SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
THE TRACKER CORPORATION OF AMERICA
----------------------------------
(Name of Small Business Issuer in Its Charter)
COMMON STOCK, $.001 PAR VALUE
-----------------------------
(Title of Class of Securities)
BRUCE I. LEWIS
1120 FINCH AVE. WEST
SUITE 303
NORTH YORK, ONTARIO CANADA M3J 3H8
416-663-8222
------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
JUNE 30, 1994
-------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
(Continued on following pages)
(Page 1 of 30 pages)
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce Irvin Lewis
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) WC, PF
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Canadian
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER 5,154,589
SHARES -----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 5,154,589
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 5,154,589
REPORTING -----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER 5,154,589
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,154,589
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [ ]
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) 100%
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions) IN
- --------------------------------------------------------------------------------
2
<PAGE>
The date of the event that requires the filing of this statement is July
1994, when The Tracker Corporation of America filed its first registration
statement pursuant to the Securities Act of 1933. Bruce Lewis, a founder of
Tracker, was greater than a 5% equity holder in Tracker at that time. Over the
ensuing years, Mr. Lewis has acquired and sold Tracker's common stock from time
to time such that he presently beneficially owns 5,154,589 shares of Tracker's
common stock. This is approximately 9% of Tracker's outstanding common stock.
He has been Tracker's Chief Executive Officer since June 30, 1994.
ITEM 1. SECURITY AND ISSUER.
This statement relates to Tracker's common stock, $.001 par value.
Tracker's principal executive offices are located at 1120 Finch Avenue, Suite
303, North York, Ontario, Canada M3J 3H8.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Bruce I. Lewis
(b) 1120 Finch Avenue, Suite 303, North York, Ontario, Canada M3J 3H8.
(c) Chief Executive Officer and Chairman of the Board of Directors of The
Tracker Corporation of America.
(d) Mr. Lewis was not convicted in a criminal proceeding during the last
five years.
(e) Mr. Lewis was not a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction that resulted in a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws, or a finding
of any violation with respect to such laws during the last five years.
(f) Mr. Lewis is a Canadian citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Initially, Mr. Lewis received 4,580,357 shares of common stock in return
for Tracker's use of his technology system that was, and is presently, central
to Tracker's business operations. Subsequently, Mr. Lewis either paid cash for
later issuances of common stock, or received common stock in lieu of receiving
wages in accordance with his employment agreements. Mr. Lewis never borrowed
money in order to purchase additional shares of Tracker's common stock.
ITEM 4. PURPOSE OF TRANSACTION.
All of the shares of Common Stock reported herein were acquired for
investment purposes. Mr. Lewis does not have any plans or proposals that relate
to or would result in any of the following transactions:
(a) The acquisition by any person of additional securities of the issuer, or the
disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer or any of
its subsidiaries;
(d) Any change in the present board of directors or management of the issuer,
including any plans or proposals to change the number or term of directors or to
fill any existing vacancies on the board;
(e) Any other material change in the present capitalization or dividend policy
of the issuer;
(f) Any other material change in the issuer's business or corporate structure,
including but not limited to, if the issuer is a registered closed-end
investment company, any plans or proposals to make changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940;
(g) Changes in the issuer's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the issuer by
any person;
(h) Causing a class of securities of the issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association;
(i) A class of equity securities of the issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Mr. Lewis owns 3,910,300 shares of Tracker's common stock. He also owns
the option to purchase an additional 1,244,289 shares, which became exercisable
on January 1, 2000. This represents approximately 9% of Tracker's outstanding
common stock. Further options to purchase an additional 1,244,289 shares will
become exercisable on January 1, 2001. Mr. Lewis has the sole power to vote
these shares of common stock. He has not effected any transactions relating to
Tracker's common stock during the past 60 days. No other person has the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of the common stock beneficially owned by Mr. Lewis.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Mr. Lewis received a stock option award from Tracker on December 22, 1998
under which he may purchase up to 2,488,578 shares of common stock. One half of
the options vested on January 1, 2000 and the other half vests on January 1,
2001.
Tracker entered into a purchase and security agreement with institutional
investors on August 18, 1999 for the issuance of up to $3,000,000 in convertible
notes. Mr. Lewis guaranteed Tracker's performance under the contract by
pledging 600,000 shares of his common stock and his right to acquire an
additional 1,244,289 shares pursuant to his stock option award agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Stock Option Award Agreement, dated December 22, 1998
B. Guaranty Agreement, dated August 18, 1999
C. Stock Pledge Agreement, dated August 18, 1999
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 9, 2000
By: /s/ Bruce I. Lewis
----------------------
Bruce I. Lewis
<PAGE>
STOCK OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT is dated as of the 22nd day of December, 1998, by and
between THE TRACKER CORPORATION OF AMERICA, a Delaware corporation ("Tracker"),
and BRUCE I. LEWIS, a citizen of the Province of Ontario, Canada (the
"Participant"). Unless otherwise expressly provided herein, capitalized terms
used herein have the same meanings assigned to them in the Amended and Restated
1994 Stock Incentive Plan (the "Plan").
W I T N E S S E T H:
-------------------
WHEREAS, Participant, in accordance with the Plan has been granted as of
the date hereof (the "Award Date") an incentive stock option (as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, ("Option" or
"Award") to purchase all or any part of the total number of shares of Common
Stock of Tracker set forth on Schedule I upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Participant and Tracker desire to enter into a written
agreement in accordance with the Plan;
NOW THEREFORE, in consideration of the mutual promises and covenants made
herein and the mutual benefits to be derived herefrom, the parties hereto agree
as follows;
1. GRANT OF OPTION. Tracker has granted to the Participant as a matter
---------------
of separate inducement and agreement in connection with his employment by
Tracker or any of its existing or future subsidiaries, and not in lieu of any
salary or other compensation for his services, the right and option to purchase,
in accordance with the Plan and on the terms and conditions of the Plan and
those hereinafter set forth, all or any part of the total number of shares of
Common Stock set forth on Schedule I at the exercise price per share set forth
on Schedule I attached hereto and incorporated herein by reference (the
"Price"), exercisable from time to time subject to the provisions of this Award
Agreement prior to the close of business on December 21, 2003 (the "Expiration
Date"). Such Price has been determined by the Committee in accordance with
Section 3.2 of the Plan.
2. EXERCISABILITY OF OPTION. Except as otherwise provided in this
--------------------------
Award Agreement, the Option may be exercised in accordance with the vesting
schedule set forth on Schedule II attached hereto and incorporated herein by
reference and the Option may only be exercised at any given time to the extent
the Option has vested in accordance with Schedule II; provided, however, that
the Option may not be exercised as to less than 1,000 shares at any one time
unless the number of shares purchased is the total number at the time available
for purchase under the Option. The Option may be exercised only as to whole
shares; fractional share interests shall be disregarded except that they may be
accumulated.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of any part of the
---------------------------------
Option shall be by means of written notice of exercise duly delivered to
Tracker, specifying the number of whole shares with respect to which the Option
is being exercised, together with any written statements required pursuant to
Section 10 below and payment of the Price in full (i) in cash or by certified or
cashier's check payable to the order of Tracker, (ii) by a promissory note made
by the Participant in favor of Tracker, upon the terms and conditions determined
1
<PAGE>
by the Committee, and secured by the Common Stock issuable upon exercise in
compliance with applicable law (including, without limitation, state corporate
law and federal margin requirements), (iii) by shares of Common Stock of Tracker
already owned by the Participant, or (iv) by application of the then market
value of vested Options of the Company (net of the Option price); provided,
however, the Committee may in its absolute discretion limit the Participant's
ability to exercise the Option by delivering shares, and any shares delivered
which were initially acquired upon exercise of a stock option must have been
owned by the Participant at least six months as of the date of delivery.
4. CONTINUANCE OF EMPLOYMENT. Nothing contained in this Award
---------------------------
Agreement or in the Plan shall confer upon the Participant any right to continue
in the employ of Tracker or constitute any contract or agreement of employment.
Nothing contained in this Award Agreement or in the Plan shall interfere in any
way with the right of Tracker to (i) terminate the employment of the
Participant, or (ii) reduce the compensation received by the Participant from
the rate in existence on the Award Date provided that nothing herein shall
modify any written employment agreement as may now exist or hereinafter be
entered into between Participant and Tracker.
5. EFFECT OF TERMINATION OF RELATIONSHIP.
-----------------------------------------
(a) If the Participant ceases to be employed by Tracker for any
reason other than breach by Tracker of any written employment agreement in
effect between the Participant and Tracker, the Option shall terminate to the
extent not vested. Notwithstanding the vesting schedule in Schedule II, if
Tracker has breached any written employment agreement with the Participant, and
as a result Participant's employment is terminated, the Option shall become
fully vested upon such termination of employment. In no event may any Option be
exercised by any person after the Expiration Date.
(b) Except as may be otherwise provided in Section 422 of the
Internal Revenue Code of 1986, as amended, or in the Plan, upon termination of
Participant's employment by reason of retirement, disability or death, the
Option, to the extent vested, may be exercised by the Participant or his
executor or administrator, as the case may be, at any time during the Option
period.
(c) Any transfer of Participant's employment between Tracker and
any of its existing or future subsidiaries or between any two subsidiaries shall
not be deemed to be a termination of Participant's employment for purposes of
implementation of the Plan.
6. NON-ASSIGNABILITY OF OPTION.
-----------------------------
(a) Interests in the Option shall not be subject to sale,
transfer, pledge, assignment or alienation other than by will or the laws of
descent and distribution regardless of any interest therein of the Participant's
spouse or such spouse's successor in interest.
(b) Notwithstanding Section 6(a) above, Participant shall have the
right to sell, pledge, assign or alienate the Option, provided that Participant
foregoes treatment of the Option as an incentive stock option, in which event
the Option shall be treated as a non -qualified stock option.
2
<PAGE>
7. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section 4.2 of
-----------------------------------
the Plan, upon the occurrence of specified events relating to Tracker's stock,
adjustments will be made in the number and kind of shares that may be issuable
under an Option. In addition, upon the occurrence of specified events relating
to Tracker, such as its dissolution or liquidation, a reorganization, merger or
consolidation in which it is not the surviving corporation, or upon sale of all
or substantially all of Tracker's property, unless provision is otherwise made
and subject to the provisions of Section 4.4 of the Plan, the Plan and any
outstanding Options will terminate.
8. ACCELERATION. Upon the occurrence of an Event, the Option shall
------------
become immediately vested to the full extent theretofore not exercisable unless
prior to an Event the Board determines otherwise pursuant to Section 4.4 of the
Plan. However, no Option shall be accelerated to a date less than six months
after the Award Date.
9. PARTICIPANT NOT A SHAREHOLDER. Neither the Participant nor any
--------------------------------
other person entitled to exercise the Option shall have any of the rights or
privileges of a shareholder of Tracker as to any shares of Common Stock not
actually issued and delivered to him. No adjustment will be made for dividends
or other rights for which the record date is prior to the date on which such
stock certificate or certificates are issued even if such record date is
subsequent to the date upon which notice of exercise was delivered and the
tender of payment was accepted.
10. APPLICATION OF SECURITIES LAWS.
---------------------------------
(a) No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of the Securities and
Exchange Commission and any other regulatory agencies, including any other state
securities law commissioners having jurisdiction over Tracker or such issuance,
and any exchanges upon which the Common Stock may be listed, shall have been
fully satisfied. The Participant represents, agrees and certifies that if the
Participant exercises the Option in whole or in part, the Participant will
acquire the Common Stock issuable upon such exercise for the purpose of
investment and not with a view to resale or distribution and that, as a
condition to each such exercise, he will furnish to Tracker a written statement
to such effect, satisfactory in form and substance to Tracker.
(b) The Participant understands that the certificate or
certificates representing the Common Stock acquired pursuant to the Option may
bear a legend referring to the fact that the Common Stock has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and has not been qualified under any state securities laws and any limitations
under the Securities Act and state securities laws with respect to the transfer
of such Common Stock, and Tracker may impose stop transfer instructions to
implement such limitations, if applicable. Any person or persons entitled to
exercise the Option under the provisions of Section 5 above shall be bound by
and obligated under the provisions of this Section 10 to the same extent as is
the Participant.
(c) The Committee may impose such conditions on an Option or on
its exercise or acceleration or on the payment of any withholding obligation
(including without limitation restricting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements.
3
<PAGE>
(d) If at any time prior to the Expiration Date, the Company
causes a registration statement ("Registration") under the Securities Act to
become effective with respect to any shares of its Common Stock, the Company
shall, within sixty (60) calendar days of the effective date of the Registration
prepare and file with the Securities and Exchange Commission a registration
statement on Form S-8 or any successor or similar forms with respect to the
shares of its Common Stock reserved for issuance pursuant to the Plan and use
its reasonable commercial efforts to cause such registration statement to become
effective, and prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective.
11. NOTICES. Any requests or notices to be given hereunder shall be
-------
deemed given, and any elections or exercises to be made or accomplished shall be
deemed made or accomplished, upon actual delivery thereof to the designated
recipient, or three (3) days after deposit thereof in the United States mail,
registered, return receipt requested, and postage prepaid, addressed, if to the
Participant, at the address given beneath the Participant's signature set forth
below, and if to Tracker, at the executive offices of Tracker.
12. EFFECT OF AWARD AGREEMENT. The Award Agreement shall be assumed
----------------------------
by, be binding upon and inure to the benefit of (i) any successor or successors
of Tracker to the extent provided in Section 4.2(b) of the Plan and (ii) any
Beneficiary or Personal Representative of the Participant as provided in Section
4.3 of the Plan.
13. TAX WITHHOLDING. The provisions of Section 4.6 of the Plan are
----------------
hereby incorporated and shall govern any withholding that Tracker employing the
Participant is required to make with respect to an exercise of the Option, as
well as Tracker's right to condition a transfer of Common Stock upon compliance
with the applicable withholding requirements of federal, state and local
authorities.
14. TERMS OF PLAN GOVERN. The Option and this Award Agreement are
-----------------------
subject to, and Tracker and the Participant agree to be bound by, all of the
terms and conditions of the Plan. The Participant acknowledges receipt of a
copy of the Plan, which is made a part hereof by this reference. The rights of
the Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence of
certain conditions as set forth in the Plan.
15. LAWS APPLICABLE TO CONSTRUCTION. The Option has been granted,
----------------------------------
executed and delivered as of the day and year first above written. This Award
Agreement and all amendments, modifications, alterations or supplements hereto
shall be deemed to have been executed in the State of Delaware, and shall be
governed and construed as to both substantive and procedural matters in
accordance with the laws of the State of Delaware, but excepting any rule which
would result in the application of the law of a jurisdiction other than the
State of Delaware. Tracker and Participant hereby irrevocably waive any
objection which it may now or hereafter have to the laying of venue of the
proceedings under this provision in the federal or state courts of the State of
Delaware as well as any claim that any such proceedings are in an inconvenient
forum and hereby release the other party from the requirement of posting any
bond in connection with the pursuit of temporary or interlocutory injunctive
relief or specific performance, to the extent permitted by law.
4
<PAGE>
16. NOTICE OF DISPOSITION. The Participant agrees to notify Tracker of
---------------------
any sale or other disposition of any shares of Common Stock received upon
exercise of the Option if such sale or disposition occurs within two years after
the Award Date or within one year after the date of exercise of the Option.
17. WAIVER. The waiver by any party hereto of a breach of or a default
------
under any provision of this Award Agreement by another party hereto shall not be
effective unless in writing and shall not be construed as a waiver of any
succeeding breach of or default under the same or any other provision, nor shall
any delay or omission on the part of any party hereto to exercise or avail
itself of any right, power or privilege of such party hereto be construed as a
waiver of such right, power or privilege. Any right, power or remedy provided
under this Award Agreement to any party hereto shall be cumulative and in
addition to any other right, power or remedy provided under this Award Agreement
or existing in law or in equity (including, without limitation, the remedies of
injunctive relief and specific performance).
18. COUNTERPARTS. This Award Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument. A facsimile copy of any such
counterpart or of the original execution of any such counterpart shall be fully
as effective as the original executed copy.
19. BINDING EFFECT. Except as otherwise set forth herein to the
---------------
contrary, all of the terms, covenants, agreements and conditions herein
contained shall be binding upon and shall inure to the benefit of all of the
parties hereto, and their respective successors and permitted assigns.
20. SEVERABILITY. In the event that any one or more of the provisions,
------------
or parts of any provisions, contained in this Award Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect by a court
of competent jurisdiction, the same shall not invalidate or otherwise affect any
other provisions hereof, and this Award Agreement shall be construed as if such
invalid, illegal or unenforceable provision or part of any provision had never
been contained herein.
21. CAPTIONS. Section headings, titles or captions contained herein
--------
are inserted only as a matter of convenience and for reference and in no way
define, limit, extend or describe the scope of the Agreement or the intent of
any provision hereof.
22. IDENTIFICATION. Whenever the singular number is used in this Award
--------------
Agreement and when required by the context, the same shall include the plural,
and the masculine gender shall include the feminine and neuter genders.
23. FURTHER ASSURANCES. The parties hereto shall sign such other
-------------------
instruments, cause such meetings to be held, resolutions passed and by-laws
enacted, exercise their vote and influence, do and perform and cause to be done
and performed such further and other acts and things as may be necessary or
desirable in order to give full effect to this Agreement.
24. ENTIRE AGREEMENT. This Award Agreement supersedes all prior
-----------------
discussions and agreements among the parties hereto with respect to the subject
matter contained herein, and, together with the Plan, contains the sole and
entire agreement between the parties hereto with respect to the transactions
contemplated herein. This Award Agreement may be amended only by an instrument
in writing signed by the parties hereto.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed his Award Agreement as
of the date first above written.
THE TRACKER CORPORATION OF AMERICA,
a Delaware corporation
By: /s/ Bruce I. Lewis
---------------------
Bruce I. Lewis, Chief Executive Officer
[CORPORATE SEAL]
PARTICIPANT:
/s/ Bruce I. Lewis
---------------------
BRUCE I. LEWIS
6
<PAGE>
SCHEDULE I
NUMBER OF SHARES AND EXERCISE PRICE
<TABLE>
<CAPTION>
Number of Option Shares Exercise Price Per Share
- ----------------------- -------------------------
<S> <C>
2,488,578 $ .075
</TABLE>
<PAGE>
SCHEDULE II
VESTING OF OPTIONS
<TABLE>
<CAPTION>
Award Date to January 1, 2000 January 1, 2001
December 31, 1999
- ------------------
<S> <C> <C>
0 shares 1,244,289 shares 1,244,289 shares
- ------------------ ----------------- -----------------
0% 50% 50%
- ------------------ ----------------- -----------------
</TABLE>
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("GUARANTY") is given this 18th day of August,
1999, to the persons and entities listed on SCHEDULE 1 hereto by BRUCE I. LEWIS
("GUARANTOR") as security for the obligations of The Tracker Corporation of
America, a Delaware corporation (the "COMPANY") described below. The entities
on SCHEDULE 1 are hereinafter collectively referred to as "PURCHASERS."
BACKGROUND
Purchasers have purchased up to an aggregate $3,000,000 in principal amount
of the Company's Series 1 Bridge Notes ("BRIDGE NOTES") issued by the Company
pursuant to a Series 1 Bridge Note Purchase and Security Agreement of even date
herewith (the "PURCHASE AGREEMENT"). Guarantor is the holder of 600,000 shares
of Common Stock of the Company represented by the copied certificates attached
hereto as EXHIBIT A collectively the "PLEDGED SHARES"). Guarantor is also a
party to a Stock Option Award Agreement dated December 22, 1998, a copy of which
is attached hereto as EXHIBIT B, pursuant to which Guarantor has the right to
acquire 1,244,289 additional shares of the Company's Common Stock (the "OPTION
RIGHTS") on or after January 1, 2000 (the Pledged Shares and the OPTION RIGHTS
are sometimes collectively referred to as "PLEDGED SECURITIES"). The execution
and delivery of this Agreement was a condition precedent and a material
inducement to Purchaser to purchase the Bridge Notes guarantied hereby.
Guarantor as the Chief Executive Officer and a stockholder of the Company
receives a significant benefit from the sale to Purchasers of the Bridge Notes
issued by the Company. Guarantor acknowledges that Purchasers would not have
purchased the Bridge Notes without the execution and delivery of this Guaranty
Agreement. Guarantor acknowledges that because of the direct benefit to the
Guarantor from the proceeds of the sale of the Bridge Notes by the Company, the
Guarantor agreed to guaranty to the Purchasers the performance of the
obligations of the Company as and to the extent set forth herein.
AGREEMENT
For and in consideration of the execution and delivery of the Purchase
Agreement by Purchasers and the purchase by Purchasers of the Bridge Notes, the
Guarantor hereby covenants and agrees with the Purchaser as follows:
SECTION 1. GUARANTY OF PAYMENT.
Guarantor hereby unconditionally and irrevocably and guaranties to
Purchasers the full payment and performance, when due, by acceleration or
otherwise, of all past, present, and future indebtedness, liabilities, and
obligations of the Company to Purchasers of any kind and description arising in
connection with the Purchase Agreement, the Bridge Notes, and this Guaranty
Agreement (collectively, the "BRIDGE NOTE PURCHASE DOCUMENTS"), whether direct
or indirect, absolute or contingent, or due or to become due (collectively, the
"OBLIGATIONS"), it being understood by all the parties hereto that such guaranty
of payment is limited to the value of the Pledged Securities at such time any
action is taken with respect to the Pledged Securities pursuant to any Event of
Default hereunder. This Guaranty shall only relate to the Obligations and not
to any other obligations of the Company which now or hereafter may be held by
Purchasers and their respective successors and assigns. The guaranty of
Guarantor as set forth in this section is an absolute, continuing, primary, and
unconditional guaranty of payment and not of collection. If a claim is ever
made upon Purchasers for the repayment or recovery of any amount or amounts
received by Purchasers in payment of any of the Obligations and Purchasers repay
all or part of such amount by reason of (a) any judgment, decree, or order of
any court or administrative body having jurisdiction over Purchasers or any of
their property, or (b) any settlement or compromise of any such claim effected
by the Purchasers with any such claimant, including the Company, then in such
event each Guarantor agrees that any such judgment, decree, order, settlement,
1
<PAGE>
or compromise shall be binding upon each Guarantor as if against the Guarantor
and in favor of the Purchasers, notwithstanding any revocation hereof or the
cancellation of any promissory note or other instrument evidencing any of the
Obligations, and each Guarantor shall be and remain obligated to Purchasers
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by Purchasers, such amount to be
included in the term "Obligations."
This Guaranty may be enforced by Purchasers against each Guarantor without
the necessity at any time of Purchasers (a) resorting to or exhausting any other
security or collateral now or hereafter pledged, assigned, or granted to
Purchasers and without the necessity at any time of Purchasers' having recourse
against the Company on the Bridge Notes, or (b) exercising any other rights
available to them under the Bridge Note Purchase Documents if neither the
Company nor Guarantor timely performs the obligations of the Company thereunder.
SECTION 2. NATURE OF OBLIGATIONS.
Each Guarantor acknowledges and agrees that no change in the nature or
terms of the Obligations or the Bridge Note Purchase Documents (including any
novation), whether by operation of law or otherwise, including, without
limitation any impairment, modification, change, release, or limitation of the
liability of the Company or any co-guarantor by reason of the Company's or any
co-guarantor's bankruptcy or insolvency or any subsequent reorganization,
merger, or consolidation of the Company or any other change in its composition,
nature, personnel, or location shall discharge all or any part of the
liabilities and obligations of each Guarantor pursuant to this Guaranty. It is
the purpose and intent of each Guarantor and Purchasers that the covenants,
agreements, and all liabilities and obligations of each Guarantor hereunder are
absolute, unconditional, and irrevocable under any and all circumstances,
including, without limitation, the invalidity or unenforceability of any or all
of the Bridge Note Purchase Documents. Without limiting the generality of the
foregoing, Guarantor agrees that until each and every one of the covenants and
agreements of this Guaranty are fully performed, and all of the obligations
hereunder are paid, performed, satisfied, and discharged in full, Guarantor's
undertakings hereunder and the Pledged Securities shall not be released, in
whole or in part, by any action or thing which might, but for this paragraph of
this Guaranty, be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, omission of Purchasers, or their failure
to proceed promptly or otherwise, or by reason of any action taken or omitted by
Purchasers, whether or not such action or failure to act varies or increases the
risk of, or affects the rights or remedies of, each Guarantor, including,
without limitation, the failure of Purchasers to perfect, or to continue the
perfection of, any lien or security interest in any security or any delay by
Purchasers in perfecting any such lien or security interest, or by reason of any
further dealings between the Company and Purchasers, or any other guarantor or
surety; and each Guarantor hereby expressly waives and surrenders any defense to
its liability hereunder based upon, and shall be deemed to have consented to,
any of the foregoing acts, omissions, things, agreements, or waivers. Without
limiting the generality of the foregoing, each Guarantor hereby gives its
consent for the Purchaser to do any one or more of the following without in any
manner affecting, impairing, limiting, modifying, or releasing any of the
obligations of each Guarantor under this Agreement and without notice to or
consent of each Guarantor: (a) exchange, compromise, or surrender the whole or
any part of any security now or hereafter held for the Obligations; (b)
exchange, extend, or renew the time or place of payment of the Obligations in
whole or in part, to a time certain or otherwise whether or not longer than the
original period, or withdraw credit or time to pay; (c) extend or change the
terms of performance of any other obligations of the Company under the Bridge
Note Purchase Documents; (d) modify, amend, or waive any of the provisions of
the Bridge Note Purchase Documents; (e) release or grant indulgences to the
Company, any co-guarantor, or any party to the Bridge Note Purchase Documents;
(f) receive property or other security as collateral for the Obligations; (g)
fail to exercise due diligence or omit to enforce any right, power, or privilege
under the Bridge Note Purchase Documents; and (h) apply any payment received by
Purchasers from the Company of, or on account of, the Obligations, in any manner
Purchasers elect.
2
<PAGE>
SECTION 3. WAIVER OF RIGHTS.
Each Guarantor expressly waives: (a) notice of the execution and delivery
of the Bridge Note Purchase Documents and creation of the Obligations; (b)
notice of acceptance of this Guaranty by Purchasers and of all extensions of
credit to the Company by Purchasers; (c) presentment and demand for payment of
any of the Obligations; (d) protest and notice of dishonor or of default or
nonpayment to each Guarantor or to any other party with respect to the
Obligations or with respect to any security therefor; (e) notice of the
Purchaser's obtaining, amending, substituting for, releasing, waiving, or
modifying any security interest, liens, or encumbrances now or hereafter
securing the Obligations, or subordinating, compromising, discharging, or
releasing such security interests, liens, or encumbrances by Purchasers and any
other notices whatever; (f) demand for payment under this Guaranty; and (g) all
rights of subrogation, indemnification, contribution, and reimbursement from the
Company, all rights to enforce any remedy Purchasers may have against the
Company, and any benefit of, or right to participate in, any collateral or
security now or hereinafter held by Purchasers in respect of the Obligations,
until the Company shall have paid in full all Bridge Notes issued by the Company
pursuant to (i) the Bridge Note Purchase Agreement of even date herewith, as the
same may hereafter be amended, extended, or modified.
SECTION 4. TERM OF GUARANTY; WARRANTIES.
This Guaranty shall continue in full force and effect until the Obligations
are fully paid, performed, and discharged. Each Guarantor warrants and
represents to Purchasers that (a) each Guarantor will directly benefit from the
financial accommodations being extended to the Company by Purchasers; (b) this
Guaranty is binding upon and enforceable against each Guarantor, in accordance
with its terms; (c) the execution and delivery of this Guaranty do not violate
or constitute a breach of any agreement to which any Guarantor is a party or of
any applicable laws; and (d) there is no litigation, claim, action, or
proceeding pending, or, to the best knowledge of each Guarantor, threatened
against any Guarantor that would materially adversely affect the financial
condition of any Guarantor or its ability to fulfill its obligations hereunder.
SECTION 5. ATTORNEYS' FEES AND COSTS OF COLLECTION.
If at any time or times hereafter Purchasers employ counsel to pursue
collection, to intervene, to sue for enforcement of, or take any other action
with respect to the terms hereof or of the Bridge Notes, then in such event, all
of the reasonable attorneys' fees and disbursements relating thereto and any
other fees and disbursements incurred by or on behalf of the Purchaser,
including costs and legal fees in any appeal due to the failure of the Company
to pay the Obligations when due and payable, shall be an additional liability of
each Guarantor to Purchasers, payable on demand.
SECTION 6. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute
an event of default (an "Event of Default") under this Guaranty: (a) the
failure of a Guarantor to perform, observe, or comply with any of the provisions
of this Guaranty, including, without limitation, the payment provisions; (b) the
occurrence and continuance of an Event of Default (as defined therein) under any
of the Bridge Note Purchase Documents; (c) the receipt by Purchasers of any
materially false, inaccurate, or misleading information contained in any
financial statement, application, schedule, report, or any other document given
by or on behalf of Guarantor in connection with this Guaranty; (d) the entry of
any order for relief under any provision of Title 11 of the United States Code
(entitled "Bankruptcy"), as amended, or under any similar federal or state
statute in any bankruptcy case filed by or against the Guarantor; or (e) the
appointment of a receiver or custodian for, the making of a general assignment
for the benefit of creditors by, or the insolvency of a Guarantor.
Upon the occurrence and during the continuance of an Event of Default under
this Guaranty, Purchasers may, at their option, declare an amount equal to any
or all of the then unpaid balance of the Obligations (whether then due or not)
to be immediately due and payable by Guarantor, and Guarantor shall on demand
pay the same to Purchasers in immediately available funds, in lawful money of
the United States of America.
3
<PAGE>
SECTION 7. GUARANTY SECURED.
The joint and several obligations of the Guarantor hereunder are secured by
a Stock Pledge Agreement among the Company, Guarantor, and Purchasers of even
date herewith, and Purchasers are entitled to all of the rights and privileges
thereof.
SECTION 8. CUMULATIVE RIGHTS.
All rights of Purchasers hereunder or otherwise arising under any of the
Bridge Note Purchase Documents are separate and cumulative and may be pursued
separately, successively, or concurrently, or not pursued, without affecting or
limiting any other right of Purchasers and without affecting or impairing the
liability of Guarantor.
SECTION 9. ASSIGNMENT.
Purchasers may, without notice to or consent of Guarantor and subject to
restrictions on transfer in the Bridge Note Purchase Agreement, sell, assign, or
transfer to any person or persons all or any part of the Obligations, and each
such person or persons shall have the right to enforce this Guaranty as fully as
Purchasers, provided that the Purchaser shall continue to have the unimpaired
right prior and superior to that of any such assignee, transferee, or holder to
enforce this Guaranty as to so much of the Obligations that it has not sold,
assigned, or transferred.
SECTION 10. SUCCESSORS AND ASSIGNS.
This Guaranty shall bind Guarantor and their respective heirs, executors,
administrators, legal representatives, successors, and assigns and shall inure
to the benefit of, and be enforceable by, Purchasers and their heirs, executors,
administrators, legal representatives, successors and assigns, including,
without limitation, each and every person who shall from time to time be or
become the holder of any of the Bridge Note Purchase Documents.
SECTION 11. NOTICES.
Notices under this Guaranty shall be given in writing and shall be deemed
served at the earlier of (a) receipt, (b) three (3) days after deposit in the
United States mail, sent certified or registered mail, return receipt requested,
postage prepaid, or (c) upon receipt by facsimile machine, and addressed to the
parties at the following addresses, or at such other addresses as the parties
shall designate in writing:
If to the Guarantor:
Bruce I. Lewis
Telephone: (__)
Facsimile: (__)
with a copy to:
Jonathan Fleisher
Gasset & Fleisher
116 Simcoe Street
Toronto, Ontario
M5H 4E2
Telephone: (416) 343-8741
Facsimile: (416) 343-4989
If to Purchasers, at the address of each Purchaser on SCHEDULE 1 hereto,
under the caption "Purchaser's name and address" with a copy to such Purchaser's
legal counsel, at the address set forth adjacent to the address of such
Purchaser on SCHEDULE 1 hereto, under the caption "Purchaser's Counsel's name
and address".
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<PAGE>
Personal delivery to a party or to any officer, partner, agent, or employee of
such party at its address herein shall constitute receipt. Rejection or other
refusal to accept or inability to deliver because of changed address of which no
notice has been received also shall constitute receipt.
SECTION 12. AMENDMENT.
This Guaranty may be terminated, amended, supplemented, waived, released or
modified only by an instrument in writing signed by the party against whom the
enforcement of the termination, amendment, supplementation, waiver, release, or
modification is sought.
SECTION 13. USURY.
Notwithstanding any other provisions herein contained, no provision of this
Guaranty shall require or permit the collection from Guarantor of interest in
excess of the maximum rate or amount that Guarantor may be required or permitted
to pay pursuant to any applicable law.
SECTION 14. GOVERNING LAW.
This Guaranty shall be deemed to be a contract made under, and for all
purposes shall be construed and interpreted in accordance with the internal laws
of the State of -----Georgia without giving effect to the principles or rules
governing conflict of laws. The parties further agree that any arbitration
action between them shall be heard in Atlanta, Georgia, and expressly consent to
the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and
the United States District Court for the Northern District of Georgia for the
adjudication of any civil action arising under or by virtue of this Agreement or
the enforcement thereof.
SECTION 15. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS; SEVERABILITY.
This Guaranty may be executed in multiple counterparts, each of which shall
be deemed an original but all of which shall constitute but one and the same
document. Captions are for reference only and in no way limit the terms of this
Guaranty. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but invalidation of any one or more of the provisions of this Guaranty shall in
no way affect any of the other provisions hereof, which shall remain in full
force and effect.
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty under seal as
of the day and year first above written.
[Signatures on following pages]
5
<PAGE>
COMPANY SIGNATURE PAGE
TO
GUARANTY AGREEMENT
THE COMPANY:
THE TRACKER CORPORATION OF AMERICA
By: /s/ Jay S. Stulberg
----------------------
Jay S. Stulberg
[Guarantor signatures on following page]
6
<PAGE>
GUARANTOR SIGNATURE PAGE
TO
GUARANTY AGREEMENT
/s/ Bruce I. Lewis
---------------------
Bruce I. Lewis
7
<PAGE>
SCHEDULE 1
TO
GUARANTY AGREEMENT
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
PURCHASER NAME AND ADDRESS PURCHASER'S COUNSEL'S PRINCIPAL AMOUNT PURCHASED
NAME AND ADDRESS
<S> <C> <C>
Purchaser Name Purchaser's Legal Counsel $
Address and Address and
Facsimile Number Facsimile Number
SovCap Equity Partners, Ltd. Balboni Law Group LLC $ 1,000,000
</TABLE>
8
<PAGE>
{BA013966.DOC} -7- 2/9/00 8:27 AM
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "AGREEMENT") is made effective as of
August 18, 1999, by and among The Tracker Corporation of America, a Delaware
corporation ("TRACKER"), Bruce I. Lewis ("PLEDGING OFFICER"), a resident of the
Province of Ontario and an executive officer of Tracker, Tracker being the
borrower under the Series 1 Bridge Note Purchase and Security Agreement dated
August 18, 1999 (the "PURCHASE AGREEMENT"), by and among Tracker and the
Purchasers thereunder (in such capacity, the "BORROWER"), and the Purchaser(s)
pursuant to the First Closing. Defined terms used and not otherwise defined in
this Stock Pledge Agreement shall have the meanings ascribed to them in the
Purchase Agreement.
BACKGROUND
A. Borrower is indebted to Purchasers in the collective sum of up to
$3,000,000, evidenced by one or more Bridge Notes of Borrower for such amount
issued by Borrower pursuant to the First Closing, a copy/copies of which are
attached hereto as EXHIBIT A.
B. Borrower has agreed to cause certain stock owned by Pledging Officer to
be pledged to Purchasers as security for Pledging Officer's guaranty of the
repayment of the Bridge Notes evidenced by the Guaranty Agreement dated August
18, 1999 executed by Pledging Officer.
In consideration of the foregoing premises, Ten Dollars ($10.00) in hand
paid, and other legal and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree to the following terms
intending to be legally bound thereby.
1. PLEDGE.
In consideration of the transactions consummated under the Purchase
Agreement pursuant to the Second Closing, Pledging Officer hereby pledges and
grants to Purchasers of Second Closing Bridge Notes a security interest in and
to the 600,000 common shares of the capital stock of The Tracker Corporation of
America (the "PLEDGED SHARES").
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<PAGE>
2. TRANSFER AND POSSESSION BY REPRESENTATIVE.
The Pledged Shares shall be delivered at the Second Closing, by the
delivery of a duly endorsed certificate therefor and an attached blank stock
power executed by Pledging Officer. The Pledged Shares shall be held by the
Representative (as defined in the Purchase Agreement) or its designee as
security for the repayment of the Note (which shall not be disposed of except in
accordance with the provisions of paragraph 6 of this Agreement) with duly
executed stock powers attached. Upon the first to occur of either full and
final payment of the First Closing Bridge Notes purchased by Purchaser(s) or the
conversion thereof pursuant to its terms, the Pledged Shares shall be released
from the Pledge as provided pursuant to this Agreement and such shares shall be
returned to Borrower. The Representative's failure to tender any shares so
released from the Pledge within fifteen (15) days after final payment or
conversion shall render this Agreement null and void, PROVIDED that no such
termination of this Pledge Agreement shall be effective unless Borrower or
Pledging Officer shall have given written notice of such failure and Purchasers
shall have had seven (7) days from the later of: (1) the date of the written
notice, or (2) the expiration of such fifteen (15) day period to cure the
failure to tender such Pledged Shares. In order to induce Representative to
serve as escrow agent hereunder, the parties hereby covenant and agree as
follows:
(1) Representative shall be obligated to perform only such duties as
are expressly set forth herein, and shall not be required, in carrying out its
duties, to refer to any agreement, instrument, or document.
(2) Representative may rely on, and shall be protected in acting or
refraining from acting upon, any written notice, instruction, or request
furnished to it pursuant to this Agreement and believed by it to be genuine and
to have been signed or presented by the proper party or parties. Representative
is acting as a depositary only and is not a party to or bound by any agreement
or undertaking which may be evidenced by or arise out of any items delivered to
it pursuant to this Agreement, and is not responsible or liable in any manner
for the sufficiency, correctness, genuineness, or validity of any such items
undertakes no responsibility or liability for the form or execution of such
items or the identity, authority, title, or rights of any person executing or
depositing same. Representative shall not be liable to any of the parties to
this Agreement or their respective heirs, successors and assigns for any action
taken or omitted to be taken in good faith.
(3) In the event of a dispute between any of the parties hereto,
sufficient in the discretion of Representative to justify its doing so,
Representative shall be entitled to tender into the registry or custody of any
court of competent jurisdiction held by Representative under the terms of this
Agreement, together with such legal proceedings as it deems appropriate, and
thereupon to be discharged from all further duties under this Agreement. Any
such legal action may be brought in any such court as Representative shall
determine to have jurisdiction thereof.
(4) Representative shall not earn any fees in connection with its
duties pursuant to this Agreement.
3. VOTING RIGHT AND DIVIDENDS.
During the term of this pledge, and so long as Borrower is not in default
in the performance of any of the terms of this Agreement or the Purchase
Agreement or the Bridge Notes, Pledging Officer or its designee shall have the
right to vote the Pledged Shares on all corporate questions and receive all
dividends or distributions of cash or property distributed in respect of the
Pledged Shares.
4. ADJUSTMENTS.
In the event that, during the term of this Agreement, any share dividend,
reclassification, readjustment, or other change is declared or made in the
capital structure of Tracker, all new, substituted, and additional shares, or
other securities, issued by reason of any such change and in connection with the
Pledged Shares, such new shares shall be held under the terms of this Agreement
in the same manner as the Pledged Shares originally pledged hereunder.
5. WARRANTS AND RIGHTS.
In the event that during the term of this Agreement, subscription
warrants or any other rights or options shall be issued in connection with the
Pledged Shares, such warrants, rights, and options shall be immediately assigned
by Purchasers to Borrower, and if exercised by Purchasers all new shares or
other securities so acquired by Purchasers shall be immediately assigned to the
Borrower to be held under the terms of this Agreement in the same manner as the
Pledged Shares originally pledged hereunder.
6. DEFAULT.
In the event that Borrower defaults in the performance of any of the
terms of this Agreement or the Purchase Agreement, or under the Bridge Notes,
Purchasers shall have the rights and remedies provided in the Uniform Commercial
Code in force in the State of Georgia on the effective date of this Agreement,
and in this connection, Purchasers may, upon five days' notice to Borrower with
a copy to the Representative, sent by certified mail, and without liability for
any diminution in price which may have occurred, sell all the Pledged Shares
remaining in the possession of the Representative (which shares shall be
delivered by the Representative to Purchasers) in such manner and for such price
as the Borrower may determine. At any bona fide public or private sale
2
<PAGE>
Purchasers shall be free to purchase all or any part of the Pledged Shares. Out
of the proceeds of any sale Purchasers may retain any amount equal to the
principal and interest then due on the Bridge Notes plus the amount of all
expenses of such sale, and shall pay any balance of such proceeds to Pledging
Officer less any other amounts owing by Borrower to Purchasers, such as actual
attorneys' fees and costs incurred. In the event that the proceeds of any sale
are insufficient to cover the principal and interest of the Bridge Notes plus
actual attorneys' fees and costs plus expenses of the sale, Borrower shall
remain liable to Purchasers for any deficiency.
7. INDEMNITY.
In consideration of Representative agreeing to serve pursuant to the
terms hereof, each of the parties, jointly and severally, agrees to indemnify
the Representative for any fees, costs and expenses and hold the Representative
harmless from any liability, that may arise from his serving as the
Representative hereunder.
[Remainder of page intentionally left blank; signatures begin on next page]
3
<PAGE>
BORROWER AND REPRESENTATIVE SIGNATURE PAGE
TO
STOCK PLEDGE AGREEMENT
FIRST CLOSING
IN WITNESS WHEREOF, the parties have executed or caused their duly
authorized officer to execute this Agreement as of the date first written above.
BORROWER:
THE TRACKER CORPORATION OF AMERICA
By: /s/ Jay S. Stulberg
----------------------
Jay S. Stulberg
REPRESENTATIVE:
SOVCAP EQUITY PARTNERS, LTD.
By: /s/ Barry W. Herman
----------------------
Name: Barry W. Herman
Title: President
PLEDGING OFFICER:
Bruce I.Lewis
4
<PAGE>
PURCHASER SIGNATURE PAGE
TO
STOCK PLEDGE AGREEMENT
FIRST CLOSING
PURCHASER:
By:
Name:
Title:
5
<PAGE>
