FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to __________
Commission File No. 2-8381-NY
ARISTA INVESTORS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2957684
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 John Street, New York, N.Y. 10038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 964-2150
Indicate by check mark whether the registrant has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No____
The aggregate number of Registrant's outstanding shares on August 13, 1996 was
2,570,100 Class A Common Stock, $0.01 par value (excluding 10,000 shares of
treasury stock) and 47,400 Class B Common Stock, $0.01 par value.
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<PAGE>
ARISTA INVESTORS CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets at June 30, 1996 3
(Unaudited) and December 31, 1995
Consolidated Statements of Operations (Unaudited) for 5
the three months and six months ended June 30, 1996
and 1995
Consolidated Statements of Changes in Stockholders' 6
Equity, for the six months ended June 30, 1996
(Unaudited) and the year ended December 31, 1995
Consolidated Statements of Cash Flows (Unaudited) 7
for the six months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 8
(Unaudited)
Item 2. Management's Discussions and Analysis of
Financial Condition and Results of Operations:
Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1 through Item 6 13
Signatures 14
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<PAGE>
PART I. FINANCIAL INFORMATION
ARISTA INVESTORS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
------
Investments:
Held to maturity securities:
Bonds and long-term U. S. Treasury
obligations at amortized cost (market
value - $2,688,657 at June 30, 1996
and $2,692,276 at December 31, 1995) $ 2,702,497 $ 2,654,939
Available-for-sale securities:
Redeemable preferred stocks, at market value
(amortized cost of $84,149 at June 30,
1996 and $141,344 at December 31, 1995) 79,776 129,502
Trading security, at market value (cost of
$1,279 at June 30, 1996 and December 31,
1995) 364 660
----------- -----------
Total investments 2,782,637 2,785,101
Cash and equivalents 7,011,560 6,777,328
Premiums receivable, net 2,248,856 2,565,853
Deferred policy acquisition costs, net 957,598 1,060,381
Furniture and office equipment, at cost, net of
accumulated depreciation of $696,138 at June
30, 1996 and $661,552 at December 31, 1995 165,229 193,549
Prepaid and refundable income taxes 1,088,909 765,877
Notes receivable shareholder, secured 500,000 --
Other assets 1,180,143 926,114
----------- -----------
Total Assets $15,934,932 $15,074,203
=========== ===========
</TABLE>
(Continued)
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable to reinsurers $ 97,022 $ 161,476
Net claims liabilities 2,200,291 2,263,158
Net unearned premiums 752,095 664,105
Net commissions payable 1,500,040 1,303,888
Accounts payable and accrued expenses 1,181,054 772,969
Deferred income taxes 544,929 622,427
Surplus note payable, net 2,857,500 2,850,000
------------ ------------
Total liabilities 9,132,931 8,638,023
------------ ------------
Commitments and contingencies: (Note 2)
Stockholders' equity:
Class A common stock, $.01 par value;
9,950,000 shares authorized; 2,580,100 shares and outstanding at June 30,
1996 and 1,940,600 shares issued and outstanding at December 31,
1995 25,801 19,406
Common stock, Class B, $.01 par value; 50,000 shares authorized, 47,400
shares issued and outstanding 474 474
Additional paid-in capital 5,082,259 4,193,354
Paid-in capital attributed to detachable
warrant 150,000 150,000
Retained earnings 1,574,876 2,111,528
Net unrealized loss on marketable securities (4,669) (11,842)
------------ ------------
6,828,741 6,462,920
Less 10,000 shares Class A common stock in
treasury, at cost (26,740) (26,740)
------------ ------------
Total Stockholders' Equity 6,802,001 6,436,180
------------ ------------
Total Liabilities w/Stockholders' Equity $ 15,934,932 $ 15,074,203
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Gross premiums earned (Note 2) $ 5,664,980 $ 6,521,075 $ 11,609,000 $ 13,070,553
Ceded premiums earned (Note 2) 2,832,490 3,260,537 5,804,500 6,535,276
------------ ------------ ------------ ------------
Net premiums earned 2,832,490 3,260,538 5,804,500 6,535,277
Net realized investment losses 0 0 (208) (137)
Investment income 99,539 51,669 191,323 108,045
Other income 60,299 82,884 125,807 127,562
------------ ------------ ------------ ------------
Total revenue 2,992,328 3,395,091 6,121,422 6,770,747
------------ ------------ ------------ ------------
Expenses:
Underwriting (Note 2):
Gross claims incurred 3,936,081 3,770,974 7,901,038 8,485,320
Ceded claims incurred 1,968,041 1,885,487 3,950,519 4,242,660
------------ ------------ ------------ ------------
Net claims incurred 1,968,040 1,885,487 3,950,519 4,242,660
------------ ------------ ------------ ------------
Gross commissions incurred 1,020,401 1,069,874 2,118,064 2,176,105
Ceded commissions incurred 772,394 1,309,841 1,665,335 2,161,910
------------ ------------ ------------ ------------
Net commissions incurred (earned) 248,007 (239,967) 452,729 14,195
------------ ------------ ------------ ------------
Total underwriting expenses 2,216,047 1,645,520 4,403,248 4,256,855
General and administrative expenses 1,286,536 1,155,835 2,459,826 2,347,405
------------ ------------ ------------ ------------
Total expenses 3,502,583 2,801,355 6,863,074 6,604,260
------------ ------------ ------------ ------------
Income (loss) before income taxes (benefits) (510,255) 593,736 (741,652) 166,487
Provision for income taxes (benefits) (154,600) 218,690 (205,000) 90,732
------------ ------------ ------------ ------------
Net income (loss) (355,655) 375,046 (536,652) 75,755
============ ============ ============ ============
Net income (loss) per common share ($ 0.14) $ 0.16 ($ 0.21) $ 0.03
============ ============ ============ ============
Weighted average number of common
shares outstanding 2,617,500 2,330,977 2,617,500 2,318,404
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Six months ended June 30, 1996 (unaudited) and year ended December 31, 1995
<TABLE>
<CAPTION>
Class A Class B
Common Stock Common Stock
------------------------- ------------------------
Number Par Number Par Additional
of value of value Paid-in
Shares $.01 Shares $.01 capital
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1995 1,940,600 $ 19,406 47,400 $ 474 $4,193,354
Net gain -- -- -- -- --
Net investment gains -- -- -- -- --
Issuance of surplus note -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Balance - December 31, 1995 1,940,600 19,406 47,400 474 4,193,354
Net loss (unaudited) -- -- -- -- --
Net investment gains (unaudited) -- -- -- -- --
Proceeds from issuance of shares of Class A
Common Stock under the Incentive Stock Option
Plan, from a Warrant and from a Non-qualified
Stock Option 639,500 6,395 -- -- 888,905
---------- ---------- ---------- ---------- ----------
Balance - June 30, 1996 (unaudited) 2,580,100 $ 25,801 47,400 $ 474 $5,082,259
========== ========== ========== ========== ==========
<CAPTION>
Paid-in
capital Class A
attributed Net common
to unrealized stock
Retained detachable loss on held in
earnings warrants investments treasury Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1995 $1,855,005 $ -- ($ 30,278) ($ 26,740) $6,011,221
Net gain 256,523 -- -- -- 256,523
Net investment gains -- -- 18,436 -- 18,436
Issuance of surplus note -- 150,000 -- -- 150,000
---------- ---------- ---------- ---------- ----------
Balance - December 31, 1995 2,111,528 150,000 (11,842) (26,740) 6,436,180
Net loss (unaudited) (536,652) -- -- -- (536,652)
Net investment gains (unaudited) -- -- 7,173 -- 7,173
Proceeds from issuance of shares of Class A
Common Stock under the Incentive Stock Option
Plan, from a Warrant and from a Non-qualified
Stock Option -- -- -- -- 895,300
---------- ---------- ---------- ---------- ----------
Balance - June 30, 1996 (unaudited) $1,574,876 $ 150,000 ($ 4,669) ($ 26,740) $6,802,001
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (536,652) $ 75,755
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 34,586 23,896
Discount on surplus note 7,500 --
Amortization of deferred acquisition costs 212,085 154,614
Amortization of intangible assets -- 62,241
Deferred income taxes/(benefit) (77,498) (9,769)
(Increase) decrease in operating assets:
Premiums receivable 316,997 572,250
Prepaid and refundable income taxes (323,032) 10,372
Notes receivable shareholder, secured (500,000) --
Other assets (254,029) (211,546)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses 408,085 (179,682)
Payable to reinsurer (64,454) 37,343
Net claims liabilities (62,867) (104,019)
Net unearned premiums 87,990 143,393
Commissions payable 196,152 358,055
----------- -----------
Net cash provided by (used in) operating activities (562,637) 932,903
----------- -----------
Cash flows from investing activities:
Capital expenditures (6,266) (43,729)
Proceeds from sale of investments 57,195 2,237
Purchases of investments (47,558) (207,082)
Payments to acquire new insurance business (109,302) (514,259)
----------- -----------
Net cash used in investing activities (105,931) (762,833)
----------- -----------
Cash flows from financing activities:
Issuance of Class A common stock 895,300 --
----------- -----------
Net cash provided by financing activities 895,300 --
----------- -----------
Increase in cash and equivalents 234,232 170,070
Cash and equivalents:
Beginning of year 6,777,328 2,724,864
----------- -----------
June 30, $ 7,011,560 $ 2,894,934
=========== ===========
Supplemental cash flow disclosure:
Cash paid during the period for income taxes $ 196,407 $ 221,797
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and 1995
(Unaudited)
Note 1 - Basis of presentation
The accompanying consolidated financial statements are prepared on the basis of
generally accepted accounting principles ("GAAP"). GAAP differs from statutory
accounting principles ("SAP") used by insurance companies in reporting to state
regulatory agencies. In the opinion of the management of Arista Investors Corp.
(the "Company" or the "Registrant"), all adjustments (consisting of normal
recurring accruals only) have been reflected for a fair presentation of the
unaudited financial position as of June 30, 1996 and results of operations for
the six-month and three-month periods ended June 30, 1996 and 1995. The
operating results for the periods are not necessarily indicative of the results
to be expected for the entire year.
Note 2 - Reinsurance
From October 1, 1993 to September 30, 1995, Arista had a quota share reinsurance
agreement with NRG America Reassurance Corporation (during 1995, its name was
subsequently changed to Harbourton Reinsurance, Inc., "Harbourton") whereby
Arista ceded, by way of reinsurance, a 50% quota share of Arista's liability
with respect to New York Statutory Disability benefits issued to policyholders.
For this, Harbourton will receive a fee based on premiums ceded.
Effective October 1, 1995, Arista entered into an agreement with The Cologne
Life Reinsurance Company ("Cologne") whereby Arista cedes, by way of
reinsurance, a 50% quota share participation in Arista's statutory disability
benefits insurance, both for business in force as of October 1, 1995 and for new
business written or acquired after October 1, 1995. This agreement is subject to
cancellation by either party on 90 days' prior written notice.
A contingent liability exists with respect to reinsurance ceded which would
become a liability of Arista in the event that the reinsurer is unable to meet
its proportionate share of the obligations assumed under the Agreement.
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and 1995
(unaudited)
Note 3 - Related parties
Bernard Kooper, President of the Company, Chairman of the Boards of Directors of
the Company and Arista and a Director of The Collection Group, Inc. and
beneficially owns 20.43% and 100% of the outstanding shares of Class A and Class
B Common Stock, respectively (including 30,400 shares of Class A Common Stock
owned by Arlyne Kooper, wife of Bernard Kooper), which includes 365,000 shares
of the Company's Class A Common Stock issued upon the exercise of a warrant in
June 1996. This does not include shares of Class A Common Stock by Louis H.
Saltzman, son-in-law of Mr. Kooper. Mr. Kooper is also the owner of Bernard
Kooper Life Agency, Inc. (the "Agency"), one of the general agents of Arista.
The Agency received approximately $110,000 and $111,000 in commissions from
Arista during the six months ended June 30, 1996 and 1995, respectively. Of this
amount, the Agency paid approximately $78,000 and $80,000 during the six months
ended June 30, 1996 and 1995, respectively, to brokers, which included certain
members of the Board of Directors of the Company and Arista. The amount paid to
members of the Board of Directors of the Company and\or Arista by the Agency was
approximately $13,000 and $11,000 during the six months ended June 30, 1996 and
1995, respectively.
Note 4 - Policy acquisitions
Arista has incurred costs under various agreements it has entered into while
acquiring the right to offer New York State statutory disability benefits
coverage to former policyholders of other disability carriers. The costs include
professional fees and finder's fees as well as fees paid directly to these
disability carriers for such right. For financial statement purposes, such costs
are deferred and are being amortized to income over five years. These costs, for
all acquisitions, amounted to $2,331,761 and $2,194,159 at June 30, 1996 and
1995, respectively. Accumulated amortization was $1,374,163 and $1,039,526 at
June 30, 1996 and 1995, respectively.
Amortization of deferred acquisition costs charged to operations aggregated
$166,050 and $154,614 for the six months ended June 30, 1996 and 1995,
respectively.
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<PAGE>
ARISTA INVESTORS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1996
(Unaudited)
Results of Operations
The Company's after tax loss for the first six months of 1996 was approximately
$590,000; the Company's after tax loss for the second quarter ended June 30,
1996 was approximately $409,000. For the first six months of 1995, the Company's
net income after taxes was approximately $76,000; for the second quarter ended
June 30, 1995, the Company had net income of approximately $375,000. The
principal reasons for the decrease in income from operations in 1996 were an
increase in the incurred loss ratio and a decrease in gross premiums earned as
well as additional expenses incurred as a result of the issuance of Arista's
surplus note.
Arista's gross premiums earned were approximately $11.6 million and $13.1
million for the first six months of 1996 and 1995, respectively. Gross premiums
earned for the second quarters of 1996 and 1995 were approximately $5.7 million
and $6.5 million, repectively. This decrease was due to Arista's termination of
its assumption reinsurance agreement during the first quarter of 1996 wherein
Arista had assumed Hawaii Temporary Disability Insurance Business that had been
ceded by Allianz Life Insurance Company of North America together with a
continuation of the net loss of covered lives as well as policyholders.
Arista's gross claims incurred for the first six months of 1996 were
approximately $7.9 million, representing 68.1% of the gross premiums earned. For
the first six months of 1995, gross claims incurred were approximately $ 8.5
million, representing 64.9% of gross premiums earned. For the second quarters of
1996 and 1995, the ratios were 69.5% and 57.8%, respectively. It is not possible
for management to predict whether or not such short-range quarterly changes in
the gross claims incurred are indicative of any trend.
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<PAGE>
ARISTA INVESTORS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1996
(Unaudited)
Consolidated investment income for the first six months of 1996 and 1995 were
approximately $191,000 and $108,000, respectively. For the second quarters of
1996 and 1995, consolidated investment income was approximately $100,000 and
$52,000 respectively. This increase reflects income earned on the proceeds
received by Arista upon the issuance of a surplus note.
Other income for the first six months of 1996 and 1995 was approximately
$125,000 and $127,000, respectively. Other income includes third-party
administration fees of approximately $120,000 and $94,000 earned by Arista
during the first six months of 1996 and 1995, respectively. This increase was
attributable to additional business serviced under Arista's third-party
administration agreements. For the second quarter of 1996 and 1995, other income
was approximately $60,000 and $83,000, respectively. This quarterly change was
mainly attributable to interest earned on a federal income tax refund received
in 1995.
Arista's gross commissions incurred as a percentage of gross premiums earned
were 18.2% and 16.7% for the first six months of 1996 and 1995, respectively. In
addition, the ratios of gross commissions incurred to gross premiums earned
during the second quarters of 1996 and 1995 were 18.0% and 16.4%, respectively.
The principal reason for these changes were an increase in the number of smaller
risks in force through recent acquisitions, generating an increase in the level
of top-of-scale commissions.
The consolidated general and administrative expenses for the first six months of
1996 and 1995 were approximately $2.5 million and $2.3 million, respectively.
This increase was due principally to interest expense incurred during the first
six months of 1996 of approximately $165,000 on the surplus note issued by
Arista. For the second quarters of 1996 and 1995, the consolidated general and
administrative expenses were approximately $1,287,000 and $1,156,000
respectively.
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<PAGE>
ARISTA INVESTORS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
June 30, 1996
(Unaudited)
Liquidity and Capital Resources
Retained earnings increased from $6,436,180 at December 31, 1995 to $6,802,001
at June 30, 1996 as a result of the Company's issuance of 639,500 shares of
Class A Common Stock upon the exercise of warrants, non-qualified stock options
and incentive stock options. This increase was offset by a net loss of
approximately $537,000 for the first six months of 1996.
Management believes that Arista's statutory capital and surplus of approximately
$5.7 million at June 30, 1996 is sufficient to support its current annual
premium level as well as provide additional annual premiums of approximately
$12.0 million.
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<PAGE>
ARISTA INVESTORS CORP.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Nothing to report.
Item 2. Changes in Securities
Nothing to report.
Item 3. Defaults Upon Senior Securities
Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders
Nothing to report.
Item 5. Other Information
On June 14, 1996, Arista Investors Corp. (the "Company") announced that the
Company obtained an option to acquire all of the issued and outstanding shares
of Class B Common Stock held by Mr. Kooper, its Chairman of the Board and
President.
In addition, the Company reported that Mr. Kooper, the holder of a warrant
to acquire 365,000 shares of the Company's Class A Common Stock, due to expire
on June 15, 1996, exercised the warrant by delivering $11,000 in cash and a
five-year Secured Promissory Note in the amount of $500,000 to the Company. The
note is payable in a lump sum in five years and is secured by the 365,000 shares
of Class A Common Stock issued upon the exercise. Interest on the note is
payable quarterly.
The Company's five-year option to acquire the 47,400 shares of Class B
Common Stock is exercisable by a vote of the majority of the Class A directors
by delivering either cash or an equal number of shares of Class A Common Stock,
plus canceling the Secured Promissory Note. The option terminates upon Mr.
Kooper's death.
The Company also announced that several other officers and employees
exercised options and paid in full the exercise price of $384,300, which options
were due to expire on June 15, 1996. The Company issued in the aggregate 274,500
shares of Class A Common Stock.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit Number 10.37 -- Secured Promissory Note, dated June 14, 1996,
issued by Bernard Kooper to Arista Investors
Corp. in the aggregate principal amount of
$500,000.
Exhibit Number 10.38 -- Pledge and Escrow Agreement, dated June 14,
1996, Investors Corp., as pledgee and
Morrison Cohen Singer & Weinstein, LLP, as
escrow agent.
Exhibit Number 10.39 -- Letter Agreement, dated June 14, 1996, between
Bernard Kooper and Arista Investors Corp.,
granting Arista Investors Corp. an option to
acquire 47,400 shares of its Class B common
stock, par value $.01 per share.
Exhibit Number 27 -- Financial Data Schedule
b. Reports on Form 8-K: None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ARISTA INVESTORS CORP. (Registrant):
BY: /S/ BERNARD KOOPER
----------------------------------------
BERNARD KOOPER, President and
Chairman of the Board (principal
executive officer)
BY: /S/ SUSAN J. HALL
----------------------------------------
SUSAN J. HALL, Senior Vice President
and Treasurer (principal financial
and accounting officer)
August 13, 1996
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EXHIBIT 10.37
SECURED PROMISSORY NOTE
$500,000.00 June 14, 1996
1. FOR VALUE RECEIVED, the undersigned, BERNARD KOOPER, an individual
having an address at 18 Harriet Drive, Syosset, New York 11791 (the "Obligor"),
hereby promises to pay to the order of ARISTA INVESTORS CORP., a New York
corporation, having its principal place of business at 116 John Street, New
York, New York 10038 (the "Payee"), the principal sum of FIVE HUNDRED THOUSAND
AND 00/100 DOLLARS ($500,000.00), together with interest at a rate of 7.50% per
annum, and on the first day of every October, January, April and July commencing
on October 1, 1996, such rate shall be adjusted to the one year Libor Rate as
announced in The Wall Street Journal (on such date or, if the anniversary date
is a weekend or a holiday, the first Business Day (as defined in paragraph 7)
thereafter), plus 1.25% (such rate hereinafter referred to as the "Applicable
Rate").
2. Accrued but unpaid interest on this secured promissory note (the "Note")
shall be payable quarterly on the last day of September, December, March and
June, commencing September 1996, and at the maturity date. Unless sooner paid,
the entire principal balance and accrued interest shall be due and payable on
June 14, 2001.
3. The occurrence of any one of the following events shall constitute an
event of default (each an "Event of Default") by Obligor under this Note:
(a) if the Obligor defaults with respect to (i) any repayment of the
principal amount of his obligations hereunder when due and payable, whether at
stated maturity, upon acceleration or otherwise, or (ii) the payment of any
interest on the Obligor's obligations hereunder when due and payable or declared
due and payable, and Obligor fails to cure such default within five (5) days
from receiving written notice from the Payee of such default;
(b) if a petition under any section or chapter of the United States
Bankruptcy Code or any similar law or regulation is filed by Obligor or if the
Obligor shall make an assignment for the benefit of his creditors;
(c) if Obligor is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of his business affairs or
if a petition under any section or chapter of the United States Bankruptcy Code
or any similar law or regulation is filed against the Obligor and such
injunction, restraint or petition is not dismissed or stayed within forty-five
(45) days after entry or filing thereof;
(d) if application is made by Obligor for the appointment of a
receiver, trustee or custodian for the Obligor's assets; or
<PAGE>
(e) if an application is made by any person other than the Obligor for
the appointment of a receiver, trustee or custodian for the Obligor's assets and
such application is not dismissed within forty-five (45) days after the
application therefor.
Upon the occurrence and during the continuance of any Event of Default, the
entire unpaid principal amount of this Note, the interest accrued thereon, and
all obligations of the Obligor hereunder to the holder hereof may be declared to
be immediately due and payable without further notice or demand; provided,
however, that if an Event of Default occurs as described in subparagraphs 3(b),
(c), (d) or (e) of this Note, the entire unpaid principal amount owed hereunder,
all interest accrued thereon, and all other obligations of the undersigned to
the holder hereof shall become immediately due and payable without declaration
or further notice or demand. During any period in which an Event of Default
(after giving effect to any applicable cure period) as described in subparagraph
3(a) of this Note shall have occurred and be continuing, whether or not the
unpaid amount of this Note shall have been accelerated, the rate of interest
payable hereunder with respect to any such amounts remaining unpaid shall bear
interest until such amounts are paid in full at a rate of the lesser of (a) 50%
above the Applicable Rate per annum and (b) 15% per annum. In no event shall any
interest to be paid hereunder exceed the maximum rate permitted by law. In any
such event, this Note shall automatically be deemed amended to permit interest
charges at an amount equal to, but not greater than, the maximum rate permitted
by law.
4. In the event that the option, dated as the date hereof (the "Option"),
granted by Obligor to Payee to acquire 47,400 shares of Payee's Class B common
stock, par value $.01 per share, is exercised by Payee or terminates in
accordance with the terms of the Option, the entire unpaid principal amount of
this Note, the interest accrued thereon, and all obligations of the Obligor
hereunder to the Payee shall become immediately due and payable without
declaration or further notice or demand.
5. As security for the due and punctual payment of the principal and
interest payments and all other obligations hereunder, this Note is secured by a
pledge of stock as set forth in that certain pledge and escrow agreement dated
as of the date hereof (the "Pledge Agreement"), by and among Obligor, Payee and
Morrison Cohen Singer & Weinstein, LLP, as escrow agent. Reference is hereby
made to the Pledge Agreement for a description of the nature and the extent of
the collateral security and the rights of the Obligor and Payee thereunder.
In the event that Obligor defaults in the performance of any of his
obligations under this Note or the Pledge Agreement and Payee sells or otherwise
disposes of the Collateral (as defined under the Pledge Agreement) in accordance
with the Pledge Agreement, any proceeds from such sale or other disposition in
excess of the entire principal amount and all unpaid interest due and payable to
Payee under this Note shall be promptly delivered by Payee to Obligor. In the
event that the proceeds from such sale or other disposition are less than the
entire principal amount and all unpaid interest due and payable under this Note,
Obligor shall remain personally liable to Payee for the difference.
2
<PAGE>
6. Principal may be prepaid without penalty, in whole or in installments of
One Thousand Dollars ($1,000) or multiples thereof, or such lesser amounts as
the Payee may agree to in writing, at any time and from time to time. Any
prepayments shall first be applied to accrued but unpaid interest, and then to
outstanding principal.
7. All sums payable hereunder shall be payable in lawful money of the
United States of America at the Payee's address listed above, or, upon receipt
of notification by the Obligor, at such other place designated in writing by the
Payee. If the date on which any payment is required to be made hereunder is not
a Business Day (as defined hereinafter), then such date for payment shall be
extended to the next succeeding Business Day. "Business Day" means any day other
than a day on which banks in New York City are authorized or required by law or
executive order to be closed.
8. This Note shall be construed and enforced in accordance with the laws of
the State of New York.
9. The Obligor hereby waives presentment, demand for payment, notice of
dishonor, protest and notice of protest, and any or all other notices or demands
in connection with this Note. The liability of the Obligor hereunder shall be
unconditional and shall not be in any manner affected by any indulgence
whatsoever granted or consented to by the holder hereof, including but not
limited to any extension of time, renewal, waiver or other modification. Any
failure of the Payee or holder hereof to exercise any right hereunder shall not
be construed as a waiver of the right to exercise the same or any other right at
any time and from time to time thereafter.
10. The rights, duties and obligations of the Obligor under this Note may
not be assigned without the prior written consent of the Payee. The rights,
duties and obligations of the Payee under this Note may be assigned without the
prior written consent of the Obligor.
11. This Note, if and to the extent required, shall be subject to any and
all applicable federal and state securities laws and any other applicable
federal and state laws.
3
<PAGE>
IN WITNESS WHEREOF, Obligor has executed and delivered this Note to Payee
in New York, New York as of the date first written above.
OBLIGOR:
/s/ Bernard Kooper
--------------------------------
BERNARD KOOPER
EXHIBIT 10.38
PLEDGE AND ESCROW AGREEMENT
AGREEMENT, dated as of June 14, 1996, by and among Bernard Kooper residing
at 18 Harriet Drive, Syossett, New York 11791 ("Pledgor"), Arista Investors
Corp., a Delaware corporation located at 116 John Street, New York, New York
10038 ("Pledgee") and Morrison Cohen Singer & Weinstein, LLP located at 750
Lexington Avenue, New York, New York 10022, counsel for the Pledgee as escrow
agent (the "Escrow Agent").
W I T N E S E T H
WHEREAS, Pledgor exercised a warrant to purchase 365,000 shares of Class A
Common Stock, par value $.01 per share, of Pledgee (the "Shares") at an exercise
price of $1.40 per share for an aggregate exercise price of $511,000;
WHEREAS, Pledgor has executed and delivered a $500,000 secured promissory
note (the "Note") in favor of Pledgee in payment for a portion of the exercise
price of the Shares;
WHEREAS, in order to secure the performance by the Pledgor of his
obligations under the Note (the "Obligations") the parties hereto have agreed to
enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. Security Interest Granted.
As security for the due and punctual payment of the payments of
interest thereon and principal at maturity and all other Obligations under the
Note, the Pledgor hereby pledges, assigns, transfers, sets over and grants to
the Pledgee a continuing general lien and first security interest in all right,
title and interest in and to the Collateral described in Paragraph 2 hereof.
2. Collateral.
The Collateral covered by this Agreement is as follows (hereinafter
collectively referred to as the "Collateral"):
(a) The Shares (such securities and any additional securities
delivered to the Escrow Agent pursuant to subparagraph 3(b) below, being
hereinafter collectively referred to as the "Pledged Securities"); and
(b) any and all proceeds in whatsoever form of any of the
foregoing.
3. Deposit of Pledged Securities; Release of Pledge.
(a) On the date hereof, the Pledgor has tendered to the Pledgee,
and the Pledgee has deposited with and delivered to the Escrow Agent, a stock
certificate in the
<PAGE>
name of the Pledgor representing the Shares together with an appropriate stock
power related thereto duly executed in blank. The Escrow Agent shall hold the
Collateral in pledge in accordance with the provisions of this Paragraph 3.
(b) In the event that any distribution in the form of property,
cash (including dividends) and/or securities issued by Pledgee is made on or
with respect to the Pledged Securities such additional property, cash and/or
securities promptly shall be delivered to the Escrow Agent and shall become a
part of the Collateral pledged by the Pledgor hereunder. In the event of a
merger, consolidation, reorganization, recapitalization, stock dividend,
split-up, combination of shares, or other change in capital structure of
Pledgee, there shall be substituted for the Pledged Securities all proceeds,
income, profits, property and/or securities arising out of any such event. Until
the occurrence of a default in the performance of the Obligations, the Pledgor
shall have all voting rights in and to the Pledged Securities, provided that the
Pledgor shall not vote the Pledged Securities in any manner that would result in
a default in the performance of or be adverse to the Pledgee with respect to (i)
this Agreement or (ii) the Obligations.
(c) Upon the discharge in full of the Obligations, whether by
payment or otherwise, the Pledgor shall be entitled to send notice thereof to
the Escrow Agent and the Pledgee stating that the Pledgor is entitled to the
release and delivery from the pledge of the Collateral. The Escrow Agent shall
deliver the Collateral to the Pledgor ten (10) days after its receipt of such
notice, unless the Pledgee shall have delivered to the Escrow Agent within such
ten (10) day period a certification that the Pledgor has not discharged in full
the Obligations and specifying in reasonable detail the manner in which such
Obligations have not been discharged. Upon the delivery by the Escrow Agent of
the Collateral to the Pledgor, the security interest herein created shall
terminate and be of no further force or effect.
(d) In the event that the Pledgor defaults in the performance of
the Obligations or this Agreement, the Pledgee shall be entitled to (i) send
notice thereof to the Escrow Agent and the Pledgor specifying the nature of such
default and stating that the Pledgee is entitled to delivery of the Collateral
and (ii) complete the stock power described in subparagraph 3(a) above and vote
the Pledged Securities and be entitled to any distributions issued by Pledgee on
or with respect to the Pledged Securities regardless of whether the Collateral
has been delivered to the Pledgee pursuant to subparagraph 3(e) below. The
Escrow Agent shall deliver the Pledged Securities to the Pledgee ten (10) days
after its receipt of such notice, unless the Pledgor shall have delivered to the
Escrow Agent within such ten (10) day period a certification that the Pledgor is
not in default in the performance of the Obligations or this Agreement and
specifying in reasonable detail why he is not in default.
(e) Upon (but not before) the delivery of the Collateral to the
Pledgee by the Escrow Agent in accordance with the foregoing, the Pledgee shall
thereafter be entitled to proceed against and foreclose upon the Collateral and
otherwise exercise all of the rights, powers, privileges and remedies of a
secured party with respect thereto as provided in the Uniform Commercial Code
then in force in the State of New York. Notice of the intended date
2
<PAGE>
and place of any foreclosure sale, whether private or public, or other
disposition of the Collateral or any part thereof, shall be deemed to be
reasonably given by the Pledgee to the Pledgor if given to the Pledgor at least
ten (10) days prior to such sale or other disposition.
4. Escrow Agent.
(a) The Escrow Agent shall have no duties or responsibilities except
those expressly set forth herein.
(b) The Escrow Agent shall have no liability hereunder except for
wilful misconduct or gross negligence.
(c) The Escrow Agent shall have no responsibility as to the validity
or value of the Collateral held in escrow hereunder. Furthermore, the Escrow
Agent shall have no duty as to the collection or protection of the Collateral
(or any additional securities issued by the Company which may be distributed on
or with respect to the Pledged Securities) or income thereon, nor as to the
preservation of any rights pertaining thereto, beyond the safe custody of any
such Collateral actually in its possession.
(d) The Escrow Agent may rely on any certificate, statement, request,
consent, agreement, instrument or other document which it believes to be genuine
and to have been signed or presented by a proper person or persons.
(e) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions from any party hereto
with respect to the Collateral held in pledge hereunder which, in its opinion,
are in conflict with any of the provisions of this Agreement or any instructions
received from the other party to this Agreement, the Escrow Agent shall be
entitled: (i) to refrain from taking any action other than to keep the
Collateral until such time as there has been a final determination of the rights
of the Pledgee and the Pledgor with respect to the Collateral as hereinafter
provided or (ii) to deposit the Collateral held in pledge hereunder into court
pursuant to relevant statutes and commence an action in interpleader in order to
obtain a judicial determination as to the party legally entitled to receive the
Collateral. In the event of such an interpleader action, or any action against
the Escrow Agent with regard to the Escrow, the Escrow Agent's costs and
expenses, including reasonable attorney's fees (either paid to retained
attorneys or representing the fair value of legal services rendered by the
Escrow Agent to itself) with regard thereto, shall be reimbursed to the Escrow
Agent by the party determined by a court of competent jurisdiction not to be
entitled to the Collateral. The Escrow Agent shall have a lien on the escrow to
the extent of such costs and expenses.
For purposes of this subparagraph 4(e), there shall be deemed to have
been a final determination of the rights of the Pledgee and the Pledgor with
respect to the Collateral at such time as either the Pledgee or the Pledgor
shall deliver to the Escrow Agent either (i) an official certified copy of a
court order, together with an opinion of counsel of the party filing
3
<PAGE>
the foregoing, in form and substance acceptable to the Escrow Agent, stating
that the court order is a final determination of the rights of the parties
hereto with respect to the Collateral, that the time to appeal from said court
order has expired, and that said court order is binding upon the Pledgee and the
Pledgor, or (ii) an executed counterpart of any agreement between the Pledgee
and the Pledgor which provides for the disposition of the Collateral.
(f) The Pledgee and the Pledgor jointly and severally agree to
indemnify the Escrow Agent and hold it harmless from and against any and all
losses, liabilities, damages and costs incurred by the Escrow Agent in respect
of anything done or omitted by it in the performance of its duties under this
Agreement (except as a result of the Escrow Agent's own wilful misconduct or
gross negligence) as well as the costs and expenses of defending any claim or
demand related thereto. As between themselves, the Pledgee and the Pledgor each
agree to bear fifty percent (50%) of all amounts paid or reimbursed to the
Escrow Agent pursuant to this subparagraph 4(f), except as provided in
subparagraph 4(e).
(g) The Escrow Agent, or any successor to it hereafter appointed, may
at any time resign and be discharged of the duties imposed hereunder by giving
notice to the Pledgee and the Pledgor, such resignation to take effect upon a
successor Escrow Agent's acceptance of appointment.
5. Modification. The terms of this Agreement may not be changed, varied,
modified, or altered except by a writing signed by the Pledgee and the Pledgor;
provided, however, that no such change, variation, modification, or alteration
which affects the duties of the Escrow Agent hereunder shall be binding upon it
without its prior written consent. A copy of any change, variation, modification
or alteration of this Agreement to which the written consent of the Escrow Agent
is not required shall promptly be furnished to the Escrow Agent by the Pledgee
or the Pledgor.
6. Non-Waiver of Rights; Cumulative Remedies; Further Assurances.
No delay or omission on the part of the Pledgee in exercising any of
its rights hereunder, nor the acquiescence in or waiver by the Pledgee of a
breach of any term, covenant or condition or this Agreement shall be deemed or
construed to operate as a waiver of such rights or acquiescence thereto except
in the specific instance for which given. Any single or partial exercise of any
right hereunder shall not thereafter preclude any other or further exercise of
any other rights. The rights and remedies of the Pledgee hereunder are
cumulative and not exclusive of any rights or remedies provided by law or
hereunder and all such rights or remedies may be exercised singularly or
concurrently. Each party will execute and deliver, or cause to be duly executed
and delivered, such further instruments and documents and do or use its best
efforts to cause to be done such further acts as may be necessary in the other
party's opinion to effectuate the provisions or purposes of this Agreement.
7. Notices. Any notices or other communications to be given, made or
provided for under this Agreement shall be in writing and be deemed to have been
duly given by its delivery personally to the person or persons specified below
or by it being sent by
4
<PAGE>
registered or certified mail, return receipt requested, to the following
addresses, or to such other addresses as any party hereto shall hereafter
specify by notice to the other party or parties hereto:
(a) If to the Pledgor, to:
Bernard Kooper
18 Harriet Drive
Syossett, New York 11791
(b) With copy to:
Bernard Kooper
451 Park Avenue South
New York, New York 10016
(c) If to the Pledgee, to:
Arista Investors Corp.
116 John Street
New York, New York 10038
Attn: Stanley S. Mandel, Executive Vice President
With a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
Attn: Stephen A. Cohen, Esq.
(d) If to the Escrow Agent, to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
Attn: Stephen A. Cohen, Esq.
Any notice or other communication provided hereunder by registered or certified
mail shall be deemed given, made and provided ten (10) days after such notice or
communication is sent by registered or certified mail, as the case may be.
5
<PAGE>
8. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
9. Applicable Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York without regard to
its principles of conflict of laws.
10. Consent to Jurisdiction. The parties to this Agreement, acting for
themselves and for their respective successors and assigns, hereby expressly and
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent and subject
themselves to the jurisdiction of, the courts of the State of New York located
in New York City, and/or the United States District Court for the Southern
District of New York, in respect of any matter arising under this Agreement.
Service of process, notices and demands of such courts may be made upon any
party to this Agreement by personal service at any place where such party may be
found or giving notice to such party as provided in Paragraph 7.
11. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. Compliance with Law. This Agreement, if and to the extent required,
shall be subject to any and all applicable federal and state securities laws and
any other applicable federal and state laws.
13. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed and delivered shall be deemed an original, and all of
which taken together shall constitute one and the same Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
ARISTA INVESTORS CORP.
By: /s/ Stanley S. Mandel
--------------------------------
Name: Stanley S. Mandel
Title: Executive Vice President
/s/ Bernard Kooper
--------------------------------
BERNARD KOOPER
ESCROW AGENT:
Morrison Cohen Singer & Weinstein, LLP
By /s/ Stephen A. Cohen
----------------------------------
7
EXHIBIT 10.39
[LETTERHEAD OF BERNARD KOOPER]
June 14, 1996
Arista Investors Corp.
116 John Street
New York, New York 10038
Re: Option to Purchase 47,400 Shares
of Class B Common Stock, $.01 Par Value Per
Share, of Arista Investors Corp.
-------------------------------------------
Dear Sirs:
This letter will confirm my agreement to grant to Arista Investors Corp.
(the "Company") and its designees and assigns, an option (the "Option") to
acquire 47,400 shares (the "Class B Shares") of Class B common stock, $.01 par
value per share, of the Company, which constitutes all of the Company's issued
and outstanding Class B Shares. Reference is made to that certain warrant that
has been issued to me by the Company for the purchase of 365,000 shares of the
Company's Class A common stock, par value $.01 per share (the "Class A Shares")
at an exercise price of $1.40 per share, for an aggregate exercise price of
$511,000 (the "Warrant Exercise Price"). The Option shall contain the terms as
set forth in this letter and the grant shall be made in consideration for the
terms and covenants set forth herein.
<PAGE>
1. Agreement to Grant Option. I agree to grant the Option to you in
consideration for your acceptance as full payment of the Warrant Exercise Price
of (a) $11,000 in immediately available funds that I will (i) wire to an account
designated by you, or (ii) deliver to you via a certified or bank cashier's
check payable to the order of the Company, and (b) the execution and delivery by
me, as maker, of a secured promissory note (the "Note") to the Company, as
payee, of $500,000, in the form attached hereto as Exhibit A.
2. Terms of Option. The Option shall have the following terms:
(a) Exercise Date. The Option may be exercised by you (or your
designees or assigns) in whole but not in part, at any time at or before June
14, 2001 (the "Exercise Date"), except that such Option shall terminate
immediately upon my death. In order to exercise this Option, you shall require a
vote of the majority of the Class A directors.
(b) Exercise Price. The Option shall be exercisable for an exercise
price (the "Option Exercise Price") that equals (1) at the Company's option,
either (i) the delivery of 47,400 Class A Shares that are duly authorized and
validly issued by the Company to me, or (ii) a cash payment by the Company to me
of the Fair Market Value (as defined below) of 47,400 Class A Shares as of the
date on which the Company exercises this Option, and (2) upon payment by me to
the Company of any and all accrued but yet unpaid interest under the Note, the
cancellation and extinguishment of the principal amount of the Note. "Fair
Market Value" means the average of the highest bid and lowest asked price
quotations (whether or not such quotations represent actual trades) reported by
NASDAQ, Inc., during the five (5) Business Days (as defined in subparagraph
2(c)) prior to the date on which this Option is exercised.
2
<PAGE>
(c) Exercise of Option. You agree that you will give me at least one
day but no more than 5 days prior written notice of your intention to exercise
the Option and that upon the exercise of the Option you will deliver to me (1)
at the Company's option, either (i) a duly authorized, validly issued stock
certificate of the Company representing 47,400 Class A Shares which shall be
free and clear of any liens, claims, security interests, or other encumbrance of
any kind, or (ii) a certified or bank cashier's check payable to the order of me
in an amount equal to the Fair Market Value of 47,400 Class A Shares as of the
date on which the Company exercises this Option, and (2) evidence reasonably
satisfactory to me of the cancellation and extinguishment of the aggregate
principal amount of the Note. In exchange for such deliveries, I agree to
concurrently deliver to you (1) certificate(s) representing all of my Class B
Shares which shall be free and clear of any liens, claims, security interests,
or other encumbrance of any kind, and (2) a certified or bank cashier's check
from me payable to the order of the Company in an amount equal to any and all
interest accrued but yet unpaid under the Note. The closing for the exercise of
this Option shall occur at least one day but no more than 5 days after notice of
an intention to exercise this Option is given by the Company to me or if such
date is not a Business Day (as defined hereinafter), then the closing shall
occur on the next succeeding Business Day unless the parties hereto mutually
agree that the closing shall occur on another day. "Business Day" means any day
other than a day on which banks in New York City are authorized or required by
law or executive order to be closed.
(d) If prior to the Exercise Date, any change is made with respect to
the outstanding common stock of the Company whether by stock dividend, stock
split, exchange of stock or any other change in corporate structure of the
Company, the number of Class A Shares
3
<PAGE>
and Class B Shares referred to in this Option shall be adjusted appropriately so
as to reflect such change and maintain the Option and the Option Exercise Price.
3. Assignment. Your rights and obligations under this letter agreement are
freely transferable and assignable by you, subject to applicable law, and shall
be binding and inure to the benefit of your successors and assigns. My rights
and obligations hereunder may not be transferred or assigned without the prior
written consent of the Company.
4. Counterparts. This letter agreement may be executed in counterparts,
each of which when so executed and delivered shall be deemed an original, and
all of which taken together shall constitute one and the same letter agreement.
5. Choice of Law. This letter agreement shall be governed by and construed
in accordance with the laws of the State of New York.
6. Compliance with Law. This Option, if and to the extent required, shall
be subject to any and all applicable federal and state securities laws and any
other applicable federal and state laws.
7. Notices. Any notices or other communications to be given, made or
provided for under this letter agreement shall be in writing and be deemed to
have been duly given by its delivery personally to the person or persons
specified below or by its being sent by registered or certified mail, return
receipt requested, to the following addresses, or to such other addresses as any
party hereto shall hereafter specify by notice to the other party or parties
hereto:
a. If to the Pledgor, to:
Bernard Kooper
18 Harriet Drive
4
<PAGE>
Syossett, New York 11791
b. With copy to:
Bernard Kooper
451 Park Avenue South
New York, New York 10016
c. If to the Pledgee, to:
Arista Investors Corp.
116 John Street
New York, New York 10038
Attn: Stanley S. Mandel, Executive Vice President
With a copy to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
Attn: Stephen A. Cohen, Esq.
d. If to the Escrow Agent, to:
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
Attn: Stephen A. Cohen, Esq.
Any notice or other communication provided hereunder by registered or
certified mail shall be deemed given, made and provided ten (10) days after such
notice or communication is sent by registered or certified mail, as the case may
be.
8. Miscellaneous. In the event that it shall ever be determined by
applicable law that delivery of this Option by me is a sale, gift, transfer or
in any manner, a conveyance of my Class B Shares pursuant to Article Fourth,
Subsection E(2) of the Company's Certificate of
5
<PAGE>
Incorporation, the Company shall promptly deliver to me the consideration that I
would be entitled to receive from the Company upon exercise of this Option in
accordance with subparagraph 2(c) hereof. In exchange for such deliveries, I
agree to concurrently deliver to the Company a certified or bank cashier's check
from me payable to the order of the Company in an amount equal to any and all
interest accrued but yet unpaid under the Note.
6
<PAGE>
Please indicate your agreement with the foregoing by executing one copy of
this letter in the space provided below and returning a fully executed copy to
me.
Very truly yours,
/s/ Bernard Kooper
Bernard Kooper
AGREED AND ACCEPTED:
ARISTA INVESTORS CORP.
By: /s/ Stanley S. Mandel
--------------------------------
Name:
Title:
7
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1994 DEC-31-1993
<PERIOD-END> JUN-30-1996 DEC-31-1995 DEC-31-1994 DEC-31-1993
<DEBT-HELD-FOR-SALE> 0 0 0 0
<DEBT-CARRYING-VALUE> 2,702,497 0 0 0
<DEBT-MARKET-VALUE> 2,688,657 0 0 0
<EQUITIES> 80,140 0 0 0
<MORTGAGE> 0 0 0 0
<REAL-ESTATE> 0 0 0 0
<TOTAL-INVEST> 2,782,637 0 0 0
<CASH> 7,011,560 0 0 0
<RECOVER-REINSURE> 0 0 0 0
<DEFERRED-ACQUISITION> 957,598 0 0 0
<TOTAL-ASSETS> 15,934,932 0 0 0
<POLICY-LOSSES> 2,200,291 0 0 0
<UNEARNED-PREMIUMS> 752,095 0 0 0
<POLICY-OTHER> 0 0 0 0
<POLICY-HOLDER-FUNDS> 0 0 0 0
<NOTES-PAYABLE> 2,857,500 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 26,275 0 0 0
<OTHER-SE> 6,775,726 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 15,934,932 0 0 0
5,804,500 0 0 0
<INVESTMENT-INCOME> 191,323 0 0 0
<INVESTMENT-GAINS> (208) 0 0 0
<OTHER-INCOME> 125,807 0 0 0
<BENEFITS> 3,950,519 0 0 0
<UNDERWRITING-AMORTIZATION> 166,050 0 0 0
<UNDERWRITING-OTHER> 4,411,840 0 0 0
<INCOME-PRETAX> (741,652) 0 0 0
<INCOME-TAX> (205,000) 0 0 0
<INCOME-CONTINUING> (536,652) 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (536,652) 0 0 0
<EPS-PRIMARY> (0.21) 0 0 0
<EPS-DILUTED> (0.21) 0 0 0
<RESERVE-OPEN> 4,526,316 4,921,446 4,168,000 4,321,400
<PROVISION-CURRENT> 6,491,069 0 0 0
<PROVISION-PRIOR> 1,409,969 0 0 0
<PAYMENTS-CURRENT> 3,831,866 12,213,891 12,489,251 11,500,803
<PAYMENTS-PRIOR> 4,194,906 4,770,091 4,510,003 4,545,583
<RESERVE-CLOSE> 4,400,582 4,526,316 4,921,446 4,168,000
<CUMULATIVE-DEFICIENCY> 0 0 (190,648) (342,003)
</TABLE>
