SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 [Fee Required]
For the Fiscal Year ended December 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange of 1934 [No Fee Required]
For the Transition Period From to
Commission File No. 33-31639
FINCA CONSULTING, INC.
Exact Name of Registrant as Specified in its Charter
COLORADO 84-1101572
State or Other Jurisdiction of IRS Employer
Incorporation or Organization Identification Number
Koenigsallee 106, 40215 Duesseldorf, Germany
Address of Principal Executive Offices , Zip Code
011-44-171-431-4529
Registrants Telephone Number, Including Area Code
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
NONE NONE
Securities Registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
The Registrant's revenues for the fiscal year ended December 31, 1996, were
$86,163,171.
The aggregate market value of the common stock held by non-affiliates of the
Registrant cannot be determined because there has been no appreciable trading in
the stock for the past several years.
As of December 31, 1996, 10,300,322 shares of Common Stock, $.01 par
value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX
<PAGE>
FINCA CONSULTING, INC.
CONTENTS
PART I.
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a
Vote of Security Holders
PART II.
Item 5. Market for Registrant's Common
Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Managements' Discussion and
Analysis of Financial Condition
and Results of Operation
Item 8. Financial Statements and
Supplementary Data
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure
PART III.
Item 10. Directors and Executive Officers
of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain
Beneficial Owners
and Management
Item 13. Certain Relationships
and Related Transactions
PART IV.
Item 14. Exhibits, Financial Statement
Schedules, and Reports on 8-K
<PAGE>
PART I
ITEM 1: BUSINESS
(a) General Development of Business
The Corporation was incorporated in Colorado on October 25,
1988 for the purpose of acquiring or completing a merger with
another company. Effective July 22, 1991, the Company entered
into a common stock exchange agreement with Finca Consulting
Costa Brava, S.A., a company organized under the laws of the
country of Spain, whereby the Company transferred essentially
100% of its net assets to Finca Consulting Costa Brava, S.A.
As a result of the merger, Finca Consulting Costa Brava, S.A.
remained as the sole ongoing entity for accounting purposes.
Finca Consulting Costa Brava, S.A. is located in and was
incorporated in Spain on June 14, 1989 and its principal
business is acting as a real estate broker for sales of
Spanish properties, mainly holiday homes.
In January 1991, the Corporation formed a wholly-owned
subsidiary, Finca Consulting GmbH, incorporated in Germany,
for the purpose of engaging in the buying, selling and
administration of Spanish real estate. That company, however,
did not generate expected revenues and, in April 1996, the
Company sold its interest in Finca Consulting GmbH for the
amount of DM100,000 to its officers and shareholders. As a
consequence of this divestiture, Finca Consulting GmbH's
accumulated deficit at January 1, 1996 in the amount of
$1,833,125 is reflected as an adjustment to the Corporation's
consolidated accumulated deficit.
In July 1992, the Corporation entered into and consummated a
common stock exchange agreement with King National
Corporation, a U.S. corporation, pursuant to which the
Corporation acquired a 100% ownership of Opti- Wert-Interest
AG ("OWI-AG") a Swiss corporation. OWI-AG, whose name was
changed to Prime Core AG in September 1996, is engaged in the
buying and selling of marketable securities and options on
behalf of its customers in Germany via a network of
independent brokers. Prime Core AG's securities brokerage
business remains the Corporation's sole source of revenues.
The sale of securities, including futures options contracts
are subject to regulation in Germany by the Banking
Supervisory Authority.
<PAGE>
The Corporation is currently subject to the reporting
requirements of the Securities Exchange Act of 1934, as
amended. The Corporation has the authority to issue an
aggregate of Twenty Million (20,000,000) common shares, par
value $.01 and Twenty Million (20,000,000) preferred shares,
$.00001 par value.
As of December 31, 1996, there were outstanding 10,300,322
Common Shares.
The Corporation did not acquire or dispose of any material
amount of assets during the fiscal year ended December 31,
1996.
<PAGE>
(b) Financial Information About Industry Segments.
The Corporation operates in two business segments, acting as a
real estate broker for sales and rentals of properties in
Europe and, through its subsidiary, Prime Core AG, the buying
and selling of marketable securities and options on behalf of
Prime Core AG's customers in Germany. The Company did not
realize any revenues from its real estate business during
1996, 1995 and 1994.
The Corporation's businesses operate primarily in Europe.
Information regarding each geographic area on an
unconsolidated basis for 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers
Real estate sales ............................... $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............................. 86,163,171 86,163,171
Operating income (loss) continuing operations
Real estate sales ............................... 0 (25,000) 0 (25,000)
Marketable securities
and option sales ............................. 0 (3,813,342) 0 (2,813,342)
Other income (expense) ............................... 0 (178,167) 0 (178,167)
------------ ------------ ------------ ------------
Net (Loss) ........................................... 0 (3,016,509) 0 (3,016,509)
Identifiable assets at December 31, 1995 ............. 0 7,767,670 0 7,767,670
General corporate assets ............................. 0 0 0 0
------------ ------------ ------------ ------------
Total Assets ................................... $ 0 $ 7,767,670 $ 0 $ 7,767,670
============ ============ ============ ============
<PAGE>
<CAPTION>
December 31, 1995
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers
Real estate sales ............................... $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............................. 0 49,409,821 0 49,409,821
Operating income (loss)
Real estate sales ............................... 0 (25,000) 0 (25,000)
Marketable securities
and option sales ............................. 0 (1,272,928) 0 (1,272,928)
Other income (expense) ............................... 0 90,906 0 90,906
------------ ------------ ------------ ------------
Net (Loss) ........................................... 0 (1,207,022) 0 (1,207,022)
Identifiable assets at December 31, 1995 ............. 0 8,360,186 0 8,360,186
General corporate assets ............................. 0 0 0 0
------------ ------------ ------------ ------------
Total Assets ................................... $ 0 $ 8,360,186 $ 0 $ 8,360,186
============ ============ ============ ============
<PAGE>
<CAPTION>
December 31, 1994
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers
Real estate sales ............................... $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............................. 0 18,900,827 0 18,900,827
Operating (loss)
Real estate sales ............................... 0 (25,000) 0 (25,000)
Marketable securities
and option sales ............................. 0 (2,325,897) 0 (2,325,897)
Other income (expense) ............................... 0 (33,476) 0 (33,476)
------------ ------------ ------------ ------------
Net (Loss) ........................................... 0 (2,384,373) 0 (2,384,373)
Identifiable assets at December 31, 1994 ............. 0 2,407,100 0 2,407,100
General corporate assets ............................. 0 0 0 0
------------ ------------ ------------ ------------
Total Assets ................................... $ 0 $ 2,407,100 $ 0 $ 2,407,100
============ ============ ============ ============
</TABLE>
<PAGE>
(c) Narrative Description of Business
The Corporation and its subsidiaries operate in two segments,
acting as a real estate broker for sales and rentals of
properties in Europe and the buying and selling of marketable
securities and options on behalf of its customers in Germany
through its subsidiary, Prime Core AG, a Swiss corporation
("PC-AG"). PC-AG currently operates 3 offices in Germany which
oversee the activities of a network of brokers throughout that
country, who are independent contractors.
Historically, the Company operated solely in the European real
estate market. However, since its acquisition of PC-AG, in
July, 1992, the Company has focused its business operation
chiefly in the buying and selling of equities and options on
behalf of German customers.
The Corporation and its subsidiaries derived revenues from its
real estate operations in the approximate amount of $36,369 in
1992. No revenues were earned from this business segment in
fiscal years 1993 to 1996. The Corporation and its
subsidiaries generated revenues from its securities brokerage
operations of $86,163,171 in 1996, $49,409,821 in 1995, and
$18,900,827 in 1994. The significant growth in revenues from
1994 to 1996 occurred as a consequence of a concerted effort
by the Company to expand its network of independent brokers in
Germany, its primary market, in response to a rapidly
developing acceptance of stock and option equities as
investment vehicles in that country.
Neither industry segment in which the Corporation does
business is seasonal. The Corporation is not dependent upon a
single customer or a few customers. Accordingly, the loss of
any one or more of such customers would not have a material
adverse effect on either industry segment.
In its securities brokerage operations, the Corporation
competes with established companies, private investors,
limited partnerships and other entities (many of which may
possess substantially greater resources than the Corporation)
in connection with its brokerage business securities and
options brokerage business. A majority of the companies with
which the Corporation competes are substantially larger, have
more substantial histories, backgrounds, experience and
records of successful operations, greater financial,
technical, marketing and other resources, more employees and
more extensive facilities than the Corporation now has, or
will have in the foreseeable future. It is also likely that
other competitors will emerge in the near future. The
Corporation competes with these entities on the basis of
service and sales commissions.
<PAGE>
The Corporation and its subsidiaries at this time employ no
personnel in its real estate operations and 22 full time
persons and no part time persons in its securities brokerage
operations.
(d) Financial information about foreign and domestic
operations and export sales.
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers ...................... $ 0 $ 86,163,171 $ 0 $ 86,163,171
Operating (loss) ..................................... 0 (2,838,342) 0 (2,838,342)
Other income (expense) ............................... 0 (178,167) 0 (178,167)
Net (Loss) ........................................... 0 (3,016,509) 0 (3,016,509)
Identifiable assets at December 31, 1995 ............. $ 0 $ 7,767,670 $ 0 $ 7,767,670
General corporate assets ............................. 0 0
------------
Total Assets ................................... $ 7,767,670
============
<CAPTION>
December 31, 1995
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers ...................... $ 0 $ 49,409,821 $ 0 $ 49,409,821
Operating (loss) ..................................... 0 (1,297,928) 0 (1,297,928)
Other income (expense) ............................... 0 90,906 0 90,906
Net (Loss) ........................................... 0 (1,207,022) 0 (1,207,022)
Identifiable assets at December 31, 1995 ............. $ 0 $ 8,360,186 $ 0 $ 8,360,186
General corporate assets ............................. 0 0
------------
Total Assets ................................... $ 8,360,186
============
<PAGE>
<CAPTION>
December 31, 1994
---------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers ...................... $ 0 $ 18,900,827 $ 0 $ 18,900,827
Operating (loss) ..................................... 0 (2,350,897) 0 (2,350,897)
Other income (expense) ............................... 0 (33,476) 0 (33,476)
Net (Loss) ........................................... 0 (2,384,373) 0 (2,384,373)
Identifiable assets at December 31, 1994 ............. $ 0 $ 2,407,100 $ 0 $ 2,407,100
General corporate assets ............................. 0
------------
Total Assets ................................... $ 2,407,100
============
</TABLE>
<PAGE>
ITEM 2: Properties
In January 1992, the Corporation entered into a lease
agreement for 9,600 square feet of office space in Dusseldorf,
Germany. The lease required a deposit of $37,345 and calles
for monthly rental payments of $12,448 through December 1996.
The monthly rent may be increased based on a price index and
the lease provides for a five year renewal option. The
Corporation also, through its subsidiary PC-AG, leases 5,500
square feet of office space in Zug, Switzerland, as well as
automobiles and office equipment under operating leases. The
Corporation paid $117,195 for the year ended December 31,
1996, $116,695 for the year ended December 31, 1995, and
$113,455 for the year ended December 31, 1994, pursuant to
above leases.
ITEM 3: LEGAL PROCEEDINGS
Many aspects of the Company's business involve risks of
liability. The Company has been named as a defendant in civil
actions arising in the ordinary course of business out its
activities in securities and futures options contracts. In the
opinion of management of the Company, however, the Company is
not involved in any litigation or legal proceedings that would
have a material effect upon its financial condition, except as
indicated below.
Regulatory Matters
Securities regulations in Germany are enforced by the German
Banking Authorities (the "Bundesaufsichtsamt fuer das
Kreditwesen", or the "BAK"). The BAK administers and enforces
the German banking act (the "Gesetz fur das Kreditwesen", or
the "KWG"). The Company's brokerage business in the past and
as currently operated utilizes the services of independent
brokers in Germany to solicit German customers who are
referred to the Company's Swiss- based subsidiary, Prime Core
AG, which maintains dministrative offices in Zug,Switzerland.
Previously, the KWG or German banking laws, loosely defined
brokers and financial services activities and operations. The
mainstream securities brokerage business in Germany was and
continues to be performed by German banks or firms which are
members of recognized stock exchanges. Because of the loosely
defined terms and regulations of the "BAK", many firms conduct
securities brokerage and financial services businesses without
being members of established stock exchanges nor in
association with an established German bank. The Corporation's
securities brokerage business operations, similarly situated
and not conducted as a bank or stock exchange member, has
operated in what is called in Germany the "gray market".
<PAGE>
As of January 1, 1998, Germany has adopted new regulations
that will require entities who conduct any financial services
business of any kind, including securities brokerage and
investment services, to register with the German authorities
in order to conduct and, in the Company's case, to continue
performing securities brokerage business in Germany. If the
Company does not comply with these new German regulations, the
continuation of its securities business in Germany could be
subject to enforcement proceedings which could have a material
advers effect on the Company's financial condition. The
Company, however, fully intends to comply with the new German
legal requirements and is now taking all measures necessary
for its securities brokerage business to be in full
compliance. It is unclear, however and notwithstanding the
Company's current efforts to comply, whether the Company will
be in full compliance with the new regulations on or shortly
after January 1, 1998. The Company's German-based advisors
have informed the Company that it will be, perhaps, six months
before the Company's securities brokerage business is in full
compliance with the new regulations. Under these
circumstances, if the German banking regulators, or the "BAK",
were to institute enforcement proceedings against the Company
in Germany, it could have material adverse effects on the
financial condition of the Company.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders
during the fourth quarter of this fiscal period.
<PAGE>
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a)(1)(i) The Corporation's securities are not currently trading on
any market nor on any exchange.
(b) As of December 31, 1996, there were approximately 2,111
shareholders of record for the Corporation's Common
Stock.
(c) The Corporation has not declared or paid any cash
dividends.
ITEM 6: SELECTED FINANCIAL DATA
The selected financial information presented below under the captions
"Statement of Operations" and "Balance Sheet" for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 is derived from the
financial statements of the Corporation and should be read in
conjunction with the financial statements and notes thereto.
<TABLE>
<CAPTION>
For The Year Ended
December 31,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance Sheet
Total Assets .................................. $ 7,767,670 $ 8,360,186 $ 2,407,100 $ 1,816,882 $ 1,810,428
Long Term Debt ................................ 0 0 0 0 0
Minority Interests in Subsidiary .............. 45,632 45,632 45,632 45,632 45,632
Total Stockholders' Equity .................... $ 4,415,305 $ 5,862,009 $ 1,248,603 $ 628,821 $ 1,456,690
<CAPTION>
December 31,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of Operations
Revenues from continuing operations ........... $ 86,163,171 $ 49,409,821 $ 18,900,827 $ 16,603,901 $ 2,692,445
Cost of Shares and Options .................... $ 68,525,189 $ 37,695,202 $ 14,450,630 $ 13,728,846 $ 1,749,426
Gross Profit ............................... $ 17,637,982 $ 11,714,619 $ 4,450,197 $ 2,675,055 $ 943,019
Selling general and administrative
expenses ................................... $ 20,476,324 $ 13,012,547 $ 6,801,094 $ 5,314,366 $ 2,732,421
------------ ------------ ------------ ------------ ------------
Operating income (loss) ....................... $ (2,838,342) $ (1,297,928) $ (2,350,897) $ (2,439,311) (1,789,402)
Other income (expense) ........................ $ (178,167) $ (90,906) $ (33,476) $ (18,320) $ 2,765
Net (loss) from continuiing operations ........ $ (3,016,509) $ (1,207,022) $ (2,384,373) $ (2,457,631) $ (1,786,637)
Extraordinary income .......................... $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------ ------------
Net Income (Loss) ............................. $ (3,016,509) $ (1,207,022) $ (2,384,373) $ (2,457,631) $ (1,786,637)
============ ============ ============ ============ ============
Loss per common share of
outstanding and subscribed stock
(from continuing operations) ............... $ (0.48) $ (0.56) $ (1.11) $ (1.20) $ (1.77)
</TABLE>
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Quarter Ended December 31, 1996
The Corporation's wholly owned Swiss subsidiary Prime Core AG
("PC-AG") continues to be the sole source of revenues for the
Corporation. PC-AG operates a securities brokerage business in
Germany, utilizing commissioned sales brokers to sell equity
stocks and options to its customers in Germany.
For the quarter ended December 31, 1996 the Corporation had
revenues of $19,110,756, resulting in a net loss of $481,636,
compared to revenues of $26,941,605 and a profit of $1,382,273
in the fourth quarter a year ago. The primary reason for the
loss are high selling, general, and administrative expenses
which although less than in the fourth quarter of 1995 due to
lower brokerage fees as a result of the lesser sales volume,
still amounted to $4,603,402 for the quarter, compared to
$5,176,526 for the same quarter a year ago.
Year Ended December 31, 1996
For the year ended December 31, 1996, the Corporation had
gross revenues of $86,163,171, generated exclusively by its
subsidiary PC-AG through its securities brokerage business in
Germany. For the same year, the Corporation experienced a net
loss of $3,016,509. The loss is attributable to relatively
high operating expenses which amounted to $20,476,324 for the
year, the majority of which were incurred by PC-AG. PC-AG
utilizes the administrative services of a German affiliate
owned jointly by the officers and directors of the Company,
Prime Core Makler GmbH, which provides the infrastructure and
facilities for the Company's network of brokers, in its equity
securities and options business. During fiscal year 1996, the
Corporation, through PC-AG, paid Prime Core Makler GmbH
$5,659,749 for these administrative services and $7,026,135 in
brokerage fees.
<PAGE>
Fiscal Year 1996 Compared to Fiscal Year 1995
During both 1996 and 1995, the Corporation's revenues were
substantially all derived from PC-AG's securities brokerage
activities in Germany. There were no revenues from real estate
operations in either 1996 or 1995. Revenues in 1996 totaled
$86,163,171 compared to $49,409,821 in 1995. The Company in
1996 achieved gross profits of $17,637,982 or 20.5% of
revenues as opposed to $11,714,619 or 23.7% of revenues in
1995. The decrease in the gross margin and resulting relative
profits, however, coupled with the significant increase in
expenses which totaled $20,476,324 for the year compared to
$13,012,547 in 1995, caused the Company to incur a loss for
the year of $3,016,509, compared to a loss of $1,207,022 in
1995. The loss in 1996 includes an amount of $470,217
attributable to a non-recurring loss on disposition of a
subsidiary: see Note 4 to Notes to Financial Statements,
attached hereto.
At December 31, 1996, working capital amounted to $1,733,069,
as opposed to $3,800,538 on December 31, 1995. The decrease in
working capital was a direct consequence of the losses
incurred. Although management considers cash reserves
sufficient to fund current and expected future operations, it
is taking steps to streamline operations in order to decrease
costs and thereby avert a further erosion of liquidity.
Fiscal Year 1995 Compared to Fiscal Year 1994
During 1995 the Corporation's revenues of $49,409,821 were all
derived from PC-AG's securities brokerage activities in
Germany. The same held true in 1994 when revenues totaled
$18,900,827. There were no revenues from real estate
operations in either 1995 or 1994. The Company in 1995
achieved gross profits of $11,714,619 or 23.7% of revenues as
opposed to $4,450,197 or 23.5% of revenues in 1994. In spite
of the increase in revenues and the increase in the gross
profits, however, the Company incurred a loss for the year,
primarily due to the increase in selling, general and
administrative expenses which totaled $13,012,547 during the
year, as compared to $6,801,094 a year ago.
<PAGE>
At December 31, 1995, working capital amounted to $3,800,536,
as opposed to $106,872 on December 31, 1994. Current assets at
year's end included high cash balances representing customers'
prepayments, as a direct consequence of the expansion of
business. The Company obtained the necessary funding to
finance its expansion through the private placement during the
year with European investors pursuant to Regulation S
promulgated under the Securities Act of 1933, as amended, of a
total of 2,404,775 shares of its preferred stock which, after
deduction of related expenses yielded $6,139,878 for the
Company. During 1994 the Company obtained additional financing
in a similar fashion through placement of an aggregate of
1,688,146 shares of its preferred stock, for net receipts of
$3,578,378. These fund inflows helped offset cash flow
deficits from operations, primarily due to the losses incurred
in both years.
Fiscal Year 1994 Compared to Fiscal Year 1993
During 1994 the Corporation's revenues of $18,900,827 were all
derived from PC-AG's securities brokerage activities in
Germany as compared to PC-AG's revenues of $16,603,901 in
1993. There were no revenues from real estate operations in
either 1994 or 1993. The Company in 1994 achieved gross
profits of 4,450,197 or 23.5% of revenues as opposed to
$2,875,055 or 17.3% of revenues in 1993. In spite of the
increase in revenues and the increase in the gross profits in
both absolute and relative terms, the net loss in 1994 was
only marginally less than in 1993 - i.e. $2,384,373 as
compared to $2,457,631.
During the year ended December 31, 1994, the Corporation
experienced a net outflow of cash from operations in the
amount of $2,408,770 compared to a deficit of $1,562,856 in
1993. The deficit in 1994 was almost entirely due to the
losses experienced during the year which accounted for
approximately 96% of that amount. The negative cash flow from
operations was offset through new funding from financing
activities which produced $2,818,498 in 1994 and $1,654,161 in
1993.
<PAGE>
Most of the cash flow from financing activities during both
years represented proceeds derived from the private placement
of the Corporation's Common and Preferred Shares with German
investors pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Corporation's Financial Statements and Notes to Financial
Statements are attached hereto as Exhibit A and incorporated
herein by reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Changes in Registrant's Certifying Accountant.
(a)
304(a)(1)(i): Neil James & Associates, P.C., Registrant's former
independent accountant previously engaged as the principal accountant to audit
the Registrant's financial statements, was dismissed on December 18, 1995.
(a)(1)(ii): Mr. Neil James & Associates, P.C. did not issue any
reports on the Registrant's financial statements for the past two
fiscal years.
(a)(1)(iii): The Registrant's Board of Directors recommended
and approved the hiring of Rosenberg Rich Baker Berman & Company
Certified Public Accountants, 380 Foothill Road, Bridgewater, New
Jersey as the Registrant's principal independent accountant and to
dismiss Neil James & Associates, P.C.
(a)(1)(iv)(A): Registrant is unaware of any disagreements
between Registrant and Neil James & Associates, P.C. on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
(a)(1)(iv)(B)(1),(2) and (3): Not applicable.
(a)(1)(iv)(C): Not applicable.
(a)(1)(iv)(D): Not applicable.
<PAGE>
(a)(1)(iv)(E): Registrant authorized its former accountant, Neil James
& Associates, P.C., to respond fully to inquiries of Rosenberg Rich Baker Berman
& Company, its successor accountant, concerning the subject matter of each and
every disagreement or event, if any, known by Registrant's former accountant.
(a)(2): Registrant's new independent auditors are Rosenberg Rich Baker
Berman & Company who were engaged on December 15, 1995.
(a)(2)(i): Registrant's management engaged in general business
conversation with its new accountant, who did not, during such conversations,
render any advice to Registrant, oral or written, which was an important factor
considered by Registrant in reaching any accounting, auditing or financial
reporting issue decisions.
(a)(2)(ii): Registrant's management did not consult its new accountant
regarding any matter that was the subject of a disagreement or event referred to
in (a)(1)(iv) above since Registrant is unaware and has no knowledge of any such
disagreement or event.
(a)(2)(ii)(A),(B), and (C): Not applicable.
(a)(2)(ii)(D): Registrant has requested its new accountant to review
the disclosure required by this Item before it is filed with the Securities and
Exchange Commission and has been provided the opportunity to furnish Registrant
with a letter addressed to the Commission containing any new information,
clarification of Registrant's expression of its views, or the respects in which
it does not agree with the statements made in response to this Item.
<PAGE>
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The names and ages of all directors and executive officers of the Corporation
are as follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
---- -------- -----------------
<S> <C> <C>
Volker Montag, Age 44 President, Chief Financial Officer July 22, 1991 to Present
and Director
Roland Schoneberg, Age 40 Secretary, Vice President and Director November 1, 1995 to Present
</TABLE>
There are no family relationships among the Corporation's Officers and
Directors.
All Directors of the Corporation hold office until the next annual meeting of
the shareholders and until successors have been elected and qualified. Executive
Officers of the Company are appointed by the Board of Directors at the annual
meeting of the Corporation's Directors and hold office for a term of one year or
until they resign or are removed from office.
Resumes:
Volker Montag - Mr. Montag was born in Essen, Germany and makes his home in
Weeze, Germany. From 1990 he has been an officer and Director of King National
Corporation (acquired by the Corporation in July 1992.) From 1988 to 1990, Mr.
Montag was the Managing Director of Opti-Wert Interest, AG (now, Prime Core AG
of Zug, Switzerland), a Swiss brokerage company, which is a wholly owned
subsidiary of the Corporation.
Roland Schoneberg - Mr. Schoneberg was born in Germany and
currently lives in Cologne, Germany. He has been serving as
director of the Company since November 1995.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors and beneficial owners of more than 10% of any
class of equity securities of the Company registered pursuant to Section 12 of
the 1934 Act to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors, and beneficial owners
of more than 10 percent of any class of equity securities of the Company
registered under the 1934 Act are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms filed.
<PAGE>
Based solely on the review of the certified list of shareholders provided by the
Company's transfer agent and on the review of the Exchange Act forms furnished
to the Company, the Company believes that the following reporting delinquencies
occurred during the Company's fiscal year ended December 31, 1996:
Section 16(a) Reporting Delinquencies
Forms 3, Initial Statement of Beneficial Ownership of Securities, Forms 4,
Statement of Changes of Beneficial Ownership of Securities, and Forms 5, Annual
Statement of Changes in Beneficial Ownership, due from directors Volker Montag
and Roland Schoeneberg showing their ownership interest in the Corporation's
common shares and as reflected in Item 12, below, have not been filed as of the
date of this Report.
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION
No compensation was paid directly to the officers and
directors of the Corporation over the last fiscal year. The
Corporation does, however, reimburse its officers and
directors for any and all out of pocket expenses incurred
relating to the business of the Corporation. Also, the
Corporation pays its German affiliate, Prime Core Makler GmbH,
significant brokerage fees and substantial administrative
charges for providing the facilities and infrastructure for
the Corporation's network of brokers. Mssrs. Volker Montag and
Roland Schoeneberg, the officers and directors of the
Corporation, indirectly own all of the interest in Prime Core
Makler GmbH through another corporation, Secure Securities,
Ltd. In addition, the current officers and directors are also
compensated as brokers: see Item 13, Certain Relationships and
Related Transactions, below.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1996, there were 10,300,322 Common Shares
outstanding. The following tabulates holdings of shares of the
Corporation by each person who, subject to the above, at the
date of this Memorandum, holds of record or is known by
Management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the
Corporation individually and as a group.
<PAGE>
<TABLE>
<CAPTION>
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
<S> <C> <C> <C>
Common Secure Securities, Ltd.
Stock c/o Hugo Winkler
665 Finchley Road
London, UK 260,240* 2.53%
Visa International, PLC
c/o Hugo Winkler
665 Finchley Road
London, UK 91,463* 0.89%
Volker Montag
c/o Prime Core AG
Industriel Str. 9
Postfach 6300 ZUB
Switzerland 351,703* 3.41%
Roland Schoneberg
c/o Prime Core AG
Industriel Str. 9
Postfach 6300 ZUB
Switzerland 351,703* 3.41%
All Directors and Officers
as a Group 351,703* 3.41%
</TABLE>
*Messrs. Volker Montag and Roland Schoneberg are the only shareholders of
Secure Securities, Ltd. and Visa International, PLC.
<PAGE>
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Commissions to Affiliate. Secure Securities, Ltd., a
shareholder of the Corporation, owned and controlled by
Messrs. Volker Montag and Roland Schoneberg, owns a German
company, Prime Core Makler GmbH, having its principal offices
located in Dusseldorf, Germany (formerly known as Telecom
GmbH). Prime Core Makler GmbH provides all of the
administrative services to Prime Core AG, the Corporation's
wholly owned subsidiary ("PC-AG"), for its securities
brokerage business. During fiscal years 1996, 1995 and 1994,
PC-AG paid Prime Core Makler GmbH $5,659.749, $4,643,639 and
$2,731,982 respectively, for their administrative services.
Prime Core Makler GmbH also pays all of PC-AG's brokerage
commissions arising out of PC-AG sales to its customers, due
to non-affiliated third parties which amounted to $7,026,135
in 1996, $5,757,210 in 1995, and $2,554,161 in 1994.
(b) Loan to Officer and Director. During 1993, OWI-AG (now,
PC-AG) made a loan in the amount of $141,750 to Mr. Volker
Montag, an officer and director of the Company. The loan's
outstanding principal balance accrues interest at the rate of
five (5%) percent, per annum, and payments in the amount of
$7,020 are due quarterly.
(C) Payments to Officer. The Company advanced funds to its
officers and directors and, in certain instances, to entities
in which they have ownership interests. Such advances
amounting to $4,663,107, $1,638,433, and $522,561 at December
31, 1996, 1995, and 1994, respectively, are unsecured, and in
certain instances were non-interest bearing obligations
without a stated due date. With respect to a certain amount of
these loans, the officers and directors have executed
revolving credit agreements and delivered promissory notes to
the Corporation: see "Documents recently Executed", below.
Management has established allowances against the above
advances for uncollectibility amounting to $2,816,940,
$300,000, and $0 for the fiscal years ended December 31, 1996,
1995 and 1994, respectively.
(d) Documents recently executed.
1. December 12, 1997: Revolving Credit Agreement By and
Between Montag and Finca pursuant to which the
Company permits Montag to borrow up to $500,000;
Montag signing personal note, promising to pay annual
interest at 5% and to pay off debt on or before
December 12, 1999: see Exhibit 10.1.
Outstanding balance at date is $330,859
2. December 12, 1997: Revolving Credit Agreement By and
Between Schoeneberg and Finca pursuant to which the
Company permits Schoeneberg to borrow up to $500,000;
Schoeneberg signing personal note, promising to pay
annual interest at 5% and to pay off debt on or
before December 12, 1999: see Exhibit 10.2
Outstanding balance at date is $330,859.
<PAGE>
3. December 12, 1997: Revolving Credit Agreement By and
Between Prime Core Holding AG, a corporation owned by
Messrs. Montag and Schoeneberg and Finca Consulting,
Inc. Pursuant to which Finca permits Prime Core to
borrow up to DM4,000,000; Prime Core signed a
corporate note, promising to pay annual interest at
5% and to pay off debt on or before December 12,
1999. In conjunction therewith, Messrs. Montag and
Schoeneberg further executed an "Unlimited Continuing
Guaranty Agreement", pursuant to which Messrs.Montag
and Schoeneberg personally guaranteed the repayment
to Finca of the debt of Prime Core Holding, AG: see
Exhibit 10.3 .
4. December 15, 1997: Letter of Intent signed between
Finca Consulting, Inc. And Prime Core Holding, Inc.,
a Delaware corporation owned by Messrs. Montag and
Schoeneberg, pursuant to which Finca will merge with
and into Prime Core Holding, Inc. on a share exchange
basis, one share of Prime Core Holding, Inc. for one
Finca common share, reincorporating the surviving
company under the laws of Delaware, which shall
become the surviving reporting company under the
Securities Exchange Act of 1934, as amended, which
transactions are subject to regulatory approval and
the affirmative vote of shareholders owning a
majority of Finca's outstanding common shares: see
Exhibit 10.4 .
5. April 1, 1997: Broker agreement by and between
Dr.Roland Schoeneberg and Prime Core AG pursuant to
which Prime Core pays to Dr.Schoeneberg DM65,000 per
month in draw payments against commissions accrued on
the solicitation of contracts for the purchase or
sale of securities by potential clients for Prime
Core AG. Volker Montag has an identical agreement:see
Exhibit 10.5 .
<PAGE>
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1) Financial Statements
The response to this portion of Item 14 is included
as a separate section, Exhibit A, attached hereto and
incorporated herein by reference.
(a)(2) Financial Statements Schedules
All schedules are omitted since the required
information is not applicable or of insufficient
materiality.
(a)(3) Exhibits
The Exhibits that are filed with this report or that
are incorporated by reference are set forth in the
Exhibit Index.
(b) Reports on form 8-K
There were no reports filed on Form 8-K during the
quarter ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FINCA CONSULTING, INC.
Date: December 23, 1997 /S/ Volker Montag
-------------- ----------------------
By: Volker Montag
President
And Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Date
- ---- ----
/S/Volker Montag December 23, 1997
- ------------------------------------- ------------------
Volker Montag, President
and Director
/S/Roland Schoeneberg December 23, 1997
- ------------------------------------- ------------------
Roland Schoeneberg, Secretary
and Director
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
(A) Financial Statements and Notes to Financial Statements
(3)(i) Articles of Incorporation incorporated by reference to Form S-
18 filed October 17, 1989. Articles of Amendment to Articles of
Incorporation incorporated by reference to the Exhibit to the
Company's Form 10-K for the fiscal year ended December 31, 1991
filed on June 4, 1992.
(3)(ii) By Laws incorporated by reference to Form S-18 filed October
17, 1989.
(10.1) Revolving Credit Agreement between Finca Consulting, Inc. and
Volker Montag, with copy of promissory note.
(10.2) Revolving Credit Agreement between Finca Consulting, Inc. and
Roland Schoeneberg, with copy of promissory note.
(10.3) Revolving Credit Agreement between Finca Consulting, Inc. and
Prime Core Holding, Inc., with copy of promissory note and
guaranty of Mssrs. Montag and Schoeneberg as exhibits.
(10.4) Letter of Intent by and between Finca Consulting, Inc. And
Prime Core Holding, Inc.
(10.5) Broker Agreement between Roland Schoenebrg and Prime Core AG.
(16) Documentation regarding change in certifying accountant
incorporated by reference to Form 8-K filed in February, 1993
and Form 8-K filed in December 1995.
(21) Subsidiaries of the Company:
(i) Finca Consulting Costa Brava, S.A.
- is a corporation formed under the laws of the
Country of Spain and is the name under which it
conducts business.
(ii) Prime Core AG (formerly Opti-Wert-Interest AG)
- is a corporation formed under the
laws of the Country of Switzerland
and conducts its retail securities
and options business in Germany.
(23) Independent Auditors' Consent - attached to Exhibit A
(27) Financial Data Schedule - attached to Exhibit A
</TABLE>
<PAGE>
EXHIBIT A
Finca Consulting, Inc. and Subsidiaries
Consolidated Financial Statements
December 31, 1996, 1995 and 1994
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Index to the Consolidated Financial Statements
December 31, 1996, 1995 and 1994
Independent Auditors' Report on the Financial Statements........................
Financial Statements
Consolidated Balance Sheets................................................
Consolidated Statements of Operations......................................
Consolidated Statements of Changes in Stockholders' Equity.................
Consolidated Statements of Cash Flows......................................
Notes to the Consolidated Financial Statements.............................
<PAGE>
Independent Auditors' Report
Rosenberg Rich Baker Berman & Company
380 Foothill Road
Bridgewater, New Jersey 08807
To the Board of Directors and Stockholders of
Finca Consulting, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Finca
Consulting, Inc. and Subsidiaries as of December 31, 1996, 1995 and 1994, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Finca Consulting,
Inc. and Subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statementshave been prepared assuming
that the Company will continue as a going concern. As discussed in the notes to
the consolidated financial statements, as of December 31, 1996 the Company has
experienced net losses and has experienced negative cash flows from operations.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are described in
the notes to the financial statements. The consolidated financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or classification of liabilities that might be necessary
should the Company be unable to continue in operation.
/s/Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
November 20, 1997, except for Note 10 which is dated December 15, 1997.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31,
------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents ........................................ $ 4,928,557 $ 6,004,844 $ 997,218
Other current assets ............................................. 111,245 248,237 75,612
------------ ------------ ------------
Total Current Assets ........................................ 5,039,802 6,253,081 1,072,830
------------ ------------ ------------
Property and Equipment .............................................. 629,826 604,108 649,523
------------ ------------ ------------
Other Assets
Receivables due from related parties ............................. 1,846,167 1,338,433 522,561
Other assets ..................................................... 251,875 164,564 162,186
------------ ------------ ------------
Total Other Assets .......................................... 2,098,042 1,502,997 684,747
------------ ------------ ------------
Total Assets ................................................ 7,767,670 8,360,186 2,407,100
============ ============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ............................ 283,249 384,885 279,491
Customer credit balances ......................................... 3,023,484 2,067,660 833,374
------------ ------------ ------------
Total Current Liabilities ................................... 3,306,733 2,452,545 1,112,865
------------ ------------ ------------
Minority Interest in Subsidiary ..................................... 45,632 45,632 45,632
------------ ------------ ------------
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares
authorized, 10,300,322, 2,146,633 and 2,146,633
shares issued and outstanding, respectively ...................... 103,003 21,466 21,466
Preferred stock; $.00001 par value, 20,000,000 shares
authorized, 0, 4,109,226 and 1,704,451 shares issued
and outstanding, respectively .................................... -- 41 17
Capital in excess of par value ................................... 13,510,301 13,724,083 7,927,857
Accumulated deficit .............................................. (9,203,652) (8,020,268) (6,813,246)
Cumulative translation adjustment ................................ 5,653 139,445 114,408
Treasury stock, 0, 275,812 and 189,899 common
shares ........................................................... -- (2,758) (1,899)
------------ ------------ ------------
Total Stockholders' Equity .................................. 4,415,305 5,862,009 1,248,603
------------ ------------ ------------
Total Liabilities and Stockholders' Equity .................. $ 7,767,670 $ 8,360,186 $ 2,407,100
============ ============ ============
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31,
----------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Revenues ...................................................... $ 86,163,171 $ 49,409,821 $ 18,900,827
Cost of shares and options .................................... 68,525,189 37,695,202 14,450,630
------------ ------------ ------------
Gross Profit .................................................. 17,637,982 11,714,619 4,450,197
Selling, general and administrative expenses .................. 20,476,324 13,012,547 6,801,094
------------ ------------ ------------
(Loss) From Operations ........................................ (2,838,342) (1,297,928) (2,350,897)
------------ ------------ ------------
Other Income (Expense)
Interest income ............................................ 292,050 90,906 --
Loss on disposition of subsidiary .......................... (470,217) -- (33,476)
------------ ------------ ------------
Total Other Income (Expense) .......................... (178,167) 90,906 (33,476)
------------ ------------ ------------
(Loss) Before provision for Income Taxes ...................... (3,016,509) (1,207,022) (2,384,373)
Provision for Income Taxes .................................... -- -- --
------------ ------------ ------------
Net Income (Loss) ............................................. (3,016,509) (1,207,022) (2,384,373)
============ ============ ============
Net Income (Loss) Per Share ................................... $ (0.48) $ (0.56) $ (1.11)
============ ============ ============
Weighted Average Number of Common Shares ......................
Outstanding 6,223,477 2,146,633 2,146,633
============ ============ ============
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1996
Preferred Stock Common Stock
-------------------------- ----------------------------
Capital
in Excess
Par Par of Par
Shares Value Shares Value Value
-------------- -------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1995 4,109,226 $ 41 2,146,633 $ 21,466 $ 13,724,083
Adjustment for accumulated
deficit of former subsidiary - - - - -
Adjustment to correct Treasury
stock - - - - (2,758)
Redemption of preferred shares (32,382) - - - (129,528)
Conversion of preferred shares
into common shares (4,076,844) (41) 8,153,689 81,537 (81,496)
Foreign currency translation loss - - - - -
Net (Loss) for the year ended
December 31, 1996 - - - - -
-------------- -------- -------------- ----------- ---------------
Balance - December 31, 1996 - $ - 10,300,322 $ 103,003 $ 13,510,301
============== ======== ============== =========== ===============
<CAPTION>
Treasury Stock
-------------------------------
Retained
Earnings Cumulative
Par (Accumulated Translation
Shares Value Deficit) Adjustment
--------------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Balance - December 31, 1995 (275,812) $ (2,758) $ (8,020,268) $ 139,445
Adjustment for accumulated
deficit of former subsidiary - - 1,833,125 -
Adjustment to correct Treasury
stock 275,812 2,758 - -
Redemption of preferred shares - - - -
Conversion of preferred shares
into common shares - - - -
Foreign currency translation loss - - - (133,792)
Net (Loss) for the year ended
December 31, 1996 - - (3,016,509) -
--------------- ------------ ---------------- ---------------
Balance - December 31, 1996 - $ - $ (9,203,652) $ 5,653
=============== ============ ================ ===============
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1995
Preferred Stock Common Stock
------------------------- ---------------------------
Capital
in Excess
Par Par of Par
Shares Value Shares Value Value
------------- -------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1994 1,704,451 $ 17 2,146,633 $ 21,466 $ 7,927,857
Acquisition of treasury stock - - - - (343,652)
Issuance of preferred stock, less
offering costs of $2,110,400 2,404,775 24 - - 6,139,878
Foreign currency translation gain - - - - -
Net (Loss) for the year ended
December 31, 1995 - - - - -
------------- -------- ------------- --------- ---------------
Balance - December 31, 1995 4,109,226 $ 41 2,146,633 $ 21,466 $ 13,724,083
============= ======== ============= ========= ===============
<CAPTION>
Treasury Stock
----------------------------
Retained
Earnings Cumulative
Par (Accumulated Translation
Shares Value Deficit) Adjustment
------------- ----------- ----------------- ----------------
<S> <C> <C> <C> <C>
Balance - December 31, 1994 (189,899) $ (1,899) $ (6,813,246) $ 114,408
Acquisition of treasury stock (85,913) (859) - -
Issuance of preferred stock, less
offering costs of $2,110,400 - - - -
Foreign currency translation gain - - - 25,037
Net (Loss) for the year ended
December 31, 1995 - - (1,207,022) -
------------- ----------- ----------------- ----------------
Balance - December 31, 1995 (275,812) $ (2,758) $ (8,020,268) $ 139,445
============= =========== ================= ================
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1994
Preferred Stock Common Stock
------------------------- ---------------------------
Capital
in Excess
Par Par of Par
Shares Value Shares Value Value
------------- -------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1993 16,305 $ 1 2,146,633 $ 21,466 $ 5,107,476
Acquisition of treasury stock - - - - (757,981)
Issuance of preferred stock, less
offering costs of $1,841,260 1,688,146 16 - - 3,578,362
Foreign currency translation gain - - - - -
Net (Loss) for the year ended
December 31, 1994 - - - - -
------------- -------- ------------- --------- ---------------
Balance - December 31, 1994 1,704,451 $ 17 2,146,633 $ 21,466 $ 7,927,857
============= ======== ============= ========= ===============
<CAPTION>
Treasury Stock
---------------------------
Retained
Earnings Cumulative
Par (Accumulated Translation
Shares Value Deficit) Adjustment
------------- ---------- ------------------ ---------------
<S> <C> <C> <C> <C>
Balance - December 31, 1993 - $ - $ (4,428,873) $ (71,249)
Acquisition of treasury stock (189,899) (1,899) - -
Issuance of preferred stock, less
offering costs of $1,841,260 - - - -
Foreign currency translation gain - - - 185,657
Net (Loss) for the year ended
December 31, 1994 - - (2,384,373) -
------------- ---------- ------------------ ---------------
Balance - December 31, 1994 (189,899) $ (1,899) $ (6,813,246) $ 114,408
============= ========== ================== ===============
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
------------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net (Loss) ................................................................... $(3,016,509) $(1,207,022) $(2,384,373)
Adjustments to Reconcile Net (Loss) to Net Cash (Used in)
Operating Activities:
Depreciation ............................................................ 87,686 51,736 70,412
(Increase) Decrease in other current assets ............................. 136,992 (172,625) (21,475)
(Increase) Decrease in receivables due from related parties ............. 1,325,391 (815,872) (228,630)
(Increase) Decrease in other assets ..................................... (87,311) (2,378) 184,860
Increase (Decrease) in accounts payable and accrued expenses ............ (101,636) 105,394 63,774
Increase (Decrease) in customer credit balances ......................... 955,824 1,234,286 (93,338)
----------- ----------- -----------
Net Cash (Used in) Operating Activities ............................. (699,563) (806,481) (2,408,770)
----------- ----------- -----------
Cash Flows From Investing Activities
(Purchase) disposition of property and equipment ........................ (113,404) (6,321) 50,132
----------- ----------- -----------
Net Cash (Used in) Investing Activities ............................. (113,404) (6,321) 50,132
----------- ----------- -----------
Cash Flows From Financing Activities
Issuance of preferred shares ............................................ -- 6,139,902 3,578,378
Redemption of preferred shares .......................................... (129,528) -- --
Acquisition of treasury shares .......................................... -- (344,511) (759,880)
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities ................. (129,528) 5,795,391 2,818,498
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash ...................................... (133,792) 25,037 185,657
----------- ----------- -----------
Net Increase (Decrease) in Cash .............................................. (1,076,287) 5,007,626 645,517
Cash and cash equivalents at Beginning of Year ............................... 6,004,844 997,218 351,701
----------- ----------- -----------
Cash and cash equivalents at End of Year ..................................... $ 4,928,557 $ 6,004,844 $ 997,218
=========== =========== ===========
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Finca Consulting, Inc. and Subsidiaries (the Company) through its
subsidiary Prime Core AG (previously Opti-Wert Interest AG), is
engaged principally in the buying and selling of marketable
securities and options on behalf of its customers and through its
subsidiaries Finca Consulting Costa Brava, S.A. and Finca
Consulting GmbH the buying, selling and administration of real
estate. Finca Consulting GmbH was sold on April 2, 1996.
Going Concern Uncertainty
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As shown in the consolidated financial statements, the
Company has experienced net losses of $3,016,509 in 1996,
$1,207,022 in 1995 and $2,384,373 in 1994. Additionally, the
Company generated negative cash flows from operations of
$699,563, $806,481 and $2,408,770 in 1996, 1995 and 1994.
These factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements
do not include adjustments relating to the recoverability of
assets and classification of liabilities that might be necessary
should the Company be unable to continue in operation.
The Company's plans to overcome this negative trend is to embark
upon a restructuring of its marketing efforts and customer
profile as well as to effect a reduction of administrative
expenses.
Principles of Consolidation
The consolidated financial statements include the accounts of
Finca Consulting, Inc. and its wholly owned subsidiaries with
the exception of Finca Consulting GmbH as to which its accounts
are included from January 1, 1996 through March 31, 1996.
All intercompany balances and transactions have been eliminated
in consolidation. Pursuant to Statement of Financial Accounting
Standards (SFAS) No. 52, "Foreign Currency Translation",
substantially all assets and liabilities of the Company's wholly
owned subsidiaries are translated at their respective period-end
currency exchange rates and revenues and expenses are translated
at average currency exchange rates for the period. The resulting
translation adjustments are accumulated in a separate component
of stockholders' equity. All foreign currency transaction gains
and losses are included in other income (expense) on the
accompanying statements of operations and are immaterial in each
year.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
Continued
Revenue Recognition
The Company's primary subsidiary, Prime Core, A.G., recognizes
revenue upon the placing of an order and execution of a trade by
and for the benefit of a customer.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash
equivalents.
Property and Equipment
Property and equipment are reported at cost with depreciation
being provided by using the straight line method over the
estimated useful lives of the respective assets which range from
3-5 years as to equipment, furniture and fixtures and 25 years
as to real estate. Repairs and maintenance expenditures which do
not extend the useful lives of the related assets are expensed
as incurred.
Income Taxes
The Company recognizes income taxes according to SFAS No. 109.
Under SFAS No. 109, the liability method is used in accounting
for income taxes. Under this method, deferred tax assets and
liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and
are measured using enacted tax rates that are expected to be in
effect when the differences reverse.
International subsidiaries are taxed according to applicable
laws of the countries in which they do business.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of cash
balances. The Company invests its excess cash with large
financial institutions located outside of the United States.
Net (Loss) Per Share
The net (loss) per share has been computed using the weighted
average number of common shares outstanding during the year.
During 1996, 1995, and 1994 10,300,332, 2,146,633 and 2,146,633
common shares were outstanding, respectively. Common stock
equivalents have not been included as the effect would be
anti-dilutive.
<PAGE>
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at cost, less accumulated
depreciation, consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Land ......................................... $ 115,560 $ 115,563 $ 115,563
Buildings .................................... 462,257 492,254 492,254
Office furniture and equipment ............... 364,486 286,783 280,462
--------- --------- ---------
Subtotal ................................ 942,303 894,600 888,279
Less accumulated depreciation and amortization 312,477 (290,492) (238,756)
--------- --------- ---------
Total ................................... $ 629,826 $ 604,108 $ 649,523
========= ========= =========
</TABLE>
Depreciation expense charged to operations was $87,686 in 1996,
$51,736 in 1995 and $70,412 in 1994.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 3 - RELATED PARTY TRANSACTIONS
(1) The Company advances from time to time, funds to certain
officers and directors of the Company and indirectly to
entities in which they are the sole shareholders. Such
advances (which are inclusive of amounts due upon the sale
of a subsidiary as discussed at Note 4) amounting to
$4,663,107 at December 31, 1996, $1,638,433 at December
31, 1995 and $522,561 at December 31, 1994 are
non-interest bearing unsecured obligations without a
stated due date. Management has established allowances for
uncollectibility amounting to $2,816,940, $300,000 and $0
respectively.
(2) The Company pays fees for marketing and administration
services to Prime Core Makler GmbH (previously Telecom
GmbH), an entity wholly owned by officers and directors of
the Company. Such fees amounted to $5,659,749 in 1996,
$4,643,639 in 1995 and $2,731,982 in 1994. Additionally,
Prime Core Makler GmbH pays brokerage fees on behalf of
the Company which amounted to $7,026,135 in 1996,
$5,757,210 in 1995 and $2,552,161 in 1994.
(3) During 1994 and 1995 the Company's subsidiary, Prime Core,
A.G. (formerly Opti-Wert Interest, A.G.) sold 1,688,146
and 2,404,775 shares of the Company's preferred stock to
its customers. Gross proceeds therefrom amounted to
$5,419,638 and $8,250,302. Prime Core, A.G.'s
proportionate costs of the offering, consisting of
allocable selling, general and administrative expenses
amounted to $1,841,260 and $2,110,400 have been charged
against such proceeds.
NOTE 4 - SALE OF SUBSIDIARY
Effective April 2, 1996 the Company sold to Prime Core Holding,
A.G. all of the issued and outstanding common stock of it's
subsidiary, Finca Consulting GmbH for $67,830. Prime Core
Holding, A.G. is wholly owned by the officers and directors of
the Company.
Finca Consulting GmbH's results of operations through April 2,
1996 which consist of a net loss of $262,594 are included in the
Company's consolidated financial statements. Finca Consulting
GmbH's accumulated deficit at January 1, 1996 in the amount of
$1,833,125 is reflected as an adjustment to the Company's
consolidated accumulated deficit.
NOTE 5 - PREFERRED SHARES CONVERSION
On March 27, 1996 the Company converted 4,076,844 preferred
shares to 8,153,689 common shares pursuant to the terms of the
Company's preferred share certificates.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 6 - INCOME TAXES
As of December 31, 1996, 1995 and 1994 the Company has U.S. net
operating loss carryforward of approximately $1,000,000,
substantially all of which expires by 2003. The tax effects of
temporary differences that give rise to deferred tax are
presented below.
Federal operating loss carryforwards $ 340,000
Less: Valuation Allowance 340,000
--------------
$ -
==============
NOTE 7 - OPERATING LEASE COMMITMENT
The Company leases certain office space and certain office
equipment under operating leases.
The following is a schedule of future minimum rental payments
required under operating leases that have initial or remaining
non-cancelable lease terms in excess of one year as of December
31, 1996. The schedule is as follows:
Year Ending December 31,
1997 $ 127,329
1998 116,654
1999 116,654
2000 116,654
2001 29,831
2002 and thereafter -
Aggregate expense pursuant to operating leases amounted to $117,195
in 1996, $116,695 in 1995 and $179,264 in 1994.
NOTE 8 - MINORITY INTEREST IN SUBSIDIARY
One of the Company's subsidiaries Prime Core, A.G. (formerly
Opti-Wert Interest, A.G.) has issued 10,500 participation
certificates with a minimal value of Sfr. 10 (US $6.60) for a
subscription price of US $9.07. These participation certificates
carry no voting rights and do not have a fixed return. A total of
5,040 certificates have been subscribed to by the Company and
have been eliminated in the consolidation process. The remaining
5,460 certificates are held by various investors.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 9 - OPERATIONS OF BUSINESS SEGMENTS AND IN GEOGRAPHIC AREAS
Business Segments
The Company operates in two business segments, through its
subsidiary Prime Core A.G. (formerly Opti- Wert - Interest AG)
buying and selling marketable securities and options on behalf of
its customers in Germany and through its subsidiaries Finca
Consulting Costa Brava, SA and Finca Consulting GmbH, (through
April 2, 1996) buying, selling, and the administration of real
estate in Germany and Spain.
The Company conducts no current business activities and has no
identifiable assets in the United States.
NOTE 10 - SUBSEQUENT EVENTS
On December 15, 1997 a letter of intent was executed between the
Company and Prime Core Holding, Inc. a Delaware corporation owned
by the Company's officers and directors, pursuant to which the
Company will merge with and into Prime Core Holding, Inc. on a
one for one share exchange basis. The surviving entity will be
reincorporated under the laws of Delaware, which shall become the
surviving reporting company. The consummation of this transaction
is subject to regulatory approval and an affirmative vote of the
Company's shareholders.
On December 12, 1997 the Company entered into various revolving
credit agreements between its two officers and directors and
Prime Core Holding AG, a corporation which is wholly owned by
them and as to which they are guarantors. Pursuant thereto
aggregate borrowings of approximately $3,352,941 are permitted
with interest of 5% to be paid annually and entire payment of
principal to be made on or before December 12, 1999.
EXHIBIT 10.1
$500,000.00 US
REVOLVING CREDIT AGREEMENT
Between
VOLKER MONTAG
and
FINCA CONSULTING, INC.
Dated December 12, 1997
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS AGREEMENT is made as of December 12, 1997, by and between Volker
Montag (the "Borrower"), and Finca Consulting, Inc., a Colorado
corporation (the "Lender.").
B A C K G R O U N D :
WHEREAS, the Borrower is an officer and director of the Lender and
both parties desire to document Borrower's outstanding loans from the Lender,
and, establish a certain credit limit to provide for the repayment of these
borrowings to the lender, and;
WHEREAS, the Borrower and Lender desire to set forth in this document
all of the terms and conditions that shall govern their credit relationship.
NOW, THEREFORE, in consideration of the mutual promises made by the
parties to each other, it is agreed as follows:
SECTION 1. AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS
1.1 The Loan Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make revolving credit loans (individually, a
"Loan"; collectively, the "Loans") to the Borrower from time to time during the
period (the "Loan Commitment Period", commencing upon the date hereof and
terminating on the second anniversary date (the "Termination Date") in an
aggregate principal amount at any one time outstanding not to exceed $500,000.00
(the "Loan Commitment"). Lender and Borrower hereby acknowledge that Lender has
previously loaned to Borrower certain sums whose aggregate outstanding balance
is $330,859.00 as of the date hereof; the parties agree that his amount shall be
deemed a "Loan" for all purposes under this Agreement and currently outstanding
under the Loan Commitment.
1.2 The Note. The Loans made by the Lender shall be evidenced by a
promissory note of the Borrower in the form of Exhibit A, with appropriate
insertions, which shall be payable to the order of the Lender and shall
represent the obligation of the Borrower to pay the amount of the Loan or, if
less, the aggregate unpaid principal amount of all Loans made by the Lender,
with interest thereon as prescribed in Section 1.5. The Note shall (a) be dated
the date hereof, (b) be stated to mature on the Termination Date and (c) bear
interest for the period from the date hereof until paid in full on the unpaid
principal amount thereof from time to time outstanding at the rates prescribed
in Section 1.5.
1.3 Procedure for Borrowing Under Loan Commitment. The Borrower may borrow
under the Loan Commitment at any time during the Loan Commitment Period.
<PAGE>
1.4 Optional Prepayment The Borrower may, at his option, prepay the Note
without premium or penalty, in whole or in part.
1.5 Interest Rates. (a) The Loans shall bear interest (calculated on the
basis of a 360-day year for the actual number of days elapsed) on the unpaid
principal amount thereof at a rate per annum equal to 5% payable annually.
(b) If all or a portion of the principal amount of any of the Loans shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue principal amount shall bear interest at the rate of 5%
per annum, to the extent permitted by law.
1.6 Maturity of Loans. The outstanding principal amount of the Loans
shall be due and payable on the Termination Date.
1.7 Previous Advances. The Lender and the Borrower acknowledge that the
amount of $330,859.00 US has been previously advanced by the Lender to the
Borrower and represents the aggregate outstanding principal balance due as of
the date hereof. Provided that the Borrower has made all payments required to be
paid hereunder and is not in default, the Lender may, upon Borrower's request,
lend additional sums up to the Loan Commitment amount of $500,000.00 US.
SECTION 2. COVENANTS
2.1 Payment of Note. The Borrower shall pay the principal of, and interest
on, the Note on the dates and in the manner provided herein and in the Note.
2.2 Personal Financial Statements. The Borrower covenants and agrees that
so long as the Loan Commitment shall be in effect or any sum under the Note
shall be outstanding, the Borrower will deliver to the Lender, as soon as
available, but not later than 120 days after the close of each calendar year,
the personal financial statement of the Borrower, as at the end of such calendar
year.
2.3 Notice of Default. If any one or more events occur which constitute a
Default or an Event of Default, upon obtaining knowledge thereof, the Borrower
will forthwith give notice to the Lender, specifying the nature and status of
the Default or Event of Default.
2.4 Covenant of the Borrower. The Borrower covenants and agrees that from
and after the date hereof he shall pay the Loan according to its terms.
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loans hereunder, the Borrower hereby represents and warrants as follows:
3.1. No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Borrower of the transactions contemplated hereby will
violate or conflict with any agreement to which the Borrower is a party or
result in the acceleration of, or entitle any party to accelerate the maturity
or the cancellation of the performance of any obligation under, or result in the
creation or imposition of any Lien in or upon the assets of the Borrower or
constitute a default (or an event which might, with the passage of time.or the
giving of notice, or both, constitute a default) under any contract; to the best
of Borrower's knowledge, any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which the Borrower is a party or by which any
of his property or assets may be bound or affected or to the best of Borrower's
knowledge, with any provision of any law, rule, regulation, order, judgment, or
ruling of any Governmental or Regulatory Body applicable to the Borrower.
3.2 Litigation. There are no outstanding orders, judgments, injunctions,
investigations, awards or-decrees of any court, Governmental or Regulatory Body
or arbitration tribunal by which the Borrower or any of his assets, properties
or business is bound. There are no actions, suits, claims, legal, administrative
or arbitration proceedings pending or, to the best knowledge of the Borrower,
overtly threatened (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against or affecting the Borrower or any of
his assets or properties, that, individually or in the aggregate, could, if
determined adversely to the Borrower have a Material Adverse Effect, nor, to the
best knowledge of the Borrower, are there any facts which are likely to give
rise to any such action, suit, claim, investigation or legal, administrative or
arbitration proceeding.
SECTION 4. CONDITIONS TO SUBSEQUENT ADVANCES
The obligation of the Lender to permit Borrower's previous loans to be
included in the Loan Commitment and to make any subsequent advance pursuant to
this Agreement shall be subject to compliance by the Borrower with his
agreements herein contained, and, shall be subject to Borrower executing and
delivering to Lender the Note in the form annexed hereto as Exhibit A.
SECTION 5. CONDITIONS TO ALL LOANS. The obligation of the Lender to make any
Loan to the Borrower and to permit previous borrowings to be accumulated and
added to the Loan Commitment under this Agreement is subject to fulfillment of
the following conditions precedent to the satisfaction of the Lender:
5.1 Representations and Warranties. The representations and warranties made
by the Borrower in this Agreement and in any certificate, document or financial
or other statement furnished at any time hereunder shall be true and correct in
all material respects unless stated to relate to a specific earlier date.
<PAGE>
5.2 No Default or Event of Default. No Default or Event of Default shall
have occurred under this Agreement or under the terms of the Note.
SECTION 6. DEFAULTS AND REMEDIES
6.1 Events of Default. Event of Default, whenever used herein means any of
the following events:
(a) the Borrower defaults in the due and punctual payment of
principal of, interest on, or any other amount owing in respect of, the Note
when and as the same shall become due and payable, and continuance of such
default for a period of 5 Business Days after receipt of notice; or
(b) the Borrower defaults in the performance or observance of any
covenant or agreement of the Borrower in this Agreement or the Note and the
continuance of such default for a period of 30 calendar days after there has
been given to the Borrower by the Lender a written notice specifying such
default and requiring it to be remedied; or
(c) the Borrower shall (i) default in any payment of principal of or
interest on any Loan or (ii) default in the observance or performance of any
agreement or condition relating to any such Loan or any other event shall occur
or condition exist, the effect of which default or other event or condition is
to cause (immediately or with the giving of notice or lapse of time or both) any
such Loan to become due prior to its stated maturity; or
(d) the Borrower, either pursuant to or within the meaning of any
applicable bankruptcy or insolvency law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors; or
(e) a court of competent jurisdiction enters an order or decree under any
applicable bankruptcy or insolvency law that: (i) is for relief against the
Borrower in an involuntary case, (ii) appoints a custodian of the Borrower for
any substantial part of all the property of the Borrower, or (iii) orders the
liquidation of the Borrower; and the order or decree remains unstayed and in
effect for 60 days.
The term Custodian means any receiver, trustee, assignee, custodian,
liquidator or similar official under any applicable bankruptcy or insolvency
law.
6.2 Acceleration of Maturity. If an Event of Default occurs and is
continuing, then and in every such case the Lender may, declare the principal of
the Note to be due and payable immediately and the Loan Commitment to be
terminated, by a notice in writing to the Borrower, and upon any such
declaration the principal of the Note shall become immediately due and payable
and the Loan Commitment shall be terminated.
<PAGE>
SECTION 7. MISCELLANEOUS
7.1 Amendments and Waiver. This Agreement and the Note may be amended, and
the terms hereof waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance.
7.2 Notices. Any notice, demand or delivery pursuant to the provisions
hereof shall be sufficiently given or made if sent by hand or by registered or
certified mail, postage prepaid, addressed to the Lender at Finca Consulting,
Inc., Koenigsalle 106, 40215 Dusseldorf, Germany, Attention: Roland Schoeneberg,
Vice President or, except as otherwise expressly provided herein, to the
Borrower at Am Abelshof 12, D-47445 Moers-Repelen, Germany, or such other
address as shall have been furnished to the party giving or making such notice,
demand or delivery. Any such notice shall be deemed given when so delivered
personally or, by telecopy, or if mailed, five (5) days following the deposit
with a reputable overnight courier.
7.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey without regard to
principles of conflicts of law.
7.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
7.5 Successors and Assigns. This Agreement and each document and
certificate delivered pursuant thereto shall be binding upon and inure to the
benefit of the Borrower and the Lender and their respective successors and
permitted assigns, except that neither the Borrower nor the Lender may assign or
transfer any of its rights under this Agreement or the Note without the prior
written consent of the other.
7.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Lender.
7.7 Severability. Any provision of this Agreement or the Note which is
prohibited, invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the,extent of such prohibition, invalidity or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition, invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction or
any other provision of this Agreement or the Note.
7.8 Investment. The Lender is acquiring the Note for its own account and
not with a view to resale.
<PAGE>
7.9 Entire Agreement. This Agreement, including Exhibit A annexed hereto
and incororated herein by reference, and the agreements, certificates and other
documents delivered pursuant to this Agreement contain the entire agreement
among the parties with respect to the transactions described herein, and
supersede all prior agreements, written or oral, with respect thereto.
7.10 Indemnification. The Borrower agrees to indemnify, defend and hold
harmless the Lender and its respective shareholders, officers, directors,
employees, and any Affiliates of the foregoing, and their successors and assigns
(collectively, the Lender Group) from and against any and all losses,
liabilities (including punitive or exemplary damages and fines or penalties and
any interest thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims, Liens or other
obligations of any nature whatsoever (hereinafter individually, a "Loss" and
collectively, "Losses") which, directly or indirectly, arise out of, result form
or relate to, (i) any inaccuracy in or any breach of any representation or
warranty of the Borrower contained in Section 4, and (ii) any breach of any
covenant of the Borrower contained in this Agreement or in any other document
contemplated by this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
LENDER:
FINCA CONSULTING, INC.
By: /s/Roland Schoeneberg
---------------------
Roland Schoeneberg, Vice President
BORROWER:
/s/Volker Montag
------------------
Volker Montag
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$500,000.00 US December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Volker Montag, an individual (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Roland Schoeneberg, Vice President, in
Dollars, US, the lawful money of the United States of America and in immediately
available funds, the principal amount of the lesser of (i) $500,000.00 US and
(ii) the aggregate unpaid principal amount of all Loans made by the Lender to
the undersigned and accrued interest, if any, on or before the second
anniversary date hereof as set forth in Section 1.1 of the Revolving Credit
Agreement, dated as of the date hereof, between the undersigned and the Lender
(the "Credit Agreement"). Capitalized terms used herein shall have the same
meanings as set forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
LENDER:
FINCA CONSULTING, INC.
By: /s/Roland Schoeneberg
---------------------
Roland Schoeneberg, Vice President
BORROWER:
/s/Volker Montag
-----------------
Volker Montag
<PAGE>
PROMISSORY NOTE
$500,000.00 US December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Volker Montag, an individual (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Roland Schoeneberg, Vice President, in
Dollars, US, the lawful money of the United States of America and in immediately
available funds, the principal amount of the lesser of (i) $500,000.00 US and
(ii) the aggregate unpaid principal amount of all Loans made by the Lender to
the undersigned and accrued interest, if any, on or before the second
anniversary date hereof as set forth in Section 1.1 of the Revolving Credit
Agreement, dated as of the date hereof, between the undersigned and the Lender
(the "Credit Agreement"). Capitalized terms used herein shall have the same
meanings as set forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
LENDER:
FINCA CONSULTING, INC.
By: /s/Roland Schoeneberg
---------------------
Roland Schoeneberg, Vice President
BORROWER:
/s/Volker Montag
-----------------
Volker Montag
EXHIBIT 10.2
$500,000.00 US
REVOLVING CREDIT AGREEMENT
Between
ROLAND SCHOENEBERG
and
FINCA CONSULTING, INC.
Dated December 12, 1997
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS AGREEMENT is made as of December 12, 1997, by and between Roland
Schoeneberg (the "Borrower"), and Finca Consulting, Inc., a Colorado
corporation (the "Lender.").
B A C K G R O U N D :
WHEREAS, the Borrower is an officer and director of the Lender and both
parties desire to document Borrower's outstanding loans from the Lender, and,
establish a certain credit limit to provide for the repayment of these
borrowings to the lender, and;
WHEREAS, the Borrower and Lender desire to set forth in this document all
of the terms and conditions that shall govern their credit relationship.
NOW, THEREFORE, in consideration of the mutual promises made by the parties
to each other, it is agreed as follows:
SECTION 1. AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS
1.1 The Loan Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make revolving credit loans (individually, a
"Loan"; collectively, the "Loans") to the Borrower from time to time during the
period (the "Loan Commitment Period", commencing upon the date hereof and
terminating on the second anniversary date (the "Termination Date") in an
aggregate principal amount at any one time outstanding not to exceed $500,000.00
(the "Loan Commitment"). Lender and Borrower hereby acknowledge that Lender has
previously loaned to Borrower certain sums whose aggregate outstanding balance
is $330,859.00 as of the date hereof; the parties agree that his amount shall be
deemed a "Loan" for all purposes under this Agreement and currently outstanding
under the Loan Commitment.
1.2 The Note. The Loans made by the Lender shall be evidenced by a
promissory note of the Borrower in the form of Exhibit A, with appropriate
insertions, which shall be payable to the order of the Lender and shall
represent the obligation of the Borrower to pay the amount of the Loan or, if
less, the aggregate unpaid principal amount of all Loans made by the Lender,
with interest thereon as prescribed in Section 1.5. The Note shall (a) be dated
the date hereof, (b) be stated to mature on the Termination Date and (c) bear
interest for the period from the date hereof until paid in full on the unpaid
principal amount thereof from time to time outstanding at the rates prescribed
in Section 1.5.
1.3 Procedure for Borrowing Under Loan Commitment. The Borrower may borrow
under the Loan Commitment at any time during the Loan Commitment Period.
1.4 Optional Prepayment The Borrower may, at his option, prepay the Note
without premium or penalty, in whole or in part.
1.5 Interest Rates. (a) The Loans shall bear interest (calculated on the
basis of a 360-day year for the actual number of days elapsed) on the unpaid
principal amount thereof at a rate per annum equal to 5% payable annually.
(b) If all or a portion of the principal amount of any of the Loans shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue principal amount shall bear interest at the rate of 5%
per annum, to the extent permitted by law.
1.6 Maturity of Loans. The outstanding principal amount of the Loans shall
be due and payable on the Termination Date.
1.7 Previous Advances. The Lender and the Borrower acknowledge that the
amount of $330,859.00 US has been previously advanced by the Lender to the
Borrower and represents the aggregate outstanding principal balance due as of
the date hereof. Provided that the Borrower has made all payments required to be
paid hereunder and is not in default, the Lender may, upon Borrower's request,
lend additional sums up to the Loan Commitment amount of $500,000.00 US.
SECTION 2. COVENANTS
2.1 Payment of Note. The Borrower shall pay the principal of, and interest
on, the Note on the dates and in the manner provided herein and in the Note.
2.2 Personal Financial Statements. The Borrower covenants and agrees that
so long as the Loan Commitment shall be in effect or any sum under the Note
shall be outstanding, the Borrower will deliver to the Lender, as soon as
available, but not later than 120 days after the close of each calendar year,
the personal financial statement of the Borrower, as at the end of such calendar
year.
2.3 Notice of Default. If any one or more events occur which constitute a
Default or an Event of Default, upon obtaining knowledge thereof, the Borrower
will forthwith give notice to the Lender, specifying the nature and status of
the Default or Event of Default.
2.4 Covenant of the Borrower. The Borrower covenants and agrees that from
and after the date hereof he shall pay the Loan according to its terms.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loans hereunder, the Borrower hereby represents and warrants as follows:
3.1. No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Borrower of the transactions contemplated hereby will
violate or conflict with any agreement to which the Borrower is a party or
result in the acceleration of, or entitle any party to accelerate the maturity
or the cancellation of the performance of any obligation under, or result in the
creation or imposition of any Lien in or upon the assets of the Borrower or
constitute a default (or an event which might, with the passage of time.or the
giving of notice, or both, constitute a default) under any contract; to the best
of Borrower's knowledge, any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which the Borrower is a party or by which any
of his property or assets may be bound or affected or to the best of Borrower's
knowledge, with any provision of any law, rule, regulation, order, judgment, or
ruling of any Governmental or Regulatory Body applicable to the Borrower.
3.2 Litigation. There are no outstanding orders, judgments, injunctions,
investigations, awards or-decrees of any court, Governmental or Regulatory Body
or arbitration tribunal by which the Borrower or any of his assets, properties
or business is bound. There are no actions, suits, claims, legal, administrative
or arbitration proceedings pending or, to the best knowledge of the Borrower,
overtly threatened (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against or affecting the Borrower or any of
his assets or properties, that, individually or in the aggregate, could, if
determined adversely to the Borrower have a Material Adverse Effect, nor, to the
best knowledge of the Borrower, are there any facts which are likely to give
rise to any such action, suit, claim, investigation or legal, administrative or
arbitration proceeding.
SECTION 4. CONDITIONS TO SUBSEQUENT ADVANCES
The obligation of the Lender to permit Borrower's previous loans to be
included in the Loan Commitment and to make any subsequent advance pursuant to
this Agreement shall be subject to compliance by the Borrower with his
agreements herein contained, and, shall be subject to Borrower executing and
delivering to Lender the Note in the form annexed hereto as Exhibit A.
SECTION 5. CONDITIONS TO ALL LOANS. The obligation of the Lender to make any
Loan to the Borrower and to permit previous borrowings to be accumulated and
added to the Loan Commitment under this Agreement is subject to fulfillment of
the following conditions precedent to the satisfaction of the Lender:
5.1 Representations and Warranties. The representations and warranties made
by the Borrower in this Agreement and in any certificate, document or financial
or other statement furnished at any time hereunder shall be true and correct in
all material respects unless stated to relate to a specific earlier date.
5.2 No Default or Event of Default. No Default or Event of Default shall
have occurred under this Agreement or under the terms of the Note.
SECTION 6. DEFAULTS AND REMEDIES
6.1 Events of Default. Event of Default, whenever used herein means any of
the following events:
(a) the Borrower defaults in the due and punctual payment of
principal of, interest on, or any other amount owing in respect of, the Note
when and as the same shall become due and payable, and continuance of such
default for a period of 5 Business Days after receipt of notice; or
(b) the Borrower defaults in the performance or observance of any
covenant or agreement of the Borrower in this Agreement or the Note and the
continuance of such default for a period of 30 calendar days after there has
been given to the Borrower by the Lender a written notice specifying such
default and requiring it to be remedied; or
(c) the Borrower shall (i) default in any payment of principal of or
interest on any Loan or (ii) default in the observance or performance of any
agreement or condition relating to any such Loan or any other event shall occur
or condition exist, the effect of which default or other event or condition is
to cause (immediately or with the giving of notice or lapse of time or both) any
such Loan to become due prior to its stated maturity; or
(d) the Borrower, either pursuant to or within the meaning of any
applicable bankruptcy or insolvency law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors; or
(e) a court of competent jurisdiction enters an order or decree under any
applicable bankruptcy or insolvency law that: (i) is for relief against the
Borrower in an involuntary case, (ii) appoints a custodian of the Borrower for
any substantial part of all the property of the Borrower, or (iii) orders the
liquidation of the Borrower; and the order or decree remains unstayed and in
effect for 60 days.
The term Custodian means any receiver, trustee, assignee, custodian,
liquidator or similar official under any applicable bankruptcy or insolvency
law.
6.2 Acceleration of Maturity. If an Event of Default occurs and is
continuing, then and in every such case the Lender may, declare the principal of
the Note to be due and payable immediately and the Loan Commitment to be
terminated, by a notice in writing to the Borrower, and upon any such
declaration the principal of the Note shall become immediately due and payable
and the Loan Commitment shall be terminated.
SECTION 7. MISCELLANEOUS
7.1 Amendments and Waiver. This Agreement and the Note may be amended, and
the terms hereof waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance.
7.2 Notices. Any notice, demand or delivery pursuant to the provisions
hereof shall be sufficiently given or made if sent by hand or by registered or
certified mail, postage prepaid, addressed to the Lender at Finca Consulting,
Inc., Koenigsalle 106, 40215 Dusseldorf, Germany, Attention: Roland Schoeneberg,
Vice President or, except as otherwise expressly provided herein, to the
Borrower at Am Klausenberg 52, 5u09 Klon-Bruk, Germany, or such other address as
shall have been furnished to the party giving or making such notice, demand or
delivery. Any such notice shall be deemed given when so delivered personally or,
by telecopy, or if mailed, five (5) days following the deposit with a reputable
overnight courier.
7.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey without regard to
principles of conflicts of law.
7.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
7.5 Successors and Assigns. This Agreement and each document and
certificate delivered pursuant thereto shall be binding upon and inure to the
benefit of the Borrower and the Lender and their respective successors and
permitted assigns, except that neither the Borrower nor the Lender may assign or
transfer any of its rights under this Agreement or the Note without the prior
written consent of the other.
7.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Lender.
7.7 Severability. Any provision of this Agreement or the Note which is
prohibited, invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the,extent of such prohibition, invalidity or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition, invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction or
any other provision of this Agreement or the Note.
7.8 Investment. The Lender is acquiring the Note for its own account and
not with a view to resale.
7.9 Entire Agreement. This Agreement, including Exhibit A annexed hereto
and incororated herein by reference, and the agreements, certificates and other
documents delivered pursuant to this Agreement contain the entire agreement
among the parties with respect to the transactions described herein, and
supersede all prior agreements, written or oral, with respect thereto.
7.10 Indemnification. The Borrower agrees to indemnify, defend and hold
harmless the Lender and its respective shareholders, officers, directors,
employees, and any Affiliates of the foregoing, and their successors and assigns
(collectively, the Lender Group) from and against any and all losses,
liabilities (including punitive or exemplary damages and fines or penalties and
any interest thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims, Liens or other
obligations of any nature whatsoever (hereinafter individually, a "Loss" and
collectively, "Losses") which, directly or indirectly, arise out of, result form
or relate to, (i) any inaccuracy in or any breach of any representation or
warranty of the Borrower contained in Section 4, and (ii) any breach of any
covenant of the Borrower contained in this Agreement or in any other document
contemplated by this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
LENDER:
FINCA CONSULTING, INC.
By: /s/Volker Montag
------------------------
Volker Montag, President
BORROWER:
/s/Roland Schoeneberg
----------------------
Roland Schoeneberg
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$500,000.00 US December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Roland Schoeneberg, an individual (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Volker Montag, President, in Dollars, US,
the lawful money of the United States of America and in immediately available
funds, the principal amount of the lesser of (i) $500,000.00 US and (ii) the
aggregate unpaid principal amount of all Loans made by the Lender to the
undersigned and accrued interest, if any, on or before the second anniversary
date hereof as set forth in Section 1.1 of the Revolving Credit Agreement, dated
as of the date hereof, between the undersigned and the Lender (the "Credit
Agreement"). Capitalized terms used herein shall have the same meanings as set
forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
LENDER:
FINCA CONSULTING, INC.
By: /s/Volker Montag
------------------------
Volker Montag, President
BORROWER:
/s/Roland Schoeneberg
----------------------
Roland Schoeneberg
<PAGE>
PROMISSORY NOTE
$500,000.00 US December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Roland Schoeneberg, an individual (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Volker Montag, President, in Dollars, US,
the lawful money of the United States of America and in immediately available
funds, the principal amount of the lesser of (i) $500,000.00 US and (ii) the
aggregate unpaid principal amount of all Loans made by the Lender to the
undersigned and accrued interest, if any, on or before the second anniversary
date hereof as set forth in Section 1.1 of the Revolving Credit Agreement, dated
as of the date hereof, between the undersigned and the Lender (the "Credit
Agreement"). Capitalized terms used herein shall have the same meanings as set
forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
LENDER:
FINCA CONSULTING, INC.
By: /s/Volker Montag
------------------------
Volker Montag, President
BORROWER:
/s/Roland Schoeneberg
----------------------
Roland Schoeneberg
EXHIBIT 10.3
4,000,000 DM
REVOLVING CREDIT AGREEMENT
Between
PRIME CORE HOLDING AG
and
FINCA CONSULTING, INC.
Dated December 12, 1997
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS AGREEMENT is made as of December 12, 1997, by and between Prime Core
Holding AG, a corporation organized under the laws of the Federal Republic of
Germany, having its principal offices located at Koenigsalle 106, 40215
Dusseldorf, Germany (the "Borrower"), Finca Consulting, Inc., a Colorado
corporation (the "Lender."), Volker Montag, an individual, having an address c/o
Prime Core Holding AG, and Roland Schoeneberg, an individual, having an address
c/o Prime Core Holding AG (collectively, sometimes hereinafter referred to as
the "Guarantors").
B A C K G R O U N D :
WHEREAS, the Borrower is an affiliate of the Lender and both parties desire
to document Borrower's outstanding loans from the Lender, and, establish a
certain credit limit to provide for the repayment of these borrowings to the
lender, and;
WHEREAS, Volker Montag and Roland Schoeneberg, officers and directors of
both the Borrower and the Lender and the owners of Prime Core Holding AG, shall
jointly and severally personally guarantee the repayment of all of the
borrowings and loans of the Borrower to the Lender, and;
WHEREAS, the Borrower, Lender as well as Volker Montag and Roland
Schoeneberg desire to set forth in this document all of the terms and conditions
that shall govern their credit relationship.
NOW, THEREFORE, in consideration of the mutual promises made by the parties
to each other, it is agreed as follows:
SECTION 1. AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS
1.1 The Loan Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make revolving credit loans (individually, a
"Loan"; collectively, the "Loans") to the Borrower from time to time during the
period (the "Loan Commitment Period", commencing upon the date hereof and
terminating on the second anniversary date (the "Termination Date") in an
aggregate principal amount at any one time outstanding not to exceed 4,000,000
DM (the "Loan Commitment"). Lender and Borrower hereby acknowledge that Lender
has previously loaned to Borrower certain sums whose aggregate outstanding
balance is 3,038,000 DM as of the date hereof; the parties agree that his amount
shall be deemed a "Loan" for all purposes under this Agreement and currently
outstanding under the Loan Commitment.
1.2 The Note. The Loans made by the Lender shall be evidenced by a
promissory note of the Borrower in the form of Exhibit A, with appropriate
insertions, which shall be payable to the order of the Lender and shall
represent the obligation of the Borrower to pay the amount of the Loan or, if
less, the aggregate unpaid principal amount of all Loans made by the Lender,
with interest thereon as prescribed in Section 1.5. The Note shall (a) be dated
the date hereof, (b) be stated to mature on the Termination Date and (c) bear
interest for the period from the date hereof until paid in full on the unpaid
principal amount thereof from time to time outstanding at the rates prescribed
in Section 1.5.
1.3 Procedure for Borrowing Under Loan Commitment. The Borrower may borrow
under the Loan Commitment at any time during the Loan Commitment Period.
1.4 Optional Prepayment The Borrower may, at his option, prepay the Note
without premium or penalty, in whole or in part.
1.5 Interest Rates. (a) The Loans shall bear interest (calculated on the
basis of a 360-day year for the actual number of days elapsed) on the unpaid
principal amount thereof at a rate per annum equal to 5% payable annually.
(b) If all or a portion of the principal amount of any of the Loans shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue principal amount shall bear interest at the rate of 5%
per annum, to the extent permitted by law.
1.6 Maturity of Loans. The outstanding principal amount of the Loans shall
be due and payable on the Termination Date.
1.7 Previous Advances. The Lender and the Borrower acknowledge that the
amount of 3,038,000 DM has been previously advanced by the Lender to the
Borrower and represents the aggregate outstanding principal balance due as of
the date hereof. Provided that the Borrower has made all payments required to be
paid hereunder and is not in default, the Lender may, upon Borrower's request,
lend additional sums up to the Loan Commitment amount of 4,000,000 DM.
1.8 Guaranty of Payment. Volker Montag and Roland Schoeneberg have executed
and delivered to the Lender original copies of a Unlimited Continuing Guaranty
Agreement, a copy of which is annexed hereto as Exhibit B, pursuant to which
Volker Montag and Roland Schoeneberg agree to be jointly and severally liable to
the Lender for any and all repayment obligations of the Borrower under this
Agreement.
SECTION 2. COVENANTS
2.1 Payment of Note. The Borrower shall pay the principal of, and interest
on, the Note on the dates and in the manner provided herein and in the Note.
2.2 Notice of Default. If any one or more events occur which constitute a
Default or an Event of Default, upon obtaining knowledge thereof, the Borrower
will forthwith give notice to the Lender, specifying the nature and status of
the Default or Event of Default.
2.3 Covenant of the Borrower. The Borrower covenants and agrees that from
and after the date hereof he shall pay the Loan according to its terms.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loans hereunder, the Borrower hereby represents and warrants as follows:
3.1. No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Borrower of the transactions contemplated hereby will
violate or conflict with any agreement to which the Borrower is a party or
result in the acceleration of, or entitle any party to accelerate the maturity
or the cancellation of the performance of any obligation under, or result in the
creation or imposition of any Lien in or upon the assets of the Borrower or
constitute a default (or an event which might, with the passage of time.or the
giving of notice, or both, constitute a default) under any contract; to the best
of Borrower's knowledge, any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which the Borrower is a party or by which any
of his property or assets may be bound or affected or to the best of Borrower's
knowledge, with any provision of any law, rule, regulation, order, judgment, or
ruling of any Governmental or Regulatory Body applicable to the Borrower.
3.2 Litigation. There are no outstanding orders, judgments, injunctions,
investigations, awards or-decrees of any court, Governmental or Regulatory Body
or arbitration tribunal by which the Borrower or any of his assets, properties
or business is bound. There are no actions, suits, claims, legal, administrative
or arbitration proceedings pending or, to the best knowledge of the Borrower,
overtly threatened (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against or affecting the Borrower or any of
his assets or properties, that, individually or in the aggregate, could, if
determined adversely to the Borrower have a Material Adverse Effect, nor, to the
best knowledge of the Borrower, are there any facts which are likely to give
rise to any such action, suit, claim, investigation or legal, administrative or
arbitration proceeding.
SECTION 4. CONDITIONS TO SUBSEQUENT ADVANCES
The obligation of the Lender to permit Borrower's previous loans to be
included in the Loan Commitment and to make any subsequent advance pursuant to
this Agreement shall be subject to compliance by the Borrower with his
agreements herein contained, and, shall be subject to Borrower executing and
delivering to Lender the Note in the form annexed hereto as Exhibit A.
SECTION 5. CONDITIONS TO ALL LOANS. The obligation of the Lender to make any
Loan to the Borrower and to permit previous borrowings to be accumulated and
added to the Loan Commitment under this Agreement is subject to fulfillment of
the following conditions precedent to the satisfaction of the Lender:
5.1 Representations and Warranties. The representations and warranties made
by the Borrower in this Agreement and in any certificate, document or financial
or other statement furnished at any time hereunder shall be true and correct in
all material respects unless stated to relate to a specific earlier date.
5.2 No Default or Event of Default. No Default or Event of Default shall
have occurred under this Agreement or under the terms of the Note.
SECTION 6. DEFAULTS AND REMEDIES
6.1 Events of Default. Event of Default, whenever used herein means any of
the following events:
(a) the Borrower defaults in the due and punctual payment of
principal of, interest on, or any other amount owing in respect of, the Note
when and as the same shall become due and payable, and continuance of such
default for a period of 5 Business Days after receipt of notice; or
(b) the Borrower defaults in the performance or observance of any
covenant or agreement of the Borrower in this Agreement or the Note and the
continuance of such default for a period of 30 calendar days after there has
been given to the Borrower by the Lender a written notice specifying such
default and requiring it to be remedied; or
(c) the Borrower shall (i) default in any payment of principal of or
interest on any Loan or (ii) default in the observance or performance of any
agreement or condition relating to any such Loan or any other event shall occur
or condition exist, the effect of which default or other event or condition is
to cause (immediately or with the giving of notice or lapse of time or both) any
such Loan to become due prior to its stated maturity; or
(d) the Borrower, either pursuant to or within the meaning of any
applicable bankruptcy or insolvency law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors; or
(e) a court of competent jurisdiction enters an order or decree
under any applicable bankruptcy or insolvency law that: (i) is for relief
against the Borrower in an involuntary case, (ii) appoints a custodian of the
Borrower for any substantial part of all the property of the Borrower, or (iii)
orders the liquidation of the Borrower; and the order or decree remains unstayed
and in effect for 60 days.
The term Custodian means any receiver, trustee, assignee, custodian,
liquidator or similar official under any applicable bankruptcy or insolvency
law.
6.2 Acceleration of Maturity. If an Event of Default occurs and is
continuing, then and in every such case the Lender may, declare the principal of
the Note to be due and payable immediately and the Loan Commitment to be
terminated, by a notice in writing to the Borrower, and upon any such
declaration the principal of the Note shall become immediately due and payable
and the Loan Commitment shall be terminated.
SECTION 7. MISCELLANEOUS
7.1 Amendments and Waiver. This Agreement and the Note may be amended, and
the terms hereof waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance.
7.2 Notices. Any notice, demand or delivery pursuant to the provisions
hereof shall be sufficiently given or made if sent by hand or by registered or
certified mail, postage prepaid, addressed to the Lender at Finca Consulting,
Inc., Koenigsalle 106, 40215 Dusseldorf, Germany, Attention: Volker Montag,
President or, except as otherwise expressly provided herein, to the Borrower at
Koenigsalle 106, 40215 Dusseldorf, Germany, or such other address as shall have
been furnished to the party giving or making such notice, demand or delivery.
Any such notice shall be deemed given when so delivered personally or, by
telecopy, or if mailed, five (5) days following the deposit with a reputable
overnight courier.
7.3 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey without regard to
principles of conflicts of law.
7.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
7.5 Successors and Assigns. This Agreement and each document and
certificate delivered pursuant thereto shall be binding upon and inure to the
benefit of the Borrower and the Lender and their respective successors and
permitted assigns, except that neither the Borrower nor the Lender may assign or
transfer any of its rights under this Agreement or the Note without the prior
written consent of the other.
7.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Lender.
7.7 Severability. Any provision of this Agreement or the Note which is
prohibited, invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the,extent of such prohibition, invalidity or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition, invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction or
any other provision of this Agreement or the Note.
7.8 Investment. The Lender is acquiring the Note for its own account and
not with a view to resale.
7.9 Entire Agreement. This Agreement, including Exhibit A annexed hereto
and incorporated herein by reference, and the agreements, certificates and other
documents delivered pursuant to this Agreement contain the entire agreement
among the parties with respect to the transactions described herein, and
supersede all prior agreements, written or oral, with respect thereto.
7.10 Indemnification. The Borrower agrees to indemnify, defend and hold
harmless the Lender and its respective shareholders, officers, directors,
employees, and any Affiliates of the foregoing, and their successors and assigns
(collectively, the Lender Group) from and against any and all losses,
liabilities (including punitive or exemplary damages and fines or penalties and
any interest thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims, Liens or other
obligations of any nature whatsoever (hereinafter individually, a "Loss" and
collectively, "Losses") which, directly or indirectly, arise out of, result form
or relate to, (i) any inaccuracy in or any breach of any representation or
warranty of the Borrower contained in Section 4, and (ii) any breach of any
covenant of the Borrower contained in this Agreement or in any other document
contemplated by this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
LENDER:
FINCA CONSULTING, INC.
By: /s/Volker Montag
-----------------
Volker Montag, President
BORROWER:
PRIME CORE HOLDING AG
By: /s/Volker Montag
-----------------
Volker Montag, President
<PAGE>
EXHIBIT A
PROMISSORY NOTE
4,000,000 DM December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Prime Core Holding AG (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Volker Montag,President, in Deutsche
Marks, the lawful money of the Federal Republic of Germany, and in immediately
available funds, the principal amount of the lesser of (i) 4,000,000 DM or (ii)
the aggregate unpaid principal amount of all Loans made by the Lender to the
undersigned and accrued interest, if any, on or before the second anniversary
date hereof as set forth in Section 1.1 of the Revolving Credit Agreement, dated
as of the date hereof, between the undersigned and the Lender (the "Credit
Agreement"). Capitalized terms used herein shall have the same meanings as set
forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
BORROWER:
PRIME CORE HOLDING AG
By: /s/Volker Montag
----------------
Volker Montag, President
<PAGE>
EXHIBIT B
UNLIMITED CONTINUING GUARANTY AGREEMENT
This UNLIMITED CONTINUING GUARANTY AGREEMENT (the "Guaranty") is made as of
this 12th day of December, 1997, by Volker Montag, an individual having an
address at Am Abelshof 12 D-47445 Moers-Repelen, Germany and Roland Schoeneberg,
an individual having an address at Am Klausenberg 52, 5u09 Klon-Bruck, Germany
(sometimes hereinafter referred to as the "Guarantors"), in favor and for the
benefit of Finca Consulting, Inc., a Colorado corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, Lender has agreed to make a loan to Prime Core Holding AG, a
German corporation with its chief executive office located at Koenigsalle 106,
40215 Dusseldorf, Germany ("Borrower") in the principal amount of FOUR MILLION
DEUTSCHE MARKS (4,000,000 DM) (the "Loan"); and
WHEREAS, the Loan is evidenced by a certain promissory note dated of even
date herewith from Borrower in favor of Lender (the "Note"); and
WHEREAS, Guarantors are officers, directors and the owners of Borrower and,
as such, have and will derive substantial benefits from the making of such
loans, advances and extensions of credit to Borrower by Lender; and
WHEREAS, in consideration of such benefits, Guarantors have agreed to
guarantee the payment and performance of Borrower's obligations to Lender,
NOW, THEREFORE, Guarantors, jointly and severally for all purposes under
this Agreement, (hereinafter the Guarantors are referred to collectively as the
"Guarantor") agree as follows:
1. Guaranty of Payment and Performance. Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to Lender the full and punctual
payment and performance of any and all loans, advances, indebtedness,
liabilities, obligation, covenants or duties of Borrower to Lender of any kind
or nature, but only arising under the Loan, whether in whole or in part, whether
created directly by Lender or acquired by assignment, purchase, discount or
otherwise, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising, whether under any present or future document, agreement or other
instrument, and whether or not evidenced by a writing and specifically
including, but not being limited to, unpaid principal, plus all accrued and
unpaid interest thereon, together with all fees, expenses, commissions, charges,
penalties and other amounts owing by or chargeable to Borrower under the Note
and any other Loan Document related thereto (collectively, the "Obligations"),
as and when the same shall become due and payable, whether at maturity, by
acceleration or otherwise.
2. Maximum Guaranteed Amount. Notwithstanding any other provision of this
Guaranty to the contrary, if the obligations of Guarantor hereunder would
otherwise be held or determined by a court of competent jurisdiction in any
action or proceeding involving any state corporate law or any state or Federal
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other law affecting the rights or creditors generally, to be void, invalid or
unenforceable to any extent on account of the amount of Guarantor's liability
under this Guaranty, then notwithstanding any other provision of this Guaranty
to the contrary, the amount of liability shall, without any further action by
Guarantor or any other person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in action or
proceeding.
3. Continuing Nature. This Guaranty is a primary and original obligation of
Guarantor and is an absolute, unconditional, continuing and irrevocable guaranty
of payment and performance and not of collectibility and is in no way
conditioned or contingent upon any action or omission by Lender, including any
requirement that Lender first attempt to collect any of the Obligations from
Borrower or resort to any security therefor, or upon any other action,
occurrence, or circumstance whatsoever other than the failure of Borrower to
promptly and completely make any payment due to Lender in respect to the
Obligations as and when the same become due and payable, whether at maturity, by
acceleration or otherwise. This Guaranty is in addition to, and not in
substitution for or in reduction of, any other guaranty by Guarantor or any
other guarantor in favor of Lender. This Guaranty shall be continuing and shall
not be discharged, impaired or affected by (i) the power or authority or lack
thereof of Borrower to incur or contract for the Obligations or to execute,
acknowledge or delivery any document, agreement or other instrument evidencing,
securing or otherwise executed in connection with the Obligations; (ii) the
regularity or irregularity, validity or invalidity, or enforceability or
unenforceability of the Obligations; (iii) any defenses or counterclaims
whatsoever that Borrower may or might have to the payment or performance of the
Obligations or to the assertion of a default under any document, agreement or
other instrument evidencing, securing or otherwise executed in connection with
the Obligations including, but not limited to, lack of consideration, statute of
frauds, infancy, breach of warranty, lender liability, usury, fraud and statute
of limitations; (iv) the existence or non-existence of Borrower as a legal
entity; (v) the transfer by Borrower of all or any part of the property securing
the Obligations except by the permitted assumption; (vi) any right of setoff,
counterclaim or defense (other than the payment and performance of the
Obligations in full) that Guarantor may or might have to its respective
undertakings, liabilities and obligations under this Guaranty, each and every
such defense being hereby waived by Guarantor; or (vii) the inability of Lender
to claim any amount of interest, fees, costs, or charges from Borrower pursuant
to Section 506(b) of the United States Bankruptcy Code, as amended.
4. Guarantor's Agreement to Pay. Guarantor further agrees, as the principal
obligor and not as a guarantor or surety only, to pay to Lender, on demand, all
costs and expenses (including court costs and legal expenses) incurred or
expended by Lender in connection with the Obligations, this Guaranty and the
enforcement thereof, together with interest on amounts recoverable under this
Guaranty from the time such amounts become due until payment, at the rate per
annum equal to the rate of interest charged by the Lender pursuant to the Note,
including the increased default rate of interest; provided, however, that if
such interest exceeds the maximum amount permitted to be paid under applicable
law, then such interest shall be reduced to such maximum permitted amount.
5. Unlimited Guaranty. The liability of Guarantor hereunder shall be
unlimited.
6. Waivers by Guarantor; Lender's Freedom to Act. Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their
representative terms regardless of law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Lender
with respect thereto. Guarantor waives presentment, demand, protest, notice of
acceptance, notice of obligations incurred and all other notices of any kind,
all defenses which may be available by virtue of any valuation, stay, moratorium
or other similar law now or hereafter in effect, any right to require the
marshalling of assets of Borrower, and all suretyship defenses generally.
Without limiting the generality of the foregoing, Guarantor agrees to the
provisions of any document, agreement or other instrument evidencing, securing
or otherwise executed in connection with any Obligations and agrees that the
obligations of Guarantor hereunder shall not be released or discharged, in whole
or in part, or otherwise affected by: (i) the failure of Lender to assert any
claim or demand or to enforce any right or remedy against Borrower; (ii) any
extensions or renewals of any Obligations; (iii) any rescissions, waivers,
amendments or modifications of any of the terms or provisions of any document,
agreement or other instrument evidencing, securing or otherwise executed in
connection with the Obligations; (iv) the substitution or release of any person
or entity primarily or secondarily liable for the Obligations; (v) the adequacy
of any rights or remedies Lender may have against any collateral or other means
of obtaining repayment of the Obligations; (vi) the impairment of any collateral
securing the Obligations, including without limitation the failure to perfect or
preserve any rights or remedies Lender might have in such collateral or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral; or (vii) any other act or omission which might in any manner or to
any extent vary the risk of Guarantor or otherwise operate as a release or
discharge of Guarantor, all of which may be done without notice to Guarantor.
7. Proceedings on Default. Upon the failure of Borrower to promptly and
completely make any required payment and performance of the Obligations, Lender
may, at its option: (a) proceed directly and at once without notice of such
default, against Guarantor to collect and recover the full amount of the
liability hereunder, or any portion thereof, without proceeding against Borrower
or any other person, or endorser, surety or guarantor, or foreclosing upon,
selling, or otherwise disposing of, or enforcing, or collecting or applying any
property, real or personal, Lender may then has as security for the Obligations,
and without enforcing or proceeding under any other guaranty; (b) sell the real
and personal property Lender may then have as security for the Obligations under
the power of sale contained in any mortgage deed, security agreement or similar
instrument pursuant to which such property is held or to which such property is
subject or sell such property through judicial foreclosure, as Lender may elect,
notice of any such election being expressly waived by Guarantor, and proceed
against Guarantor for an amount equal to the difference between the net proceeds
of such sale to Lender and the amount of the Obligations then due and owing.
Nothing herein shall prohibit Lender from exercising its rights against
Guarantor, any other guarantor, endorser, or surety, the security, if any, for
the Obligations, and Borrower simultaneously, jointly and/or severally.
8. Representations. Guarantor represents and warrants to Lender that this
Guaranty does not violate the provisions of any document, agreement or other
instrument by which Guarantor is bound; no consent or authorization is required
as a condition to the execution of this Guaranty; Guarantor is fully aware of
the financial condition of Borrower; Guarantor delivers this Guaranty based
solely upon Guarantor's own independent investigation and understanding of the
transaction of which this Guaranty is a part and in no part upon any
representation or statement of Lender with respect thereto; Guarantor is in a
position to and hereby assumes full responsibility for obtaining any additional
information concerning Borrower's financial condition or business operations as
Guarantor may deem material to his obligations hereunder and Guarantor is not
relying upon, nor expecting Lender to furnish Guarantor with, any information in
Lender's possession concerning Borrower's financial condition or business
operations. Guarantor acknowledges and agrees that he hereby knowingly accepts
the full range of risk encompassed within a contract of "continuing guaranty",
which risk includes, without limitation, the possibility that Borrower will
incur or contract for additional indebtedness for which Guarantor will be liable
hereunder.
9. Independent Obligation. The obligations of Guarantor hereunder shall be
absolute and unconditional and are independent of the obligations of Borrower or
of any other person, endorser, surety or guarantor.
10. Bankruptcy. All of the Obligations shall, at the option of Lender,
forthwith become due and payable if there shall be filed against Borrower a
petition in bankruptcy or for insolvency proceedings or for reorganization,
dissolution or liquidation, or for appointment of a receiver or trustee, or if
Borrower makes an assignment for the benefit of creditors. This Guaranty shall
remain in full force and effect, without abatement, until the Obligations have
been paid or performed in full and all other obligations guaranteed hereunder
have been performed to the satisfaction of Lender, it being expressly understood
and agreed to by Guarantor that this Guaranty shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment, in whole or in
part, of any of the Obligations is rescinded, invalidated, declared to be
fraudulent or preferential, set aside or must otherwise be restored or returned
by Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower all as though such payment had not been made, to
Borrower or a trustee, receiver or any other party. Guarantor understands and
agrees that in the event Lender is required to so return all or any portion of a
payment received from Borrower, Guarantor shall be required to pay Lender for
such amount.
11. Unenforceability of Obligations Against Borrower. If for any reason
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on Guarantor to the same extent as if Guarantor at all
times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of Borrower or for any other reason,
all such amounts otherwise subject to acceleration under the terms of any
document, agreement or other instrument evidencing, securing or otherwise
executed in connection with any of the Obligations shall be immediately due and
payable by Guarantor.
12. Guarantor's Solvency. Guarantor represents and warrants to the Lender
that (both before and after giving effect to the transactions contemplated in
this Guaranty) he is solvent on a going concern basis, and has assets having a
fair value in excess of the amount required to pay his probable liabilities on
his existing debts as they become absolute and matured, and has, and will have,
access to the adequate capital for the conduct of his business and the ability
to pay his debts from time to time incurred therewith as such debts mature.
13. Payments. Guarantor covenants and agrees that the Obligations will be
paid strictly in accordance with their respective terms regardless of any law,
regulation or order now or hereinafter in effect in any jurisdiction affecting
any of such terms of the rights of the Lender with respect thereto. Without
limiting the generality of the foregoing, Guarantor's obligations hereunder with
respect to any Obligation shall not be discharged by a payment in a currency
other than Deutsche Marks or at a place other than the place specified for the
payment of the Obligations, whether pursuant to a judgment or otherwise, to the
extent that the amount so paid on conversion to Deutsche Marks and transferred
to the Lender at its main office under normal banking procedures does not yield
the amount of Deutsche Marks dollars due thereunder.
14. Further Assurances. Guarantor agrees that it will provide to Lender
information relating to the financial condition and business operations of
Guarantor as Lender may reasonably request.
15. Successors and Assigns. This Guaranty shall be binding upon Guarantor
and his heirs, executors, personal representatives, successors and assigns, and
shall inure to the benefit of and be enforceable by Lender and its successors,
transferees and assigns. Without limiting the generality of the foregoing
sentence, Lender may assign or otherwise transfer any document, agreement or
other instrument held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participation in any interest therein
to any other Person or entity, and such other person or entity shall thereupon
become vested, to the extent set forth in the agreement evidencing such
assignment, transfer or participation, with all rights in respect thereof
granted to Lender herein.
16. Amendments and Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be effective
unless the same shall be in writing and signed by Lender. No failure on the part
of Lender to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise of any other right.
17. Notices. All notices, requests, demands, and other communications
called for hereunder shall be made in writing and, unless otherwise specifically
provided herein, shall be deemed to have been duly made or given when delivered
by hand or mailed first class mail postage prepaid or, in the case of telecopy
or facsimile notice, when transmitted, answer back received, addressed as set
forth above, or at such address as either party may designate in writing.
18. Joint and Several Obligations. If this Guaranty is now, or hereafter
shall be, signed by more than one Person, it shall be the joint and several
obligation of all such persons (including, without limitation, all makers,
endorsers, Guarantor and sureties, if any) and shall be binding on all such
persons and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
19. Governing Law; Consent to Jurisdiction. This Guaranty, and the rights
and obligations of the parties hereunder, shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New Jersey.
Guarantor agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of the State of New Jersey or any Federal Court sitting
therein and consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon Guarantor by mail at the
address specified above. Guarantor hereby waives any objection that it may now
or hereafter have to the venue of any such suit or any such court or that such
suit was brought in an inconvenient court.
20. Termination. This Guaranty shall remain in full force and effect,
without abatement, until the Obligations have been paid or performed in full and
all other obligations guaranteed hereunder have been performed to the
satisfaction of Lender.
21. Amendments and Modifications. The provisions of this Guaranty shall
extend and be applicable to all renewals, amendments, extensions and
modifications of the Obligations and the documents, agreements and other
instruments evidencing, securing or otherwise executed in connection with the
Obligations, and all references to the Obligations and such documents,
agreements or instruments shall be deemed to include any renewal, extension,
amendment or modification thereof.
22. Miscellaneous. This Guaranty constitutes the entire agreement of
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other document, agreement or other instrument and this Guaranty shall be
in addition to any other guaranty of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. All section headings
in this Guaranty are included for convenience of reference only and shall not
constitute a part of this Guaranty for any other purpose. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
<PAGE>
IN WITNESS WHEREOF, Guarantors have executed this Guaranty as of the date
first set forth above.
/s/Volker Montag
---------------------
Volker Montag
/s/Roland Schoeneberg
---------------------
Roland Schoeneberg
<PAGE>
PROMISSORY NOTE
4,000,000 DM December 12, 1997
Dusseldorf, Germany
FOR VALUE RECEIVED, the undersigned, Prime Core Holding AG (the
"Borrower"), hereby unconditionally promises to pay to the order of Finca
Consulting, Inc., a Colorado corporation (the "Lender"), at Koenigsalle 106,
40215 Dusseldorf, Germany, Attention: Volker Montag,President, in Deutsche
Marks, the lawful money of the Federal Republic of Germany, and in immediately
available funds, the principal amount of the lesser of (i) 4,000,000 DM or (ii)
the aggregate unpaid principal amount of all Loans made by the Lender to the
undersigned and accrued interest, if any, on or before the second anniversary
date hereof as set forth in Section 1.1 of the Revolving Credit Agreement, dated
as of the date hereof, between the undersigned and the Lender (the "Credit
Agreement"). Capitalized terms used herein shall have the same meanings as set
forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be paid (whether at the stated maturity, by acceleration
or otherwise) on the dates and at the applicable rates per annum as provided in
Section 1.5 of the Credit Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof and is subject to the terms and conditions provided
therein.
Except as expressly provided herein, the undersigned hereby waives
presentation, demand, protest and all other notices of any kind.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New Jersey without regard to principles of conflicts of law.
BORROWER:
PRIME CORE HOLDING AG
By: /s/Volker Montag
------------------------
Volker Montag, President
<PAGE>
UNLIMITED CONTINUING GUARANTY AGREEMENT
This UNLIMITED CONTINUING GUARANTY AGREEMENT (the "Guaranty") is made as of
this 12th day of December, 1997, by Volker Montag, an individual having an
address at Am Abelshof 12 D-47445 Moers-Repelen, Germany and Roland Schoeneberg,
an individual having an address at Am Klausenberg 52, 5u09 Klon-Bruck, Germany
(sometimes hereinafter referred to as the "Guarantors"), in favor and for the
benefit of Finca Consulting, Inc., a Colorado corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, Lender has agreed to make a loan to Prime Core Holding AG, a
German corporation with its chief executive office located at Koenigsalle 106,
40215 Dusseldorf, Germany ("Borrower") in the principal amount of FOUR MILLION
DEUTSCHE MARKS (4,000,000 DM) (the "Loan"); and
WHEREAS, the Loan is evidenced by a certain promissory note dated of even
date herewith from Borrower in favor of Lender (the "Note"); and
WHEREAS, Guarantors are officers, directors and the owners of Borrower and,
as such, have and will derive substantial benefits from the making of such
loans, advances and extensions of credit to Borrower by Lender; and
WHEREAS, in consideration of such benefits, Guarantors have agreed to
guarantee the payment and performance of Borrower's obligations to Lender,
NOW, THEREFORE, Guarantors, jointly and severally for all purposes under
this Agreement, (hereinafter the Guarantors are referred to collectively as the
"Guarantor") agree as follows:
1. Guaranty of Payment and Performance. Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to Lender the full and punctual
payment and performance of any and all loans, advances, indebtedness,
liabilities, obligation, covenants or duties of Borrower to Lender of any kind
or nature, but only arising under the Loan, whether in whole or in part, whether
created directly by Lender or acquired by assignment, purchase, discount or
otherwise, whether any of the foregoing are direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising, whether under any present or future document, agreement or other
instrument, and whether or not evidenced by a writing and specifically
including, but not being limited to, unpaid principal, plus all accrued and
unpaid interest thereon, together with all fees, expenses, commissions, charges,
penalties and other amounts owing by or chargeable to Borrower under the Note
and any other Loan Document related thereto (collectively, the "Obligations"),
as and when the same shall become due and payable, whether at maturity, by
acceleration or otherwise.
2. Maximum Guaranteed Amount. Notwithstanding any other provision of this
Guaranty to the contrary, if the obligations of Guarantor hereunder would
otherwise be held or determined by a court of competent jurisdiction in any
action or proceeding involving any state corporate law or any state or Federal
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other law affecting the rights or creditors generally, to be void, invalid or
unenforceable to any extent on account of the amount of Guarantor's liability
under this Guaranty, then notwithstanding any other provision of this Guaranty
to the contrary, the amount of liability shall, without any further action by
Guarantor or any other person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in action or
proceeding.
3. Continuing Nature. This Guaranty is a primary and original obligation of
Guarantor and is an absolute, unconditional, continuing and irrevocable guaranty
of payment and performance and not of collectibility and is in no way
conditioned or contingent upon any action or omission by Lender, including any
requirement that Lender first attempt to collect any of the Obligations from
Borrower or resort to any security therefor, or upon any other action,
occurrence, or circumstance whatsoever other than the failure of Borrower to
promptly and completely make any payment due to Lender in respect to the
Obligations as and when the same become due and payable, whether at maturity, by
acceleration or otherwise. This Guaranty is in addition to, and not in
substitution for or in reduction of, any other guaranty by Guarantor or any
other guarantor in favor of Lender. This Guaranty shall be continuing and shall
not be discharged, impaired or affected by (i) the power or authority or lack
thereof of Borrower to incur or contract for the Obligations or to execute,
acknowledge or delivery any document, agreement or other instrument evidencing,
securing or otherwise executed in connection with the Obligations; (ii) the
regularity or irregularity, validity or invalidity, or enforceability or
unenforceability of the Obligations; (iii) any defenses or counterclaims
whatsoever that Borrower may or might have to the payment or performance of the
Obligations or to the assertion of a default under any document, agreement or
other instrument evidencing, securing or otherwise executed in connection with
the Obligations including, but not limited to, lack of consideration, statute of
frauds, infancy, breach of warranty, lender liability, usury, fraud and statute
of limitations; (iv) the existence or non-existence of Borrower as a legal
entity; (v) the transfer by Borrower of all or any part of the property securing
the Obligations except by the permitted assumption; (vi) any right of setoff,
counterclaim or defense (other than the payment and performance of the
Obligations in full) that Guarantor may or might have to its respective
undertakings, liabilities and obligations under this Guaranty, each and every
such defense being hereby waived by Guarantor; or (vii) the inability of Lender
to claim any amount of interest, fees, costs, or charges from Borrower pursuant
to Section 506(b) of the United States Bankruptcy Code, as amended.
4. Guarantor's Agreement to Pay. Guarantor further agrees, as the principal
obligor and not as a guarantor or surety only, to pay to Lender, on demand, all
costs and expenses (including court costs and legal expenses) incurred or
expended by Lender in connection with the Obligations, this Guaranty and the
enforcement thereof, together with interest on amounts recoverable under this
Guaranty from the time such amounts become due until payment, at the rate per
annum equal to the rate of interest charged by the Lender pursuant to the Note,
including the increased default rate of interest; provided, however, that if
such interest exceeds the maximum amount permitted to be paid under applicable
law, then such interest shall be reduced to such maximum permitted amount.
5. Unlimited Guaranty. The liability of Guarantor hereunder shall be
unlimited.
6. Waivers by Guarantor; Lender's Freedom to Act. Guarantor agrees that the
Obligations will be paid and performed strictly in accordance with their
representative terms regardless of law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Lender
with respect thereto. Guarantor waives presentment, demand, protest, notice of
acceptance, notice of obligations incurred and all other notices of any kind,
all defenses which may be available by virtue of any valuation, stay, moratorium
or other similar law now or hereafter in effect, any right to require the
marshalling of assets of Borrower, and all suretyship defenses generally.
Without limiting the generality of the foregoing, Guarantor agrees to the
provisions of any document, agreement or other instrument evidencing, securing
or otherwise executed in connection with any Obligations and agrees that the
obligations of Guarantor hereunder shall not be released or discharged, in whole
or in part, or otherwise affected by: (i) the failure of Lender to assert any
claim or demand or to enforce any right or remedy against Borrower; (ii) any
extensions or renewals of any Obligations; (iii) any rescissions, waivers,
amendments or modifications of any of the terms or provisions of any document,
agreement or other instrument evidencing, securing or otherwise executed in
connection with the Obligations; (iv) the substitution or release of any person
or entity primarily or secondarily liable for the Obligations; (v) the adequacy
of any rights or remedies Lender may have against any collateral or other means
of obtaining repayment of the Obligations; (vi) the impairment of any collateral
securing the Obligations, including without limitation the failure to perfect or
preserve any rights or remedies Lender might have in such collateral or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral; or (vii) any other act or omission which might in any manner or to
any extent vary the risk of Guarantor or otherwise operate as a release or
discharge of Guarantor, all of which may be done without notice to Guarantor.
7. Proceedings on Default. Upon the failure of Borrower to promptly and
completely make any required payment and performance of the Obligations, Lender
may, at its option: (a) proceed directly and at once without notice of such
default, against Guarantor to collect and recover the full amount of the
liability hereunder, or any portion thereof, without proceeding against Borrower
or any other person, or endorser, surety or guarantor, or foreclosing upon,
selling, or otherwise disposing of, or enforcing, or collecting or applying any
property, real or personal, Lender may then has as security for the Obligations,
and without enforcing or proceeding under any other guaranty; (b) sell the real
and personal property Lender may then have as security for the Obligations under
the power of sale contained in any mortgage deed, security agreement or similar
instrument pursuant to which such property is held or to which such property is
subject or sell such property through judicial foreclosure, as Lender may elect,
notice of any such election being expressly waived by Guarantor, and proceed
against Guarantor for an amount equal to the difference between the net proceeds
of such sale to Lender and the amount of the Obligations then due and owing.
Nothing herein shall prohibit Lender from exercising its rights against
Guarantor, any other guarantor, endorser, or surety, the security, if any, for
the Obligations, and Borrower simultaneously, jointly and/or severally.
8. Representations. Guarantor represents and warrants to Lender that this
Guaranty does not violate the provisions of any document, agreement or other
instrument by which Guarantor is bound; no consent or authorization is required
as a condition to the execution of this Guaranty; Guarantor is fully aware of
the financial condition of Borrower; Guarantor delivers this Guaranty based
solely upon Guarantor's own independent investigation and understanding of the
transaction of which this Guaranty is a part and in no part upon any
representation or statement of Lender with respect thereto; Guarantor is in a
position to and hereby assumes full responsibility for obtaining any additional
information concerning Borrower's financial condition or business operations as
Guarantor may deem material to his obligations hereunder and Guarantor is not
relying upon, nor expecting Lender to furnish Guarantor with, any information in
Lender's possession concerning Borrower's financial condition or business
operations. Guarantor acknowledges and agrees that he hereby knowingly accepts
the full range of risk encompassed within a contract of "continuing guaranty",
which risk includes, without limitation, the possibility that Borrower will
incur or contract for additional indebtedness for which Guarantor will be liable
hereunder.
9. Independent Obligation. The obligations of Guarantor hereunder shall be
absolute and unconditional and are independent of the obligations of Borrower or
of any other person, endorser, surety or guarantor.
10. Bankruptcy. All of the Obligations shall, at the option of Lender,
forthwith become due and payable if there shall be filed against Borrower a
petition in bankruptcy or for insolvency proceedings or for reorganization,
dissolution or liquidation, or for appointment of a receiver or trustee, or if
Borrower makes an assignment for the benefit of creditors. This Guaranty shall
remain in full force and effect, without abatement, until the Obligations have
been paid or performed in full and all other obligations guaranteed hereunder
have been performed to the satisfaction of Lender, it being expressly understood
and agreed to by Guarantor that this Guaranty shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment, in whole or in
part, of any of the Obligations is rescinded, invalidated, declared to be
fraudulent or preferential, set aside or must otherwise be restored or returned
by Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower all as though such payment had not been made, to
Borrower or a trustee, receiver or any other party. Guarantor understands and
agrees that in the event Lender is required to so return all or any portion of a
payment received from Borrower, Guarantor shall be required to pay Lender for
such amount.
11. Unenforceability of Obligations Against Borrower. If for any reason
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on Guarantor to the same extent as if Guarantor at all
times had been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of Borrower or for any other reason,
all such amounts otherwise subject to acceleration under the terms of any
document, agreement or other instrument evidencing, securing or otherwise
executed in connection with any of the Obligations shall be immediately due and
payable by Guarantor.
12. Guarantor's Solvency. Guarantor represents and warrants to the Lender
that (both before and after giving effect to the transactions contemplated in
this Guaranty) he is solvent on a going concern basis, and has assets having a
fair value in excess of the amount required to pay his probable liabilities on
his existing debts as they become absolute and matured, and has, and will have,
access to the adequate capital for the conduct of his business and the ability
to pay his debts from time to time incurred therewith as such debts mature.
13. Payments. Guarantor covenants and agrees that the Obligations will be
paid strictly in accordance with their respective terms regardless of any law,
regulation or order now or hereinafter in effect in any jurisdiction affecting
any of such terms of the rights of the Lender with respect thereto. Without
limiting the generality of the foregoing, Guarantor's obligations hereunder with
respect to any Obligation shall not be discharged by a payment in a currency
other than Deutsche Marks or at a place other than the place specified for the
payment of the Obligations, whether pursuant to a judgment or otherwise, to the
extent that the amount so paid on conversion to Deutsche Marks and transferred
to the Lender at its main office under normal banking procedures does not yield
the amount of Deutsche Marks dollars due thereunder.
14. Further Assurances. Guarantor agrees that it will provide to Lender
information relating to the financial condition and business operations of
Guarantor as Lender may reasonably request.
15. Successors and Assigns. This Guaranty shall be binding upon Guarantor
and his heirs, executors, personal representatives, successors and assigns, and
shall inure to the benefit of and be enforceable by Lender and its successors,
transferees and assigns. Without limiting the generality of the foregoing
sentence, Lender may assign or otherwise transfer any document, agreement or
other instrument held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participation in any interest therein
to any other Person or entity, and such other person or entity shall thereupon
become vested, to the extent set forth in the agreement evidencing such
assignment, transfer or participation, with all rights in respect thereof
granted to Lender herein.
16. Amendments and Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall be effective
unless the same shall be in writing and signed by Lender. No failure on the part
of Lender to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise of any other right.
17. Notices. All notices, requests, demands, and other communications
called for hereunder shall be made in writing and, unless otherwise specifically
provided herein, shall be deemed to have been duly made or given when delivered
by hand or mailed first class mail postage prepaid or, in the case of telecopy
or facsimile notice, when transmitted, answer back received, addressed as set
forth above, or at such address as either party may designate in writing.
18. Joint and Several Obligations. If this Guaranty is now, or hereafter
shall be, signed by more than one Person, it shall be the joint and several
obligation of all such persons (including, without limitation, all makers,
endorsers, Guarantor and sureties, if any) and shall be binding on all such
persons and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
19. Governing Law; Consent to Jurisdiction. This Guaranty, and the rights
and obligations of the parties hereunder, shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New Jersey.
Guarantor agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of the State of New Jersey or any Federal Court sitting
therein and consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon Guarantor by mail at the
address specified above. Guarantor hereby waives any objection that it may now
or hereafter have to the venue of any such suit or any such court or that such
suit was brought in an inconvenient court.
20. Termination. This Guaranty shall remain in full force and effect,
without abatement, until the Obligations have been paid or performed in full and
all other obligations guaranteed hereunder have been performed to the
satisfaction of Lender.
21. Amendments and Modifications. The provisions of this Guaranty shall
extend and be applicable to all renewals, amendments, extensions and
modifications of the Obligations and the documents, agreements and other
instruments evidencing, securing or otherwise executed in connection with the
Obligations, and all references to the Obligations and such documents,
agreements or instruments shall be deemed to include any renewal, extension,
amendment or modification thereof.
22. Miscellaneous. This Guaranty constitutes the entire agreement of
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other document, agreement or other instrument and this Guaranty shall be
in addition to any other guaranty of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. All section headings
in this Guaranty are included for convenience of reference only and shall not
constitute a part of this Guaranty for any other purpose. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
<PAGE>
IN WITNESS WHEREOF, Guarantors have executed this Guaranty as of the date
first set forth above.
/s/Volker Montag
---------------------
Volker Montag
/s/Roland Schoeneberg
---------------------
Roland Schoeneberg
EXHIBIT 10.4
Finca Consulting, Inc.
Koenigsalle 106
40215 Dusseldorf
Germany
December 15, 1997
PERSONAL AND CONFIDENTIAL
VIA TELECOPY AND OVERNIGHT DELIVERY
Board of Directors
Prime Core Holding, Inc.
380 Foothill Road
Bridgewater, New Jersey 08807
RE: Proposed Merger of Finca Consulting, Inc.
By and Into Prime Core Holding, Inc.
Gentlemen:
This letter sets forth our agreement in principle made on or about December
28, 1996, and further memorializes our intent concerning the contemplated merger
of Finca Consulting, Inc. ("Finca") by and into Prime Core Holding, Inc. ("Prime
Core") through an exchange of shares (the "Merger"). The parties agree to move
forward with the proposed Merger in good faith.
The proposed terms of the Merger are as follows:
1. General. Prime Core has a capitalization of 20,000,000 shares
authorized, 10,000,000 of which are preferred stock, $.05 par value per share,
with no such shares issued and outstanding, and; 10,000,000 of which shares are
common shares, $.01 par value per share, with 100 of such shares issued and
outstanding as of the date hereof. Finca has a capitalization of 40,000,000
shares authorized, 20,000,000 of which are preferred stock, $.00001 par value
per share, with no such shares issued and outstanding, and; 20,000,000 of which
shares are common shares, $.01 par value per share, with 10,300,322 of such
shares issued and outstanding as of the date hereof. As soon as practicable,
Prime Core shall amend its certificate of incorporation increasing the number of
its authorized common shares from 10,000,000 to 20,000,000.
The Merger of Finca with Prime Core will be effected through an exchange of
our companies' common shares pursuant to which the shareholders of Finca shall
deliver all of Finca's issued and outstanding common shares (the "Finca Shares")
to Prime Core in exchange for shares of Prime Core's Common Stock, on the basis
of one (1) share of Finca's Common Stock for one (1) Prime Core Share. It is the
intention of the parties to this Merger that Prime Core shall become the
corporation that shall assume all of the obligations of Finca under the U.S.
Securities Laws, including without limitation, the obligation to file reports
under the Securities Exchange Act of 1934, as amended (the "1934 Act") and to
file any required registration statements under the Securities Act of 1933, as
amended (the "1933 Act"), as well as to accomplish the reincorporation of the
corporation of the "public" corporation, previously Finca, in the State of
Delaware.
2. Confidentiality of Information. Each party will hold in strict
confidence all information concerning the business and affairs of the other
party obtained from the other party (the "Confidential Material"), use such
Confidential Material solely for the purpose of evaluating the subject
transaction and only make available such information to such officers, employees
and representatives (including legal and accounting representatives) as is
necessary to evaluate the subject transactions or as may be required by law or
regulation or to comply with the applicable requirements of any governmental
agency. Confidential Material does not, however, include any such information
which (i) is or becomes generally available to the public other than as a result
of a disclosure by the receiving party, (ii) was known to the receiving party on
a non- confidential basis prior to its disclosure by the disclosing party, or
(iii) becomes available to the receiving party on a non-confidential basis from
a source other than the disclosing party or its agents, provided that such
source is not bound by a confidentiality agreement with the disclosing party
known to the receiving party. If the subject transaction contemplated are not
consummated, each party will return or destroy all information so obtained. All
parties further agree that they will consult with each other before issuing any
press release or otherwise making any public statements with resect to the
subject transactions contemplated in this agreement, and shall not issue any
such press release or make any such public statement prior to such consultation
or, after such consultation, if any party is not reasonably satisfied with the
text of such release or statement.
3. Conditions. The obligations of the parties to consummate the Merger will
be subject to, among other things, (a) the receipt of the unanimous approvals of
the parties' respective Boards of Directors, (b) the confirmation from the
independent auditors of both Prime Core and Finca that the exchange of shares
contemplated in the Merger will be treated as a tax-free exchange under
applicable provisions of the U.S. Internal Revenue Code of 1986, as amended (c)
the execution and delivery of a definitive agreement by the parties on or before
January 31, 1998 (d) the receipt of all approvals from applicable regulatory
agencies (e) the receipt of the respective approvals of Prime Core's and Finca's
shareholders, (f) the normal warranties, representations and covenants, and (g)
the filing by Finca and Prime Core of a registration statement on Form S-4 with
the U.S. Securities and Exchange Commission ("SEC") registering the Prime Core
Common Shares to be issued in the Merger and its being declared effective by the
SEC.
4. No Oral Modifications. This agreement cannot be changed, modified,
altered or amended in any way, other than in writing signed by all parties. This
agreement supersedes any and all prior agreements, understandings and contracts
between the parties, whether oral or written.
Very truly yours,
PRIME CORE HOLDING, INC.
By: /s/Volker Montag
-------------------------
Volker Montag, President
FINCA CONSULTING, INC.
By: /s/Volker Montag
-------------------------
Volker Montag, President
EXHIBIT 10.5
BROKER AGREEMENT
Prime Core AG
Gotthardstrasse 3
CH-6300 Zug (hereinafter called "AG")
and
Dr. Roland Schoneberg
Am Klausenberg 52
51109 Koln (hereinafter called "Broker")
herewith enter into the following contractual agreement:
1. Scope of Activities:
Effective April 1, 1997, Broker will begin representing AG as independent agent
in the Federal Republic of Germany, within the specific geographical area
assigned to him.
Broker will be active as broker and agent in the Investment and Securities
business, on behalf of AG or other entities designated by AG. This activity
encompasses the procurement of contracts, for the purchase and sale of
securities and stock and commodity options issued by AG or third parties, and
the solicitation of potential clients for such business.
It is explicitly understood that Broker's choice of investments for
recommendation to potential buyers is his alone. AG will not assume any
liability with respect to any investment advise issued by Broker.
Broker may use his own literature and collateral if needed and employ his own
personnel and resources as required in the course of his activities.
In conducting his business Broker may elect to utilize the facilities and
personnel resources of an office services company, specifically
Telecom GmbH .
In such case Broker agrees to pay a rental fee, on account of all transactions
which resulted from utilizing the resources of the office services company. For
that purpose, a separate rental and service agreement is required. Broker is not
authorized to enter into any commission business, either in his own name or on
account of AG.
2. Business Conduct:
Broker will apply all normal and usual care in safeguarding the interests of AG
in all respects.
He is required to conduct his marketing and solicitation efforts in a manner
which does not create any obligations or liabilities for AG, particularly with
respect to making unrealistic promises for profits or failing to disclosure the
risks for loss. Broker understands that the enticement to securities
transactions of uninformed investors who are not fully informed about the
associated risks, is considered a punishable offense subject to prosecution.
Broker may dispense information and give advice only after a thorough assessment
of the situation. Where such information is obtained through or from third
parties, he is obliged to state so in all communication to clients.
He is required to especially point out the speculative nature of the investment
which he recommends. He furthermore must refrain from making a comparison with
any other form of investments which is subject to regulatory oversight, in
particular the German stock market, or stocks of other companies.
Clients have to be fully and truthfully informed about all applicable
administrative charges (commission expenses, cost and fee structure in
connection with proprietary AG-Options).
Broker agrees to pass on to AG all orders for purchase or sale which meet the
criteria established for a valid trade (i.e. all forms/contracts have been
executed, the client received the information brochure, he has been advised of
the risks associated with this type of investment).
3. Legal Points:
Broker has been specifically advised that fraudulent and deceitful actions and
the inducement to the speculation in securities are punishable offenses. He
confirms that he has not previously been indicted or punished for fraud,
inducement to the speculation in securities, or other similar offenses.
He furthermore confirms that he is not currently subject to legal action or
discovery in connection with such offenses, and that he will immediately notify
AG if and when such occurs in the future.
4. Responsibilities of Broker:
Broker will observe absolute confidentiality with regard to all aspects of AG's
business which may come to his attention; this obligation extends also for the
time after termination of his relationship with AG, with respect to all
information of confidential or proprietary nature.
Confidential information includes the marketing concepts of AG, as well as all
facts and data pertaining to customers of AG. Broker is required to forward to
AG all applicable data about customers which he may have obtained in discussions
with the customer, especially any information with regard to such customers'
financial circumstances, prior to the execution of any business transaction.
Transactions which are financed solely by or through third parties, should
generally be declined.
Broker may not enter into any contracts, either in his own name, or on behalf of
AG.
In all cases, the current General Terms and Conditions of AG apply. The current
version of these Terms and Conditions is attached to this Agreement.
5. Responsibilities of AG:
AG will - through an office services company - provide to Broker the support and
infrastructure required for conducting this business.
In particular, such support includes the needed documents for this type
business, literature and sales collateral brochures, market information, and
account statements issued by brokerage houses with whom AG transacts business.
Broker is required to verify the accuracy of all such records.
All records and materials must be returned to AG upon termination of this
Agreement, immediately and without special request.
6. Commissions:
Broker is entitled to a commission on all business resulting from his activity,
entered into during the duration of this Agreement. The commission amount
depends upon the particular investment (see below) and is ultimately determined
between the parties hereto at the end of each year. Broker will receive a
monthly draw against the annual commission, in the amount of
DM 65,000
payable to a bank account of Broker's choice.
AG is required to issue credit at the end of a given year for all commissions
accrued to Broker, and to immediately transfer to such account the balance
remaining after deducting the monthly draw payments. Such credit and payment
must be made no later than March 31 of the following year.
Broker is entitled to commissions only after
a) AG's Administrative Agreement, duly executed by customer, has been returned
to and received by AG;
b) an order confirmation signed by customer is available; and
c) the customer has made payment for the transaction (if by check, upon credit),
and funds have been received.
The preliminary earned monthly commissions (see above) are paid to Broker per
check on the 5th workday of the month following the month during which an
invoice has been rendered (any deviation from this rule must be explained).
Any claim of Broker for commissions or advances against earned commissions
expires 6 months after the event that gives rise to such claims. Any right of AG
for refund of previously paid commissions or draws expires 6 months after AG
became aware of the circumstances which justify a demand for such refund.
AG specifically advises Broker that he personally is responsible to pay all
income- and social taxes. He indemnifies AG against all claims from and
liabilities to any tax authorities or social pension providers.
7. Term:
This Agreement is valid until terminated.
Either of the two parties may terminate this Agreement effective with the end of
a calendar month, with one month' notice, and after three years effective with
the end of a calendar quarter with observation of a three months' notice.
Notwithstanding the above, both parties have the right to immediately terminate
the Agreement for cause.
This Agreement is subject to a trial period of three months during which either
party may terminate the Agreement without cause or notice.
Any termination, for cause or otherwise, must be done in writing.
8. Miscellaneous:
Broker agrees that AG may sponsor fictitious transactions for test purposes in
which case it is authorized to listen in on relevant negotiations.
Broker is free to set his own working hours. Broker may conduct his business
from the facilities of an independent office services company recommended by AG,
however, is not obliged to do so.
9. Other Conditions:
Any changes to this Agreement, including this clause, must be done in writing.
There are no verbal side agreements.
If any clause in this Agreement should be held invalid, this will not affect the
validity of the other clauses. In such case, the parties are held to agree upon
a formula which meets the intent of the substituted clause in the best possible
way.
The attached "Terms and Conditions for Business Transacted by AG" are made part
of this Agreement. Broker agrees that personal information available through
public or commercial channels may be obtained, stored, transmitted, and deleted
in the course of normal business.
Broker is prohibited from contacting any client of AG after termination of this
Agreement.
All contracts are accepted and closed at the place of business of AG. Any action
or proceeding brought by either party under this Agreement shall be brought
before a court at the place of business of AG.
AG has the right to also bring action against Broker at a court situated at
Broker's location.
<PAGE>
This Agreement is governed by Swiss Law.
Place of Business of AG: ________________________
.................................... ..............................
AG Broker
EXHIBIT 23
Rosenberg Rich Baker Berman & Company
380 Foothill Road
Bridgewater, New Jersey 08807
Independent Auditors' Consent
We hereby consent to the use on Form 10-K of our report dated November 20, 1997,
relating to the consolidated financial statements of Finca Consulting, Inc. and
Subsidiaries, and to the reference to our firm under the caption "Experts".
/s/Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
December 23, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF FINCA CONSULTING, INC. AND SUBSIDIARIES AT AND FOR THE CALENDAR
YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,928,557
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,039,802
<PP&E> 942,303
<DEPRECIATION> 312,477
<TOTAL-ASSETS> 7,767,670
<CURRENT-LIABILITIES> 3,306,733
<BONDS> 0
0
0
<COMMON> 103,003
<OTHER-SE> 4,312,302
<TOTAL-LIABILITY-AND-EQUITY> 7,767,670
<SALES> 0
<TOTAL-REVENUES> 86,163,171
<CGS> 0
<TOTAL-COSTS> 68,525,189
<OTHER-EXPENSES> 20,476,324
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,838,342)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,838,342)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,016,509)
<EPS-PRIMARY> (0.48)
<EPS-DILUTED> (0.48)
</TABLE>
