions after December 31, 1996, the closing of the
NYPF Business Combination and this Offering(1)............ $ 1,758 3,385
Additional paid in capital.................................. 11,176 7,738,268
Deferred offering costs..................................... (383,462)
Accumulated deficit......................................... (412,905) (412,905)
--------- ----------
Total shareholders' equity........................ $(783,433) $7,328,748
========= ==========
</TABLE>
- ---------------
(1) Includes the issuance of 125,000 shares to Mr. Nimberg in connection with
the closing of the NYPF Business Combination. Assumes no exercise of the
Purchase Warrants, the Over-Allotment Option, the Representative Options,
or the Lender Options and no issuance of the Prepayment Shares. See
"PROSPECTUS SUMMARY -- The Offering," "PROPOSED BUSINESS -- The NYPF
Business Combination," "PRINCIPAL SHAREHOLDERS," "UNDERWRITING" and Note 8
to Financial Statements of the Company.
15
<PAGE> 18
DILUTION
The difference between the public offering price per share and the pro
forma net tangible book value per share of Common Stock of the Company after
this Offering constitutes the dilution to investors in this Offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total tangible assets less total liabilities and loan
origination costs) by the number of outstanding shares of Common Stock.
At December 31, 1996, the unaudited net tangible book value of the Company
was $(783,433) or approximately $(.45) per share of capital stock of the Company
(based upon 1,758,000 shares then outstanding). After giving effect to the
February Redemption, the closing of the NYPF Business Combination, the issuance
of an aggregate of 125,000 shares of the Common Stock to Mr. Nimberg in
connection with that closing as part of the consideration for NYPF's assets
having an aggregate value of $50,928, the sale of 900,000 Units offered hereby
(and assuming that a value of $0.125 is ascribed to the Purchase Warrants
included in the Units offered hereby) and the application of the estimated Net
Proceeds, the pro forma net tangible book value of the Company at December 31,
1996 would have been $2,494,259 or approximately $.74 per share, representing an
immediate increase in net tangible book value of $3,277,692 or $1.19 per share
to existing shareholders and an immediate dilution of $2.34 per Share to new
investors (which represents 76.0% of the public offering price of the Shares).
As of the date hereof, there are currently no plans, proposals, arrangements,
understandings or obligations with respect to the sale of additional securities
to any persons for the period commencing with the Closing, other than the
Company's issuance of shares of Common Stock upon the exercise of the
Over-Allotment Option, the Representative Options, the Lender Options and if the
February 1997 Debt is prepaid by the Company, the Prepayment Shares. See
"PROSPECTUS SUMMARY -- The Offering," "PROPOSED BUSINESS -- The NYPF Business
Combination," "PRINCIPAL SHAREHOLDERS," "UNDERWRITING" and Financial Statements
of the Company.
The following table illustrates the foregoing information with respect to
dilution to new investors on a per-share basis after this Offering:
<TABLE>
<S> <C> <C>
Initial public offering price per Share..................... $3.08(1)
Net tangible book value per share of Common Stock, before
this Offering............................................. $ (.45)
Increase per share of Common Stock attributable to payment
by new investors.......................................... 1.19
------
Pro forma adjusted net tangible book value per share of
Common Stock after this Offering.......................... .74
Net tangible book value dilution to new investors per Share
of Common Stock........................................... $2.34
=====
</TABLE>
- ---------------
(1) Reflects the initial offering price of one share of Common Stock, assuming
that a value of $.0125 is ascribed to each of the Purchase Warrants).
16
<PAGE> 19
The following table sets forth as of the Effective Date, with respect to
existing shareholders (including for this purpose Mr. Nimberg, who will become a
shareholder upon the closing of the NYPF Business Combination) and new investors
with respect to the number of shares of Common Stock included in the Units, on a
pro forma basis, a comparison of the number of shares of Common Stock acquired
from the Company, their percentage ownership of such shares, the total
consideration paid, the percentage of total consideration paid and the average
price per share of Common Stock:
<TABLE>
<CAPTION>
SECURITIES PURCHASED(1) TOTAL CONSIDERATION
------------------------ -----------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Existing Shareholders..................... 685,000 20.2% $ 385,685 4.4%
New Investors -- Shares................... 2,700,000 79.8% 8,325,000(2) 95.6%
---------- -----
$8,710,685 100%
========== =====
</TABLE>
- ---------------
(1) The above table assumes no exercise of the Purchase Warrants, the
Over-Allotment Option, the Representative Options or the Lender Options or
the issuance of the Prepayment Shares. If the Over-Allotment Option is
exercised in full, the new investors will have paid $9,572,400 for
3,105,000 Shares, representing approximately 96.1% of the total
consideration of $9,958,085, assuming no exercise of the Purchase Warrants,
the Representative Options, the Lender Options or the issuance of the
Prepayment Shares. See "PROSPECTUS SUMMARY -- The Offering," "PRINCIPAL
SHAREHOLDERS" and "UNDERWRITING."
(2) Before deduction of underwriting discounts and estimated expenses of the
Offering.
17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto of the Company and NYPF included elsewhere in this
Prospectus.
GENERAL
The Company was organized in February 1995, and to date has had no revenues
and has not engaged in any operations. THE CLOSING IS SUBJECT TO THE
SIMULTANEOUS CLOSING OF THE NYPF BUSINESS COMBINATION. In addition to the
consummation of the NYPF Business Combination and entering into the check
factoring business, the Company may explore the possibility of offering other
financial services, including accounts receivable, asset based lending and
medical receivables financing. The Company has no agreements, agreements in
principle or understandings with respect to entering into these other commercial
finance areas and does not intend to enter into these areas in the immediate
future. See "PROPOSED BUSINESS -- The NYPF Business Combination" and
"-- Employees."
Management of NYPF estimates that NYPF typically purchases checks for
between 98% and 99% of the face amount of the check, depending on the amount of
the check, the historical volume of checks purchased by NYPF from each NYPF
Customer, whether the checks are presented directly by the NYPF Customer or
through a broker, whether the checks actually have been presented to NYPF at the
time of NYPF's payment to the NYPF Customer, and whether those checks are
post-dated. (Management believes that the dollar amount of checks purchased
before they are presented to NYPF, and post-dated checks, is not material.) The
weighted average discounted purchase price is 98.9% of the face amount of the
check. The difference between the face amount of the check and NYPF's purchase
price for the check is known as the "discount." The discount is negotiated on a
case by case basis. NYPF's fee income is derived solely from discounts. Gross
proceeds relating to the purchase of checks is recognized for financial
accounting purposes in the month the related check is negotiated by NYPF. The
term "gross proceeds" means amounts collected by NYPF from its negotiation of
checks purchased from the NYPF Customers. See "PROPOSED BUSINESS -- Sources of
Business" and "-- Commissioned Agent."
RESULTS OF OPERATIONS -- NYPF
The following discussion is based solely upon information provided to the
Company and its accountants by NYPF's management and accountants.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
For the year ended December 31, 1996, NYPF derived fee income of $2,605,549
from the purchase of checks, as compared to $1,467,620 for the year ended
December 31, 1995. This increase of approximately $1,137,929 (approximately
78.0%) was a result of the activities of a commissioned agent. Purchased checks
increased from $136,471,119 during 1995 to $253,365,164 during 1996. See
"PROPOSED BUSINESS -- Sources of Business" and "-- Commissioned Agent."
Selling, general and administrative expenses, including, among other
expenses, amounts paid in respect of sales representatives, payroll and related
expenses and office overhead costs (including rent) increased by $858,355
(91.2%) to $1,799,556 for the year ended December 31, 1996, as compared to
$941,201 for the year ended December 31, 1995. This increase was primarily a
result of a $369,906 increase in commissions to the commissioned agent and a
$29,517 increase in rent expense due to the opening of a third location in New
York City. NYPF's payroll costs increased to approximately $712,500 from
approximately $458,600 primarily as a result of additional employees hired at
its new facility. Selling, general and administrative expenses constituted
approximately 69.0% and 64.0% of fee income for the year ended December 31, 1996
and December 31, 1995, respectively.
18
<PAGE> 21
For the year ended December 31, 1996, interest expense was $500,595 versus
$210,704 for the year ended 1995. This increase of $289,891 (or 137.5%) is a
result of increased borrowings during fiscal year ended December 31, 1996 as
compared to the borrowings during fiscal year ended December 31, 1995. (See
"-- Liquidity and Capital Resources -- NYPF.")
Net income for the year ended December 31, 1996 was $465,269 as compared to
$288,601 for the year ended December 31, 1995, representing an increase by
approximately 61.2%. This increase resulted from an increase in the purchase of
checks and a corresponding increase in fee income, monies received from the
Company in the form of a forfeited deposit offset by increases in selling,
general and administrative expenses, primarily an increase in an officer's
salary, and interest expenses noted above. Net income as a percentage of fee
income was approximately 17.9% and 19.6% for the years ended December 31, 1996
and December 31, 1995, respectively. See Note D to "GENERAL CREDIT CORPORATION
UNAUDITED PRO FORMA FINANCIAL STATEMENTS".
NYPF's provision for income taxes reflects primarily the provision for New
York City income taxes as NYPF is approved for S corporation status for federal
and state income tax purposes, which provides for corporate taxable income to be
passed through directly to the shareholders.
LIQUIDITY AND CAPITAL RESOURCES -- NYPF
NYPF's capital requirements generally increase proportionately to the
aggregate face amount of checks purchased, although more rapid collection of
purchased checks can mitigate NYPF's cash needs.
Since its inception through December 31, 1996, NYPF has financed its
operations principally through (i) an equity investment of $50,000; (ii) working
capital loans in the aggregate amount of $1,924,984, provided by three financial
institutions and three financial services firms, individuals not affiliated with
NYPF, and Mr. Schultz, an officer of NYPF (the "Working Capital Loans"); and
(iii) net proceeds received from the collection of purchased checks. In June
1996, a Working Capital Management Account Line of Credit agreement between NYPF
and one of these financial services firms was activated whereby the maximum
principal amount outstanding at any time would be $300,000, which is
collateralized by most of the assets of NYPF. In addition, the provisions of the
agreement require NYPF to maintain cash in a separate trust account with the
financial services firm in an amount not less than 66% of the outstanding line
of credit balance. As of December 31, 1996, the outstanding line of credit
balance is $185,334 and the restricted cash associated with the agreement is
$122,320. Interest on the outstanding principal balance accrues at the annual
rate of prime plus 1%. As of December 31, 1996, NYPF was indebted pursuant to
the Working Capital Loans in the amount of $1,924,984, all of which liabilities
are anticipated to be extinguished upon the closing of the NYPF Business
Combination. See "RISK FACTORS -- Possible Use of Debt Financing; Debt of NYPF"
and Notes 3 and 4 to Financial Statements of NYPF.
During the year ended December 31, 1996, NYPF incurred positive cash flow
of $997,534. Such increase primarily related to increased borrowings of
approximately $771,100 and cash provided by operations of approximately
$621,000.
During the fiscal year ended December 31, 1995, NYPF incurred a net
increase in cash of $51,812 as a result of, among other things, cash flows from
operations of approximately $283,000, a reduction in borrowings of approximately
$53,000 and a payment of approximately $159,000 in dividend to shareholders.
As of December 31, 1996 and December 31, 1995 NYPF had available cash of
$2,244,928 and $1,247,394, respectively. NYPF's total liabilities increased to
$2,226,224 as of December 31, 1996 from $1,267,383 as of December 31, 1995.
Assuming the sale of the Securities offered hereby, of which there can be
no assurance, the Company expects to use approximately $1,969,000 (or $2,919,097
if the Over-Allotment Option is exercised in full) of the Net Proceeds to
purchase checks. The Company also expects that its operating expenses will
increase due to additional overhead, including the payment of salaries, required
for the increased monitoring and processing of newly acquired checks resulting
from increased cash controls and sites of the Company's business and for the
management of a public company. The Company expects that the Net Proceeds and
the anticipated cash
19
<PAGE> 22
flow from its operations will be sufficient to meet its working capital
requirements for at least 12 months. See "RISK FACTORS -- Use of Proceeds to
Repay Debt" and "MANAGEMENT -- Employment Agreements/Executive Compensation."
As of the Effective Date, the Company is not involved in any material
acquisitions, nor are any material acquisitions currently planned, other than
the NYPF Business Combination. There is no assurance that the Company's
resources will be sufficient to finance any acquisition or expansion other than
the NYPF Business Combination. See "PROPOSED BUSINESS -- Possible Expansion."
EFFECTS OF INFLATION
The Company believes that the results of its operations subsequent to the
NYPF Business Combination could be materially impacted by inflation, including
increases in interest rates generally, if inflation materially adversely
affected the operations of the NYPF Customers and their customers, and if
inflation materially increased NYPF's costs of obtaining working capital (e.g.,
if the Company entered into larger lines of credit in lieu of its maintaining
some of the current bank deposits against which it negotiates checks purchased
by it).
TAX CONSIDERATIONS
Simultaneously with the Closing, the Company will purchase the assets of
NYPF in the NYPF Business Combination. Included in the purchased assets will be
goodwill and other intangible assets of $4,834,489. The purchased goodwill and
intangibles will be held in connection with the conduct of a trade or business
and accordingly will be amortizable, for tax purposes, over a 15-year period
pursuant to Internal Revenue Code Section 197. See Note (E) to "GENERAL CREDIT
CORPORATION UNAUDITED PRO FORMA FINANCIAL STATEMENTS."
No substantial deferred tax assets or liabilities are anticipated to be
recorded in the application of Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes" to the assets purchased. Both the
allocation of purchase price and the depreciable lives of acquired assets will
be similar for both book and tax.
20
<PAGE> 23
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following sets forth the unaudited pro forma balance sheet as of
December 31, 1996 which has been prepared by combining the unaudited balance
sheets of General Credit Corporation (the "Company") and New York Payroll
Factors, Inc. ("NYPF"). The acquisition is being accounted for using the
purchase method as if the acquisition had occurred on December 31, 1996. The
combined balance sheet was based on terms provided in the asset purchase
agreement and reflects the issuance of common stock and receipt of proceeds from
the proposed public offering. The unaudited pro forma statements of operations
for the years ended December 31, 1996 and 1995, which present the results of
operations as if: (a) The Company had reflected compensation to certain
executive officers pursuant to Employment Agreements as if such agreements had
been in effect for the years ended December 31, 1996 and 1995, (b) NYPF had not
elected to be treated as an S corporation during those periods, (c) The Company
had adjusted for a pro forma reduction in interest expense for the year ended
December 31, 1996 and 1995, associated with the portion of the Offering proceeds
to be used to retire debt at December 31, 1996, (d) The Company had reflected
amortization of the excess purchase price over the net book value of net assets
acquired, which is currently estimated to be amortized on a straight-line basis
over a five-year period for identifiable intangibles and a twenty-year period
for goodwill. In management's opinion, all adjustments necessary to reflect the
effects of the transaction have been made.
The unaudited pro forma results of operations are not necessarily
indicative of the actual results that would have occurred had the transactions
been consummated on such date, nor is it necessarily indicative of future
financial position or operating results of the Company. The unaudited pro forma
financial statements and accompanying notes should be read in conjunction with
the historical financial statements and the related notes of the Company
included elsewhere in this prospectus. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION."
21
<PAGE> 24
GENERAL CREDIT CORPORATION
PRO FORMA BALANCE SHEET
(UNAUDITED)
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL GENERAL
GENERAL NEW YORK CREDIT
CREDIT PAYROLL PRO FORMA CORPORATION
CORPORATION FACTORS, INC. ADJUSTMENTS PRO FORMA
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........ $ 650 $2,244,928 $ 217,991 (A)(B)(C)(G) $2,463,569
Restricted cash.................. 122,320 (122,320) (C)
Accounts receivable, less
allowance for doubtful
accounts....................... 137,251 (137,251) (C)
Prepaid expenses and other
assets......................... 18,089 (18,089) (C)
--------- ----------- ----------- ----------
Total current assets... 650 2,522,588 (59,669) 2,463,569
Fixed assets, at cost, net of
accumulated depreciation and
amortization................... 41,368 41,368
Goodwill and other intangibles... 376,255 4,458,234 (B) 4,834,489
Other assets..................... 4,762 9,560 14,322
--------- ---------- ----------- ----------
Total assets........... $ 5,412 $2,949,771 $ 4,398,565 $7,353,748
========= ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Notes payable.................... $ 518,000 $ 573,936 $(1,091,936) (C)(F)
Accounts payable and accrued
expenses....................... 270,845 203,123 (448,968) (C)(G) $ 25,000
Due to officer................... 689,650 (689,650) (C)
Long-term portion of notes
payable........................ 759,515 (759,515) (C)
--------- ---------- ----------- ----------
Total liabilities...... 788,845 2,226,224 (2,990,069) 25,000
--------- ---------- ----------- ----------
Shareholders' equity
(deficiency):
Common stock................... 1,758 50,000 (48,373) (A)(B)(C) 3,385
Additional paid-in capital..... 11,176 7,727,092 (A)(C) 7,738,268
Retained earnings
(deficiency)................ (412,905) 673,547 (673,547) (C) (412,905)
Less deferred offering
costs..................... (383,462) 383,462 (A)
--------- ---------- ----------- ----------
Total shareholders'
equity
(deficiency)......... (783,433) 723,547 7,388,634 7,328,748
--------- ---------- ----------- ----------
Total liabilities and
shareholders'
equity............... $ 5,412 $2,949,771 $ 4,398,565 $7,353,748
========= ========== =========== ==========
</TABLE>
22
<PAGE> 25
GENERAL CREDIT CORPORATION
PRO FORMA INCOME STATEMENT
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL GENERAL
GENERAL NEW YORK CREDIT
CREDIT PAYROLL PRO FORMA CORPORATION
CORPORATION FACTORS, INC. ADJUSTMENTS PRO FORMA
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenue............................. $2,605,549 $2,605,549
Operating expenses:
General and administrative............ $ 103,325 1,742,751 $(177,000)(D) 1,669,076
Amortization expense.................. 871 56,805 237,419(E)(G) 295,095
--------- ---------- --------- ----------
Income (loss) from
operations.................. (104,196) 805,993 60,419 641,378
Other (income) expense:
Interest expense...................... 108,296 500,595 (608,891)(F)
Other................................. 200,000 (200,000)
--------- ---------- --------- ----------
Income (loss) before provision
for income taxes............ (412,492) 505,398 548,472 641,378
Provision for income taxes.............. -- 40,129 257,705(H) 297,834
--------- ---------- --------- ----------
Net income (loss)............. $(412,492) $ 465,269 $ 290,767 $ 343,544
========= ========== ========= ==========
Pro forma net income per share(I)....... .42
==========
Pro forma weighted average number of
common shares outstanding(I).......... 817,000
==========
Pro forma net income per share including
shares sold in offering(J)............ .10
==========
Pro forma weighted average number of
common shares outstanding, including
shares sold in offering(J)............ 3,517,000
==========
</TABLE>
23
<PAGE> 26
GENERAL CREDIT CORPORATION
PRO FORMA INCOME STATEMENT
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL GENERAL
GENERAL NEW YORK CREDIT
CREDIT PAYROLL PRO FORMA CORPORATION
CORPORATION FACTORS, INC. ADJUSTMENTS PRO FORMA
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenue.................................. $1,467,620 $1,467,620
Operating expenses:
General and administrative................. $ 371 884,385 $ 80,220(D) 964,976
Amortization expense....................... 42 56,816 237,408(E) 294,266
----- ---------- --------- ----------
Income (loss) from operations...... (413) 526,419 (317,628) 208,378
Interest expense............................. 210,704 (210,704)(F)
----- ---------- --------- ----------
Income (loss) before provision for income
taxes................................... (413) 315,715 (106,924) 208,378
Provision for income taxes................... -- 27,114 59,080(H) 86,194
----- ---------- --------- ----------
Net income (loss).................. $(413) $ 288,601 $ 166,004 $ 122,184
===== ========== ========= ==========
Pro forma net income per share(I)............ .15
==========
Pro forma weighted average number of common
shares outstanding(I)...................... 817,000
==========
Pro forma net income per share including
shares sold in offering(J)................. .03
==========
Pro forma weighted average number of common
shares outstanding, including shares sold
in offering(J)............................. 3,517,000
==========
</TABLE>
24
<PAGE> 27
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(A) To reflect the issuance of 900,000 units at an offering price of $10.00 per
unit of General Credit Corporation and the receipt of the net proceeds from
the offering of $7,344,500 as set forth in the Registration Statement. Each
unit consists of three shares of common stock and six redeemable common
stock warrants. Also reflects the redemption of 1,198,000 shares of common
stock for $1,198.
(B) To reflect cash payment of $4,500,000 and the issuance of 125,000 shares of
common stock of General Credit Corporation at $3.083 per share ($385,417)
to the owners of New York Payroll Factors, Inc. and the excess of purchase
price paid ($4,885,417) over the historical basis of net assets purchased
($50,928). The General Credit Corporation stock is valued at a price of
$3.083 which was determined based on the allocation of the offering price
as set forth in this Registration Statement.
(C) To reflect in the pro forma balance sheet those assets of $2,898,843
including cash of $2,060,714, to be distributed in accordance with the
asset purchase agreement and liabilities of $2,226,224 to be eliminated
prior to the effective date of the Acquisition.
(D) To reflect the annual compensation aggregating $350,000 to Irwin
Zellermaier, David Bader and Gerald Nimberg pursuant to separate Employment
Agreements as if the agreements had been in effect for the years ended
December 31, 1995 and 1996, offset by $269,780 and $527,000 in savings from
compensation paid to the Chief Executive Officer and Chief Operating
Officer of New York Payroll Factors, Inc. for the years ended December 31,
1995 and 1996, respectively.
(E) Represents amortization of the excess purchase price over the net book
value of assets acquired of $4,834,489 of which $350,000 has been allocated
to covenant not to compete and customer list to be amortized over a
five-year period and goodwill of $4,484,489 amortized over a twenty-year
period, less amortization reflected in the historical statements.
(F) To reflect a reduction in interest expense of $210,704 and $500,595 for the
years ended December 31, 1995 and 1996, respectively, for interest incurred
by New York Payroll Factors, Inc. on debt that will not be assumed by the
General Credit Corp., and an additional reduction of $108,296 in interest
for fiscal 1996 associated with the portion of the Offering proceeds used
to retire General Credit Corporation's debt of $518,000.
(G) To reflect the payment of the accrued liabilities of General Credit
Corporation relating to accrued interest and deferred registration costs.
(H) To reflect the provision for income taxes based upon pro forma income
before taxes as if New York Payroll Factors, Inc. had been a C corporation
and all the income has been generated within the State of New York and in
New York City. Historically, NYPF has filed its income tax returns as an
"S" corporation which provides for income and deductions to pass through
to, and be included in, the shareholders' respective income tax returns.
(I) Pro forma net income per share, for the years ended December 31, 1995 and
1996, respectively, has been computed by dividing pro forma net income by
the weighted average number of common shares outstanding (all shares deemed
outstanding throughout the period) and common stock equivalents of 132,000
outstanding during the period. The pro forma weighted average number of
common shares includes the adjustment for the redemption of the 1,198,000
shares of common stock, and does not reflect the increase in shares related
to the anticipated public offering.
(J) In addition to (I) above, the weighted average number of common shares
outstanding include shares issued in connection with the anticipated public
offering.
25
<PAGE> 28
PROPOSED BUSINESS
INTRODUCTION
Since its inception as a New York corporation in February 1995, the
Company's activities have been limited to administrative activities and, in
February 1996, entering into an agreement to purchase the business of NYPF.
Under the Charter, the Company was authorized to issue 200 shares of its common
stock, no par value. Pursuant to a plan of reorganization, effective on April
24, 1996, the Company authorized a 100,000-for-one stock split, changed the par
value of its common stock to $.001 per share, and effected an 8,790-for-one
stock dividend to its shareholders of record. See Note 1 to Financial Statements
of the Company. To date, the Company has not generated any revenues nor engaged
in any operations. THE CLOSING IS SUBJECT TO THE SIMULTANEOUS CLOSING OF THE
NYPF BUSINESS COMBINATION.
The description of NYPF in this Prospectus is based solely upon information
provided to the Company and its accountants by NYPF's management and
accountants.
Since the purchase of its current business in January 1992, NYPF has
provided working capital financing to the NYPF Customers through the discounted
purchase of checks (commonly referred to as "check factoring"), generally on a
non-recourse basis with respect to the NYPF Customers except to the extent of
forged signatures on and stop payments of the purchased checks. The NYPF
Customers are small- and medium-sized independent contracting firms located in
the New York City metropolitan area and northern New Jersey area, which NYPF's
management estimates have annual sales of at least $2,000,000 and some of which
provide goods and services to labor intensive businesses such as apparel
manufacturers (commonly referred to as "garment industry" firms) and
construction firms. Included among the NYPF Customers are sewing contractors,
wholesale distributors, independent trucking companies, printing companies,
converters, healthcare providers, insurers and commercial real estate owners.
The makers of the checks are manufacturers, construction firms and other
businesses paying for goods or services purchased from the NYPF Customers.
Occasionally, NYPF purchases checks directly from the manufacturers,
construction firms and other businesses themselves. The NYPF Customers, typical
of garment industry contractors and other small-and medium-sized vendors
generally, face extraordinary periodic short-term cash requirements. By
factoring checks, the NYPF Customer can realize cash more quickly.
Operating from a single office on the lower east side of Manhattan in 1992,
NYPF changed its emphasis from primarily Spanish-speaking sewing contractors in
the "garment district" of Manhattan, many of which required credit on a weekly
basis, to contractors predominantly owned by persons of Asian ancestry and
requiring nominal credit.
For the fiscal years ended December 31, 1995 and 1996, NYPF generated net
income of $288,601 and $465,269, respectively, from the negotiation by it of
checks purchased from NYPF Customers. See Financial Statements of NYPF. In
mid-1995, NYPF opened its second office, in midtown Manhattan near the "garment
district," and, in January 1996, NYPF opened its third site, on Seventh Avenue
in the "garment district." See "-- Facilities." NYPF also expanded its use of
sales agents from three in 1992 to eight currently, increasing the volume of
checks purchased by NYPF. Management of NYPF estimates that as of March 1, 1997,
there were over 1,800 NYPF Customers (900 of which were active on a monthly
basis), approximately 1,350 of which were predominantly Asian sewing contractors
(650 of which were active on a monthly basis).
INDUSTRY OVERVIEW
Factoring, including check factoring, has been a method of working capital
financing in the United States for over 200 years. The factoring industry has
undergone considerable consolidation over the past several years; as a result,
the industry is characterized by a small number of very large factors operating
nationally, with a multitude of small companies generally operating on a local
or regional basis. Currently, however, NYPF believes, based on an informal study
conducted by it, that, including NYPF, there are approximately 20 check
factoring firms operating in the New York City "garment district," all within
the same seven block area in which the NYPF Customers are located.
26
<PAGE> 29
THE NYPF BUSINESS COMBINATION
The NYPF Business Combination consists of the acquisition, by the Company
or its wholly-owned subsidiary corporation, of NYPF's corporate and trade names
and trademarks, goodwill, computer programs and software, lists of the NYPF
Customers and all other assets of NYPF associated with or related to NYPF's
business (excluding cash, the purchase price for the NYPF Business Combination,
and minutes, minute books and stock record books of NYPF), and assignment to the
Company or its wholly-owned subsidiary of purchase and sale agreements with
respect to factored checks between NYPF and the NYPF Customers, and rights of
NYPF's affiliates as tenants under three commercial leases, for total
consideration of (i) $4,700,000 in cash to NYPF at the closing of the NYPF
Business Combination, of which $425,000 has been paid to date, $200,000 of which
was paid by the Company as consideration for an expired non-refundable option
and (ii) the issuance of an aggregate of 125,000 shares of the Common Stock,
which shares are to be assigned to Gerald Nimberg, Vice President and Chief
Operating Officer of NYPF. Under certain circumstances, Mr. Nimberg is entitled
to certain piggy back registration rights with respect to his shares of Common
Stock. At the closing of the NYPF Business Combination, it is contemplated that
Mr. Nimberg will become the President and Chief Operating Officer of the Company
pursuant to a ten-year employment agreement with the Company, as well as a
director of the Company. See "MANAGEMENT -- Employment Agreements/Executive
Compensation." Messrs. Schultz and Nimberg, owners of the outstanding shares of
capital stock of NYPF, have agreed that each of them shall not compete with the
Company's operations for a period of five years within the geographic region
consisting of New York State, New Jersey and Connecticut. See "RISK FACTORS --
Dependence on Availability of Funding Sources" and "-- Possible Use of Debt
Financing; Debt of NYPF," "USE OF PROCEEDS," Note 8 to Financial Statements of
the Company and Note 6 to Financial Statements of NYPF.
NYPF'S OPERATING PROCEDURES
Management of NYPF estimates that NYPF typically purchases checks for
between 98% and 99% of the face amount of the check, depending on the amount of
the check, the historical volume of checks purchased by NYPF from each NYPF
Customer, whether the checks are presented directly by the NYPF Customer or
through a broker, whether the checks actually have been presented to NYPF at the
time of NYPF's payment to the NYPF Customer, and whether those checks are
post-dated. (Management of NYPF believes that the dollar amount of checks
purchased before they are presented to NYPF, and post-dated checks, is not
material). The weighted average discounted purchase price is 98.9% of the face
amount of the check. The difference between the face amount of the check and
NYPF's purchase price for the check is known as the "discount." The discount is
negotiated on a case by case basis. The Company believes that the NYPF Customers
prefer NYPF as opposed to more conventional financial institution financing as a
source of funds because (i) NYPF does not require complex credit agreements,
credit evaluation of NYPF Customers, guarantees or other credit enhancement,
financial statements, collateral or a minimum borrowing base of receivables or
inventory, all or some of which would typically be required by a financial
institution prior to establishing an accounts receivable or asset based line of
credit, and (ii) NYPF provides liquidity virtually upon demand of the NYPF
Customers, in larger amounts daily than most financial institutions are able to
supply. Management of NYPF estimates that during the year ended December 31,
1996, the average face amount of a check purchased by NYPF was approximately
$3,600 (unaudited) and NYPF purchased an average of $4,800,000 (unaudited) in
face amount of checks weekly, of which approximately $2,700,000 (unaudited) in
face amount of checks was purchased on Fridays and Saturdays. In an attempt to
limit its exposure arising from a purchased check not being collectible, NYPF's
policy is rarely to purchase any check the face amount of which is in excess of
$50,000. See "RISK FACTORS -- Credit Losses; Recessionary Environment."
NYPF's procedures include its entering into a Purchase and Sale Agreement
with each NYPF Customer, including a list of the current customers of the NYPF
Customer, stating the amount of the discount on checks to be purchased by NYPF
from the NYPF Customer, and providing, among other things, that (i) NYPF is not
required to purchase any check having a face amount less than $2,500, or not
made payable to the order of the NYPF Customer, or drawn on an account of anyone
other than a check maker approved by NYPF,
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<PAGE> 30
(ii) the NYPF Customer is responsible for losses resulting from forged or
unauthorized signatures of makers of checks or stop payments of checks, (iii)
the NYPF Customer represents to NYPF that, among other things, it owns the
checks sold, each check represents payment for merchandise or services actually
delivered or performed for a customer of the NYPF Customer in a business and not
a consumer transaction, and each check is genuine and not subject to offsets or
defenses. NYPF generally requires presentation of identification by each
representative of an NYPF Customer seeking to sell a check to NYPF. NYPF
Customers can advise NYPF of check amounts and their requested bill
denominations so that cash envelopes are available when their representatives
arrive at NYPF's offices. NYPF also offers a door-to-door armed guard delivery
service upon the request of NYPF customers. Pursuant to banking resolutions and
powers of attorney in favor of NYPF provided by each NYPF Customer, NYPF
endorses each purchased check beneath the endorsement of the NYPF Customer
before depositing it in NYPF's bank account.
SOURCES OF BUSINESS
During 1995 and 1996, management of NYPF estimates that it obtained, as a
percentage of its fee income (i) approximately 10% from sales representatives at
a weighted average fee income of 1.0%, and (ii) approximately 25% from NYPF's
independent contractor relationship with Ace Ventures Inc. ("Ace"), described
below, operating from premises located at 499 Seventh Avenue, New York, New York
(see "-- Commissioned Agent"). NYPF has maintained a sales representation
relationship with one of its ten representatives for more than three years.
COMMISSIONED AGENT
NYPF entered into an agreement with Ace as of February 1, 1996. Under the
terms of that agreement, Ace, which is otherwise unaffiliated with NYPF, is
NYPF's exclusive agent to arrange check factoring with prospective NYPF
Customers predominantly owned by persons of Asian ancestry and operating
businesses located in midtown Manhattan, New York in or near the "garment
district" (the "Asian Market"), so long as Ace fulfills all of its requirements
under that agreement and maintains gross proceeds from the Asian Market of an
average of $700,000 per week, and Ace is required to refer to NYPF all check
factoring business that Ace generates in the Asian Market, with no obligation of
NYPF either to accept any particular Ace customer as an NYPF Customer or to
accept any minimum aggregate check face amount of business referred to NYPF
through Ace. NYPF generally is required under that agreement to supply Ace's
daily cash funding requirement requested by Ace from NYPF at least one week in
advance. Under that agreement, NYPF has agreed to pay Ace a commission
calculated as a percentage of NYPF's fee income resulting from Ace's efforts,
ranging from 40% to 50%, depending upon the amount of such fee income and the
days of check purchases; effective upon and after the Closing, Ace's commission
will be 50% of all of NYPF's fee income from the Asian Market resulting from
Ace's efforts. Under that agreement, Ace has agreed to reimburse NYPF for 50% of
the costs of remodeling the office located at 499 Seventh Avenue, New York, New
York (the "Ace Office"), telephone, alarm system, attorney review of the lease,
rent, common area charges, electricity, trash removal, security deposit and
office insurance, and Ace bears its operating costs for tellers, sales,
marketing, messenger, and delivery services. NYPF bears its costs for securing,
insuring, and delivering the cash to the Ace Office, and for money counting,
bookkeeping, and accounting at the Ace Office. NYPF is not restricted from
soliciting business directly from any prospective NYPF Customer, even within the
Asian Market, so long as NYPF does not do so on the premises of the Ace Office
and does not use an agent other than Ace to do so with respect to the Asian
Market. The agency initial term is the same as the term of the lease of the Ace
Office (ending on January 31, 2001). The term will renew automatically for one
year periods provided that neither party has breached any provision of the
agreement. See "-- Security" and "-- Facilities."
COMPETITION
NYPF competes in its check factoring business with firms that provide
working capital financing to small- and medium-sized businesses. Those competing
firms include banks, financial institutions, commercial finance companies and
factoring companies, some of which may have substantially greater financial and
other
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<PAGE> 31
resources than NYPF. NYPF believes, based on an informal study conducted by it,
that, including NYPF, there are approximately 20 check factoring firms operating
in the New York City "garment district," all within the same seven block area in
which the NYPF Customers are located, generating, in the aggregate,
approximately $26,000,000 gross proceeds weekly, and that NYPF generates the
most gross proceeds, both annually and, on an average, weekly. Based upon the
Company's informal survey, the four largest factors in the United States had
approximately $67,900,000,000 of reported gross proceeds in 1995, compared to
approximately $136,000,000 in gross proceeds for the Company in 1995. NYPF also
competes with other regional factoring companies that target clients similar to
the clients of NYPF, some of which have operated in the markets serviced by NYPF
for a longer period of time than NYPF. There can be no assurance that the
Company can continue to compete successfully with its competitors.
SECURITY
All NYPF employees work behind bullet-resistant plexiglass and steel
partitions, and security measures for each office include safes, alarm systems
and security cameras that are monitored by third parties, control over entry to
cash processing areas, detection of entry through perimeter openings, walls and
ceilings, checking all movement in and out of secured areas, wireless phones,
security guards and telephone battery back-up.
Since NYPF's business requires it to maintain a significant supply of cash
in its stores, NYPF is subject to the risk of cash shortages resulting from
theft and employee errors. Although the Company has implemented various programs
to reduce these risks and to provide security for its facilities and employees,
there can be no assurance that these problems will be eliminated. See "RISK
FACTORS -- Inherent Risks of Cash Business."
Daily transportation of currency and checks is provided by nationally
recognized armored carriers and insured bonded vendors.
EMPLOYEES
As of the Effective Date, after giving effect to the closing of the NYPF
Business Combination, the Company's employees will consist of its three
executive officers, Irwin Zellermaier, Gerald Nimberg and David Bader, and four
additional full-time and seven additional part-time employees. Subsequent to the
consummation of the NYPF Business Combination, Messrs Bader and Nimberg will
devote their full business time to the operations of the Company and Mr.
Zellermaier will continue to devote approximately 75% of his business time to
the Company's business. Prior to the consummation of the NYPF Business
Combination, Mr. Bader devotes approximately 25% of his business time to the
affairs of the Company.
REGULATION
Under the Bank Secrecy Act and the Financial Recordkeeping and Currency and
Foreign Transactions Reporting Act regulations of the U.S. Department of the
Treasury, each financial institution, including check cashers such as NYPF, must
file a CTR for each deposit, withdrawal, exchange of currency, or other payment
or transfer, by, through, or to the financial institution which involves a
transaction in currency of more than $10,000. Any series of transactions within
any calendar day that total more than $10,000, and that NYPF has knowledge were
effected by or on behalf of the same person, must also be reported. In addition,
NYPF is required to report any "suspicious or unusual activity" to its Bank
Secrecy Act examiner, the Internal Revenue Service. The civil penalty imposed
upon NYPF and any director, officer or employee of NYPF willfully violating
these requirements is not more than the greater of the amount (not to exceed
$100,000) involved in the transaction (if any) or $25,000. Criminal penalties
for intentional violations include fines of up to $500,000, and up to ten years
imprisonment, or both.
During a typical week, approximately 25 of NYPF's transactions require the
filing of a CTR. The Company believes NYPF's computerized daily transaction
reports, its staff training and supervision and its diligence and persistence in
obtaining from the NYPF Customers the information required to be reported assist
NYPF in complying with these reporting requirements, but there can be no
assurance that all information reported by NYPF is accurate, complete, and in
accordance with such statute and regulations.
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<PAGE> 32
Although some states, including New York, have established limits on
check-cashing fees, management of NYPF has advised the Company that these limits
are not applicable to its business and that, in any event, NYPF's discount of
the face amount of checks that it purchases is within these limits. NYPF is
subject to all local laws and ordinances relating to weapons carried by its
security guards, messengers and other employees.
There can be no assurance that the Company will not be materially adversely
affected by legislation or regulations enacted in the future.
POSSIBLE EXPANSION
The Company plans, at a future time, to explore the possibility of its
opening additional check factoring offices and its providing a broader range of
financial services to small- and medium-sized firms, including asset based
lending, invoice or accounts and credit card receivable factoring and premium
finance services, both within and outside the New York City metropolitan area
and northern New Jersey area. The Company believes that there exists a market
niche to deliver working capital assistance to small- and medium-sized companies
that are seeking funding in the $250,000 to $1,000,000 range. As a means of
positioning itself to enter into the business of providing a broader range of
products to its customers, the Company may acquire an established business
operation. The Company has no agreements, agreements in principle or
understandings with regard to an acquisition of an operating business or with
regard to providing a broader range of services generally and does not intend to
enter into such an acquisition in the immediate future.
FACILITIES
Since February, 1995, the Company, pursuant to a month-to-month sublease
agreement with Irwin Zellermaier, Chairman, Chief Executive Officer and a
director of the Company, at no cost to the Company, has maintained its executive
offices in approximately 1,000 square feet of space located at 211 East 70th
Street, New York, New York 10021. The Company considers this space, which is
leased by Mr. Zellermaier, adequate for its current operations. Upon the
Closing, the Company will terminate its operations at 211 East 70th Street and
assume NYPF's leases, and may lease additional office space in NYPF's service
area (the New York City metropolitan area and northern New Jersey area). As of
the date hereof, the Company has no agreements, agreements in principle or
understandings with respect to the acquisition of such additional leased office
space. NYPF bears the obligations of its affiliates under two separate
noncancelable operating leases through January 31, 2002 and July 31, 2000,
respectively, for office space of 500 square feet and 1,200 square feet,
respectively, located at 201 Allen Street (on the lower east side of Manhattan)
and 55 West 39th Street (in midtown Manhattan near the "garment district"). Ace
operates out of leased space at 499 Seventh Avenue, New York, New York, pursuant
to a five-year lease through January 31, 2001. The aggregate minimum rentals
under these leases through January 31, 2002 are $347,747. See "-- Commissioned
Agent" and Note 5 to Financial Statements of NYPF.
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<PAGE> 33
MANAGEMENT
The following sets forth certain information concerning the directors and
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Irwin Zellermaier(1)........... 71 Chairman, Chief Executive Officer, director and,
until the closing of the NYPF Business Combination,
President
Gerald Nimberg................. 53 President, Chief Operating Officer, director, all
effective as of the closing of the NYPF Business
Combination
David Bader.................... 51 Vice President, Secretary, Treasurer, Chief
Financial Officer, director
Vincent J. Putignano(1)(2)..... 51 director
Brien G. Reidy(1)(2)........... 45 director
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
IRWIN ZELLERMAIER, Chairman and Chief Executive Officer and director of the
Company since February 1995, and President of the Company from February 1995
until the closing of the NYPF Business Combination, has been engaged in
investment banking and management consulting as a sole proprietorship for more
than five years. Since January 1, 1990, he has been associated as an independent
contractor with Eagle Funding, a mortgage broker with respect to commercial
properties.
GERALD NIMBERG, President and Chief Operating Officer and director of the
Company effective as of the closing of the NYPF Business Combination, has been
Vice President and Chief Operating Officer of NYPF since May 1993. From May 1992
until May 1993, he was Regional Manager of Exchange Mortgage, Inc., a
residential mortgage lending firm, and from May 1991 until May 1992, he was
Regional Manager of Gelt Funding, also a residential mortgage lending firm.
Previously, he was a manager of various divisions of Sun Oil.
DAVID BADER, Vice President, Secretary, Treasurer and Chief Financial
Officer and director of the Company since April 1996, has been engaged in
financial and management consulting through Riz Business Consultants since 1988.
VINCENT J. PUTIGNANO, director of the Company since July 1996, has operated
a securities brokerage and investment banking and consulting business in New
York State since 1978. Before March 1991, he was President and Chief Executive
Officer of United States Business Products, Inc., a business equipment firm.
Since March 1991, he has engaged in sales administration and consulting with
Minor & Casey, a commercial real estate firm.
BRIEN G. REIDY, director of the Company since July 1996, has been engaged
in financial consulting and public relations in California and New York since
1987.
Each director serves until the next annual meeting of shareholders and
until his successor is elected and qualified. Each officer is appointed to serve
until the next annual meeting of the Board of Directors and until his successor
has been appointed and qualified.
The Charter includes certain provisions, permitted under Corporate Law,
that a director of the Company will not be personally liable to the Company or
its shareholders for damages for breach of duty as a director, except for
liability arising from (i) acts or omissions in bad faith or which involve
intentional misconduct or a knowing violation of law, (ii) any transaction from
which the director personally gained in fact a financial or other advantage to
which he was not legally entitled, or (iii) certain corporate actions prohibited
by Corporate Law. See "RISK FACTORS -- Elimination of Liability for Directors"
and "DESCRIPTION OF SECURITIES -- Charter and By Laws."
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<PAGE> 34
EMPLOYMENT AGREEMENTS/EXECUTIVE COMPENSATION
Irwin Zellermaier and David Bader, currently the only two employees of the
Company, have received no cash compensation from the Company since its inception
for their services rendered. Mr. Zellermaier, however, has received from the
Company reimbursement for his reasonable business expenses incurred in
connection with activities on behalf of the Company.
In June 1996, Irwin Zellermaier entered into a ten-year employment
agreement with the Company, effective immediately. Under the terms of that
agreement, Mr. Zellermaier serves as the Chairman and Chief Executive Officer of
the Company and becomes entitled to receive an annual base salary of $160,000
per annum subsequent to the Closing and continuing through and including June
2006. Mr. Zellermaier currently devotes and will continue to devote
approximately 75% of his business and professional time to the affairs of the
Company. The employment agreement with Mr. Zellermaier further provides that Mr.
Zellermaier shall receive bonuses and such other fringe benefits as are paid to
other executive officers of the Company. Such fringe benefits take the form of
medical coverage and an automobile expense allowance of $1,500 per month, the
aggregate value of which is estimated at approximately $20,800 per annum.
Further pursuant to the terms of his employment agreement, Mr. Zellermaier has
agreed during the term of his employment with the Company and for a three-year
period thereafter not to compete with the Company.
David Bader serves as the Vice President and Chief Financial Officer of the
Company pursuant to the terms of a five-year employment agreement which
terminates in June 2001. Pursuant to the agreement, Mr. Bader is entitled to
receive an annual base salary of $85,000 per annum, effective as of the Closing.
The employment agreement with Mr. Bader further provides for payment of bonuses
and for such other fringe benefits as are paid to other executive officers of
the Company. Such fringe benefits take the form of medical coverage and an
automobile expense allowance of $150 per month, the aggregate value of which is
estimated at approximately $7,240 per annum. Further pursuant to the terms of
his employment agreement, Mr. Bader has agreed during the term of his employment
with the Company and for a three-year period thereafter not to compete with the
Company.
At the closing of the NYPF Business Combination, Gerald Nimberg and the
Company will enter into a ten-year employment agreement which will terminate on
the tenth anniversary of that closing, pursuant to which, Mr. Nimberg, as of
that closing, shall begin to serve as the President and Chief Operating Officer
of the Company. The employment agreement with Mr. Nimberg provides that Mr.
Nimberg shall receive an annual base salary of $105,000 per annum, commencing
with the closing of the NYPF Business Combination, with annual adjustments for
increases in the Consumer Price Index. The employment agreement with Mr. Nimberg
further provides for payment of bonuses and for such other fringe benefits as
are paid to other executive officers of the Company. Such fringe benefits take
the form of medical coverage, the aggregate value of which is estimated at
approximately $5,440 per annum. In addition, the employment agreement provides
that at the closing of the NYPF Business Combination, the Company shall loan to
Mr. Nimberg the sum of $250,000, which sum, with simple interest calculated on
the basis of the annual rate of 9.25%, shall be repaid by Mr. Nimberg to the
Company through payroll deductions over ten years, interest only being payable
during the first two years. Further pursuant to the terms of his employment
agreement, Mr. Nimberg has agreed during the term of his employment with the
Company and for a three-year period thereafter not to compete with the Company.
The agreement with each of Messrs. Zellermaier, Bader and Nimberg provides
that, if his employment is terminated by the Company for cause (as defined in
the agreement) or by voluntary unilateral decision by the employee without
cause, then the employee is entitled to his base salary under the agreement
earned, accrued vacation, and reimbursements of expenses, through the date of
termination. In addition, the agreement with each of Messrs. Zellermaier and
Bader provides that, if his employment is otherwise terminated, employee is
entitled to receive, in one lump sum payment, the employee's total compensation
(base salary plus bonus) paid by the Company to the employee for the six months
prior to termination and all applicable allowances and reimbursements to the
date of termination.
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<PAGE> 35
CONFLICTS OF INTEREST
It is anticipated that Irwin Zellermaier will devote approximately 75% of
his business time to the affairs of the Company and, accordingly, may have
conflicts of interest in allocating his management time among the Company's
operations and various real estate-related activities that will not be in
conflict with the Company's business.
In the course of his other business activities, including private
investment activities, however, Mr. Zellermaier may become aware of investment
and business opportunities which may be appropriate for presentation to the
Company as well as the other entities with which he is affiliated. He may have
conflicts of interest in determining to which entity a particular business
opportunity should be presented. In general, officers and directors of
corporations incorporated under the laws of the State of New York are required
to present certain business opportunities to such corporations. Accordingly, as
a result of multiple business affiliations, Mr. Zellermaier may have similar
legal obligations relating to presenting certain business opportunities to
multiple entities. In addition, conflicts of interest may arise in connection
with evaluations of a particular business opportunity by the Board of Directors
with respect to the foregoing criteria. There can be no assurances that any of
the foregoing conflicts will be resolved in favor of the Company.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 36
PRINCIPAL SHAREHOLDERS
The following table sets forth information, as of the date hereof and as
adjusted to reflect the issuance of an aggregate of 125,000 shares of Common
Stock to Mr. Nimberg in connection with the NYPF Business Combination and the
sale of the Shares offered hereby, based on information obtained from the
persons named below, with respect to the beneficial ownership of shares of
Common Stock by (i) each person known by the Company to be the owner of more
than 5% of the outstanding shares of Common Stock; (ii) each director; and (iii)
all officers and directors as a group:
<TABLE>
<CAPTION>
BEFORE OFFERING AFTER OFFERING
---------------------------- -----------------------------
AMOUNT AND APPROXIMATE AMOUNT AND APPROXIMATE
NATURE OF PERCENTAGE OF NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) SHARES(2) OWNERSHIP(1) SHARES(3)
------------------------------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Irwin Zellermaier
211 East 70th Street
New York, NY 10021........................ 380,000 67.9% 380,000 11.2%
Victoria Kleinmunz(4)
17 Bayowski Road
West Orange, NJ 07052..................... 150,000 26.7% 150,000 4.4%
Gerald Nimberg
1009 Owl Place
Cherry Hill, NJ 08003..................... -- -- 125,000(5) 3.7%
David Bader
38 Milton Road
Babylon, NY 11702......................... 30,000 5.4% 30,000 1.0%
Vincent J. Putignano
907 Palmer Avenue
Mamaroneck, NY 10543...................... -- -- -- --
Brien G. Reidy
Seven Miller Lane West
East Hampton, NY 11937.................... -- -- -- --
All officers and directors as a group
(4 persons before the Closing, 5 persons
after the Closing)........................ 410,000 100.0% 535,000 15.9%
</TABLE>
- ---------------
(1) Unless otherwise noted, all persons named in the table have sole voting and
sole investment power with respect to all shares of Common Stock
beneficially owned by them, and no persons named in the table are acting as
nominees for any persons or are otherwise under the control of any person
or group of persons. As used herein, the term "beneficial ownership" with
respect to a security is defined by Rule 13d-3 under the Exchange Act as
consisting of sole or shared voting power (including the power to vote or
direct the vote) or sole or shared investment power (including the power to
dispose or direct the disposition) with respect to the security through any
contract, arrangement, understanding, relationship or otherwise, including
a right to acquire any such power during the next 60 days. Unless otherwise
noted for such persons, beneficial ownership consists of sole ownership,
voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) Based upon 560,000 shares of Common Stock outstanding before the Closing and
the closing of the NYPF Business Combination, excluding 198,000 shares of
Common Stock reserved for issuance upon exercise of the Lender Options.
(3) Based upon 3,385,000 shares of Common Stock to be outstanding after the
Closing and the closing of the NYPF Business Combination, assuming no
exercise of the Purchase Warrants, Over-Allotment Option, Representative
Options, or Lender Options and no issuance of the Prepayment Shares. See
"UNDERWRITING."
(4) Represents shares held by D.P. Morton & Associates, L.L.C., a private entity
investing for its own account, of which Victoria Kleinmunz is the owner of
98% of the outstanding shares of common stock and the sole director.
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<PAGE> 37
(5) Represents shares of Common Stock contemplated to be issued simultaneously
with the closing of the NYPF Business Combination, pursuant to the
provisions of the agreement between the Company and NYPF providing for the
NYPF Business Combination. Upon the closing of the NYPF Business
Combination, Mr. Nimberg will become an officer and a director of the
Company. See "PROPOSED BUSINESS -- The NYPF Business Combination."
Mr. Zellermaier may be deemed to be a "promoter" and "parent" of the
Company, as such terms are defined under the federal securities laws.
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock, par
value $.001 per share. Prior to this Offering, 560,000 shares of Common Stock
are outstanding, held of record by three persons. Upon the closing of the NYPF
Business Combination, an additional 125,000 shares will be issued, in addition
to the Securities purchased in this Offering. See "PRINCIPAL SHAREHOLDERS."
UNITS
Each Unit being offered hereby consists of three shares of Common Stock and
six Purchase Warrants. Each Purchase Warrant entitles the holder thereof to
purchase one share of Common Stock at $3.375 per share, subject to adjustment.
No fractional shares will be issued upon exercise of the Purchase Warrants. Upon
issuance of the Units, the Shares and Purchase Warrants comprising the Units
will be immediately detachable and separately tradeable.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voted for the election of directors can
elect all of the directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. In the event of liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to share ratably in
all assets remaining available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the Common Stock. Holders of shares of Common Stock, as
such, have no conversion, preemptive or other subscription rights, and, except
as noted herein, there are no redemption provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the Shares, when
issued and paid for as set forth in this Prospectus, will be, fully paid and
nonassessable. See "UNDERWRITING."
The holders of Common Stock do not have any subscription, redemption or
conversion rights, nor do they have any preemptive or other rights to acquire or
subscribe for additional, unissued or treasury shares. Accordingly, if the
Company were to elect to sell additional shares of Common Stock following this
Offering, persons acquiring Common Stock in this Offering would have no right to
purchase additional shares, and, as a result, their percentage equity interest
in the Company would be reduced.
Pursuant to the Company's By Laws, except for any matters which, pursuant
to Corporate Law, require a greater percentage vote for approval, the holders of
majority of the issued and outstanding Common Stock entitled to vote, if present
in person or by proxy, are necessary and sufficient to constitute a quorum for
the transaction of business at meetings of the Company's shareholders. Further,
except as to any matter which, pursuant to Corporate Law, requires a greater
percentage vote for approval, the affirmative vote of the holders of a majority
of the Common Stock voted on the matter (provided a quorum as aforesaid is
present) is necessary and sufficient to authorize, affirm or ratify any act or
action except the election of directors, which is by a plurality of the votes
cast.
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<PAGE> 38
The holders of Common Stock do not have cumulative voting rights.
Accordingly, the holders of more than half of the outstanding shares of Common
Stock can elect all of the directors to be elected in any election. In such
event, the holders of the remaining shares of Common Stock would not be able to
elect any directors. The Board of Directors is empowered to fill any vacancies
on the Board of Directors created by the resignation, death or removal of
directors.
In addition to voting at duly called meetings at which a quorum is present
in person or by proxy, Corporate Law, the Charter and the Company's By Laws
provide that shareholders may take action without the holding of a meeting by
written consent or consents signed by the holders of that number of the
outstanding shares of the capital stock of the Company entitled to vote thereon
which would be required to take the subject action. Prompt notice of the taking
of any action without a meeting by less than unanimous consent of the
shareholders will be given to those shareholders who do not consent in writing
to the action. The purposes of this provision are to facilitate action by
shareholders and to reduce the corporate expense associated with annual and
special meetings of shareholders. Pursuant to the rules and regulations of the
Commission, if shareholder action is taken by written consent, the Company will
be required to send to each shareholder entitled to vote on the matter acted on,
but whose consent was not solicited, an information statement containing
information substantially similar to that which would have been contained in a
proxy statement.
Upon the Closing, without giving effect to the exercise of the Purchase
Warrants, Over-Allotment Option, Representative Options, or Lender Options or
the issuance of the Prepayment Shares, the Company's executive officers and
directors will beneficially own approximately 15.9% of the outstanding shares of
Common Stock, and may accordingly be in a position to significantly influence
the voting results of certain actions required or permitted to be taken by
shareholders of the Company, including the election of directors. As a result,
the officers and directors of the Company are in a position to control the
outcome of substantially all matters on which shareholders are entitled to vote,
including the election of directors.
PURCHASE WARRANTS
The following is a brief summary of certain provisions of the Purchase
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the Purchase Warrant Agreement
between the Company and American Stock Transfer & Trust Company (the "Transfer
and Warrant Agent"). A copy of the Purchase Warrant Agreement has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part. See
"ADDITIONAL INFORMATION."
Exercise Price and Terms. Each Purchase Warrant entitles the holder
thereof to purchase, at any time from the Effective Date through the fifth
anniversary of the Effective Date, one share of Common Stock at a price of
$3.375 per share if exercised prior to , 2002, when the Purchase
Warrants expire, subject to adjustment in accordance with the anti-dilution and
other provisions referred to below.
The holder of any Purchase Warrant may exercise such Purchase Warrant by
surrendering the certificate representing the Purchase Warrant to the Transfer
and Warrant Agent, with the subscription form on the reverse side of such
certificate properly completed and executed, together with payment of the
exercise price. The Purchase Warrants may be exercised at any time in whole or
in part at the applicable exercise price until expiration of the Purchase
Warrants three years from the Effective Date. No fractional shares will be
issued upon the exercise of the Purchase Warrants.
Commencing after the Effective Date, the Purchase Warrants are subject to
redemption by the Company, at the option of the Company, at $0.25 per Purchase
Warrant, upon 30 days prior written notice, if the closing bid price, as
reported on Nasdaq, or the closing sale price, as reported on a national or
regional securities exchange, as applicable, of the shares of the Common Stock
for 30 consecutive trading days ending within ten days of the notice of
redemption of the Purchase Warrants averages in excess of $6.00 per share,
subject to adjustment. The Company is required to maintain an effective
registration statement with respect to the Common Stock underlying the Purchase
Warrants prior to redemption of the Purchase Warrants. Prior to the first
anniversary of the Effective Date, the Purchase Warrants will not be redeemable
by the Company without the written consent of the Underwriter. In the event the
Company exercises the right to redeem the
36
<PAGE> 39
Purchase Warrants, such Purchase Warrants will be exercisable until the close of
business on the date for redemption fixed in such notice. If any Purchase
Warrant called for redemption is not exercised by such time, it will cease to be
exercisable and the holder will be entitled only to the redemption price.
Redemption of the Purchase Warrants could force the Purchase Warrant holders
either to (i) exercise the Purchase Warrants and pay the exercise price thereof
at a time when it may be less advantageous economically to do so, or (ii) accept
the redemption price in consideration for cancellation of the Purchase Warrant,
which could be substantially less than the market value thereof at the time of
redemption.
The exercise price of the Purchase Warrants bear no relation to any
objective criteria of value and should in no event be regarded as an indication
of any future market price of the Securities offered hereby.
The Company has authorized and reserved for issuance a sufficient number of
shares of Common Stock to accommodate the exercise of all Purchase Warrants to
be issued in this Offering. All shares of Common Stock issued upon exercise of
the Purchase Warrants, if exercised in accordance with their terms, will be
fully paid and non-assessable.
Adjustments. The exercise price and the number of shares of Common Stock
purchasable upon exercise of the Purchase Warrants are subject to adjustment
upon the occurrence of certain events, including stock dividends, stock splits,
combinations or reclassification of the Common Stock, or sale by the Company of
shares of its Common Stock (or other securities convertible into or exercisable
for Common Stock) at a price per share or share equivalent below the
then-applicable exercise price of the Purchase Warrants or the then-current
market price of the Common Stock. Additionally, an adjustment would be made in
the case of a reclassification or exchange of Common Stock, consolidation or
merger of the Company with or into another corporation, or sale of all or
substantially all of the assets of the Company, in order to enable Purchase
Warrant holders to acquire the kind and number of shares of stock or other
securities or property receivable in such event by a holder of that number of
shares of Common Stock that would have been issued upon exercise of the Purchase
Warrant immediately prior to such event. No adjustments will be made until the
cumulative adjustments in the exercise price per share amount to $.05 or more.
No adjustment to the exercise price of the shares subject to the Purchase
Warrants will be made for dividends (other than stock dividends), if any paid on
the Common Stock or upon exercise of the Purchase Warrants, the Underwriter
Warrant or any other options or warrants outstanding as of the date of this
Prospectus.
Transfer, Exchange and Exercise. The Purchase Warrants are in registered
form and may be presented to the Transfer and Warrant Agent for transfer,
exchange or exercise at any time prior to their expiration date three years from
the Effective Date, at which time the Purchase Warrants become wholly void and
of no value. If a market for the Purchase Warrants develops, the holder may sell
the Purchase Warrants instead of exercising them. There can be no assurance,
however, that a market for the Purchase Warrants will develop or continue. If
the Company is unable to qualify for sale in particular states the Common Stock
underlying the Purchase Warrants, holders of the Purchase Warrants residing in
such states and desiring to exercise the Purchase Warrants will have no choice
but to sell such Purchase Warrants or allow them to expire. See "--Transfer and
Warrant Agent."
Warrant Holder Not a Shareholder. The Purchase Warrants do not confer upon
holders any voting or any other rights as shareholders of the Company.
CHARTER AND BY LAWS
Pursuant to Corporate Law, if the certificate of incorporation or a by-law
adopted by the shareholders so provides, then the power to adopt, amend and
repeal a corporation's by-laws is conferred upon the board of directors as well
as the shareholders, but any by-law adopted by the board of directors may be
amended or repealed by the shareholders. The shareholders of the Company have
not adopted any by-law. The Company's By Laws provide that (i) the Board of
Directors has no power to change the quorum for meetings of shareholders or of
the Board of Directors, or to change any provisions of the By Laws with respect
to the removal of directors or the filling of vacancies on the Board of
Directors resulting from the removal of one or more directors by the
shareholders and (ii) each director has one vote on each matter for which
directors are entitled to vote and, except as otherwise provided by law, by the
Charter or by the By Laws, the action of a
37
<PAGE> 40
majority of the directors present at any meeting at which a quorum is present
will be the act of the Board of Directors.
The Charter provides with respect to the indemnification of directors and
officers that the Registrant shall indemnify its directors and officers to the
fullest extent permitted by Corporate Law. See "RISK FACTORS -- Elimination of
Liability for Directors".
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, there will be 3,385,000 shares of Common
Stock outstanding excluding (a) an aggregate of 5,400,000 shares issuable upon
the exercise of (i) the Purchase Warrants; (ii) the Over-Allotment Option; and
(iii) the Representative Option, including shares issuable under the Purchase
Warrants included in the Representative Options granted as of the Effective
Date, and (b) an aggregate of 198,000 shares of Common Stock reserved for
issuance upon exercise of the Lender Options. See "CAPITALIZATION" and
"UNDERWRITING." Of these shares, the 2,700,000 shares sold in this Offering, the
5,400,000 shares underlying the Purchase Warrants, and the shares issuable upon
full exercise of the Over-Allotment Option and the exercise of the
Representative Option and the Purchase Warrants included in the Representative
Option will be freely tradeable without restriction or further registration
under the Securities Act, except for any such shares purchased by an "affiliate"
of the Company. The 560,000 shares currently outstanding, the 125,000 shares
issuable to Mr. Nimberg in connection with the NYPF Business Combination, the
198,000 shares of Common Stock issuable upon exercise of the Lender Options and
the Prepayment Shares, if issued, are "restricted securities" as defined in Rule
144 and may not be sold without registration under the Securities Act unless
pursuant to an applicable exemption therefrom (collectively, the "Restricted
Shares" or "Current Shares").
In general, under Rule 144, a person (or persons whose shares are required
to be aggregated) who has satisfied a two-year holding period (or such shorter
period as prescribed by the rules of the Commission) may, under certain
circumstances, sell within any three-month period a number of Restricted Shares,
and an "affiliate" of the Company may, under certain circumstances, sell within
any three-month period a number of shares, whether or not Restricted Shares,
which does not exceed the greater of 1% of the then-outstanding shares of Common
Stock or the average weekly trading volume during the four calendar weeks prior
to such sale as reported on NASDAQ, all exchanges and the consolidated
transaction reporting system. Rule 144 also permits the sale of Restricted
Shares without any quantity limitations by a person who is not an "affiliate" of
the Company, who has not been an "affiliate" of the Company for at least three
months immediately preceding the sale, and who has owned the shares for at least
three years (or such shorter period as prescribed by the rules of the
Commission). The holders of all of the Current Shares and all of the Lender
Options have agreed not to sell any shares of Common Stock for a period of 24
months from the Effective Date, or any longer period required by the law of any
state (the "Lock-up").
The Company is unable to predict the effect that any subsequent sales of
the Company's securities by its existing shareholders, under Rule 144 or
otherwise, may have on the then-prevailing market price of the Common Stock,
although such sales could have a depressive effect on such market price. The
foregoing summary of Rule 144 is not intended to be a complete description
thereof.
DIVIDENDS
The Company has not paid any dividends on its capital stock to date and
does not currently intend to pay cash dividends prior to the consummation of the
NYPF Business Combination. The payment of dividends after the NYPF Business
Combination, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition at that
time. The payment of any dividends subsequent to NYPF Business Combination will
be within the discretion of the Company's then Board of Directors. It is the
current intention of the Board of Directors to retain all earnings, if any, for
use in the Company's business operations and, accordingly, the Board does not
anticipate paying any cash dividends in the foreseeable future.
TRANSFER AND WARRANT AGENT
The transfer agent for the Common Stock and the warrant agent for the
Purchase Warrants is American Stock Transfer & Trust Company, New York, New
York.
38
<PAGE> 41
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom Barron Chase Securities,
Inc. (the "Representative") is acting as Representative, have severally agreed
to purchase from the Company an aggregate of 900,000 Units. The number of Units
which each Underwriter has agreed to purchase is set forth opposite its name.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
- ----------- ---------------
<S> <C>
Barron Chase Securities, Inc................................
</TABLE>
The Units are offered by the Underwriters subject to prior sale, when, as
and if delivered to and accepted by the Underwriters and subject to approval of
certain legal matters by counsel and certain other conditions. The Underwriters
are committed to purchase all Units offered by this Prospectus, if any are
purchased.
The Company has been advised by the Representative that the Underwriters
propose to offer the Units to the public at the offering price set forth in the
cover page of this Prospectus, and that the Underwriters may allow concessions
to certain selected dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD") and certain foreign dealers, all of whom agree
to sell the Units in conformity with the NASD's Conduct Rules. Such concessions
will not exceed the amount of the underwriting discount that the Underwriters
are to receive.
The Company has granted to the Representative an Over-Allotment Option,
exercisable for 45 days from the Effective Date, to purchase up to an additional
135,000 Units at the public offering price less the Underwriting Discount
(defined below) set forth on the cover page of this Prospectus. The
Representative may exercise this option solely to cover over-allotments in the
sale of the Securities being offered by this Prospectus.
Officers and directors of the Company may (but currently have no plans,
arrangements or understandings to) introduce the Representative to persons to
consider this Offering and to purchase Units either through the Representative,
other Underwriters or through participating dealers. In this connection,
officers and directors will not receive any commissions or any other
compensation. No Units have been reserved for the purpose of satisfying the
requests of persons introduced by officers or directors of the Company.
The Company has agreed to pay to the Representative a commission of 10% of
the gross proceeds of this Offering (the "Underwriting Discount"), including the
gross proceeds from the sale of the Over-Allotment Option, if exercised. In
addition, the Company has agreed to pay to the Representative the
Non-Accountable Expense Allowance of 3% of the gross proceeds of this Offering,
including proceeds from any Units purchased pursuant to the Over-Allotment
Option. The Representative's expenses in excess of the Non-Accountable Expense
Allowance will be paid by the Representative. To the extent that the expenses of
the Representative are less than the amount of the Non-Accountable Expense
Allowance received, such excess shall be deemed to be additional compensation to
the Representative.
The Company has agreed to engage the Representative as a financial advisor
for a period of three years from the Closing, at a fee of $108,000, all of which
is payable to the Representative at the Closing. Pursuant to the terms of a
financial advisory agreement, the Representative has agreed to provide, at the
Company's request, advice to the Company concerning potential merger and
acquisition and financing proposals, whether by public financing or otherwise.
There are currently no plans, proposals, arrangements or understandings with
respect to any potential merger, acquisition, financing proposal or joint
venture.
Prior to this Offering, there has been no public market for the Units, the
Shares or Purchase Warrants. Consequently, the initial public offering price for
the Units, and the terms of the Purchase Warrants (including the exercise price
of the Purchase Warrants), have been determined by negotiation between the
39
<PAGE> 42
Company and the Representative. Among the factors considered in determining the
public offering price were the history of, and the prospects for, the Company's
business, an assessment of the Company's management, its past and present
operations, the Company's development and the general condition of the
securities market at the time of this Offering. The initial public offering
price does not necessarily bear any relationship to the Company's assets, book
value, earnings or other established criterion of value. Such price is subject
to change as a result of market conditions and other factors, and no assurance
can be given that a public market for the Units, the Shares or the Purchase
Warrants will develop after the Closing, or if a public market in fact develops,
that such public market will be sustained, or that the Units, the Shares or
Purchase Warrants can be resold at any time at the offering or any other price.
See "RISK FACTORS -- No Assurance of Public Market; Arbitrary Determination of
Offering Price."
At the Closing, the Company will issue to the Representative or persons
related to the Representative, for nominal consideration, the Representative
Options to purchase up to 90,000 Units (the "Representative Units"). The
Representative Units are substantially similar to the Units sold to the public,
except for certain provisions, including the purchase price. The Representative
Options will be exercisable for a five-year period commencing on the Effective
Date. The initial exercise price of each Representative Option shall be $16.50
per Representative Option (165% of the public offering price). The
Representative Options will not be transferable by the holders for twelve months
from the Effective Date, except (i) to officers of the Representative and
members of the selling group and officers and partners thereof; (ii) by will; or
(iii) by operation of law.
The Representative Options contain provisions providing for appropriate
adjustment in the event of any merger, consolidation, recapitalization,
reclassification, stock dividend, stock split or similar transaction. The
Representative Options contain net issuance provisions permitting the holders
thereof to elect to exercise the Representative Options in whole or in part and
instruct the Company to withhold from the securities issuable upon exercise, a
number of securities, valued at the current fair market value on the date of
exercise, to pay the exercise price. Such net exercise provision has the effect
of requiring the Company to issue shares of Common Stock without a corresponding
increase in capital. A net exercise of the Representative Options will have the
same dilutive effect on the interests of the Company's shareholders as will a
cash exercise. The Representative Options do not entitle the Representative to
any rights as a shareholder of the Company until such Representative Options are
exercised and Representative Units are purchased thereunder.
The Representative Options and the securities issuable thereunder may not
be offered for sale except in compliance with the applicable provisions of the
Securities Act. The Company has agreed that if it shall cause a post-effective
amendment, a new registration statement, or similar offering document to be
filed with the Commission, the holders shall have the right, for seven years
from the Effective Date, to include in such registration statement or offering
statement the Representative Options or the securities issuable upon their
exercise at no expense to the holders. Additionally, the Company has agreed
that, upon request by the holders of 50% or more of the Representative Options
and registrable securities during the period commencing 12 months from the
Effective Date and expiring four years thereafter, the Company will, under
certain circumstances, register the Representative Options and any of the
securities issuable upon their exercise.
The Company has also agreed that if the Company participates in any
transaction which the Representative has introduced in writing to the Company
during a period of five years after the Closing (including mergers,
acquisitions, joint ventures and any other business excluding the NYPF Business
Combination), and which is consummated after the Closing (including an
acquisition of assets or stock for which it pays, in whole or in part, with
shares or other securities of the Company), or if the Company retains the
services of the Representative in connection with any such transaction, then the
Company will pay for the Representative's services an amount equal to 5% of up
to one million dollars of value paid or received in the transaction, 4% of the
next million of such value, 3% of the next million of such value, 2% of the next
million of such value, and 1% of the next million dollars of such value and of
all such value above $4,000,000.
The Company has agreed to indemnify the Underwriters against any costs or
liabilities incurred by the Underwriters by reasons of misstatements or
omissions to state material facts in connection with the statements made in the
Registration Statement on Form SB-2 filed by the Company with the Commission
(the "Registration Statement") under the Securities Act and this Prospectus. The
Underwriters have in turn
40
<PAGE> 43
agreed to indemnify the Company against any costs or liabilities by reason of
misstatements or commissions to state material facts in connection with the
statements made in the Registration Statement and this Prospectus, based on
information relating to the Underwriters and furnished in writing by the
Underwriters. To the extent that this section may purport to provide exculpation
from possible liabilities arising from the federal securities laws, in the
opinion of the Commission, such indemnification is contrary to public policy and
therefore unenforceable.
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to copies
of each such agreement which are filed as exhibits to the Registration
Statement. See "ADDITIONAL INFORMATION."
LEGAL PROCEEDINGS
The Company is not a party to, nor is it aware of, any pending litigation
to which it is a party or of which its property is subject.
NYPF is engaged from time to time as plaintiff in litigation relating to
collection of returned checks. Such litigation has not historically had any
material effect on NYPF's financial condition or results of operations.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Berman Wolfe &
Rennert, P.A., Miami, Florida. Certain matters regarding New York law have been
passed upon for the Company by Robert P. Gaudiosi, Esq., Melville, New York.
Certain legal matters will be passed upon for the Underwriters by David A.
Carter, P.A., Boca Raton, Florida.
EXPERTS
The balance sheet of the Company as of December 31, 1996 and the statements
of operations, shareholder's deficiency and cash flows for the period February
10, 1995 (inception) to December 31, 1995, and for the year ended December 31,
1996 included in this Prospectus and Registration Statement have been included
herein in reliance on the report, which includes an explanatory paragraph
relating to the Company's ability to continue as a going concern, of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The balance sheet of NYPF as of December 31, 1996 and the statements of
income, shareholders' equity and cash flows for each of the two years in the
period ended December 31, 1996, included in this Prospectus and Registration
Statement have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
41
<PAGE> 44
ADDITIONAL INFORMATION
The Company has filed with the Commission the Registration Statement under
the Securities Act with respect to the Securities, the Representative Options
and the securities underlying the Representative Options. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and this
Offering, reference is made to the Registration Statement, including the
exhibits filed therewith, which may be examined at the Commission's principal
office, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549; the Northeast Regional Office of the Commission at 7 World Trade Center,
Suite 1300, New York, New York 10048; and the Midwest Regional Office of the
Commission, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, where copies may be obtained upon payment of the fees prescribed
by the Commission. Such documents may also be obtained through the website
maintained by the Commission at http://www.sec.gov. Descriptions contained in
this Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete and each such
description is qualified by reference to such contract or document. The Company
will provide without charge to each person who receives a Prospectus, upon
written or oral request of such person to the following address or telephone
number, a copy of any of the information that is incorporated by reference in
this Prospectus: 211 East 70th Street, New York, New York 10021; (212) 861-2867.
42
<PAGE> 45
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheet as of December 31, 1996....................... F-3
Statements of Operations for the period February 10, 1995
(inception) to December 31, 1995, for the year ended
December 31, 1996 and for the period February 10, 1995
(inception) to December 31, 1996.......................... F-4
Statements of Shareholders' Deficiency for the period
February 10, 1995 (inception) to December 31, 1995, for
the year ended December 31, 1996 and for the period
February 10, 1995 (inception) to December 31, 1996........ F-5
Statements of Cash Flows for the period February 10, 1995
(inception) to December 31, 1995, for the year ended
December 31, 1996 and for the period February 10, 1995
(inception) to December 31, 1996.......................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 46
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
General Credit Corporation:
We have audited the accompanying balance sheet of General Credit
Corporation (a development stage corporation), as more fully described in Note
1, as of December 31, 1996 and the related statements of operations,
shareholders' deficiency and cash flows for the year ended December 31, 1996 and
for the period February 10, 1995 (inception date) to December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of General Credit Corporation
as of December 31, 1996 and the results of its operations and its cash flows for
the year ended December 31, 1996 and for the period February 10, 1995
(inception) to December 31, 1996, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's ability to commence operations is dependent
on obtaining adequate financial resources through a contemplated public
offering, or otherwise, which raises substantial doubts about its ability to
continue as a going concern. If unsuccessful, the Company may be unable to
continue in its present form. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.
/s/ Coopers & Lybrand L.L.P.
Melville, New York
March 14, 1997
F-2
<PAGE> 47
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 650
---------
Total current assets.............................. 650
Other assets................................................ 4,762
---------
Total assets...................................... $ 5,412
=========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Notes payable............................................. $ 518,000
Accounts payable and accrued expenses..................... 270,845
---------
Total current liabilities......................... 788,845
---------
Commitments (Notes 2 and 8)
Shareholders' deficiency:
Common shares, $.001 par value, 20,000,000 shares
authorized, 1,758,000 shares issued and outstanding.... 1,758
Additional paid-in capital................................ 11,176
Deficit accumulated during the development stage.......... (412,905)
Deferred offering costs................................... (383,462)
---------
Total shareholders' deficiency.................... (783,433)
---------
Total liabilities and shareholders' deficiency.... $ 5,412
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 48
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FEBRUARY 10, 1995 FOR THE FEBRUARY 10, 1995
(INCEPTION) TO YEAR ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1996
----------------- ------------ -----------------
<S> <C> <C> <C>
Expenses:
General and administrative...................... $ 371 $ 103,325 $ 103,696
Amortization.................................... 42 871 913
Interest expense.................................. -- 108,296 108,296
Forfeiture of deposit on acquisition.............. -- 200,000 200,000
---------- ---------- ----------
Net loss................................ $ (413) $ (412,492) $ (412,905)
========== ========== ==========
Net loss per common share......................... $ $ (.23) $ (.23)
========== ========== ==========
Weighted average number of common shares
outstanding..................................... 1,758,000 1,758,000 1,758,000
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 49
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE DEFERRED TOTAL
------------------ PAID-IN DEVELOPMENT OFFERING SHAREHOLDERS'
SHARES AMOUNT CAPITAL STAGE COSTS DEFICIENCY
--------- ------ ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, February 10, 1995
(inception)................... $ -- $ -- $ -- $ -- $ --
Issuance of common shares to
original founders for cash, at
par value..................... 1,758,000 1,758 196 1,954
Net loss for the period from
February 10, 1995 (inception)
to December 31, 1995.......... (413) (413)
Payment of offering costs....... (5,000) (5,000)
--------- ------ ------- --------- --------- ---------
Balance, December 31, 1995...... 1,758,000 1,758 196 (413) (5,000) (3,459)
Options issued in connection
with bridge financing (Note
6)............................ 10,980 10,980
Payment of offering costs....... (378,462) (378,462)
Net loss for the year ended
December 31, 1996............. (412,492) (412,492)
--------- ------ ------- --------- --------- ---------
Balance, December 31, 1996...... 1,758,000 $1,758 $11,176 $(412,905) $(383,462) $(783,433)
========= ====== ======= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 50
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FEBRUARY 10, 1995 FOR THE YEAR FEBRUARY 10, 1995
(INCEPTION) TO ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1996
----------------- ------------ -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................ $ (413) $(412,492) $(412,905)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization................................. 42 70,351 70,393
Issuance of stock options....................... 10,980 10,980
Change in assets and liabilities:
Other assets................................. (250) (5,425) (5,675)
Accounts payable and accrued expenses........ 270,845 270,845
------- --------- ---------
Net cash used in operating activities... (621) (65,741) (66,362)
------- --------- ---------
Cash flows from financing activities:
Borrowings under bridge financing............... 518,000 518,000
Proceeds from issuance of common stock.......... 1,954 -- 1,954
Deferred debt costs............................. (1,000) (68,480) (69,480)
Deferred offering costs......................... (5,000) (378,462) (383,462)
Loans from (repayments to) officer and
shareholder.................................. 7,150 (7,150) --
------- --------- ---------
Net cash provided by financing
activities............................ 3,104 63,908 67,012
------- --------- ---------
Net (decrease) increase in cash and cash
equivalents........................... 2,483 (1,833) 650
Cash, beginning of period......................... -- 2,483 --
------- --------- ---------
Cash, end of period............................... $ 2,483 $ 650 $ 650
======= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 51
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
1. OPERATIONS AND REORGANIZATION
General Credit Corporation, a development stage company (the "Company"),
was incorporated in February, 1995, for the purpose of seeking out business
opportunities, including acquisitions. Since inception, the Company's activities
have been limited to administrative activities.
The accompanying financial statements have been prepared on a going concern
basis. The Company's continuation as a going concern is dependent upon either
the successful completion of the proposed public offering (Note 7) or attaining
other sources of financing.
Under its original certificate of incorporation, the Company was authorized
to issue 200 shares of its no par value common stock. Pursuant to a plan of
reorganization, effective April 24, 1996, the Company authorized a 100,000 for
one stock split and effected a 8,790 for one stock dividend to shareholders of
record. The accompanying financial statements have been retroactively adjusted
to reflect the foregoing reorganization.
2. GOING CONCERN
The financial statements have been prepared on a going concern basis, which
contemplates realization of assets and liquidation of liabilities in the
ordinary course of business. The ability to continue as a going concern is
dependent, among other things, upon the Company's obtaining adequate long-term
financing and the attainment of profitable commercial operations. Management has
signed a letter of intent to raise additional working capital through an initial
public offering ("IPO").
Although management expects that the above factors will allow the Company
to continue as a going concern, there is no assurance that the financing will be
consummated or revenues from product sales will generate profitable operations.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEFERRED OFFERING COSTS
At December 31, 1996, the Company has deferred costs aggregating $383,462
in connection with an expected public offering of its equity securities (Note
7). If the offering is unsuccessful, such costs will be charged to operations.
LOSS PER SHARE
Loss per share has been computed by dividing net losses by the weighted
average number of common shares outstanding.
Retroactive restatement has been made to all share and per share amounts
for the reorganization discussed in Note 1.
STATEMENT OF CASH FLOWS
The Company considers all highly liquid debt instruments, purchased with
maturities of three months or less, to be cash equivalents.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates and assumptions that affect the reported amounts of
F-7
<PAGE> 52
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
INCOME TAXES
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax liabilities and assets are determined
based on the difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
As of December 31, 1996, the Company's net operating loss for tax purposes
differs from the loss for financial reporting purposes as a result of certain
accrued costs deductible for tax purposes when paid. The Company has recorded a
full valuation allowance against the potential future benefit of such deferred
tax assets.
NEWLY ISSUED ACCOUNTING STANDARDS
In February 1997, the financial accounting standards board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" which
establishes standards for computing and presenting earnings per share. The
statement, which becomes effective for periods after December 15, 1997, replaces
the presentation of primary earnings per share with basic earnings per share. It
also requires dual presentation of basic and diluted earnings per share on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of basic earnings
per share to diluted earnings per share. Adoption of the new standard is
required for fiscal years beginning after December 15, 1997. This pronouncement
would not have an impact on the historical financial statements presented
herein.
4. OTHER ASSETS
Other assets consists of the following:
<TABLE>
<S> <C>
Deposits.................................................... $4,603
Other....................................................... 159
------
$4,762
======
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<S> <C>
Professional fees........................................... $231,764
Accrued interest............................................ 38,816
Other....................................................... 265
--------
$270,845
========
</TABLE>
6. NOTES PAYABLE
During fiscal 1996, the Company obtained $518,000 of bridge financing to
provide interim working capital and pay for costs associated with the proposed
public offering (Note 7). These uncollateralized notes bear interest at 12% per
annum and are payable upon closing of the offering. The Company believes the
payment terms will be renegotiated if the offering does not close. In addition,
certain bridge lenders received options to
F-8
<PAGE> 53
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
purchase a total of 198,000 shares of the Company's common stock at $1 per share
for a term of one year from the closing of the offering. All the options issued
in connection with the bridge financing were valued at approximately $11,000.
Subsequent to December 31, 1996, the Company raised an additional $16,390
to provide interim working capital. These notes have the same terms as noted
above.
7. PROPOSED PUBLIC OFFERING
The Proposed Offering (the "Offering") calls for the Company to offer for
public sale 900,000 units at $10 per unit. Each unit consists of three shares of
common stock and six redeemable common stock warrants. Each warrant entitles the
holder to purchase one additional share of common stock at an exercise price of
$3.375 from the effective date of the Offering through fiscal 2002. The Company
would be entitled to call all or a portion of the warrants for a redemption
price of $.25 per warrant upon 30 days prior written notice to the holders.
In connection with the Offering, the Company will grant the underwriter an
option to purchase up to 90,000 units at an exercise price of $16.50 per unit,
exercisable during a five-year period commencing on the effective date.
As additional compensation for the underwriter's services in connection
with the Offering, the Company will pay the underwriter a nonaccountable expense
allowance of 3% of the total purchase price and will engage the underwriter as a
financial advisor for a three-year period from the closing of the Offering at a
total cost of $108,000 payable at closing.
8. PROPOSED ACQUISITION
On February 19, 1996, the Company entered into a definitive agreement to
acquire New York Payroll Factors, Inc. ("NYPF") in exchange for $3,145,000 in
cash, 375,500 shares of the Company's common stock, and a $300,000 note payable
due in 42 equal monthly installments at an interest rate of 10.5% per annum.
During 1996, the Company made non-refundable payments of $200,000 towards the
total purchase price. As stipulated under the original acquisition agreement, if
the acquisition did not close by November 15, 1996, the Company would forfeit
its deposit. Accordingly, as the acquisition did not close by November 15, 1996
the deposit of $200,000 was expensed to operations during fiscal 1996. On
January 13, 1997, the Company and NYPF modified the terms of the original
agreement. The new terms require the Company to pay $4,500,000 in cash and
125,000 shares of common stock. In February 1997, the Company paid a
non-refundable deposit of $225,000 towards the purchase price. The remaining
balance is expected to be paid from the proceeds of the Offering (Note 7).
The following unaudited pro forma results of operations assume the
acquisition occurred as of January 1, 1995 and was recorded under the purchase
method of accounting. The proposed acquisition would result in the recording of
identifiable intangibles and goodwill of $4,834,489 which is currently estimated
to be amortized over a five-year and twenty-year period, respectively.
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996
---------- ----------
<S> <C> <C>
Net revenue................................................. $1,467,620 $2,605,549
Net income.................................................. 122,184 343,544
Earnings per share.......................................... .14 .39
</TABLE>
F-9
<PAGE> 54
GENERAL CREDIT CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. INCOME TAXES
The components of deferred taxes as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accrued expenses.......................................... $ 15,526
Net operating loss........................................ 149,636
----------
Total deferred tax asset.......................... 165,162
Valuation allowance......................................... (165,162)
----------
$ --
==========
</TABLE>
10. SUBSEQUENT EVENT
In February 1997, the Company entered into an agreement with its current
shareholders to redeem 1,198,000 common shares for $1,198. The repurchased
shares will be available for future issuance.
During February 1997, the Company raised $300,000 through the issuance of
notes to ten unrelated parties. These unsecured notes bear interest at 18% per
annum. Interest is to be paid monthly commencing June 1, 1997. Principal and all
unpaid interest is due on December 31, 2001. The notes contain prepayment
clauses which are calculated based on the provisions in the notes. The
prepayment clauses can be paid through the issuance of the Company's common
stock, not to exceed 50,000 shares.
F-10
<PAGE> 55
NEW YORK PAYROLL FACTORS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-12
Balance Sheet as of December 31, 1996....................... F-13
Statements of Income for the years ended December 31, 1995
and 1996.................................................. F-14
Statements of Shareholders' Equity for the years ended
December 31, 1995 and 1996................................ F-15
Statements of Cash Flows for the years ended December 31,
1995 and 1996............................................. F-16
Notes to Financial Statements............................... F-17
</TABLE>
F-11
<PAGE> 56
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
New York Payroll Factors, Inc.:
We have audited the accompanying balance sheet of New York Payroll Factors,
Inc. (the "Company"), as of December 31, 1996, and the related statements of
income, shareholders' equity, and cash flows for each of the two years in the
period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As more fully disclosed in Note 6, the Company entered into an agreement to
sell certain of its assets and all of its operations.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New York Payroll Factors,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Melville, New York
March 14, 1997
F-12
<PAGE> 57
NEW YORK PAYROLL FACTORS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
Current assets:
Cash...................................................... $2,244,928
Restricted cash........................................... 122,320
Accounts receivable, less allowance for doubtful accounts
of $30,000............................................. 137,251
Prepaid expenses and other current assets................. 18,089
----------
Total current assets.............................. 2,522,588
Fixed assets, at cost, less accumulated depreciation and
amortization.............................................. 41,368
Intangibles, net............................................ 376,255
Other assets................................................ 9,560
----------
Total assets...................................... $2,949,771
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable............................................. $ 573,936
Due to related parties.................................... 689,650
Accrued expenses.......................................... 203,123
----------
Total current liabilities......................... 1,466,709
Long-term portion of notes payable.......................... 759,515
Commitments (Note 5)
Shareholders' equity:
Common stock (no par value, 200 shares authorized, 26
shares issued and outstanding)......................... 50,000
Retained earnings......................................... 673,547
----------
Total shareholders' equity........................ 723,547
----------
Total liabilities and shareholders' equity........ $2,949,771
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE> 58
NEW YORK PAYROLL FACTORS, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1996
------------- -------------
<S> <C> <C>
Fee income, net............................................. $1,467,620 $2,605,549
Selling, general and administrative expenses................ 941,201 1,799,556
---------- ----------
Income from operations............................ 526,419 805,993
Other income (expenses):
Interest expense.......................................... (210,704) (500,595)
Other income.............................................. 200,000
---------- ----------
Income before provision for income taxes.......... 315,715 505,398
Provision for income taxes.................................. 27,114 40,129
---------- ----------
Net income........................................ $ 288,601 $ 465,269
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-14
<PAGE> 59
NEW YORK PAYROLL FACTORS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED SHAREHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
------ ------- --------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994............................. 26 $50,000 $ 328,131 $ 378,131
Net income for the year.............................. 288,601 288,601
Distributions to shareholders........................ (159,008) (159,008)
-- ------- --------- ---------
Balance, December 31, 1995............................. 26 50,000 457,724 507,724
Net income for the year.............................. 465,269 465,269
Distributions to shareholders........................ (249,446) (249,446)
-- ------- --------- ---------
Balance, December 31, 1996............................. 26 $50,000 $ 673,547 $ 723,547
== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-15
<PAGE> 60
NEW YORK PAYROLL FACTORS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------
1995 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 288,601 $ 465,269
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation........................................... 8,113 11,048
Amortization........................................... 56,816 56,805
Bad debt expense....................................... 82,196 158,872
Changes in assets and liabilities:
Accounts receivable.................................... (100,312) (255,784)
Prepaid expenses and other current assets.............. (6,649) 1,954
Other assets........................................... (4,375) (5,185)
Accrued expenses....................................... (41,590) 187,676
---------- ----------
Net cash provided by operating activities......... 282,800 620,655
---------- ----------
Cash flows from investing activities:
Capital expenditures...................................... (19,144) (22,520)
---------- ----------
Net cash used in investing activities............. (19,144) (22,520)
---------- ----------
Cash flows from financing activities:
Note payable borrowing.................................... 225,000 675,334
Note payable repayments................................... (359,056) (121,003)
Distributions to shareholders............................. (159,008) (249,446)
Net proceeds from related parties......................... 81,220 216,834
Restricted funds.......................................... (122,320)
---------- ----------
Net cash provided by (used in) financing
activities...................................... (211,844) 399,399
---------- ----------
Net increase in cash........................................ 51,812 997,534
Cash at beginning of period................................. 1,195,582 1,247,394
---------- ----------
Cash at end of period....................................... $1,247,394 $2,244,928
========== ==========
Supplemental information:
Interest paid during the year............................. $ 221,025 $ 487,762
Taxes paid during the year................................ 16,677 44,609
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-16
<PAGE> 61
NEW YORK PAYROLL FACTORS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
The Company was incorporated on January 24, 1989, pursuant to the laws of
New York State. The Company is engaged in providing working capital financing to
its customers through the discounted purchase of checks made payable to the
Company's customers. Gross proceeds from the purchase of these checks were
$253,365,164 and $136,471,119 for the years December 31, 1996 and 1995,
respectively. The Company deals with numerous small and medium sized labor
intensive contracting firms located in New York and New Jersey. Revenues are
recognized at the time the customer is provided cash for the purchase of third
party checks.
FIXED ASSETS
Fixed assets are recorded at cost. Expenditures for additions and
betterments are capitalized and expenditures for maintenance and repairs are
charged to operations as incurred. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets
(leasehold improvements, 5-7 years, equipment, furniture and fixtures, 7 years).
Upon retirement or disposal, the asset cost and related accumulated depreciation
and amortization are eliminated from the respective accounts and the resulting
gain or loss, if any, is included in the results of operations for the period.
INTANGIBLE ASSETS
The net assets of businesses acquired are recorded at their fair value at
the acquisition date and any excess of acquisition costs over the fair value of
identifiable net assets acquired is included in goodwill and is amortized on a
straight-line basis over fifteen years. At December 31, 1996, goodwill was
$352,513, net of amortization of $170,796.
Covenants not to compete are stated at cost and are amortized using the
straight-line method over six years. At December 31, 1996, covenants not to
compete were $23,742, net of amortization of $107,758.
The Company continually evaluates the existence of goodwill impairment on
the basis of whether the goodwill is fully recoverable from projected,
undiscounted net cash flows for each related business. Based upon its most
recent analysis, the Company believes that no impairment of goodwill exists at
December 31, 1996. For the years ended December 31, 1995 and 1996, amortization
of goodwill was $56,816 and $56,805, respectively.
INCOME TAXES
The Company is approved for S corporation status for federal income tax
purposes. Accordingly, taxable income, deductions and tax credits are passed
through to, and included in, the shareholders' respective income tax returns and
no provision for federal income taxes is included in the accompanying statements
of operations. S corporations operating in New York are subject to a corporate
level surcharge on their allocable net income which is calculated using an
effective rate equal to the difference between the subchapter C corporate level
tax rate and the highest personal income tax rate. S corporations operating in
New York City are taxed as C corporations.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments, purchased with
original maturities of three months or less, to be cash equivalents. At December
31, 1996, the Company had $122,320 in restricted cash invested in short-term,
highly liquid investments. These investments collateralize the Company's lines
of credit. (See Note 3.)
F-17
<PAGE> 62
NEW YORK PAYROLL FACTORS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist of accounts receivable and cash deposits.
Cash balances are held principally at one financial institution and may, at
times, exceed insurable amounts.
The Company believes concentration of credit risk with respect to accounts
receivable is limited due to the large number of customers comprising the
Company's customer base and the fact that no single customer represents greater
than 5%. The Company performs ongoing informal background and financial
evaluations of its customers and does not require collateral. Historical losses
of the Company have been immaterial. In February 1996, the Company entered into
an agency agreement (see Note 5), which generated approximately 29% of its net
fee income in 1996. The loss of this arrangement could have a significant impact
on the Company's financial position and results of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents and notes payable are reflected in the
accompanying balance sheets at amounts considered by management to reasonably
approximate fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and reported amounts of revenues and expenses during the reporting
period. The Company performs ongoing credit evaluations of the entities whose
checks are discounted by customers.
RECLASSIFICATIONS
Certain reclassifications have been made to conform prior year amounts to
the current year presentation.
2. FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<S> <C>
Furniture and fixtures...................................... $33,738
Office equipment............................................ 45,348
Leasehold improvements...................................... 9,824
-------
88,910
Less: Accumulated depreciation and amortization... 47,542
-------
$41,368
=======
</TABLE>
Depreciation expense for the years ended December 31, 1995 and 1996 was
$8,113 and $11,048, respectively.
3. NOTES PAYABLE
In connection with the acquisition of the payroll factoring business during
fiscal 1992, the Company issued notes for the remaining unpaid purchase price.
These notes bear interest at 9% per annum and are collateralized by the assets
of the Company. The terms of the note require the Company to pay $7,819 on a
monthly basis through the maturity date of June, 1998. At December 31, 1996,
$98,117 remains outstanding.
F-18
<PAGE> 63
NEW YORK PAYROLL FACTORS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996, the Company had notes payable to two unrelated
parties totalling $950,000. Of the total outstanding, $200,000 is due during
March 1997 and bears interest at a rate of 20% per annum. The remaining $750,000
note was due at various dates though fiscal 1997. In February 1997, the Company
extended the terms of the note. The new note bears interest at a rate of 21 1/2%
per annum and is due on February 1, 1999. In addition, if the new note is paid
prior to February 1, 1999, the Company is required to pay a $35,000 prepayment
fee. These notes are personally guaranteed by the majority shareholder of the
Company and are payable on demand in the event the Company sells its assets or
stock.
In January, 1996, the Company borrowed $100,000 under a credit facility
with a financial institution bearing interest at the bank's prime (8.25% at
December 31, 1996) plus 1%. The credit facility is renewed by the Company on a
monthly basis.
On June 12, 1996, the Company entered into a line of line of credit
agreement with a financial services firm in the amount of $300,000. This
facility is collateralized by the assets of the Company and bears interest at
the bank's prime rate (8.25% at December 31, 1996) plus 1%. In addition, the
provisions of the agreement require the Company to maintain cash in a separate
trust account with the financial services firm in an amount not less than 66% of
the outstanding line of credit balance (see Note 1). As of December 31, 1996,
the amount borrowed under the credit facility is $185,334.
Required principal payments of long-term debt are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
<S> <C>
1997........................................................ $ 573,936
1998........................................................ 9,515
750,000
----------
1999........................................................ $1,333,451
==========
</TABLE>
4. RELATED PARTY TRANSACTIONS
Due to related parties includes a note payable of $689,650 to one of the
Company's shareholders which bears interest at a rate of 8% per annum and is
payable upon the shareholder's demand.
5. COMMITMENTS AND CONTINGENCIES
The Company is obligated under noncancelable real property operating lease
agreements. Minimum rents under these obligations are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 67,913
1998........................................................ 67,762
1999........................................................ 71,216
2000........................................................ 65,627
2001........................................................ 69,346
Thereafter.................................................. 5,883
--------
$347,747
========
</TABLE>
These leases contain escalation clauses with respect to related operating
costs. The accompanying financial statements reflect rent expense on a
straight-line basis over the terms of the lease as required by generally
accepted accounting principles. Rent expense was $31,743 and $61,260 for fiscal
1995 and 1996, respectively.
During February 1996, the Company entered into an exclusive agency
arrangement with an unrelated entity. This arrangement provides that the entity
will refer certain check factoring customers to the Company
F-19
<PAGE> 64
NEW YORK PAYROLL FACTORS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
for a fee ranging from 40% to 50% of the net fee revenues received. The
arrangement is currently expected to terminate during January 2001.
6. PROPOSED SALE
On February 19, 1996, the Company entered into a definitive agreement to
sell certain assets and all of its operations to General Credit Corporation
("GCC") in exchange for $3,145,000 in cash, 375,000 shares of GCC common stock
and a $300,000 note payable due in 42 monthly installments at an interest rate
of 10.5% per annum. During fiscal 1996, the Company received downpayments of
$200,000 towards the total selling price. Under a provision in the definitive
agreement, the acquisition was to close on or before November 15, 1996, if not,
the deposit would be forfeited. Accordingly, the Company has recognized $200,000
as other income in fiscal 1996. On January 13, 1997, the Company and GCC
modified the terms of the agreement. The new terms require GCC to pay $4,500,000
and issue 125,000 shares of common stock. In February 1997, the Company received
a non-refundable downpayment of $225,000 toward the new purchase price.
F-20
<PAGE> 65
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER
TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER, SOLICITATION OR SALE MADE HEREUNDER, SHALL UNDER ANY
CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 6
Use of Proceeds...................... 14
Capitalization....................... 15
Dilution............................. 16
Management's Discussion and Analysis
or Plan of Operation............... 18
General Credit Corporation Unaudited
Pro Forma Financial Statements..... 21
Proposed Business.................... 26
Management........................... 31
Principal Shareholders............... 34
Description of Securities............ 35
Underwriting......................... 39
Legal Proceedings.................... 41
Legal Matters........................ 41
Experts.............................. 41
Additional Information............... 42
Financial Statements................. F-1
</TABLE>
UNTIL , 1997 (25 DAYS AFTER THE FIRST DATE ON WHICH THE REGISTERED
SECURITIES WERE BONA FIDE OFFERED TO THE PUBLIC), ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WITH RESPECT TO THEIR
SOLICITATION OF SUBSCRIPTIONS TO PURCHASE THE SECURITIES OFFERED HEREBY.
======================================================
======================================================
(LOGO) GENERAL CREDIT CORPORATION
900,000 UNITS
EACH UNIT CONSISTS OF THREE SHARES
OF COMMON STOCK AND SIX WARRANTS
TO PURCHASE AN ADDITIONAL
SIX SHARES OF COMMON STOCK
------------------------
PROSPECTUS
------------------------
(LOGO) BARRON CHASE SECURITIES
7700 WEST CAMINO REAL
SUITE 200
BOCA RATON, FLORIDA 33433
(561) 347-1200
ATLANTA, GEORGIA
BEVERLY HILLS, CALIFORNIA
BOSTON, MASSACHUSETTS
CHICAGO, ILLINOIS
CLEARWATER, FLORIDA
DENVER, COLORADO
EAST BOCA RATON, FLORIDA
HOOPESTON, ILLINOIS
LA JOLLA, CALIFORNIA
MIAMI, FLORIDA
MIDDLETOWN, NEW JERSEY
MINNEAPOLIS, MINNESOTA
OKLAHOMA CITY, OKLAHOMA
ORLANDO, FLORIDA
SARASOTA, FLORIDA
TAMPA, FLORIDA
TULSA, OKLAHOMA
, 1997
======================================================
<PAGE> 66
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Paragraph Seventh of the Certificate of Incorporation, as amended, of
General Credit Corporation (the "Registrant") provides with respect to the
indemnification of directors and officers that the Registrant shall indemnify
its directors and officers to the fullest extent permitted by law in existence
either now or hereafter.
Reference is made to Section 6 of the Underwriting Agreement, which
provides for indemnification of the officers and directors of the Registrant
under certain circumstances.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses, other than underwriting
discounts, which will be incurred in connection with the Offering. Other than
the SEC registration fee, NASD filing fee and non-accountable expense allowance
payable to Barron Chase Securities, Inc. (the "Underwriter"), amounts set forth
below are estimates:
<TABLE>
<S> <C>
SEC registration fee....................................... $ 11,500
NASD filing fee............................................ 4,000
*Non-Accountable Expense Allowance.......................... 270,000
Blue sky fees and expenses................................. 40,000
Listing expenses........................................... 20,000
Printing and engraving expenses............................ 75,000
Legal fees and expenses.................................... 220,000
Accounting fees and expenses............................... 112,500
Transfer and Warrant Agent fees............................ 2,500
--------
TOTAL............................................. 755,500
========
Additional Non-Accountable Expense Allowance
assuming exercise of Over-Allotment Option in full........ 40,500
--------
TOTAL............................................. $796,000
========
</TABLE>
- ---------------
* Assumes no exercise of the Over-Allotment Option or the financial advisor fee
paid by the Company to the Representative.
II-1
<PAGE> 67
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following sets forth information relating to all securities of the
Registrant sold by it since February 10, 1995, the date of the Registrant's
inception, after giving effect to the Company's redemption in February 1997 of
an aggregate of 1,463,000 shares of Common Stock:
<TABLE>
<CAPTION>
NAME DATE OF ISSUANCE SHARES OF COMMON STOCK CONSIDERATION PER SHARE
---- ---------------- ---------------------- -----------------------
<S> <C> <C> <C>
Irwin Zellermaier............... 4/24/96 380,000 $.001
Victoria Kleinmunz(1)........... 4/24/96 150,000 $.001
David Bader..................... 4/24/96 30,000 $.001
David A. Viets.................. 2/7/96 30,000(2) $1.00
M.S. Chen....................... 2/7/96 60,000(2) $1.00
Dr. Isreal Kazew................ 2/19/96 15,000(2) $1.00
John G. Watson.................. 2/22/96 15,000(2) $1.00
Dominic Ricci................... 2/29/96 18,000(2) $1.00
Anthony Fazio................... 3/4/96 15,000(2) $1.00
Regist Ferguson................. 4/2/96 15,000(2) $1.00
Chirstopher J. Wetzel........... 5/14/96 15,000(2) $1.00
Yung I. Park.................... 4/23/96 15,000(2) $1.00
Walter G. Romano, Jr............ 9/23/96 None
Nick Balson..................... 9/30/96 None
Ronald M. Stein(3).............. 2/28/97 None
Robert A. Stein(3).............. 2/28/97 None
Eric Stein(3)................... 2/28/97 None
Jack S. Greenman(3)............. 2/28/97 None
Stephen J. Dresnick, M.D.(3).... 2/28/97 None
Thomas Zotos(3)................. 2/28/97 None
S.J. Workman(3)................. 2/28/97 None
Dan Cohen(3).................... 2/28/97 None
Jeffrey D. Greenhawt(3)......... 2/28/97 None
Reynaldo Martinez(3)............ 2/28/97 None
</TABLE>
- ---------------
(1) Represents shares held by D.P. Morton & Associates, L.L.C., of which
Victoria Kleinmunz is the owner of 98% of the outstanding shares of common
stock and the sole director.
(2) Amounts refected are shares of Common Stock underlying Lender Options
currently exercisable.
(3) Represents $30,000 principal amount unsecured corporate promissory notes.
Shares of Common Stock are contemplated to be issued in connection with the
closing of the NYPF Business Combination, in the amount of 125,000 shares to
Gerald Nimberg.
Exemption from registration under the Securities Act is claimed for the
sales or issuance of the securities referred to above in reliance upon the
exemption afforded by Section 4(2) of the Act for transactions not involving a
public offering. These transactions were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) because they did not
involve any public offering. Each certificate evidencing such shares of Common
Stock bears an appropriate restrictive legend and "stop transfer" orders are
maintained on Registrant's stock transfer records there against.
II-2
<PAGE> 68
ITEM 27. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement between the Registrant and the Underwriter.
1.2 -- Form of Selected Dealer Agreement between the Underwriter and the Selected
Dealers.
*1.3 -- Form of Financial Advisory Agreement between the Registrant and the
Underwriter.
*1.4 -- Form of Merger and Acquisition Agreement between the Registrant and the
Underwriter.
1.5 -- Form of Agreement Among Underwriters.
*2.1 -- Amended and Restated Asset Purchase Agreement dated as of February 19, 1996
among New York Payroll Factors, Inc., Gerald Schultz, Gerald Nimberg, and
the Registrant.
Schedule 2.3 Allocation of Purchase Price
Schedule 3.6 Material Changes
Schedule 3.7 Advances and Accounts Receivable
Schedule 3.11 Litigation
Schedule 3.13 Employees
Schedule 3.15 Transactions with Affiliates
Schedule 3.16 Employee Benefit Plans
Exhibit "A" Assets
Exhibit "B" Obligations and Liabilities
Exhibit "C" Contracts
Exhibit "D" Employment Agreement between the Registrant and Gerald
Nimberg
Exhibit "E" Promissory Note
*2.2 -- Amendment to Amended and Restated Asset Purchase Agreement dated as of
September 6, 1996 between New York Payroll Factors, Inc. and the
Registrant.
Exhibit "D" Employment Agreement between the Registrant and Gerald
Nimberg
Exhibit "E" Promissory Note
2.3 -- Second Amendment to Amended and Restated Asset Purchase Agreement dated as
of January 30, 1997 between New York Payroll Factors, Inc. and the
Registrant.
*3.1 -- Certificate of Incorporation of the Registrant.
*3.2 -- Certificate of Amendment of Certificate of Incorporation of the Registrant.
*3.3 -- Amended and Restated By Laws of the Registrant.
*4.1 -- Form of certificate evidencing shares of Common Stock.
*4.2 -- Form of certificate evidencing Purchase Warrant.
4.3 -- Form of Warrant Agreement between the Registrant and the Transfer and
Warrant Agent.
4.4 -- Form of Representative Option between the Registrant and the
Representative.
5.1 -- Opinion of Berman Wolfe & Rennert, P.A.
@*10.1 -- Employment Agreement dated as of June 1, 1996 between the Registrant and
Irwin Zellermaier.
@*10.2 -- Employment Agreement dated as of June 1, 1996 between the Registrant and
David Bader.
*10.3 -- Lease Agreement dated January 13, 1992 between 201 Allen Street Associates,
as Landlord, and Mersa Corp., as Tenant.
*10.4 -- Lease Agreement dated as of January 31, 1996 between Benjamin P. Feldman as
Receiver for 491-499 Seventh Avenue, as Owner, and G.S. Capital Corp., as
Tenant.
</TABLE>
II-3
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S> <C>
*10.5 -- Lease Agreement dated as of May 4, 1995 between Millinery Syndicate, Inc.,
as Owner, and Meryka, Inc., as Tenant.
*10.6 -- Agreement dated as of February 1, 1996 between New York Payroll Factors,
Inc. and Ace Ventures Inc.
*10.7 -- Promissory note and option grant agreement dated February 7, 1996 made by
the Registrant to David A. Viets.
*10.8 -- Promissory note and option grant agreement dated February 7, 1996 made by
the Registrant to M. S. Chen.
*10.9 -- Promissory note and option grant agreement dated February 19, 1996 made by
the Registrant to Dr. Isreal Kazew.
*10.10 -- Promissory note and option grant agreement dated February 22, 1996 made by
the Registrant to John G. Watson.
*10.11 -- Promissory note and option grant agreement dated February 29, 1996 made by
the Registrant to Dominic Ricci.
*10.12 -- Promissory note and option grant agreement dated March 4, 1996 made by the
Registrant to Anthony Fazio.
*10.13 -- Promissory note and option grant agreement dated April 2, 1996 made by the
Registrant to Regis Ferguson.
*10.14 -- Promissory note and option grant agreement dated May 14, 1996 made by the
Registrant to Christopher J. Wetzel.
*10.15 -- Form of Agreement regarding Restriction on Transferability of Shares.
*@10.16 -- Form of Employment Agreement between the Registrant and Gerald Nimberg.
*10.17 -- Promissory note and option grant agreement dated April 23, 1996 made by the
Registrant to Yung I. Park, M.D.
10.18 -- Promissory Note dated September 23, 1996 made by the Registrant to Walter
G. Romano, Jr.
10.19 -- Promissory Note dated September 30, 1996 made by the Registrant to Nick
Balson.
10.20 -- Promissory Note dated February 28, 1997 made by the Registrant to Ronald M.
Stein.
10.21 -- Promissory Note dated February 28, 1997 made by the Registrant to Robert
Stein.
10.22 -- Promissory Note dated February 28, 1997 made by the Registrant to Eric
Stein.
10.23 -- Promissory Note dated February 28, 1997 made by the Registrant to Kinserd
Limited Partnership.
10.24 -- Promissory Note dated February 28, 1997 made by the Registrant to S.J.
Workman.
10.25 -- Promissory Note dated February 28, 1997 made by the Registrant to Dan
Cohen.
10.26 -- Promissory Note dated February 28, 1997 made by the Registrant to Jeffrey
D. Greenhawt.
10.27 -- Promissory Note dated February 28, 1997 made by the Registrant to Jack S.
Greenman.
10.28 -- Promissory Note dated February 28, 1997 made by the Registrant to Thomas
Zotos.
10.29 -- Promissory Note dated February 28, 1997 made by the Registrant to Reynaldo
Martinez.
10.30 -- Redemption Agreement dated as of February 15, 1997 by and among the
Registrant, Irwin Zellermaier, David Bader and D.P. Morton & Associates
LLC.
10.31 -- Common Stock Redemption Agreement dated as of December 30, 1996 by and
among the Registrant, JMB Holding Inc. and Wall Street Equities, Inc.
10.32 -- Extension of Lease dated as of January 17, 1997 between Allen House, Inc.,
as agent for Landlord and Mersa Corp., as Tenant.
</TABLE>
II-4
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S> <C>
23.1 -- Consent of Independent Accountants.
23.2 -- Consent of Counsel (included as part of Exhibit 5.1).
*25.1 -- Power of Attorney (included on the signature page of Part II of this
Registration Statement).
27.1 -- Financial Data Schedules for New York Payroll Factors, Inc. as of and for
the Year Ended December 31, 1995 and 1996.
</TABLE>
- ---------------
* Filed previously.
@ Contracts with executive officers.
(b) FINANCIAL STATEMENT SCHEDULES. Financial statement schedules are
omitted because the conditions requiring their filing do not exist or the
information required thereby is included in the financial statements filed,
including the notes thereto.
ITEM 28. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(i) To include any Prospectus required by section 10(a)(3)of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any additional or changed material information
with respect to the plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise (other than insurance), the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against the
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-5
<PAGE> 71
(6)(a) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 72
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, General
Credit Corporation, the Registrant, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and
authorized this Amendment No. 2 to Registration Statement to be signed on its
behalf by the undersigned, in the City of New York, State of New York, on the
20th day of March, 1997.
GENERAL CREDIT CORPORATION
By: /s/ IRWIN ZELLERMAIER
------------------------------------
Irwin Zellermaier,
Chairman, Chief Executive Officer,
President
In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 2 to Registration Statement was signed below by the following
persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ IRWIN ZELLERMAIER Chairman, Chief Executive March 20, 1997
- ----------------------------------------------------- Officer, President,
Irwin Zellermaier director
/s/ DAVID BADER Vice President, Secretary, March 20, 1997
- ----------------------------------------------------- Treasurer, Chief
David Bader Financial Officer, Chief
Accounting Officer
director
/s/ VINCENT J. PUTIGNANO Director March 20, 1997
- -----------------------------------------------------
Vincent J. Putignano
/s/ BRIEN G. REIDY Director March 20, 1997
- -----------------------------------------------------
Brien G. Reidy
</TABLE>
II-7
<PAGE> 73
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C> <C>
1.1 -- Form of Underwriting Agreement between the Registrant and
the Underwriter.
1.2 -- Form of Selected Dealer Agreement between the Underwriter
and the Selected Dealers.
1.5 -- Form of Agreement Among Underwriters.
2.3 -- Second Amendment to Amended and Restated Asset Purchase
Agreement dated as of January 30, 1997 between New York
Payroll Factors, Inc. and the Registrant.
4.3 -- Form of Warrant Agreement between Registrant and Transfer
and Warrant Agent.
4.4 -- Form of Representative Option between the Registrant and the
Representative.
5.1 -- Opinion of Berman Wolfe & Rennert, P.A.
10.18 -- Promissory Note dated September 23, 1996 made by the
Registrant to Walter G. Romano, Jr.
10.19 -- Promissory Note dated September 30, 1996 made by the
Registrant to Nick Balson.
10.20 -- Promissory Note dated February 28, 1997 made by the
Registrant to Ronald M. Stein.
10.21 -- Promissory Note dated February 28, 1997 made by the
Registrant to Robert Stein.
10.22 -- Promissory Note dated February 28, 1997 made by the
Registrant to Eric Stein.
10.23 -- Promissory Note dated February 28, 1997 made by the
Registrant to Kinserd Limited Partnership.
10.24 -- Promissory Note dated February 28, 1997 made by the
Registrant to S.J. Workman.
10.25 -- Promissory Note dated February 28, 1997 made by the
Registrant to Dan Cohen.
10.26 -- Promissory Note dated February 28, 1997 made by the
Registrant to Jeffrey D. Greenhawt.
10.27 -- Promissory Note dated February 28, 1997 made by the
Registrant to Jack S. Greenman.
10.28 -- Promissory Note dated February 28, 1997 made by the
Registrant to Thomas Zotos.
10.29 -- Promissory Note dated February 28, 1997 made by the
Registrant to Reynaldo Martinez.
10.30 -- Common Stock Redemption Agreement dated as of February 15,
1997 by and among the Registrant, Irwin Zellermaier, David
Bader and D.P. Morton & Associates LLC.
10.31 -- Common Stock Redemption Agreement dated as of December 30,
1996 by and among the Registrant, JMB Holding Inc. and
Wall Street Equities, Inc.
10.32 -- Extension of Lease dated as of January 17, 1997 between
Allen House, Inc., as agent for Landlord and Mersa Corp.,
as Tenant.
23.1 -- Consent of Independent Accountants.
23.2 -- Consent of Counsel (included as part of Exhibit 5.1).
27.1 -- Financial Data Schedules for New York Payroll Factors, Inc.
as of and for the Year Ended December 31, 1995 and 1996.
</TABLE>
II-8
<PAGE> 1
EXHIBIT 1.1
GENERAL CREDIT CORPORATION
900,000 UNITS
(EACH UNIT CONSISTING OF THREE SHARES OF COMMON STOCK AND SIX
COMMON STOCK PURCHASE WARRANTS, EACH COMMON STOCK PURCHASE WARRANT
EXERCISABLE TO PURCHASE ONE SHARE OF COMMON STOCK AT A PRICE
OF $3.375 PER SHARE AT ANY TIME DURING THE PERIOD BETWEEN
THE EFFECTIVE DATE AND FIVE YEARS FROM THE EFFECTIVE DATE)
UNDERWRITING AGREEMENT
Boca Raton, Florida
____________, 1997
Barron Chase Securities, Inc.
7700 West Camino Real, Suite 200
Boca Raton, Florida 33433
Gentlemen:
General Credit Corporation (the "Company"), on the basis of the
representations, warranties, covenants and conditions contained herein, hereby
proposes to issue and sell to such Underwriters as named in Schedule A (the
"Underwriters") to the Underwriting Agreement (the "Agreement"), for whom
Barron Chase Securities, Inc. is acting as a representative (the
"Representative"), pursuant to the terms of this Agreement, on a "firm
commitment" basis, an aggregate of 900,000 Units (the "Units"), at $10.00 per
Unit. Each Unit consists of three shares of Common Stock ("Shares") and six
Common Stock Purchase Warrants, each Common Stock Purchase Warrant ("Warrant")
exercisable to purchase one share of Common Stock at a price of $3.375 per
share at any time during the period between the Effective Date and five years
from the Effective Date. The Units are also referred to as the "Securities".
The date upon which the Securities and Exchange Commission ("Commission") shall
declare the Registration Statement of the Company effective shall be the
"Effective Date". The Warrants are subject to redemption under certain
circumstances. In addition, the Company proposes to grant to the Underwriters
(or, at the option of the Representative, to the Representative, individually)
the option referred to in Section 2(b) to purchase all or any part of an
aggregate of 135,000 additional Units (the "Option Securities").
<PAGE> 2
You have advised the Company that you and the other Underwriters
desire to purchase, severally, the Securities, and that you have been
authorized by the Underwriters to execute this Agreement on their behalf. The
Company confirms the agreements made by it with respect to the purchase of the
Securities by the several Underwriters on whose behalf you are signing this
Agreement, as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with each of the
Underwriters as of the Effective Date (as defined above), the Closing Date (as
hereinafter defined) and the Option Closing Date (as hereinafter defined) that:
(a) A registration statement (File No. 333-09831) on Form SB-2
relating to the public offering of the Securities, including a preliminary form
of the prospectus, copies of which have heretofore been delivered to you, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Commission thereunder, and has been filed
with the Commission under the Act. The Company has prepared in the same manner
and proposes to file, prior to the Effective Date of such registration
statement, an additional amendment or amendments to such registration
statement, including a final form of Prospectus, copies of which shall be
delivered to you. "Preliminary Prospectus" shall mean each prospectus filed
pursuant to the Rules and Regulations under the Act prior to the Effective
Date. The registration statement (including all financial schedules and
exhibits) as amended at the time it becomes effective and the final prospectus
included therein are respectively referred to as the "Registration Statement"
and the "Prospectus", except that (i) if the prospectus first filed by the
Company pursuant to Rule 424(b) of the Rules and Regulations shall differ from
said prospectus as then amended, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b), and (ii) if such registration
statement or prospectus is amended or such prospectus is supplemented, after
the effective date of such registration statement and prior to the Option
Closing Date (as hereinafter defined), the terms "Registration Statement" and
"Prospectus" shall include such registration statement and prospectus as so
amended, and the term "Prospectus" shall include the prospectus as so
supplemented, or both, as the case may be.
(b) At the Effective Date and at all times subsequent thereto up
to the Option Closing Date, if any, and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriters or Selected Dealers: (i) the Registration Statement and Prospectus
will in all respects conform to the requirements of the Act and the Rules and
<PAGE> 3
Regulations; and (ii) neither the Registration Statement nor the Prospectus
will include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that the Company makes no representations,
warranties or agreement as to information contained in or omitted from the
Registration Statement or Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by the Underwriters specifically
for use in the preparation thereof. It is understood that the statements set
forth in the Prospectus with respect to stabilization, under the heading
"Underwriting" and regarding the identity of counsel to the Underwriters under
the heading "Legal Matters" constitute the only information furnished in
writing by the Underwriters for inclusion in the Prospectus.
(c) Each of the Company and each subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, with full power and
authority (corporate and other) to own its properties and conduct its business
as described in the Prospectus and is duly qualified to do business as a
foreign corporation and is in good standing in all other jurisdictions in which
the nature of its business or the character or location of its properties
requires such qualification, except where failure to so qualify will not
materially affect the Company's business, properties or financial condition.
(d) The authorized, issued and outstanding securities of the
Company as of the date of the Prospectus is as set forth in the Prospectus
under "Capitalization"; all of the issued and outstanding securities of the
Company have been, or will be when issued as set forth in the Prospectus, duly
authorized, validly issued and fully paid and non- assessable; the issuances
and sales of all such securities complied in all material respects with
applicable Federal and state securities laws; the holders thereof have no
rights of rescission against the Company with respect thereto, and are not
subject to personal liability by reason of being such holders; none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company; except as set forth in the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or agreements or
other rights to convert any obligation into, any securities of the Company have
been granted or entered into by the Company; and all of the securities of the
Company, issued and to be issued as set forth in the Registration Statement,
conform to all statements relating thereto contained in the Registration
Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when issued,
delivered and paid for pursuant to this Agreement, will be
3
<PAGE> 4
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights of any security holder of the Company. Neither the filing of
the Registration Statement nor the offering or sale of the Securities as
contemplated in this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any
securities of the Company, except as described in the Registration Statement.
The Warrants have been duly authorized and, when issued, delivered and
paid for pursuant to this Agreement, will have been duly authorized, issued and
delivered and will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms and entitled to the benefits
provided by the warrant agreement pursuant to which such Warrants are to be
issued (the "Warrant Agreement"), which will be substantially in the form filed
as an exhibit to the Registration Statement. The shares of Common Stock
issuable upon exercise of the Warrants have been reserved for issuance and when
issued in accordance with the terms of the Warrants and Warrant Agreement, will
be duly and validly authorized, validly issued, fully paid and non-assessable,
free of pre-emptive rights and no personal liability will attach to the
ownership thereof. The Warrant exercise period and the Warrant exercise price
may not be changed or revised by the Company without the prior written consent
of the Representative. The Warrant Agreement has been duly authorized and,
when executed and delivered pursuant to this Agreement, will have been duly
executed and delivered and will constitute the valid and legally binding
obligation of the Company enforceable in accordance with its terms.
The Representative's Warrants and Warrant Securities (all as defined
in the Representative's Warrant Agreement described in Section 12 herein), have
been duly authorized and, when issued, delivered and paid for, will be validly
issued, fully paid, non-assessable, free of pre-emptive rights and no personal
liability will attach to the ownership thereof, and will constitute valid and
legally binding obligations of the Company enforceable in accordance with their
terms and entitled to the benefits provided by the Representative's Warrant
Agreement.
(f) This Agreement, the Warrant Agreement, the Financial Advisory
Agreement, the Merger and Acquisition Agreement (the "M/A Agreement") and the
Representative's Warrant Agreement have been duly and validly authorized,
executed and delivered by the Company, and assuming due execution of this
Agreement by the other party hereto, constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally. The Company has full power and
lawful authority to authorize, issue and sell the Securities to be sold by it
hereunder on the terms and conditions set forth herein, and no consent,
approval, authorization or other order of any governmental authority is
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<PAGE> 5
required in connection with such authorization, execution and delivery or with
the authorization, issue and sale of the Securities or the securities to be
issued pursuant to the Representative's Warrant Agreement, except such as may
be required under the Act or state securities laws, or as otherwise have been
obtained.
(g) Except as described in the Prospectus, neither the Company nor
any subsidiary is in material violation, breach of or default under, and
consummation of the transactions herein contemplated and the fulfillment of the
terms of this Agreement will not conflict with, or result in a breach of, or
constitute a material default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of the
Company or each subsidiary or any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or each subsidiary is a party or by which the Company or each
subsidiary may be bound or to which any of the property or assets of the
Company or each subsidiary is subject, nor will such action result in any
material violation of the provisions of the articles of incorporation or
by-laws of the Company or each subsidiary, as amended, or any statute or any
order, rule or regulation applicable to the Company or subsidiary of any court
or of any regulatory authority or other governmental body having jurisdiction
over the Company or each subsidiary.
(h) Subject to the qualifications stated in the Prospectus, the
Company and each subsidiary have good and marketable title to all properties
and assets described in the Prospectus as owned by each of them, free and clear
of all liens, charges, encumbrances or restrictions, except such as are not
materially significant or important in relation to its business; all of the
material leases and subleases under which the Company or each subsidiary is the
lessor or sublessor of properties or assets or under which the Company or each
subsidiary holds properties or assets as lessee or sublessee as described in
the Prospectus are in full force and effect, and, except as described in the
Prospectus, neither the Company nor each subsidiary is in default in any
material respect with respect to any of the terms or provisions of any of such
leases or subleases, and no claim has been asserted by anyone adverse to rights
of the Company or each subsidiary as lessor, sublessor, lessee, or sublessee
under any of the leases or subleases mentioned above, or affecting or
questioning the right of the Company or each subsidiary to continued possession
of the leased or subleased premises or assets under any such lease or sublease
except as described or referred to in the Prospectus; and the Company and each
subsidiary owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise
stated in the Prospectus, as proposed to be conducted as set forth in the
Prospectus.
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<PAGE> 6
(i) Coopers & Lybrand, L.L.P. who have given their report on
certain financial statements filed and to be filed with the Commission as part
of the Registration Statement, and which are included in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(j) The financial statements and schedules, together with related
notes, set forth in the Prospectus and the Registration Statement present
fairly the financial position and results of operations and changes in
financial position of the Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Said statements and related notes and schedules have been prepared in
accordance with generally accepted accounting principles applied on a basis
which is consistent during the periods involved. The Company's internal
accounting controls and procedures are sufficient to cause the Company and each
subsidiary to prepare financial statements which comply in all material
respects with generally accepted accounting principles applied on a basis which
is consistent during the periods involved. During the preceding five (5) year
period, nothing has been brought to the attention of the Company's management
that would result in any reportable condition relating to the Company's
internal accounting procedures, weaknesses or controls.
(k) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and the Prospectus and to and including
the Option Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (i) neither the Company nor any
subsidiary has incurred and will not have incurred any material liabilities or
obligations, direct or contingent, and has not entered into and will not have
entered into any material transactions other than in the ordinary course of
business and/or as contemplated in the Registration Statement and the
Prospectus; (ii) neither the Company nor any subsidiary has and will not have
paid or declared any dividends or have made any other distribution on its
capital stock; (iii) there has not been any change in the capital stock of, or
any incurrence of long-term debt by, the Company or any subsidiary; (iv)
neither the Company nor any subsidiary has issued any options, warrants or
other rights to purchase the capital stock of the Company or any subsidiary;
and (v) there has not been and will not have been any material adverse change
in the business, financial condition or results of operations of the Company or
any subsidiary, or in the book value of the assets of the Company or any
subsidiary, arising for any reason whatsoever.
(l) Except as set forth in the Prospectus, there is not pending
or, to the knowledge of the Company or any subsidiary, threatened, any material
action, suit, proceeding, inquiry, arbitration or investigation against the
Company or any subsidiary,
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<PAGE> 7
or any of the officers or directors of the Company or any subsidiary, or any
material action, suit, proceeding, inquiry, arbitration, or investigation,
which might result in any material adverse change in the condition (financial
or other), business prospects, net worth, or properties of the Company or any
subsidiary.
(m) Except as disclosed in the Prospectus, each of the Company and
each subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due thereon; and there is
no tax deficiency which has been or to the knowledge of the Company might be
asserted against the Company or any subsidiary that has not been provided for
in the financial statements.
(n) Except as set forth in the Prospectus, each of the Company and
each subsidiary has sufficient licenses, permits and other governmental
authorizations currently required for the conduct of its business or the
ownership of its property as described in the Prospectus and is in all material
respects in compliance therewith and owns or possesses adequate right to use
all material patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service mark registrations, copyrights,
and licenses necessary for the conduct of such business and has not received
any notice of conflict with the asserted rights of others in respect thereof.
To the best of the Company's knowledge, none of the activities or business of
the Company or any subsidiary are in violation of, or cause the Company or any
subsidiary to violate, any law, rule, regulation or order of the United States,
any state, county or locality, or of any agency or body of the United States or
of any state, county or locality, the violation of which would have a material
adverse impact upon the condition (financial or otherwise), business, property,
prospective results of operations, or net worth of the Company and any
subsidiary.
(o) Neither the Company nor any subsidiary has, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contribution, in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments or contributions required or
allowed by applicable law.
(p) On the Closing Dates (herein defined) all transfer or other
taxes (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Securities to the several
Underwriters hereunder will have been fully paid or provided for by the Company
and all laws imposing such taxes will have been fully complied with.
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<PAGE> 8
(q) All contracts and other documents which are required to be
described in or filed as exhibits to the Registration Statement have been so
described and/or filed.
(r) Except as described in the Registration Statement and
Prospectus, no holders of Common Stock or of any other securities of the
Company have the right to include such Common Stock or other securities in the
Registration Statement and Prospectus.
(s) Except as set forth in or contemplated by the Registration
Statement and the Prospectus, neither the Company nor any subsidiary has any
material contingent liabilities.
(t) The Company has no subsidiary corporations except as disclosed
in the Registration Statement and Prospectus, nor has it any equity interest in
any partnership, joint venture, association or other entity except as disclosed
in the Registration Statement or Prospectus. Except as described in the
Registration Statement and Prospectus, the Company owns all of the outstanding
securities of each of its subsidiaries.
(u) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus with respect to the offer and
sale of the Securities and each Preliminary Prospectus, as of its date, has
conformed fully in all material respects with the requirements of the Act and
the Rules and Regulations and did not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading.
(v) Neither the Company, nor, to the Company's knowledge, any of
its officers, directors, employees or stockholders, have taken or will take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any of the securities of the
Company.
(w) Item 26 of Part II of the Registration Statement accurately
discloses all unregistered securities sold by the Company within the three year
period prior to the date as of which information is presented in the
Registration Statement. All of such securities were sold in transactions which
were exempt from the registration provisions of the Act and not in violation of
Section 5 thereof.
(x) Other than as set forth in the Prospectus, the Company has not
entered into any agreement pursuant to which any person is entitled, either
directly or indirectly, to compensation from the Company for services as a
finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriters against any losses, claims,
damages or liabilities, joint or several, which shall include, but not be
limited to, all
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<PAGE> 9
costs to defend against any such claim, so long as such claim arises out of
agreements made or allegedly made by the Company.
(y) Based upon written representations received by the Company, no
officer, director or five percent (5%) or greater stockholder of the Company or
any subsidiary has any direct or indirect affiliation or association with any
member of the National Association of Securities Dealers, Inc. ("NASD"), except
as disclosed to the Representative in writing, and no beneficial owner of the
Company's unregistered securities has any direct or indirect affiliation or
association with any NASD member except as disclosed to the Representative in
writing. The Company will advise the Representative and the NASD if any five
percent (5%) or greater shareholder of the Company or any subsidiary is or
becomes an affiliate or associated person of an NASD member participating in
the distribution.
(z) The Company and each subsidiary is in compliance in all
material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms and
conditions of employment and wages and hours relating thereto. There are no
pending investigations involving the Company or any subsidiary by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state or local laws and regulations. There is no
unfair labor practice charge or complaint against the Company or any subsidiary
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or to the knowledge of the
Company, threatened against or involving the Company or any subsidiary or any
predecessor entity. No question concerning representation exists respecting
the employees of the Company or any subsidiary and no collective bargaining
agreement or modification thereof is currently being negotiated by the Company
or any subsidiary. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any
subsidiary, if any.
(aa) Neither the Company nor any subsidiary maintains, sponsors nor
contributes to, nor is it required to contribute to, any program or arrangement
that is an "employee pension benefit plan", an "employee welfare benefit plan",
or a "multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). Neither the Company nor any subsidiary
maintained or contributed to a defined benefit plan, as defined in Section
3(35) of ERISA.
(ab) Based upon written representations received from the officers
and directors of the Company and each subsidiary, except as disclosed in the
Prospectus, during the past five years, none of
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<PAGE> 10
the officers or directors of the Company or any subsidiary have been:
(1) Subject of a petition under the Federal
bankruptcy laws or any state insolvency law filed by or
against them, or by a receiver, fiscal agent or similar
officer appointed by a court for their business or property,
or any partnership in which either or them was a general
partner at or within two years before the time of such filing,
or any corporation or business association of which either of
them was an executive officer at or within two years before
the time of such filing;
(2) Convicted in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) The subject of any order, judgment, or decree
not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining either of them from, or otherwise limiting, any of
the following activities:
(i) acting as a futures commission
merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person
regulated by the Commodity Futures Trading
Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated
person, director or employee of any investment
company, bank, savings and loan association or
insurance company, or engaging in or continuing any
conduct or practice in connection with any such
activity;
(ii) engaging in any type of business
practice; or
(iii) engaging in any activity in connection
with the purchase or sale of any security or
commodity or in connection with any violation of
Federal or State securities law or Federal Commodity
laws.
(4) The subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated of any Federal
or State authority barring, suspending or otherwise limiting
for more than sixty (60) days either of their right to engage
in any activity described in paragraph (3)(i) above, or be
associated with persons
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<PAGE> 11
engaged in any such activity;
(5) Found by any court of competent jurisdiction in
a civil action or by the Securities and Exchange Commission to
have violated any Federal or State securities law, and the
judgment in such civil action or finding by the Commission has
not been subsequently reversed, suspended or vacated; or
(6) Found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to
have violated any Federal Commodities Law, and the judgment in
such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.
(ac) Based upon written representations received from the officers
and directors of the Company, each of the officers and directors of the Company
has reviewed the sections in the Prospectus relating to their biographical data
and equity ownership position in the Company, and all information contained
therein is true and accurate.
2. Purchase, Delivery and Sale of the Securities.
(a) Subject to the terms and conditions of this Agreement and upon
the basis of the representations, warranties and agreements herein contained,
the Company hereby agrees to issue and sell to the Underwriters an aggregate of
900,000 Units at $9.00 per Unit (the public offering price less ten percent
(10%)), at the place and time hereinafter specified, in accordance with the
number of Units set forth opposite the names of the Underwriters in Schedule A
attached hereto, plus any additional Securities which such Underwriters may
become obligated to purchase pursuant to the provisions of Section 9 hereof.
The Securities shall consist of 900,000 Units to be purchased from the Company,
and the price at which the Underwriters shall sell the Securities to the public
shall be $10.00 per Unit.
Delivery of the Securities against payment therefor shall take place
at the offices of Barron Chase Securities, Inc., 7700 West Camino Real, Suite
200, Boca Raton, Florida 33433 (or at such other place as may be designated by
the Representative) at 10:00 a.m., Eastern Time, on such date after the
Registration Statement has become effective as the Representative shall
designate, but not later than ten (10) business days (holidays excepted)
following the first date that any of the Securities are released to you, such
time and date of payment and delivery for the Securities being herein called
the "Closing Date".
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties
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<PAGE> 12
and agreements herein contained, the Company hereby grants an option to the
Underwriters (or, at the option of the Representative, to the Representative,
individually) to purchase all or any part of an aggregate of an additional
135,000 Units at the same price per Unit as the Underwriters shall pay for the
Securities being sold pursuant to the provisions of subsection (a) of this
Section 2 (such additional Securities being referred to herein as the "Option
Securities"). This option may be exercised within forty-five (45) days after
the Effective Date of the Registration Statement upon notice by the
Underwriters to the Company advising as to the amount of Option Securities as
to which the option is being exercised, the names and denominations in which
the certificates for such Option Securities are to be registered and the time
and date when such certificates are to be delivered. Such time and date shall
be determined by the Underwriters (or the Representative, individually) but
shall not be later than ten (10) full business days after the exercise of said
option, nor in any event prior to the Closing Date, and such time and date is
referred to herein as the "Option Closing Date". Delivery of the Option
Securities against payment therefor shall take place at the offices of the
Representative. The Option granted hereunder may be exercised only to cover
overallotments in the sale by the Underwriters of the Securities referred to in
subsection (a) above. In the event the Company declares or pays a dividend or
distribution on its Common Stock, whether in the form of cash, shares of Common
Stock or any other consideration, prior to the Option Closing Date, such
dividend or distribution shall also be paid on the Option Closing Date.
(c) The Company will make the certificates for the Securities to
be sold hereunder available to you for inspection at least two (2) full
business days prior to the Closing Date at the offices of the Representative,
and such certificates shall be registered in such names and denominations as
you may request. Time shall be of the essence and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Company to each Underwriter.
Definitive certificates in negotiable form for the Securities to be
purchased by the Underwriters hereunder will be delivered by the Company to you
for the accounts of the several Underwriters against payment of the respective
purchase prices by the several Underwriters, by certified or bank cashier's
checks in New York Clearing House funds, payable to the order of the Company or
by wire transfer in New York Clearing House funds.
In addition, in the event the Underwriters (or the Representative
individually) exercises the option to purchase from the Company all or any
portion of the Option Securities pursuant to the provisions of subsection (b)
above, payment for such Securities shall be made payable in New York Clearing
House funds at the offices of the Representative, or by wire transfer, at the
time and
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<PAGE> 13
date of delivery of such Securities as required by the provisions of subsection
(b) above, against receipt of the certificates for such Securities by the
Representative for the respective accounts of the several Underwriters
registered in such names and in such denominations as the Representative may
request.
It is understood that the Representative, individually and not as
Representative of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this Section 2 on behalf of any
Underwriters whose check or checks shall not have been received by the
Representative at the time of delivery of the Securities to be purchased by
such Underwriter or Underwriters. Any such payment by the Representative shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder. It is also understood that the Representative
individually, rather than all of the Underwriters, may (but shall not be
obligated to) purchase the Option Securities referred to in subsection (b) of
this Section 2, but only to cover overallotments.
It is understood that the several Underwriters propose to offer the
Securities to be purchased hereunder to the public upon the terms and
conditions set forth in the Registration Statement, after the Registration
Statement is declared effective by the Commission.
3. Covenants of the Company. The Company covenants and agrees
with the several Underwriters that:
(a) The Company, upon notification from the Commission that the
Registration Statement has become effective, will so advise you and will not at
any time, whether before or after the Effective Date, file any amendment to the
Registration Statement or supplement to the Prospectus of which you shall not
previously been advised and furnished with a copy or to which you or your
counsel shall have objected in writing, acting reasonably, or which is not in
compliance with the Act and the Rules and Regulations. At any time prior to
the later of (i) the completion by the Underwriters of the distribution of the
Securities as contemplated hereby; or (ii) 25 days after the date on which the
Registration Statement shall have become or been declared effective, the
Company will prepare and file with the Commission, promptly upon your request,
any amendments or supplements to the Registration Statement or Prospectus which
may be necessary or advisable in connection with the distribution of the
Securities and as mutually agreed by the Company and the Representative.
After the Effective Date and as soon as the Company is advised
thereof, the Company will advise you, and confirm the advice in writing, of the
receipt of any comments of the Commission, of the effectiveness of any post-
effective amendment to the Registration Statement, of the filing of any
supplement to the Prospectus or any
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<PAGE> 14
amended Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance by the Commission or any
state or regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension of the
qualification of the Securities for offering in any jurisdiction, or of the
institution of any proceedings for any of such purposes, and will use its best
efforts to prevent the issuance of any such order, and, if issued, to obtain as
soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus and Definitive Prospectus, and the Company has consented
and hereby consents to the use of such copies for the purposes permitted by the
Act. The Company authorizes the Underwriters and Selected Dealers to use the
Prospectus in connection with the sale of the Securities for such period as in
the opinion of counsel to the Underwriters the use thereof is required to
comply with the applicable provisions of the Act and the Rules and Regulations.
In case of the happening, at any time within such period as a Prospectus is
required under the Act to be delivered in connection with sales by the
Underwriters or Selected Dealers, of any event of which the Company has
knowledge and which materially affects the Company or the securities of the
Company, or which in the opinion of counsel for the Company or counsel for the
Underwriters, should be set forth in an amendment to the Registration Statement
or a supplement to the Prospectus, in order to make the statements therein not
then misleading, in light of the circumstances existing at the time the
Prospectus is required to be delivered to a purchaser of the Securities, or in
case it shall be necessary to amend or supplement the Prospectus to comply with
law or with the Act and the Rules and Regulations, the Company will notify you
promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which
they are made, not misleading. The preparation and furnishing of any such
amendment or supplement to the Registration Statement or amended Prospectus or
supplement to be attached to the Prospectus shall be without expense to the
Underwriters.
The Company will comply with the Act, the Rules and Regulations
thereunder, the Securities Exchange Act of 1934 (the "1934 Act"), and the rules
and regulations thereunder in connection with the offering and issuance of the
Securities.
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<PAGE> 15
(b) The Company will act in good faith and use its best efforts
and cooperate with you and your counsel to qualify to register the Securities
for sale under the securities or "blue sky" laws of such jurisdictions as the
Representative may designate and will make such applications and furnish such
information as may be required for that purpose and to comply with such laws,
provided the Company shall not be required to qualify as a foreign corporation
or a dealer in securities or to execute a general consent to service of process
in any jurisdiction in any action other than one arising out of the offering or
sale of the Securities. The Company will, from time to time, prepare and file
such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Underwriters may reasonably
request.
(c) If the sale of the Securities provided for herein is not
consummated, the Company shall pay all costs and expenses incident to the
performance of the Company's obligations hereunder, including, but not limited
to, all such expenses itemized in Section 8(a) and 8(c) hereof, and either (i)
the out-of-pocket expenses of the Representative, not to exceed the $50,000
previously paid if the Representative elects to terminate the offering for any
reason; or (ii) the out-of-pocket expenses of the Representative if the Company
elects to terminate the offering for any reason. For the purposes of this
sub-paragraph, the Representative shall be deemed to have assumed such expenses
when they are billed or incurred, regardless of whether such expenses have been
paid. The Representative shall not be responsible for any expenses of the
Company or others, or for any charges or claims relative to the proposed public
offering if it is not consummated.
(d) The Company will deliver to you at or before the Closing Date
two signed copies of the Registration Statement, including all financial
statements and exhibits filed therewith, and of each amendment or supplement
thereto. The Company will deliver to or upon the order of the several
Underwriters, from time to time until the Effective Date of the Registration
Statement, as many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date of the Registration Statement as the
Underwriters may reasonably request. The Company will deliver to the
Underwriters on the Effective Date of the Registration Statement and thereafter
for so long as a Prospectus is required to be delivered under the Act, from
time to time, as many copies of the Prospectus, in final form, or as thereafter
amended or supplemented as the several Underwriters may from time to time
reasonably request.
(e) For so long as the Company is a reporting company under either
Section 12 or 15 of the 1934 Act, the Company, at its expense, will furnish to
the Representative during the period ending five (5) years from the Effective
Date, (i) as soon as
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<PAGE> 16
practicable after the end of each fiscal year, a balance sheet of the Company
and any of its subsidiaries as at the end of such fiscal year, together with
statements of income, surplus and cash flow of the Company and any subsidiaries
for such fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent accountants; (ii) as soon as they
are available, a copy of all reports (financial or other) mailed to security
holders; (iii) as soon as they are available, a copy of all non-confidential
documents, including annual reports, periodic reports and financial statements,
furnished to or filed with the Commission under the Act and the 1934 Act; (iv)
copies of each press release, news item and article with respect to the
Company's affairs released by the Company; and (v) such other information as
you may from time to time reasonably request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above
will be on a consolidated basis to the extent the accounts of the Company and
its subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will make generally available to its stockholders
and to the registered holders of its Warrants and deliver to you as soon as it
is practicable, but in no event later than the first day of the sixteenth full
calendar month following the Effective Date, an earnings statement (which need
not be audited) covering a period of at least twelve consecutive months
beginning with the Effective Date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act.
(h) On the Closing Date, the Company shall have taken the
necessary action to become a reporting company under Section 12 of the 1934
Act, and the Company will make all filings required to, and will have obtained
approval for, the listing of the Units, Shares and Warrants on The Nasdaq Small
Cap Market System, and will use its best efforts to maintain such listing for
at least seven (7) years from the date of this Agreement.
(i) For such period as the Company's securities are registered
under the 1934 Act, the Company will hold an annual meeting of stockholders for
the election of Directors within 180 days after the end of each of the
Company's fiscal years and, within 150 days after the end of each of the
Company's fiscal years will provide the Company's stockholders with the audited
financial statements of the Company as of the end of the fiscal year just
completed prior thereto. Such financial statements shall be those required by
Rule 14a-3 under the 1934 Act and shall be included in an annual report
pursuant to the requirements of such Rule.
(j) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with its statement under the caption
"Use of Proceeds" in the Prospectus, and will file such
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<PAGE> 17
reports with the Commission with respect to the sale of the Securities and the
application of the proceeds therefrom as may be required by Sections 12, 13
and/or 15 of the 1934 Act and pursuant to Rule 463 under the Act.
(k) The Company will, promptly upon your request, prepare and file
with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action,
which in the reasonable opinion of counsel to the Underwriters and the Company
may be reasonably necessary or advisable in connection with the distribution of
the Securities and will use its best efforts to cause the same to become
effective as promptly as possible.
(l) On the Closing Date, the Company shall execute and deliver to
you the Representative's Warrant Agreement. The Representative's Warrant
Agreement and Warrant Certificates will be substantially in the form of the
Representative's Warrant Agreement filed as an Exhibit to the Registration
Statement.
(m) The Company will reserve and keep available for issuance that
maximum number of its authorized but unissued securities which are issuable
upon exercise of the Representative's Warrants outstanding from time to time.
(n) All beneficial owners of the Company's securities (including
Warrants, Options and Common Stock of the Company), as of the Effective Date,
shall agree in writing, in a form satisfactory to the Representative, not to
sell, transfer or otherwise dispose of any of such securities or underlying
securities for a period of twenty-four (24) months from the Effective Date, or
any longer period required by any State, without the prior written consent of
the Representative. All sales of the Company's securities by officers and/or
directors of the Company shall be effected through the Representative.
(o) The Company will obtain, on or before the Closing Date, key
person life insurance on each of the lives of Irwin Zellermaier and Gerald
Nimberg in an amount of not less than $1,000,000 each, and will use its best
efforts to maintain such insurance for a period of at least five (5) years from
the Effective Date.
(p) Prior to the Closing Date, the Company shall, at its own
expense, undertake to list the Company's securities in the appropriate
recognized securities manual or manuals published by Standard & Poor's
Corporation and such other manuals as the Representative may designate, such
listings to contain the information required by such manuals and the Uniform
Securities Act. The Company hereby agrees to use its best efforts to maintain
such listing for a period of not less than five (5) years. The Company shall
take such action as may be reasonably requested by
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<PAGE> 18
the Representative to obtain a secondary market trading exemption in such
states as may be reasonably requested by the Representative.
(q) During the one hundred eighty (180) day period commencing on
the Closing Date, the Company will not, without the prior written consent of
the Representative, grant options or warrants to purchase the Company's Common
Stock at a price less than the initial per share public offering price.
(r) Prior to the Closing Date, neither the Company nor any
subsidiary will issue, directly or indirectly, without your prior consent, any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering of the Securities other than
routine customary advertising of the Company's products and services, and
except as required by any applicable law or the directives of any relevant
regulatory authority in any relevant jurisdiction.
(s) At the Closing Date, the Company will engage the
Representative as a non-exclusive financial advisor to the Company for a period
of thirty-six (36) months commencing on the first day of the month following
the Company's receipt of the proceeds of this offering, at an aggregate fee of
$108,000, all of which shall be payable to the Representative on the Closing
Date. The financial advisory agreement will provide that the Representative
shall, at the Company's request, provide advice and consulting services to the
Company concerning potential merger and acquisition proposals and the obtaining
of short or long-term financing for the Company, whether by public financing or
otherwise.
(t) The Company shall employ the services of a firm of independent
certified public accountants in connection with the preparation of the
financial statements to be included in any registration statement or similar
disclosure document to be filed by the Company hereunder, or any amendment or
supplement thereto. For a period of five (5) years from the Effective Date,
the Company, at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
quarterly report and the mailing of quarterly financial information to
stockholders.
(u) The Company shall retain American Stock Transfer & Trust
Company as the transfer agent for the securities of the Company, or such other
transfer agent as you may agree to in writing. In addition, the Company shall
direct such transfer agent to furnish the Representative with daily transfer
sheets as to each of the Company's securities as prepared by the Company's
transfer agent and copies of lists of stockholders and warrantholders as
reasonably requested by the Representative, for a five (5) year period
commencing from the Closing Date.
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<PAGE> 19
(v) The Company shall cause the Depository Trust Company, or such
other depository of the Company's securities, to deliver a "special security
position report" to the Representative on a daily and weekly basis at the
expense of the Company, for a five (5) year period from the Effective Date.
(w) Following the Effective Date, the Company shall, at its sole
cost and expense, prepare and file such Blue Sky applications with such
jurisdictions as the Representative shall designate and the Company may
reasonably agree.
(x) On the Effective Date and for a period of three (3) years
thereafter, the Company's Board of Directors shall consist of a minimum of five
(5) persons, two (2) of whom shall be independent and not otherwise affiliated
with the Company or associated with any of the Company's affiliates. The
Representative shall have the opportunity to invite an observer to attend Board
of Directors meetings of the Company at the expense of the Company.
(y) On the Closing Date, the Company shall execute and deliver to
you a non-exclusive M/A Agreement with the Representative in a form
satisfactory to the Representative, providing:
(1) that the Representative will be paid a finder's fee,
of from five percent (5%) of the first $1,000,000 ranging in
$1,000,000 increments down to one percent (1%) of the excess, if any,
over $4,000,000 of the consideration involved in any transaction
introduced in writing by the Representative (including mergers,
acquisitions, joint ventures, and any other business for the Company
introduced by the Representative) consummated by the Company, as an
"Introduced, Consummated Transaction", by which the Representative
introduced the other party to the Company during a period ending five
(5) years from the date of the M/A Agreement; and
(2) that any such finder's fee due to the Representative
will be paid in cash or stock as mutually agreed at the closing of the
particular Introduced, Consummated Transaction for which the finder's
fee is due.
(z) After the Closing Date, the Company shall prepare and publish
"tombstone" advertisements of at least 5 x 5 inches in publications to be
designated by the Representative at a total cost not to exceed $20,000.
(aa) For such period as any Warrants are outstanding, the Company
shall use its best efforts to cause post- effective amendments to the
Registration Statement or a new Registration Statement to become effective in
compliance with the Act and without any lapse of time between the effectiveness
of any such post-effective amendments and cause a copy of each Prospectus, as
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<PAGE> 20
then amended, to be delivered to each holder of record of a Warrant and to
furnish to each of the Underwriters and each dealer as many copies of each such
Prospectus as such Underwriter or such dealer may reasonably request. Such
post- effective amendments or new Registration Statements shall also register
the Representative's Warrants and all the securities underlying the
Representative's Warrants. The Company shall not call for redemption of any of
the Warrants unless a Registration Statement covering the securities underlying
the Warrants has been declared effective by the Commission and remains current
at least until the date fixed for redemption. In addition, the Warrants shall
not be redeemable during the first year after the Effective Date without the
written consent of the Representative.
(ab) Until such time as the securities of the Company are listed or
quoted on either the New York Stock Exchange or the American Stock Exchange,
the Company shall engage the Company's legal counsel to deliver to the
Representative a written opinion detailing those states in which the
Securities, Shares and Warrants may be traded in non-issuer transactions under
the Blue Sky laws of the fifty states ("Secondary Market Trading Opinion").
The initial Secondary Market Trading Opinion shall be delivered to the
Representative on the Effective Date, and the Company shall continue to update
such opinion and deliver same to the Representative on a timely basis, but in
any event at the beginning of each fiscal quarter, for a five (5) year period,
if required.
(ac) As promptly as practicable after the Closing Date, the Company
will prepare, at its own expense, hard cover "bound volumes" relating to the
offering, and will distribute such volumes to the individuals designated by the
Representative or counsel to the Representative.
4. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Securities which they have
agreed to purchase hereunder from the Company are subject, as of the date
hereof and as of the Closing Date and the Option Closing Date, to the
continuing accuracy of, and compliance with, the representations and warranties
of the Company herein, to the accuracy of statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of
its obligations hereunder, and to the following conditions:
(a) (i) The Registration Statement shall have become effective
not later than 5:00 p.m., Eastern Time, on the date of this Agreement, or at
such later time or on such later date as you may agree to in writing; (ii) at
or prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceeding for that purpose shall have been initiated or pending, or shall be
threatened, or to the knowledge of the Company, contemplated by the Commission;
(iii) no stop order suspending the
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<PAGE> 21
effectiveness of the qualification or registration of the Securities under the
securities or "blue sky" laws of any jurisdiction (whether or not a
jurisdiction which you shall have specified) shall be threatened or to the
knowledge of the Company contemplated by the authorities of any such
jurisdiction or shall have been issued and in effect; (iv) any request for
additional information on the part of the Commission or any such authorities
shall have been complied with to the satisfaction of the Commission and any
such authorities, and to the satisfaction of counsel to the Underwriters; and
(v) after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Underwriters and the Underwriters did not object
thereto.
(b) At the Closing Date, since the respective dates as of which
information is presented in the Registration Statement and the Prospectus, (i)
there shall not have been any material change in the capital stock or other
securities of the Company or any subsidiary or any material adverse change in
the long-term debt of the Company or any subsidiary except as set forth in or
contemplated by the Registration Statement, (ii) there shall not have been any
material adverse change in the general affairs, business, properties, condition
(financial or otherwise), management, or results of operations of the Company
or any subsidiary, whether or not arising from transactions in the ordinary
course of business, in each case other than as set forth in or contemplated by
the Registration Statement or Prospectus; (iii) neither the Company nor any
subsidiary shall have sustained any material interference with its business or
properties from fire, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree, which is not set forth in the
Registration Statement and Prospectus; and (iv) the Registration Statement and
the Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and shall in all material respects conform to
the requirements thereof, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstance under which they are made, not misleading.
(c) Except as set forth in the Prospectus, there is not pending
or, to the knowledge of the Company or any subsidiary, threatened, any material
action, suit, proceeding, inquiry, arbitration or investigation against the
Company or any subsidiary, or any of the officers or directors of the Company
or any subsidiary, or any material action, suit, proceeding, inquiry,
arbitration, or investigation, which might result in any material adverse
change in the condition (financial or other), business
21
<PAGE> 22
prospects, net worth, or properties of the Company or any subsidiary.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct as of this date and at the Closing
Date as if made at the Closing Date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with.
(e) At each Closing Date, you shall have received the opinion,
together with copies of such opinion for each of the other several
Underwriters, dated as of each Closing Date, from Berman Wolfe and Rennert,
P.A., counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) the Company and each subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own its properties and conduct its
business as described in the Registration Statement and Prospectus and
is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each other jurisdiction in which the
ownership or leasing of its properties or conduct of its business
requires such qualification except for jurisdictions in which the
failure to so qualify would not have a material adverse effect on the
Company and each subsidiary as a whole;
(ii) the authorized capitalization of the Company is as set
forth under "Capitalization" in the Prospectus; all shares of the
Company's outstanding stock and other securities requiring
authorization for issuance by the Company's Board of Directors have
been duly authorized, validly issued, are fully paid and non-
assessable and conform to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock of the Company and
other securities have not been issued in violation of the preemptive
rights of any shareholder and the shareholders of the Company do not
have any preemptive rights or, to such counsel's knowledge, other
rights to subscribe for or to purchase securities of the Company, nor,
to such counsel's knowledge, are there any restrictions upon the
voting or transfer of any of the securities of the Company, except as
disclosed in the Prospectus; the Units, the Common Stock, the Shares,
the Warrants, and the securities contained in the Representative's
Warrant Agreement conform to the respective descriptions thereof
contained in the Prospectus; the Units, the Common Stock, the Shares,
the Warrants, the shares of Common Stock to be issued upon exercise of
the Warrants and the securities contained in the
22
<PAGE> 23
Representative's Warrant Agreement, have been duly authorized and,
when issued, delivered and paid for, will be duly authorized, validly
issued, fully paid, non-assessable, free of pre-emptive rights and no
personal liability will attach to the ownership thereof; all prior
sales by the Company of the Company's securities have been made in
compliance with or under an exemption from registration under the Act
and applicable state securities laws and no shareholders of the
Company have any rescission rights against the Company with respect to
the Company's securities; a sufficient number of shares of Common
Stock has been reserved for issuance upon exercise of the Warrants and
the Representative Warrants, and to the best of such counsel's
knowledge, neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement
gives rise to any registration rights or other rights, other than
those which have been waived or satisfied or described in the
Registration Statement;
(iii) this Agreement, the Representative's Warrant Agreement,
the Warrant Agreement, the Financial Advisory Agreement and the M/A
Agreement have been duly and validly authorized, executed and
delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by the Representative, are
the valid and legally binding obligations of the Company, enforceable
in accordance with their terms, except (a) as such enforceability may
be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which
effect creditors' rights generally; and (b) no opinion is expressed as
to the enforceability of the indemnity provisions or the contribution
provisions contained in this Agreement;
(iv) the certificates evidencing the outstanding
securities of the Company, the Shares, the Common Stock and the
Warrants are in valid and proper legal form;
(v) to the best of such counsel's knowledge, except as set
forth in the Prospectus, there is not pending or, to the knowledge of
the Company, threatened, any material action, suit, proceeding,
inquiry, arbitration or investigation against the Company or any
subsidiary or any of the officers of directors of the Company or any
subsidiary, nor any material action, suit, proceeding, inquiry,
arbitration, or investigation, which might materially and adversely
affect the condition (financial or otherwise), business prospects, net
worth, or properties of the Company or any subsidiary;
(vi) the execution and delivery of this Agreement, the
Representative's Warrant Agreement, the Warrant Agreement, the
Financial Advisory Agreement and the M/A Agreement, and the
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<PAGE> 24
incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated, will
not result in a violation of, or constitute a default under (a) the
Articles of Incorporation or By-Laws of the Company and each
subsidiary; (b) to the best of such counsel's knowledge, any material
obligations, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company or any subsidiary is a
party or by which it or any of its properties is bound; or (c) to the
best of such counsel's knowledge, any material order, rule,
regulation, writ, injunction, or decree of any government,
governmental instrumentality or court, domestic or foreign;
(vii) the Registration Statement has become effective under
the Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for that purpose have been instituted or
are pending before, or threatened by, the Commission; the Registration
Statement and the Prospectus (except for the financial statements and
other financial data contained therein, or omitted therefrom, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
Rules and Regulations; and
(viii) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or
delivery of the Securities by the Company, in connection with the
execution, delivery and performance of this Agreement by the Company
or in connection with the taking of any action contemplated herein, or
the issuance of the Representative's Warrants or the Securities
underlying the Representative's Warrants, other than registrations or
qualifications of the Securities under applicable state or foreign
securities or Blue Sky laws and registration under the Act.
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or public officials as
to matters of fact; and may rely as to all matters of law, upon opinions of
counsel satisfactory to you and counsel to the Underwriters. The opinion of
such counsel to the Company shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and that the Representative and
they are justified in relying thereon.
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<PAGE> 25
Such counsel shall also include a statement to the effect that such
counsel has participated in the preparation of the Registration Statement and
the Prospectus and nothing has come to the attention of such counsel to lead
such counsel to believe that the Registration Statement or any amendment
thereto at the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading or that the Prospectus
or any supplement thereto contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make statements therein, in light of the circumstances under which
they are made, not misleading (except, in the case of both the Registration
Statement and any amendment thereto and the Prospectus and any supplement
thereto, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion).
(f) You and the several Underwriters shall have received on each
Closing Date a certificate dated as of each Closing Date, signed by the Chief
Executive Officer and the Chief Financial Officer of the Company and such other
officers of the Company as the Underwriters may request, certifying that:
(i) No Order suspending the effectiveness of the
Registration Statement or stop order regarding the sale of the
Securities in effect and no proceedings for such purpose are pending
or are, to their knowledge, threatened by the Commission;
(ii) They do not know of any litigation instituted or, to
their knowledge, threatened against the Company or any subsidiary or
any officer or director of the Company or any subsidiary of a
character required to be disclosed in the Registration Statement which
is not disclosed therein; they do not know of any contracts which are
required to be summarized in the Prospectus which are not so
summarized; and they do not know of any material contracts required to
be filed as exhibits to the Registration Statement which are not so
filed;
(iii) They have each carefully examined the Registration
Statement and the Prospectus and, to the best of their knowledge,
neither the Registration Statement nor the Prospectus nor any
amendment or supplement to either of the foregoing contains an untrue
statement of any material fact or omits to state any material fact
required to be stated therein or necessary to make the statement
therein, in light of the circumstances under which they are made, not
misleading; and since the Effective Date, to the best of their
knowledge, there has occurred no event required to be set forth in an
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<PAGE> 26
amended or supplemented Prospectus which has not been so set forth;
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in the condition of the Company or
any subsidiary, financial or otherwise, or in the results of its
operations, except as reflected in or contemplated by the Registration
Statement and the Prospectus and except as so reflected or
contemplated since such date, there has not been any material
transaction entered into by the Company or any subsidiary;
(v) The representations and warranties set forth in this
Agreement are true and correct in all material respects and the
Company has complied with all of its agreements herein contained;
(vi) Neither the Company nor any subsidiary is delinquent in
the filing of any federal, state and municipal tax return or the
payment of any federal, state or municipal taxes; they know of no
proposed redetermination or re-assessment of taxes, adverse to the
Company or any subsidiary, and the Company and each subsidiary has
paid or provided by adequate reserves for all known tax liabilities;
(vii) They know of no material obligation or liability of the
Company or any subsidiary, contingent or otherwise, not disclosed in
the Registration Statement and Prospectus;
(viii) This Agreement, the Representative's Warrant
Agreement, the Warrant Agreement, the Financial Advisory Agreement and
the M/A Agreement, the consummation of the transactions therein
contemplated, and the fulfillment of the terms thereof, will not
result in a breach by the Company of any terms of, or constitute a
default under, its Articles of Incorporation or By-Laws, any
indenture, mortgage, lease, deed or trust, bank loan or credit
agreement or any other material agreement or undertaking of the
Company or any subsidiary including, by way of specification but not
by way of limitation, any agreement or instrument to which the Company
or any subsidiary is now a party or pursuant to which the Company or
any subsidiary has acquired any right and/or obligations by succession
or otherwise;
(ix) The financial statements and schedules filed with and
as part of the Registration Statement present fairly the financial
position of the Company as of the dates thereof all in conformity with
generally accepted principles of accounting applied on a consistent
basis throughout the periods involved. Since the respective dates of
such financial statements, there
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<PAGE> 27
have been no material adverse change in the condition or general
affairs of the Company, financial or otherwise, other than as referred
to in the Prospectus;
(x) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
except as may otherwise be indicated therein, neither the Company nor
any subsidiary has, prior to the Closing Date, either (i) issued any
securities or incurred any material liability or obligation, direct or
contingent, for borrowed money, or (ii) entered into any material
transaction other than in the ordinary course of business. The
Company has not declared, paid or made any dividend or distribution of
any kind on its capital stock;
(xi) They have reviewed the sections in the Prospectus
relating to their biographical data and equity ownership position in
the Company, and all information contained therein is true and
accurate; and
(xii) Except as disclosed in the Prospectus, during the past
five years, they have not been:
(1) Subject of a petition under the Federal
bankruptcy laws or any state insolvency law filed by or
against them, or by a receiver, fiscal agent or similar
officer appointed by a court for their business or property,
or any partnership in which either or them was a general
partner at or within two years before the time of such filing,
or any corporation or business association of which either of
them was an executive officer at or within two years before
the time of such filing;
(2) Convicted in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) The subject of any order, judgment, or decree
not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining either of them from, or otherwise limiting, any of
the following activities:
(i) acting as a futures commission merchant,
introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by
the Commodity Futures Trading Commission, or an
associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director
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<PAGE> 28
or employee of any investment company, bank, savings
and loan association or insurance company, or
engaging in or continuing any conduct or practice in
connection with any such activity;
(ii) engaging in any type of business
practice; or
(iii) engaging in any activity in connection
with the purchase or sale of any security or
commodity or in connection with any violation of
Federal or State securities law or Federal Commodity
laws.
(4) The subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated of any Federal
or State authority barring, suspending or otherwise limiting
for more than sixty (60) days either of their right to engage
in any activity described in paragraph (3)(i) above, or be
associated with persons engaged in any such activity;
(5) Found by any court of competent jurisdiction in
a civil action or by the Securities and Exchange Commission to
have violated any Federal or State securities law, and the
judgment in such civil action or finding by the Commission has
not been subsequently reversed, suspended or vacated; or
(6) Found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to
have violated any Federal Commodities Law, and the judgment in
such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.
(g) The Underwriters shall have received from Coopers & Lybrand,
L.L.P., independent auditors to the Company, certificates or letters, one dated
and delivered on the Effective Date and one dated and delivered on the Closing
Date, in form and substance satisfactory to the Underwriters, stating that:
(i) they are independent certified public accountants
with respect to the Company within the meaning of the Act and the
applicable Rules and Regulations;
(ii) the financial statements and the schedules included
in the Registration Statement and the Prospectus were examined by them
and, in their opinion, comply as to form in all material respects with
the applicable accounting requirements of the Act, the Rules and
Regulations and instructions of the
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<PAGE> 29
Commission with respect to Registration Statements on
Form SB-2;
(iii) on the basis of inquiries and procedures conducted by
them (not constituting an examination in accordance with generally
accepted auditing standards), including a reading of the latest
available unaudited interim financial statements or other financial
information of the Company (with an indication of the date of the
latest available unaudited interim financial statements), inquiries of
officers of the Company who have responsibility for financial and
accounting matters, review of minutes of all meetings of the
shareholders and the Board of Directors of the Company and other
specified inquiries and procedures, nothing has come to their
attention as a result of the foregoing inquiries and procedures that
causes them to believe that:
(a) during the period from (and including) the
date of the financial statements in the Registration Statement
and the Prospectus to a specified date not more than five days
prior to the date of such letters, there has been any change
in the Common Stock, long-term debt or other securities of the
Company (except as specifically contemplated in the
Registration Statement and Prospectus) or any material
decreases in net current assets, net assets, shareholder's
equity, working capital or in any other item appearing in the
Company's financial statements as to which the Underwriters
may request advice, in each case as compared with amounts
shown in the balance sheet as of the date of the financial
statement in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or will occur;
(b) during the period from (and including) the date
of the financial statements in the Registration Statement and
the Prospectus to such specified date there was any material
decrease in revenues or in the total or per share amounts of
income or loss before extraordinary items or net income or
loss, or any other material change in such other items
appearing in the Company's financial statements as to which
the Underwriters may request advice, in each case as compared
with the fiscal period ended as of the date of the financial
statement in the Prospectus, except in each case for
increases, changes or decreases which the Prospectus discloses
have occurred or will occur;
(c) the unaudited interim financial statements of
the Company appearing in the Registration Statement and the
Prospectus (if any) do not comply as to form in all material
respects with the applicable accounting
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requirements of the Act and the Rules and Regulations or are
not fairly presented in conformity with generally accepted
accounting principles and practices on a basis substantially
consistent with the audited financial statements included in
the Registration Statements or the Prospectus.
(iv) they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the
general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be in
agreement; and
(v) they have not during the immediately preceding five
(5) year period brought to the attention of the Company's management
any reportable condition related to the Company's internal accounting
procedures, weaknesses and/or controls.
Such letters shall also set forth such other information as may be
requested by counsel for the Underwriters. Any changes, increases or decreases
in the items set forth in such letters which, in the judgment of the several
Underwriters, are materially adverse with respect to the financial position or
results of operations of the Company shall be deemed to constitute a failure of
the Company to comply with the conditions of the obligations to the several
Underwriters hereunder.
(h) Upon exercise of the option provided for in Section 2(b)
hereof, the obligation of the several Underwriters (or, at its option, the
Representative, individually) to purchase and pay for the Option Securities
referred to therein will be subject (as of the date hereof and as of the Option
Closing Date) to the following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings for that purpose
shall have been instituted or shall be pending, or, to your knowledge
or the knowledge of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of the Commission
for additional information shall have been complied with to the
satisfaction of counsel to the Underwriters.
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(ii) At the Option Closing Date, there shall have been
delivered to you the signed opinion from Berman, Wolfe & Rennert,
P.A., counsel for the Company, dated as of the Option Closing Date, in
form and substance satisfactory to counsel to the Underwriters, which
opinion shall be substantially the same in scope and substance as the
opinion furnished to you at the Closing Date pursuant to Section 4(e)
hereof, except that such opinion, where appropriate, shall cover the
Option Securities.
(iii) At the Option Closing Date, there shall have been
delivered to you a certificate of the Chief Executive Officer and
Chief Financial Officer of the Company, dated the Option Closing Date,
in form and substance satisfactory to counsel to the Underwriters,
substantially the same in scope and substance as the certificate
furnished to you at the Closing Date pursuant to Section 4(f) hereof.
(iv) At the Option Closing Date, there shall have been
delivered to you a letter in form and substance satisfactory to you
from Coopers & Lybrand L.L.P., independent auditors to the Company,
dated the Option Closing Date and addressed to the several
Underwriters confirming the information in their letter referred to in
Section 4(g) hereof and stating that nothing has come to their
attention during the period from the ending date of their review
referred to in said letter to a date not more than five business days
prior to the Option Closing Date, which would require any change in
said letter if it were required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing
Date in connection with the sale and issuance of the Option Securities
shall be satisfactory in form and substance to the Underwriters, and
the Underwriters and counsel to the Underwriters shall have been
furnished with all such documents, certificates, and opinions as you
may request in connection with this transaction in order to evidence
the accuracy and completeness of any of the representations,
warranties or statements of the Company or its compliance with any of
the covenants or conditions contained herein.
(i) No action shall have been taken by the Commission or the NASD,
the effect of which would make it improper, at any time prior to the Closing
Date, for members of the NASD to execute transactions (as principal or agent)
in the Common Stock and no proceedings for the taking of such action shall have
been instituted or shall be pending, or, to the knowledge of the several
Underwriters or the Company, shall be contemplated by the Commission or the
NASD. The Company represents that at the date hereof it has no knowledge that
any such action is in fact contemplated by the Commission or the NASD. The
Company shall advise the Representative of any NASD affiliations of any of its
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<PAGE> 32
officers, directors, or stockholders or their affiliates in accordance
with paragraph 1(y) of this Agreement.
(j) At the Effective Date, you shall have received from counsel to
the Company, dated as of the Effective Date, in form and substance satisfactory
to counsel for the Underwriter, a written Secondary Market Trading Opinion
detailing those states in which the Units, Shares and Warrants may be traded in
non-issuer transactions under the Blue Sky laws of the fifty (50) states after
the Effective Date, in accordance with paragraph 3(ab) of this Agreement.
(k) The authorization and issuance of the Securities and delivery
thereof, the Registration Statement, the Prospectus, and all corporate
proceedings incident thereto shall be satisfactory in all respects to counsel
for the several Underwriters, and such counsel shall be furnished with such
documents, certificates and opinions as they may reasonably request to enable
them to pass upon the matters referred to in this sub-paragraph.
(l) Prior to the Effective Date, the Representative shall have
received clearance from the NASD as to the amount of compensation allowable or
payable to the Representative, as described in the Registration Statement.
(m) If any of the conditions herein provided for in this Section
shall not have been fulfilled as of the date indicated, this Agreement and all
obligations of the several Underwriters under this Agreement may be canceled
at, or at any time prior to, the Closing Date and/or the Option Closing Date by
the Representative and/or the Underwriters notifying the Company of such
cancellation in writing or by telegram at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of the several
Underwriters to the Company.
5. Conditions of the Obligations of the Company. The obligation
of the Company to sell and deliver the Securities is subject to the following
conditions:
(i) The Registration Statement shall have become
effective not later than 5:00 p.m., Eastern Time, on the date of this
Agreement, or on such later time or date as the Company and the
Representative may agree in writing; and
(ii) At the Closing Date and the Option Closing Date, no stop
orders suspending the effectiveness of the Registration Statement
shall have been issued under the Act or any proceedings therefore
initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for in
this Section have been fulfilled on the Closing Date but are not fulfilled
after the Closing Date and prior to the Option
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<PAGE> 33
Closing Date, then only the obligation of the Company to sell and
deliver the Securities on exercise of the option provided for in
Section 2(b) hereof shall be affected.
6. Indemnification. (a) The Company indemnifies and holds
harmless each Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include but not be limited to, all reasonable costs of defense and
investigation and all attorneys' fees), to which the Underwriter or such
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in (i) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
(ii) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the Company and filed in any state or other jurisdiction in order to qualify
any or all of the Securities under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or arise out of or are based upon the omission or alleged
omission to state in the Registration Statement, any Preliminary Prospectus,
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any such cases to the extent, but only to the extent, that any
such losses, claim, damages or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriters specifically for use in the
preparation of the Registration Statement or any such amendment or supplement
thereof or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment or supplement thereto. Notwithstanding
the foregoing, the Company shall have no liability under this section if such
untrue statement or omission made in a Preliminary Prospectus is cured in the
Prospectus and the Prospectus is not delivered to the person or persons
alleging the liability upon which indemnification is being sought. This
indemnity will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter, severally, but not jointly, indemnifies and
holds harmless the Company, each of its directors, each nominee (if any) for
director named in the Prospectus, each of its officers who have signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages or
liabilities (which shall,
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<PAGE> 34
for all purposes of this Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys' fees) to which the Company or
any such director, nominee, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statements or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by you or by any Underwriter
through you specifically for use in the preparation thereof. Notwithstanding
the foregoing, the Underwriters shall have no liability under this section if
such untrue statement or omission made in a Preliminary Prospectus is cured in
the Prospectus and the Prospectus is not delivered to the person or persons
alleging the liability upon which indemnification is being sought through no
fault of the Underwriter. This indemnity agreement will be in addition to any
liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify in writing the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with
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<PAGE> 35
counsel reasonably satisfactory to the indemnified party; provided that if the
indemnified party is an Underwriter or a person who controls such Underwriter
within the meaning of the Act, the fees and expenses of such counsel shall be
at the expense of the indemnifying party if (i) the employment of such counsel
has been specifically authorized in writing by the indemnifying party or (ii)
the named parties to any such action (including any impleaded parties) include
both the Underwriter or such controlling person and the indemnifying party and
in the reasonable judgment of the Representative, it is advisable for the
Representative or such Underwriters or controlling persons to be represented by
separate counsel (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of the Underwriter or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for all such Underwriters
and controlling persons, which firm shall be designated in writing by you). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnifying party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnifying party.
7. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) each Underwriter makes
claim for indemnification pursuant to Section 6 hereof but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case,
notwithstanding the fact that the express provisions of Section 6 provide for
indemnification in such case, or (ii) contribution under the Act may be
required on the part of any Underwriter, then the Company and each person who
controls the Company, in the aggregate, and any such Underwriter shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (which shall, for all purposes of this Agreement, include,
but not be limited to, all reasonable costs of defense and investigation and
all reasonable attorneys' fees) in either such case (after contribution from
others) in such proportions that all such Underwriters are responsible in the
aggregate for that portion of such losses, claims, damages or liabilities
represented by the percentage that the underwriting discount per Share
appearing on the cover page of the Prospectus bears to the public offering
price appearing thereon, and the Company shall be responsible for the remaining
portion, provided, however, that (a) if such allocation is not permitted by
applicable law then the relative fault of the Company and the Underwriter and
controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
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<PAGE> 36
considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company, or
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if the respective obligations of the Company and the Underwriters to
contribute pursuant to this Section 7 were to be determined by pro rata or per
capita allocation of the aggregate damages (even if the Underwriters and their
controlling persons in the aggregate were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this Section; and
(b) that the contribution of each contributing Underwriter shall not be in
excess of its proportionate share (based on the ratio of the number of
Securities purchased by such Underwriter to the number of Securities purchased
by all contributing Underwriters) of the portion of such losses, claims,
damages or liabilities for which the Underwriters are responsible. No person
ultimately determined to be guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not ultimately determined to be guilty of such fraudulent
misrepresentation. As used in this paragraph, the term "Underwriter" includes
any officer, director, or other person who controls the Underwriter within the
meaning of Section 15 of the Act, and the word "Company" includes any officer,
director, or person who controls the Company within the meaning of Section 15
of the Act. If the full amount of the contribution specified in this paragraph
is not permitted by law, then the Underwriter and each person who controls the
Underwriter shall be entitled to contribution from the Company, its officers,
directors and controlling persons to the full extent permitted by law. This
foregoing agreement shall in no way affect the contribution liabilities of any
persons having liability under Section 11 of the Act other than the Company and
the Underwriter. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in
light of all factors of importance to such party.
8. Costs and Expenses. (a) Whether or not this Agreement
becomes effective or the sale of the Securities to the Underwriters is
consummated, the Company will pay all costs and expenses incident to the
performance of this Agreement by the Company including but not limited to the
fees and expenses of counsel to the Company and of the Company's accountants;
the costs and expenses incident to the preparation, printing, filing and
distribution under the Act of the Registration Statement (including the
financial statements therein and all amendments and exhibits
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<PAGE> 37
thereto), Preliminary Prospectus and the Prospectus, as amended or
supplemented; the fee of the National Association of Securities Dealers, Inc.
("NASD") in connection with the filing required by the NASD relating to the
offering of the Securities contemplated hereby; all state filing fees, expenses
and disbursements and fees of counsel to the Representative who shall serve as
Blue Sky counsel to the Company in connection with the filing of applications
to register the Securities under the state securities or blue sky laws (which
fees shall be payable by the Company in the sum of $20,000, of which $10,000
has been paid); the cost of printing and furnishing to the several Underwriters
copies of the Registration Statement, each Preliminary Prospectus, the
Prospectus, this Agreement, the Selected Dealers Agreement, the Agreement Among
Underwriters, Underwriters Questionnaire, Underwriters Power of Attorney and
the Blue Sky Memorandum; the cost of printing the certificates evidencing the
securities comprising the Securities; the cost of preparing and delivering to
the Underwriters and its counsel bound volumes containing copies of all
documents and appropriate correspondence filed with or received from the
Commission and the NASD and all closing documents; and the fees and
disbursements of the transfer agent for the Company's securities. The Company
shall pay any and all taxes (including any original issue, transfer, franchise,
capital stock or other tax imposed by any jurisdiction) on sales to the
Underwriters hereunder. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus or of any supplement to be
attached to the Prospectus. The Company shall also engage the Company's
counsel to provide the Representative with a written Secondary Market Trading
Opinion in accordance with paragraphs 3(ab) and 4(j) of this Agreement.
(b) In addition to the foregoing expenses, the Company shall at
the Closing Date pay to the Representative a non-accountable expense allowance
equal to three percent (3%) of the gross proceeds received from the sale of the
Securities, of which an advance of $50,000 has been paid to date. In the event
the overallotment option is exercised, the Company shall pay to the
Representative at the Option Closing Date an additional amount equal to three
percent (3%) of the gross proceeds received upon exercise of the overallotment
option.
(c) Other than as disclosed in the Registration Statement, no person
is entitled either directly or indirectly to compensation from the Company,
from the Representative or from any other person for services as a finder in
connection with the proposed offering, and the Company agrees to indemnify and
hold harmless the Representative and the other Underwriters against any losses,
claims, damages or liabilities, joint or several which shall, for all purposes
of this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees, to which the Representative or such
other Underwriter may become subject insofar as such losses, claims, damages or
liabilities (or
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actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. Substitution of Underwriters. If any of the Underwriters
shall for any reason not permitted hereunder cancel their obligations to
purchase the Securities hereunder, or shall fail to take up and pay for the
number of Securities set forth opposite their respective names in Schedule A
hereto upon tender of such Securities in accordance with the terms hereof,
then:
(a) if the aggregate number of Securities which such Underwriter
or Underwriters agreed but failed to purchase does not exceed ten percent (10%)
of the total number of Securities, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Securities which such defaulting Underwriter or Underwriters agreed but
failed to purchase.
(b) If any Underwriter or Underwriters so default and the agreed
number of Securities with respect to which such default or defaults occurs is
more than ten percent (10%) of the total number of Securities, the remaining
Underwriters shall have the right to take up and pay for (in such proportion as
may be agreed upon among them) the Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase. If such remaining Underwriters
do not, at the Closing Date, take up and pay for the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the Securities shall be extended to the next business day to
allow the several Underwriters the privilege of substituting within twenty-four
hours (including non- business hours) another Underwriter or Underwriters
satisfactory to the Company. If no such Underwriter or Underwriters shall have
been substituted as aforesaid, within such twenty-four period, the time of
delivery of the Securities may, at the option of the Company, be again extended
to the next following business day, if necessary, to allow the Company the
privilege of finding within twenty-four hours (including non-business hours)
another Underwriter or Underwriters to purchase the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the Securities of the defaulting Underwriter or Underwriters as
provided in this Section, (i) the Company or the Representative shall have the
right to postpone the time of delivery for a period of not more than seven (7)
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be
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made necessary; and (ii) the respective numbers of Securities to be purchased
by the remaining Underwriters or substituted Underwriters shall be taken at the
basis of the underwriting obligation for all purposes of this Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the Securities agreed
to be purchased by the defaulting Underwriters or substitute another
Underwriter or Underwriters as aforesaid, and the Company shall not find or
shall not elect to seek another Underwriter or Underwriters for such Securities
as aforesaid, then this Agreement shall terminate.
If, following exercise of the option provided in Section 2(b) hereof,
any Underwriter or Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase Option Securities at the Option Closing
Date, or shall fail to take up and pay for the number of Option Securities,
which they become obligated to purchase at the Option Closing Date upon tender
of such Option Securities in accordance with the terms hereof, then the
remaining Underwriters or substituted Underwriters may take up and pay for the
Option Securities of the defaulting Underwriters in the manner provided in
Section 9(b) hereof. If the remaining Underwriters or substituted Underwriters
shall not take up and pay for all Option Securities, the Underwriters shall be
entitled to purchase the number of Option Securities for which there is no
default or, at their election, the option shall terminate, the exercise thereof
shall be of no effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of
termination, there shall be no liability on the part of any non-defaulting
Underwriter to the Company, provided that the provisions of this Section 9
shall not in any event affect the liability of any defaulting Underwriter to
the Company arising out of such default.
10. Effective Date. The Agreement shall become effective upon its
execution except that you may, at your option, delay its effectiveness until
11:00 a.m., Eastern time, on the first full business day following the
execution of this Agreement; or at such earlier time after the effective date
of the Registration Statement as you in your discretion shall first commence
the public offering by the Underwriters of any of the Securities. The time of
the public offering shall mean the time after the effectiveness of the
Registration Statement when the Securities are first generally offered by you
to the other Underwriters and Selected Dealers. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that Sections 3(c), 6, 7, 8, 13, 14, 15, 16, 17 and 18 shall remain in
effect notwithstanding such termination.
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11. Termination. (a) This Agreement, except for Sections 3(c), 6,
7, 8, 13, 14, 15, 16, 17, and 18 hereof, may be terminated at any time prior to
the Closing Date, and the option referred to in Section 2(b) hereof, if
exercised, may be cancelled at any time prior to the Option Closing Date, by
you if in your judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriters for the resale of the Securities agreed to
be purchased hereunder by reason of: (i) the Company having sustained a
material adverse loss, whether or not insured, by reason of fire, earthquake,
flood, accident or other calamity, or from any labor dispute or court or
government action, order or decree; (ii) trading in securities on the New York
Stock Exchange or the American Stock Exchange having been suspended or limited;
(iii) material governmental restrictions having been imposed on trading in
securities generally (not in force and effect on the date hereof); (iv) a
banking moratorium having been declared by Federal or New York or Florida state
authorities; (v) an outbreak of major international hostilities or other
national or international calamity having occurred; (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
the Representative to have a material adverse impact on the business, financial
condition or financial statements of the Company or the market for the
securities offered hereby; (vii) any material adverse change in the financial
or securities markets beyond normal market fluctuations having occurred since
the date of this Agreement; (viii) any material adverse change having occurred,
since the respective dates as of which information is given in the Registration
Statement and Prospectus, in the earnings, business prospects or general
condition of the Company, financial or otherwise, whether or not arising in the
ordinary course of business; (ix) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's business, or a
notification having been received by the Company of the threat of any such
proceeding or action, which could, in the reasonable judgment of the
Representative, materially adversely affect the Company; (x) except as
contemplated by the Prospectus, the Company is merged or consolidated into or
acquired by another company or group or there exists a binding legal commitment
for the foregoing or any other material change of ownership or control occurs;
or (xi) the Company shall not have complied in all material respects with any
term, condition or provisions on their part to be performed, complied with or
fulfilled (including but not limited to those set forth in this Agreement)
within the respective times therein provided.
(b) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section, the Company shall be
promptly notified by you, by telephone, telegram or facsimile, confirmed by
letter.
12. Representative's Warrant Agreement. At the Closing Date, the
Company will issue to the Representative and/or persons related
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to the Representative, for an aggregate purchase price of $10, and upon the
terms and conditions set forth in the form of Representative's Warrant
Agreement annexed as an exhibit to the Registration Statement, Representative
Warrants to purchase up to an aggregate of 90,000 Units, in such denominations
as the Representative shall designate. In the event of conflict in the terms
of this Agreement and the Representative's Warrant Agreement, the language of
the form of Representative's Warrant Agreement shall control.
13. Representations, Warranties and Agreements to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company and its principal officers, where
appropriate, and the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Underwriters, the Company or any of its officers or
directors or any controlling person and will survive delivery of and payment
for the Securities and the termination of this Agreement.
14. Notice. All communications hereunder will be in writing and,
except as otherwise expressly provided herein, will be mailed, delivered or
telegraphed and confirmed:
If to the Underwriters: Robert T. Kirk, President
Barron Chase Securities, Inc.
7700 West Camino Real, Suite 200
Boca Raton, Florida 33433
Copy to: David A. Carter, P.A.
355 West Palmetto Park Road
Boca Raton, Florida 33432
If to the Company: Irwin Zellermaier, President
General Credit Corporation
211 E. 70th Street
New York, New York 10021
Copy to: Charles J. Rennert, Esq.
Berman Wolfe & Rennert, P.A.
International Place, 35th Floor
100 Southeast Second Street
Miami, Florida 33131-2130
15. Parties in Interest. This Agreement herein set forth is made
solely for the benefit of the several Underwriters, the Company and, to the
extent expressed, any person controlling the Company or of the Underwriters,
and directors of the Company, nominees for directors (if any) named in the
Prospectus, its officers who have signed the Registration Statement, and their
respective executors, administrators, successors, assigns and no other person
shall acquire or have any right under or by virtue of
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<PAGE> 42
this Agreement. The term "successors and assigns" shall not include any
purchaser of the Securities, as such purchaser, from the several Underwriters.
All of the obligations of the Underwriters hereunder are several and not joint.
16. Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida applicable to contracts
made and to be performed entirely within the State of Florida. The parties
agree that any action brought by any party against another party in connection
with any rights or obligations arising out of this Agreement shall be
instituted properly in a federal or state court of competent jurisdiction
with venue only in the Fifteenth Judicial Circuit Court in and for Palm Beach
County, Florida or the United States District Court for the Southern District
of Florida, West Palm Beach Division. A party to this Agreement named as a
Defendant in any action brought in connection with this Agreement in any court
outside of the above named designated county or district shall have the right
to have the venue of said action changed to the above designated county or
district or, if necessary, have the case dismissed, requiring the other party
to refile such action in an appropriate court in the above designated county or
federal district.
17. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
18. Entire Agreement. This Agreement and the agreements referred
to within this Agreement constitute the entire agreement of the parties, and
supersedes all prior agreement, understanding, negotiations and discussions,
whether written or oral, of the parties hereto.
19. Representative as Underwriter. In the event the Representative
acts as the sole Underwriter ("Underwriter") in connection with the
underwriting of the securities being offered pursuant to the Registration
Statement, all references to the Representative in this Agreement shall be
replaced by reference to the "Underwriter", and (i) any consents required to be
obtained from the Representative shall be required to be obtained solely from
the Underwriter; (ii) all compensation to be received by the Representative
shall instead be received by the Underwriter; and (iii) the provisions of
section nine (9) of this Agreement shall not apply.
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<PAGE> 43
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Agreement, whereupon it will become a
binding Agreement between the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
GENERAL CREDIT CORPORATION
BY: /s/ Irwin Zelleermaier
----------------------------------------
Irwin Zellermaier, President
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
BARRON CHASE SECURITIES, INC.
BY: /s/ Robert T. Kirk
----------------------------------------
Robert T. Kirk, President
For itself and as Representative
of the several Underwriters
43
<PAGE> 44
SCHEDULE A
TO THE UNDERWRITING AGREEMENT
<TABLE>
<CAPTION>
UNDERWRITER UNITS
- ----------- --------
<S> <C>
Barron Chase Securities, Inc . . . . . . . . . . .
--------
900,000
</TABLE>
44
<PAGE> 1
EXHIBIT 1.2
GENERAL CREDIT CORPORATION
900,000 Units
SELECTED DEALER AGREEMENT
Boca Raton, Florida
_____________, 1997
Gentlemen:
1. Barron Chase Securities, Inc. (the "Representative") and the
other Underwriters named in the Prospectus (collectively the "Underwriters"),
acting through us as the Representative, are severally offering for sale an
aggregate of 900,000 Units (the "Firm Securities") of General Credit
Corporation (the "Company"), which we have agreed to purchase from the Company,
and which are more particularly described in the Registration Statement,
Underwriting Agreement and Prospectus. In addition, the several Underwriters
have been granted an option to purchase from the Company up to an additional
135,000 Units (the "Option Securities") to cover overallotments in connection
with the sale of the Firm Securities. The Firm Securities and any Option
Securities purchased are herein called the "Securities". The Securities and
the terms under which they are to be offered for sale by the several
Underwriters are more particularly described in the Prospectus.
2. The Securities are to be offered to the public by the several
Underwriters at the price per Unit set forth on the cover page of the
Prospectus (the "Public Offering Price"), in accordance with the terms of
offering set forth in the Prospectus.
3. Some or all of the several Underwriters are severally
offering, subject to the terms and conditions hereof, a portion of the
Securities for sale to certain dealers who are actually engaged in the
investment banking or securities business and who are either (a) members in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"), or (b) dealers with their principal places of business located outside
the United States, its territories and its possessions and not registered as
brokers or dealers under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), who have agreed not to make any sales within the United States,
its territories or its possessions or to persons who are nationals thereof or
residents therein (such dealers who shall agree to sell Securities hereunder
being herein called "Selected Dealers") at the public offering price, less a
selling concession (which may be changed) of not in excess of $______ per Unit
payable as hereinafter provided, out of which concession an amount not
1
<PAGE> 2
exceeding $__________ per Unit may be reallowed by Selected Dealers to members
of the NASD or foreign dealers qualified as aforesaid. The Selected Dealers
who are members of the NASD agree to comply with all of the provisions of the
NASD Conduct Rules. Foreign Selected Dealers agree to comply with the
provisions of Rule 2740 of the NASD Conduct Rules, and, if any such dealer is a
foreign dealer and not a member of the NASD, such Selected Dealer also agrees
to comply with the NASD's Interpretation with Respect to Free-Riding and
Withholding, and to comply, as though it were a member of the NASD, with the
provisions of Rules 2730 and 2750 of the NASD Conduct Rules, and to comply with
Rule 2420 of the NASD Conduct Rules as that Rule applies to non-member foreign
dealers. Some or all of the Underwriters may be included among the Selected
Dealers. Each of the Underwriters has agreed that, during the term of this
Agreement, it will be governed by the terms and conditions hereof whether or
not such Underwriter is included among the Selected Dealers.
4. Barron Chase Securities, Inc. shall act as Representative on
behalf of the Underwriters and shall have full authority to take such action as
we may deem advisable in respect to all matters pertaining to the public
offering of the Securities.
5. If you desire to act as a Selected Dealer, and purchase any of
the Securities, your application should reach us promptly by facsimile or
telegraph at the offices of Barron Chase Securities, Inc., 7700 West Camino
Real, Suite 200, Boca Raton, Florida 33433. We reserve the right to reject
subscriptions in whole or in part, to make allotments, and to close the
subscription books at any time without notice. The Securities allotted to you
will be confirmed, subject to the terms and conditions of this Agreement.
6. The privilege of subscribing for the Securities is extended to
you only on behalf of such of the Underwriters, if any, as may lawfully sell
the Securities to Selected Dealers in your state or other applicable
jurisdiction.
7. Any Securities to be purchased by you under the terms of this
Agreement may be immediately reoffered to the public in accordance with the
terms of offering as set forth herein and in the Prospectus, subject to the
securities or Blue Sky laws of the various states or other jurisdictions.
You agree to pay us on demand for the accounts of the several
Underwriters an amount equal to the Selected Dealer concession as to any
Securities purchased by you hereunder which, prior to the completion of the
public offering as defined in paragraph 8 below, we may purchase or contract to
purchase for the account of any Underwriter and, in addition, we may charge you
with any broker's commission and transfer tax paid in connection with such
purchase or contract to purchase. Certificates for Securities delivered on
such repurchases need not be the identical certificates originally
2
<PAGE> 3
purchased.
You agree to advise us from time to time, upon request, of the number
of Securities purchased by you hereunder and remaining unsold at the time of
such request, and, if in our opinion any such Securities shall be needed to
make delivery of the Securities sold or overallotted for the account of one or
more of the Underwriters, you will, forthwith upon our request, grant to us for
the account or accounts of such Underwriter or Underwriters the right,
exercisable promptly after receipt of notice from you that such right has been
granted, to purchase, at the Public Offering Price less the selling concession
or such part thereof as we shall determine, such number of Securities owned by
you as shall have been specified in our request.
No expenses shall be charged to Selected Dealers. A single transfer
tax, if payable, upon the sale of the Securities by the respective Underwriters
to you will be paid when such Securities are delivered to you. However, you
shall pay any transfer tax on sales of Securities by you and you shall pay your
proportionate share of any transfer tax (other than the single transfer tax
described above) in the event that any such tax shall from time to time be
assessed against you and other Selected Dealers as a group or otherwise.
Neither you nor any other person is or has been authorized to give any
information or to make any representation in connection with the sale of the
Securities other than as contained in the Prospectus.
8. The first three paragraphs of Section 7 hereof will terminate
when we shall have determined that the public offering of the Securities has
been completed and upon telefax notice to you of such termination, but, if not
theretofore terminated, they will terminate at the close of business on the
30th full business day after the date hereof; provided, however, that we shall
have the right to extend such provisions for a further period or periods, not
exceeding an additional 30 days in the aggregate upon facsimile notice to you.
9. For the purpose of stabilizing the market in the Securities,
we have been authorized to make purchases and sales of the Securities of the
Company, in the open market or otherwise, for long or short account, and, in
arranging for sales, to overallot.
10. On becoming a Selected Dealer, and in offering and selling the
Securities, you agree to comply with all the applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the 1934 Act. You
confirm that you are familiar with Rule 15c2-8 under the 1934 Act relating to
the distribution of preliminary and final prospectuses for securities of an
issuer (whether or not the issuer is subject to the reporting requirements
3
<PAGE> 4
of Section 13 or 15(d) of the 1934 Act) and confirm that you have complied and
will comply therewith.
We hereby confirm that we will make available to you such number of
copies of the Prospectus (as amended or supplemented) as you may reasonably
request for the purposes contemplated by the 1933 Act or the 1934 Act, or the
rules and regulations thereunder.
11. Upon request, you will be informed as to the states and other
jurisdictions in which we have been advised that the Securities are qualified
for sale under the respective securities or Blue Sky laws of such states and
other jurisdictions, but neither we nor any of the Underwriters assume any
obligation or responsibility as to the right of any Selected Dealer to sell the
Securities in any state or other jurisdiction or as to the eligibility of the
Securities for sale therein. We will, if requested, file a Further State
Notice in respect of the Securities pursuant to Article 23-A of the General
Business Law of the State of New York.
12. No Selected Dealer is authorized to act as our agent or as
agent for the Underwriters, or otherwise to act on our behalf or on behalf of
the Underwriters, in offering or selling the Securities to the public or
otherwise or to furnish any information or make any representation except as
contained in the Prospectus.
13. Nothing will constitute the Selected Dealers an association or
other separate entity or partners with the Underwriters, or with each other,
but you will be responsible for your share of any liability or expense based on
any claim to the contrary. We and the several Underwriters shall not be under
any liability for or in respect of value, validity or form of the Securities,
or the delivery of the certificates for the Securities, or the performance by
anyone of any agreement on its part, or the qualification of the Securities for
sale under the laws of any jurisdiction, or for or in respect of any other
matter relating to this Agreement, except for lack of good faith and for
obligations expressly assumed by us or by the Underwriters in this Agreement
and no obligation on our part shall be implied herefrom. The foregoing
provisions shall not be deemed a waiver of any liability imposed under the 1933
Act.
14. Payment for the Securities sold to you hereunder is to be made
at the Public Offering Price less the above-mentioned selling concession on
such time and date as we may advise, at the office of Barron Chase Securities,
Inc., 7700 West Camino Real, Suite 200, Boca Raton, Florida 33433, by wire
transfer to the account of the Representative or by a certified or official
bank check in current New York Clearing House funds, payable to the order of
Barron Chase Securities, Inc., as Representative, against delivery of
certificates for the Securities so purchased. If such payment is not made at
such time, you agree to pay us interest on such funds
4
<PAGE> 5
at the prevailing broker's loan rate.
15. Notices to us should be addressed to us at the offices of
Barron Chase Securities, Inc., 7700 West Camino Real, Suite 200, Boca Raton,
Florida 33433, Attention: Robert T. Kirk. Notices to you shall be deemed to
have been duly given if telephoned, telefaxed, telegraphed or mailed to you at
the address to which this letter is addressed.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to the
choice of law or conflicts of law principles thereof.
17. If you desire to purchase any Securities and act as a Selected
Dealer, please confirm your application by signing and returning to us your
confirmation on the duplicate copy of this letter enclosed herewith, even
though you may have previously advised us thereof by telephone or telegraph.
Our signature hereon may be by facsimile.
Very truly yours,
BARRON CHASE SECURITIES, INC.
As Representative of the Several
Underwriters
BY:
----------------------------------------
Authorized Officer
5
<PAGE> 6
Robert T. Kirk, President
Barron Chase Securities, Inc.
7700 West Camino Real, Suite 200
Boca Raton, Florida 33433
We hereby subscribe for __________ Units of General Credit Corporation
in accordance with the terms and conditions stated in the foregoing Selected
Dealers Agreement and letter. We hereby acknowledge receipt of the Prospectus
referred to in the Selected Dealers Agreement and letter. We further state
that in purchasing said Units we have relied upon said Prospectus and upon no
other statement whatsoever, whether written or oral. We confirm that we are a
dealer actually engaged in the investment banking or securities business and
that we are either (i) a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD"); or (ii) a dealer with its principal place of
business located outside the United States, its territories and its possessions
and not registered as a broker or dealer under the Securities Exchange Act of
1934, as amended, who hereby agrees not to make any sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein. As a member of the NASD, we hereby agree to
comply with all of the provisions of NASD Conduct Rules. If we are a foreign
Selected Dealer, we agree to comply with the provisions of Rule 2740 of the
NASD Conduct Rules, and if we are a foreign dealer and not a member of the
NASD, we agree to comply with the NASD's interpretation with respect to
free-riding and withholding, and agree to comply, as though we were a member of
the NASD, with provisions of Rules 2730 and 2750 of the NASD Conduct Rules, and
to comply with Rule 2420 of the NASD Conduct Rules as that Rule applies to
non-member foreign dealers.
Firm:
-------------------------------------
By:
-------------------------------------
(Name and Position)
Address:
-------------------------------------
-------------------------------------
Telephone No.:
-------------------------------------
Dated: , 1997
--------------------
6
<PAGE> 1
EXHIBIT 1.5
GENERAL CREDIT CORPORATION
900,000 Units
AGREEMENT AMONG UNDERWRITERS
Boca Raton, Florida
_____________, 1997
Barron Chase Securities, Inc.
7700 West Camino Real, Suite 200
Boca Raton, Florida 33433
Dear Sirs:
1. Underwriting Agreement. We understand that General Credit
Corporation (the "Company"), proposes to enter into an underwriting agreement
attached hereto as Exhibit A (the "Underwriting Agreement") with Barron Chase
Securities, Inc. (the "Representative") and the other underwriters named in
Schedule A to the Underwriting Agreement (the "Underwriters"), acting severally
and not jointly, with respect to the purchase of an aggregate of 900,000 Units,
each Unit consisting three shares of Common Stock and six Common Stock Purchase
Warrants, each Common Stock Purchase Warrant exercisable to purchase one share
of Common Stock at a price of $3.375 per share at any time during the period
between the Effective Date and five years from the Effective Date. The Units
are hereinafter also referred to as the "Securities". The Securities and the
terms under which they are to be offered for sale by the several Underwriters
are more particularly described in the Registration Statement, Underwriting
Agreement and Prospectus.
Unless the context indicates otherwise, the term Securities shall also
include an additional 135,000 Units (the "Option Securities"), all or any part
of which the Representative and/or the Underwriters are entitled to purchase
from the Company upon exercise of the Representative's over-allotment option
referred to in Section 2(b) of the Underwriting Agreement.
This is to confirm that we agree to purchase, in accordance with the
terms hereof and of the Underwriting Agreement, the number of Securities set
forth opposite our name in Schedule A, plus such number of Securities, if any,
which we may become obligated to purchase pursuant to Sections 2(b) and 9 of
the Underwriting Agreement and Section 4 hereof ("our Securities"). The ratio
which the number of our Securities bears to the total number of Securities
purchased pursuant to the Underwriting Agreement is herein called "our
underwriting proportion".
2. Registration Statement and Prospectus. We have heretofore
received and examined a copy of the registration statement, as amended to the
date hereof, and the related
1
<PAGE> 2
prospectus in respect of the Securities, as filed with the Securities and
Exchange Commission. The registration statement as amended at the time it
becomes effective, including financial statements and exhibits, is hereafter
referred to as the "Registration Statement", and the prospectus in the form
first filed with the Securities and Exchange Commission pursuant to its Rule
424(b) after the Registration Statement becomes effective is referred to as the
"Prospectus".
We confirm that the information furnished to you by us for use in the
Registration Statement and in the Prospectus is correct and is not misleading
insofar as it relates to us. We consent to being named as an Underwriter in
such Registration Statement and we are willing to accept our responsibilities
under the Securities Act of 1933 (the "Act"), as a result thereof. We confirm
that we have authorized you to advise the Company on our behalf (a) as to the
statements to be included in any Preliminary Prospectus and in the Prospectus
under the heading "Underwriting" insofar as they relate to us and (b) that
there is no other information about us required to be stated in the
Registration Statement or Prospectus. We further confirm that, upon request by
you as Representative, we have furnished a copy of any amended Preliminary
Prospectus to each person to whom we have furnished a copy of any previous
Prospectus, and we confirm that we have delivered, and we agree that we will
deliver, all preliminary and final Prospectuses required for compliance with
the provisions of Rule 15c2-8 under the Securities Exchange Act of 1934 (the
"1934 Act").
3. Authority of the Representative. We authorize you, acting as
Representative of the Underwriters, to execute and deliver on our behalf, the
Underwriting Agreement, and to agree to any variation of its terms (except as
to the purchase price and the number of our Securities) which, in your
judgment, is not a variation which materially and adversely affects our rights
and obligations. We also authorize you, in your discretion and on our behalf,
with approval of counsel for the Underwriters, to approve the Prospectus and to
approve of, or object to, any further amendments to the Registration Statement,
or amendments or supplements to the Prospectus. We further authorize you to
exercise all the authority and discretion vested in the Underwriters and in you
by the provisions of the Underwriting Agreement and to take all such action as
you in your discretion may believe desirable to carry out the provisions of the
Underwriting Agreement and of this Agreement including the extension of any
date specified in the Underwriting Agreement, the exercise of any right of
cancellation or termination and to determine all matters relating to the public
advertisement of the Securities; provided, however, that, except with the
consent of Underwriters who shall have agreed to purchase in the aggregate 50%
or more of the Securities, no extension of the time by which the Registration
Statement is to become effective as provided in the Underwriting Agreement
shall be for a period in excess of two business days. We authorize you to take
such action as in your discretion may be necessary or desirable to effect the
sale and distribution of the Securities, including, without limiting the
generality of the
2
<PAGE> 3
foregoing, the right to determine the terms of any proposed offering, the
concession to Selected Dealers (as hereinafter defined) and the reallowance, if
any, to other dealers and the right to make the judgments provided for in the
Underwriting Agreement.
4. Authority of Representative as to Defaulting Underwriters.
Until the termination of this Agreement, we authorize you to arrange for the
purchase by other persons, who may include you or any of the other
Underwriters, of any Securities not taken up by any defaulting Underwriter. In
the event that such arrangements are made, the respective amounts of the
Securities to be purchased by the non-defaulting Underwriters and by such other
person or persons, if any, shall be taken as the basis for all rights and
obligations hereunder; but this shall not in any way affect the liability of
any defaulting Underwriter to the other Underwriters for damages resulting from
its default, nor shall any such default relieve any other Underwriter of any of
its obligations hereunder or under the Underwriting Agreement except as herein
or therein provided.
In the event of default by one or more Underwriters in respect of
their obligations (a) under the Underwriting Agreement to purchase the
Securities agreed to be purchased by them thereunder, (b) under this Agreement
to take up and pay for any Securities purchased or (c) to deliver any
Securities sold or over-allotted by you for the respective accounts of the
Underwriters pursuant to this Agreement, or to bear their respective share of
expenses or liabilities pursuant to this Agreement, and to the extent that
arrangements shall not have been made by you for any persons to assume the
obligations of such defaulting Underwriter or Underwriters, we agree to assume
our proportionate share of the obligations of each defaulting Underwriter
(subject in the case of clause (a) above to the limitations contained in the
Underwriting Agreement) without relieving any such defaulting Underwriter of
its liability therefor.
5. Offering of Securities. We understand that you will notify us
when the public offering of the Securities is to be made and of the initial
public offering price. We hereby authorize you to fix the concession to
dealers and the reallowance to dealers and in your sole discretion after the
public offering to change the public offering price, the concession and the
reallowance. The offering price at any time in effect is hereinafter referred
to as the "public offering price". We agree that we will not offer any of the
Securities for sale at a price other than the public offering price or allow
any discount therefrom except as herein otherwise specifically provided.
We agree that public advertisement of the offering shall be made by
you on behalf of the Underwriters on such date as you shall determine. We have
not advertised the offering and will not do so until after such date. We
understand that any advertisement we may then make will be on our own
responsibility and at our own expense.
3
<PAGE> 4
We authorize you to reserve and offer for sale to institutions and
other retail purchasers and to dealers (the "Selected Dealers") to be selected
by you (such dealers may include any Underwriter ) such of our Securities as
you in your sole discretion shall determine. Any such offering to Selected
Dealers may be made pursuant to a Selling Agreement, in the form attached
hereto as Exhibit B, or otherwise , as you may determine. The form of Selling
Agreement attached hereto as Exhibit B is satisfactory to us.
We authorize you to make purchases and sales of the Securities from or
to any Selected Dealers or Underwriters at the public offering price less all
or any part of the concession and, with your consent, any Underwriter may make
purchases or sales of the Securities from or to any Selected Dealer or
Underwriter at the public offering price less all or any of the concession.
We understand that you will notify each Underwriter promptly upon the
release of the Securities for public offering as to the amount of Securities
reserved for sale to Selected Dealers and retail purchasers. Securities not so
reserved may be sold by each Underwriter for its own account, except that from
time to time you may, in your discretion, add to the Securities reserved for
sale to Selected Dealers and retail purchasers any Securities retained by an
Underwriter remaining unsold. We agree to notify you from time to time upon
request of the amount of our Securities retained by us remaining unsold. If
all the Securities reserved for offering to Selected Dealers and retail
purchasers are not promptly sold by you, any Underwriter may from time to time,
with your consent, obtain a release of all or any Securities of such
Underwriter then remaining unsold and Securities so released shall thereafter
be deemed not to have been reserved. Securities of any Underwriter so reserved
which remain unsold, or, if sold, have not been paid for at any time prior to
the termination of this Agreement may, in your discretion or upon the request
of such Underwriter, be delivered to such Underwriter for carrying purposes
only, but such Securities shall remain subject to redelivery to you upon demand
for disposition by you until this Agreement is terminated.
We agree that in connection with sales and offers to sell the
Securities, if any, made by us outside the United States or its territories or
possessions, (a) we will furnish to each person to whom any such offer or sale
is made such Prospectus, advertisement or other offering document containing
information relating to the Securities or the Company as may be required under
the laws of the jurisdiction in which such offer or sale is made and (b) we
will furnish to each person to whom any such offer is made a copy of the then
current Preliminary Prospectus and to each person to whom any such sale is made
a copy of the Prospectus referred to in the Underwriting Agreement (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto). Any Prospectus, advertisement or other offering document
(other than any such preliminary Prospectus or Prospectus) furnished by us to
any person in accordance with the preceding sentence and all such additional
offering material, if any, as we
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<PAGE> 5
may furnish to any person (i) shall comply in all respects with the laws of the
jurisdiction in which it is so furnished, (ii) shall be prepared and so
furnished at our sole risk and expense, and (iii) shall not contain information
relating to the Securities or the Company which is inconsistent in any respect
with information contained in the then current Preliminary Prospectus or in the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), as the case may be.
We recognize the importance of a broad distribution of the Securities
among bona fide investors and we agree to use our best efforts to obtain such
broad distribution and to that end, to the extent we deem practicable, to give
priority to small orders.
We agree that we will not sell to any account over which we exercise
discretionary authority any of the Securities which we have agreed to purchase
pursuant to the Underwriting Agreement.
6. Compensation to Representative. We authorize you to charge to
our account, as compensation for your services as Representative in connection
with this offering, including the purchase from the Company of the Securities
and the management of the offering, an amount equal to $_____ per Unit in
respect to each of our Securities.
7. Payment and Delivery. At or about 9:00 a.m., Eastern Time, on
the Closing Dates (including the first Closing Date and any Option Closing
Date, as defined in the Underwriting Agreement), we agree to deliver to you at
your office by wire transfer to the account of the Representative or by a
certified or official bank check payable in New York Clearing House funds to
your order in an amount equal to the initial public offering price, less the
concession to the Selected Dealers in respect of that portion of our Securities
which has been retained by or released to us for direct sales.
In the event that our funds are not received by you when required, you
are authorized, in your discretion, but shall not be obligated, to make payment
for our account pursuant to the Underwriting Agreement by advancing your own
funds. Any such payment by you shall not relieve us from any of our
obligations hereunder or under the Underwriting Agreement.
We authorize you to hold and deliver against payment any of our
Securities which have been sold or reserved for sale to Selected Dealers or
retail purchasers. Any of our Securities not sold or reserved by you as
aforesaid, will be available for delivery to us at your office as soon as
practicable after such Securities have been delivered to you.
Upon the termination of this Agreement, or prior thereto at your
discretion, you will deliver to us any of our Securities reserved by you for
sale to Selected Dealers or retail purchasers but not sold and paid for against
payment by us of an amount equal
5
<PAGE> 6
to the initial public offering price of such Securities, less the concession to
the Selected Dealers in respect thereof.
8. Authority to Borrow. We authorize you to arrange loans for our
account and to execute and deliver any notes or other instruments in connection
therewith, and to pledge as security therefor all or any part of our
Securities, as you may deem necessary or advisable to carry out the purchase,
carrying and distribution of the Securities, and to advance your own funds,
charging current interest rates.
9. Over-allotment; Stabilization. We authorize you, for the
account of each Underwriter, prior to the termination of this Agreement, and
for such longer period as may be necessary to cover any short position incurred
for the accounts of the several Underwriters pursuant to this Agreement, (a) to
over-allot in arranging for sales of Securities to Selected Dealers and others
and, if necessary, to purchase Securities (whether pursuant to exercise of the
option set forth in Section 2(b) of the Underwriting Agreement or otherwise) at
such prices as you may determine for the purpose of covering such
over-allotments, and (b) for the purpose of stabilizing the market in the
Securities, to make purchases and sales of Securities on the open market or
otherwise, for long or short account, on a when-issued basis or otherwise, at
such prices, in such amounts and in such manner as you may determine; provided,
however, that at no time shall our net commitment, either for long or short
account, under this Section exceed 15% of the amount of our Securities. Such
purchases, sales and over-allotments shall be made for the respective accounts
of the several Underwriters as nearly as practicable to their respective
underwriting proportions. We agree to take up on demand at cost any Securities
so purchased for our account and deliver on demand any Securities so sold or
over-allotted for our account. We authorize you to sell for the account of the
Underwriters any Securities purchased pursuant to this Section, upon such terms
as you may deem advisable, and any Underwriter, including yourselves, may
purchase such Securities. You are authorized to charge the respective accounts
of the Underwriters with broker's commissions or dealer's mark-up on purchases
and sales effected by you.
If pursuant to the provisions of the preceding paragraph and prior to
the termination of this Agreement (or prior to such earlier date as you may
have determined) you purchase or contract to purchase for the account of any
Underwriter in the open market or otherwise any Securities which were retained
by, or released to, us for direct sale, or any Securities which may have been
issued in exchange for such Securities, we authorize you either to charge our
account with an amount equal to the concession to Selected Dealers with respect
thereto, which amount shall be credited against the cost of such Securities, or
to require us to repurchase such Securities at a price equal to the total cost
of such purchase, including transfer taxes and broker's commissions or dealer's
mark-up, if any. In lieu of such action you may, in your discretion, sell for
our account the Securities so purchased and debit or credit our account for the
loss or profit resulting from such sale.
6
<PAGE> 7
You will notify us promptly if and when you engage in any
stabilization transaction pursuant to this Section or otherwise and will notify
us of the date of termination of stabilization. We agree to file with you any
reports required of us including "Not as Manager" reports pursuant to Rule
17a-2 under the 1934 Act not later than five business days following the date
upon which stabilization was terminated, and we authorize you to file on our
behalf with the Securities and Exchange Commission any reports required by such
Rule.
10. Limitation on Transactions by Underwriters. Except as
permitted by you, we will not during the term of this Agreement bid for,
purchase, sell or attempt to induce others to purchase or sell, directly or
indirectly, any Securities other than (i) as provided in the Underwriting
Agreement and in this agreement, (ii) purchases from or sales to dealers of the
Securities at the public offering price less all or any part of the reallowance
to dealers or (iii) purchases or sales by us of any Securities as broker or
unsolicited orders for the account of others.
We represent that we have not participated in any transaction
prohibited by the preceding paragraph and that we have at all times complied
with the provisions of Rule 10b-6 and Rule 10b-6A under the 1934 Act applicable
to this offering.
We may, with your prior consent, make purchases of the Securities from
and sales to other Underwriters at the public offering price, less all or any
part of the concession to dealers.
11. Allocation and Payment of Expenses. We understand that all
expenses of a general nature incurred by you, as Representative, in connection
with the purchase, carrying, marketing and sale of the Securities shall be
borne by the Underwriters in accordance with their respective share of the
underwriting obligations. We authorize you to charge our account with our
share, based on our underwriting obligation, of the aforesaid expenses
including all transfer taxes paid of our behalf on sales or transfers made for
our account.
As promptly as possible after the termination of this Agreement, the
accounts arising pursuant hereto shall be settled and paid. Your ascertainment
of all expenses and the apportionment thereof shall be conclusive.
Notwithstanding any settlement or settlements hereunder, we will remain liable
for our share of all expenses and liabilities which may be incurred by or the
accounts of the Underwriters, including any expenses and liabilities referred
to in Sections 13 and 14 hereof, which shall be determined as provided in this
Section.
12. Termination. Unless this Agreement or any provision hereof is
earlier terminated by you and except for provisions herein that contemplate
obligations surviving the termination hereof as noted in the next paragraph,
this Agreement will terminate at the close of business on the 45th day after
the date hereof, but in your discretion may be extended by you for a further
7
<PAGE> 8
period not exceeding 30 days with the consent of the Underwriters who have
agreed to purchase in the aggregate 50% or more of the Securities. No
termination or suspension pursuant to this Section shall affect your authority
to cover any short position under this Agreement.
Upon termination of this Agreement, all authorizations, rights and
obligations hereunder shall cease, except (i) the mutual obligations to settle
accounts under Section 11, (ii) our obligation to pay any transfer taxes which
may be assessed and paid on account of any sales thereunder for our account,
(iii) our obligation with respect to purchases which may be made by you from
time to time thereafter to cover any short position incurred under this
Agreement, (iv) the provisions of Sections 13 and 14 and (v) the obligations of
any defaulting Underwriter, all of which shall continue until fully discharged.
13. Liability of Representative and Underwriters. Neither as
Representative nor individually shall you be under any liability whatsoever to
any other Underwriter nor shall you be under any liability in respect of any
matters connected herewith or action taken by you pursuant hereto, except for
the obligations expressly assumed by you in this Agreement. You shall be under
no liability for or in respect of the value for the Securities or the validity
of the form thereof, the Registration Statement, the Prospectus, or agreements
or other instruments executed by the Company or others; or for or in respect of
the delivery of the Securities; or for the performance by the Company or others
of any agreement on its or their part.
Nothing herein contained shall constitute the several Underwriters an
association, or partners with us or with each other, or, except as herein
expressly provided, render any Underwriter liable for the obligation of any
other Underwriter. The rights, obligations and liabilities of each of the
Underwriters are several, in accordance with their respective obligations, and
not joint. Notwithstanding any settlement of accounts under this Agreement, we
agree to pay our underwriting proportion of the amount of any claim demand or
liability which may be asserted against and discharged by the Underwriters or
any of them, based on the claim that the Underwriters constitute an
association, unincorporated business or other entity, and also to pay our
underwriting proportion of expenses approved by you incurred by the
Underwriters, or any of them, in contesting any such claims, demands or
liabilities. If the Underwriters shall be deemed to constitute a partnership
for income tax purposes, it is the intent of each Underwriter to be excluded
from the application of Subchapter K, Chapter 1, Subtitle A of the Internal
Revenue Code of 1954, as amended. Each Underwriter elects to be so excluded
and agrees not to take any position inconsistent with such election. Each
Underwriter authorizes you, in your discretion, to execute and file on behalf
of the Underwriters such evidence of election as may be required by the
Internal Revenue Service.
14. Indemnification and Future Claims.
8
<PAGE> 9
(a) We agree to indemnify and hold harmless you and each other
Underwriter, and each person, if any, who controls you and such other
Underwriter within the meaning of Section 15 of the Securities Act of 1933, and
to reimburse their expenses, to the extent and upon the terms that we agree to
indemnify and hold harmless the Company and to reimburse expenses as set forth
in the Underwriting Agreement. Our indemnity agreement set forth in this
Section remain in full force and effect regardless of any investigation made by
or on behalf of such other Underwriter or controlling person and shall survive
the delivery of and payment for the Securities and the termination of this
Agreement.
(b) In the event that at any time any claim or claims shall be
asserted against you, as Representative, or otherwise involving the
Underwriters generally, relating to the Registration Statement or any
Preliminary Prospectus or the Prospectus, as such may be from time to time
amended or supplemented, the public offering of the Securities or any of the
transactions contemplated by this Agreement, we authorize you to take such
other action as you shall deem necessary or desirable under the circumstances,
including settlement of any such claim or claims if such course of action shall
be recommended by counsel retained by you. We agree to pay to you on request,
our underwriting proportion of all expenses incurred by you (including, but not
limited to, disbursements and fees of counsel so retained) in investigating and
defending against such claim or claims and our underwriting proportion of any
liability incurred by you in respect of such claim or claims, whether such
liability shall be the result of a judgment or as a result of any such
settlement.
15. Title to Securities. The Securities purchased by, or on
behalf of, the respective Underwriters shall remain the property of such
Underwriters until sold, and title to any such Securities shall not in any
event pass to the Representative by virtue of any of the provisions of this
Agreement.
16. Blue Sky Matters. It is understood that you assume no
responsibility with respect to the right of any Underwriter or other person to
offer or to sell Securities in any jurisdiction, not withstanding any
information which you may furnish as to the jurisdictions under the securities
laws of which it is believed the Securities may be sold.
17. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Florida.
18. Capital Requirements. We confirm that the incurrence by us of
our obligation under this Agreement and under the Underwriting Agreement will
not place us in violation of the net capital requirements of Rule 15c3-1 under
the 1934 Act or of any applicable rules relating to capital requirements of any
securities exchange to which we are subject.
19. Miscellaneous. Any notice from you to us shall be deemed to
have been duly given if telefaxed, telephoned or telegraphed,
9
<PAGE> 10
and confirmed by mail to us at the address set forth in the Underwriters
Questionnaire furnished by us to you. Any notice from us to you shall be
deemed to have been duly given if telefaxed or telegraphed, and confirmed by
mail to you at 7700 West Camino Real, Suite 200, Boca Raton, Florida 33433.
We understand that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"). We hereby confirm that we
are actually engaged in the investment banking or securities business and are
either (i) a member in good standing of the NASD or (ii) a dealer with its
principal place of business located outside the United States, its territories
and its possession and not registered as a broker or dealer under the 1934 Act
who agrees not to make any sales within the United States, its territories or
its possessions or to persons who are nationals thereof or residents therein
(except that we may participate in sales to Selected Dealers and others under
Section 5 of this Agreement). We hereby agree that if we are members of the
NASD, we will comply with all of the provisions of the NASD Conduct Rules. If
we are a foreign dealer, we agree to comply with Rule 2740 of the NASD Conduct
Rules. If we are a foreign dealer and not a member of the NASD, we agree to
comply with the NASD's interpretation with respect to free-riding and
withholding, as though we were a member of the NASD, with the provisions of
Rules 2730 and 2750 of the NASD Conduct Rules, and to comply with Rule 2420 of
the NASD Conduct Rules as that applies to a non-member foreign dealer. In
connection with sales and offers to sell Securities made by us outside the
United States, its territories and possessions (i) we will either furnish to
each person to whom any such sale or offer is made a copy of the then current
Preliminary Prospectus or the Prospectus, as the case may be, or inform such
person that such Preliminary Prospectus or Prospectus will be available upon
request, and (ii) we will furnish to each person to whom any such sale or offer
is made such Prospectus, advertisement or other offering document containing
information relating to the Securities or the Company as may be required under
the law of the jurisdiction in which such sale or offer is made. Any
Prospectus, advertisement or other offering document furnished by us to any
person in accordance with the preceding sentence and any such additional
offering material as we may furnish to any person (i) shall comply in all
respects with the law of the jurisdiction in which it is so furnished, (ii)
shall be prepared and so furnished at our sole risk and expenses and (iii)
shall not contain information relating to the Securities or the Company which
is inconsistent in any respect with the information contained in the then
current preliminary Prospectus or in the Prospectus, as the case may be.
We understand that, in consideration of your services in connection
with the public offering of the Securities, the Company has agreed with you
individually, and not as Representative of the Underwriters (a) to sell to you
the Representative's Warrants referred to in the Underwriting Agreement for the
sum of $10; (b) to pay to you a non- accountable expense allowance referred to
in the Underwriting Agreement; (c) to pay you a financial advisory fee
10
<PAGE> 11
referred to in the Underwriting Agreement; and (d) to enter into the Merger and
Acquisition Agreement (the "M/A Agreement") referred to in the Underwriting
Agreement. In addition, you may, at your sole discretion, elect to exercise
the over-allotment option individually. We confirm to you that we shall make
no claim to the Representative's Warrants (or any offering of the Company's
securities related thereto, or any right to participate in any capacity in any
offering resulting therefrom), any rights related thereto, the Company's
securities underlying the Representative's Warrants, the non-accountable
expense allowance, the financial advisory fee, or, to the over-allotment option
to the extent you elect to exercise such option individually, or the M/A
Agreement. You confirm to us that we shall have no obligation or liabilities
with respect to the purchase of the Representative's Warrants, the exercise
thereof, the Company's securities underlying the Representative's Warrants (or
any offering of the Company's securities related thereto, unless we shall
subsequently agree to become an underwriter for, or otherwise participate in
any such offering) or the non-accountable expense allowance, the financial
advisory agreement, the M/A Agreement, or, the over-allotment option, to the
extent you elect to exercise such option individually.
Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.
Very truly yours,
By:
---------------------------------------
(Attorney-in-fact for each of the
several Underwriters named in
Schedule A to the attached
Underwriting Agreement.)
Confirmed as of the date first
above written:
BARRON CHASE SECURITIES, INC.
By:
-------------------------
Robert T. Kirk, President
11
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
irrevocably constitute and appoint Robert T. Kirk and/or Barron Chase
Securities, Inc., the true and lawful agent and attorney-in-fact of the
undersigned with respect to all matters arising in connection with the
undersigned's acting as one of the Underwriters of the proposed offering of an
aggregate of
900,000 Units
of
General Credit Corporation
(such securities being more fully described in the Registration Statement No.
333-09831) filed by General Credit Corporation pursuant to the Securities Act
of 1933) with full power and authority to execute and deliver for and on behalf
of the undersigned all such agreements, consents and documents in connection
therewith as said agent and attorney-in-fact may deem advisable. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, the power an
authority to execute and deliver an Agreement Among Underwriters relating to
such financing, to agree to increase or decrease the size of the offering to an
amount as shall be approved by Barron Chase Securities, Inc., as Representative
of the Underwriters, and to appoint a substitute or substitutes to act
hereunder with the same power and authority as said agent and attorney-in-fact
would have if personally acting. The undersigned hereby ratifies and confirms
all that said agent and attorney-in-fact, or any substitute or substitutes, may
do by virtue hereof.
WITNESS the due execution hereof at ___________________________________
________________________________________________________________________________
(Street) (City)
this _________ day of __________________, 1997.
________________________________
Firm Name
___________________________ By: ________________________________
Witness Partner, Officer or
Sole Proprietor
(indicate which)
12
<PAGE> 13
CORPORATE ACKNOWLEDGEMENT
STATE OF )
) ss.:
COUNTY OF )
On this ________ day of _________________, 1997, before me personally
came ___________________________________ , to me know, who being by me duly
sworn, deposes and say that he resides at No. _________________________________
________________: that he is the ____________________________ of ______________
____________________, the aforementioned corporation, which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; and that it was so affixed
by order the Board of Directors of said corporation; and that he signed his
name thereto by like order.
_________________________
Notary Public
My Commission Expires:
PARTNERSHIP ACKNOWLEDGEMENT
STATE OF )
) ss.:
COUNTY OF )
On this ________ day of _________________, 1997, before me personally
came ___________________________________ , one of the members of the firm of
________________________________________, to me known and known to me to be the
individual who executed the foregoing instrument and acknowledged that he
executed, and was duly authorized to execute, the same as and for the act and
deed of said firm.
_________________________
Notary Public
My Commission Expires:
______________________________________
Unless prior to 5:00 p.m. Eastern Time, on the date immediately
preceding the proposed public offering date, the Syndicate Department of Barron
Chase Securities, Inc., 7700 West Camino Real, Suite 200, Boca Raton, Florida
33433 receives a telegram or letter from you revoking the Power of Attorney,
the power and authority granted by such Power of Attorney may be exercised in
accordance with the terms thereof.
13
<PAGE> 1
EXHIBIT 2.3
AMENDMENT NO 2. TO AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
("Amendment No. 2") is made as of the 13th day of January, 1997, among NEW YORK
PAYROLL FACTORS, INC., a New York corporation ("Seller"), GENERAL CREDIT
CORPORATION, a New York corporation ("Buyer"), and, only with respect to
Sections 2.1(b) and (c), the final paragraph of Section 2.1, 8.3, 8.4(d), 12.1
and 13 of the Agreement, as that term is hereinafter defined, GERALD SCHULTZ
("Schultz") and GERALD NIMBERG ("Nimberg").
RECITALS
The parties have entered into the Amended and Restated Asset Purchase
Agreement (the "A&R Agreement"), dated as of February 19, 1996, among Gerald
Schultz and Gerald Nimberg ("Nimberg") only with respect to Sections 2.1(b),
2.1(c), 8.3,12 and 13 of the A&R Agreement, Seller and Buyer.
Seller and Buyer also have entered into the Amendment to Amended and
Restated Asset Purchase Agreement ("Amendment No.1"), dated as of September 6,
1996. The A&R Agreement, as amended by Amendment No. 1, is hereinafter
referenced as the Agreement.
The parties desire to further amend the Agreement to the extent and in
the respects set forth in this Amendment No. 2.
NOW THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated herein, and of the mutual promises herein contained, it is
hereby agreed as follows:
1. Section 2.1(a) of the Agreement is hereby amended in its entirety to read
as follows:
$4,700,000, payable in cash to Seller (of which $200,000 has been
paid by Buyer before the date hereof as consideration for a non-
refundable option in favor of Buyer, which option has expired) and
$4,500,000 shall be paid in cash to Seller at the Closing;
2. Section 2.1(b) of the Agreement is hereby amended to substitute 125,000
shares in place of 150,000 shares and to substitute Nimberg in place of Schultz.
3. Sections 2.1(c) and (d) of the Agreement and Exhibit "E" to the Agreement
are hereby deleted in their entirety.
4. Section 2.1 of the Agreement is hereby amended to delete both references
to "Schultz and" in the final paragraph of Section 2.1.
5. Section 8.1 of the Agreement is hereby amended to substitute February 7,
1997 in place of November 15, 1996, and to substitute in place of both provisos
(i.e., the balance of that sentence) the following:
provided, however, that the latest date of the Closing shall be
postponed to May 15, 1997, and said option shall be extended only
in the event that (a) Buyer pays to Seller, on account of and
credited against the cash portion of the Consideration under
Section 2.1(a)
<PAGE> 2
hereof, an additional and non-refundable $225,000 by cashiers of
certified check or confirmation of a wire transfer to Seller, on
or before Wednesday February 19, 1997, and (b) a "red herring"
with respect to the IPO is printed on or before Tuesday, April 8,
1997.
6. Section 8.3(a) of the Agreement is hereby amended to delete the reference
at the beginning of that provisions to "Each of Schultz and."
7. Section 8.4(b) of the Agreement is hereby amended to substitute
$4,500,000 in place of $2,920,000.
8. The text of Section 8.4(c) of the Agreement is hereby deleted in its
entirety, and the text of Section 8.4(c) is "[Intentionally Omitted]" without
re-lettering the subsequent subsections of Section 8.4.
9. Section 8.4(d) of the Agreement is hereby amended to delete the reference
to "Schultz and."
10. Section 12.1 of the Agreement is hereby amended to delete from the
definition therein of "Holder" the reference to "each of Schultz."
11. All references in the Agreement to "this Agreement" shall be deemed to
refer to the Agreement as amended by this Amendment No. 2.
12. Seller may continue using, at its sole cost and expense, the services of
its bookkeeper Li Ju Chen, subject to her consent, for four (4) weeks following
the Closing and thereafter, on a part-time basis, as necessary to close Seller's
books.
13. Except to the extent expressly set forth in this Amendment No. 2, the
Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of
the date first above written.
NEW YORK PAYROLL FACTORS, INC.
as Seller
/s/ Gerald Schultz By: /s/ Gerald Schultz
- -------------------------------- ------------------------------
Gerald Schultz Gerald Schultz, President
GENERAL CREDIT CORPORATION,
as Buyer
/s/ Gerald Nimberg By: /s/ Irwin Zellermaier
- -------------------------------- -------------------------------
Gerald Nimberg Irwin Zellermaier, Chairman
and Chief Executive Officer
and President
2
<PAGE> 1
EXHIBIT 4.3
WARRANT AGREEMENT
Agreement made as of April, 1997, between General Credit
Corporation, a New York corporation, with offices at 211 East 70th Street, New
York, New York ("Company"), and American Stock Transfer & Trust Company, a New
York corporation, with offices at 40 Wall Street, New York, New York 10005
(herein called, the"Warrant Agent").
WHEREAS, the Company has determined to issue and deliver up to
6,210,000 Redeemable Common Stock Purchase Warrants ( the "Warrants")
evidencing the right of the holders thereof to purchase an aggregate of
6,210,000 shares of common stock, $.001 par value per share, of the Company
("Common Stock"), which Warrants are to be issued and delivered in connection
with the Company's initial public offering ("IPO") of Units; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, redemption and exercise of the
Warrants; and
WHEREAS, the Company desires to provide for the form and provisions of
the Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are
necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided herein, the
valid, binding and legal obligations of the Company, and to authorize the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent
to act as agent for the Company for the Warrants, and the Warrant Agent hereby
accepts such appointment and agrees to perform the same in accordance with the
terms and conditions set forth in this Agreement.
2. Warrants.
2.1. Form of Warrant. Each Warrant shall be issued in registered form
only, shall be in substantially the form of Exhibit A hereto, the provisions of
which are incorporated herein and shall be signed by, or bear the facsimile
signature of, the Chairman or President and Secretary or Assistant Secretary of
the Company and shall bear a facsimile of the Company's seal. In the event the
person whose facsimile signature has been placed upon any Warrant shall have
ceased to be Chairman or President and Secretary or Assistant Secretary of the
Company before such Warrant is issued, it may be issued with the same effect as
if he had not ceased to be such at the date of issuance. No Warrant may be
exercised until it has been countersigned by the Warrant Agent as provided in
Section 2.3 hereof.
<PAGE> 2
2.2. Effect of Countersignature. Unless and until countersigned by the
Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect.
2.3. Events for Countersignature. The Warrant Agent shall countersign
a Warrant only upon the occurrence of either of the following events:
(i) if the Warrant is to be issued in exchange or substitution for one
or more previously countersigned Warrants, as hereinafter provided, or
(ii) if the Company instructs the Warrant Agent to do so.
2.4. Registration.
2.4.1. Warrant Register. The Warrant Agent shall maintain books
('Warrant Register"), for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company.
2.4.2. Registered Holder. Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant shall be registered upon the Warrant
Register ("registered holder"), as the absolute owner of such Warrant and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the Warrant Certificate made by anyone other than the Company
or the Warrant Agent), for the purpose of any exercise thereof, and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.
2.5. Detachabilitv of Warrants. The Warrant Agent understands that the
Warrants may be traded separately.
3. Terms and Exercise of Warrants
3.1. Warrant Price. Each Warrant shall, when countersigned by the
Warrant Agent, entitle the registered holder thereof, subject to the provisions
of such Warrant and of this Warrant Agreement, to purchase from the Company one
share of Common Stock for $3.375 per whole share, subject to the adjustments
provided in Section 4 hereof. The term "Warrant Price" as used in this Warrant
Agreement refers to the price per share at which Common Stock may be purchased
at the time a Warrant is exercised.
3.2. Duration of Warrants. A Warrant may be exercised only during the
period ("Exercise Period") commencing on April __, 1997 and terminating at 4:00
p.m., New York, New York time, on April __, 2002; provided, however, that the
Exercise Period of the Warrants shall terminate earlier on the date fixed for
redemption of such Warrants as provided in Section 6 of this Agreement
("Expiration Date"). Each Warrant not exercised on or before the Expiration
Date shall become void, and all rights thereunder and all rights in respect
thereof under
2
<PAGE> 3
this Agreement shall cease at the close of business on the Expiration Date. The
Company has the right, in its sole discretion, to extend the expiration date of
the Warrants on five business days' prior written notice to the holders of the
Warrants.
3.3. Exercise of Warrants.
3.3.1. Payment. A Warrant, when countersigned by the Warrant Agent,
may be exercised by the registered holder thereof by surrendering it, at the
office of the Warrant Agent, or at the office of its successor as Warrant
Agent, in the Borough of Manhattan, City and State of New York, with the
purchase form, as set forth in the Warrant and in substantially the form of
Exhibit A hereto, duly executed, and by paying in full, in lawful money of the
United States, the Warrant Price for each full share of Common Stock as to
which the Warrant is exercised and any and all applicable taxes due in
connection with the exercise of the Warrant, the exchange of the Warrant for
the Common Stock, and the issuance of the Common Stock. Upon exercise of any
Warrant, the Warrant Agent shall promptly remit the payment received for the
Warrant to the Company or its agent, as the Company may direct in writing.
3.3.2. Issuance of Certificates. As soon as practicable after the
exercise of any Warrant, the Company shall issue to the registered holder of
such Warrant a certificate or certificates for the number of full shares of
Common Stock to which he is entitled, registered in such name or names as may
be directed by him, and if such Warrant shall not have been exercised in full,
a new countersigned Warrant for the number of shares as to which such Warrant
shall not have been exercised. Notwithstanding the foregoing, the Company shall
not be obligated to deliver any securities pursuant to the exercise of a
Warrant unless a registration statement under the Securities Act of 1933 with
respect to the securities is effective. Warrants may not be exercised by, or
securities issued to, any registered holder in any state in which such exercise
would be unlawful.
3.3.3. Valid Issuance. All shares of Common Stock issued upon the
proper exercise of a Warrant in conformity with this Agreement shall be validly
issued.
3.3.4. Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the registered holder of record of such shares on the
date on which the Warrant was surrendered, and payment of the Warrant Price was
made, irrespective of the date of delivery of such certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are closed, such person shall be deemed to have become the
holder of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
4. Adjustments.
4.1. Stock Dividends - Split-Ups. If after the date hereof, and
subject to the provisions of Section 4.5 below, the number of outstanding
shares of Common Stock is increased by a stock dividend payable in shares of
Common Stock or by a split-up of shares of Common Stock or other similar event,
then, on the effective date of such stock dividend or split-up, the number of
shares
<PAGE> 4
issuable on exercise of each Warrant shall be increased in proportion to such
increase in outstanding shares and the then applicable Warrant Price shall be
correspondingly decreased.
4.2. Aggregation of Shares. If after the date hereof, and subject to
the provisions of Section 4.5, the number of outstanding shares of Common Stock
is decreased by a consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective date of such
consolidation, combination or reclassification, the number of shares issuable
on exercise of each Warrant shall be decreased in proportion to such decrease
in outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
4.3. Reorganization, etc. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the Warrant holders shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented thereby, such shares of stock, securities, or assets as
may be issued or payable with respect to or in exchange for the number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by the Warrants, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the Warrant holders to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Warrant Price
and of the number of shares purchasable upon the exercise of the Warrants)
shall thereafter be applicable, as nearly as may be in relation to any share of
stock, securities, or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger, or sale unless
prior to the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing such assets, shall assume by written instrument executed and
delivered to the Warrant Agent the obligation to deliver to the Warrant holders
such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, such holders may be entitled to purchase.
4.4. Notices of Changes in Warrant. Upon every adjustment of the
Warrant Price or the number of shares issuable on exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Warrant Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 4.1., 4.2., or 4.3., then, in any
such event, the Company shall give written notice in the manner set forth above
on the record date for such event, or the effective date of such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance of shares. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution, or subscription rights, or shall be entitled to
exchange their Common Stock for stock, securities, or other assets deliverable
upon such
<PAGE> 5
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such event.
4.5. No Fractional Shares. Notwithstanding any provision contained in
this Warrant Agreement to the contrary, the Company shall not issue fractional
shares upon exercise of Warrants. If, by reason of any adjustment made pursuant
to this Section 4, the holder of any Warrant would be entitled, upon the
exercise of such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, purchase such fractional interest,
determined as follows:
(i) If the Common Stock is listed on a National Securities Exchange or
admitted to unlisted trading privileges on such exchange or listed for trading
on the Nasdaq National Market or Nasdaq SmallCap Market, the current value
shall be the last reported sale price of the Common Stock on such exchange on
the last business day prior to the date of exercise of the Warrant or if no
such sale is made on such day, the average of the closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of the Warrant; or;
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
4.6. Form of Warrant. The form of Warrant need not be changed because
of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However,
the Company may at any time in its sole discretion make any change in the form
of Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant hereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.
5. Transfer and Exchange of Warrants.
5.1. Registration of Transfer. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by
the Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant
Agent to the Company from time to time upon request.
<PAGE> 6
5.2. Procedure for Surrender of Warrants. Warrants may be surrendered
to the Warrant Agent, together with a written request for exchange or transfer,
and thereupon the Warrant Agent shall issue in exchange therefor one or more
new Warrants as requested by the registered holder of the Warrants so
surrendered, representing an equal aggregate number of Warrants; provided,
however, that in the event that a Warrant surrendered for transfer bears a
restrictive legend, the Warrant Agent shall not cancel such Warrant and issue
new Warrants in exchange therefor until the Warrant Agent has received an
opinion of counsel for the Company stating that such transfer may be made and
indicating whether the new Warrants must also bear a restrictive legend.
5.3. Fractional Warrants. The Warrant Agent shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a Warrant for a fraction of a Warrant.
5.4. Service Charges. No service charge shall be made for any exchange
or registration of transfer of Warrants.
5.5. Warrant Execution and Countersignature. The Warrant Agent is
hereby authorized to countersign and to deliver, in accordance with the terms
of this Agreement, the Warrants required to be issued pursuant to the
provisions of this Section 5, and the Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrants duly executed on behalf of
the Company for such purpose.
6. Redemption.
6.1. Redemption. The Warrants may be redeemed, at the option of the
Company, as a whole at any time or in part from time to time, after April __,
1997, and prior to their expiration, in any proportion as the Company in its
sole discretion may determine, at the office of the Warrant Agent, upon the
notice referred to in Section 6.2., at the price of $.25 per Warrant
("Redemption Price"), provided that the closing bid price of the Common Stock
as reported on Nasdaq, or the closing sale price, as reported on a national or
regional securities exchange, as applicable, of the shares of the Common Stock
for 30 consecutive trading days ending within 10 days of the notice of
redemption of the Warrants averages in excess of $6.00 per share, subject to
adjustment, and further provided that the Company shall give written notice of
the Company's intent to redeem the Warrants at least five business days prior
to the date of the notice of redemption. Prior to the April __, 1998, the
Warrants will not be redeemable by the Company without the written consent of
Barron Chase Securities, Inc.("Barron"). The provisions of this Section 6.1
shall not be modified, amended or deleted without the prior written consent of
Barron.
6.2. Date Fixed for, and Notice of, Redemption. In the event the
Company shall elect to redeem all or any part of the Warrants, the Company
shall fix a date for the redemption. Notice of redemption shall be mailed by
first class mail, postage prepaid, by the Company or the Company's agent at its
direction not less than 30 days from the date fixed for redemption to the
registered holders of the Warrants to be redeemed at their last addresses as
they shall appear on the registration books. Any notice mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the registered holder received such notice.
<PAGE> 7
6.3. Exercise After Notice of Redemption. The Warrants may be
exercised in accordance with Section 3 of this Agreement at any time after
notice of redemption shall have been given by the Company pursuant to Section
6.2. hereof and prior to the date fixed for redemption. On and after the
redemption date, the record holder of the Warrants shall have no further rights
except to receive, upon surrender of the Warrants, the redemption price.
7. Other Provisions Relating to Rights of Holders of Warrants.
7.1. No Rights as Stockholder. A Warrant does not entitle the
registered holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights or rights to vote or to consent
or to receive notice as stockholders in respect of the meetings of stockholders
or the election of directors of the Company or any other matter.
7.2. Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof, issue a new Warrant of like denomination, tenor, and date as the
Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall
constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any
time enforceable by anyone.
7.3. Reservation of Common Stock. The Company shall at all times
reserve and keep available a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants issued pursuant to this Agreement.
7.4. Registration Statement. The Company has filed with the Securities
and Exchange Commission a Registration Statement No. 333-09831 ("Registration
Statement") on Form SB-2 for the registration, under the Securities Act of
1933, of, among others, the Warrants and the Common Stock issuable upon
exercise of the Warrants.
7.5. Registration of Common Stock. The Company will use its best
efforts to cause the Registration Statement to become effective and to maintain
the effectiveness of such Registration Statement or another registration
statement with respect to such Common Stock underlying the Warrants until the
expiration or redemption of the Warrants in accordance with the provisions of
this Agreement.
8. Concerning the Warrant Agent and Other Matters.
8.1. Payment of Taxes. The Company will from time to time promptly pay
all taxes and charges that may be imposed upon the Company or the Warrant Agent
in respect of the issuance or delivery of shares of Common Stock upon the
exercise of Warrants, but the Company shall not be obligated to pay any
transfer taxes in respect of the Warrants or such shares.
<PAGE> 8
8.2. Resignation, Consolidation, or Merger of Warrant Agent.
8.2.1. Appointment of Successor Warrant Agent. The Warrant Agent, or
any successor to it hereafter appointed, may resign its duties and be
discharged from all further duties and liabilities (other than those incurred
prior to such resignation or discharge) hereunder after giving sixty (60) days'
notice in writing to the Company and may be removed by the Company upon sixty
(60) days' notice. If the office of the Warrant Agent becomes vacant by
resignation or incapacity to act or otherwise, the Company shall appoint in
writing a successor Warrant Agent in place of the Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after it has
been notified in writing of such resignation or incapacity by the Warrant
Agent, then the holder of any Warrant may apply to the Supreme Court of the
State of New York for the County of New York for the appointment of a successor
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or
by such court, shall be a corporation in good standing and having its principal
office in the Borough of Manhattan, City and State of New York, and authorized
under such laws to exercise corporate trust powers and subject to supervision
or examination by federal or state authority. After appointment, any successor
Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.
8.2.2. Notice of Successor Warrant Agent. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.
8.2.3. Merger or Consolidation of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this
Agreement without any further act.
8.2.4. Records. The Warrant Agent shall, upon request by the Company,
deliver to the Company a copy of the transfer records relating to the Warrants
subject to the payment of any amounts required to be paid pursuant to Section
8.3.1.
8.3. Fees and Expenses of Warrant Agent.
8.3.1. Remuneration. The Company agrees to pay the Warrant Agent the
aggregate sum of $500 per month for (i) its services as Warrant Agent hereunder
and (ii) its services as transfer agent to the Company, and to reimburse the
Warrant Agent, upon demand and presentation of appropriate vouchers or
receipts, for the reasonable costs incurred by the Warrant Agent in
<PAGE> 9
connection with its services as Warrant Agent hereunder.
8.3.2. Further Assurances. The Company and the Warrant Agent agree to
perform, execute, acknowledge, and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts, instruments, and
assurances as may reasonably be required by the Warrant Agent or the Company
for the carrying out or performing of the provisions of this Agreement.
8.4. Liability of Warrant Agent.
8.4.1. Reliance on Company Statement. Whenever in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a statement signed
by the Chairman or President of the Company and delivered to the Warrant Agent.
The Warrant Agent may rely upon such statement for any action taken or suffered
in good faith by it pursuant to the provisions of this Agreement.
8.4.2. Indemnity. The Warrant Agent shall be liable hereunder only for
its own negligence or willful misconduct or any actions taken in bad faith. The
Company agrees to indemnify the Warrant Agent and save it harmless against any
and all liabilities, including judgments, costs and reasonable counsel fees,
for anything done or omitted by the Warrant Agent in the execution of this
Agreement except as a result of the Warrant Agent's negligence, willful
misconduct, or bad faith.
8.4.3. Exclusions. The Warrant Agent shall have no responsibility with
respect to the validity or execution of any Warrant (except its
countersignature thereof; nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant; nor shall it be responsible to make any adjustments required under the
provisions of Section 4. hereof or responsible for the manner, method, or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Warrant or as to whether any shares of Common Stock will when
issued be valid and fully paid and nonassessable.
8.5. Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and among other things, shall account promptly to
the Company with respect to Warrants exercised and concurrently account for,
and pay to the Company, all moneys received by the Warrant Agent for the
purchase of shares of the Company's Common Stock through the exercise of
Warrants.
8.6. Right to Consult Counsel. The Warrant Agent may at any time
consult with legal counsel of its selection satisfactory to it (who may be
legal counsel for the Company), and the
<PAGE> 10
Warrant Agent shall incur no liability or responsibility to the Company or to
any registered holder for any action taken, suffered or omitted by it in good
faith in accordance with the opinion or advice of such counsel.
9. Miscellaneous Provisions.
9.1. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of their respective successors and assigns.
9.2. Notices. Any notice, statement or demand authorized by this
Warrant Agreement to be given or made by the Warrant Agent or by the holder of
any Warrant to or on the Company shall be sufficiently given or made if sent by
certified mail, or private courier service, postage prepaid, addressed to the
address as set forth above (until another address is filed in writing by the
Company with the Warrant Agent). Any notice, statement or demand authorized by
this Agreement to be given or made by the holder of any Warrant or by the
Company to or on the Warrant Agent shall be sufficiently given or made if sent
by certified mail or private courier service, postage prepaid, addressed to the
address as set forth above (until another address is filed in writing by the
Warrant Agent with the Company).
9.3. Applicable Law. The validity, interpretation, and performance of
this Agreement and of the Warrants shall be governed in all respects by the
laws of the State of New York.
9.4. Persons Having Rights under this Agreement. Nothing in this
Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the parties hereto and the registered holders
of the Warrants and, for the purposes of Sections 6 hereof, Barron. Barron
shall be deemed to be a third party beneficiary of this Agreement with respect
to Sections 6.1 hereof. All covenants, conditions, stipulations, promises, and
agreements contained in this Warrant Agreement shall be for the sole and
exclusive benefit of the parties hereto (and Barron to the extent set forth
above) and their successors and assigns and of the registered holders of the
Warrants.
9.5. Examination of the Warrant Agreement. A copy of this Agreement
shall be available at all reasonable times at the offices of the Warrant Agent
in the Borough of Manhattan, City and State of New York, for inspection by the
registered holder of any Warrant. The Warrant Agent may require any such holder
to submit his or her Warrant for inspection by it.
9.6. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
9.7. Effect of Headings. The Section headings herein are for
convenience only and are not part of this Warrant Agreement and shall not
affect the interpretation thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto
<PAGE> 11
under their respective corporate seals as of the day and year first above
written.
GENERAL CREDIT CORPORATION
By:
-----------------------------------
Authorized Representative
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:
------------------------------------
Authorized Representative
<PAGE> 12
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. W______ ______Warrants
Cusip No. 369451 11 7
VOID AFTER _______, 2002
REDEEMABLE COMMON STOCK PURCHASE WARRANT CERTIFICATE TO
PURCHASE COMMON STOCK OF
GENERAL CREDIT CORPORATION
This Warrant Certificate certifies that ___________________________________
_____ or registered assigns thereof, is the registered holder of Warrants (the
"Warrants") to purchase shares of common stock, $.001 par value per share (the
"Shares") of General Credit Corporation, a New York corporation (the"Company").
Each Warrant evidenced hereby entities the holder to purchase from the Company
on or before 4:00 p.m., Eastern Time, on , 2002 (the "Expiration Date") one
fully paid and nonassesable Share at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $3.375 per share upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent in New York, New York, but only subject
to the conditions set orth herein and in the Warrant Agreement, dates as of the
Effective Date (the "Warrant Agreement") between the Company and American Stock
Transfer & Trust Company, as Warrant Agent (the"Warrant Agent"). All
capitalized terms used but not defined herein have the meanings set forth in
the Warrant Agreement. Payment of the Exercise Price may be made in cash or by
certified or official bank check payable to the order of the Company. Reference
is hereby made to the further provisions of this Warrant Certificate,
including, without limitation, those set forth on the reverse hereof, and such
further provisions are incorporated herein by reference and will for all
purposes have the same effect as though fully set forth herein. This Warrant
Certificate shall not be valid unless countersigned by the Warrant Agent. This
Warrant Certificate is negotiable. The Warrants may be redeemed as provided in
the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
GENERAL CREDIT CORPORATION
Dated: By:
----------- -------------------------------
By:
-------------------------------
[seal]
<PAGE> 13
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY, as Warrant Agent
By
-----------------------------------
Authorized Officer
[FORM OF REVERSE OF REDEEMABLE COMMON STOCK PURCHASE
WARRANTS]
ELECTION TO PURCHASE
(To Be Executed Upon Exercise of the Warrant)
<PAGE> 14
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase Shares and herewith
tenders in payment for such Shares cash or a certified or official bank check
payable to the order of the Company in the amount of $ e all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares
be registered in the name of ___________ whose address is ___________ and
that such certificate be delivered to whose address is ____________. If said
number of Shares is less than all the Shares purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing Warrants to
purchase the remaining balance of the Shares be registered in the name of
whose address is and that such certificate be delivered to ____________ whose
address is ___________.
The undersigned represents that the exercise of the within Warrant was
solicited by a member of the National Association of Securities Dealers, Inc.
If not solicited by an NASD member, please write "unsolicited" in the space
below. Unless otherwise indicated by listing the name of an NASD member firm,
it will be assumed that the exercise was "unsolicited"
- -------------------------
Dated: X
--------------------- -----------------------------------------
Signature
X
-----------------------------------------
Signature
-----------------------------------------
-----------------------------------------
Address
------------------------------------------
Taxpayer Identification Number(s)
------------------------------------------
Signature(s) Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
If Such Holder desires to transfer the Warrant Certificate
FOR VALUE RECEIVED, ____________hereby sells, assigns and transfers unto
<PAGE> 15
==================================
----------------------------------
----------------------------------
----------------------------------
----------------------------------
[please print or type name and address]
----------------------------------
[please insert social security or other identifying number]
(all)_________ of the Warrants evidenced by this Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _____________________________________________Attorney,
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution.
Dated: X
----------------- ----------------------------------------------
X
----------------------------------------------
Signature(s) Guaranteed
X
----------------------------------------------
<PAGE> 1
EXHIBIT 4.4
REPRESENTATIVE'S UNIT PURCHASE OPTION OR WARRANT AGREEMENT (the
"Representative's Warrant Agreement" or "Agreement"), dated as of ___________,
1997, between General Credit Corporation (the "Company"), and Barron Chase
Securities, Inc. (the "Representative").
WITNESSETH:
WHEREAS, the Representative has agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between
the Company and the Representative, to act as the Representative of the
Underwriters in connection with the Company's proposed public offering of
900,000 Units, each Unit consisting of three shares of Common Stock and six
Common Stock Purchase Warrants, each Common Stock Purchase Warrant ("Public
Warrants") exercisable to purchase one share of Common Stock at a price of
$3.375 per share at any time during the period between the Effective Date and
five years from the Effective Date (the "Public Offering"); and
WHEREAS, the Company proposed to issue to the Representative and/or
persons relating to the Representative as those persons are defined in Rule
2710 of the NASD Conduct Rules (the "Holder"), 90,000 Representative Warrants
to purchase 90,000 Units, each Unit consisting of three shares of Common Stock
("Shares") and six Common Stock Purchase Warrants, each Common Stock Purchase
Warrant ("Underlying Warrant") exercisable to purchase one share of Common
Stock at a price of $3.375 per share at any time during the period between the
Effective Date and five years from the Effective Date. The "Representative
Warrants" are also referred to as the "Warrants". The "Units", the "Shares"
and the "Underlying Warrants" are collectively referred to as the "Warrant
Securities"; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Holders in consideration for, and as part of
the compensation in connection with, the Representative acting as
Representative pursuant to the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of TEN DOLLARS AND NO CENTS ($10.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant and Period.
The Public Offering has been registered under a Registration Statement
on Form SB-2 (File No. 333-09831) and declared effective by the Securities and
Exchange Commission (the "SEC" or
1
<PAGE> 2
"Commission") on _______________, 1997 (the "Effective Date"). This Agreement,
relating to the purchase of the Warrants, is entered into pursuant to the
Underwriting Agreement between the Company and the Representative, as
representative of the Underwriters, in connection with the Public Offering.
Pursuant to the Warrants, the Holders are hereby granted the right to
purchase from the Company, at any time during the period commencing on the
Effective Date and expiring five (5) years thereafter (the "Expiration Time"),
up to 90,000 Units at an initial exercise price (subject to adjustment as
provided in Article 8 hereof) of $16.50 per Unit (165% of the public offering
price) (the "Exercise Price" or "Purchase Price"), each Unit consisting of
three Shares and five non-redeemable Underlying Warrants. Each Underlying
Warrant is exercisable to purchase one (1) share of Common Stock at $3.375 per
share during the five (5) year period commencing on the Effective Date.
Except as specifically otherwise provided herein, the Units, the
Shares and the Underlying Warrants constituting the Warrant Securities shall
bear the same terms and conditions as such securities described under the
caption "Description of Securities" in the Registration Statement, and as
designated in the Company's Articles of Incorporation and any amendments
thereto, and the Underlying Warrants shall be governed by the terms of the
Warrant Agreement executed in connection with the Company's public offering
(the "Warrant Agreement"), except as provided herein, and the Holders shall
have registration rights under the Securities Act of 1933, as amended (the
"Act"), for the Warrants, the Units, the Shares, the Underlying Warrants, and
the shares of Common Stock underlying the Underlying Warrants, as more fully
described in paragraph seven (7) of this Representative's Warrant Agreement.
In the event of any extension or charge of the expiration date or reduction or
change of the exercise price of the Public Warrants, the same such changes to
the Underlying Warrants shall be simultaneously effected, except that the
Underlying Warrants shall expire no later than five (5) years from the
Effective Date.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificate") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth in the
form of Warrant Certificate, attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Full Exercise.
(i) The Holder hereof may effect a cash exercise of the
2
<PAGE> 3
Warrants and/or the Underlying Warrants by surrendering the Warrant
Certificate, together with a Subscription in the form of Exhibit "A"
attached thereto, duly executed by such Holder to the Company, at any
time prior to the Expiration Time, at the Company's principal office,
accompanied by payment in cash or by certified or official bank check
payable to the order of the Company in the amount of the aggregate
purchase price (the "Aggregate Price"), subject to any adjustments
provided for in this Agreement. The aggregate price hereunder for
each Holder shall be equal to the exercise price as set forth in
Section six (6) hereof multiplied by the number of Warrants,
Underlying Warrants or Shares that are the subject of each Holder's
Warrant (as adjusted as hereinafter provided).
(ii) The Holder hereof may effect a cashless exercise of
the Warrants and/or the Underlying Warrants by delivering the Warrant
Certificate to the Company together with a Subscription in the form of
Exhibit "B" attached thereto, duly executed by such Holder, in which
case no payment of cash will be required. Upon such cashless
exercise, the number of Units or Shares to be purchased by each Holder
hereof shall be determined by dividing: (i) the number obtained by
multiplying the number of Units or Shares that are the subject of each
Holder's Warrant Certificate by the amount, if any, by which the then
Market Value (as hereinafter defined) exceeds the Purchase Price; by
(ii) the per share purchase price. In no event shall the Company be
obligated to issue any fractional securities and, at the time it
causes a certificate or certificates to be issued, it shall pay the
Holder in lieu of any fractional securities or shares to which such
Holder would otherwise be entitled, by the Company check, in an amount
equal to such fraction multiplied by the Market Value. The Market
Value shall be determined on a per Unit or Share basis as of the close
of the business day preceding the exercise, which determination shall
be made as follows: (a) if the Units or Common Stock is listed for
trading on a national or regional stock exchange or is included on the
NASDAQ National Market or Small-Cap Market, the average closing sale
price quoted on such exchange or the NASDAQ National Market or
Small-Cap Market which is published in The Wall Street Journal for the
ten (10) trading days immediately preceding the date of exercise, or
if no trade of the Unit or Common Stock shall have been reported
during such period, the last sale price so quoted for the next day
prior thereto on which a trade in the Unit or Common Stock was so
reported; or (b) if the Unit or Common Stock is not so listed,
admitted to trading or included, the average of the closing highest
reported bid and lowest reported ask price as quoted on the National
Association of Securities Dealer's OTC Bulletin Board or in the "pink
sheets" published by the National Daily Quotation Bureau for the first
day immediately preceding the date of exercise on which the Unit or
Common Stock is traded.
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3.2 Partial Exercise. The securities referred to in paragraph
3.1 above also may be exercised from time to time in part by surrendering the
Warrant Certificate in the manner specified in Section 3.1 hereof, except that
with respect to a cash exercise, the Purchase Price payable shall be equal to
the number of securities being purchased hereunder multiplied by the per
security Purchase Price, subject to any adjustments provided for in this
Agreement. Upon any such partial exercise, the Company, at its expense, will
forthwith issue to the Holder hereof a new Warrant Certificate or Warrants of
like tenor calling in the aggregate for the number of securities (as
constituted as of the date hereof) for which the Warrant Certificate shall not
have been exercised, issued in the name of the Holder hereof or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct.
4. Issuance of Certificates.
Upon the exercise of the Warrants and/or the Underlying Warrants, the
issuance of certificates for the shares of Common Stock and/or other securities
shall be made forthwith (and in any event within three (3) business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Sections 5 and 7 hereof) be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the shares
of Common Stock and/or other securities shall be executed on behalf of the
Company by the manual or facsimile signature of the then present Chairman or
Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants.
The Holder of a Warrant Certificate, by acceptance thereof, covenants
and agrees that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for a period of one
(1) year from the Effective
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Date of the Public Offering, except (a) to officers of the Representative or to
officers and partners of the other Underwriters or Selected Dealers
participating in the Public Offering; (b) by will; or (c) by operation of law.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Prices.
The initial exercise price of each Warrant shall be $16.50 per Unit
(165% of the public offering price). The initial exercise price of each
Underlying Warrant shall be $3.375 per share. The adjusted exercise price
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof. The Warrant and the Underlying Warrants are exercisable
during the five (5) year period commencing on the Effective Date.
6.2 Exercise Price.
The term "Exercise Price" herein shall mean the initial exercise price
or the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933.
The Warrants, the Units, the Shares, the Underlying Warrants and the
shares of Common Stock issuable upon exercise of the Underlying Warrants
(collectively the "Registrable Securities") have been registered under the
Securities Act of 1933, as amended (the "Act"). Upon exercise, in part or in
whole, of the Warrants, certificates representing the Shares, the Underlying
Warrants and/or the shares of Common Stock issuable upon exercise of the
Underlying Warrants shall bear the following legend in the event there is no
current registration statement effective with the Commission at such time as to
such securities:
The securities represented by this certificate may not be offered or
sold except pursuant to (i) an effective registration statement under
the Act, (ii) to the extent applicable, Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an exemption
from registration under such Act and applicable state securities laws
is available.
7.2 Piggyback Registration.
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If, at any time commencing after the Effective Date of the offering
and expiring seven (7) years thereafter, the Company prepares and files a
post-effective amendment to the Registration Statement, or a new Registration
Statement under the Act, or files a Notification on Form 1-A or otherwise
registers securities under the Act, or files a similar disclosure document with
the Commission (collectively the "Registration Documents") as to any of its
securities under the Act (other than under a Registration Statement pursuant to
Form S-8), it will give written notice by registered mail, at least thirty (30)
days prior to the filing of each such Registration Document, to the
Representative and to all other Holders of the Registrable Securities of its
intention to do so. If the Representative and/or other Holders of the
Registrable Securities notify the Company within twenty (20) days after receipt
of any such notice of its or their desire to include any such Registrable
Securities in such proposed Registration Documents, the Company shall afford
the Representative and such Holders of such Registrable Securities the
opportunity to have any Registrable Securities registered under such
Registration Documents or any other available Registration Document.
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the filing but
prior to the effective date thereof.
7.3 Demand Registration.
(a) At any time commencing one (1) year after the Effective Date
of the Public Offering, and expiring four (4) years thereafter, the Holders of
Registrable Securities representing more than 50% of such securities at that
time outstanding shall have the right (which right is in addition to the
registration rights under Section 7.2 hereof), exercisable by written notice to
the Company, to have the Company prepare and file with the Commission, on one
occasion, a registration statement and/or such other documents, including a
prospectus, and/or any other appropriate disclosure document as may be
reasonably necessary in the opinion of both counsel for the Company and counsel
for the Representative and Holders, in order to comply with the provisions of
the Act, so as to permit a public offering and sale of their respective
Registrable Securities for nine (9) consecutive months (or such longer period
of time as permitted by the Act) by such Holders and any other Holders of any
of the Registrable Securities who notify the Company within ten (10) days after
being given notice from the Company of such request. A Demand Registration
shall not be counted as a Demand Registration hereunder until such Demand
Registration has been declared effective by the SEC and maintained continuously
effective for a period of at least nine months or such
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<PAGE> 7
shorter period when all Registrable Securities included therein have been sold
in accordance with such Demand Registration, provided that a Demand
Registration shall be counted as a Demand Registration hereunder if the Company
ceases its efforts in respect of such Demand Registration at the request of the
majority Holders making the demand for a reason other than a material and
adverse change in the business, assets, prospects or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by the majority of the Holders to
all other registered Holders of any of the Registrable Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.2 and
subsection (a) of this Section 7.3, at any time commencing one (1) year after
the Effective Date of the offering, and expiring four (4) years thereafter, the
Holders of a majority of the Registrable Securities shall have the right,
exercisable by written request to the Company, to have the Company prepare and
file, on one occasion, with the Commission a registration statement or any
other appropriate disclosure document so as to permit a public offering and
sale for nine (9) consecutive months (or such longer period of time as
permitted by the Act) by any such Holder of Registrable Securities; provided,
however, that the provisions of Section 7.4(b) hereof shall not apply to any
such registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holders participating in the offering
pro-rata.
(d) Any written request by the Holders made pursuant to this
Section 7.3 shall:
(i) specify the number of Registrable Securities which
the Holders intend to offer and sell and the minimum price at which
the Holders intend to offer and sell such securities;
(ii) state the intention of the Holders to offer such
securities for sale;
(iii) describe the intended method of distribution of such
securities; and
(iv) contain an undertaking on the part of the Holders to
provide all such information and materials concerning the Holders and
take all such action as may be reasonably required to permit the
Company to comply with all applicable requirements of the Commission
and to obtain acceleration of the effective date of the registration
statement.
(e) In the event the Company receives from the Holders of any
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<PAGE> 8
Registrable Securities representing more than 50% of such securities at that
time outstanding, a request that the Company effect a registration on Form
S-3 with respect to the Registrable Securities and if Form S-3 is available for
such offering, the Company shall, as soon as practicable, effect such
registration as would permit or facilitate the sale and distribution of the
Registrable Securities as are specified in the request. All expenses incurred
in connection with a registration requested pursuant to this Section shall be
borne by the Company. Registrations effected pursuant to this Section 7.3(e)
shall not be counted as registrations pursuant to Section 7.3(a) and 7.3(c)
hereof.
7.4 Covenants of the Company With Respect to Registration.
In connection with any registration under Section 7.2 or 7.3 hereof,
the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand pursuant to
Section 7.3, and shall use its best efforts to have any such registration
statement declared effective at the earliest practicable time. The Company
will promptly notify each seller of such Registrable Securities and confirm
such advice in writing, (i) when such registration statement becomes effective,
(ii) when any post-effective amendment to such registration statement becomes
effective and (iii) of any request by the SEC for any amendment or supplement
to such registration statement or any prospectus relating thereto or for
additional information.
The Company shall furnish to each seller of such Registrable
Securities such number of copies of such registration statement and of each
such amendment and supplement thereto (in each case including each preliminary
prospectus and summary prospectus) in conformity with the requirements of the
Act, and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities by such seller.
(b) The Company shall pay all costs (excluding transfer taxes, if
any, and fees and expenses of Holder(s)' counsel and the Holder's pro-rata
portion of the selling discount or commissions), fees and expenses in
connection with all registration statements filed pursuant to Sections 7.2 and
7.3(a) hereof including, without limitation, the Company's legal and accounting
fees, printing expenses, blue sky fees and expenses. The Holder(s) will pay
all costs, fees and expenses in connection with any registration statement
filed pursuant to Section 7.3(c). If the Company shall fail to comply with
the provisions of Section 7.3(a), the Company shall, in addition to any other
equitable or other relief available to the Holder(s), be liable for any or all
special and consequential damages sustained by the Holder(s)
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<PAGE> 9
requesting registration of their Registrable Securities.
(c) The Company shall prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be reasonably necessary to keep such
registration statement effective for at least nine months (or such longer
period as permitted by the Act), and to comply with the provisions of the Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the seller or sellers of Registrable Securities set forth in
such registration statement. If at any time the SEC should institute or
threaten to institute any proceedings for the purpose of issuing a stop order
suspending the effectiveness of any such registration statement, the Company
will promptly notify each seller of such Registrable Securities and will use
all reasonable efforts to prevent the issuance of any such stop order or to
obtain the withdrawal thereof as soon as possible. The Company will use its
good faith reasonable efforts and take all reasonably necessary action which
may be required in qualifying or registering the Registrable Securities
included in a registration statement for offering and sale under the securities
or blue sky laws of such states as reasonably are required by the Holder(s),
provided that the Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction. The Company shall use its
good faith reasonable efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities of the United States or any State thereof
as may be reasonably necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities.
(d) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement and each person,
if any, who controls such Holders within the meaning of Section 15 of the Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act,
the Exchange Act or otherwise, arising from such registration statement but
only to the same extent and with the same effect as the provisions pursuant to
which the Company has agreed to indemnify the Representative as contained in
the Underwriting Agreement.
(e) If requested by the Company prior to the filing of any
registration statement covering the Registrable Securities, each of the
Holder(s) of the Registrable Securities to be sold pursuant to
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<PAGE> 10
a registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage
or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from written information furnished by such Holder, or their successors or
assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in the Underwriting
Agreement pursuant to which the Representative has agreed to indemnify the
Company, except that the maximum amount which may be recovered from each Holder
pursuant to this paragraph or otherwise shall be limited to the amount of net
proceeds received by the Holder from the sale of the Registrable Securities.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants or Underlying Warrants prior
to the filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Registrable Securities to be included in any registration
statement filed pursuant to Section 7.3 hereof without the prior written
consent of the Holders of the Registrable Securities representing a majority of
such securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and
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<PAGE> 11
memoranda described below and the managing underwriter copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement and permit each Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
National Association of Securities Dealers, Inc. ("NASD"). Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as any
such Holder shall reasonably request.
(j) With respect to a registration statement filed pursuant to
Section 7.3, the Company, if requested, shall enter into an underwriting
agreement with the managing underwriter, reasonably satisfactory to the
Company, selected for such underwriting by Holders holding a majority of the
Registrable Securities requested to be included in such underwriting. Such
agreement shall be satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders, if required by the Underwriter to be parties to any underwriting
agreement relating to an underwritten sale of their Registrable Securities,
may, at their option, require that any or all the representations, warranties
and covenants of the Company to or for the benefit of such underwriters shall
also be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders and their
intended methods of distribution.
(k) Notwithstanding the provisions of paragraph 7.2 or paragraph
7.3 of this Agreement, the Company shall not be required to effect or cause the
registration of Registrable Securities pursuant to paragraph 7.2 or paragraph
7.3 hereof if, within thirty (30) days after its receipt of a request to
register such Registrable Securities (i) counsel for the Company delivers an
opinion to the Holders requesting registration of such Registrable Securities,
in form and substance satisfactory to counsel to such Holder(s), to the effect
that the entire number of Registrable Securities proposed to be sold by such
Holder(s) may otherwise be sold, in the manner proposed by such Holder(s),
without registration under the Securities Act, or (ii) the SEC shall have
issued a no-action position, in form and substance satisfactory to counsel for
the Holder(s) requesting registration of such Registrable Securities, to the
effect that the entire number of Registrable Securities proposed to be sold by
such Holder(s) may be
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sold by it, in the manner proposed by such Holder(s), without registration
under the Securities Act.
(l) After completion of the Public Offering, the Company shall
not, directly or indirectly, enter into any merger, business combination or
consolidation in which (a) the Company shall not be the surviving corporation
and (b) the stockholders of the Company are to receive, in whole or in part,
capital stock or other securities of the surviving corporation, unless the
surviving corporation shall, prior to such merger, business combination or
consolidation, agree in writing to assume the obligations of the Company under
this Agreement, and for that purpose references hereunder to "Registrable
Securities" shall be deemed to include the securities which the Holders would
be entitled to receive in exchange for Registrable Securities under any such
merger, business combination or consolidation, provided that to the extent such
securities to be received are convertible into shares of Common Stock of the
issuer thereof, then any such shares of Common Stock as are issued or issuable
upon conversion of said convertible securities shall also be included within
the definition of "Registrable Securities".
8. Adjustments to Exercise Price and Number of Securities.
8.1 Adjustment for Dividends, Subdivisions, Combinations or
Reclassifications.
In case the Company shall (a) pay a dividend or make a distribution in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (b) subdivide its outstanding shares of Common Stock into
a greater number of shares, (c) combine its outstanding shares of Common Stock
into a smaller number of shares, or (d) issue by reclassification of its shares
of Common Stock any shares of capital stock of the Company; then, and in each
such case, the per share Exercise Price and the number of Warrant Securities in
effect immediately prior to such action shall be adjusted so that the Holder of
this Warrant thereafter upon the exercise hereof shall be entitled to receive
the number and kind of shares of the Company which such Holder would have owned
immediately following such action had this Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this Section shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this Section, the Holder of this Warrant shall
become entitled to receive shares of two or more classes of capital stock of
the Company, the Board of Directors of the Company (whose determination shall
be conclusive) shall determine the allocation of the adjusted Exercise Price
between or among shares of such class of capital stock.
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Immediately upon any adjustment of the Exercise Price pursuant to this
Section, the Company shall send written notice thereof to the Holder of Warrant
Certificates (by first class mail, postage prepaid), which notice shall state
the Exercise Price resulting from such adjustment, and any increase or decrease
in the number of Warrant Securities to be acquired upon exercise of the
Warrants, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
8.2 Adjustment For Reorganization, Merger or Consolidation.
In case of any reorganization of the Company or consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental Warrant agreement providing that the Holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the
number of shares of Common Stock of the Company for which such warrant might
have been exercised immediately prior to such reorganization, consolidation,
merger, conveyance, sale or transfer. Such supplemental Warrant agreement
shall provide for adjustments which shall be identical to the adjustments
provided in Section 8 and such registration rights and other rights as provided
in this Agreement. The Company shall not effect any such consolidation,
merger, or similar transaction as contemplated by this paragraph, unless prior
to or simultaneously with the consummation thereof, the successor corporation
(if other than the Company) resulting from such consolidation or merger or the
corporation purchasing, receiving, or leasing such assets or other appropriate
corporation or entity shall assume, by written instrument executed and
delivered to the Holders, the obligation to deliver to the Holders, such shares
of stock, securities, or assets as, in accordance with the foregoing
provisions, such holders may be entitled to purchase, and to perform the other
obligations of the Company under this Agreement. The above provision of this
Subsection shall similarly apply to successive consolidations or successively
whenever any event listed above shall occur.
8.3 Dividends and Other Distributions.
In the event that the Company shall at any time prior to the exercise
of all of the Warrants and/or Underlying Warrants distribute to its
stockholders any assets, property, rights, evidences of indebtedness,
securities (other than a distribution
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<PAGE> 14
made as a cash dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the jurisdictions of
incorporation of the Company), whether issued by the Company or by another, the
Holders of the unexercised Warrants shall thereafter be entitled, in addition
to the shares of Common Stock or other securities and property receivable upon
the exercise thereof, to receive, upon the exercise of such Warrants, the same
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of
such distribution as if the Warrants had been exercised immediately prior to
such distribution. At the time of any such distribution, the Company shall
make appropriate reserves to ensure the timely performance of the provisions of
this subsection or an adjustment to the Exercise Price, which shall be
effective as of the day following the record date for such distribution.
8.4 Adjustment in Number of Securities.
Upon each adjustment of the Exercise Price pursuant to the provisions
of this Section 8, the number of securities issuable upon the exercise of each
Warrant and/or Underlying Warrant shall be adjusted to the nearest full amount
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of securities issuable upon exercise of the
Warrants and/or the Underlying Warrants immediately prior to such adjustment
and dividing the product so obtained by the adjusted Exercise Price.
8.5 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made if the amount of
said adjustment shall be less than 5 cents ($.05) per Share, provided, however,
that in such case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least 5 cents ($.05) per Share.
8.6 Accountant's Certificate of Adjustment.
In each case of an adjustment or readjustment of the Exercise Price or
the number of any securities issuable upon exercise of the Warrants and/or
Underlying Warrants, the Company, at its expense, shall cause independent
certified public accountants of recognized standing selected by the Company
(who may be the independent certified public accountants then auditing the
books of the Company) to compute such adjustment or readjustment in accordance
herewith and prepare a certificate showing such adjustment or readjustment, and
shall mail such certificate, by first class mail, postage prepaid, to any
Holder of the Warrants and/or Underlying Warrants at the Holder's address as
shown on the Company's books.
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The certificate shall set forth such adjustment or readjustment, showing in
detail the facts upon which such adjustment or readjustment is based including,
but not limited to, a statement of (i) the Exercise Price at the time in
effect, and (ii) the number of additional securities and the type and amount,
if any, of other property which at the time would be received upon exercise of
the Warrants and/or Underlying Warrants.
8.7 Adjustment of Underlying Warrant Exercise Price.
With respect to any of the Underlying Warrants whether or not the
Underlying Warrants have been exercised (or are exercisable) and whether or not
the Underlying Warrants are issued and outstanding, the Underlying Warrant
exercise price and the number of shares of Common Stock underlying such
Underlying Warrants shall be automatically adjusted in accordance with the
Warrant Agreement between the Company and the Company's transfer agent, upon
occurrence of any of the events relating to adjustments described therein.
Thereafter, the Underlying Warrants shall be exercisable at such adjusted
Underlying Warrant exercise price for such adjusted number of underlying shares
of Common Stock or other securities, properties or rights.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of securities in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interest.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock upon the exercise of the Warrants and/or
Underlying Warrants, nor shall it be required to issue script or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests may be eliminated, at the Company's option, by rounding
any fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights, or in lieu thereof
15
<PAGE> 16
paying cash equal to such fractional interest multiplied by the current value
of a share of Common Stock.
11. Reservation and Listing.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants and the Underlying Warrants, such number of shares of
Common Stock or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and/or the Underlying Warrants, and payment of the
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Warrants and/or Underlying Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants and the Underlying Warrants to be listed and
quoted (subject to official notice of issuance) on all securities Exchanges and
Systems on which the Common Stock and/or the Public Warrants may then be listed
and/or quoted, including Nasdaq.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holders of the Warrants and/or Underlying Warrants the right to vote
or to consent or to receive notice as a stockholder in respect of any meetings
of stockholders for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any
time prior to the expiration of the Warrants and/or Underlying Warrants and
their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
16
<PAGE> 17
merger) or a sale of all or substantially all of its property, assets
and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date of the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notices shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. Underlying Warrants.
The form of the certificate representing the Underlying Warrants (and
the form of election to purchase shares of Common Stock upon the exercise of
the Underlying Warrants and the form of assignment printed on the reverse
thereof) shall be substantially as set forth in the exhibits to the Warrant
Agreement. Subject to the terms of this Agreement, one (1) Underlying Warrant
shall evidence the right to initially purchase one (1) fully-paid and
non-assessable share of Common Stock at an initial purchase price of $3.375
during the five (5) year period commencing on the Effective Date of the
Registration Statement, at which time the Underlying Warrants, unless the
exercise period has been extended, shall expire. The exercise price of the
Underlying Warrants and the number of shares of Common Stock issuable upon the
exercise of the Underlying Warrants are subject to adjustment, whether or not
the Warrants have been exercised and the Underlying Warrants have been issued,
in the manner and upon the occurrence of the events set forth in the Warrant
Agreement, which is hereby incorporated herein by reference and made a part
hereof as if set forth in its entirety herein. Subject to the provisions of
this Agreement and upon issuance of the Underlying Warrants, each registered
holder of such Underlying Warrant shall have the right to purchase from the
Company (and the Company shall issue to such registered holders) up to the
number of fully-paid and non-assessable shares of Common Stock (subject to
adjustment as provided in the Warrant Agreement) set forth in such Warrant
Certificate, free and clear of all preemptive rights of stockholders, provided
that such registered Holder complies with the terms governing exercise of the
Underlying Warrant set forth in the Warrant Agreement, and pays the applicable
exercise price, determined in accordance with the terms of the Warrant
Agreement. Upon exercise of the Underlying Warrants, the Company shall
forthwith issue to the registered Holder of any such
17
<PAGE> 18
Underlying Warrant in his name or in such name as may be directed by him,
certificates for the number of shares of Common Stock so purchased. Except as
otherwise provided herein and in this Agreement, the Underlying Warrants shall
be governed in all respects by the terms of the Warrant Agreement. The
Underlying Warrants shall be transferrable in the manner provided in the
Warrant Agreement, and upon any such transfer, a new Underlying Warrant
certificate shall be issued promptly to the transferee. The Company covenants
to send to each Holder, irrespective of whether or not the Warrants have been
exercised, any and all notices required by the Warrant Agreement to be sent to
holders of Underlying Warrants.
14. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given when personally
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of any of the Registrable
Securities, to the address of such Holder as shown on the books of the
Company; or
(b) If to the Company, to the address set forth below or
to such other address as the Company may designate by notice to the
Holders.
Irwin Zellermaier, President
General Credit Corporation
211 E. 70th Street
New York, New York 10021
With a Copy To: Charles J. Rennert, Esq.
Berman Wolfe & Rennert, P.A.
International Place, 35th Floor
100 Southeast Second Street
Miami, Florida 33131-2130
15. Entire Agreement: Modification.
This Agreement (and the Underwriting Agreement and Warrant Agreement
to the extent applicable) contain the entire understanding between the parties
hereto with respect to the subject matter hereof, and the terms and provisions
of this Agreement may not be modified, waived or amended except in a writing
executed by the Company and the Holders of at least a majority of Registrable
Securities (based on underlying numbers of shares of Common Stock). Notice of
any modification, waiver or amendment shall be promptly provided to any Holder
not consenting to such modification, waiver or amendment.
18
<PAGE> 19
16. Successors.
All the covenants and provisions of this Agreement shall be binding
upon and inure to the benefit of the Company, the Holders and their respective
successors and assigns hereunder.
17. Termination.
This Agreement shall terminate at the close of business on
______________, 2004. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination.
18. Governing Law; Submission to Jurisdiction.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Florida and for all
purposes shall be construed in accordance with the laws of said State without
giving effect to the rules of said State governing the conflicts of laws. The
Company, the Representative and the Holders hereby agree that any action,
proceeding or claim arising out of, or relating in any way to, this Agreement
shall be brought and enforced in a federal or state court of competent
jurisdiction with venue only in the Fifteenth Judicial Circuit Court in and for
Palm Beach County, Florida or the United States District Court for the Southern
District of Florida, West Palm Beach Division, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company, the
Representative and the Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to
be served upon any of the Company, the Representative and the Holders (at the
option of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
14 hereof. Such mailing shall be deemed personal service and shall be legal
and binding upon the party so served in any action, proceeding or claim.
19. Severability.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
20. Captions.
The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive
effect.
19
<PAGE> 20
21. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Representative and any other
registered Holder(s) of the Warrant Certificates or Registrable Securities any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Representative and any other Holder(s) of the Warrant Certificates or
Registrable Securities.
22. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
GENERAL CREDIT CORPORATION
By: /s/ Irwin Zellermaier
--------------------------------------
Irwin Zellermaier, President
Attest:
- --------------------------------
David Bader, Secretary
BARRON CHASE SECURITIES, INC.
By: /s/ Robert Kirk
--------------------------------------
Robert Kirk, President
20
<PAGE> 21
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M, EASTERN TIME ON ______________, 200___
NO. W-_____
________ Warrants
or
________ Underlying
Warrants
This Warrant Certificate certifies that ________________, or
registered assigns, is the registered holder of _______ Warrants or __________
Underlying Warrants of General Credit Corporation (the "Company"). Each Warrant
permits the Holder hereof to purchase initially, at any time from ______, 1997
("Purchase Date") until 5:30 p.m. Eastern Time on _______, 2002 ("Expiration
Date"), one (1) Unit of the Company at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $16.50 per Unit (165%
of the public offering price). Each Underlying Warrant permits the Holder the
reof to purchase, at any time from the Purchase Date until five (5) years from
the Purchase Date, one (1) share of the Company's Common Stock at the Exercise
Price of $3.375 per share.
Any exercise of Warrants and/or Underlying Warrants shall be effected
by surrender of this Warrant Certificate and payment of the Exercise Price at
an office or agency of the Company, but subject to the conditions set forth
herein and in the Representative's Warrant Agreement dated as of _______, 1997,
between the Company and Barron Chase Securities, Inc. (the "Representative's
Warrant Agreement"). Payment of the Exercise
21
<PAGE> 22
Price shall be made by certified check or official bank check in New York
Clearing House funds payable to the order of the Company in the event there is
no cashless exercise pursuant to Section 3.1(ii) of the Representative's
Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., Eastern Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation or rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the
occurrence of certain events, the Exercise Price and the type and/or number of
the Company's securities issuable thereupon may, subject to certain conditions,
be adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Exercise Price
and the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter, or otherwise impair,
the rights of the holder as set forth in the Representative's Warrant
Agreement.
Upon due presentment for registration or transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
22
<PAGE> 23
All terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of ______________, 1997
GENERAL CREDIT CORPORATION
By:
----------------------------------
Irwin Zellermaier, President
Attest:
- --------------------------------
David Bader, Secretary
23
<PAGE> 24
EXHIBIT "A"
FORM OF SUBSCRIPTION (CASH EXERCISE)
(To be signed only upon exercise of Warrant)
TO: Irwin Zellermaier, President
General Credit Corporation
211 E. 70th Street
New York, New York 10021
The undersigned, the Holder of Warrant Certificate number ___ (the
"Warrant"), representing _________ Warrants and/or ___________ Underlying
Warrants of General Credit Corporation (the "Company"), which Warrant
Certificate is being delivered herewith, hereby irrevocably elects to exercise
the purchase right provided by the Warrant Certificate for, and to purchase the
reunder, ___________ Units or _____________ Shares of the Company, and
herewith makes payment of $_________ therefor, and requests that the
certificates for such securities be issued in the name of, and delivered to, __
______________________________________________________________, whose address is
________________________________________________________________________________
________________________________________________________, all in accordance
with the Representative's Warrant Agreement and the Warrant Certificate.
Dated: _______________________
________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
________________________________
________________________________
(Address)
24
<PAGE> 25
EXHIBIT "B"
FORM OF SUBSCRIPTION (CASHLESS EXERCISE)
TO: Irwin Zellermaier, President
General Credit Corporation
211 E. 70th Street
New York, New York 10021
The undersigned, the Holder of Warrant Certificate number ____________
(the "Warrant"), representing ________ Warrants and/or __________ Underlying
Warrants General Credit Corporation (the "Company"), which Warrant is being
delivered herewith, hereby irrevocably elects the cashless exercise of the
purchase right provided by the Representative's Warrant Agreement and the
Warrant Certificate for, and to purchase thereunder, __________ Units or _____
_____ Shares of the Company in accordance with the formula provided at Section
three (3) of the Representative's Warrant Agreement. The undersigned requests
that the certificates for such Units or Shares be issued in the name of, and
delivered to, _________________________________________________________________
_____________________________, whose address is,_______________________________
_______________________________________________________________________________
_____________________________, all in accordance with the Warrant Certificate.
Dated: _______________________
________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
________________________________
________________________________
(Address)
25
<PAGE> 26
(FORM OF ASSIGNMENT)
(To be exercised by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________________________
hereby sells, assigns and transfers unto
(Print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
____________________ Attorney, to transfer the within Warrant Certificate on
the books of the within-named Company, and full power of substitution.
Dated: Signature:
_______________________ _______________________________
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant Certificate)
_______________________________
(Insert Social Security or
Other Identifying Number of
Assignee)
26
<PAGE> 1
EXHIBIT 5.1
BERMAN WOLFE & RENNERT, P.A.
Attorneys and Counselors
35th Floor, International Place
100 Southeast Second Street
Miami, Florida 33131-2130
Charles J. Rennert Phone (305) 577-4177
Fax (305) 373-6036
March 19, 1997
General Credit Corporation
211 East 70th Street
New York, NY 10021
Re: General Credit Corporation
SEC File No. 333-09831
Gentlemen:
We have acted as counsel to General Credit Corporation, a New York
corporation (the "Company"), in connection with the proposed issuance and sale
of the following securities registered on a Form SB-2 Registration Statement,
SEC File No. 333-09831 (the "Registration Statement"), filed with the U.S.
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Act"):
1. 900,000 Units (the "Units"), each Unit consisting of three shares of
Common Stock, par value $.001 per share (the "Common Stock") and six
Purchase Warrants (each a "Purchase Warrant") to purchase six shares
of Common Stock;
2. 2,700,000 shares of Common Stock underlying the Units;
3 5,400,000 Purchase Warrants underlying the Units;
4. 5,400,000 shares of Common Stock to be issued upon exercise of the
Purchase Warrants;
5. 135,000 Units reserved for the over-allotment option;
6. 405,000 shares of Common Stock, to be issued upon exercise of the
over-allotment option;
7. 810,000 Purchase Warrants, to be issued upon exercise of the over-
allotment option;
<PAGE> 2
GENERAL CREDIT CORPORATION
MARCH 19, 1997
PAGE 2
8. 810,000 shares of Common Stock, to be issued upon exercise of the
Purchase Warrants issuable upon exercise of the over-allotment option;
9. 90,000 Representative Options ("RPOs"), to be issued and sold to
Barron Chase Securities, Inc. (the "Representative"), each RPO
entitling the holder thereof to purchase one Underwriter Unit (the
"Underwriter Units");
10. 90,000 Underwriter Units, each Underwriter Unit consisting of three
shares of Common Stock and six Underwriter Purchase Warrants (the
"Underwriter Purchase Warrants");
11. 270,000 shares of Common Stock underlying the Underwriter Units;
12. 540,000 Underwriter Purchase Warrants underlying the Underwriter
Units; and
13. 540,000 shares of Common Stock underlying the Underwriter Purchase
Warrants.
In rendering the opinion expressed herein, we have examined the following
documents and instruments:
1. The Registration Statement, the exhibits filed in connection
therewith, and the form of Prospectus contained therein;
2. The Company's Certificate of Incorporation, as amended, as certified
by the Secretary of State of New York;
3. The Company's Amended and Restated Bylaws; and
4. The resolutions adopted by the Board of Directors of the Company dated
as of July 31, 1996 and February 15, 1997 authorizing the issuance and
sale of the Company's securities pursuant to the terms contained in
the Registration Statement.
In addition, we have obtained from public officials and from officers of
the Company certificates, agreements and assurances and have examined originals
or copies, identified to our satisfaction, of such other certificates,
agreements and other assurances as we considered necessary for the purposes of
rendering the opinion hereinafter expressed.
We have also consulted with officers and directors of the Company and have
obtained such representations with respect to the matters of fact as we have
deemed necessary or advisable for
<PAGE> 3
GENERAL CREDIT CORPORATION
MARCH 19, 1997
PAGE 3
purposes of rendering the opinion hereinafter expressed. We have not
independently verified the factual statements made to us in connection
therewith, nor the veracity of such representations.
With respect to matters regarding New York law, this opinion is given in
reliance upon the opinion of Robert P. Gaudiosi, Esq.
Based on the foregoing, it is our opinion that:
After the Commission has declared the Registration Statement to be
effective (such Registration Statement as is finally declared effective and the
form of Prospectus contained therein being hereinafter referred to as the
"Registration Statement" and the "Prospectus," respectively) and when the
applicable provisions of the "Blue Sky" or other state securities laws shall
have been complied with, the Company's securities covered by the Registration
Statement, upon receipt of payment therefor, will constitute legally issued
securities of the Company, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference of this law firm in the Prospectus
under the heading "Legal Matters." In giving this consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
Berman Wolfe & Rennert, P.A.
By: /s/ Charles J. Rennert
---------------------------
Charles J. Rennert
CJR:ss
<PAGE> 1
EXHIBIT 10.18
PRIVATE PLACEMENT MEMORANDUM
LOAN UNIT VALUE: $15,000 DATE: SEPTEMBER 23, 1996
General Credit Corporation ("GCC") promises to repay Walter G. Romano, Jr.
("Lender") at 119 Hillsvale Road, Edinburg, PA 16116, or such place as the
Lender may designate in writing, the sum of Fifteen Thousand ($15,000) with
interest which will commence to accrue starting on September 23, 1996.
The unpaid principal and accrued interest shall be payable at the closing
of the public offering of GCC's securities. All payments on this obligation
shall be applied first in payment of accrued interest and any remainder in
payment of principal.
Interest will start to accrue starting September 23, 1996 on the unpaid
principal at the rate of 12% annually.
All payments of principal and interest on this obligation shall be paid in
the legal currency of the United States. GCC waives presentment for payment,
protest and notice of protest and nonpayment of this obligation.
No renewal or extension of this obligation, delay in enforcing any right
Lender of this obligation shall affect the liability of GCC. All rights of the
lender under this obligation are cumulative and may be exercised concurrently at
the Lender's option.
This Obligation shall be construed in accordance with the laws of the State
of New York. If this agreement is not completed within six (6) months, the loan
will be returned with interest.
Signed and attested to this 23rd day of September 1996 at
211 East 70th Street, New York, NY 10021
General Credit Corporation
BY: /s/ IRWIN ZELLERMAIER, PRES.
----------------------------------
Irwin Zellermaier
President
<PAGE> 1
EXHIBIT 10.19
PRIVATE PLACEMENT MEMORANDUM
LOAN UNIT VALUE: $25,000 DATE: SEPTEMBER 30, 1996
General Credit Corporation ("GCC") promises to repay Nick Belson ("Lender")
at 323 Repp Road, New Kensington, PA 15068, or such place as the Lender may
designate in writing, the sum of Twenty Five Thousand ($25,000) with interest
which will commence to accrue starting on September 30, 1996.
The unpaid principal and accrued interest shall be payable at the closing
of the public offering of GCC's securities. All payments on this obligation
shall be applied first in payment of accrued interest and any remainder in
payment of principal.
Interest will start to accrue starting September 30, 1996 on the unpaid
principal at the rate of 12% annually.
All payments of principal and interest on this obligation shall be paid in
the legal currency of the United States. GCC waives presentment for payment,
protest and notice of protest and nonpayment of this obligation.
No renewal or extension of this obligation, delay in enforcing any right
Lender of this obligation shall affect the liability of GCC. All rights of the
Lender under this obligation are cumulative and may be exercised concurrently at
the Lender's option.
This Obligation shall be construed in accordance with the laws of the State
of New York. If this agreement is not completed within six (6) months, the loan
will be returned with interest.
Signed and attested to this 30th day of September 1996 at
211 East 70th Street, New York, NY 10021
General Credit Corporation
BY: /s/ IRWIN ZELLERMAIER, PRES.
----------------------------------
Irwin Zellermaier
President
<PAGE> 1
EXHIBIT 10.20
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Ronald M. Stein (the "Holder"), having an
address located at 6520 Allison Road, Miami Beach, FL 33141, the principal sum
of $30,000, at the Company's offices, or such other address as the Holder may
provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
<PAGE> 2
3. PREPAYMENT PRIVILEGE :
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
2
<PAGE> 3
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
3
<PAGE> 4
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
4
<PAGE> 5
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
5
<PAGE> 6
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: -----------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
----------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.21
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Robert Stein (the "Holder"), having an
address located at 20655 N.E. 25th Place, North Miami Beach, FL 33180, the
principal sum of $30,000, at the Company's offices, or such other address as the
Holder may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
8
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
9
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
10
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
11
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: --------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
--------------------------------
David Bader, Secretary
12
<PAGE> 1
EXHIBIT 10.22
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Eric Stein (the "Holder"), having an address
located at 20655 N.E. 25th Place, North Miami Beach, FL 33180, the principal sum
of $30,000, at the Company's offices, or such other address as the Holder may
provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of.February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: ---------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
----------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.23
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Kinserd Limited Partnership (the "Holder"),
having an address located at 4700 Davis Road, Coral Gables, FL 33143, the
principal sum of $30,000, at the Company's offices, or such other address as the
Holder may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
--------------------------------
ATTEST: Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
----------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.24
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of S. J. Workman (the "Holder"), having an
address located at 3370 North 47th Avenue, Hollywood, FL 33021, the principal
sum of $30,000, at the Company's offices, or such other address as the Holder
may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
--------------------------------
ATTEST: Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
----------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.25
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Dan Cohen (the "Holder"), having an address
located at 2480 N.W. 41st Street, Boca Raton, FL 33431, the principal sum of
$30,000, at the Company's offices, or such other address as the Holder may
provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: -------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
------------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.26
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Jeffrey D. Greenhawt (the "Holder"), having
an address located at 3571 North 31st Avenue, Hollywood, FL 33021, the principal
sum of $30,000, at the Company's offices, or such other address as the Holder
may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Companys
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor," as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: -----------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
--------------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.27
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Jack S. Greenman (the "Holder"), having an
address located at 21171 N.E. 21st Place, North Miami Beach, FL 33179, the
principal sum of $30,000, at the Company's offices, or such other address as the
Holder may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Companys
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor," as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: ----------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
--------------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.28
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Thomas Zotos (the "Holder"), having an
address located at 20655 N.E. 25th Place, North Miami Beach, FL 33180, the
principal sum of $30,000, at the Company's offices, or such other address as the
Holder may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST: ----------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
----------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.29
THE SECURITIES REPRESENTED BY THIS INSTRUMENT WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR COMPARABLE STATE LAWS IN
RELIANCE ON THE PROVISIONS OF SECTION 3(B), 4(2) OR 4(6) OF THE ACT, AND
COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES MAY NOT BE RESOLD,
DISTRIBUTED, TRANSFERRED, PLEDGED, CONVEYED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE FEDERAL, STATE OR FOREIGN LAWS, OR THE
TRANSACTION IS DEMONSTRATED TO BE EXEMPT FROM SUCH REQUIREMENTS TO THE COMPANY'S
SATISFACTION.
GENERAL CREDIT CORPORATION
(a New York corporation)
NON-NEGOTIABLE UNSECURED CORPORATE PROMISSORY NOTE
$30,000
February 28, 1997
FOR VALUE RECEIVED, General Credit Corporation, a New York corporation
with offices at 211 East 70th Street, New York, NY 10021 (the "Company"),
promises to the pay to the order of Reynaldo Martinez (the "Holder"), having an
address located at 3992 S.W. 136th Avenue, Miami, Florida 33175, the principal
sum of $30,000, at the Company's offices, or such other address as the Holder
may provide for such purpose, subject to the following terms:
1. BASIC TERMS:
(a) This Corporate Promissory Note ("Note") shall bear interest at the rate of
18% per annum. Interest only shall accrue and be paid monthly commencing
June 1, 1997 and each month thereafter on or before the tenth of the month
(the "Monthly Payment"). A late fee equal to 1.5% of the principal amount
owing on the Note shall be paid in the event the Monthly Payment is not
delivered on or prior to the tenth of the month. All accrued but unpaid
interest as well as the principal amount of this Note shall be paid in one
installment on December 31, 2001.
(b) This Note is non-negotiable and no transfers or divisions of this Note will
be effected by the Company.
2. COLLATERAL:
This Note is an unsecured, general obligation of the Company.
3. PREPAYMENT PRIVILEGE:
<PAGE> 2
(a) This Note may not be repaid in whole or in part except as herein
specifically provided. This Note may be prepaid in whole, but not in part,
provided that the Company pays to the Holder at the time of such prepayment
an additional amount (the "Amount") as a prepayment premium in accordance
with the following schedule:
<TABLE>
<CAPTION>
Time of Prepayment Amount of Prepayment Penalty
------------------ ----------------------------
<S> <C>
On or prior to October 31, 1997 22 months of accrued interest
From November 1, 1997 through February 10, 1998 18 months of accrued interest
From February 11, 1998 through July 31, 1998 12 months of accrued interest
From August 1, 1998 through February 10, 1999 6 months of accrued interest
From February 11, 1999 through December 31, 2000 3 months of accrued interest
After December 31, 2000 No prepayment penalty
</TABLE>
The Company, at its option may pay the Amount by delivering to the Holder
the aggregate number of shares of common stock, par value $.001 per share of the
Company (the "Shares"), equal to the quotient obtained by dividing (x) the
Amount divided by (y) (.66) multiplied by the Share Value, provided, however,
the number of Shares to be delivered to pay the Amount shall not exceed 5,000.
The term Share Value shall mean the fair market value of one share of the
Company's Common Stock (the "Fair Value"). In the event the Company's shares of
Common Stock are quoted for trading on Nasdaq or the OTC Electronic Bulletin
Board or listed for trading on a stock exchange, Fair Value shall mean the
average of the last sale price, as reported on Nasdaq, the OTC Electronic
Bulletin Board or similar quotation board, or the closing sale price, as
reported on a national securities exchange of the price of the Company's shares
of Common Stock for the 30 trading days immediately preceding the date of the
calculation.
(b) Neither this Note nor the Shares will be registered with the Securities and
Exchange Commission ("SEC") or with any state securities regulatory
authorities, but, rather, will be issued in reliance on exemptions from
registration requirements provided by such laws, based on:
(1) The Holder's status as a qualified investor, as that term is
hereinafter defined;
(2) The Holder's intent to hold this Note and the Shares for
investment purposes and not with a view to further resale,
distribution, transfer, pledge, conveyance or hypothecation
without prior registration under applicable state and federal
securities laws or a written opinion of legal counsel acceptable
to the Company attesting to the fact that the proposed
transaction will not violate applicable laws and detailing the
factors and legal basis for such opinion; and
2
<PAGE> 3
(3) The representations by the Company and the Holder (as reflected
in the Subscription Agreement pursuant to which this Note was
issued) that the Holder shall agree not to sell the Shares for a
period of 24 months from the effective date of the Company's
Registration Statement and that certificates for the Shares will
bear restrictive legends indicating the foregoing, and that the
Company's transfer agent will be instructed not to effect
transfers of the Shares unless it is informed by the Company that
the registered owner has demonstrated to the Company, through
affidavits and legal opinions satisfactory to the Company's legal
counsel, that the Shares have been appropriately registered with
state and federal regulatory authorities, or, that the
transaction involved in such transfer meets all criteria for
exemption from such requirements.
For the purposes of this Note, a "qualified investor" is a person that
either (a) is an "accredited investor, " as that term is defined in Rule
501 of Regulation D promulgated by the SEC, or (b) is sophisticated in
financial affairs, or has relied on the advice of someone sophisticated in
financial affairs, has, alone or together with such other person, such
knowledge and experience in financial and business matters that the
qualified investor is capable of evaluating the merits and risks of the
prospective investment in this Note, and is able to bear the economic risks
of an investment in this Note.
4. MISCELLANEOUS PROVISIONS:
4.1 NOTICES:
Any demand or notice made or given by the Holder in connection herewith
shall be made upon or given to the Company by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
address first set forth above, but mailing or giving or attempting to make
or give any demand or notice shall not waive any right, granted hereunder
or otherwise, to act without demand or notice.
4.2 WAIVERS AND CONSENTS:
The Company and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Severally waive presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of
protest of this Note, and all of the notices in connection with
the delivery, acceptance, performance, default or enforcement of
the payment of this Note;
(b) Expressly consent to all extensions of time, renewals,
postponements of time of payment of this Note or other
modifications hereof, from time to time, prior to or after the
day that they become due, without notice, consent or
consideration to any foregoing;
3
<PAGE> 4
(c) Expressly agree to any substitution, exchange, addition or
release of any party or person primarily or secondarily liable
hereon;
(d) Expressly agree that the Holder shall not be required first to
institute any suit or to exhaust his, her or its remedies against
the undersigned or any other person or party liable hereunder in
order to enforce the payment of this Note; and
(e) Expressly agree that, notwithstanding the occurrence of any of
the foregoing, the Company shall be and remain directly and
primarily liable for all sums due under this Note.
4.3 LITIGATION:
(a) The state courts of the State of Florida in Dade County and the federal
courts located in Dade County, Florida shall have jurisdiction to hear and
determine disputes arising under this Note, and the Company and the Holder
hereby irrevocably submit to the jurisdiction of said courts, with venue in
said courts, and agree that service of process and any other papers (in
addition to any method permitted by law) by first class mail to the address
set forth at the head of this Note shall be deemed good and sufficient
service of process. The Company or the Holder, if named as a defendant in
any action brought in connection with this Note in any court outside of
Dade County, Florida, shall have the right to have the venue of said action
changed to Dade County, Florida, or, if necessary, have the case dismissed,
requiring the other of them to refile each action in an appropriate court
in Dade County, Florida.
(b) Each of the Company and the Holder hereby waives all right to trial by jury
in any action, proceeding or counterclaim relating to or arising out of
this Note.
4.4 ASSUMPTION, ASSIGNMENT AND TRANSFER:
This Note shall be assumable only with the express, prior written consent
of the Holder. This Note shall not be assignable or transferable and any
assignment shall be void and ineffective.
4.5 EXPENSES:
In the event of any dispute arising under this Note, all costs and expenses
(including without limitation reasonable attorneys' fees and expenses of
attorneys, in negotiations and trial and appellate litigation) of the
prevailing party in any legal proceeding arising out of that dispute shall
be reimbursed to it by the other party to that dispute.
4.6 ENFORCEMENT:
4
<PAGE> 5
No delay by the Holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the Holder of
any particular provision hereof shall be deemed a waiver of any other
provision or a continuing waiver of such particular provision, and, except
as so expressly waived, all provisions hereof shall continue in full force
and effect.
4.7 TIMELINESS:
Time shall be of the essence of this Note.
4.8 GOVERNING LAW:
This Note shall be governed by and construed in accordance with the laws of
the State of Florida, both substantive, procedural and remedial, determined
without regard to principles of conflicts of law. No payment of interest or
other sum construed to be interest or charges in the nature of interest
shall exceed the highest lawful contract rate permissible under the laws of
the State of Florida. Therefore, this Note and all agreements between the
Holder and the Company are limited so that in no contingency or event
whatsoever, whether acceleration of maturity of the indebted ness or
otherwise, shall the amount paid or agree to be paid to the Holder for the
use, forbearance, or detention of the money advanced hereunder exceed the
highest lawful rate permissible under the laws of the State of Florida. If,
under any circumstances whatsoever, fulfillment of any provision hereof, at
the time of performance of such provision shall be due, shall involve the
payment of interest in excess of that authorized by Florida law, the
obligation to be fulfilled shall be reduced to the limit so authorized by
law, and if under any circumstances the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, the amount
that would be excessive shall be either applied to the reduction of the
unpaid principal balance of the indebtedness, without payment of the Amount
or refunded to the Company, and the Holder shall not be subject to any
penalty provided for the contracting for, charging, or receiving interest
in excess of the maximum lawful rate regardless of when or the
circumstances under which said refund or application was made.
5. ACCELERATION:
This Note will be immediately due and payable upon the happening of any of
the following events with respect to the Company:
The filing of a petition in bankruptcy or a petition to take advantage of
any insolvency act; making an assignment for the benefit of its creditors;
commencement of a proceeding for the appointment of a receiver, trustee,
liquidator or conservator for either itself or for any substantial part of
its property; filing of a petition or action seeking reorganization,
arrangement or similar relief under federal bankruptcy laws or any other
applicable laws or statutes of the United States or any state; or the
commencement of proceedings similar to the foregoing by third or other
parties against the Company, which proceedings are not dismissed within
thirty (30) days after commencement thereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has executed this instrument effective as
of February 28, 1997.
GENERAL CREDIT CORPORATION
[CORPORATE SEAL] By: /s/ Irwin Zellermaier
ATTEST --------------------------------
Irwin Zellermaier, President and
Chief Executive Officer
By: /s/ David Bader
--------------------------
David Bader, Secretary
6
<PAGE> 1
EXHIBIT 10.30
COMMON STOCK REDEMPTION AGREEMENT
This Common Stock Redemption Agreement (the "Agreement") is made and
entered into as of the 15 day of February, 1997 by and among General Credit
Corporation, a New York corporation (the "Company"), Irwin Zellermaier
("Zellermaier"), D. P. Morton & Associates, LLC ("D.P. Morton") and David Bader
("Bader"), Zellermaier, D.P. Morton and Bader are sometimes collectively
referred to as the "Sellers."
RECITALS
A. The Sellers currently own the following the following shares of Common
Stock, par value $.001 of the Company:
<TABLE>
<CAPTION>
Name Number of Shares
<S> <C>
Irwin Zellermaier 855,000
D. P. Morton & Associates, LLC 805,000
David Bader 98,000
</TABLE>
B. The Sellers each have agreed to have the following number of shares of the
Company's Common Stock redeemed by the Company (collectively, the "Redeemed
Shares").
<TABLE>
<CAPTION>
Name Number of Shares
<S> <C>
Irwin Zellermaier 475,000
D. P. Morton & Associates, LLC 655,000
David Bader 68,000
</TABLE>
C. The parties hereto desire to set forth in writing the terms and conditions
pursuant to which the Redemption shall be accomplished.
NOW, THEREFORE for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree as follows:
1. Recitals. The foregoing Recitals are true and correct and are hereby
incorporated by reference.
<PAGE> 2
2. Redemption of Shares of Common Stock. At Closing (as hereinafter defined),
in exchange for the Redemption Price (as hereinafter defined), the Company shall
redeem the Redeemed Shares and the Sellers agree to have the Redeemed Shares
redeemed by the Company.
3. Redemption Price. The price to be paid by the Company for the Redemption of
the Redeemed Shares shall be $.001 per share.
4. Closing. The consummation of the transactions contemplated by this
Agreement ("Closing") shall take place on February 19, 1997. At Closing, upon
tender by the Company to the Sellers of the Redemption Price, the Sellers shall,
as applicable, execute and deliver any and all documents, including common stock
certificates of the Company evidencing the Seller's interest in the Redeemed
Shares.
5. Miscellaneous.
a. Entire Agreement. This Agreement (including the exhibits and schedules
hereto) constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior
negotiations, understandings, agreements, arrangements and
understandings, both oral and written, among the parties hereto with
respect to such subject matter.
b. Amendment. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
c. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give
any person, firm, corporation, partnership, association or other
entity, other than the parties hereto and their respective successors
and assigns, any rights or remedies under or by reason of this
Agreement.
d. Waivers and Remedies. The waiver by any of the parties hereto of any
other party's prompt and complete performance, or breach or
violation, of any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation, and the
waiver by any of the parties hereto to exercise any right or remedy
which it may possess hereunder shall not operate nor be construed as a
bar to the exercise of such right or remedy by such party upon the
occurrence of any subsequent breach or violation.
e. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in this
Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part hereof, all of which are
inserted conditionally on their being valid in law, and, in the event
that any one or more of the words, phrases, sentences, clauses,
sections or
2
<PAGE> 3
subsections contained in this Agreement shall be declared invalid by
a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, section or sections, or subsection or
subsections had not been inserted.
f. Descriptive Headings. Descriptive headings contained herein are for
convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
g. Counterparts. This Agreement may be executed in any numbers of
counterparts and by the separate parties hereto in separate
counterparts, each of which shall be deemed to be one and the same
instrument.
h. Notices. All notices, consents, requests, instructions, approvals and
other communications provided for herein and all legal process in
regard hereto shall be in writing and shall be deemed to have been
duly given, when delivered by hand or three (3) days after deposited
in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, as follows:
If to the Company: General Credit Corporation
211 East 790 th Street
New York, New York 10021
If to the Sellers: At the address last
reflected on the books
and records of the
Company or to such other
address as the Seller
may from time to time
designate in writing
delivered in a like
manner.
i. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns. None of the parties hereto shall assign any of
its rights or obligations hereunder.
j. Applicable Law. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in accordance with the laws of the
State of Florida.
k. Expenses. Each of the parties hereto agrees to pay all of the
respective expenses incurred by it in connection with the negotiation.
preparation, execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
3
<PAGE> 4
l. Attorneys' Fees. In the event any suit or other legal proceeding is
brought for the enforcement of any of the provisions of this
Agreement, the parties hereto agree that the prevailing party or
parties shall be entitled to recover from the other party or parties
upon final judgment on the merits reasonable attorneys' fees (and
sales taxes thereon, if any), including attorneys' fees for any
appeal, and costs incurred in bringing such suit or proceeding.
m. Agent. Neither party is hereby constituted an agent or legal
representative of the other party hereto and neither is granted any
right or authority hereunder to assume or create any obligation,
express or implied, or to make any representation, covenant, warranty,
or guaranty, except as expressly granted or made in this Agreement.
n. Other Documents. The parties hereto shall cooperate in the
effectuation of the transactions contemplated hereby and shall execute
any and all additional documents and shall take such additional
actions as shall be reasonably necessary or appropriate for such
purposes.
o. Waiver of Jury Trial. The parties hereto each knowingly, voluntarily
and intentionally waive their respective rights to a trial by jury in
respect of any litigation related to or arising from this Agreement,
or any course of conduct, course of dealing, statement or actions of
any of the parties hereto.
p. Applicable Law and Venue. This Agreement shall be construed in
accordance with and be governed by the laws of the State of Florida
and the parties hereto agree that any suit brought hereunder shall be
brought only in the Circuit Court for the Eleventh Judicial Circuit in
and for Dade County, Florida and the United States District Court for
the Southern District of Florida, Miami Division.
q. Release and Indemnification. Each of the (x) Sellers and the
(y)Company, hereby release each other and their respective affiliates
from any and all actions or claims, whether unknown or known which
either ever had, now has or hereinafter may have against the other
relating to, arising out of or in any way related to the redemption by
the Company of the Redeemed Shares. Each of the (z)Sellers and its
respective affiliates, and the (zz) Company and its affiliates, hereby
agree to defend, indemnify and hold harmless the other of and from,
any and all demands, claims losses or liabilities arising ut of or in
an way related to the redemption by the Company of the Redeemed
Shares.
4
<PAGE> 5
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE OPPORTUNITY
TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND UNDERSTAND EACH OF
THE PROVISIONS OF THIS AGREEMENT.
GENERAL CREDIT CORPORATION
By:/s/ Irwin Zellermaier
------------------------------------
Irwin Zellermaier, President
/s/ Irwin Zellermaier
---------------------------------------
Irwin Zellermaier, Individually
D.P. MORTON & ASSOCIATES, LLC
By:/s/ Victoria Kleinmunz
------------------------------------
Authorized Representative
/s/ David Bader
---------------------------------------
David Bader
5
<PAGE> 1
EXHIBIT 10.31
COMMON STOCK REDEMPTION AGREEMENT
This Common Stock Redemption Agreement (the "Agreement") is made and
entered into as of the 30th day of December, 1996 by and among General
Credit Corporation, a New York corporation (the "Company"), JMB Holdings, Inc.
and Wall Street Equities, Inc. are sometimes collectively referred to as the
"Sellers."
RECITALS
A. The Sellers currently own the following the following shares of Common
Stock, par value $.001 of the Company:
Name Number of Shares
JMB Holdings, Inc. 215,000
Wall Street Equities, Inc. 50,000
B. The Sellers each have agreed to have the following number of shares of
the Company's Common Stock redeemed by the Company (collectively, the "Redeemed
Shares").
Name Number of Shares
JMB Holdings, Inc. 215,000
Wall Street Equities, Inc. 50,000
C. The parties hereto desire to set forth in writing the terms and
conditions pursuant to which the Redemption shall be accomplished.
NOW, THEREFORE for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree as follows:
1. Recitals. The foregoing Recitals are true and correct and are hereby
incorporated by reference.
2. Redemption of Shares of Common Stock. At Closing (as hereinafter
defined), in exchange for the Redemption Price (as hereinafter defined), the
Company shall redeem the Redeemed Shares and the Sellers agree to have the
Redeemed Shares redeemed by the Company.
3. Redemption Price. The price to be paid by the Company for the
Redemption of the Redeemed Shares shall be $.001 per share.
1
<PAGE> 2
4. Closing. The consummation of the transactions contemplated by
this Agreement ("Closing") shall take place on December 30, 1996. At Closing,
upon tender by the Company to the Sellers of the Redemption Price, the Sellers
shall, as applicable, execute and deliver any and all documents, including
common stock certificates of the Company evidencing the Seller's interest in
the Redeemed Shares.
5. Miscellaneous.
a. Entire Agreement. This Agreement (including
the exhibits and schedules hereto) constitutes the
entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior
negotiations, understandings, agreements, arrangements and
understandings, both oral and written, among the parties
hereto with respect to such subject matter.
b. Amendment. This Agreement may not be amended
or modified in any respect, except by the mutual written
agreement of the parties hereto.
c. No Third Party Beneficiary. Nothing
expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other
entity, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by
reason of this Agreement.
d. Waivers and Remedies. The waiver by any of
the parties hereto of any other party's prompt and
complete performance, or breach or violation, of any
provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or
violation, and the waiver by any of the parties hereto to
exercise any right or remedy which it may possess hereunder
shall not operate nor be construed as a bar to the exercise
of such right or remedy by such party upon the occurrence
of any subsequent breach or violation.
e. Severability. The invalidity of any one or
more of the words, phrases, sentences, clauses, sections
or subsections contained in this Agreement shall not affect
the enforceability of the remaining portions of this
Agreement or any part hereof, all of which are inserted
conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in
this Agreement shall be declared invalid by a court of
competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases,
sentence or sentences, clause or clauses, section or
sections, or subsection or subsections had not been
inserted.
2
<PAGE> 3
f. Descriptive Headings. Descriptive headings
contained herein are for convenience only and
shall not control or affect the meaning or
construction of any provision of this
Agreement.
g. Counterparts. This Agreement may be executed
in any numbers of counterparts and by the
separate parties hereto in separate
counterparts, each of which shall be deemed
to be one and the same instrument.
h. Notices. All notices, consents, requests,
instructions, approvals and other communications
provided for herein and all legal process in regard hereto
shall be in writing and shall be deemed to have been duly
given, when delivered by hand or three (3) days after
deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid,
as follows:
If to the Company: General Credit Corporation
211 East 790th Street
New York, New York 10021
If to the Sellers: At the address last reflected on the
books and records of the Company or to
such other address as the Seller may
from time to time designate in writing
delivered in a like manner.
i. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. None
of the parties hereto shall assign any of its rights or
obligations hereunder.
j. Applicable Law. This Agreement shall be governed by, and
shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida.
k. Expenses. Each of the parties hereto agrees to pay all
of the respective expenses incurred by it in connection
with the negotiation. preparation, execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby.
l. Attorneys' Fees. In the event any suit or other legal
proceeding is brought for the enforcement of any of the
provisions of this Agreement, the parties hereto agree
that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final
judgment on the merits reasonable attorneys' fees (and
sales taxes thereon, if any), including attorneys' fees
for any appeal, and costs incurred in bringing such suit
or proceeding.
3
<PAGE> 4
m. Agent. Neither party is hereby constituted an agent or
legal representative of the other party hereto and
neither is granted any right or authority hereunder to
assume or create any obligation, express or implied, or to
make any representation, covenant, warranty, or guaranty,
except as expressly granted or made in this Agreement.
n. Other Documents. The parties hereto shall cooperate
in the effectuation of the transactions contemplated
hereby and shall execute any and all additional
documents and shall take such additional actions as shall
be reasonably necessary or appropriate for such purposes.
o. Waiver of Jury Trial. The parties hereto each knowingly,
voluntarily and intentionally waive their respective
rights to a trial by jury in respect of any litigation
related to or arising from this Agreement, or any course
of conduct, course of dealing, statement or actions of any
of the parties hereto.
p. Applicable Law and Venue. This Agreement shall be
construed in accordance with and be governed by the
laws of the State of Florida and the parties hereto agree
that any suit brought hereunder shall be brought only in
the Circuit Court for the Eleventh Judicial Circuit in and
for Dade County, Florida and the United States District
Court for the Southern District of Florida, Miami
Division.
q. Release and Indemnification. Each of the (x) Sellers and
the (y)Company, hereby release each other and their
respective affiliates from any and all actions or claims,
whether unknown or known which either ever had, now has or
hereinafter may have against the other relating to,
arising out of or in any way related to the redemption by
the Company of the Redeemed Shares. Each of the (z)Sellers
and its respective affiliates, and the (zz) Company and
its affiliates, hereby agree to defend, indemnify and hold
harmless the other of and from, any and all demands,
claims losses or liabilities arising ut of or in an way
related to the redemption by the Company of the Redeemed
Shares.
4
<PAGE> 5
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE
OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND
UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
GENERAL CREDIT CORPORATION
By: /s/ Irwin Zellermaier Irwin
-------------------------------------
Zellermaier, President
JMB HOLDINGS, INC.
/s/ James Beimel, Sr.
--------------------------------------------
James Beimel, Sr., Authorized Representative
WALL STREET EQUITIES, INC.
/s/ James Connel
---------------------------------------
James Connel, Authorized Representative
5
<PAGE> 1
EXHIBIT 10.32
Allen House, Inc.
Post Office Box 1470
Gracie station
New York, New York 10028
Landlord
EXTENSION OF LEASE
Date January 3, 1997
Tenant(s): Mersa Corporation Re: LEASE
201 Allen St. Store No.1 Dated: January 3, 1997
New York, NY 10002 Expires on January 31, 1997
Apt.-office-etc.: Store No. 1
Dear Tenant(s):
The LEASE referred to above expires shortly. If you wish to extend
your LEASE the annual rent for the premises commencing on February 1, 1997 will
be $ payable $ monthly in advance for an extended term
of
PLEASE REFER TO ADDENDUM
In connection with the foregoing, additional security will be required
in the amount of $0 making the total security of $ REFER TO LEASE
If prior to the commencement of the extended term you default in any
of the terms, covenants and conditions of the LEASE this agreement shall, at
the option of the Landlord, be null and void.
All other terms, covenants and conditions of the LEASE shall remain in
full force and effect for the duration of the extended term.
If you wish to extend the term of the LEASE please sign this agreement
where indicated (x) and return two copies to the Landlord together with a check
in the amount of the additional security within days of the above
date.
If you intend to vacate the premises please sign your name under the
words "Tenant(s) will vacate the premises at the end of the present term" and
return two copies to the Landlord.
SIGN HERE TO EXTEND LEASE
Tenant(s): X /s/ MERSA CORPORATION This EXTENSION AGREEMENT
does not become binding until
the return to you of a copy
X /s/ Gerald Nimberg signed by the Landlord.
Tenant(s) will vacate the premises at
the end of the term
______________________________________ Agent
______________________________________ By /s/
<PAGE> 2
ADDENDUM TO EXTENSION OF LEASE DATED JANUARY 3, 1997
FOR: 201 ALLEN STREET, NEW YORK 10002 (AKA: STORE #1)
Tenant covenants to pay to Owner the following sums:
FIVE YEAR RENT PLAN
<TABLE>
<CAPTION>
Year Increase Monthly Rent Yearly Rent
<S> <C> <C> <C> <C>
1. Feb. 1, 1997 - Jan. 31, 1998 5% $1,300.00 $15,600.00
2. Feb. 1, 1998 - Jan. 31, 1999 5% $1,365.00 $16,380.00
3. Feb. 1, 1999 - Jan. 31, 2000 5% $1,433.25 $17,199.00
4. Feb. 1, 2000 - Jan. 31, 2001 5% $1,504.91 $18,058.95
5. Feb. 1, 2001 - Jan. 31, 2002 5% $1,580.16 $18,961.90
TOTAL: $70,599.85
</TABLE>
The foregoing amounts shall be payable in equal monthly installments, as set
forth above, in advance, without previous demand therefor, and without any
offset, counterclaim, or deduction whatsoever, on the first day of each and
every calendar month throughout the term of this lease, except that the first
installment or Fixed Rent shall be paid upon the execution of the lease.
Tenant shall also pay as "Additional Rent" any other sums of money as shall
become due and payable hereunder (as in the Original LEASE agreement), the
default for which Owner shall have the same rights and remedies as for the
default in the payment of Fixed Rent.
Notwithstanding the above, tenant must always maintain a security deposit,
which is presently in terms with the original LEASE agreement.
/s/
-------------------------
Tenant: New York Payroll Co. Landlord: Allen House, Inc.
Agent
MERSA CORP.
/s/ G. Nimberg
1/17/97 1/13/97
- ----------------------------- ----------------------------
Date Date
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form SB-2 (File
No. 333-09831) of our report, dated March 14, 1997, on our audits of the
financial statements of New York Payroll Factors, Inc. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Melville, New York
March 19, 1997
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form SB-2 (File
No. 333-09831) of our report which includes an explanatory paragraph concerning
the Company's ability to continue as a going concern, dated March 14, 1997, on
our audits of the financial statements of General Credit Corporation. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Melville, New York
March 19, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
PAYROLL FACTORS, INC. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND FOR THE
YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,367,248
<SECURITIES> 0
<RECEIVABLES> 137,251
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,522,588
<PP&E> 88,910
<DEPRECIATION> 47,542
<TOTAL-ASSETS> 2,949,771
<CURRENT-LIABILITIES> 1,466,709
<BONDS> 0
0
0
<COMMON> 50,000
<OTHER-SE> 673,547
<TOTAL-LIABILITY-AND-EQUITY> 2,949,711
<SALES> 2,605,549
<TOTAL-REVENUES> 2,605,549
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,799,556
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 500,595
<INCOME-PRETAX> 505,398
<INCOME-TAX> 40,129
<INCOME-CONTINUING> 465,269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465,269
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
PAYROLL FACTORS, INC. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 AND FOR
THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,247,394
<SECURITIES> 0
<RECEIVABLES> 40,339
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,307,776
<PP&E> 66,390
<DEPRECIATION> 36,494
<TOTAL-ASSETS> 1,775,107
<CURRENT-LIABILITIES> 1,172,266
<BONDS> 0
0
0
<COMMON> 50,000
<OTHER-SE> 457,724
<TOTAL-LIABILITY-AND-EQUITY> 1,775,107
<SALES> 1,467,620
<TOTAL-REVENUES> 1,467,620
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 941,201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 210,704
<INCOME-PRETAX> 315,715
<INCOME-TAX> 27,114
<INCOME-CONTINUING> 288,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 288,601
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
