SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NUMBER 1 TO
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Apple Homes Corporation
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3525328
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
124 North Belair Road
Evans, Georgia 30809
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(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code 706-650-2015
Securities to be registered pursuant to Section 12(b) of the Act
None
Securities to be registered pursuant to Section 12(g) of the Act
Common Stock, $.002 Par Value
<PAGE>
Item 1. Business
General Information
Apple Homes Corporation (the "Company") is a retailer of factory built
manufactured homes, known in the industry as manufactured housing. It presently
operates 12 retail sales locations-four in Augusta, Georgia, two in Thomson,
Georgia, and one each in Wrens, Washington, Statesboro and Waynesboro, Georgia
and Aiken and Anderson, South Carolina. It also operates a reconditioning and
used sales lot in Augusta, this lot houses its Mobile Air Systems subsidiary
offering air conditioning sales and service to manufactured home owners. All of
the Company's retail sales locations and other mobile home operations use the
trade name "Apple Homes".
The Company presently purchases homes for resale from six manufacturers
located in the southeastern United States. Purchases are financed through
wholesale floor plan financing lines totaling $10,275,000 provided by three
major financial institutions and three local banks. To promote retail sales and
generate additional fee income, the Company assists its customers in finding
mortgage financing for the purchase of homes and also places homeowners
insurance for home buyers.
The Company is also involved in development and sale of two adjoining real
estate subdivisions in Richmond County, Georgia. The sites, known as Mayfair
Acres and The Timbers, consist of 47 developed lots, of which the Company still
owns seven lots and 10 rental homes. The Company also owns 6.3 acres of
undeveloped land in the area which it is presently considering developing by
installing roads and utilities and obtaining the necessary zoning approval. The
Company believes that the property may be subdivided into approximately 40 lots
for sale to retail purchasers of its manufactured homes.
The Company was organized as a Delaware corporation on April 17, 1989 under
the name PLAM Properties, Inc. It changed its name to Mayfair Homes Corporation
in 1993 to reflect the name of its principal residential development and again
to Apple Homes Corporation in 1997 to reflect the trade name under which it
operates its mobile home sales centers. It presently operates three of its
retail sales centers and its used sales lot under its own name and the remaining
nine retail sales centers through six wholly or partially owned subsidiaries:
Augusta Housing Center, Inc., which is 100% owned and operates one center; Big
Daddy's Mobile Homes, Inc., 80% owned and operating two centers; Evans-Lanier,
Inc., 80% owned and operating two centers; Apple Homes, Inc., 100% owned and
operating one center; J.C. Homes, Inc., 80% owned and operating one center; and
Tim Phillips Homes, Inc., 100% owned and operating two centers.
(2)
<PAGE>
Industry Overview
Manufactured homes are complete single family residences built in a factory
and transported to the site on which they are to be located. They are built on a
chassis and may be transported by tow trucks to their designation. Once setup, a
manufactured home may or may not have a permanent foundation added, is connected
to the required utilities and meets the certification standards required by the
Secretary of HUD. Substantially all of the Company's sales are of manufactured
homes. Manufactured homes offer most of the amenities of and are generally built
with the same materials as site-built homes. They are produced in sections, also
referred to as "floors;" finished homes may consist of one or more sections.
Because of their lower costs of construction when compared to costs of
site-built homes, manufactured homes have historically served as one of the most
affordable alternatives for the home buyer. According to statistics compiled by
the Georgia Manufactured Housing Institute for 1998, the average cost per square
foot of a single-section manufactured home in the state of Georgia (where 84% of
the Company's sales originated in that year) averaged $23 for a manufactured
home, compared to an average cost of $55 per square foot for a site-built home
(in each case excluding land costs).
Since they are relatively less expensive than traditional housing,
manufactured homes have been an attractive means for home buyers to overcome the
obstacle of large down payments and high monthly mortgage payments. According to
the Manufactured Housing Institute, industry wide domestic shipments accounted
for 29.6% of the overall new housing market in the United States during 1998.
The use of manufactured housing in the southeastern United States, in which the
Company's primary market area is located, is even greater than for the nation as
a whole. The Georgia Manufactured Housing Association has reported that the
State of Georgia alone has more than 30 plants manufacturing housing and over
1,000 manufactured home retail sales locations. During 1997, according to the
National Conference of States on Building Codes and Standards, the states of
Georgia and South Carolina (which now comprise the principal market area for the
Company) ranked third and fifth in manufactured home shipments, and Georgia was
the leading producer of manufactured homes, a ranking it has held since 1984.
The manufactured housing industry is cyclical and is affected by many of
the same factors that influence the housing industry generally, including
inflation, interest rates, availability of financing, regional economic and
(3)
<PAGE>
demographic conditions and consumer confidence levels, as well as the
affordability and availability of alternative housing such as apartments,
condominiums and conventional site-built homes. While the Company has been able
to expand its revenues and operations in recent years, the industry is presently
suffering from difficult market conditions, including lessened demand for its
products and strong price competition. There can be no assurance that the
Company's current expansion of revenues and profitability can be sustained.
Sales of manufactured homes are typically conducted in retail sales centers
whose operators range from small proprietors to large regional or national
dealerships, many of whom manufacture their own retail products. Because of
economies of scale, the ability to obtain larger rebates and discounts from
manufacturers and better financing for inventory and customers, these large
retail dealerships have a distinct advantage over small single location
operators. The Company's goal is to move its operations toward the level of
these large dealership networks.
The Company's Retail Operations
Commencing in 1992 with the acquisition of its first two retail sales
centers, the Company's sales operations have expanded substantially over the
past five years. Sales during this period, which are not necessarily indicative
of future performance by the Company, have been as follows:
Quarter Ended
Year Ended March 31, June 30
--------------------------------------- -----------
1999 1998 1997 1996 1995 1994 1999 1998
---- ---- ---- ---- ---- ---- ---- ----
Home Units Sold (1) 792 639 399 278 195 112 194 198
Retail Sales 12 9 6 3 3 2 12 12
Centers Owned (2)
Weighted Average 66 71 67 93 65 56 16 16
Unit Sales per
Center
(4)
<PAGE>
- - ----------------------
(1) Sales are divided between single-section and multi-section homes, with
single-section homes accounting for 34% and multi-section homes accounting
for 66% of sales in fiscal 1999. The range of home sale prices during
fiscal 1999 was $16,500 for the least expensive single-section unit to
$94,000 for the most expensive multi-section home, excluding land costs.
A single section home is a home transported in one section, which cannot
exceed 16 feet in width and 80 feet in length, and which is built on a
permanent chassis and designed to be used as a single family dwelling when
connected to the required utilities. It also includes the plumbing, heating
and electrical systems contained in it.
A multi section home is a home transported in multiple sections, of which
each section cannot exceed 16 feet in width and 80 feet in length, and
which is built on a permanent chassis and designed to be inter-connected to
form a single family dwelling when connected to the required utilities. It
also includes the plumbing, heating and electrical systems contained in it.
(2) Based on number of centers open at least three months during the period.
The Company believes that these statistics are typical for retail sales
dealerships in its primary market area. In addition to sales of new manufactured
homes, the Company also deals in used homes acquired in trade-ins, which account
for approximately 4% of sales.
Sales are conducted through commissioned retail sales representatives located at
each sales center. Each sales center typically has onsite at any given time from
15 to 20 manufactured home units in a variety of models and price ranges,
although some sales centers carry a smaller inventory. All units are equipped
with basic appliances and some are furnished, and every unit is ready to move
onto the customer's site on purchase.
To enhance sales, the Company provides assistance to its customers in locating
purchase money financing. The Company has agreements with several large retail
finance companies including Green Point, Bergen, Bombardier, Deutsche Bank and
Dynex, under which it introduces its customers who require purchase money
financing. The Company receives fees from lenders for these services. Revenues
from this source were $136,460 for fiscal 1998 and $430,000 for fiscal 1999.
As part of its placement of retail financing for its customers, applications and
supporting documentation required by the lenders are submitted by the Company.
In certain cases, if a lender discovers a loan has been made on the basis of an
erroneous application, it will look to the Company for recourse. This practice,
which is common in the industry, has resulted in contingent recourse liability
to the Company that, at March 31, 1999 amounted to $859,000. Industry statistics
and Company performance indicate that an average loss of 10-15% of this amount
can be expected if the Company has to repossess a home. The Company does not
believe that this contingent liabilty is significant to its operations or
financial condition, however, as it is in a position to relieve itself of this
liability in any given case by repossessing and reselling the home in question.
The Company also receives significant revenues from various commissions and
rebates. The sources of these revenues include the placement of homeowner's
insurance for American Modern Insurance Company, rebates on freight contracts
for the delivery of its inventory, the sale of repossessed homes for lending
institutions, furniture sales, discounts for prompt payment of sales taxes and
small rebates earned in connection with purchases of furniture and appliances in
bulk quantities. Total commission and rebate income was $107,000 for fiscal 1998
and $231,000 for fiscal 1999.
(5)
<PAGE>
The Company's retail sales centers each consist of a tract of land ranging from
one to six acres on which 15 to 20 manufactured home units are displayed, and a
sales office. The land on which all centers are located is leased by the Company
with the exception of one lot in Thomson Georgia which it purchased in March
1999 for $275,000 paid by a purchase money mortgage, and one lot formerly
operated in Pelzer South Carolina which it purchased in September 1998 for a
price of $50,000. The sales offices on the lots are manufactured homes used for
that purpose. The Company owns or has financed 7 offices, rents 2 offices from
unrelated parties, rents 3 offices from minority shareholders and rents 3
offices from the Company President The Company also owns three tow trucks and
two escort vehicles to transport units sold to customer sites, as well as other
necessary equipment.
Each sales center has personnel available to transport each purchased home to
the customer's site and to install and make it fully operational at the site.
Some of these personnel are Company employees, while others are independent
contractors who supply their own transportation equipment. The equipment and
personnel used for these activities typically service more than one location,
thus reducing overall costs of installation and transportation. The Company
believes that by expanding its retail sales network to new locations, it will be
able to enhance its profitability per inventory unit by emphasizing integration
of these activities among these new and existing sales centers.
In addition to its retail sales activities, the Company went into the air
conditioning sales and service business in January 1999 with the purchase of
Mobile Air Systems, Inc.("MAS"). The subsidiary was purchased from Robert Steed
for a price of $257,500, of which $10,000 was paid in cash, $20,000 was a short
term note and the balance was paid by issuing the owner 130,000 shares of
Company Common Stock at its then market price of $1.75 per share. Gross revenues
for MAS during calendar 1998 were $595,500 and its profit for the year was
$76,349. As of the date of its purchase by the Company, MAS had a net worth per
its books of $76,449.
Real Estate Development Activities
The Company's original business, commenced in 1989, involved a real estate
subdivision and development in the Augusta, Georgia area known as Mayfair Acres.
The first phase of this development, which consists of 11 acres, contains 29
developed lots, the remaining 6.7 acres are not yet developed. The developed
lots were acquired by the Company in 1989 for $30,000 and were developed at a
cost of $160,000. The Company is presently marketing the remaining seven
developed lots on the site, four of which include a manufactured home installed
(6)
<PAGE>
on the lot. It is considering the development of the remaining 6.7 acres in
Mayfair Acres into a subdivision with approximately 40 lots for sale to
prospective retail purchasers.
In addition to its Mayfair Acres subdivision, the Company purchased 18 homes in
The Timbers, a subdivision located near Mayfair Acres. Nine of the homes were
purchased in April, 1996 from Robert S. Wilson, a Company director and promoter,
and Ted C. Smith, a stockholder of the Company, for a purchase price of $200,000
(approximately the cost of these housing units to the sellers). The other nine
houses were acquired in June, 1997 from LEAP Associates, a partnership of which
Mr. Wilson is an owner, for 70,500 shares of Common Stock. Ten of the 18 houses
are rented and eight have been sold under installment sales contracts for prices
ranging from $30,000 to $42,000.
In May 1999, the Company sold installment contracts on 18 of the homes in
Mayfair Acres and The Timbers for $320,000, leaving it with a total of 7 homes
and/or lots and the undeveloped acreage owned in the two sites.
Suppliers
The Company currently purchases manufactured homes from six manufacturers, all
located in the Southeastern United States. Two of these suppliers, General
Housing of Waycross, Georgia and Bellcrest Homes of Millen, Georgia accounted
for over 75% of inventory purchased in fiscal 1999. Eight of the Company's
retail sales centers sell General Housing homes exclusively, and the inventory
costs at those centers are borne by that supplier. The Company purchases
inventory units on a deal-by-deal basis and has one year contracts with each
supplier, the terms of which are reviewed annually. While the Company does not
anticipate any problems in continued supply of product from these suppliers and
believes that it can replace any of them by substituting the products of other
manufacturers located in the Southeastern region, the loss of any of its major
suppliers may have a material adverse effect on the Company's operations. Each
supplier offers incentive payments to the Company based upon its volume of
purchases. During fiscal 1999 these incentives amounted to an average of $2,150
per unit.
Dealer Financing
The Company finances purchases of manufactured housing units through "floor
plan" financing. Under these financing arrangements, the Company borrows the
purchase price for each manufactured home it acquires from a bank or other
(7)
<PAGE>
lending institution pursuant to a master contract, each loan being secured by
the unit purchased with its proceeds. When the unit is sold to a retail
customer, the Company must pay off the loan and obtain a release of the lender's
security interest, in order to give the buyer free and clear title to the
property.
The Company now has floor plan financing contracts with six lenders, three of
whom, Bombardier Capital, TransAmerica Distribution Finance and Deutsche
Financial Services, are major financial institutions and three, Regions
Financial Corp. of Thompson Georgia, First National Bank & Trust of Louisville
Georgia and First Bank of Thomson Georgia are local financial institutions. The
Company's floor plan financing lines now total $10.275 million, of which
$7,993,154 was outstanding at March 31, 1999 and $8,158,969 was outstanding at
June 30, 1999. The applicable interest rates run from 1% to 2% over prime. The
lines are reviewed and extended on an annual basis. E. Samuel Evans, the
Company's President, has personally guaranteed all of this financing for which
he receives an annual fee from the Company.
The Company believes that its lines of credit are sufficient to finance
purchases of inventory in its existing locations for the foreseeable future.
However, if its retail operations continue to increase, it may have to increase
them, as each retail sales center typically requires up to $500,000 to finance
inventory units on hand. The Company believes that new floor plan financing will
be available as needed to cover the requirements for its proposed new sales
centers, but there can be no assurance that this availability will continue to
exist or that the present interest rates and other credit terms it now enjoys
(which are subject to changes in lending practices of its present lenders and
other general economic conditions) will continue to be available. The Company
has no present commitments for any expanded dealer financing.
Competition
The retail manufactured home sales business is highly competitive, as capital
requirements for entry are relatively small. Competition is based primarily on
price, reputation for service and quality, depth of field inventory, sales
promotion and merchandising and terms and availability of retail customer
financing. In its existing sales areas (the 150 mile radius around Augusta,
Georgia) there are many manufactured home retail sales centers with which the
Company competes. The Company generally expects that any areas in which it opens
new retail sales centers will have similar numbers of competitors in the market
place. While the Company is larger than most of the over 30 competitors in the
Augusta, GA area, one company, South Atlantic Homes, is substantially larger
(8)
<PAGE>
than Apple Homes. In addition, many national and regional manufactured home
producers operate their own retail sales locations throughout the country. At
least two of these producers, Oakwood Homes and Fleetwood Homes, are currently
operating in the Company's primary marketing areas and other companies (which
because of their size and integrated operations may offer better pricing and
terms of financing than the Company has available) may become competitors in the
future.
Government Regulation
There are a number of federal, state and local laws and regulations affecting
the manufacture, sale and financing of manufactured homes. Manufacturers are
governed by federal laws including the Department of Housing and Urban
Development's comprehensive national construction standards, affecting such
items as structural integrity, fire, safety, thermal protection and ventilation.
State and local building and zoning codes may also affect the quality, type and
number of manufactured homes the Company is permitted to sell within any given
geographic area. The Company believes that the homes it is currently selling
meet all of these federal, state and local laws and regulations.
The sale and financing of manufactured homes are also the subject of extensive
federal and local regulation. These include Federal Trade Commission rules
involving unfair credit and collection practices, Federal Reserve rules
requiring written disclosure of financing terms and information used as a basis
for denial of credit, and laws prohibiting discrimination in sales and lending
practices. In addition, the Company's activities as a mortgage broker and
insurance agent require licenses from state agencies which also govern allowable
charges and sales practices. The Company believes that it is currently in
compliance with all such governmental regulations.
Federal, state and local legislation and regulations are proposed from time to
time that, if enacted, could significantly affect the regulatory climate for
sales and financing of manufactured homes. It is not possible at this time to
predict what if any changes such legislation and regulations may have upon the
Company's business in the future.
Employees
At June 30, 1999, the Company had 97 full time employees, including 41 in sales,
14 in transportation, installation and repair, and 42 in general or
administrative positions, as well as 110 independent contractors who are used
for site preparation and installation of homes. The Company has no collective
bargaining agreement with its employees and has not experienced any work
stoppages as a result of labor disputes. It considers that its relations with
its employees are good. All employees with the exception of sales personnel are
salaried; sales employees are paid by commission based upon their production.
(9)
<PAGE>
Item 2. Financial Information
A. Summary Financial and Operating Data
Summary operating and financial data for the Company's five fiscal years ended
March 31,1995 through March 31, 1999 and the fiscal quarters ended June 30, 1998
and 1999 and balance sheets as of those dates are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1996 1997 1998 1999
STMT OF OPERATIONS ------------------------------------------------------------------------------
- - ------------------
<S> <C> <C> <C> <C> <C>
NET SALES (REVENUES) $ 6,768,965 $ 8,442,228 $ 15,549,376 $ 25,615,535 $ 33,776,250
INCOME (LOSS) FROM OPERATIONS 244,334 179,296 116,538 34,962 (247,196)
OTHER INCOME (LOSS) (137,835) (274,399) (518,346) 37,785 434,228
NET INCOME (LOSS) 106,499 (93,434) (439,526) (51,531) 104,304
INCOME (LOSS) PER COMMON SHARE 0.08 (0.10) (0.40) (0.03) 0.05
WEIGHTED AVG SHARES O/S 1,269,087 946,264 1,109,669 1,491,423 1,925,012
OPERATING DATA
- - --------------
HOMES SOLD 195 278 399 639 792
NUMBER OF RETAIL CENTERS 3 3 6 9 12
WEIGHTED AVG UNITS SOLD / CTR 65 93 67 71 66
BALANCE SHEET DATA
- - ------------------
WORKING CAPITAL
(CURR ASSETS LESS CURR LIAB) $ (103,648) $ (36,090) $ (143,743) $ 640,812 $ 1,442,991
TOTAL ASSETS 3,804,957 3,442,001 6,628,919 8,331,753 12,906,584
LONG TERM OBLIGATIONS 510,769 528,485 1,085,323 491,508 1,054,316
SHAREHOLDERS' EQUITY 568,923 723,296 333,427 1,609,056 2,291,110
QUARTER ENDED JUNE 30,
---------------------------
STMT OF OPERATIONS 1999 1998
- - ------------------ ---- ----
NET SALES (REVENUES) 9,140,675 8,142,694
INCOME (LOSS) FROM OPERATIONS (117,941) 128,537
OTHER INCOME (LOSS) 126,699 5,161
NET INCOME (LOSS) (8,404) 149,227
INCOME (LOSS) PER COMMON SHARE (.004) 0.07
WEIGHTED AVG SHARES O/S 2,091,539 1,811,942
OPERATING DATA
- - --------------
HOMES SOLD 194 198
NUMBER OF RETAIL CENTERS 12 12
WEIGHTED AVG UNITS SOLD / CTR 16 16
BALANCE SHEET DATA
- - ------------------
WORKING CAPITAL 1,231,437 909,880
TOTAL ASSETS 12,966,393 9,830,128
LONG TERM OBLIGATIONS 988,330 510,656
SHAREHOLDERS' EQUITY 2,282,706 1,872,033
</TABLE>
B. Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and the notes thereto included
elsewhere in this Registration Statement. The discussions of results, causes and
trends should not be construed to imply any conclusion that such results or
trends will necessarily continue in the future.
(10)
<PAGE>
Results of Operations -- Fiscal Years ended March 31, 1997, March 31, 1998 and
March 31, 1999 and three month periods ended June 30, 1998 and 1999
The following table shows the components of the results of operations for fiscal
years 1997, 1998 and 1999 and the first quarters of fiscal 1999 and fiscal 2000
in amounts and percentage of revenues (000 omitted):
Results of Operations Quarters ended June 30, 1998 and 1999
The following table shows the components of the results of operations for fiscal
quarters ended June 30, 1999 and 1998 in amounts and percentages of revenues
(000 omitted)
QUARTER ENDED JUNE 30
----------------------------------------
DESCRIPTION 1999 1998
- - ----------- ------------------ ------------------
Sales 9,140 100.0% 8,143 100.0%
Cost of Sales 7,539 82.5% 6,398 78.6%
------ ------ ------ ------
Gross Profit 1,601 17.5% 1,745 21.4%
Operating Expenses:
Compensation 808 8.8% 719 8.8%
Advertising 173 1.9% 157 1.9%
Occupancy and vehicle 49 0.5% 142 1.7%
Depreciation and amortization 31 0.3% 30 0.4%
Insurance 90 1.0% 54 0.7%
Professional fees 48 0.5% 34 0.4%
Taxes and licenses 95 1.0% 60 0.7%
Guarantee fees 43 0.5% 36 0.4%
Utilities 73 0.8% 66 0.8%
Office and lot 176 1.9% 157 1.9%
Travel, training and entertainment 18 0.2% 68 0.8%
Rent and maintenance 115 1.3% 93 1.1%
------ ------ ------ ------
Total Operating Expenses 1,719 18.7% 1,616 19.8%
Other Income (Expense):
Commissions earned 105 1.0% 32 0.4%
Rental income 20 0.2% 22 0.3%
Interest income 18 0.2% 23 0.3%
Other income (expense) 8 0.1% (83) -1.0%
Finance participation 154 1.7% 41 0.5%
Interest expense (178) -1.9% (30) -0.4%
------ ------ ------ ------
Total Other Income (Expense) 127 1.3% 5 0.1%
Income (Loss) Before Income Tax
Provision and Minority Interest 9 0.1% 134 1.6%
Income tax provision (6) -0.1% 4 0.0%
Minority interest in net income (11) -0.1% 11 0.1%
------ ------ ------ ------
Net Income (8) -0.1% 149 1.8%
====== ====== ====== ======
(11)
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
DESCRIPTION 1997 1998 1999
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 15,549 100.0% 25,616 100.0% 33,776 100.0%
Cost of Sales 12,327 79.3% 20,544 80.2% 27,849 82.5%
--------------------------------------------------------------------------
Gross Profit 3,222 20.7% 5,072 19.8% 5,927 17.5%
Operating Expenses:
Compensation 1,416 9.2% 2,355 9.2% 2,949 8.7%
Advertising 194 1.2% 353 1.4% 639 1.9%
Occupancy and vehicle 240 1.6% 358 1.4% 269 0.8%
Depreciation and amortization 38 0.2% 70 0.3% 98 0.3%
Insurance 101 0.6% 196 0.8% 223 0.7%
Professional fees 147 1.0% 219 0.9% 126 0.4%
Taxes and licenses 141 0.9% 296 1.2% 301 0.9%
Miscellaneous 829 5.3% 1,190 4.6% 1,569 4.6%
--------------------------------------------------------------------------
Total Operating Expenses 3,106 20.0% 5,037 19.7% 6,174 18.2%
Other Income (Expense):
Commissions earned 37 0.2% 108 0.5% 231 0.6%
Rental income 92 0.3%
Interest income 49 0.3% 27 0.1% 88 0.3%
Other income (expense) (5) 0.0% 380 1.5% 18 0.1%
Finance participation 137 0.5% 430 1.3%
Interest expense (599) (3.8%) (614) (2.4%) (425) (1.3%)
--------------------------------------------------------------------------
Total Other Income (Expense) (518) (3.3%) 38 0.2% 434 1.3%
Income (Loss) Before Income Tax
Provision and Minority Interest (402) (2.6%) 73 0.3% 187 0.5%
Income tax provision 33 0.2% 116 0.4% (73) (0.2%)
Minority interest in net income (71) (0.5%) (240) (0.9%) (10) (0.0%)
---------------------------------------------------------------------------
Net Income (440) (2.9%) (51) (0.2%) 104 0.3%
===========================================================================
Comparison of Fiscal Quarters ended June 30, 1999 and June 30, 2000
- - -------------------------------------------------------------------
Revenues for the 1999 quarter continued the trend of increased sales by the
Company, showing a 12% increase over the corresponding 1998 quarter. However,
there was a significant decrease in earnings, with the 1999 quarter showing a
loss of $8404 as opposed to a profit for the corresponding 1998 quarter of
$149,227. This was caused by a reduction in gross profit margin of $143,453,
from 21.4% of sales for the 1998 quarter to 17.5% of sales in the 1999 quarter.
This reduction was attributable to a general softening in the manufactured
housing market and a corresponding increase in price competition among
manufactured home dealers. This was somewhat offset by a tightening control over
operating expenses, which reduced these costs to 18.7% of revenues in the 1999
quarter from 19.8% in the 1998 quarter, and by increased commissions and fees
which contributed (after interest expense) $126,699 to income in 1999 as opposed
to $5,161 in 1998. The Company took steps to further bring its costs in line in
the 1999 quarter by closing an unprofitable sales center and changing managers
at another center, moves which it believes will contribute to improved earnings
in the second quarter of fiscal 2000.
Comparison of Fiscal 1999 to Fiscal 1998. Sales in 1999 rose by approximately $8
million, or 32%, on an increase of 153 units sold, or 24%, primarily due to a
net increase of three sales lots in 1999, with the Company opening a total of
four new centers during the year while selling one. However, these greater sales
did not result in an increase in gross profit margin, which decreased as a
percentage of sales to 17.5% in 1999 from 19.8% in 1998. This decrease was due
primarily to a more competitive market which demands a decreased sales price per
unit. Another factor is the additional costs to implement governmental
restrictions related to the set-up and placement of homes. The Company is using
inventory management methods in an effort to address these conditions in fiscal
2000. Despite this adverse condition, net profit for 1999 increased by $155,000
in 1999, or over 300%, due to two primary factors which offset the decrease in
gross margin. These were a reduction in operating costs from 19.7% of sales in
1998 to 18.2% of sales in 1999 and an increase in other income from .2% of sales
in 1998 to 1.3% of sales in 1999. These resulted from the following factors: (i)
spreading the operating costs over a greater sales base: (ii) an increase in
commission, rental, interest and finance participation income (fees earned based
on the volume of loans that we refer to retail finance companies); and (iii) a
large decrease in interest expense due to the assumption of floor plan expense
by manufacturers at a number of retail sales centers featuring their products
exclusively. Minority
(11-a)
</TABLE>
<PAGE>
Interest in Net Income decreased from $240,392 in Fiscal 1998 to $9,989 in
Fiscal 1999, due to an agreement between the Company and the minority
shareholders to pay them bonuses based on performance rather than to pay
dividends to them. As a result of this new plan, the Company paid $193,460 to
the minority shareholders, which was recorded as compensation. The effect of
this was to reduce the profits in the minority ownership subsidiaries, resulting
in a reduction in the amount recorded as Minority Interest in Net Income of
Consolidated Subsidiaries.
Comparison of Fiscal 1998 to Fiscal 1997. Sales rose by approximately $10
million, or 65%, in 1998 on increased unit sales of 260, or 60%. This increase
was primarily attributable to a net increase of three sales lots in that year,
with the Company opening five new sales centers and closing two. Gross margin
dropped in 1998 by .9% from 20.7% in 1997 to 19.8% in 1998 due to the same
factors adversely affecting gross margin in 1999, although the effect of these
conditions was not as severe as in the later year. The net loss was reduced from
$440,000 in 1997 to $51,000 in 1998 due almost entirely to a very substantial
increase in commission, interest and finance participation income from $86,000
in 1997 to $642,000 in 1998. This increase resulted from better terms the
Company was able to negotiate with its suppliers because of the very large
increase in Company purchases from them. As reported in the Consolidated
Statements of Operations, income (loss) before income tax provision and minority
interest amounted to $72,747 for the year ended March 31, 1998, compared to a
loss of $(401,808) for the year ended March 31, 1997. As a result of this
significant improvement in operations and the probable realization of net
operating loss carryforwards for income tax purposes, management considered it
appropriate to reduce the valuation allowance recorded against deferred income
tax assets in prior years. In 1998 a reduction in the valuation allowance of
$143,663 was recorded, which resulted in a net income tax benefit of $116,114
being recognized for 1998.
Liquidity and Capital Resources
Since its formation in 1990, the Company has funded its operations and capital
expenditures primarily through contributions from its founders and private
placements of its equity securities and debt, including convertible notes. In
the most recent placements of securities made by the Company (i) in 1997, it
received a total of $ 485,000 in capital contributions through the conversion of
notes originally sold in 1996 and the sale of 200,000 shares of common stock in
a private offering, and (ii) in fiscal 1999 it received $202,500 from the sale
of convertible debentures and $100,000 from the sale of warrants in another
private placement.
As an addition source of capital, the Company recently sold to a local finance
company for $565,204 a total of 34 retail installment sales contracts held
received from the sale of lots and homes.
The Company has used these proceeds to open and supply inventory to new retail
locations and to improve its working capital position. The Company believes that
the proceeds from these placements, together with cash flow from its operations
and its present lines of floor plan financing, should provide it with sufficient
liquidity to conduct operations and maintain its expansion of sales for the next
twelve months. There can be no assurance that such will be the case, however,
particularly if general economic conditions result in a downturn in the sale of
housing in the Augusta Georgia market. The Company has no plans for any major
capital expenditures for the next 12 months based on its determination that for
the next year it will suspend its expansion of operations and will not open any
new sales centers except with the use of capital provided by its mobile home
suppliers. While the Company has had a negative cash flow of $240,709 from
operations for the period including the past two fiscal years and the first
quarter of the current fiscal year, management believes that this is
attributable to its concentration of the expansion of operations during that
period, with a net increase of six new sales centers. With the program to expand
suspended for the time being and an emphasis on improving profitability during
the current year, the Company believes that it will return to positive cash flow
from this source. This cannot be assured, however, particularly if the current
strong price competition in the local mobile home market in the Augusta Georgia
continues to prevail.
(12)
<PAGE>
Year 2000 Compliance
The following discussion of the Year 2000 issue contains numerous "forward
1ooking statements." See "Forward-Looking Statements and Other Safe Harbor
Applications," below, for a discussion of factors to be considered in reading
forward-looking statements.
Year 2000 (or "Y2K") Compliance relates to the possibility that certain
computers, hardware or software, may not perform properly because of the
inability to read dates after December 31, 1999. This discussion includes
consequences of this failure as it relates to the Company, not just from our
internal computer systems, but also from our suppliers and vendors. It is
conceivable that computer system failures could temporarily disrupt our ability
to (i) obtain financing and financing information for our customers, (ii)
maintain a current inventory with appropriate floorplan financing, (iii) process
accounting transactions, including payroll, and other normal business
activities.
The Company's State of Readiness
- - --------------------------------
The Company has identified three information technology (IT) and non-IT areas
for which Y2K compliance is critical to normal and routine operations. These
areas are: (1) commercial software (including accounting and financial systems)
used in the corporate and sales offices, (2) computer hardware within the
Company, and (3) facilities-related applications and processes, such as
telecommunications and equipment with embedded chips.
The Company has no software in use at this time that is not "off-the-shelf"
software. We have contacted each of our third party suppliers and the
manufacturers of these programs, and have installed any updates required to be
compliant with Y2K readiness. We have received assurances from these third
parties that they are as fully prepared as possible in this area.
Due to the recent expansion that has occurred in the Company, we do not own any
computer hardware that is more than two years old. We hired a computer
consultant to come in and evaluate all of our equipment with Y2K in mind, and
have received assurances that we are fully prepared in this area, also.
The expansion that we have experienced has also helped us in the area of
telecommunications equipment and other embedded software, non-IT problems. The
corporate office moved to a new location in April 1999. At that time, all new
phone systems and wiring were installed. All of these systems come with Y2K
compliant warranties. The majority of our sales locations have also obtained new
phone systems and lines within the last two years, either because they are new
locations or because our business has grown to a level that new equipment became
necessary. Our computer consultants have assured us that all of this equipment
should operate smoothly through the new year.
The biggest concern for the Company relates to the Y2K readiness of our vendors
and suppliers. We have addressed this in each of the following three areas: (1)
Manufacturers, (2) Floorplan Lenders and (3) Retail Finance Companies. The homes
that we carry in inventory come from six manufacturing companies; however, we
purchase a significant amount of our inventory from two of these, General
Housing and Pioneer Homes. We have contacted both of these companies and they
have assured us of their readiness with regard to Y2K issues. Our three main
floorplan lenders, Bombardier Capital, Deutsche Financial Services and
Transamerica Distribution Finance are all public companies, and have addressed
Y2K concerns in their annual reports to the SEC. Our main retail finance
company, GreenPoint Credit, is also a public company with the same reporting
requirements to the SEC. In addition to relying on their SEC filings for
information about Y2K concerns, we have also written to each of the above named
companies and received replies that they are, in fact, doing everything possible
to be in compliance with Y2K readiness issues.
Cost of the Year 2000 Program
- - -----------------------------
Since the majority of our Y2K compliance was done in conjunction with our
expansion, the Company has not recognized any additional cost on our books that
relates to Y2K compliance. We also do not anticipate any additional costs, over
and above our normal operating costs, related to this problem. It is possible,
since we have relied on new equipment and computer hardware manufacturer's
assurances, that we could have to purchase replacement equipment in the event of
a failure. We have not accrued any of these potential costs, and do not have any
way of predicting what they may be. We do not, however, anticipate that there
will be costs that are significantly outside the range of normal operations. Any
equipment purchased would be capitalized and depreciated over the usual life
expected.
(13)
<PAGE>
Risks of the Company's Year 2000 Issues
- - ---------------------------------------
The failure to identify and correct a Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. The Company does not expect such failures to have an adverse effect
on its results of operations or financial condition. However, because of the
general uncertainty about Year 2000 readiness throughout the world economy,
which results in uncertainties regarding the readiness of the Company's vendors,
contractor and customers, the Company is currently unable to determine whether
Year 2000 problems may have a materially adverse effect on its results of
operations or financial condition.
Worst Case Scenario
It is not possible for the Company to describe a reasonably likely "worst case
scenario" at this time without making numerous assumptions. The Company
presently believes that a most likely scenario would be the failure of our
retail finance companies to continue to finance loans for our customers. This
would slow down the cash flow within the Company and is the event most likely to
cause us harm. We understand that we could be required to change some vendors,
rearrange some work plans or perhaps interrupt some sales activities. Assuming
this is correct, the Company does not believe that such circumstances would have
a materially adverse effect on its operations, even if it is necessary to incur
additional costs to correct unanticipated compliance failures.
The Company's Contingency Plans
- - -------------------------------
The Company has developed relationships with twelve retail finance companies to
help assure that our worst case scenario does not have an impact on us. Also, in
the event that one or more of our manufacturers has problems, we have other
companies that we can turn to for inventory. We also are in the process of
developing relationships with another floorplan lending source for the same
reason. We maintain a three month inventory at all times, making the impact of a
loss of manufacturers much less. The Company feels that with any other suppliers
and contractors that may have problems related to YSK, we would be in a position
to rearrange some work plans or otherwise replace the products required with
comparable products. However, there can be no assurance that these assumptions
or estimates will have been correctly made, or that the Company will have
anticipated all relevant factors, or that there will not be delays or increased
costs associated with the Company's implementation of final Y2K preparations as
the end of 1999 draws nearer. Specific factors that might cause the actual
outcome to differ from the projected outcome include, without limitation, the
continued availability of personnel and consultants trained in the computer
programming skills necessary for remediation of Year 2000 problems, the ability
to locate and correct all relevant computer codes and embedded software, timely
responses by third parties, including suppliers, contractors and customers, and
the ability to implement interfaces between new systems and systems not being
replaced.
Forward Looking Statements
The discussion contained in this Section and elsewhere in this Registration
Statement contain certain "forward looking statements" (within the meaning of
that term as defined in the Securities Act and the Exchange Act), about the
Company's future operations. The likelihood of the Company's success is based
upon a number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company and which reflect business conditions that are subject to
change. These include adverse changes in the financial markets, which may in
turn adversely affect the Company's ability to borrow funds and the price at
which those funds will be available, changes in the mortgage market, which may
adversely affect the ability of the Company's customers to finance the purchase
of new homes, and in economic conditions in those areas in which the Company's
retail sales centers are located. As a result of these uncertainties, actual
results may vary substantially from these forward looking statements contained
herein and prospective investors should not place undue reliance on any of them.
C. Qualitative and Quantitative Disclosures about Market Risk.
The Company does not hold and has not held any derivative securities such as
options or other market risk sensitive instruments and, accordingly, is not
presently subject to the risks of investment in such vehicles.
Item 3. Properties
The Company's principal offices are located in building at 124 North Belair
Road, Evans, Georgia which it acquired in January 1999 for a price of $285,000.
The property has 3,340 square feet of modern office space and is adequate for
the Company's requirements for the foreseeable future. It was financed by a
$230,000 mortgage loan from Suntrust Bank personally guaranteed by E. Samuel
Evans, the Company's President and Robert S. Wilson, one of its directors and
original promoters. The mortgage is due in monthly installments of $2,115,
including interest at 7.25% per annum, with the balance of the principal due on
December 5, 2001.
(13-a)
<PAGE>
The Company holds a continuing interest in the Mayfair Acres and Timbers
properties consisting of seven lots for sale (four with mobile homes installed
on them), 10 rental units and 6.7 acres of undeveloped land.
Eleven of the Company's retail mobile home sales lots, consisting of
approximately two to five acres each, are leased for a total rental of $260,852
per year. One lot at Thomson Georgia, consisting of 1.5 acres, was purchased by
the Company in March 1999 for a price of $275,000, payable in monthly
installments of $2,663 each, or the same amount the Company was formerly paying
as rent for the property to its owner. The Company also owns a lot in Pelzer
South Carolina formerly used a sales center. The property was acquired in 1998
for a price of $50,000.
The sales offices on the lots are manufactured homes used for that purpose.
Three of these offices are leased from E. Samuel Evans, the Company's president
and three are leased from other shareholders. The Company owns three tow trucks
and two escort vehicles to transport units sold to customer sites, as well as
five service trucks and other necessary sales and office equipment. Total book
value of these vehicles and equipment was $120,898 at March 31, 1999 against
outstanding financing owing by the Company of $114,962.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock at June 1, 1999, of (i) each person who is known by
the Company to own beneficially more than five percent of its Common Stock, (ii)
each executive officer and director of the Company, and (iii) all officers and
directors of the Company as a group. The Company has been advised by each
stockholder identified in the table that he possesses all voting and investment
power with respect to the stock beneficially owned by him.
(14)
<PAGE>
<TABLE>
<CAPTION>
Name, Address Shares Percentage of Percentage of
and Affiliation Beneficially Outstanding Shares Covered Outstanding
with Company Owned Shares By Warrants Shares (1)
- - --------------- ------------ -------------- ----------- ----------
<S> <C> <C> <C> <C>
E. Samuel Evans, 195,000 9.3% 200,000 14.4%
President and Director
845 Vivian Court
Evans GA 30809
Robert S. Wilson, 247,951(2) 11.9% 328,000 21.0%
Director
4715 Lake Front Drive
Martinez, Georgia 30907
Richard Belz, Director 9,900 0.4% 70,000 2.9%
101 Fairchild Avenue
Plainview NY 11803
Laura Rollins, Chief 3,000 0.1% -0- 0.1%
Financial Officer,
Secretary and Treasurer
3690 Inverness Way
Martinez GA 30907
Bryce N. Batzer, 161,672(3) 7.7% 50,000 7.7%
Director
2263 N.E. 26th Street
Lighthouse Point, FL
33064
All officers and 614,523 29.4% 648,000 46.1%
directors as a group
(five persons)
- - ---------------------------
(1) This percentage is derived by dividing the sum of the shares owned plus
shares covered by warrants by the total number of outstanding shares of the
Company's Common Stock (2,091,539) plus the total number of shares covered
by the warrants held only by the officers and directors (648,000). As the
warrants are exercisable at a price (6.50 per share) that is far above the
current market price for the Common Stock, there is no possibility that the
warrants will be exercisable in the foreseeable future.
(2) This table includes 51,000 shares held by Mr. Wilson's wife, and 2,813
shares held by Stock Builders Corp., a corporation of which Mr. Wilson and
members of his immediate family own 41.67%.
(3) The table includes 128,672 shares held in trust by Mr. Batzer, as trustee,
for the benefit of members of his family, and 33,000 shares issuable on
conversion of $90,000 in Convertible Debentures.
(15)
</TABLE>
<PAGE>
Item 5. Directors and Executive Officers
The directors and executive officers of the Company are:
Name Age Position
- - ---- --- --------
E. Samuel Evans 50 President, CEO and
Director
Robert S. Wilson 76 Director
Bryce N. Batzer 78 Director
Richard Belz 43 Director
Cynthia D. Holley 36 Vice President-
Operations
Chester C. Helmick 57 Vice President- Sales
Laura H. Rollins 43 CFO, Secretary and
Treasurer
E. Samuel Evans has served as president and a director of the Company since
1992. Prior to that date his principal occupation was as president and owner of
Augusta Housing Center Inc. from its formation in 1982 until its sale to the
Company in 1992. Mr. Evans is a graduate of Augusta College with a degree in
business administration in 1971 and a graduate of Woodrow Wilson College of Law
in Atlanta, Georgia in 1979. He is licensed to practice law in the State of
Georgia.
Robert S. Wilson has been chairman of the board of the Company since its
founding in 1989. He has resigned as Chairman effective June 30. 1999. He served
as its president and chief executive officer until 1992 and as secretary and
treasurer until 1998. Prior to his founding of the Company, Mr. Wilson was
active for 34 years in the securities industry as an executive with S.D. Cohn &
Company, a retail broker/dealer in New York City from 1981 to 1984 and, prior to
that date, as a sales representative or wholesaler of mutual funds with several
other firms. From 1986 to 1989, he was self-employed as a real estate broker and
from 1984 to 1986, he was an employee of Lease/Purchase Corporation, a real
estate dealer and developer. Until 1999, he held a real estate sales license in
the State of New York and is a 1947 graduate of Cornell University.
Bryce N. Batzer has been a director of the Company since 1994. He is currently
the owner of Cedarbrook Development Company Inc., a Florida land and home
developer which he organized in 1987. He is also vice president of American
Marine Products Inc., a manufacturer of marine windows, boat windshields and
other marine products. Mr. Batzer was the president of Plastiline Inc., a
publicly held company, from 1955 through 1976, and until 1996 he served Florida
Coast Banks Inc. for over 25 years as a member of the executive committee,
chairman of the loan committee and chairman of the compensation committee. Mr.
Batzer was a founder and board member of the Broward Manufacturers Association
(16)
<PAGE>
and a founder, director and chairman of the Broward Industrial Development
Board, both of which are instrumental in developing an industrial economic base
for Broward County, Florida. He is a graduate of Syracuse University, holding a
bachelor's degree in industrial engineering.
Laura H. Rollins joined the Company as Comptroller in August, 1998. She
previously worked for the Company's auditors, Serotta, Maddox, Evans & Co. for
one year and for C. C. McGregor & Co. of Columbia, South Carolina for the prior
two and one-half years. She is a certified public accountant licensed in South
Carolina and Georgia and a graduate of the University of North Carolina. She is
a member of the AICPA and the South Carolina and Georgia Societies of CPA's.
Richard Belz was elected a director of the Company in November 1998. He has been
a principal and officer of Redstone Securities, Inc. since 1989. He is a
licensed securities representative and certified public accountant.
Cynthia D. Holley has been an employee of the Company since October 1995 as
office manager and administrative assistant and was promoted to her present
position in April 1999. She is a graduate of Mercer University with a BBA in
marketing management and holds certificates as human relations specialist and
GMHA housing consultant.
Chester C. Helmick joined Augusta Housing Center, one of the Company's
subsidiaries, in 1984 as a housing consultant and has served the Company in
various managerial positions since its acquisition of that subsidiary. He was
elected to his present position with the Company in March 1999. Mr. Helmick is
retired from the United States Army in which he served for 20 years.
Mr. Wilson and Mr. Evans may be deemed promoters of the Company. They, members
of their families, and Mr. Batzer have been involved in several transactions
with the Company, described in "Certain Transactions".
Each director serves for a term of one year and is elected at the annual meeting
of shareholders. The Company's officers are appointed by its Directors and hold
office at their discretion.
(17)
<PAGE>
Item 6. Executive Compensation
The following table sets forth information concerning total compensation paid
by the Company during its last three fiscal years to the Company's chief
executive officer and its officers and directors as a group:
Year Ended
Name Position March 31 Compensation
- - ---- -------- -------- ------------
E. Samuel Evans President 1999 $ 110,332
1998 $ 123,741 (1)
1997 $ 94,259
All directors and officers 1999 $ 307,182
as a group (6 in number) 1998 $ 277,211
1997 $ 156,759
- - ----------------
(1) Includes automobile allowances in the amount of $18,000 paid to Mr. Evans
in fiscal 1998, but does not include guarantee fee paid annually to Mr.
Evans for his personal guarantee of the Company's floor plan financing. See
"Certain Relationships and Related Transactions".
In June 1997, the Company granted 200,000 Class A Warrants each to Messrs.
Wilson and Evans and 50,000 Class A Warrants to Mr. Batzer. The Warrants had no
significant value at the dates they were issued.
Mr. Batzer and Mr. Belz serve as directors for minimal cash compensation but are
reimbursed for out-of-pocket expenses in attending to the affairs of the
Company.
The Company has entered into an employment agreement terminating on March 31,
2000 with Mr. Evans calling for compensation of $96,000 per year plus bonuses to
be determined by the Board of Directors based upon profitability of the
Company's operations. The employment contract also contains a covenant not to
compete with the Company for a period of one year following termination of
employment.
Equity Incentive Plan
- - ---------------------
On April 26, 1996 the Company adopted an Equity Incentive Plan and reserved 1
million shares for issuance pursuant to options and awards granted under the
Plan. All full time employees are eligible for participation in the Plan,
including senior management and directors. All awards and options issued under
the Plan must be approved by a committee of the Board of Directors not including
members of senior management, which will fix the terms of the options and awards
granted. At this date no such awards or options remain in effect.
(18)
<PAGE>
Item 7. Certain Relationships and Related Transactions
The Company and its subsidiaries have engaged in the following transactions with
officers and directors of the Company and members of their immediate families
since April 1, 1998:
1. On May 24, 1999, the Company paid off a mortgage loan in the amount of
$114,424 from McDuffie Bank & Trust Co. of Thomson, Georgia, the proceeds
of which were used to repay a loan of $40,000 made to purchase the Mayfair
Acres property and to pay for the development of the lots and site
improvements on the property. This bank loan had been personally guaranteed
by Messrs. Evans and Wilson, and in consideration for giving their personal
guarantees, the Company had issued to each of them 20,000 shares of Common
Stock in March 1994.
2. Mr. Evans has personally guaranteed payment of the Company's obligations
under its existing floor plan lines of credit. For these guarantees, the
Company pays him a fee equal to 2% of the average floor plan financing used
by the Company each month. During fiscal 1999 these fees amounted to
$147,560.
3. The Company employs Sheryl Evans, wife of Mr. Evans, as consultant in the
decoration and furnishing of mobile homes it sells to its retail customers.
During fiscal 1999, Mrs. Evans received $152,725 for her services to the
Company in this capacity, and incurred approximately $24,000 in expenses
for the purchase of materials used in Company displays.
4. On April 28, 1999, the Company purchased two manufactured homes from Bryce
Batzer, a director of the Company, for a total purchase price of $62,349,
which was approximately his cost in the homes. On that day, Mr. Batzer used
the proceeds from the sale to acquire a $65,000 convertible debenture of
the Company. The remaining $2,651 was treated as a miscellaneous expense of
the Company.
5. The Company rents three mobile homes from Mr. Evans for use as sales
offices on its lots in Augusta and Statesboro, Georgia and Anderson, South
Carolina. Total rental for these homes is $33,446 per year.
6. On October 1, 1998, Apple Homes acquired Southern States Lenders, Inc., a
recently organized Augusta Georgia mortgage lender and servicer, from that
company's founders for $35,000. The Company subsequently came to the
conclusion that the acquisition would not serve its best interests as
Southern States had larger capital requirements than the Company could
afford to meet. The Company then sold all of its stock in Southern States
back to that company for the sum of $35,000 plus an additional amount (some
$25,000) equal to funds the Company had advanced to Southern States. For
accounting purposes, the sale of the stock back to Southern States happened
on October 1, 1998 also, and no transactions undertaken by Southern States
have been recorded on the Company's books. Southern States raised the funds
to purchase its stock back and to have additional working capital by sales
of stock to a group of investors, including Messrs. Wilson and Batzer. It
then distributed to the Apple Homes stockholders approximately 200,000
shares of Southern States stock (representing 18% of its outstanding stock)
on April 1, 1999. There is no remaining connection between the companies.
The Company believes that these transactions with its officers and shareholders
have been and will be on terms no less favorable to the Company than those
available from unaffiliated parties.
(19)
<PAGE>
Item 8. Legal Proceedings
The Company is currently a defendant in several lawsuits, none of which is
material to its operations or would, in the event of an adverse decision, be
materially adverse to its business.
Item 9. Market Price and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
The Company's Common Stock have traded on the OTC Bulletin Board since May 11,
1998. The following table sets forth the high and low bid and asked prices for
both securities and the volume of trading on a quarterly basis since that date.
Quarter Ended Bid Asked
------------- --- -----
June 30, 1998 3.00--9.12 4.00--9.62
September 30, 1998 3.50--5.62 3.62--6.00
December 31, 1998 0.94--3.68 1.75--4.50
March 31, 1999 1.75--3.25 1.75--4.00
June 30 1999 1.62--2.37 1.87--3.00
July 1, 1999 -
August 24, 1999 1.125--1.75 1.50--2.25
On August 24, 1999 the Common Stock was quoted at 1.125 bid and 1.50 asked.
Item 10 Recent Sales of Unregistered Securities
Since April 1, 1996, the Company has issued shares of Common Stock, warrants to
purchase Common Stock and debentures convertible into Common Stock in the
following transactions. None of these securities was registered under the
Securities Act of 1933 on the basis of the exemptions stated below.
1. In June 1996 the Company issued in a private placement to 19 purchasers a
total of $600,000 in debentures; the purchasers also acquired for no
additional consideration Class A warrants to purchase 600,000 shares of
Common Stock for an exercise price of $6.50 per share. As part of the
transaction, 500,000 warrants were issued to Charles M. O'Rourke, an
attorney for the Company, for his efforts in introducing the Company to R.
T. G. Richards & Co., the brokerage firm which acted as placement agent for
the Company in securing the investors participating in the offering. Each
of the investors represented himself to the Company to be an "accredited
investor" (within the meaning of that term, as defined in SEC Regulation
D). This issuance was made pursuant to the provisions of the Rules of
Regulation D, including Rule 504,and was consequently exempt from
registration.
2. The Company agreed in June 1996 to pay fees owed to Mr. O'Rourke amounting
to $43,657 for legal services performed by him in the placement and in
prior transactions by issuing to him 87,118 shares of stock. At the same
time, the Company agreed with OTC Corporate Transfer Service Co., its stock
transfer agent, to pay it $6,000 in fees by issuing it 12,000 shares of
stock. The certificates for these shares were issued in October 1996 and
were legended to reflect their status as "restricted securities"
transferrable only pursuant to SEC Rule 144. Their issuance was exempt from
registration under the Act by reason of the provisions of Section 4(2) of
the Act.
3. During June 1997 $481,500 of the debentures referred to in paragraph 1 were
converted into 240,750 shares of Common Stock at the conversion price of
$2.00 per share, determined at the time of conversion to be the fair value
of the stock issued. This issuance was exempt from registration pursuant to
Section 3(a)9 of the Act.
4. During 1998 a total of $77,500 in debentures issued by the Company in a
private offering in 1993 were converted into 62,000 shares of Common Stock
in accordance with their terms. The issuance of these shares was also
exempt from registration by reason of the provisions of Section 3(a)9 of
the Act.
5. In a private placement conducted from June to December, 1997, the Company
issued to 10 purchasers introduced to it by Redstone Securities Inc., as
placement agent a total of 200,000 shares of Common Stock at a price of
$5.00 per share (172 additional shares were inadvertently issued in the
offering and were subsequently cancelled). The offering and sale of these
shares was exempt from registration under the Act under Rule 504 of
Regulation D.
(20)
<PAGE>
6. As part of the foregoing placement, the placement agent was granted the
right to purchase up to 100,000 Class A Warrants of the Company at a price
of 10 cents per Warrant. This right was exercised in December 1998, and the
Warrants were issued to 11 designees of the placement agent for $100,000.
The Warrants were legended as "restricted securities" under SEC Rule 144,
and they and the underlying shares are transferrable only pursuant to the
provisions of that Rule. The sale was exempt from registration under the
Act by reason of Section 4(2) thereof.
7. In June 1997, the Company engaged in three transactions involving the
issuance of shares to affiliates to clear debt from its balance sheet and
acquire property it was then using. These included:
(i) the issuance of 70,500 shares to LEAP Associates, a partnership of
which Robert Wilson, his son and other investors were partners, in exchange
for 18 houses in The Timbers subdivision in which the Company also owned
houses.
(ii) the issuance to Bryce Batzer and Robert Wilson of 43,125 shares
and 5,625 shares, respectively, in payment for debt the Company then owed
them and the acquisition from Mr. Batzer of land in one of the Company
subdivisions.
(iii) the sale of 1,000 shares to two employees.
The shares issued in the above transactions were treated as "restricted
securities", transferrable only pursuant to the provisions of SEC Rule 144.
The transactions were exempt from registration under the Act by reason of
Section 4(2) thereof.
8. From January to April 1999, the Company issued a total of $202,500 in
debentures convertible into Common Stock at a price of $4.00 per share. The
sales were part of a private placement arranged by Redstone Securities in
which debentures were sold to Mr. Batzer and purchasers introduced to the
Company by Redstone Securities, by Mr. Wilson, and by Mr. Batzer, each of
whom signed representations that they were accredited investors. This
issuance was conducted pursuant to the provisions of Regulation D,
including Rule 506, and was thus exempt from registration under the Act.
The debentures have been legended as "restricted securities", as that term
is defined in Rule 144, and may not be transferred except in accordance
with the provisions of that Rule.
9. During February 1999 the Company issued a total of 12,000 shares to Wayne
Bridges, former CFO of the Company, and his employer, R.W. Allen & Co., for
the performance of internal financial reporting services. In addition, in
June 1998, it issued 25,000 shares to WGBN, Inc., a financial public
relations firm for assistance in preparing press releases and reports to
stockholders. These shares were issued as "restricted shares" under Section
4(2) of the Act and Rule 144, are legended as such and may not be sold or
trasferred except in compliance with Rule 144.
10. In June 1998, the Company issued to Warren Bagatelle, a stockholder of the
Company who had lent money to the Company in December, 1993 and December,
1995, a total of 41,925 shares in payment of $38,750 in accrued interest on
the debt it owed him. In December 1998, it paid $60,000 of this debt by the
issuance of 30,000 additional shares to Mr. Bagatelle. The number of shares
issued was based on negotiations between the parties at the time of
issuance and the shares were treated as restricted securities, transferable
only pursuant to SEC Rule 144. The transaction was exempt from registration
under the Act by reason of Section 4(2) thereof.
11. In February 1999, the Company acquired Mobile Air Systems Inc. from its
owner, Robert Steed in part for 130,000 shares valued at $1.75, deemed by
the parties to be their then fair market value. These shares were treated
as restricted securities transferable only pursuant to SEC Rule 144. The
transaction was exempt from registration under the Act by reason of Section
4(2) thereof.
Item 11. Description of Registrant's Securities to be Registered
Common Stock
The Company is authorized to issue 10,000,000 shares of Common Stock, $.002 par
value. At June 30, 1999, there were 2,091,539 shares of Common Stock issued and
outstanding, owned by 61 stockholders of record. Based on its inquiries with the
market makers for the Common Stock, the Company believes there to be at least
250 beneficial owners holding their shares in brokerage accounts. The following
description of the Company's securities does not purport to be complete and is
subject to and qualified in its entirety by reference to the Certificate of
Incorporation and By-laws of the Company and the provisions of applicable law.
Each holder of Common Stock is entitled to all rights and privileges of holders
of common stock under Delaware law, which provides that: (1) such holders are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of legally available funds; (2) in the
(21)
<PAGE>
event of the liquidation, dissolution or winding up of a corporation, such
holders are entitled to share ratably in all assets remaining after the payment
of liabilities and (3) such holders do not have preemptive rights or other
rights to subscribe for additional shares. There are no redemption or sinking
fund provisions applicable to the Common Stock. Each Common Stock holder has the
right to one vote for each share he owns. As there is no cumulative voting for
the election of directors or any other purpose, the persons holding a majority
of the outstanding shares voted in any election of directors will be able to
elect all directors. All outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and non-assessable. All shares of Common Stock are
issued in registered form and are freely transferable, subject to applicable
securities laws and to restrictive agreements between the Company and the
holders of such shares.
Transfer Agent
The Transfer Agent for the Common Stock and Class A Warrants is OTC Corporate
Transfer Service Company, P.O. Box 501, Hicksville, New York 11801
(516-433-6503).
Item 12. Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law grants corporations
the right to limit or eliminate the personal liability of their directors for
monetary damages for breach of their fiduciary duty except for breaches of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, for certain transactions involving unlawful payments on
account of dividends or repurchase or redemption of the corporation's stock, and
for transactions in which the directors derive an improper personal benefit. The
Company's Certificate of Incorporation provides for the elimination of personal
liability of a director to the Company and its stockholders for monetary damages
for the breach of the director's fiduciary duty to the full extent allowable
under Section 102(b)(7).
Section 145 of the Delaware General Corporation Law grants corporations the
right to indemnify their directors, officers, employees and agents against
expenses, judgment, fines and other amounts paid pursuant to settlement of any
pending, completed or threatened legal action to which any of such persons
becomes a party by reason of the fact that he is or was a director, officer,
employee or agent of the corporation so long as the indemnity has acted in good
faith and in a manner he reasonably believes to be or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, has had no reasonable cause to believe that his conduct was
unlawful. The Company's Certificate of Incorporation provides for
indemnification of such persons to the full extent allowable under applicable
law.
(22)
<PAGE>
Item 13. Financial Statements and Supplementary Data
See the attached financial statements listed in Item 15.
Item 14. Changes in Registrant's Certifying Accountants
The Company's consolidated financial statements were previously audited by
Cherry Bekaert & Holland LLP as of and for the year ended March 31, 1997 and by
Serotta Maddocks Evans & Co. as of and for the year ended March 31, 1998. The
Company in March, 1998 decided, with approval by the Board of Directors, to
dismiss Cherry Bekaert & Holland LLP and change to Serotta Maddocks Evans & Co.
On March 18, 1999, the Company, with the approval by the Board of Directors,
decided to change audit services from Serotta Maddocks Evans & Co. to Gifford,
Hillegass & Ingwersen, P.C. This decision was based on the fact that Serotta
Maddocks Evans & Co. does not provide audit services to SEC reporting entities.
The reports of Cherry Bekaert & Holland LLP and Serotta Maddocks Evans & Co.
over the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with the audits for the two most recent fiscal years and through
March 18, 1999, there have been no disagreements with Cherry Bekaert & Holland
LLP or Serotta Maddocks Evans & Co. on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Cherry Bekaert &
Holland LLP and Serotta Maddocks Evans & Co. would have caused them to make
reference thereto in their report on the financial statements for such years.
There have been no reportable events during the two most recent fiscal years and
through March 18, 1999.
(23)
<PAGE>
Item 15. Financial Statements and Exhibits
Financial Statements
Item Page No.
- - ---- --------
Consolidated Balance Sheets as of June 30, 1999 and March 31, 1999 F-1
Consolidated Statement of Operations
for the quarters ended June 30, 1999 and 1998 F-3
Consolidated Statement of Cash Flows
for the quarters ended June 30, 1999 and 1998 F-4
Notes to Financial Statements F-6
Report of Gifford Hillegass & Ingwersen, P.C.
Independent Accountants F-7
Consolidated Balance Sheets as of March 31, 1998
and March 31, 1999 F-8
Consolidated Statement of Operations for the
years ended March 31, 1997, March 31, 1998 and March 31, 1999 F-10
Consolidated Statement of Changes in
Shareholders' Equity for the years ended
March 31, 1997, March 31, 1998 and March 31, 1999 F-11
Consolidated Statement of Cash Flows for the year
ended March 31, 1997, March 31, 1998 and March 31, 1999 F-12
Notes to Financial Statements F-14
Report of Serotta Maddocks Evans & Co., CPA's
Independent Accountants F-28
Consolidated Balance Sheet as of March 31, 1998 F-29
Consolidated Statement of Operations for the year ended March 31, 1998 F-30
Consolidated Statement of Changes in Shareholders' Equity
for the year ended March 31, 1998 F-31
Consolidated Statements of Cash Flows for the year ended
March 31, 1998 F-32
Notes to Financial Statements F-33
Report of Cherry Bekaert & Holland LLP, Independent Accountants F-40
Consolidated Balance Sheet as of March 31, 1997 F-41
Consolidated Statement of Operations for the year ended March 31, 1997 F-43
Consolidated Statement of Changes in Shareholders' Equity
for the year ended March 31, 1997 F-44
Consolidated Statements of Cash Flows for the year ended
March 31, 1997 F-45
Notes to Financial Statements F-46
Exhibits
- - --------
2 Mobile Air Systems, Inc., Purchase Agreement
3(i) * Certificate of Incorporation of the Company, as amended
3(ii) * By-laws of the Company
4.1 Common Stock Certificate
4.2 Warrant Certificate
10.1 * Employment Agreement between the Company and E.
Samuel Evans dated April 26, 1996
10.2.1* Rental Agreement between the Company and E.
Samuel Evans dated February 15, 1995
covering the rental of manufactured home sales office
10.2.2* Rental Agreement between the Company and
E. Samuel Evans dated January 1, 1997 covering
the rental of a manufactured home sales office
10.3.1 Floorplan Contract - Transamerica
10.3.2 Floorplan Contract - Bombardier Capital
10.3.3 Floorplan Contract - Deutsche Finance
10.3.4 Floorplan Contract - Regions Financial Corp.
10.3.5 Floorplan Contract - First National Bank
10.3.6 Floorplan Contract - First Bank
10.4 Equity Incentive Plan
10.5 Employee 401(k) Plan
10.6.1 Minority Shareholder Agreement - Hardy Lanier
10.6.2 Minority Shareholder Agreement - Chad Aycock
10.6.3 Minority Shareholder Agreement - Carol Stratton
11 Computation of Basic and Diluted EPS
16.1 * Letter re changes in certifying accountants
from Cherry, Bekaert & Holland, LLP
16.2 * Letter re changes in certifying accountants
from Serotta Maddocks Evans & Co., CPA'S
21 * List of subsidiaries of the Company
23.1 * Consent of Independent Accountants Cherry Bekaert & Holland, LLP
23.2 * Consent of Independent Accountants
Serotta Maddocks Evans & Co., CPA'S
23.3 * Consent of Independent Accountants
Gifford Hillegass & Ingwersen, P.C.
27 * Financial Data Schedule - 3/31/99
27.2 Financial Data Schedule - 6/30/99
- - ----------
* Previously Filed
(24)
<PAGE>
<TABLE>
<CAPTION>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Financial Sheets
(Unaudited)
- - --------------------------------------------------------------------------------------------------------
Assets
June 30, 1999 March 31, 1999
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash $ 618,808 $ 683,452
Accounts receivable 933,080 781,723
Rebates receivable 454,915 409,011
Other receivables 76,442 57,645
Inventories 8,504,912 8,317,210
Other current assets 87,107 18,116
Deferred taxes 101,431 107,520
Notes receivable, current portion 57,720 544,955
----------- -----------
Total current assets 10,834,415 10,919,632
----------- -----------
Property and equipment, net 1,332,540 1,235,876
----------- -----------
Other assets
Notes receivable, net of current portion 248,820 184,215
Deferred loan costs, net of accumulated
amortization of $98,468 and $92,954 83,811 89,325
Goodwill, net of accumulated amortization
of $43,698 and $39,747 454,237 434,341
Other assets 12,570 43,195
----------- -----------
Total other assets 799,438 751,076
----------- -----------
TOTAL ASSETS $12,966,393 $12,906,584
=========== ===========
- - --------------------------------------------------------------------------------------------------------
F-1
<PAGE>
- - --------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
June 30, 1999 March 31, 1999
- - --------------------------------------------------------------------------------------------------------
Current liabilities
Floorplan payable $ 8,185,969 $ 7,993,154
Accounts payable 764,742 746,969
Sales tax payable 167,623 170,749
Accrued salaries and commissions 82,819 90,926
Other accrued liabilities 180,372 195,640
Customer deposits 105,976 132,037
Income tax payable 18,826
Due to minority stockholders 30,980 40,407
Notes payable, current portion 84,497 87,933
------------ ------------
Total current liabilities 9,602,978 9,476,641
------------ ------------
Long term liabilities
Notes payable 988,330 1,054,316
------------ ------------
Minority interest in net assets of
consolidated corporation 92,379 84,517
------------ ------------
Stockholders' equity
Common stock, $.002 par value; authorized
10,000,000 shares; 2,091,539
issued and outstanding 4,183 4,183
Additional paid-in capital 2,727,809 2,727,809
Retained deficit (449,286) (440,882)
------------ ------------
Total stockholders' equity 2,282,706 2,291,110
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,966,393 $ 12,906,584
============ ============
- - --------------------------------------------------------------------------------------------------------
See accompanying notes
.
F-2
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
- - ---------------------------------------------------------------------------------------------------------------
Quarter ended June 30,
1999 1998
- - ---------------------------------------------------------------------------------------------------------------
Sales $ 9,140,675 $ 8,142,694
Cost of Sales 7,539,428 6,397,994
----------- -----------
Gross Profit 1,601,247 1,744,700
----------- -----------
Operating expenses
Compensation 807,694 718,532
Occupancy and vehicle 49,445 142,581
Advertising 173,311 156,862
Insurance 89,610 54,035
Taxes and licenses 94,933 59,575
Professional fees 48,155 34,242
Guarantee Fees 42,844 36,007
Depreciation and amortization 31,008 29,773
Utilities 72,737 66,546
Office and lot 176,644 156,749
Travel, training and entertainment 17,663 67,730
Rent and maintenance 115,064 93,531
----------- -----------
Total operating expenses 1,719,188 1,616,163
----------- -----------
Operating income (loss) (117,941) 128,537
Other income (expense)
Finance participation 153,917 41,322
Rental income 19,997 22,363
Interest income 17,850 22,987
Commissions 104,689 32,000
Other income (expense) 7,781 (83,267)
Interest expense (177,535) (30,244)
----------- -----------
Total other income (expense) 126,699 5,161
----------- -----------
Income (loss) before income tax provision and minority interest 8,758 133,698
Income tax (provision) benefit (6,413) 4,488
Minority interest in net (income) loss of consolidated subsidiaries (10,749) 11,041
----------- -----------
NET INCOME (LOSS) $ (8,404) $ 149,227
=========== ===========
Per share data:
Weighted average number of shares outstanding 2,091,539 1,811,942
Net income (loss) per share (0.004) 0.07
- - ---------------------------------------------------------------------------------------------------------------
See accompanying notes.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
For the Quarter Ended June 30,
------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (8,404) $ 149,227
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Bad debt expense 14,374 24,040
Deferred income taxes 6,089 17,715
Depreciation and amortization 31,088 29,773
Issuance of common stock for
professional services 0 74,000
Issuance of common stock in lieu of
payment of interest expense 0 38,750
Minority interest in net income of
consolidated subsidiary 10,749 (11,041)
Change in assets and liabilities, net of effects from
purchase of subsidiary
Accounts receivable (151,357) (282,451)
Other receivables (64,701) (17,832)
Inventories (103,062) (1,083,549)
Other current assets (68,991) 87,131
Notes receivable 323,616 (120,494)
Other assets 30,625 (11,799)
Floorplan payable 192,815 1,378,979
Accounts payable 17,773 133,797
Accrued expenses (26,501) (219,301)
Customer deposits (26,061) 76,456
Other liabilities (18,834) (30,136)
----------- -----------
Net cash provided by operating activities 159,218 233,265
----------- -----------
Cash flows from investing activities:
Additions to property and equipment (30,373) (76,682)
Purchase minority ownership from shareholder (28,646) 0
----------- -----------
Net cash (used in) investing activities (59,019) (76,682)
----------- -----------
F-4
<PAGE>
For the Quarter Ended June 30,
------------------------------
1999 1998
---- ----
Cash flows from financing activities:
Principal payments on notes payable $(157,328) $ (38,101)
Due to/from minority stockholders, net (7,515) (54,225)
--------- ---------
Net cash (used) by financing activities (164,843) (92,356)
--------- ---------
Net increase (decrease) in cash (64,644) 64,227
Cash, beginning of quarter 683,452 922,176
--------- ---------
Cash, end of quarter $ 618,808 $ 986,403
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the quarter for interest $ 175,634 $ 40,999
========= =========
Cash paid during the quarter for income taxes $ 19,150 $ 0
========= =========
Non cash investing and financing activities:
Financed property and equipment purchases $ 87,906
Repossessed mobile home units
converted to inventory 84,640 $ 70,000
Note payable and interest converted to common stock 0 39,750
Issuance of stock for professional services 0 74,000
See accompanying notes
F-5
</TABLE>
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The unaudited financial information included in this report includes all
adjustments which are, in the opinion of management, necessary to reflect a fair
statement of the results for the interim periods presented. The operations for
the three months ended June 30, 1999 are not necessarily indicative of the
results of the full fiscal year. While certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted pursuant
to the Securities and Exchange Commission rules and regulations governing Form
10-Q, the Company believes that the disclosures herein are adequate to make the
information presented not misleading. The condensed financial statements
included in this report should be read in conjunction with the audited financial
statements and notes thereto included in the Registrant's March 31, 1999 yearend
report included in the Form 10 filed with the SEC on July 16, 1999.
NOTE B - PURCHASE OF MINORITY INTEREST
In May, the Company purchased the minority ownership in one of its entities, Tim
Phillips Homes, Inc. The purchase price of $28,646 reduced the minority
ownership of the consolidated company and resulted in goodwill being recorded on
the books of $23,847. The Company now has three entities with minority ownership
still included in the consolidated corporation, and anticipates the buyout of
another minority owner in the near future.
NOTE C - NOTES RECEIVABLE
Notes receivable result from Company financial sales of manufactured homes. The
notes have remaining terms of one to thirty years and interest rates range from
8% to 15%. In May, 1999, the Company sold notes receivable with a face value of
$596,717 to a financing company for $481,605. The discount of $115,112 was
written off against the allowance for doubtful accounts of $148,277. Remaining
notes receivable at June 30, 1999 are net of an allowance for doubtful accounts
of $29,791.
Of the thirty-two notes, which were sold by the Company, nineteen notes have
recourse for twelve months, and thirteen notes were sold without recourse. The
conditions of the recourse allow the Company the option to make any payments on
the owners' behalf to avoid defaults in the loan and give the Company the right
to collect directly from the owners for any such payments made. No reserve has
been recorded for this recourse, as management believes the Company will be able
to collect on any outstanding payments.
NOTE D - SELECTED QUARTERLY FINANCIAL DATA
Quarter Ended June 30,
1999 1998
---- ----
(in thousands except per share data)
Net sales 9,141 8,143
Gross profit 1,601 1,745
Net income (Loss) (8) 149
Earnings per share (.004) .007
========== ==========
Weighted average
shares outstanding 2,091,539 1,811,942
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Apple Homes Corporation and Subsidiaries
Evans, Georgia
We have audited the accompanying consolidated balance sheet of Apple Homes
Corporation and Subsidiaries at March 31, 1999, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
consolidated financial statements of Apple Homes Corporation as of March 31,
1998 were audited by other auditors whose report dated June 15, 1998 (except for
Notes 13 and 16, dated June 23, 1999) expressed an unqualified opinion on those
statements. The consolidated financial statements of Apple Homes Corporation as
of March 31, 1997 were audited by other auditors, whose report dated January 26,
1998 (except for Note 20, dated June 23, 1999) expressed an unqualified opinion
on those statements. As discussed in Note M to these consolidated financial
statements, the consolidated financial statements for March 31, 1998 and 1997
have been adjusted to reflect correction of errors related to these years.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 audit 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 Apple Homes
Corporation and Subsidiaries as of March 31, 1999, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Gifford, Hillegass & Ingwersen, P.C.
-----------------------------------------
GIFFORD, HILLEGASS & INGWERSEN, P.C.
Atlanta, GA
June 23, 1999
F-7
<PAGE>
<TABLE>
<CAPTION>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
====================================================================================
Assets
March 31,
-------------------------
1999 1998
- - ------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 683,452 $ 922,176
Accounts receivable 781,723 240,445
Rebates receivable 409,011 --
Other receivable 57,645 165,766
Inventories (Notes C and F) 8,317,210 5,251,617
Other current assets 18,116 95,087
Deferred taxes (Note J) 107,520 74,531
Notes receivable, current portion (Note E) 544,955 42,883
----------- -----------
Total current assets 10,919,632 6,792,505
----------- -----------
Property and equipment, net (Notes D and H) 1,235,876 402,160
----------- -----------
Other assets
Notes receivable, net of current portion (Note E) 184,215 679,761
Deferred taxes (Note J) -- 78,102
Deferred loan costs, net of accumulated
amortization of $92,954 and $74,954 89,325 87,050
Goodwill, net of accumulated amortization
of $39,747 and $29,979 (Note P) 434,341 292,175
Other assets 43,195 --
----------- -----------
Total other assets 751,076 1,137,088
----------- -----------
TOTAL ASSETS $12,906,584 $ 8,331,753
=========== ===========
====================================================================================
F-8
<PAGE>
====================================================================================
Liabilities and Stockholders' Equity
March 31,
-----------------------------
1999 1998
- - ------------------------------------------------------------------------------------
Current liabilities
Floorplan payable (Note F) $ 7,993,154 $ 4,641,509
Accounts payable 746,969 421,493
Sales tax payable 170,749 207,009
Accrued salaries and commissions 90,926 230,799
Other accrued liabilities 195,640 309,490
Customer deposits 132,037 96,704
Income tax payable 18,826 --
Due to minority stockholders 40,407 128,440
Notes payable, current portion (Notes G and H) 87,933 116,249
------------ ------------
Total current liabilities 9,476,641 6,151,693
------------ ------------
Long term liabilities
Notes payable (Notes G and H) 1,054,316 491,508
------------ ------------
Minority interest in net assets of
consolidated corporation 84,517 79,496
------------ ------------
Commitments and contingencies (Note O)
Stockholders' equity
Common stock, $.002 par value; authorized
10,000,000 shares; 2,091,539 and
1,790,614 issued and outstanding 4,183 3,581
Additional paid-in capital 2,727,809 2,150,661
Retained deficit (440,882) (545,186)
------------ ------------
Total stockholders' equity 2,291,110 1,609,056
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,906,584 $ 8,331,753
============ ============
=====================================================================================
The accompanying notes are an integral part of these financial statements.
F-9
</TABLE>
<PAGE>
<TABLE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
======================================================================================================================
Year ended March 31,
1999 1998 1997
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 33,776,250 $ 25,615,535 $ 15,549,376
Cost of Sales 27,849,088 20,543,498 12,327,352
------------ ------------ ------------
Gross Profit 5,927,162 5,072,037 3,222,024
------------ ------------ ------------
Operating expenses
Compensation 2,948,697 2,354,711 1,416,052
Occupancy and vehicle 269,482 357,735 239,413
Advertising 639,072 352,610 194,151
Insurance 223,001 196,223 101,373
Taxes and licenses 301,447 296,081 140,489
Professional fees 125,805 219,417 147,383
Depreciation and amortization 97,562 70,059 37,980
Guarantee Fee 147,560 159,019 --
Utilities 284,010 215,740 106,672
Office and lot 617,044 220,523 155,494
Travel, training and entertainment 121,668 92,337 61,959
Rent and maintenance 399,010 112,811 7,422
Miscellaneous -- 389,809 497,098
------------ ------------ ------------
Total operating expenses 6,174,358 5,037,075 3,105,486
------------ ------------ ------------
Operating income (loss) (247,196) 34,962 116,538
Other income (expense)
Finance participation 429,814 136,460 --
Rental income 92,200 -- --
Interest income 88,140 27,137 49,457
Commissions 231,183 107,666 36,851
Other income (expense) 17,528 380,082 (5,332)
Interest expense (424,637) (613,560) (599,322)
------------ ------------ ------------
Total other income (expense) 434,228 37,785 (518,346)
------------ ------------ ------------
Income (loss) before income tax provision and minority interest 187,032 72,747 (401,808)
Income tax (provision) benefit (72,739) 116,114 33,333
Minority interest in net income of consolidated subsidiaries (9,989) (240,392) (71,051)
------------ ------------ ------------
NET INCOME (LOSS) $ 104,304 $ (51,531) $ (439,526)
============ ============ ============
Per share data: (Note I)
Weighted average number of shares outstanding 1,925,012 1,491,423 1,109,669
Net income (loss) per share $ 0.05 $ (0.03) $ (0.40)
======================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-10
</TABLE>
<PAGE>
<TABLE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years Ended March 31, 1999, 1998, and 1997
===================================================================================================================================
Additional Retained
Number of Common Paid-in Earnings
Shares Stock Capital (Deficit) Total
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1996 1,067,849 $ 2,136 $ 775,289 $ (54,129) $ 723,296
Issuance of common stock 99,118 198 49,459 -- 49,657
Net loss -- -- -- (439,526) (439,526)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1997, as restated (a) 1,166,967 2,334 824,748 (493,655) 333,427
Issuance of common stock:
Stock offering / services, as restated (a) 268,672 537 597,697 -- 598,234
Debt disposition 266,475 533 527,374 -- 527,907
Residential land and manufactured homes 88,500 177 129,859 -- 130,036
Contributed Capital 70,983 70,983
Net loss, as restated (a) -- -- -- (51,531) (51,531)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1998, as restated (a) 1,790,614 3,581 2,150,661 (545,186) 1,609,056
Issuance of common stock:
Professional services 37,000 74 73,926 -- 74,000
Debt disposition 133,925 268 175,982 -- 176,250
Purchase of subsidiary 130,000 260 227,240 -- 227,500
Sale of warrants -- -- 100,000 -- 100,000
Net income -- -- -- 104,304 104,304
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1999 2,091,539 $ 4,183 $ 2,727,809 $ (440,882) $ 2,291,110
=========== =========== =========== =========== ===========
(a) Reference Note M for explanation of restated balances and prior period adjustments.
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPLE HOMES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
============================================================================================================================
For the Year Ended March 31,
-----------------------------------------------
1999 1998 1997
- - ----------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) $ 104,304 $ (51,531) $ (439,526)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Bad debt expense 51,101 21,324 --
Bad debt recovery -- (76,602) --
Deferred income taxes 45,113 (116,114) (29,933)
Depreciation and amortization 97,562 61,044 37,980
Issuance of common stock for
professional services 74,000 -- 49,657
Issuance of common stock in lieu of
payment of interest expense 38,750 -- --
Gain on sale of assets -- (190,137) (2,500)
Minority interest in net income of
consolidated subsidiary 9,989 240,392 71,051
Changes in assets and liabilities, net of effects
from purchase of subsidiary:
Accounts receivable (505,536) (195,431) 73,726
Other receivables (289,790) 98,686 (180,080)
Inventories (2,767,830) (830,859) (2,215,125)
Other current assets 76,971 (86,250) (1,988)
Notes receivable (337,627) (393,507) (127,748)
Other assets (15,356) 14,435 57,995
Floorplan payable 3,351,645 747,384 2,168,133
Accounts payable 310,524 (78,766) 359,826
Accrued expenses (317,992) 458,980 182,533
Customer deposits 35,333 (9,968) 75,223
Other liabilities 18,826 (2,009) 27,009
----------- ----------- -----------
Net cash provided by (used in) operating activities (20,013) (388,929) 106,233
----------- ----------- -----------
Cash flows from investing activities:
Additions to property and equipment (257,783) (144,986) (161,803)
Excess of cash acquired over cash paid for
purchsed subsidiary 44,805 -- --
Proceeds from the sale of developed
residential land and manufactured homes -- 292,000 2,500
Advances to related entities -- 132,999 (64,099)
----------- ----------- -----------
Net cash provided by (used in) investing activities (212,978) 280,013 (223,402)
----------- ----------- -----------
============================================================================================================================
F-12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
For the Year Ended March 31,
-----------------------------------------------
1999 1998 1997
- - ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
<S> <C> <C> <C>
Principal payments on notes payable $ (181,346) $ (359,984) $ (68,461)
Proceeds from issuance of notes payable 188,889 -- 907,555
Payments made for loan cost (20,275) -- --
Additions to deferred underwriting cost -- (49,459) (200,926)
Proceeds from issuance of common stock and warrants 100,000 1,002,860 0
Distributions paid to minority stockholders -- (185,393) (111,499)
Due to/from minority stockholders, net (93,001) 128,440 --
Repayments on advances from officers -- (19,000) (34,082)
Capital Contributions -- 70,983 --
----------- ----------- -----------
Net cash provided (used) by financing activities (5,733) 588,447 492,587
----------- ----------- -----------
Net increase (decrease) in cash (238,724) 479,531 375,418
Cash, beginning of year 922,176 442,645 67,227
----------- ----------- -----------
Cash, end of year $ 683,452 $ 922,176 $ 442,645
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 533,881 $ 602,000 $ 503,982
=========== =========== ===========
Cash paid during the year for income taxes $ 8,770 $ -- $ --
=========== =========== ===========
Non cash investing and financing activities:
Financed property and equipment purchases $ 644,449 $ 35,036 $ --
Purchased subsidiary through
Issuance of common stock 227,500 -- --
Seller financing 20,000 -- --
Repossessed mobile home units
converted to inventory 280,000 -- --
Converted developed residential land to:
Inventory -- 449,314 --
Property and equipment -- 132,477 --
Note payable and interest converted to common stock 98,750 46,407 --
Debentures converted to common stock 77,500 481,500 --
Issuance of stock for professional services 74,000 0 49,657
Issuance of stock for services in connection with offering -- 150,000 --
Developed residential land received in exchange for:
Accounts receivable -- 51,134 --
Notes receivable -- 210,591 --
Common stock -- 130,036 54,700
Transfer of deferred underwriting cost against
related capital contributio -- 404,611 --
===========================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-13
</TABLE>
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE A - NATURE OF BUSINESS
The principal operations of Apple Homes Corporation and its subsidiaries (the
"Company") consist of the sale and installation of manufactured homes, primarily
in the southeastern United States. The subsidiaries of Apple Homes Corporation
consist of the following:
Name Location Percent Ownership
- - --------------------------------------------------------------------------------
Augusta Housing Center, Inc. Augusta, Georgia 100%
Big Daddy's Mobile Homes, Inc. Augusta, Georgia 80%
Evans-Lanier, Inc. Thomson, Georgia 80%
Apple Homes, Inc. Waynesboro, Georgia 100%
J. C. Homes, Inc. Augusta, Georgia 80%
Tim Phillips Homes, Inc. Thomson, Georgia 80%
Mobile Air Systems, Inc. Augusta, Georgia 100%
All subsidiaries conduct business in the name of Apple Homes. The Company
extends customary trade terms to some of its customers, all of whom are located
in the southeastern United States.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned and majority owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation.
Management Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturity dates of three
months or less to be cash equivalents.
Accounts Receivable
The Company uses the allowance method to provide for recognition of bad debt. As
of March 31, 1999 and 1998, there was no allowance considered necessary against
accounts receivable.
F-14
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventories
Inventories are stated at the lower of cost or market and are determined using
the specific identification method. As referenced in Note C, inventories are
inclusive of land held for resale. Land and land improvements are recorded at
cost and are allocated to lots as land is subdivided.
Property and Equipment
Property and equipment are stated at cost. Maintenance and repairs are charged
to expense as incurred, and renewals and betterments are capitalized. Provisions
for depreciation are charged to income over the estimated useful lives of the
assets using accelerated methods of depreciation.
Deferred Loan Costs
Deferred loan costs related to the private placements of subordinated debentures
described in Note G are being amortized over the expected life of the related
debt using a method that approximates the interest method.
Goodwill
Goodwill represents the excess of acquisition costs over the fair market value
of the net assets of acquired subsidiaries. Goodwill is being amortized on a
straight-line basis over a period of thirty years. In accordance with APB 17,
"Intangible Assets," the Company continues to evaluate the amortization period
to determine whether events or circumstances warrant revised amortization
periods. The Company also evaluates goodwill in reference to SFAS 121,
"Accounting for the Impairment of Long-Lived Assets".
Customer Deposits
Customer deposits represent amounts received from customers in connection with
the sale of manufactured homes for which the closing of the sale transaction has
not been finalized.
Revenue Recognitions
The Company recognizes revenue on the sale of a manufactured home once the
customer is approved for credit and all closing documents have been executed and
any waiting period expired.
Rebates Receivable
The Company is eligible to participate in various volume incentive plans with
manufacturers. Once the Company meets the requirement of the incentive plan and
qualifies for the rebate, the receivable is recognized.
Advertising Costs
The Company expenses advertising costs as they are incurred.
Income Taxes
Income taxes are allocated among Apple Homes Corporation and its subsidiaries
based upon their respective separate taxable income or loss. Deferred taxes are
recognized for differences between the basis of assets and liabilities for
financial statement and income tax purposes. The differences relate primarily to
allowance for doubtful receivables (deductible for financial statement purposes
but not for income tax purposes), inventory capitalization for income tax
reporting, and the value of net operating losses for tax purposes carried
forward from prior years. The deferred tax assets represent the future tax
return consequences of these differences, which will be deductible when the
assets are recovered or settled.
F-15
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Common Stock
As of March 31, 1999 the Company had 10,000,000 shares of common stock
authorized of which 2,091,539 is issued and outstanding. Each share of common
stock is entitled to one vote. There are no restrictions or preferred provisions
regarding dividends. Reference Note N regarding stock warrants currently
outstanding.
Fair Value of Financial Instruments
The carrying amounts of cash, receivables, and payables approximate fair value
because of the short maturity, generally less than three months, of these
instruments. The carrying value of the Company's notes receivable approximates
fair value because the majority of the outstanding balance was adjusted to the
sales price of the notes sold subsequent to year end as described in Note E. The
carrying value of the Company's long-term debt approximates fair value because
current market prices and the Company's current incremental borrowing rate are
not significantly different from the terms in the Company's debt portfolio.
Concentration of Credit Risk
The Company is subject to credit risk through trade and note receivables and
uninsured cash balances. The majority of the Company's business is from retail
trade of manufactured homes in the southeastern United States. Consideration was
given to this concentration and the financial position of these customers when
determining the allowance for doubtful accounts. Reference Note O regarding
potential recourse liability. Cash is placed in well capitalized, high quality
financial institutions. The Federal Insurance Corporation insures accounts at
each institution up to $100,000. At March 31, 1999 balances in excess of the
$100,000 limit amounted to approximately $285,000.
Reclassifications
Certain 1998 and 1997 amounts have been reclassified to conform with the 1999
presentation. These reclassifications had no effect on net income or loss for
the years.
F-16
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE C - INVENTORIES
At March 31, 1999 and 1998, inventories consisted of:
1999 1998
--------------- --------------
New Manufactured Homes $ 7,377,858 $ 4,537,876
Repossessed Homes 191,513 -0-
Used Manufactured Homes 194,233 264,427
Air Conditioning Units 89,088 -0-
Land and Home Packages 464,518 449,314
--------------- --------------
$ 8,317,210 $ 5,251,617
=============== ==============
NOTE D - PROPERTY AND EQUIPMENT
At March 31, 1999 and 1998, property and equipment consisted of:
1999 1998
------------- -------------
Land $ 325,000 $ -0-
Buildings 416,930 200,477
Furniture and Fixtures 86,194 56,604
Vehicles 176,250 73,559
Leasehold Improvements 173,594 -0-
Machinery and Equipment 34,337 -0-
Rental Units 134,186 132,477
------------- -------------
1,346,491 463,117
Less Accumulated Depreciation (110,615) (60,957)
------------- -------------
$ 1,235,876 $ 402,160
============= =============
Property and equipment are depreciated over estimated useful lives using
accelerated methods of depreciation. The range of estimated useful lives is as
follows:
Years
-----
Buildings 15-39
Furniture and Fixtures 5-7
Vehicles 5
Leasehold Improvements 10-15
Machinery and Equipment 5-7
Rental Units 15-39
NOTE E - NOTES RECEIVABLE
Notes receivable result from Company financial sales of manufactured homes. The
Company uses the allowance method to provide for recognition of bad debt related
to notes receivable. The notes have remaining terms of one to thirty years and
interest rates range from 8% to 15%. Subsequent to March 31, 1999, the Company
sold notes receivable with a face value of $596,717 to a financing company for
$481,605. The discount of $115,112 was recorded at March 31, 1999 and is part of
the allowance for doubtful accounts of $148,277 at March 31, 1999. Notes
receivable at March 31, 1998 are net of an allowance for doubtful accounts of
$97,041.
Of the thirty-two notes which were sold by the Company subsequent to year end,
nineteen notes have recourse for twelve months, and thirteen notes were sold
without recourse. The
F-17
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE E - NOTES RECEIVABLE (continued)
conditions of the recourse allow the Company the option to make any payments on
the owners' behalf to avoid defaults in the loan and give the Company the right
to collect directly from the owners for any such payments made. No reserve has
been recorded for this recourse, as management believes the Company will be able
to collect on any outstanding payments.
NOTE F - FLOORPLAN PAYABLE
The Company has maintained a floorplan line of credit of $10,275,000 during
1999 and $7,150,000 during 1998 with several finance companies for new homes
inventory. These credit lines are collateralized by the homes and are guaranteed
by an officer of the Company. Interest rates range from prime to prime + 2%,
depending on several factors, including the number of days a home is on a sales
lot. Of the available line, $7,993,154 was utilized on March 31, 1999 and
$4,641,509 was utilized on March 31, 1998.
For the years ended March 31, 1999 and 1998 floorplan interest expense was
$385,394 and $404,814, respectively.
NOTE G - SUBORDINATED DEBENTURES
During the year ended March 31, 1994, the Company completed a private placement
of seventeen debentures in the principal amount of $300,000. The debentures are
due in 2003, pay interest semi-annually at 10.0%, and are convertible by the
holders after two years into shares of the Company's common stock at a
conversion ratio of $1.25 per share. As of March 31, 1999, $77,500 of the
original debenture amount had been converted into 62,000 shares of stock. None
of the debentures were converted during the year ended March 31, 1998.
In December 1998, the Company offered convertible subordinated debentures as a
private placement pursuant to Rule 504 of Regulation D of the 1933 Securities
Act. The offering is not to exceed $900,000. As of March 31, 1999, $137,500 had
been issued to investors. In April, 1999, an additional $65,000 was issued. The
debentures are due five years from their date of issue. They bear interest,
payable semiannually, at a rate of 10% per annum. They are convertible into
common stock of the Company at the conversion price of $5.00 per share.
The debentures are subordinated in right of payment to holders of senior debt,
including bank borrowings and floorplan financing.
F-18
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE H - NOTES PAYABLE
At March 31 1999, and 1998, notes payable consisted of the following:
1999 1998
---------- -----------
Subordinated debentures (see Note G) $ 360,000 $ 300,000
Note payable to Sun Trust with interest
at 7.25%, monthly payments of $2,115 due
through December 2001; secured by an
office building and personal guarantees
of the Company president and a director. 228,802 -0-
Note payable to Southeastern at 9.50%,
monthly payments of $2,663 due through
November 2013; secured by land. 252,393 -0-
Note payable to McDuffie Bank &Trust at
10.25%, monthly payments of $1,830 due
through September 2000; secured by land
and personal guarantees of the Company
president and a director. 116,247 126,335
Note payable to a stockholder at 10%
interest, principal and accrued interest
of $38,749 due in September 1998;
unsecured. -0- 85,000
Other notes payable to banks bearing
interest ranging from prime plus .85% to
18% fixed, monthly payments totaling
$4,566, maturing between April 1999 and
November 2002; secured primarily by
automobiles. 114,489 66,690
Other notes payable bearing interest
rates ranging from 4.9% to 11.08%,
monthly payments totaling $708 maturing
between November 2001 and February 2002;
secured by various equipment. 22,111 -0-
F-19
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE H - NOTES PAYABLE (continued)
1999 1998
---------- ----------
Unsecured note payable to an individual;
principal and interest at 10%, due in
monthly installments of $1,062 through
November 2000 $ 20,389 $ 29,732
Other unsecured notes payable due in
full over the next year. 27,818 -0-
---------- ----------
1,142,249 607,757
Less current portion (87,933) (116,249)
---------- ----------
$1,054,316 $ 491,508
========== ==========
As of March 31, 1999 future maturities are as follows:
Year ending March 31, 1999
2000 $ 87,933
2001 80,022
2002 264,745
2003 35,427
2004 254,986
2005 and thereafter 419,136
----------
$1,142,249
==========
NOTE I - EARNINGS PER SHARE
Basic earnings (loss) per share is computed by dividing net income or loss
attributable to common shares by the weighted average of common shares
outstanding during the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. The accompanying financial
statements do not include diluted earnings per share because conversion of the
subordinated debentures described in Note G and exercise of the stock warrants
described in Note N are antidilutive for the years presented.
F-20
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE J - INCOME TAXES
For the years ended March 31, 1999, 1998, and 1997 the income tax (provision)
benefit consisted of:
1999 1998 1997
----------- ------------ -----------
Current:
Federal $ -0- $ -0- $ -0-
State (27,596) -0- -0-
----------- ------------ -----------
(27,596) -0- -0-
----------- ------------ -----------
Deferred:
Federal (38,372) 98,697 28,333
State (6,771) 17,417 5,000
----------- ------------ -----------
(45,143) 116,114 33,333
----------- ------------ -----------
$ (72,739) $ 116,114 $ 33,333
=========== ============ ===========
The reconciliation of reported income tax (expense) benefit to the amount of
income tax (expense) benefit that would result from applying federal statutory
tax rates to pretax income is as follows:
F-21
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE J - INCOME TAXES (continued)
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------------------------------------
1999 1998 1997
---------------------- --------------------- ------------------
Balance % Balance % Balance %
---------------------- --------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income tax $ (63,891) (34.0) $ (24,734) (34.0) $ 136,615 34.0
State income tax, net of
federal tax benefit (27,596) (14.8) -0- -0- -0- -0-
Non deductible expenses (36,252) (19.4) (2,815) (3.9) -0- -0-
Valuation allowance change 55,000 29.3 143,663 197.5 (103,282) (25.7)
--------- ------ --------- -------- -------- ------
$ (72,739) (38.9) $ 116,114 159.6 $ 33,333 8.3
========= ====== ========= ======== ======== ======
The components of deferred tax assets were as follows:
March 31,
----------------------------------------------
1999 1998 1997
------------- -------------- --------------
Net operating loss carryforward $ 35,495 $ 150,063 $ 198,663
Allowance for doubtful accounts 59,311 38,816 36,519
Inventory capitalization 12,714 18,754 -0-
------------- -------------- --------------
107,520 207,633 235,182
Less valuation allowance -0- (55,000) (198,663)
------------- ------------- --------------
$ 107,520 $ 152,633 $ 36,519
============= ============== ==============
</TABLE>
SFAS No. 109 requires a valuation allowance to be recorded when it is more
likely than not that some or all of the deferred tax assets will not be
realized. At March 31, 1999, due to improved profitability of the Company,
management determined that it was more likely than not that future taxable
income would be sufficient to enable the Company to realize all of its deferred
tax assets. Accordingly, no valuation allowance has been recorded at March 31,
1999. As of March 31, 1999, the remaining net operating loss carryforward of
approximately $88,000 will expire in varying amounts through 2012.
NOTE K - RELATED PARTY TRANSACTIONS
During the years ended March 31, 1999, 1998, and 1997 rent of $33,445, $33,000,
and $21,444, respectively, was paid to an officer of the Company for
month-to-month leasing arrangements. In addition, the Company paid floor plan
guaranty fees of $147,560 and $159,019 during the years ended 1999 and 1998,
respectively, to an officer. The guarantee fees are based on 2% annual rate on
the outstanding floor plan balance each month and will continue as long as the
personal guarantee is required.
During the year ended March 31, 1999, the Company employed the president's wife
in a consulting capacity. She decorated and furnished manufactured homes that
the Company sells to its retail customers. Related compensation amounted to
approximately $153,000, which included reimbursement of her direct expenses of
approximately $24,000.
The Company currently has four subsidiaries with minority shareholder ownership
of 20% each. An agreement exists which allows bonuses to be paid at the
discretion of management. There is no requirement to pay bonuses or dividends.
There is also a provision which allows for and encourages the buildup of working
capital.
F-22
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE K - RELATED PARTY TRANSACTIONS (continued)
During the year ended March 31, 1998 the Company received developed residential
land from related parties, (directors in the Company), in exchange for accounts
receivable of $51,134, notes receivable of $210,591, and the issuance of common
stock of $130,036.
NOTE L - EQUITY INCENTIVE PLAN
In a prior year, the Company approved an Equity Incentive Plan designed to
attract and retain key employees. The Plan, administered by a committee
appointed by the Board of Directors, provides for stock options and other stock
based awards to reward employees, as the Committee deems appropriate. The
Company approved the allocation of up to 1,000,000 shares of common stock to be
used in the Plan. No stock has been awarded under this Plan.
NOTE M -- PRIOR PERIOD ADJUSTMENTS
The balance of retained earnings (deficit) at March 31, 1997 has been restated
to correct an error in accounting. The retained earnings (deficit), as
previously reported at March 31, 1997 of $(605,154) was inclusive of
distributions of $111,499 paid to minority stockholders of partially owned
subsidiaries during 1997 which should have been applied against minority
interest liability and not retained earnings. The effect of the correction is to
reduce the retained earnings (deficit) at March 31, 1997 from $(605,154) to
$(493,655). This correction does not impact the previously reported net loss for
the year ended March 31, 1997.
The balances of retained earnings (deficit), paid-in capital and net income as
of and for the year ended March 31, 1998, as previously reported, have been
restated to correct errors in accounting. These corrections are based on
information discovered subsequent to the original release of the March 31, 1998
financial statements. The corrections are summarized as follows:
F-23
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTE M -- PRIOR PERIOD ADJUSTMENTS (continued)
Additional Retained Net
Year Ended March 31, 1998 Paid-in Earnings Income
------------------------- Capital (Deficit) (Loss)
----------- ------------ -------------
<S> <C> <C> <C>
Balance at beginning of year, as previously $ 824,748 $ (605,154)
reported
As previously reported:
Prior period adjustment - 93,145
Issuance of common stock
Stock offering/other cash 659,306 -
-
Debt disposition 484,467 -
Residential land and manufactured
homes 129,859 -
Distributions paid to minority interest - (240,392)
Net income - 202,982 $ 202,982
--------- -------- ---------
Balance at March 31, 1998, as previously
reported 2,098,380 (549,419)
Correction of classification of 1997
distributions to minority stockholders - 111,499
Correction of:
Prior period adjustment - (93,145) (93,145)
Valuation of stock issued for services,
offering cost and contributions to
capital 52,281 - (52,281)
Revenue cut off, accrued expenses and
minority interest - - (205,036)
Income tax provision - - 95,949
Classification of 1998 distributions to
minority stockholders - 240,392 -
----------
Total 1998 net income adjustments (254,513) (254,513)
----------- ---------- ----------
Balances at March 31, 1998, as restated $ 2,150,661 $ (545,186) $ (51,531)
=========== ========== ==========
</TABLE>
F-24
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE M -- PRIOR PERIOD ADJUSTMENTS (continued)
The net effect of the adjustments to net income noted above was to change
earnings per share of $0.14, as previously reported, to loss per share of
$(0.03).
NOTE N - WARRANTS
At March 31, 1999, the Company had outstanding Class A Warrants to purchase
2,913,872 shares of the Company's common stock at $6.50 per share. The warrants
expire on December 31, 2001.
NOTE O - COMMITMENTS AND CONTINGENCIES
At March 31, 1999, the Company was contingently liable for outstanding mortgages
placed with third party lenders on several homes that were previously sold with
recourse for various limited periods of time. The original mortgages at the time
of sale were approximately $859,000. Management estimates that the range of any
future possible loss if the owners default on these mortgages is between $86,000
and $129,000. These estimates are based on the Company's past performance and
industry averages for manufactured homes that are repossessed and then resold.
These losses are expensed when incurred as normal operating cost.
The Company has several operating leases that are month to month contracts. Rent
expense for the years ended March 31, 1999, 1998 and 1997 totaled approximately
$366,000, $213,000 and $82,000 respectively.
NOTE P -- ACQUISITIONS
On January 1, 1999, the Company acquired 100% of the issued outstanding stock of
Mobile Air Systems, Inc. for $10,000 cash, $20,000 note payable, and 130,000
shares of common stock of Apple Homes Corporation valued at $227,500. The
transaction was accounted for as a purchase, and goodwill in the amount of
$181,051 was recognized, which is being amortized over 30 years for financial
reporting. The pro forma results on the operations of the Company for the past
two years is insignificant.
NOTE Q - EMPLOYEE BENEFIT PLAN
The Company sponsors a 401(k) Profit Sharing Plan. All individuals employed on
March 15, 1999 were eligible to participate in the plan immediately. Individuals
employed after March 15, 1999 must complete six months of service and have
attained the age of 21. Eligible employees are allowed to make elective
deferrals of compensation to the plan in accordance with the 401(k) provisions.
The Company may elect to make additional contributions under the profit sharing
provisions of the plan. There were no Company contributions made to the plan for
the year ended March 31, 1999.
F-25
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE R - PENDING ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999. This
Statement establishes accounting and reporting standards for derivative
instruments and hedging activities. Management does not believe that the
adoption of this statement will be material to the consolidated financial
statements.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use. This SOP gives guidelines for the
capitalization or expensing of certain external and internal costs incurred when
developing computer software for internal use. The SOP also gives guidelines as
to the amortization of the capitalized cost. The SOP is effective for financial
statements for fiscal years beginning after December 15, 1998. Management does
not believe that the adoption of this SOP will be material to the consolidated
financial statements.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. This SOP provides guidance on the financial reporting of start-up
costs and organizational costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. This SOP is effective for
financial statements for fiscal years beginning after December 15, 1998.
Management does not believe that the adoption of this SOP will be material to
the consolidated financial statements.
F-26
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE S - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter
-------------------------------------------------------------
1st 2nd 3rd 4th
------------ ------------ ------------- ------------
(In thousands except per share data)
Year ended March 31, 1999
<S> <C> <C> <C> <C>
Net sales $ 8,143 $ 10,490 $ 7,307 $ 7,836
Gross profit 1,745 1,677 1,109 1,396
Net income (loss) 149 20 (81) 16
Earnings per share $ 0.07 $ 0.01 $ (0.04) $ 0.01
============ ============ ============ =============
Weighted average
shares outstanding 1,811,942 1,897,756 1,913,517 2,077,506
Year ended March 31, 1998
Net sales $ 5,957 $ 6,408 $ 5,794 $ 7,457
Gross profit 1,196 1,163 1,037 1,676
Net income (loss) 61 (84) (159) 130
Earnings per share $ 0.05 $ (0.06) $ (0.10) $ 0.07
============ =========== ============ =============
Weighted average
shares outstanding 1,166,967 1,446,218 1,599,668 1,748,114
Earnings per share is computed independently for each of the quarters presented.
Therefore, the sum of the quarterly earnings per share do not necessarily equal
the total for the year.
F-27
</TABLE>
<PAGE>
SME
--------------------------
SEROTTA
--------------------------
Report of Independent Certified Public Accountants MADDOCKS
--------------------------
EVANS & CO., CPA'S
--------------------------
A Professional Corporation
--------------------------
The Board of Directors
Apple Homes Corporation
Augusta, Georgia
We have audited the accompanying consolidated balance sheet of Apple Homes
Corporation and Subsidiaries (the "Company") as of March 31, 1998, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit 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 Apple Homes
Corporation and Subsidiaries as of March 31, 1998, and the results of its
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.
As discussed in Note 16 to the financial statements, certain errors in reported
amounts were discovered by management of the Company subsequent to our
previously issued 1998 report dated June 15, 1998. Accordingly, the 1998
financial statements have been restated to correct these errors.
/s/ Serotta Maddocks Evans & Co.
- - -----------------------------------
SEROTTA MADDOCKS EVANS & CO., CPA'S
Augusta, Georgia
June 15, 1998, except for Notes 13
and 16, as to which the date is June 23, 1999
- - --------------------------------------------------------------------------------
701 Greene Street, Suite 200 / Augusta, GA 30901-2322
Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299)
F-28
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIAREIS
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 922,176
Accounts receivable 240,445
Other receivables 165,766
Inventories 5,251,617
Other current assets 95,087
Deferred taxes 74,531
Notes receivable, current portion 42,883
-----------
Total Current Assets 6,792,505
-----------
PROPERTY AND EQUIPMENT, NET 402,160
-----------
OTHER ASSETS
Notes receivable, net of allowance
for bad debt of $97,041 679,761
Deferred taxes 78,102
Deferred loan acquisition costs,
net of accumulated amortization of $74,954 87,050
Goodwill, net of accumulated
amortization of $29,979 292,175
-----------
Total Other Assets 1,137,088
-----------
$ 8,331,753
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Floorplan payable $ 4,641,509
Accounts payable 421,493
Sales tax payable 207,009
Accrued salaries and commissions 230,799
Other accrued liabilities 309,490
Customer deposits 96,704
Due to minority stockholders 128,440
Notes payable, current portion 116,249
-----------
Total Current Liabilities 6,151,693
-----------
LONG-TERM LIABILITIES
Notes payable 491,508
-----------
MINORITY INTEREST IN NET ASSETS
OF CONSOLIDATED SUBSIDIARY 79,496
-----------
STOCKHOLDERS' EQUITY
Common stock, $.002 par value;
authorized 10,000,000 shares;
1,790,614 issued and outstanding 3,581
Additional paid-in capital 2,150,661
Retained deficit (545,186)
-----------
Total Stockholders' Equity 1,609,056
-----------
$ 8,331,753
===========
See notes to consolidated financial statements
F-29
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1998
NET SALES $ 25,615,535
COST OF SALES 20,543,498
------------
Gross Profit 5,072,037
------------
OPERATING EXPENSES
Compensation 2,354,711
Occupancy and vehicle 357,735
Advertising 352,610
Insurance 196,223
Taxes and licenses 296,081
Professional fees 219,417
Depreciation and amortization 70,059
Utilities 215,740
Office and lot 220,523
Travel and entertainment 92,337
Guaranty fees 159,019
Rent and maintenance 112,811
Other 389,809
------------
Total Operating Expenses 5,037,075
------------
Operating Income 34,962
------------
OTHER INCOME (EXPENSE)
Finance participation and other 516,542
Interest income 27,137
Commissions 107,666
Interest expense (613,560)
------------
Total Other Income (Expense) 37,785
------------
Income Before Income Tax Provision
and Minority Interest 72,747
INCOME TAX BENEFIT 116,114
MINORITY INTEREST IN NET INCOME
OF CONSOLIDATED SUBSIDIARY (240,392)
------------
Net Loss $ (51,531)
============
Per share data:
Weighted average number of shares outstanding 1,491,423
Net loss per share $ (0.03)
See notes to consolidated financial statements
F-30
<PAGE>
<TABLE>
<CAPTION>
APPLE HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
YEAR ENDED MARCH 31, 1998
Retained
Common Paid-in Earnings
Stock Capital (Deficit) Total
----- ------- --------- -----
<S> <C> <C> <C> <C>
Balance, March 31, 1997 $ 2,334 $ 824,748 $ (493,655) $ 333,427
Issuance of common stock:
Stock offering/other cash 537 597,697 -- 598,234
Debt disposition 533 527,374 -- 527,907
Residential land and manufactured homes 177 129,859 -- 130,036
Contribution of capital 70,893 70,893
Net loss -- -- (51,531) (51,531)
---------- ---------- ---------- ----------
Balance, March 31, 1998 $ 3,581 $2,150,661 $ (545,186) $1,609.056
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements
F-31
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (51,531)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Bad debt expense 21,324
Bad debt recovery (76,602)
Deferred income taxes (116,114)
Depreciation and amortization 61,044
Gain on sale of developed residential
land and manufactured homes (190,137)
Minority interest in net income of
consolidated subsidiary 240,392
Cash provided by (used in):
Accounts receivables (195,431)
Rebates receivables 98,686
Inventories (830,859)
Notes receivable (393,507)
Other assets (71,815)
Floorplan payable 747,384
Accounts payable (78,766)
Accrued expenses 458,980
Customer deposits (9,968)
Other liabilities (2,009)
-----------
Net cash used in operating activities (388,929)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (144,986)
Proceeds from the sale of developed
residential land and manufactured homes 292,000
Advances to related entities 132,999
-----------
Net cash provided by investing activities 280,013
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (359,984)
Proceeds from issuance of common stock 1,022,860
Additions to deferred underwriting cost (49,459)
Capital contribution 70,983
Distributions paid to minority stockholders (185,393)
Due to minority stockholders 128,440
Repayments on advances from officers (19,000)
-----------
Net cash provided by financing activities 588,447
-----------
Net increase in cash and cash equivalents 479,531
Cash and cash equivalents, beginning of year 442,645
===========
Cash and cash equivalents, end of year $ 922,176
===========
See notes to consolidated financial statements
F-32
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
- - ---------------------------
The principal operations of Apple Homes Corporation and its subsidiaries (the
"Company") consist of the sale and installation of manufactured homes primarily
in the southeastern United States. The subsidiaries of Apple Homes Corporation
consist of the following:
Name Location Percent Ownership
- - --------------------------------------------------------------------------------
Augusta Housing Center. Inc. Augusta, Georgia 100%
Big Daddy's Mobile Homes, Inc. Augusta, Georgia 80
Evans-Lanier, Inc. Thomson, Georgia 80
Apple Homes, Inc. Waynesboro, Georgia 80
J. C. Homes, Inc. Augusta, Georgia 80
Tim Phillips Housing, Inc. Thompson, Georgia 80
New Century Homes, Inc. Augusta, Georgia 80
All subsidiaries conduct business in the name of Apple Homes. The Company
extends customary trade terms to some of its customers, all of whom are located
in the southeastern United States.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ---------------------------------------------------
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned and majority owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation.
Management Estimates
The preparation of the consolidated 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.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents.
Receivables
The Company uses the allowance method to provide for recognition of bad debt.
F-33
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
- - ---------------------------------------------------
Inventory
Inventory is stated at the lower of cost or market and is determined using the
specific identification method.
Property and Equipment
Property and equipment are stated at cost. Maintenance and repairs are charged
to expense as incurred, and renewals and betterments are capitalized. Provisions
for depreciation are charged to income over the estimated useful lives of the
assets using methods applicable for income tax purposes, which do not differ
significantly from generally accepted accounting principles.
Advertising Costs
The Company expenses advertising costs as they are incurred.
Income Taxes
Income taxes are accounted for using the asset and liability approach for
financial accounting and reporting purposes. Under that method, deferred tax
assets and liabilities are recognized for temporary differences between the
financial statement carrying amounts of assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Net Income Per Share
Net income per share is computed by dividing net income by the weighted average
number of shares outstanding during the year. The weighted average number of
shares used in the calculation of net income per share was computed based on the
actual time such shares were outstanding during the year. The Company's
convertible debentures (see Note 8) meet the criteria for classification as
common stock equivalents. Therefore, they were included in the calculation of
weighted average number of shares. The Company's Class A warrants do not meet
the criteria for classification as common stock equivalents. Therefore, they
were excluded from the calculation of weighted average number of shares.
NOTE 3 - INVENTORY
- - ------------------
At March 31, 1998, inventory consists of:
New manufactured homes $ 4,537,876
Used manufactured homes 264,427
Land and mobile home packages 449,314
-----------
$ 5,251,617
===========
F-34
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - PROPERTY AND EQUIPMENT
- - -------------------------------
At March 31, 1998, property and equipment consists of:
Buildings and improvements $ 200,477
Rental mobile home units 132,477
Furniture and fixtures 56,604
Vehicles 73,559
---------
463,117
Less accumulated depreciation (60,957)
---------
$ 402,160
=========
NOTE 5 - DEFERRED LOAN ACQUISITION COSTS
- - ----------------------------------------
The Company incurred costs related to the private placement of its debentures
and the acquisition of bridge loans, principally during 1994. These costs have
been deferred and are being amortized over the expected life of the related debt
using a method that approximates the interest method.
NOTE 6 - GOODWILL
- - -----------------
Goodwill is being amortized over a period of thirty years using the
straight-line method.
NOTE 7 - FLOORPLAN PAYABLE
- - --------------------------
The Company maintains a $7.15 million floorplan line of credit with several
finance companies for new homes inventory. These credit lines are collateralized
by the homes and personal guarantee from an officer of the Company. Interest
rates range from prime to prime + 4%, depending on several factors, including
the number of days a home is on a lot. The finance companies also offer
incentive packages back to the Company based on the volume of homes financed and
the turnover of inventory financed. Of the available line, approximately $4.6
million was utilized on March 31, 1998.
For the year ended March 31, 1998, floor plan interest expense and incentives
received were $404,814 and $136,460, respectively.
F-35
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - SUBORDINATED DEBENTURES
- - --------------------------------
During 1994, the Company completed a private placement of 17 debentures in the
principal amount of $300,000. The debentures are due 2003, pay interest
semi-annually at 10.0%, and are convertible by the holders after two years into
shares of the Company's common stock at a conversion ratio of $l.25 per share.
NOTE 9 - NOTES PAYABLE
- - ----------------------
At March 31, 1998, notes payable consists of the following:
Note payable to First Union with interest at prime
plus 1.50%, payments of $640.86 are due monthly
through April 2000; secured by an automobile. $ 20,634
Note payable to First Union with interest at prime
plus 1.50%, payments of $471.63 are due monthly
through April 1999; secured by an automobile. 6,133
Note payable to an individual; principal and
interest at 10%, due in monthly installments of
$1,062 through November 2000; unsecured. 29,732
Note payable to McDuffie Bank & Trust at 10%
interest, payments of $515.14 are due monthly
through February 2002; secured by a manufactured
home. 19,803
Note payable to Regions Bank at 10% interest,
payments of $552.56 are due monthly through
December 2001; secured by a vehicle. 20,120
Note payable to McDuffie Bank & Trust at 10.25%
interest, payments of $1,830 are due monthly
through September 2000; secured by land and
personal guarantees of the Company president and a
minority shareholder. 126,335
Debentures (See Note 8) 300,000
Note payable to a stockholder at 10% interest,
principal and accrued interest of $38,749 due in
September 1998; unsecured. 85,000
---------
607,757
Less current portion (116,249)
---------
$ 491,508
=========
F-36
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - NOTES PAYABLE (continued)
- - ----------------------
Maturities are as follows:
Year ending March 31,
---------------------
1999 $ 116,249
2000 28,877
2001 153,392
2002 9,239
2003 --
2004 and thereafter 300,000
---------
$ 607,757
=========
NOTE 10 - INCOME TAXES
- - ----------------------
At March 31, 1998, the income tax benefit consists of:
Current:
Federal $ --
State --
Deferred:
Federal (98,697)
State (17,417)
----------
Total $ (116,114)
==========
The reconciliation of reported net income tax benefit to the amount of
income tax expense that would result from applying federal statutory tax rates
to pretax income is as follows:
Amount Percent
------ -------
Statutory federal income tax expense $ 24,734 34.0
Valuation allowance change (143,663) (197.5)
Other 2,815 3.9
--------- ------
$(116,114) (159.6)
========= ======
At March 31, 1998, the components of deferred tax assets were as follows:
Net operating loss carryforward $150,063
Allowance for uncollectible accounts 38,816
Inventory capitalization 18,754
--------
207,633
Less valuation allowance (55,000)
--------
$152,633
========
SFAS No. 109 requires a valuation allowance to be recorded when it is more
likely than not that some or all of the deferred tax assets will not be
realized. At March 31, 1998, management has determined that a reserve is
necessary until future taxable income is sufficient to enable the Company to
realize all of its deferred tax assets. At March 31, 1998, the remaining net
operating loss carryforward of approximately $370,000 will expire in varying
amounts through 2012.
F-37
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - RELATED PARTY TRANSACTIONS
- - ------------------------------------
During the year ended March 31, 1998, rent of approximately $33,000 was paid to
an officer of the Company for month-to-month leasing arrangements. In addition,
floorplan guaranty fees of $159,019 were paid to an officer of the Company.
NOTE 12 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
- - ----------------------------------------------------------
During the year ended March 31, 1998, cash paid for interest was approximately
$602,000.
During the year ending March 31, 1998, the following noncash transactions
occurred:
Related
Amount Party Transaction
- - --------------------------------------------------------------------------------
Received developed residential land in $ 51,134 Yes
exchange for write-off of accounts
receivable
Received developed residential land in 210,591 Yes
exchange for write-off of notes
receivable
Received developed residential land in 130,036 Yes
exchange for issuance of common stock
Write-off of a note payable in exchange 46,407 Yes
for issuance of common stock
Write-off prepaid expense to related 404,611 No
cash addition to paid-in capital
Assets purchased through financing 35,036 No
arrangements
Received underwriting services in exchange for
issuance of common stock 150,000 No
Converted developed residential land
to inventory 449,314 No
Converted developed residental land
to property and equipment 132,477 No
Debentures converted to common stock 481,500 No
NOTE 13 - EQUITY INCENTIVE PLAN
- - -------------------------------
In a prior year, the Company approved an Equity Incentive Plan designed to
attract and retain key employees. The Plan, administered by a committee
appointed by the Board of Directors, provides for stock options and other stock
based awards to reward employees as the Committee deems appropriate. The Company
approved the allocation of up to 1,000,000 shares of common stock to be used in
the Plan. No stock has been awarded under this Plan.
NOTE 14 - CONCENTRATION OF CREDIT RISK
- - ---------------------------------------
The Company maintains its cash balances at several financial institutions.
Accounts at each institution are insured up to $100,000 by the Federal Insurance
Corporation. At March 31, 1998, the Company's uninsured cash balances totaled
approximately $525,000.
F-38
<PAGE>
SME
APPLE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - WARRANTS
- - ------------------
At March 31, 1998, the Company had outstanding Class A warrants to purchase
1,913,872 shares of the Company's common stock at $6.50 per share. The warrants
expire on December 31, 2001.
NOTE 16 - RESTATEMENTS
- - ----------------------
Certain reclassifications and errors of reported amounts were discovered by
management of the Company subsequent to our previously issued 1998 report dated
June 15, 1998. Therefore, the financial statements have been restated as
follows:
<TABLE>
<CAPTION>
March 31, 1998, March 31, 1998,
as previously reported Restatement as restated
---------------------------------------------------------------
<S> <C> <C> <C>
Assets $ 8,148,089 $ 183,664 $ 8,331,753
Liabilities 6,228,863 414,338 6,643,201
Minority interest in net assets
of consolidated corporations 366,684 (287,188) 79,496
Stockholders' Equity 1,552,542 56,514 1,609,056
Sales 25,522,390 93,145 25,615,535
Other operating expenses 4,685,190 351,885 5,037,075
Interest expense 521,838 91,722 613,560
Income tax benefit 20,165 95,949 116,114
</TABLE>
F-39
<PAGE>
Report of Independent Certified Public Accountants
The Board of Directors
Mayfair Homes Corporation
Augusta, Georgia
We have audited the accompanying consolidated balance sheets of Mayfair Homes
Corporation and Subsidiaries (the "Company") as of March 31, 1997 and 1996, 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Mayfair Homes
Corporation and Subsidiaries as of March 31, 1997 and 1996, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
As discussed in Note 20 to the financial statements, certain errors in reported
amounts were discovered by management of the Company subsequent to our
previously issued 1997 and 1996 report dated January 26, 1998. Accordingly, the
1997 financial statements have been restated to correct these errors.
/s/ Cherry, Bekaert & Holland, LLP
- - -----------------------------------
Cherry, Bekaert & Holland, LLP
Augusta, Georgia
January 26, 1998, except for Note 20,
as to which the date is June 23, 1999
F-40
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and 1996
ASSETS
1997 1996
---------- ----------
Current assets
Cash $ 442,645 $ 67,227
Trade receivables, net 19,546 93,272
Other receivables 245,497 65,417
Inventory 3,971,444 1,790,894
Advances to related entities 132,999 68,900
Current portion of notes receivable 191,852 38,467
Prepaid and other current assets 8,837 6,849
Deferred income taxes 29,109 3,186
---------- ----------
Total current assets 5,041,929 2,134,212
---------- ----------
Property and equipment
Building and improvements 172,859 74,792
Vehicles 51,803 4,923
Furniture and equipment 48,517 31,661
---------- ----------
273,179 111,376
Less accumulated depreciation 33,202 23,360
---------- ----------
Net property and equipment 239,977 88,016
---------- ----------
Developed residential land 207,118 172,543
---------- ----------
Other assets
Notes receivable, net 369,200 394,837
Finance participation receivable, net 18,955 23,055
Deferred loan acquisition costs 105,049 126,050
Deferred underwriting costs 355,152 154,226
Goodwill 269,694 277,332
Deferred income taxes 7,410 3,400
Other 14,435 68,330
---------- ----------
Total other assets 1,139,895 1,047,230
---------- ----------
Total assets $6,628,919 $3,442,001
========== ==========
See notes to consolidated financial statements.
F-41
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
----------- -----------
Current liabilities
Floor plan payable $ 3,894,125 $ 1,725,992
Accounts payable 500,259 140,433
Accrued expenses 263,318 80,785
Customer deposits 106,672 31,449
Advances from officers 19,000 53,082
Current portion of notes payable 52,085 113,561
Short-term notes payable 323,204 25,000
Other liabilities 27,009 --
----------- -----------
Total current liabilities 5,185,672 2,170,302
----------- -----------
Long-term liabilities
Subordinated debentures 300,000 300,000
Notes payable 785,323 228,485
----------- -----------
Total long-term liabilities 1,085,323 528,485
----------- -----------
Minority interest in net assets of
consolidated subsidiary 24,497 19,918
----------- -----------
Stockholders' equity
Common stock, $.002 par value;
authorized 5,000,000 shares;
issued and outstanding:
1997 - 1,166,967; 1996
1,067,849 shares 2,334 2,136
Additional paid-in capital 824,748 775,289
Retained deficit (493,655) (54,129)
----------- -----------
Total stockholders' equity 333,427 723,296
----------- -----------
Total liabilities and
stockholders' equity $ 6,628,919 $ 3,442,001
=========== ===========
F-42
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31, 1997 and 1996
1997 1996
------------ ------------
Net Sales $ 15,549,376 $ 8,442,228
Less cost of sales 12,327,352 7,028,488
------------ ------------
Gross profit 3,222,024 1,413,740
------------ ------------
Operating expenses
Compensation 1,416,052 600,807
Occupancy and vehicle 239,413 133,931
Advertising 194,151 101,667
Insurance 101,373 60,779
Taxes and licenses 140,489 47,458
Professional fees 147,383 42,510
Depreciation and amortization 37,980 35,982
Other 828,645 211,310
------------ ------------
Total operating expenses 3,105,486 1,234,444
------------ ------------
Operating income 116,538 179,296
Other income (expense)
Commissions 36,851 30,004
Rental and other (5,332) 6,316
Interest income 49,457 12,343
Interest expense (599,322) (323,062)
------------ ------------
Other expense, net (518,346) (274,399)
------------ ------------
Loss before income taxes and
minority interest (401,808) (95,103)
Income tax benefit 33,333 6,586
Minority interest in net income of
consolidated subsidiary (71,051) (4,917)
------------ ------------
Net loss $ (439,526) $ (93,434)
============ ============
Per share data:
Weighted average number of
shares outstanding 1,109,669 946,264
Net loss per share $ (.40) $ (.10)
============ ============
See notes to consolidated financial statements.
F-43
<PAGE>
<TABLE>
<CAPTION>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
Years ended March 31, 1997 and 1996
Retained
Common Paid-in Earnings
Stock Capital (Deficit Total
----- ------- -------- -----
<S> <C> <C> <C> <C>
Balance, March 31, 1994 $ 1,193 $ 315,425 $ (67,194) $ 249,424
Issuance of common stock 510 212,490 -- 213,000
Net income -- -- 106,499 106,499
--------- --------- --------- ---------
Balance, March 31, 1995 1,703 527,915 39,305 568,923
Issuance of common stock 433 247,374 -- 247,807
Net loss -- -- (93,434) (93,434)
--------- --------- --------- ---------
Balance, March 31, 1996 2,136 775,289 (54,129) 723,296
Issuance of common stock 198 49,459 49,657
Net loss -- -- (439,526) (439,526)
--------- --------- --------- ---------
Balance, March 31, 1997 $ 2,334 $ 824,748 $(493,655) $ 333,427
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-44
<PAGE>
<TABLE>
<CAPTION>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 1997 and 1996
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (439,526) $ (93,434)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Minority interest in net income of consolidated subsidiary 71,051 4,918
Depreciation and amortization 37,980 35,982
Deferred income taxes (29,933) (6,586)
(Gain) loss on disposition of assets (2,500) 6,055
Professional services contributed 49,657 --
Cash provided by (used in):
Trade receivables, net 73,726 (56,201)
Other receivables (180,080) (4,755)
Inventory (2,180,550) 541,679
Notes receivable, net (127,748) (25,699)
Prepaid and other current assets (1,988) 15,557
Developed residential land (34,575) --
Other assets, net 57,995 15,321
Floor plan payable 2,168,133 (634,273)
Accounts payable 359,826 31,407
Accrued expenses 182,533 12,139
Customer deposits 75,223 8,085
Other liabilities 27,009 --
----------- -----------
Net cash provided by (used in) operating activities 106,233 (149,805)
----------- -----------
Cash flows from investing activities
Additions to property and equipment (161,803) (24,673)
Advances to related entities (64,099) (64,176)
Proceeds from disposition of property and equipment 2,500 30,346
Investment in sales locations opened subsequent to March 31, 1997 -- (25,000)
----------- -----------
Net cash used in investing activities (223,402) (83,503)
----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock -- 108,000
Proceeds from issuance of common stock of subsidiaries 0 15,000
Proceeds from issuance of notes payable 907,555 101,723
Principal payments on notes payable (68,461) (73,102)
Distributions paid to minority stockholders (111,499) --
Additions to deferred underwriting costs (200,926) (46,477)
Proceeds from advances from officers -- 49,515
Repayments on advances from officers (34,082) (4,983)
----------- -----------
Net cash provided by financing activities 492,587 149,676
----------- -----------
Net increase (decrease) in cash 375,418 (83,632)
Cash at beginning of year 67,227 150,859
----------- -----------
Cash at end of year $ 442,645 $ 67,227
=========== ===========
See notes to consolidated financial statements.
F-45
</TABLE>
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 and 1996
Note 1 - The Company and Basis of Presentation
The principal operations of Mayfair Homes Corporation and its subsidiaries (the
"Company") consist of the sale and installation of manufactured homes and the
development of residential property for resale primarily in the southeastern
United States. The Company began operations in October 1990. The wholly owned
subsidiaries of Mayfair Homes Corporation consist of Augusta Housing Center,
Inc. and Big Daddy's Mobile Homes, Inc. During 1996, Mayfair Homes Corporation
completed the purchase of an 80% interest in Evans-Lanier, Inc., a sales
location in Thomson, Georgia. During 1997, the Company began operations with an
80% interest in four new subsidiaries, Apple Homes, Inc. (Augusta, Georgia), J.
C. Homes, Inc. (Augusta, Georgia), Deneaux Housing, Inc. (Waynesboro, Georgia),
and Apple Homes of Tennessee, Inc. (Johnson City, Tennessee). All subsidiaries
conduct business in the name of Apple Homes. The Company extends customary trade
terms to some of its customers, all of whom are located in the southeastern
United States.
Note 2 - Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned and majority owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation. For 1996, the
accounts of Evans-Lanier, Inc. are included for the period from its date of
incorporation, February 1, 1995, through its year end, December 31, 1995. The
effect on the consolidated financial statements of using a calendar year for
Evans-Lanier is not considered material.
During 1997, Evans-Lanier, Inc. changed its fiscal year end from December 31 to
March 31 to coincide with the Company's fiscal year end. For 1997, the accounts
of Evans-Lanier, Inc. are included for its fiscal year ended March 31, 1997.
Operations of Evans-Lanier, Inc. for the three month period ended March 31,
1996, presented in summary form below, are immaterial and unaudited.
Evans-Lanier, Inc.
Selected Financial Data
For the Three Month Period Ended March 31, 1996
-----------------------------------------------
Sales $691,892
Cost of sales 568,364
--------
Gross profit 123,528
Operating expenses 71,105
--------
Operating income 52,423
Other expense, net 13,179
--------
Net income $ 39,244
========
Management Estimates
The preparation of the consolidated 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.
F-46
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 2 - Summary of Significant Accounting Policies (Continued)
Fair Value of Financial Instruments
Financial instruments held by the Company at March 31, 1997 include cash,
accounts and notes receivable, related party advances, floor plan, accounts and
notes payable and customer deposits. Management believes that, based on current
interest rates and terms for comparable financial instruments, the estimated
fair value of the Company's financial instruments approximated their carrying
values at March 31, 1997.
Receivables
The Company uses the allowance method to provide for recognition of bad debt.
The Company's allowance for doubtful accounts was $76,602 and $9,371 at March
31, 1997 and 1996, respectively.
Inventory
Inventory is stated at the lower of cost or market and is determined using the
specific identification method.
Property and Equipment
Property and equipment are stated at cost. Maintenance and repairs are charged
to expense as incurred, and renewals and betterments are capitalized. Gains and
losses on disposals are credited or charged to operations.
Depreciation and Amortization
Provisions for depreciation are charged to income over the estimated useful
lives of the assets using methods applicable for income tax purposes. The
estimated useful lives of depreciable and amortizable assets are as follows:
Years
-----
Building and improvements 15
Vehicles 3 - 5
Furniture and equipment 3 - 7
Goodwill 40
Deferred loan acquisition costs 9
Other intangible assets 5
Depreciation expense for the years ended March 31, 1997 and 1996 was $21,330 and
$9,007, respectively.
Income Taxes
Income taxes are accounted for using the asset and liability approach for
financial accounting and reporting purposes. Under that method, deferred tax
assets and liabilities are recognized for temporary differences between the
financial statement carrying amounts of assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Net Loss Per Share
Net loss per share is computed by dividing net loss by the weighted average
number of shares outstanding during the year. The weighted average number of
shares used in the calculation of net loss per share was computed based on the
actual time such shares were outstanding during the year. The Company's
convertible debentures (see Note 10) do not meet the criteria for classification
as common stock equivalents. Therefore, they were excluded from the calculation
of weighted average number of shares.
F-47
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 2 - Summary of Significant Accounting Policies (Continued)
Future Impact of Recently Issued Accounting Standards
The Financial Accounting Standards Board (FASB) has issued two accounting
standards which the Company will adopt during its fiscal year ending March 31,
1998.
Statement of Financial Accounting Standards (SFAS) 128, "Earnings per Share" is
effective for fiscal years ending after December 15, 1997. The Statement
requires the presentation of basic earnings per share, which is calculated using
the weighted average number of outstanding common shares, and diluted earnings
per share, which incorporates the potential dilution from all potentially
dilutive securities outstanding.
SFAS 129, "Disclosure of Information about Capital Structure" is also effective
for fiscal years ending after December 15, 1997. This Statement, which applies
to all entities, requires the disclosure of information related to an entity's
securities, liquidation preference of preferred stock, and redeemable stock.
Management has determined that the impact on the Company's consolidated
financial statements of adopting the standards discussed above would not be
material.
Reclassifications
Certain 1996 amounts have been reclassified to conform with the 1997
presentation. These reclassifications had no effect on net loss.
Note 3 - Notes Receivable
Notes receivable consists of the following:
1997 1996
-------- ---------
Receivable from individuals; secured by real
estate; due in monthly installments of principal
and interest at rates ranging from 8.25% to 8.5%
with terms of 360 months $104,674 $ --
Receivable from minority shareholders; due in
quarterly payments based on minority interests'
share of net profits 56,830 --
Receivable from an individual; secured by real
estate; due in monthly installments of principal
and interest at 11.0% through December 19, 2006 -- 50,000
Receivable from individuals; secured by mobile
homes; due in monthly installments of principal
and interest at rates ranging from 6.36% to 26.61
with terms from 12 to 240 months 264,808 174,665
F-48
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 3 - Notes Receivable (Continued)
1997 1996
-------- --------
Receivable from a company owned by a Director;
secured by developed residential lots.
Payments are in the form of lot releases
upon sales of lots $210,592 $218,010
-------- --------
Total 636,904 442,675
Less current portion 191,852 38,467
-------- --------
Long-term notes receivable 445,052 404,208
Less allowance for doubtful accounts ( 75,852) ( 9,371)
-------- --------
Net long-term notes receivable $369,200 $394,837
======== ========
Note 4 - Developed Residential Land
Developed residential land primarily consists of approximately 7 acres located
within Mayfair Acres subdivision in Richmond County, Georgia.
Note 5 - Finance Participation Receivable
The Company sold, in prior years, a portion of its mobile homes under a recourse
financing plan. In doing so, it participated in finance charges which are held
in reserve by the financing agent. Payment of this reserve is contingent on the
customers paying their obligations. The March 31, 1997 and 1996 receivable of
$18,955 and $23,055, respectively, is presented net of an allowance for doubtful
accounts of $19,500 and $15,990 at March 31, 1997 and 1996, respectively.
Note 6 - Deferred Loan Acquisition Costs
The Company incurred costs related to the private placement of its debentures
and the acquisition of bridge loans principally during 1994. These costs have
been deferred and are being amortized over the expected life of the related debt
using a method that approximates the interest method.
Note 7 - Deferred Underwriting Costs
The Company incurred certain administrative costs related to its efforts to
raise capital, which culminated in a Rule 504 offering of common stock completed
subsequent to year-end - See Note 19. These costs will be deducted from the
proceeds of the related offering.
Note 8 - Goodwill
Goodwill relates to the purchase of Augusta Housing Center, Inc. and Big Daddy's
Mobile Homes, Inc., the Company's wholly owned subsidiaries, and Evans-Lanier,
Inc., a majority owned subsidiary, and is being amortized over a period of forty
years using the straight-line method.
F-49
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 8 - Goodwill (Continued)
At March 31, 1997 and 1996, goodwill and related amortization is as follows:
1997 1996
-------- --------
Goodwill:
Augusta Housing Center, Inc. $104,632 $104,632
Big Daddy's Mobile Homes, Inc. 138,405 138,405
Evans-Lanier, Inc. 50,000 50,000
-------- --------
293,037 293,037
-------- --------
Accumulated amortization:
Augusta Housing Center, Inc. 10,463 7,847
Big Daddy's Mobile Homes, Inc. 10,380 6,920
Evans-Lanier, Inc. 2,500 938
-------- --------
23,343 15,705
-------- --------
$269,694 $277,332
======== ========
Note 9 - Other Assets
Other assets consists of the following: 1997
1996 Option to purchase 10 houses and lots in
The Timbers subdivision, acquired through
issuance of 136,000 shares of the Company's
stock. Purchase price for the 10 homes is
$200,000, with closing to occur upon the
successful completion of the public offering. $ -- $ 39,984
Investment in sales locations opened
subsequent to March 31, 1996 25,000
Other miscellaneous 14,435 3,346
-------- --------
$ 14,435 $ 68,330
======== ========
Note 10 - Subordinated Debentures
During 1994 the Company completed a private placement of 17 debentures in the
principal amount of $300,000. The debentures are due 2003, pay interest
semi-annually at 10.0%, and are convertible by the holders after two years into
shares of the Company's common stock at a conversion ratio of $1.25 per share.
Note 11 - Notes Payable
Short-term notes payable consists of the following:
1997 1996
-------- ----------
Promissory notes payable to individuals;
principal and interest at 10% due June 30,
1997. $115,000 $ --
Bridge loan from a shareholder; interest at
10%; due on demand; unsecured. 85,000 --
Payable on demand to a shareholder; interest
at 10%; unsecured. 25,000 25,000
Note payable to a shareholder; principal and
interest at 10% due May 14, 1997; unsecured. 25,000 --
F-50
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 11 - Notes Payable (Continued)
1997 1996
---------- ----------
Note payable to a bank; due September 24,
1997; interest at 11%; secured by real
estate. $ 25,085 $ --
Note payable at a bank; due September 25,
1997; interest at 9.25%; unsecured. 48,119 --
---------- ---------
Short-term notes payable $ 323,204 $ 25,000
========== =========
Long-term liabilities consists of the following:
1997 1996
---------- ---------
Promissory notes payable to individuals; principal
and interest at 10% due originally June 30,
1997. Amount was subsequently converted to
common stock. See Note 19. $ 485,000 $ --
Payable to a financial institution at rates
ranging from 10.25% to 10.75%; due in monthly
installments through March 1998; unsecured 3,478 10,776
Bridge loan from a shareholder; interest at 10%;
$50,000 due March 31, 1997; $35,000 convertible
into common stock at $2 per share, due December
27, 1997; unsecured -- 85,000
Bridge loan from a bank; principal and interest at
10.25% payable monthly beginning April 1994;
balloon payment extended to August 1997;
secured by land 146,550 173,328
Subordinated debentures payable to individuals;
interest at 10% payable semi-annually; due 2003 300,000 300,000
Mortgages to a financial institution; interest at
11%; due in monthly installments through August
1997; secured by a mobile home 117,597 8,508
Note payable to an individual; principal and
interest at 10%; due in monthly installments of
$1,062 through November 2000; unsecured 39,729 47,711
Payable to a financial institution; principal and
interest at prime plus 1.5% payable monthly
beginning May 1997 through April 2001; secured
by a vehicle 25,018 --
Payable to a financial institution; principal and
interest at prime plus 1.5% payable monthly
beginning May 1997 through April 1999; secured
by vehicles 20,036 --
Payable to a bank; principal and interest at
9.25%; due in monthly installments through
February 2001; secured by model home in Mayfair
Acres subdivision -- 16,723
--------- --------
Total 1,137,408 642,046
Less current portion 52,085 113,561
--------- --------
Long-term notes payable and
subordinated debentures $1,085,323 $528,485
========== ========
F-51
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 11 - Notes Payable (Continued)
The Company's long-term liabilities mature as follows:
Year ending March 31,
---------------------
1998 $ 52,085
1999 52,236
2000 46,338
2001 187,016
2002 14,733
2003 and thereafter 785,000
----------
$1,137,408
==========
Note 12 - Income Taxes
Income tax expense (benefit) in 1997 and 1996 is summarized as follows:
1997 1996
-------- --------
Current taxes:
Federal $ -- $ --
State -- --
---------- ----------
-- --
---------- ----------
Deferred taxes ( 33,333) ( 6,586)
---------- -----------
Total income tax benefit $( 33,333) $ ( 6,586)
========= =========
The following is a reconciliation of Federal income taxes for 1997 and 1996 at
the Federal statutory rate with Federal income taxes recorded by the Company:
1997 1996
--------- --------
Computed income taxes at the
Federal statutory rate $(136,615) $(20,585)
Losses not available for carryback 136,615 20,585
--------- --------
Income tax expense (benefit) $ -- $ --
========= ========
Deferred tax assets at March 31, 1997 and 1996 consist of the following:
1997 1996
--------- ---------
Operating loss carryforwards $ 198,663 $ 46,681
Allowance for uncollectible accounts 36,519 6,586
--------- ---------
235,182 53,267
Less valuation allowance (198,663) ( 46,681)
--------- ---------
Net deferred tax asset $ 36,519 $ 6,586
========= =========
At March 31, 1997, the Company had net operating loss carryforwards of
approximately $522,800, which will expire in various periods through 2012.
F-52
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 13 - Operating Leases
The Company leases office space, lot space and certain equipment under
short-term operating leases. Rent expense under these leases amounted to
$239,413 and $110,366 in 1997 and 1996, respectively.
Note 14 - Related Party Transactions
Related party advances consist of the following:
<TABLE>
<CAPTION>
1997 1996
---------------------- -----------------------
Receivables Payables Receivables Payables
----------- -------- ----------- --------
<S> <C> <C>
Receivable from a company owned by a Director of
the Company $ 51,134 $ -- $ 37,448 $ --
Receivable from a partnership in which the Chairman
of the Company owns a 50% interest 77,311 -- 26,728 --
Receivable from the President of the Company 4,554 -- 4,724 --
Payable to a partnership in which the Company owns a
minority interest -- -- -- 8,165
Payable to the wife of the Chairman of the Company -- 9,000 -- 24,917
Payable to the President of the Company -- 10,000 -- 20,000
--------- -------- --------- -------
Total related party advances $132,999 $ 19,000 $ 68,900 $53,082
========= ======== ========= =======
</TABLE>
During 1995 the Chairman's wife purchased the sales office at one of the
locations and leases the sales office back to the Company for $625 per month on
a month-to-month basis.
Two of the Company's sales offices are owned by the President. The Company
leases the offices on a month-to-month basis for $1,787 per month.
Note 15 - Reverse Stock Split
On March 6, 1996 the Company's Board of Directors approved a one-for-two reverse
split of the Company's outstanding common stock. The effect of the reverse split
was to decrease the number of outstanding common shares from 2,135,694 to
1,067,849 and to increase the par value from $.001 to $.002.
Note 16 - Supplemental Disclosure of Cash Flow Information
Cash paid for interest was $503,982 and $300,029 for the years ended March 31,
1997 and 1996, respectively.
During the year ended March 31, 1996, the Company recorded a receivable in the
amount of $4,724 related to the sale of a vehicle to the Company's President.
Asset additions through financing arrangements totaled $22,242 during the year
ended March 31, 1996. There were no such arrangements during 1997.
The Company recognized goodwill in the amount of $50,000 in 1996 related to its
purchase of an 80% interest in Evans-Lanier, Inc. (see Note 1).
F-53
<PAGE>
MAYFAIR HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
March 31, 1997 and 1996
Note 16 - Supplemental Disclosure of Cash Flow Information (Continued)
During the year ended March 31, 1996, the Company purchased a model home in its
Mayfair Acres subdivision from a Director in exchange for 46,147 shares of
stock. The home is carried in the Company's consolidated financial statements at
March 31, 1996 at the purchase price of $54,700. During 1997, the home was sold
to a third party.
Note 17 - Amendment of Certificate of Incorporation
On April 26, 1996 the Company amended its Certificate of Incorporation to
increase the authorized capitalization to 10,000,000 shares of common stock and
to increase the par value to $.002.
Note 18 - Equity Incentive Plan
On April 26, 1996 the Company rescinded its 1993 Stock Option Plan and approved
a new Equity Incentive Plan designed to attract and retain key employees. The
Plan, administered by a committee appointed by the Board of Directors, provides
for stock options and other stock based awards to reward employees as the
Committee deems appropriate. The Company approved the allocation of up to
1,000,000 shares of common stock to be used in the Plan. No shares of stock were
used in the 1993 Stock Option Plan.
Note 19 - Subsequent Events
Subsequent to March 31, 1997 the Company converted $485,000 of its $600,000
short-term promissory notes to common stock at a rate of $2 per share. The
remaining $115,000 plus accrued interest was repaid by the Company.
Subsequent to March 31, 1996 the Company completed the sale of 200,000 Units of
$5 per Unit. Each Unit consisted of one share of common stock and one Common
Stock Purchase Warrant, each to purchase one share of the Company's common stock
at $6.50 per share. The warrants are exercisable until December 31, 2001.
Note 20 - Retained earnings and minority interest
In previously issued financial statements, dividends of $111,499 paid to
minority interest shareholders during the year ended March 31, 1997 were
incorrectly shown as a reduction of retained earnings. In the accompanying
financial statements, retained earnings has been restated to exclude the
minority interest dividends, and the dividends have been charged to the
liability account "Minority interest in net assets of consolidated subsidiary."
F-54
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Amendment Number 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
APPLE HOMES CORPORATION
By: /s/ E. Samuel Evans
-------------------------------
E. Samuel Evans, President
Date: September 10, 1999
-----------------------------
(25)
Exhibit 2
STATE OF GEORGIA
COUNTY OF RICHMOND
AGREEMENT
This agreement, made and entered into this 1st day of January, 1999, by and
between Apple Homes, Inc., a Delaware Corporation, having it's principal place
of business in Richmond County, Georgia, herein after referred to as "Apple",
and Robert H. Steed, Jr., a resident of Richmond County, Georgia, hereinafter
referred to as "Steed".
WITNESSETH: Whereas, Robert H. Steed, Jr. is the registered owner of one hundred
percent (100%) of the issued and outstanding stock of Mobile Air Systems, Inc.,
a Georgia Corporation, and,
WHEREAS, Apple Homes Corporation agrees to buy and Steed agrees to sell 100% of
said stock for the following purchase price: Thirty Thousand Dollars ($30,000)
and 130,000 shares of "Restricted" stock in Apple Homes Corporation, said
lettered stock cannot be sold in the public market for a period of 12 months,
said 130,000 shares being free traded on February 26, 2000.
IN WITNESS WHEREOF, the parties hereto have set their hands and affixed their
seal, on this, the 1ST day of January, 1999.
/s/Robert H. Steed, Jr. /s/Danny Taylor
- - ----------------------- ---------------
Robert H. Steed, Jr. Witness
/s/E. Samuel Evans /s/Cynthia Holley
- - ------------------ -----------------
Apple Homes, Inc. Witness
E. Samuel Evans, President
INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE
N2095 ***Number***
CUSIP NO. 037845 10 4
Apple Homes Corporation
10,000,000 AUTHORIZED SHARES $.002 PAR VALUE NON-ASSESSABLE
THIS CERTIFIES THAT [NAME]
IS THE RECORD HOLDER OF ***NUMBER***
Shares of APPLE HOMES CORPORATION Common Stock Transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned
by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated: 03/26/1998 Countersigned and Registered
OTC Corporate Transfer Service Co.
Nassau County, N.Y.
By: /s/ Signature on file
Transfer Agent and Registrar -
Authorized Signature
/s/ Charles M. O'Rourk [SEAL] /s/ E. Samuel Evans
- - ---------------------- ------ -------------------
Charles M. O'Rourk E. Samuel Evans
Secretary President
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties (Cust ) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________________________
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________
________________________________________________________________________________
(Please print or typewrite name and address, including zip code, of Assignee)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint____________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated:_______________________
NOTICE: SIGNATURE MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, BROKER OR ANY
OTHER ELIGIBLE GUARANTOR INSTITUTION THAT IS AUTHORIZED TO DO SO UNDER
THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (STAMP) UNDER RULES
PROMULGATED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION.
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of in the absence of (i) an
effective registration statement for such securities under said act or (ii) an
opinion of company counsel that such registration is not required.
These securities have been issued or sold in reliance on paragraph 13 of Code
Section 10-5-9 of the Georgia Securities Act of 1973, and may not be sold or
transferred except in a transaction which is exempt under such Act or pursuant
to an effective registration under such Act.
APPLE HOMES CORPORATION
CLASS A WARRANT
WARRANT NO. NUMBER OF WARRANTS
WA 2054 ***[NUMBER]***
CUSIP NO. 037845 11 2 CLASS A WARRANT
THIS IS TO CERTIFY that [NAME]
IS THE OWNER OF ***[NUMBER]*** APPLE HOMES CORPORATION CLASS A WARRANTS
Each Class A Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions of the Certificate and of the Warrant
Agreement between the Company and OTC Corporate Transfer Service Co., dated
October 15, 1996 (the Warrant Agreement), at any time on or after the
Commencement Date and prior to the Expiration Date (as those terms are defined
herein), one share of Common Stock, $.002 par value per share, of the Company at
the initial exercise price (the Class A Warrant Price) of $6.50 per share
(subject to adjustment as provided in the Warrant Agreement), upon presentation
to the Warrant Agent of this Certificate with the Subscription Form on the
reverse side hereof properly filled out and signed by the Registered Holder,
accompanied by payment of the Class A Warrant Price for each Warrant exercised.
This Certificate and the Class A Warrants represented hereby are issued pursuant
to the terms and conditions of the Warrant Agreement, which is incorporated
herein by reference. The Warrant Agreement sets forth, among other things, the
terms and conditions under which the Class A Warrant may be called or redeemed,
and warrant price and the number of shares issuable upon exercise of the
Warrants represented hereby may be adjusted. A copy of the Warrant Agreement may
be obtained by written request to the Company at 3633 Wheeler Road, Suite 140,
Augusta, Georgia 30909 or the Warrant Agent at 9 Field Avenue, Hicksville, New
York 11801 (mailing address P.O. Box 501, Hicksville, New York 11802).
The Class A Warrants may be exercised commencing on the day the Registration
Statement filed by the Company under the Securities Act of 1933, as amended,
covering shares of the Company's common stock to be sold in its initial public
offering becomes effective or December 31, 1996, whichever is sooner (the
Commencement Date). The right to exercise the Class A Warrants shall expire at
5:00 p.m. on December 31, 2001 or such later date as the Company may determine
(the Expiration Date).
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by
the facsimile signatures of two of its officers, thereunto duly authorized, and
by the impression of its facsimile corporate seal hereon.
DATED: 07/16/1997
COUNTERSIGNED AND REGISTERED
OTC CORPORATE TRANSFER SERVICE, CO.
/s/ J. Barnett Transfer Agent
and Registrar
Authorized Signature
/s/ Charles M. O'Rourk [SEAL] /s/ E. Samuel Evans
- - ---------------------- ------ ---------------------
Charles M. O'Rourk E. Samuel Evans
Secretary President
<PAGE>
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of in the absence of (i) an
effective registration statement for such securities under said act or (ii) an
opinion of company counsel that such registration is not required.
These securities have been issued or sold in reliance on paragraph 13 of Code
Section 10-5-9 of the Georgia Securities Act of 1973, and may not be sold or
transferred except in a transaction which is exempt under such Act or Pursuant
to an effective registration under such Act.
APPLE HOMES CORPORATION
CLASS A WARRANT
SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise__________________Class A
Warrants evidenced by this Certificate to purchase the shares of Common Stock
issuable upon exercise thereof and herewith encloses payment for such shares in
the full amount of Class A Warrant Price, and requests that a new Certificate
evidencing any Class A Warrants not exercised hereby be registered in the name
of, and delivered to, the Registered Holder at the address stated below.
Dated:__________________________
Please type or print
Name(s) of Registered Holder(s)_________________________________________________
Address of registered Holder(s)_________________________________________________
Signature(s) of Registered Holder(s)____________________________________________
Signature Guarantee:
The above signature(s) must correspond exactly with the name(s) written upon the
face of this Certificate. If the Warrants are held of record by two or more
owners, all owners must sign.
ASSIGNMENT FORM
The undersigned hereby assigns and transfers unto:
Please type or print
Name:___________________________________________________________________________
Address:________________________________________________________________________
E.I. No.:_______________________________________________________________________
the Class A Warrants evidenced by this Certificate and hereby irrecocably
constitutes and appoints________________________________________________________
as his attorney to transfer said Warrants on the books of the Company, with full
power of substitution in the premises.
Dated:_______________________________
Signature(s) of Registered Holder(s)____________________________________________
Signature Guarantee:
The above signature(s) must correspond exactly with the name(s) written upon the
face of this Certificate. If the Warrants are held of record by two or more
owners, all owners must sign.
Exhibit 10.3.1
TRANSAMERICA Transamerica Commercial Finance Corporation
DISTRIBUTION FINANCE 11121 Carmel Commons Blvd.
Charlotte, NC 28226
Augusta Housing Center, Inc.
Big Daddy's Mobile Homes, Inc.
Evans-Lanier, Inc.
Apple Homes, Inc.
(All of the foregoing are herein referred to collectively, as "Dealer")
- - -----------------------------------------------------------------------
PROGRAM LETTER - CHARLOTTE
(Manufactured Housing)
Reference is made to an inventory Security Agreement between Dealer and
Transamerica Commercial Finance Corporation ("TCFC") as from time to time
amended (the "ISA"). All terms defined in the ISA shall have the same meaning
herein as in the ISA except that any reference to "Prime Rate" shall mean for
any calendar month the highest of the rates set out in the definition of Prime
Rate in the ISA, or 7.0% per year. THIS PROGRAM LETTER APPLIES TO APPROVALS AND
ADVANCES ISSUED BY TCFC'S RECREATIONAL PRODUCTS DIVISION.
1. Credit Limit: Up to $1.000.000.00 in Advances and Approvals at any one time.
Any and all Advances and Approvals are in TCFC's sole discretion.
2. Place of Payment: Dealer shall send all payments to TCFC at Post Office Box
74666, Chicago, IL 60675-4666.
3. Financing Program: Pay as sold,
4. Principal Payments and Charges.
(a) Principal Payment. In the ISA, Dealer agreed to pay each Advance made
to finance the purchase of any item of inventory upon the sale of such item.
For new Inventory: Dealer agrees to pay curtailments equal to 2% of the
initial amount of each Advance for new inventory on or before the fifth billing
through the fifteenth billings after the Start Date. Dealer also agrees to pay
curtailments equal to 5% of the original invoice beginning with the sixteenth
billing and continuing every billing until the inventory is liquidated, except
that, with respect to any Advances made under a manufacturer-sponsored program,
curtailments shall be paid in accordance with such manufacturer's sponsored
programs
<PAGE>
For used Inventory: Dealer agrees to pay curtailments equal to 30% of the
initial amount of each Advance on or before the end of the first and each
subsequent calendar month. The Due in Full Date with respect to an Advance for
used inventory of manufactured housing is 12 months after the Start Date of such
Advance.
(b) Interest. Until changed as provided in the ISA and in addition to the
additional interest provided for below, interest shall accrue on the unpaid
balance of each Advance from its Start Date at a rate per year equal to the
Prime Rate plus 0.95 % (the "Dealer Standard Rate") until paid in full except
that, with respect to any Advances made under a manufacturer-sponsored program,
interest shall accrue from the Start Date on the unpaid balance of such Advance
until paid in full at the rate stated in such manufacturer's sponsored program
for the duration of the manufacturer-sponsored program and thereafter at the
Dealer Standard Rate.
(e) Additional Interest. In addition to the interest provided for
above, Dealer shall pay additional interest on the unpaid balance of each
Advance: (i) for new inventory, beginning on the 366th day after the Start Date
(but no earlier than the expiration of any manufacturer-sponsored program with
respect thereto) and through the 540th day after the Start Date at 2% per year,
and beginning on the 541st day after the Start Date at 4% per year; or (ii) for
used inventory, at 1% per year for the first 180 days after the Start Date and
at 4% per year thereafter.
(d) Administrative and Dealer Handling Fees. In addition to interest,
Dealer shall pay (i) with respect to each unit of new or used inventory for
which there is an outstanding Advance at any time during a month, a monthly
service charge equal to: (specify one) (XX) $ 1 0.00 ( ) _____% of the highest
amount of Advances outstanding at any time during such month, plus (ii) with
respect to each unit of used inventory financed by an Advance, a one-time charge
equal to: (specify one) ( ) $ 0.00 or ( ) 0.00 % of the average Advance made to
finance used inventory outstanding during the billing period in which such
Advance was made. Dealer agrees that such charges are a reasonable estimate for
purposes of reimbursing TCFC for actual costs incurred which are incidental to
servicing Dealer's account, such as costs for documentation, perfection of
Liens, billing, handling, credit review, processing payments, and floor
inspections. Dealer shall also pay any dealer handling fees imposed under any
manufacture sponsored program. DEALER ACKNOWLEDGES THAT IT IS FAMILIAR WITH THE
TERMS OF ALL RELEVANT MANUFACTURER-SPONSORED PROGRAMS.
NOTWITHSTANDING THE FOREGOING TERMS IN THIS PROGRAM LETTER, DEALER ACKNOWLEDGES
AND AGREES THAT THE RATES OF INTEREST AND REPAYMENT TERMS APPLICABLE TO EACH
ADVANCE MADE TO OR ON BEHALF OF DEALER BY TCFC SHALL BE GOVERNED BY THE
TRANSACTION STATEMENT SENT BY TCFC TO DEALER RELATED TO THE ADVANCE, UNTIL SUCH
ADVANCE IS PAID IN FULL TO TCFC.
5. Effectiveness. This Program Letter shall not become a contract unless
signed by Dealer and accepted by TCFC in Illinois. Dealer waives notice of such
acceptance.
Very truly yours,
TRANSAMERICA COMMERCIAL
FINANCE CORPORATION
<PAGE>
DEALER
Agreed as of May 13, 1998:
Accepted in Illinois:
TRANSAMERICA COMMERCIAL
FINANCE CORPORATION
Augusta Housing Center, Inc. By: /s/ Richard Strickler
- - ---------------------------- -------------------------
By: /s/ E. Samuel Evans Title:
- - ----------------------- -------------------------
Print Name: E. Samuel Evans
Title: President
Big Daddy's Mobile Homes, Inc.
- - ------------------------------
By: /s/ E. Samuel Evans
- - -----------------------
Print Name: E. Samuel Evans
Title: President
Evans-Lanier, Inc.
- - ------------------
By: /s/ Danny Taylor
- - --------------------
Print Name: Danny Taylor
Title: President
Apple Homes, Inc.
- - -----------------
By: /s/ E. Samuel Evans
- - -----------------------
Print Name: E. Samuel Evans
Title: President
Exhibit 10.3.2a
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
<PAGE>
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
<PAGE>
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any "free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
<PAGE>
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
<PAGE>
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
1819 Gordon Highway
Augusta, GA 30909
Location #2
1878 Gordon hwy
Augusta, GA 30904
Location #3
Location #4
Effective as of the 23 day of July 1998.
DEALER: Big Daddy's Mobile Homes, Inc.
--------------------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron
- - -----------------
Secretary Name: E. Samuel Evans
(SEAL)
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC.
Name:
By:
Title:
Title:
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF Georgia
COUNTY OF Richmond
On this the 23 day of July____, 1998 before me personally appeared E.
Samuel Evans who acknowledged himself to be the President of Big Daddy's Mobile
Homes, Inc., a corporation, and that he, being authorized by the Board of
Directors, voluntarily executed the foregoing Inventory Security Agreement and
Power of Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/ Frances M. Flake
--------------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 23 day of July, 1998, by and between Bombardier Capital Inc.
("BCI") and Big Daddy's Mobile Homes, Inc. ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 07-23-98 (the "ISA") under and pursuant to
which BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Big Daddy's Mobile Homes, Inc.
By: By: /s/ E. Samuel Evans
- - -------------------- -----------------------
Title: Title: President
By:
Title:
<PAGE>
Bombardier Capital Inc. MANUFACTURED HOUSING
ADDENDUM TO INVENTORY
SECURITY AGREEMENT AND
POWER OF ATTORNEY
This Manufactured Housing Addendum (this "Addendum" is made as of the date
stated below by and between Big Daddy's Mobile Homes, Inc. having its principal
place of business at 1819 Gordon Highway Augusta, GA 30909 ("Debtor") and
BOMBARDIER CAPITAL INC., having an office at Colchester, Vermont ("Secured
Party"). The parties intend that this addendum be an addendum to that certain
Inventory Security Agreement and Power of Attorney (the "ISA") either heretofore
or contemporaneously herewith signed by the parties hereto in consideration for
which Secured Party from time to time may grant extensions of credit to or on
behalf of Debtor so that Debtor may acquire Debtor's "Inventory" as that term is
defined in the ISA.
1. All capitalized terms not otherwise defined herein shall have the same
meanings as ascribed to those terms in the ISA. Except as amended by this
Addendum, the ISA remains unchanged and in full force and effect between
the parties in accordance with its terms. The ISA and this Addendum
together with any other amendments thereto constitute a singular agreement
between the parties.
2. Other than as part of a delivery and set-up service to a purchaser buying
Inventory in the ordinary course of Debtor's business, Debtor agrees never
to affix any Inventory to any real property in such a manner as o become a
"fixture" without first notifying Secured Party and obtaining Secured
Party's express written permission to do so.
3. Debtor agrees to notify Secured Party in writing of the exact address
(including a complete e legal description) of any real estate upon which
Debtor places any Inventory, regardless of the manner of affixation. Debtor
further agrees to notify in writing (with a copy to Secured Party) any
owner or encumbrancer of real estate upon which debtor places any Inventory
of the existence of Secured Party's security interest in Debtor's
Inventory. In the event Debtor, or any legal entity all or a majority of
which is owned or controlled by Debtor, is the owner or encumbrancer of
such real estate, Debtor, for him-, her-, or itself, and/or on behalf of
such other entity and, in the capacity of owner or encumbrancer, hereby
consents to Secured Party's security interest in such Inventory and
disclaims any interest in such Inventory as fixtures.
4. Debtor agrees to execute and deliver to Secured Party at any time or from
time to time any instrument, document, financing statement, continuation
statement, assignment, manufacturer's statement or certificate of origin or
of title and any certificate of title issued by any state or political
subdivision evidencing that title to a particular item of Inventory is held
in the name of Debtor (collectively, "Title Documents"), or any other
writing which secured party may deem necessary or desirable to perfect
secured Party's security interest in the Inventory, and t pay all
recordation costs and taxes incident to filing or recording any such
instrument, document, statement, assignment, lien on title documents, or
other such writing.
5. Debtor, for its own convenience, hereby requests, authorizes and empowers
Secured Party, or any employee, agent or representative of Secured Party's
designation, for and on behalf and in the name of Debtor, and as Debtor's
lawful attorney-in-fact, to execute, deliver and record any financing
statements, continuation statements and the like giving notice of Inventory
floorplan financing done or to be done under this Addendum and the ISA.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum to be duly signed
on FEBRUARY 11, 1998.
ACCEPTED BY: (Seal)
BOMBARDIER CAPITAL INC. Augusta Housing Center, Inc.
- - ----------------------- ----------------------------
By: By: /s/ E. Samuel Evans
- - --------------------- -----------------------
(Signature) (and Title if Debtor
is a corporation)
Title: E. Samuel Evans - President
Attest: Witness: /s/ Brenda Ferron
- - --------------------- --------------------------
(Signature)(Secretary if Debtor
is a corporation)
(If a corporation, Debtor's corporate seal must be affixed, and its Secretary
must sign on line marked "Witness")
ACKNOWLEDGEMENT FOR INDIVIDUAL DEBTOR
STATE OF ________________________: CITY/COUNTY OF ___________________:TO WIT:
I HEREBY CERTIFY that on this ________ day of _____________, 19_____,
before me, the subscriber, a Notary Public in and for the State and City/County
aforesaid, personally appeared ____________________________________ known to me
or satisfactorily proven to be the person executing the foregoing Addendum as
Debtor, who acknowledged that (s)he has executed the foregoing Addendum in
his/her individual capacity and that the same is he/her act and deed.
My Commission Expires on_______________ ____________________________________
Notary Public
ACKNOWLEDGEMENT FOR PARTNERSHIP OR CORPORATE DEBTOR
STATE OF GEORGIA: CITY/COUNTY OF RICHMOND: TO WIT:
I HEREBY CERTIFY that on this 11th day of February, 1997, before me, the
subscriber, a Notary Public in and for the State and city/County aforesaid,
personally appeared E. Samuel Evans known to me or satisfactorily proven to be
the person executing the foregoing Addendum on behalf of the Debtor, who
acknowledged that (s)he is a President of the Debtor, ( ) a partnership (X) a
corporation, and that, as such President, (s)he is duly authorized to execute
and has executed the foregoing Addendum on behalf of the debtor for the purpose
therein set forth by signing the name of the Debtor and that the same is the at
and deed of the Debtor.
My commission Expires on June 10, 2000. /s/Frances M. Flake
- - --------------------------------------- -------------------
Notary Public
<PAGE>
Exhibit 10.3.2aa
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
inventory is owned by Dealer or in which Dealer has an interest, the
<PAGE>
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any 'free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
<PAGE>
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
<PAGE>
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
1919 Gordon Highway
Augusta, GA 30909
Location #2
Location #3
Location #4
Effective as of the 6 day of February 19 98
DEALER: Augusta Housing Center, Inc.
------------------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron (SEAL)
- - ----------------- ------
Secretary Name: E. Samuel Evans
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC.
Name:
By /s/ S. Harris
- - ----------------
Title:
Title: Credit Manager
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
--------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF GEORGIA
COUNTY OF RICHMOND
On this the 4 day of January, 1995 before me personally appeared E. Samuel
Evans who acknowledged himself to be the President of Augusta Housing Center, a
corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/Sadie G. Peek
----------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 4 day of January, 1995, by and between Bombardier Capital Inc.
("BCI") and Augusta Housing Center, Inc. ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 1-4-95 (the "ISA") under and pursuant to which
BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Apple Homes Corporation
By: By: /s/ E. Samuel Evans
- - --------------------- -----------------------
Title:Credit Mgr. Title: President
By:
Title:
<PAGE>
Exhibit 10.3.2bb
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
<PAGE>
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any "free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
<PAGE>
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
<PAGE>
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
128 Hadden Pond Road
Waynesboro, GA 30830
Location #2
Location #3
Location #4
Effective as of the 23 day of JULY 1998
DEALER: Apple Homes. Inc.
-------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron (SEAL)
- - ----------------- ------
Secretary Name: E. Samuel Evans
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC.
Name:
By /s/ S. Harris
- - ----------------
Title:
Title: Credit Manager
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
-------------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF GEORGIA
COUNTY OF BULLOCH
On this the 6 day of February, 1998 before me personally appeared E. Samuel
Evans who acknowledged himself to be the President of Apple Homes Corporation, a
corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/Frances M. Flake
-------------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 6 day of February, 1998, by and between Bombardier Capital
Inc. ("BCI") and Apple Homes Corporation ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 2-6-98 (the "ISA") under and pursuant to which
BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Apple Homes Corporation
By: By: /s/ E. Samuel Evans
- - ---------------------- -----------------------
Title:Credit Mgr. Title: President
By:
<PAGE>
Bombardier Capital Inc. MANUFACTURED HOUSING
ADDENDUM TO INVENTORY
SECURITY AGREEMENT AND
POWER OF ATTORNEY
This Manufactured Housing Addendum (this "Addendum" is made as of the date
stated below by and between Apple Homes, Inc. having its principal place of
business at 128 Hadden Pond Rd Waynesboro, GA 30830 ("Debtor") and BOMBARDIER
CAPITAL INC., having an office at Colchester, Vermont ("Secured Party"). The
parties intend that this addendum be an addendum to that certain Inventory
Security Agreement and Power of Attorney (the "ISA") either heretofore or
contemporaneously herewith signed by the parties hereto in consideration for
which Secured Party from time to time may grant extensions of credit to or on
behalf of Debtor so that Debtor may acquire Debtor's "Inventory" as that term is
defined in the ISA.
1. All capitalized terms not otherwise defined herein shall have the same
meanings as ascribed to those terms in the ISA. Except as amended by this
Addendum, the ISA remains unchanged and in full force and effect between
the parties in accordance with its terms. The ISA and this Addendum
together with any other amendments thereto constitute a singular agreement
between the parties.
2. Other than as part of a delivery and set-up service to a purchaser buying
Inventory in the ordinary course of Debtor's business, Debtor agrees never
to affix any Inventory to any real property in such a manner as o become a
"fixture" without first notifying Secured Party and obtaining Secured
Party's express written permission to do so.
3. Debtor agrees to notify Secured Party in writing of the exact address
(including a complete e legal description) of any real estate upon which
Debtor places any Inventory, regardless of the manner of affixation. Debtor
further agrees to notify in writing (with a copy to Secured Party) any
owner or encumbrances of real estate upon which debtor places any Inventory
of the existence of Secured Party's security interest in Debtor's
Inventory. In the event Debtor, or any legal entity all or a majority of
which is owned or controlled by Debtor, is the owner or encumbrancer of
such real estate, Debtor, for him-, her-, or itself, and/or on behalf of
such other entity and, in the capacity of owner or encumbrancer, hereby
consents to Secured Party's security interest in such Inventory and
disclaims any interest in such Inventory as fixtures.
4. Debtor agrees to execute and deliver to Secured Party at any time or from
time to time any instrument, document, financing statement, continuation
statement, assignment, manufacturer's statement or certificate of origin or
of title and any certificate of title issued by any state or political
subdivision evidencing that title to a particular item of Inventory is held
in the name of Debtor (collectively, "Title Documents"), or any other
writing which secured party may deem necessary or desirable to perfect
secured Party's security interest in the Inventory, and to pay all
recordation costs and taxes incident to filing or of recording any such
instrument, document, statement, assignment, lien on title documents, or
other such writing.
5. Debtor, for its own convenience, hereby requests, authorizes and empowers
Secured Party, or any employee, agent or representative of Secured Party's
designation, for and on behalf and in the name of Debtor, and as Debtor's
lawful attorney-in-fact, to execute, deliver and record any financing
statements, continuation statements and the like giving notice of Inventory
floorplan financing done or to be done under this Addendum and the ISA.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum to be duly signed
on JULY 23, 1998.
ACCEPTED BY: (Seal)
BOMBARDIER CAPITAL INC. Apple Homes Homes, Inc.
By: By: /s/ E. Samuel Evans
- - ------------------------ -----------------------
(Signature) (and Title if
Debtor is a corporation)
Title: E. Samuel Evans - President
Attest: Witness: /s/ Brenda Ferron
- - ------------------------ --------------------------
(Signature)(Secretary if Debtor
is a corporation)
(If a corporation, Debtor's corporate seal must be affixed, and its Secretary
must sign on line marked "Witness")
ACKNOWLEDGEMENT FOR INDIVIDUAL DEBTOR
STATE OF ________________________: CITY/COUNTY OF ___________________:TO WIT:
I HEREBY CERTIFY that on this ________ day of _____________, 19_____,
before me, the subscriber, a Notary Public in and for the State and City/County
aforesaid, personally appeared ____________________________________ known to me
or satisfactorily proven to be the person executing the foregoing Addendum as
Debtor, who acknowledged that (s)he has executed the foregoing Addendum in
his/her individual capacity and that the same is he/her act and deed.
My Commission Expires on_______________ __________________________________
Notary Public
ACKNOWLEDGEMENT FOR PARTNERSHIP OR CORPORATE DEBTOR
STATE OF GEORGIA: CITY/COUNTY OF RICHMOND: TO WIT:
I HEREBY CERTIFY that on this 23rd day of July, 1998, before me, the
subscriber, a Notary Public in and for the State and city/County aforesaid,
personally appeared E. Samuel Evans known to me or satisfactorily proven to be
the person executing the foregoing Addendum on behalf of the Debtor, who
acknowledged that (s)he is a President of the Debtor, ( ) a partnership (X) a
corporation, and that , as such President, (s)he is duly authorized to execute
and has executed the foregoing Addendum on behalf of the debtor for the purpose
therein set forth by signing the name of the Debtor and that the same is the act
and deed of the Debtor.
My commission Expires on June 10, 2000. /s/Frances M. Flake
- - --------------------------------------- -------------------
Notary Public
<PAGE>
Exhibit 10.3.2cc
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
<PAGE>
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any 'free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
<PAGE>
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
<PAGE>
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
108 Jimps Road
Statesboro, GA
Location #2
Location #3
Location #4
Effective as of the 6 day of February 1998
DEALER: Apple Homes Corp.
-------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron (SEAL)
- - ----------------- ------
Secretary Name: E. Samuel Evans
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC. --------------------------
Name:
By /s/ S. Harris
- - ----------------
Title:
Title: Credit Manager
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
-----------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF GEORGIA
COUNTY OF BULLOCH
On this the 6 day of February, 1998 before me personally appeared E. Samuel
Evans who acknowledged himself to be the President of Apple Homes Corporation, a
corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/Frances M. Flake
-------------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 6 day of February, 1998, by and between Bombardier Capital
Inc. ("BCI") and Apple Homes Corporation ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 2-6-98 (the "ISA") under and pursuant to which
BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Apple Homes Corporation
By: By: /s/ E. Samuel Evans
- - ----------------------- -----------------------
Title:Credit Mgr. Title: President
By:
Title:
<PAGE>
Bombardier Capital Inc. MANUFACTURED HOUSING
ADDENDUM TO INVENTORY
SECURITY AGREEMENT AND
POWER OF ATTORNEY
This Manufactured Housing Addendum (this "Addendum" is made as of the date
stated below by and between Apple Homes Corp. having its principal place of
business at 108 Jimps Rd., Statesboro, GA ("Debtor") and BOMBARDIER CAPITAL
INC., having an office at Colchester, Vermont ("Secured Party"). The parties
intend that this addendum be an addendum to that certain Inventory Security
Agreement and Power of Attorney (the "ISA") either heretofore or
contemporaneously herewith signed by the parties hereto in consideration for
which Secured Party from time to time may grant extensions of credit to or on
behalf of Debtor so that Debtor may acquire Debtor's "Inventory" as that term is
defined in the ISA.
1. All capitalized terms not otherwise defined herein shall have the same
meanings as ascribed to those terms in the ISA. Except as amended by this
Addendum, the ISA remains unchanged and in full force and effect between
the parties in accordance with its terms. The ISA and this Addendum
together with any other amendments thereto constitute a singular agreement
between the parties.
2. Other than as part of a delivery and set-up service to a purchaser buying
Inventory in the ordinary course of Debtor's business, Debtor agrees never
to affix any Inventory to any real property in such a manner as o become a
"fixture" without first notifying Secured Party and obtaining Secured
Party's express written permission to do so.
3. Debtor agrees to notify Secured Party in writing of the exact address
(including a complete e legal description) of any real estate upon which
Debtor places any Inventory, regardless of the manner of affixation. Debtor
further agrees to notify in writing (with a copy to Secured Party) any
owner or encumbrances of real estate upon which debtor places any Inventory
of the existence of Secured Party's security interest in Debtor's
Inventory. In the event Debtor, or any legal entity all or a majority of
which is owned or controlled by Debtor, is the owner or encumbrancer of
such real estate, Debtor, for him-, her-, or itself, and/or on behalf of
such other entity and, in the capacity of owner or encumbrancer, hereby
consents to Secured Party's security interest in such Inventory and
disclaims any interest in such Inventory as fixtures.
4. Debtor agrees to execute and deliver to Secured Party at any time or from
time to time any instrument, document, financing statement, continuation
statement, assignment, manufacturer's statement or certificate of origin or
of title and any certificate of title issued by any state or political
subdivision evidencing that title to a particular item of Inventory is held
in the name of Debtor (collectively, "Title Documents"), or any other
writing which secured party may deem necessary or desirable to perfect
secured Party's security interest in the Inventory, and to pay all
recordation costs and taxes incident to filing or of recording any such
instrument, document, statement, assignment, lien on title documents, or
other such writing.
5. Debtor, for its own convenience, hereby requests, authorizes and empowers
Secured Party, or any employee, agent or representative of Secured Party's
designation, for and on behalf and in the name of Debtor, and as Debtor's
lawful attorney-in-fact, to execute, deliver and record any financing
statements, continuation statements and the like giving notice of Inventory
floorplan financing done or to be done under this Addendum and the ISA.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum to be duly signed
on JULY 23, 1998.
ACCEPTED BY: (Seal)
BOMBARDIER CAPITAL INC. Evans-Lanier, Inc.
By: By: /s/ E. Samuel Evans
- - --------------------------- -----------------------
(Signature) (and Title if Debtor
is a corporation)
Title: E. Samuel Evans - President
Attest: Witness: /s/ Brenda Ferron
- - --------------------------- --------------------------
(Signature)(Secretary if Debtor
is a corporation)
(If a corporation, Debtor's corporate seal must be affixed, and its Secretary
must sign on line marked "Witness")
ACKNOWLEDGEMENT FOR INDIVIDUAL DEBTOR
STATE OF ________________________: CITY/COUNTY OF ___________________:TO WIT:
I HEREBY CERTIFY that on this ________ day of _____________, 19_____,
before me, the subscriber, a Notary Public in and for the State and City/County
aforesaid, personally appeared ____________________________________ known to me
or satisfactorily proven to be the person executing the foregoing Addendum as
Debtor, who acknowledged that (s)he has executed the foregoing Addendum in
his/her individual capacity and that the same is he/her act and deed.
My Commission Expires on_______________ ________________________________
Notary Public
ACKNOWLEDGEMENT FOR PARTNERSHIP OR CORPORATE DEBTOR
STATE OF GEORGIA: CITY/COUNTY OF BULLOCK: TO WIT:
I HEREBY CERTIFY that on this 23rd day of July, 1998, before me, the
subscriber, a Notary Public in and for the State and city/County aforesaid,
personally appeared E. Samuel Evans known to me or satisfactorily proven to be
the person executing the foregoing Addendum on behalf of the Debtor, who
acknowledged that (s)he is a President of the Debtor, ( ) a partnership (X) a
corporation, and that , as such President, (s)he is duly authorized to execute
and has executed the foregoing Addendum on behalf of the debtor for the purpose
therein set forth by signing the name of the Debtor and that the same is the act
and deed of the Debtor.
My commission Expires on June 10, 2000. /s/Frances M. Flake
- - --------------------------------------- -------------------
Notary Public
<PAGE>
Exhibit 10.3.2dd
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
<PAGE>
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any 'free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
<PAGE>
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
<PAGE>
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
452 East Hill Street
Thomson, GA 30824
Location #2
17536 US Highway 1
Wrens, GA 30833
Location #3
Location #4
Effective as of the 6 day of February 1998
DEALER: Evans-Lanier, Inc..
---------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron (SEAL)
- - ----------------- ------
Secretary Name: E. Samuel Evans
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC.
Name:
By /s/ S. Harris
- - ----------------
Title:
Title: Credit Manager
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
-------------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF GEORGIA
COUNTY OF McDuffie
On this the 7 day of August, 1996 before me personally appeared E. Samuel
Evans who acknowledged himself to be the President of Evans-Lanier, Inc., a
corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/Frances M. Flake
-------------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 7 day of August, 1996, by and between Bombardier Capital Inc.
("BCI") and Evans-Lanier, Inc. ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 8-7-96 (the "ISA") under and pursuant to which
BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Evans-Lanier, Inc.
By: By: /s/ E. Samuel Evans
- - ------------------------- -----------------------
Title:Credit Mgr. Title: President
<PAGE>
Bombardier Capital Inc. MANUFACTURED HOUSING
ADDENDUM TO INVENTORY
SECURITY AGREEMENT AND
POWER OF ATTORNEY
This Manufactured Housing Addendum (this "Addendum" is made as of the date
stated below by and between Evan-Lanier, Inc.. having its principal place of
business at 452 E Hill Street, Thomson, GA 30824 ("Debtor") and BOMBARDIER
CAPITAL INC., having an office at Colchester, Vermont ("Secured Party"). The
parties intend that this addendum be an addendum to that certain Inventory
Security Agreement and Power of Attorney (the "ISA") either heretofore or
contemporaneously herewith signed by the parties hereto in consideration for
which Secured Party from time to time may grant extensions of credit to or on
behalf of Debtor so that Debtor may acquire Debtor's "Inventory" as that term is
defined in the ISA.
1. All capitalized terms not otherwise defined herein shall have the same
meanings as ascribed to those terms in the ISA. Except as amended by this
Addendum, the ISA remains unchanged and in full force and effect between
the parties in accordance with its terms. The ISA and this Addendum
together with any other amendments thereto constitute a singular agreement
between the parties.
2. Other than as part of a delivery and set-up service to a purchaser buying
Inventory in the ordinary course of Debtor's business, Debtor agrees never
to affix any Inventory to any real property in such a manner as o become a
"fixture" without first notifying Secured Party and obtaining Secured
Party's express written permission to do so.
3. Debtor agrees to notify Secured Party in writing of the exact address
(including a complete e legal description) of any real estate upon which
Debtor places any Inventory, regardless of the manner of affixation. Debtor
further agrees to notify in writing (with a copy to Secured Party) any
owner or encumbrances of real estate upon which debtor places any Inventory
of the existence of Secured Party's security interest in Debtor's
Inventory. In the event Debtor, or any legal entity all or a majority of
which is owned or controlled by Debtor, is the owner or encumbrancer of
such real estate, Debtor, for him-, her-, or itself, and/or on behalf of
such other entity and, in the capacity of owner or encumbrancer, hereby
consents to Secured Party's security interest in such Inventory and
disclaims any interest in such Inventory as fixtures.
4. Debtor agrees to execute and deliver to Secured Party at any time or from
time to time any instrument, document, financing statement, continuation
statement, assignment, manufacturer's statement or certificate of origin or
of title and any certificate of title issued by any state or political
subdivision evidencing that title to a particular item of Inventory is held
in the name of Debtor (collectively, "Title Documents"), or any other
writing which secured party may deem necessary or desirable to perfect
secured Party's security interest in the Inventory, and to pay all
recordation costs and taxes incident to filing or of recording any such
instrument, document, statement, assignment, lien on title documents, or
other such writing.
5. Debtor, for its own convenience, hereby requests, authorizes and empowers
Secured Party, or any employee, agent or representative of Secured Party's
designation, for and on behalf and in the name of Debtor, and as Debtor's
lawful attorney-in-fact, to execute, deliver and record any financing
statements, continuation statements and the like giving notice of Inventory
floorplan financing done or to be done under this Addendum and the ISA.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum to be duly signed
on July 23, 1998
ACCEPTED BY: (Seal)
BOMBARDIER CAPITAL INC. Evans-Lanier, Inc.
By: By: /s/ E. Samuel Evans
- - --------------------------- -----------------------
(Signature) (and Title if Debtor is a
corporation)
Title: E. Samuel Evans - President
Attest: Witness: /s/ Brenda Ferron
- - --------------------------- --------------------------
(Signature)(Secretary if Debtor is a
corporation)
(If a corporation, Debtor's corporate seal must be affixed, and its Secretary
must sign on line marked "Witness")
ACKNOWLEDGEMENT FOR INDIVIDUAL DEBTOR
STATE OF ________________________: CITY/COUNTY OF ___________________:TO WIT:
I HEREBY CERTIFY that on this ________ day of _____________, 19_____,
before me, the subscriber, a Notary Public in and for the State and City/County
aforesaid, personally appeared ____________________________________ known to me
or satisfactorily proven to be the person executing the foregoing Addendum as
Debtor, who acknowledged that (s)he has executed the foregoing Addendum in
his/her individual capacity and that the same is he/her act and deed.
My Commission Expires on_______________ __________________________________
Notary Public
<PAGE>
Exhibit 10.3.2e
Bombardier Capital Inc. INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
1. Parties: The parties to this Agreement are Bombardier Capital Inc. ("BCI")
and the Dealer who has signed at the end of this Agreement ("Dealer").
2. Advances: At Dealer's request, BCI, at its option, will advance funds for
the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. Payment: Dealer shall repay BCI in accordance with either or a combination
of the following Plans, which shall be chosen at the sole discretion of
BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. Collateral:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
<PAGE>
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral"). Dealer shall execute and deliver such financing
statements and amendments thereto and all further writings as BCI
shall request to accomplish the purpose of this Agreement and Dealer
shall bear all the costs of recording and perfection.
5. Dealer's Duties: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition,
and to pay all transportation and storage charges on the Collateral.
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any 'free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
<PAGE>
6. Power of Attorney: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and
b) adjust, make, pursue, settle and collect any insurance claim in
connection with this Agreement, as attorney-in-fact for Dealer.
7. Default: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. Remedies: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owed to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity of any document or for the
existence or value of any Collateral. Dealer further agrees to pay
reasonable attorney's fees and legal expenses incurred by BCI in enforcing
this Agreement after default by Dealer. To the extent not prohibited by
law, Dealer waives all valuation and exemption laws and releases all right
of appeal after payment in full.
9. Time and Acknowledgement: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce its rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
<PAGE>
10. Assignment: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. Modification: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. Governing Law: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. Dealer Business and Warehouse Addresses: (Attach a schedule if more space
required.)
Location #1
108 Jimps Road
Statesboro, GA
Location #2
Location #3
Location #4
Effective as of the 6 day of February 1998
DEALER: Augusta Housing Center, Inc.
------------------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ E. Samuel Evans
-----------------------
/s/ Brenda Ferron (SEAL)
- - ----------------- ------
Secretary Name: E. Samuel Evans
Title: President
Accepted by: By:
BOMBARDIER CAPITAL INC.
Name:
By /s/ S. Harris
- - ----------------
Title:
Title: Credit Manager
<PAGE>
ACKNOWLEDGMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______, 19__ before me personally appeared
______________known to me to be the person(s) whose name(s) is (are) subscribed
to the foregoing Inventory Security Agreement and Power of Attorney and
acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
-----------------------------------
Notary Public
ACKNOWLEDGMENT BY DEALER IF A CORPORATION
STATE OF GEORGIA
COUNTY OF BULLOCH
On this the 6 day of February, 1998 before me personally appeared E. Samuel
Evans who acknowledged himself to be the President of Apple Homes Corporation, a
corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereto set my hand and Official Seal.
/s/Frances M. Flake
-------------------
Notary Public
<PAGE>
Bombardier Capital FIRST AMENDMENT TO
INVENTORY SECURITY AGREEMENT
AND POWER TO ATTORNEY
This First Amendment to Inventory Security Agreement and Power of Attorney
is made as of the 6 day of February, 1998, by and between Bombardier Capital
Inc. ("BCI") and Apple Homes Corporation ("Dealer").
WHEREAS, BCI and Dealer entered into a certain Inventory Security Agreement
and Power of Attorney dated as of 2-6-98 (the "ISA") under and pursuant to which
BCI provided certain financing to the Dealer for the purchase by Dealer of
inventory (as that term is defined in the ISA and incorporated herein by
reference);
WHEREAS, the ISA called for the Dealer to pay BCI certain sums in
connection with financing provided by BCI under and pursuant to the ISA;
WHEREAS, BCI and the Dealer wish to amend the ISA for the purpose of
further clarifying their existing agreement with respect to rates charged to the
Dealer by BCI under and pursuant to the ISA.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, BCI and the Dealer hereby agree
that the ISA is amended to add the following two paragraphs after the second of
the two paragraphs lettered b) in Section 3 of the ISA:
c) The specific interest rate(s) charged to Dealer are stated on individual
financial program letters, which letters may be obtained by the Dealer from
BCI representatives. The interest rates charged at any given time are
determined by the financial programs in force for the specific products
that Dealer purchases under this Agreement, and Dealer and BCI agree that
the rates charged may fluctuate over time and may vary depending on factors
such as the type and brand of Inventory purchased, time of year, age of the
Inventory, and/or payment habits of Dealer.
d) It is the intention of BCI to conform to all applicable laws governing
the rates of interest that may be charged. If the amount contracted for,
charged or received by BCI exceeds the maximum amount permitted by law, it
is agreed that such excess will be considered an error and canceled
immediately and, if already paid, shall be refunded to the Dealer or, at
BCI's option, applied to other outstanding liabilities of Dealer to BCI.
As hereby amended, the ISA is affirmed and ratified in all respects.
BCI: DEALER: Apple Homes Corporation
By: By: /s/ E. Samuel Evans
- - ---------------------------- -----------------------
Title:Credit Mgr. Title: President
By:
Title:
Exhibit 10.3.3
AGREEMENT FOR WHOLESALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of April 10,
1998 between Deutsche Financial Services corporation ("DFS") and Apple Homes
corporation a ( ) SOLE PROPRIETORSHIP, ( ) PARTNERSHIP, (XX) CORPORATION, ( )
LIMITED LIABILITY COMPANY (check applicable term) ("Dealer"), having a principal
place of business located at 3633 Wheeler Rd., Ste 140, Augusta, GA 30909.
1. Extension of Credit. Subject to the terms of this Agreement, DFS may extend
credit to Dealer from time to time to purchase inventory from DFS approved
vendors ("Vendors") and for other purposes. If DFS advances funds to Dealer
following Dealer's execution of this Agreement, DFS will be deemed to have
entered into this Agreement with Dealer, whether or not executed by DFS. DFS'
decision to advance funds will not be binding until the funds are actually
advanced. DFS may combine all of DFS' advances to Dealer or on Dealer's behalf,
whether under this Agreement or any other agreement, and whether provided by one
or more of DFS' branch offices together with all finance charges, fees and
expenses related thereto, to make one debt owed by Dealer. DFS may, at any time
and without notice to Dealer, elect not to finance any inventory sold by
particular Vendors who are in default of their obligations to DFS, or with
respect to which DFS reasonably feels insecure. This is an agreement regarding
the extension of credit, and not the provision of goods or services.
2. Financing Terms and Statements of Transaction. Dealer and DFS agree that
certain financial terms of any advance made by DFS under this Agreement, whether
regarding finance charges, other fees, maturities, curtailments or other
financial terms, are not set forth herein because such terms depend, in part,
upon the availability of Vendor discounts, payment terms or other incentives,
prevailing economic conditions, DFS' floorplanning volume with Dealer and with
Dealer's Vendors, and other economic factors which may vary over time. Dealer
and DFS further agree that it is therefore in their mutual best interest to set
forth in this Agreement only the general terms of Dealer's financing arrangement
with DFS. Upon agreeing to finance a particular item of inventory for Dealer,
DFS will send Dealer a Statement of Transaction identifying such inventory and
the applicable financial terms. Unless Dealer notifies DFS in writing of any
objection within fifteen (15) days after a Statement of Transaction is mailed to
Dealer: (a) the amount shown on such Statement of Transaction will be an account
stated; (b) Dealer will have agreed to all rates, charges and other terms shown
on such Statement of Transaction; (c) Dealer will have agreed that DFS is
financing the items of inventory referenced in such Statement of Transaction at
Dealer's request; and (d) such Statement of Transaction will be incorporated
herein by reference, will be made a part hereof as if originally set forth
herein, and will constitute an addendum hereto. If Dealer objects to the terms
of any Statement of Transaction, Dealer agrees to pay DFS for such inventory in
accordance with the most recent terms for similar invent6ory to which Dealer has
<PAGE>
no objected (or, if there are no prior terms, at the lesser of 16% per annum or
at the maximum lawful contract rate of interest permitted under applicable law),
but Dealer acknowledges that DFS may then elect to terminate Dealer's financing
program pursuant to Section17, and cease making additional advances to Dealer.
However, such termination will not accelerate the maturities of advances
previously made, unless Dealer shall otherwise be in default of this Agreement.
3. Grant of Security Interest. To secure payment of all of Dealer's current and
future debts to DFS, whether under this Agreement or any current or future
guaranty or other agreement, Dealer grants DFS a security interest in all of
Dealer's Inventory, equipment, fixtures, accounts, contract rights, chattel
paper, security agreements, instruments, deposit accounts, reserves, documents,
and general intangibles; and all judgments, claims, insurance policies, and
payments owed or made to Dealer thereon; all whether now owned or hereafter
acquired, all attachments, accessories, accessions, returns, repossessions,
exchanges, substitutions and replacements, thereto and all proceeds thereof. All
such assets are collectively referred to herein as the "Collateral." All of such
terms for which meanings are provided in the Uniform Commercial Code of the
applicable state are used herein with such meanings. All Collateral financed by
DFS, and all proceeds thereof, will be held in trust by Dealer for DFS, with
such proceeds being payable in accordance with Section 9.
4. Affirmative Warranties and Representations. Dealer warrants and represents to
DFS that: (a) Dealer has good title to all Collateral; (b) DFS' security
interest in the Collateral financed by DFS is not now and will not become
subordinate to the security interest, lien, encumbrance or claim of any person;
(c) Dealer will execute all documents DFS requests to perfect and maintain DFS'
security interest in the Collateral; (d) Dealer will deliver to DFS immediately
upon each request, and DFS may retain, each Certificate of Title or Statement of
Origin issued for Collateral financed by DFS; (e) Dealer will at all times by
duly organized, existing in good standing, qualified and licensed to do business
in each state, county, or parish, in which the nature of its business or
property so requires; (f) Dealer has the right and is duly authorized to enter
into this Agreement; (g) Dealer's execution of this Agreement does not
constitute a breach of any agreement to which Dealer is now or hereafter becomes
bound; (h) there are and will be no actions or proceedings pending or threatened
against Dealer which might result in any material adverse change in Dealer's
financial or business condition or which might in any way adversely affect any
of Dealer's assets; (i) Dealer will maintain the Collateral in good condition
and repair; (j) Dealer has duly filed and will duly file all tax returns
required by law; (k) Dealer has paid and will pay when due all taxes, levies,
assessments and governmental charges of any nature; (l) Dealer will keep and
maintain all of its books and records pertaining to the Collateral at its
principal place of business designated in this Agreement; (m) Dealer will
promptly supply DFS with such information concerning it or any guarantor as DFS
hereafter may reasonably request; (n) all Collateral will be kept at Dealer's
principal place of business listed above, and such other locations, if any , of
which Dealer has notified DFS in writing or as listed on any current or future
Exhibit "A" attached hereto which written notice(s) to DFS and Exhibit A(s) are
incorporated herein by reference; (o) Dealer will give DFS thirty (30) days
prior written notice of any change in Dealer's identity, name, form of business
<PAGE>
organization, ownership, management, principal place of business, Collateral
locations or other business locations, and before moving any books and records
to any other location; (p) Dealer will observe and perform all matters required
by any lease, license, concession or franchise forming part of the Collateral in
order to maintain all the rights of DFS thereunder; (q) Dealer will advise DFS
of the commencement of material legal proceedings against Dealer or any
guarantor; and (r) Dealer will comply with all applicable laws and will conduct
its business in a manner which preserves and protects the Collateral and the
earnings and incomes thereof.
5. Negative Covenants. Dealer will not at any time (without DFS' prior written
consent): (a) other than in the ordinary course of its business, sell, lease or
otherwise dispose of or transfer any of its assets; (b) rent, lease,
demonstrate, consign, or use any Collateral financed by DFS; or (c) merge or
consolidate with another entity.
6. Insurance. Dealer will immediately notify DFS of any loss, theft or damage to
any Collateral. Dealer will keep the Collateral insured for its full insurable
value under an "all risk" property insurance policy with a company acceptable to
DFS, naming DFS as a lender loss-payee or mortgage and containing standard
lender's loss payable and termination provisions. Dealer will provide DFS with
written evidence of such property insurance coverage and lender's loss-payee or
mortgagee endorsement.
7. Financial Statement. Dealer will deliver to DFS: (a) within ninety (90) days
after the end of each of Dealer's fiscal years, a reasonably detailed balance
sheet as of the last day of such fiscal year and a reasonably detailed income
statement covering Dealer's operations for such fiscal year, in a form
satisfactory to DFS; (b) within forty-five (45) days after the end of each of
Dealer's fiscal quarters, a reasonably detail balance sheet as of the last day
of such quarter and an income statement, covering Dealer's operations for such
quarter, in a form satisfactory to DFS; and (c) within ten (10) days after
request therefor by DFS, any other report requested by DFS relating to the
Collateral or the financial condition of Dealer. Dealer warrants and represents
to DFS that all financial statements and information relating to Dealer or any
guarantor which have been or may hereafter be delivered by Dealer or any
guarantor are true and correct and have been and will be prepared in accordance
with generally accepted accounting principles consistently applied and, with
respect to such previously delivered statements or information, there has been
no material adverse change in the financial or business condition of Dealer or
any guarantor since the submission to DFS, either as of the date of delivery,
or, if different, the date specified therein, and Dealer acknowledges DFS'
reliance thereon.
8. Reviews. Dealer grants DFS an irrevocable license to enter Dealer's business
locations during normal business hours without notice to Dealer to: (a) account
for and inspect all Collateral; (b) veri9fy Dealer's compliance with this
Agreement; and (c) examine and copy Dealer's books and records related to the
Collateral.
9. Payment Terms. Dealer will immediately pay DFS the principal indebtedness
owed DFS on each item of Collateral financed by DFS (as shown on the Statement
of Transaction identifying such Collateral) on the earliest occurrence of any of
the following events: (a) when such Collateral is lost, stolen or damaged; (b)
for Collateral financed under Pay-As-Sold ("PAS") terms (as shown on the
Statement of Transaction identifying such Collateral), when such Collateral is
sold, transferred, rented, leased, otherwise disposed of or matured; (c) in
<PAGE>
strict accordance with any curtailment schedule for such Collateral (as shown on
the Statement of Transaction identifying such Collateral); (d) for Collateral
financed under Scheduled Payment Program ("SPP") terms (as shown on the
Statement of Transaction identifying such Collateral), in strict accordance with
the installment payment schedule; and (e) when otherwise required under the
terms of any financing program agreed to in writing by the parties. Regardless
of the SPP terms pertaining to any Collateral financed by DFS, if DFS determines
that the current outstanding debt which Dealer owes to DFS exceeds the agg5egate
wholesale invoice price of such Collateral in Dealer" possession, Dealer will
immediately upon demand pay DFS the difference between such outstanding debt and
the aggregate wholesale invoice price of such Collateral. If Dealer from time to
time is required to make immediate payment to DFS of any past due obligation
discovered during any Collateral audit, or at any other time, dealer agrees that
acceptance of such payment by DFS shall not be construed to have waived or
amended the terms of its financing program. The proceeds of any Collateral
received by Dealer will be held by Dealer in trust for DFS' benefit, for
application as provided in this Agreement. Dealer will send all payments to DFS'
branch office(s) responsible for Dealer's account. DFS may apply: (i) payments
or reduce finance charges first and then principal, regardless of Dealer's
instructions, and (ii) principal payments to the oldest (earliest) invoice for
Collateral financed by DFS, but, in any event, all principal payments will first
be applied to such Collateral which is sold, lost, stolen, damaged, rented,
leased, or otherwise disposed of or unaccounted for. Any third party discount,
rebate, bonus or credit granted to Dealer for any Collateral will not reduce the
debt Dealer owes DFS until DFS has received payment therefor in cash. Dealer
will: (1) pay DFS even if any Collateral is defective or fails to conform to any
warranties extended by any third party; (2) not assert against DFS any claim or
defense Dealer has against any third party; and (3) indemnify and hold DFS
harmless against all claims and defenses asserted by any buyer of the Collateral
relating to the condition of, or any representations regarding, any of the
Collateral. Dealer waives all rights of offset and counterclaims Dealer may have
against DFS.
10. Calculation of Charges. Dealer will pay finance charges to DFS on the
outstanding principal debt which Dealer owes DFS for each item of Collateral
financed by DFS at the rate(s) shown on the Statement of Transaction identifying
such Collateral, unless Dealer objects thereto as provided in Section 2. The
finance charges attributable to the rate shown on the Statement of Transaction
will: (a) be computed based on a 360 day year; (b) be calculated by multiplying
the Daily Charge (as defined below) by the actual number of days in the
applicable billing period, and (c) accrue from the invoice date of the
Collateral identified on such Statement of Transaction until DFS receives full
payment in good funds of the principal debt Dealer owes DFS for each item of
such Collateral in accordance with DFS' payment recognition policy and DFS
applies such payment to Dealer's principal debt in accordance with the terms of
this Agreement. The "Daily Charge" is the product of the Daily Rate (as defined
below) multiplied by the Average Daily Balance (as defined below). The "Daily
Rate" is the quotient of the annual rate shown on the Statement of Transaction
divided by 360, or the monthly rate shown on the Statement of Transaction
divided by 30. The "Average Daily Balance" is the quotient of (i) the sum of the
outstanding principal debt owed DFS on each day of a billing period for each
item of Collateral identified on a Statement of Transaction, divided by (ii) the
actual number of days in such billing period. Dealer will also pay DFS $100 for
<PAGE>
each check returned unpaid for insufficient funds (an "NSF check") (such $100
payment repays DFS' estimated administrative costs; it does not waive the
default caused by the NSF check). The annual percentage rate of the finance
charges relating to any item of Collateral financed by DFS will be calculated
from the invoice date of such Collateral, regardless of an period during which
any finance charge subsidy shall be paid or payable by any third party. Dealer
acknowledges that DFS intends to strictly conform to the applicable usury laws
governing this Agreement. Regardless of any provision contained herein or in any
other document executed or delivered in connection herewith or therewith. DFS
shall never be deemed to have contracted for, charged or be entitled to receive,
collect or apply as interest on this Agreement (whether termed interest herein
or deemed to be interest by judicial determination or operation of law), any
amount in excess of the maximum amount allowed by applicable law, and, if DFS
ever receives, collects or applies as interest any such excess, such amount
which would be excessive interest will be applied first to the reduction of the
unpaid principal balances of advances under this Agreement, and, second, any
remaining excess will be paid to Dealer. In determining whether or not the
interest paid or payable under any specific contingency exceeds the highest
lawful rate. Dealer and DFS shall, to the maximum extent permitted under
applicable law: (A) characterize any non-principal payment (other than payments
which are expressly designated as interest payments hereunder) as an expense or
fee rather than as interest; (B) exclude voluntary pre-payments and the effect
thereof; and (C) spread the total amount of interest throughout the entire term
of this Agreement so that the interest rate is uniform throughout such term.
11. Billing Statement. DFS will send Dealer a monthly billing statement
identifying all charges due on Dealer's account with DFS. The charges specified
on each billing statement will be: (a) due and payable in full immediately on
receipt; and (b) an account stated, unless DFS receives Dealer's written
objection thereto within 15 days after it is mailed to Dealer. If DFS does not
receive, by the 25th day of any given month, payment of all charges accrued to
Dealer's account with DFS during the immediately preceding month, Dealer will
(to the extent allowed by law) pay DFS a late fee ("Late Fee") equal to the
greater of $5 or 5% of the amount of such finance charges (payment of the late
Fee does not waive the default caused by the late payment). DFS may adjust the
billing statement at any time to conform to applicable law and this Agreement.
12. Default. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein, in any
Statement of Transaction to which Dealer has not objected as provided in Section
2, or in any other agreement between DFS and Dealer; (b) any guarantor of
Dealer's debts to DFS breaches any terms, warranties or representations
contained in any guaranty or other agreement between the guarantor and DFS; (c)
any representation, statement, report or certificate made or delivered by Dealer
or any guarantor to DFS is not accurate when made; (d) Dealer fails to pay any
portion of Dealer's debts to DFS when due and payable hereunder or under any
other agreement between DFS and Dealer; (e) Dealer abandons any Collateral; (f)
Dealer or any guarantor is or Becomes in default in the payment of any debt owed
<PAGE>
to any third party; (g) a money judgment issues against Dealer or any guarantor;
(h) an attachment, sale or seizure issues or is executed against any assets of
Dealer or of any guarantor; (I) the undersigned dies while Dealer's business is
operated as a sole proprietorship, any general partner dies while Dealer's
business is operated as a general or limited partnership, or any member dies
while Dealer's business is operated as a limited liability company, as
applicable; (j) any guarantor dies; (k) Dealer or any guarantor ceases or
suspends business; (m) Dealer, any guarantor or any member while Dealer's
business is operated as a limited liability company, as applicable, makes a
general assignment for the benefit of creditors; (n) Dealer, any guarantor or
any member while Dealer's business is operated as a limited liability company,
as applicable, becomes insolvent or voluntarily or involuntarily becomes subject
to the Federal Bankruptcy Code, any state insolvency law or any similar law; (o)
any receiver is appointed for any assets of Dealer, any guarantor or any member
while Dealer's business is operated as a limited liability company, as
applicable; (p) any guaranty of Dealer's debts to DFS is terminated; (q) Dealer
loses any franchise, permission, license or right to sell or deal in any
Collateral which DFS finances; (R) Dealer or any guarantor misrepresents
Dealer's or such guarantor's financial condition or organizational structure; or
(s) DFS determines in good faith that it is insecure with respect to any of the
Collateral or the payment of any part of Dealer's obligation to DFS.
13. Rights of DFS upon Default. In the event of a default:
(a) DFS may at any time at DFS' election, without notice or demand to Dealer, do
any one or more of the following: declare all or any part of the debt Dealer
owes DFS immediately due and payable, together with all costs and expenses of
DFS' collection activity, including, without limitation, all reasonable
attorneys' fees; exercise any or all rights under applicable law (including,
without limitation, the right to possess, transfer and dispose of the
Collateral); and/or cease extending any additional credit to Dealer (DFS' right
to cease extending credit shall not be construed to limit the discretionary
nature of this credit facility).
(b) Dealer will segregate and keep the Collateral in trust for DFS, and in good
order and repair, and will not sell, rent, lease, consign, otherwise dispose of
or use any Collateral, nor further encumber any Collateral.
(c) Upon DFS' oral or written demand, Dealer will immediately deliver the
Collateral to DFS, in good order and repair, at a place specified by DFS,
together with all related documents; or DFS may, in DFS' sole discretion and
without notice or demand to Dealer, take immediate possession of the Collateral
together with all related documents.
(d) DFS may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified in
Dealer's financing program with DFS, if any, or if there is none so specified,
at the lesser of 3% per annum above the rate in effect immediately prior to the
default, or the highest lawful contract rate of interest permitted under
applicable law.
All of DFS' rights and remedies are cumulative. DFS' failure to exercise any of
DFS' rights or remedies hereunder will not waive any of DFS' rights or remedies
as to any past, current or future default.
<PAGE>
14. Sale of Collateral. Dealer agrees that if DFS conducts a private sale of any
Collateral by requesting bids from 10 or more dealers or distributors in that
type of Collateral, any sale by DFS of such Collateral in bulk or in parcels
within 120 days of: (a) DFS' taking possession and control of such Collateral;
or (b) when DFS is otherwise authorized to sell such Collateral; whichever
occurs last, to the bidder submitting the highest cash bid (therefor, is a
commercially reasonable sale of such Collateral under the Uniform Commercial
Code Dealer agrees that the purchase of any Collateral by a Vendor, as provided
in any agreement between DFS and the Vendor, is a commercially reasonable
disposition and private sale of such Collateral under the Uniform Commercial
Code and no request for bids shall be required. Dealer further agrees that 7 or
more days prior written notice will be commercially reasonable notice of any
public or private sale 9including any sale to a Vendor). Dealer irrevocably
waives any requirement that DFS retain possession and not dispose of any
Collateral until after an arbitration hearing, arbitration award, confirmation,
trial or final judgment. If DFS disposes of any such Collateral other than as
herein contemplated, the commercial reasonableness of such disposition will be
determined in accordance with the laws of the state governing this Agreement.
15. Power of Attorney. Dealer grants DFS an irrevocable power of attorney to:
execute or endorse on Dealer's behalf any checks, financing statements,
instruments, Certificates of Title and Statements of Origin pertaining to the
Collateral; supply any omitted information and correct errors in any documents
between DFS and Dealer; initiate and settle any insurance claim pertaining to
the Collateral; and do anything to preserve and protect the Collateral and DFS'
rights and interest therein.
16. Information. DFS may provide to any third party any credit, financial or
other information on Dealer that DFS may from time to time possess. DFS may
obtain from any Vendor any credit, financial or other information regarding
Dealer that such Vendor may from time to time possess.
17. Termination. Either party many terminate this Agreement at any time by
written notice received by the other party. If DFS terminates this Agreement,
Dealer agrees that if Dealer: (a) is not in default hereunder, 30 days prior
notice of termination is reasonable and sufficient (although this provision
shall not be construed to mean that shorter periods may not, in particular
circumstances, also be reasonable and sufficient); or (b) is in default
hereunder, no prior notice of termination is required. Dealer will not be
relieved from any obligation to DFS arising out of DFS' advance or commitments
made before the effective termination date of this Agreement. DFS will retain
all of its rights, interests and remedies hereunder until Dealer has paid all of
Dealer's debts to DFS. All waivers set forth within this Agreement will survive
any termination of this Agreement.
18. Binding Effect. Dealer cannot assign its interest in this Agreement without
DFS' prior written consent, although DFS may assign or participate DFS'
interest, in whole or in part, without Dealer's consent. This Agreement will
protect and bind DFS'; and Dealer's respective heirs, representatives,
successors and assigns.
<PAGE>
19. Notices. Except as otherwise stated herein, all notices, arbitration claims,
responses, requests and documents will be sufficiently given or served if mailed
or delivered; (a) to Dealer at Dealer's principal place of business specified
above: and (b) to DFS at 655 Maryville Centre Drive, St. Louis, Missouri
63141-5832, Attention: General Counsel, or such other address as the parties may
hereafter specify in writing.
20. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND DFS FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE
PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN
AGREEMENTS BETWEEN THE PARTIES.
21. Other Waivers. Dealer irrevocably waives notice of: DFS' acceptance of this
Agreement, presentment, demand, protest, nonpayment, nonperformance, and
dishonor. Dealer and DFS irrevocably waive all rights to claim any punitive
and/or exemplary damages.
22. Severability. If any provision of this Agreement or its application is
invalid or unenforceable, the remainder of this Agreement will not be impaired
or affected and will remain binding and enforceable.
23. Supplement. If Dealer and DFS have heretofore executed other agreements in
connection with all or nay part of the Collateral, this Agreement shall
supplement each and every other agreement previously executed by and between
Dealer and DFS, and in that event this Agreement shall neither be deemed a
novation nor a termination of such previously executed agreement nor shall
execution of this Agreement be deemed a satisfaction of any obligation secured
by such previously executed agreement.
24. Receipt of Agreement. Dealer acknowledges that it has received a true and
complete copy of this Agreement. Dealer acknowledges that it has read and
understood this Agreement. Notwithstanding anything herein to the contrary: (a)
DFS may rely on any facsimile copy, electronic data transmission or electronic
data storage of this Agreement, any Statement of Transaction, billing statement,
invoice from a Vendor, financial statements or other reports, and (b) such
facsimile copy, electronic data transmission or electronic data storage will be
deemed an original, and the best evidence thereof for all purposes, including,
without limitation, under this Agreement or any other agreement between DFS and
Dealer, and for all evidentiary purposes before any arbitrator, court or other
adjudicatory authority.
<PAGE>
25. Miscellaneous. Time is of the essence regarding Dealer's performance of its
obligations to DFS notwithstanding any course of dealing or custom on DFS' part
to grant extensions of time. Dealer's liability under this Agreement is direct
and unconditional and will not be affected by the release or nonperfection of
any security interest granted hereunder. DFS will have the right to refrain from
or postpone enforcement of this Agreement or any other agreements between DFS
and Dealer without prejudice and the failure to strictly enforce these
agreements will not be construed as having created a course of dealing between
DFS and Dealer contrary to the specific terms of the agreements or as having
modified, released or waived the same. The express terms of this Agreement will
not be modified by any course of dealing, usage of trade, or custom of trade
which may deviate from the terms hereof. If Dealer fails to pay any taxes, fees
or other obligations which may impair DFS' interest in the Collateral, or fails
to keep the Collateral insured, DFS may, but shall not be required to, pay such
taxes, fees or obligation and pay the cost to insure the Collateral, and the
amounts paid will be: (a) an additional debt owed by Dealer to DFS, which shall
be subject to finance charges as provided herein; and (b) due and payable
immediately in full. Dealer agrees to pay all of DFS' reasonable attorneys' fees
and expenses incurred by DFS in enforcing DFS' rights hereunder. The Section
titles used in this Agreement are for convenience only and do not define or
limit the contents of any Section.
26. BINDING ARBITRATION.
26.1 Arbitrable Claims. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or in equity
of any type or nature whatsoever (including, without limitation, all torts,
whether regarding negligence, breach of fiduciary duty, restraint of trade,
fraud, conversion, duress, interference, wrongful replevin, wrongful
sequestration, fraud in the inducement, usury or any other tort, all contract
actions, whether regarding express or implied terms, such as implied covenants
of good faith, fair dealing, and the commercial reasonableness or lawfulness of
any act), whether arising before or after the date of this Agreement, and
whether directly or indirectly relating to (a) this Agreement and/or any
amendments and addenda hereto, or the breach, invalidity or termination hereof;
(b) any previous or subsequent agreement between DFS and Dealer; (c) any act
committed by DFS or by any parent company, subsidiary or affiliated company of
DFS (the "DFS Companies"), or by any employee, agent, officer or director of an
DFS Company whether or not arising within the scope and course of employment or
other contractual representation of the DFS Companies provided that such act
arises under a relationship, transaction or dealing between DFS and Dealer;
and/or (d) any other relationship, transaction or dealing between DFS and Dealer
(collectively the "Disputes"), will be subject to and resolved by binding
arbitration.
26.2 Administrative Body. All arbitration hereunder will be conducted by the
American Arbitration Association ("AAA"). If the AAA is dissolved, disbanded or
becomes subject to any state or federal bankruptcy or insolvency proceeding, the
parties will remain subject to binding arbitration which will be conducted by a
mutually agreeable arbitral forum. Tha parties agree that all arbitrator(s)
selected will be attorneys with at least five (5) years secured transactions
<PAGE>
experience. The arbitrator(s) will decide if any inconsistency exists between
the rules of any applicable arbitral forum and the arbitration provisions
contained herein. If such inconsistency exists, the arbitration provisions
contained herein will control and supersede such rules. The site of all
arbitration proceedings will be in the Division of the Fe3deral Judicial
District in which AAA maintains a regional office that is closest to Dealer.
26.3 Discovery. Discovery permitted in any arbitration proceeding commenced
hereunder is limited as follows. No later than thirty (30) days after the filing
of a claim for arbitration, the parties will exchange detailed statements
setting forth the facts supporting the claim(s) and all defenses to be raised
during the arbitration and a list of all exhibits and witnesses. No later than
twenty-one (21) days prior to the arbitration hearing, the parties will exchange
a final list of all exhibits and all witnesses, including any designation of any
expert witness(es) together with a summary of their testimony; a copy of all
documents and a detailed description of any property to be introduced at the
hearing. Under no circumstances will the use of interrogatories, requests for
admission, requests for the production of documents or the taking of depositions
be permitted. However, in the event of the designation of any expert
witness(es), the following will occur: (a) all information and documents relied
upon by the expert witness(es) will be delivered to the opposing party, (b) the
opposing party will be permitted to depose the expert witness(es), (c) the
opposing party will be permitted to designate rebuttal expert witness(es), and
(d) the arbitration hearing will be continued to the earliest possible date that
enables the foregoing limited discovery to be accomplished.
26.4 Exemplary or Punitive Damages. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
26.5 Confidentiality of Awards. All arbitration proceedings, including testimony
or evidence at hearings, will be kept confidential, although any award or order
rendered by the arbitrator(s) pursuant to the terms of this Agreement may be
entered a s a judgement or order in any state or federal court and may be
confirmed within the federal judicial district which includes the residence of
the party against whom such award or order was entered. This Agreement concerns
transactions involving commerce among the several states. The Federal
Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will
govern all arbitration(s) and confirmation proceedings hereunder.
26.6 Prejudgment and Provisional Remedies. Nothing herein will be construed to
prevent DFS' or Dealer's use of bankruptcy, receivership, injunction,
repossession, replevin, claim and delivery, sequestration, seizure, attachment,
foreclosure, dation and/or any other prejudgment or provisional action or remedy
relating to any Collateral for any current or future debt owed by either party
to the other. Any such action or remedy will not waive DFS' or Dealer's right to
compel arbitration of any Dispute.
26.7 Attorneys' Fees. If either Dealer or DFS brings any other action for
judicial relief with respect to any Dispute (other than those set forth in
Section 26.6), the party bringing such action will be liable for and immediately
pay all of the other party's costs and expenses (including attorneys' fees)
incurred to stay or dismiss such action and remove or refer such Dispute to
arbitration. If either Dealer or DFS brings or appeals an action to vacate or
modify an arbitration award and such party does not prevail, such party will pay
all costs and expenses, including attorneys' fees, incurred by the other party
<PAGE>
in defending such action. Additionally, if Dealer sues DFS or institutes any
arbitration claim or counterclaim against DFS in which DFS is the prevailing
party, Dealer will pay all costs and expenses (including attorneys' fees)
incurred by DFS in the course of defending such action or proceeding.
26.8 Limitations. Any arbitration proceeding must be instituted: (a) with
respect to any Dispute fort the collection of any debt owed by either party to
the other, within two (2) years after the date the last payment was received by
the instituting party; and (b) with respect to any other Dispute, within two (2)
years after the date the incident giving rise thereto occurred, whether or not
any damage was sustained or capable of ascertainment or either party knew of
such incident. Failure to institute an arbitration proceeding within such period
will constitute an absolute bar and waiver to the institution of any proceeding,
whether arbitration or a court proceeding, with respect to such Dispute.
26.9 Survival After Termination. The agreement to arbitrate will survive the
termination of this Agreement.
27. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY
DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A
JURY. DEALER AND DFS WAIVE ANY RIGHT TO A TRIAL IN ANY SUCH PROCEEDING.
28. Governing Law. Dealer acknowledges and agrees that this and all other
agreements between Dealer and DFS have been substantially negotiated, and will
be substantially performed, in the state of Georgia. Accordingly, Dealer agrees
that all Disputes will be governed by, and construed in accordance with, the
laws of such state, except to the extent inconsistent with the provisions of the
FAA which shall control and govern all arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the date
first set forth hereinabove.
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
DEUTSCHE FINANCIAL SERVICES CORPORATION APPLE HOMES CORPORATION
Dealer's Name
BY: /s/ Don Poskus BY: /s/ E. Samuel Evans
- - ------------------ -----------------------
PRINT NAME: Don Poskus PRINT NAME: E. Samuel Evans
TITLE: Branch Operations Manager TITLE: President
ATTEST:
/s/ Brenda Ferron
-----------------
(ASSISTANT) SECREATRY
PRINT NAME: Brenda Ferron
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was unanimously
adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this corporation,
or any one or more of them, are hereby authorized and empowered on behalf of
this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS") in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by the
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation on
the date stated below.
Dated: April 10, 1998 /s/ Brenda Ferron
- - --------------------- -----------------
Brenda Ferron
(ASSISTANT) SECRETARY
APPLE HOMES CORPORATION
-----------------------
CORPORATE NAME
Exhibit 10.3.4
Regions Bank
Floor Plan Financing Agreement _____________________
Tax I. D. Number
Borrower's Name
Apple Homes Corp. and E. Samuel Evans
- - -------------------------------------
Address
3633 Wheeler Road, Suite 140, Augusta, GA 30909
- - -----------------------------------------------
Aggregate amount of line of credit Date of Agreement Place of Agreement
$100,000.00 10/23/98 Thomson, GA
- - ----------- -------- -----------
Your line of credit. You've received a line of credit from us in the aggregate
amount shown. Under the conditions stated below, we will advance money to you,
or on your behalf, up to the amount of your line of credit. In return, you
promise to perform all of your obligations under this agreement and to pay to
our order the amount of all advances we have made, plus interest and other
charges due under this agreement.
In this agreement, we, us, and our mean the bank named above. You and your mean
the Borrower. This Agreement means the Floor Plan Financing Agreement.
Payments by you. You agree to make monthly payments to us of all accrued
interest, beginning 12/1, 1998 and on the same day of each month thereafter. If
your payment is due on the 29th, 30th, or 31st of a month that does not have
that many days, then your payment will be due on the last day of that month. You
also agree to make principal payments as described below. If we request, you
agree to sign, at any time, a promissory note payable to our order for the
amount outstanding under your line of credit.
Purpose of line of credit. You have obtained this line of credit in order to
finance your purchase of goods for resale at retail. These goods are described
below:
Allocation of line of credit. Your line of credit is allocated as follows:
Supplier Available Credit
[ ] Advances for new goods requested ___________________ ___________________
through ACH. If checked, we will ___________________ ___________________
make advances to the supplier or ___________________ ___________________
suppliers shown below.
We may make advances to this supplier or suppliers, or any other persons
whom they designate, when we receive electronic requests through the
Automated Clearing House (ACH) from a supplier of goods delivered or sold
to you. The amount of the advance that we make on your behalf to the
supplier will be for the amount indicated on the electronic payment
request. You agree that we may, at our option, make these advances even
though the electronic payment requests are not accompanied or preceded by
the original invoices. We are not obligated to accept and pay any
electronic payment request when the amount you owe us, including interest,
exceeds the available credit for the supplier as stated in this paragraph,
or, if no limits are stated, the aggregate amount of your line of credit
less the amount of credit available, if any, for your purchase of goods for
which advances are not requested by draft but are requested directly by
you.
[ ] Advances for new goods requested ___________________ ___________________
by draft. If checked, we will ___________________ ___________________
make advances to the supplier or ___________________ ___________________
suppliers shown at the right. ___________________ ___________________
<PAGE>
Exhibit 10.3.4 (Page 2)
We may make advances to these supplier or suppliers, or any other person whom
they designate, when we receive sight or cash drafts from a supplier for goods
delivered or sold to you. We need not make any advance unless the drafts are
accompanied by the original invoices for the goods. The amount of the advance
that we make on your behalf to the supplier will be for the amount of the
invoice. You agree that we may, at our option, make these advances even though
the drafts are not accompanied by the original invoices. We are not obligated to
accept and pay any draft when the amount you owe us, including interest, exceeds
the available credit for the supplier as stated in this paragraph, or, if no
limits are stated, the aggregate amount of your line of credit less the amount
of credit available, if any, for your purchase of used goods and new goods for
which advances are not requested by draft but are requested directly by you.
[X] Advances for new goods not requested by draft. If checked, we will make
advances up to an aggregate amount of $___________________________ for the
amount of your purchase price of new goods, when requested directly by you
and accompanied by the bill of sale and other evidence of your ownership
(such as a certificate of title for a vehicle), satisfactory to us, for the
goods purchased. At our option, you may supply us with copies of these
documents. If no figure is listed above, the credit limit under this
section is the aggregate amount of your line of credit, less the amount of
credit available, if any, for your purchase of used goods and new goods for
which advances are requested by draft.
[X] Advances for used goods. If checked, we will make advances for your
purchase of used goods as described below under "Advances for used goods."
The amount of available credit for the purchase of used goods is limited to
$______________________. (If no figure is listed, the credit limit is the
aggregate amount of your line of credit less the amount of credit
available, if any, for your purchase of new goods.)
Interest. You agree to pay us interest on the amount of the outstanding balance
that you owe us. Interest on your debt is calculated every day on the basis of
1/365th of your annual interest rate then in effect.
Your interest rate. For advances for new goods, your interest rate is equal to
the Commercial Base Rate plus 1.1 percentage points. For advances for used
goods, your interest rate is equal to the Commercial Base Rate plus 1. 1
percentage points. Your interest rate is dependent upon the Commercial Base Rate
announced by Regions Financial Corp. When the Commercial Base Rate changes, your
rate will increase or decrease correspondingly. Your rate may change each day
the Commercial Base Rate changes.
JURY WAIVER AND ARBITRATION. You and we irrevocably waive all right to trial by
jury in any court in any action: (a) we bring to collect amounts owed us under
this Agreement; (b) alleging that (I) we have breached this Agreement or any
agreement modified by this Agreement, (II) we have breached any other agreement,
express or implied, (III) we or any of our officers, employees, or agents have
acted wrongfully, negligently, or otherwise tortuously with respect to you; or
(c) between the parties. This waiver of trial by jury does not waive your or our
right to bring a lawsuit that a judge, without a jury, would decide.
To the extent that any court of competent jurisdiction determines that such jury
waiver is inapplicable or unenforceable with respect to any claim or dispute,
such claim or dispute shall be submitted to and settled by final and binding
arbitration under the Federal Arbitration Act or other applicable law pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
Such proceeding shall be held before a single arbitrator who is an active
attorney or retired judge. The party against which the decision is rendered
shall pay the costs and reasonable attorney's fees of the prevailing party for
any such proceeding.
Signatures. You agree that you sign this agreement, under seal, and you agree to
all the terms of this agreement. You also acknowledge that we've given you a
completed copy of this agreement.
CAUTION-IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN
IT.
Borrower: Apple Homes Corporation
REGIONS BANK
By: /s/ Renee E. Wright By: /s/ E. Samuel Evans
- - ----------------------- -----------------------
Its: Loan Officer Its: President
<PAGE>
Exhibit 10.3.4 (Page 3)
Advances for new goods not requested by draft. If your line of credit applies to
the purchase of new goods for which advances are not requested by draft, we may
make advances for these purchases when you directly request an advance by
supplying us with the bill of sale and other evidence of your ownership (such as
certificate of title for a vehicle), free and clear of all liens and
encumbrances, satisfactory to us, for the goods purchased. At our option, you
may supply us with copies of these documents. We will make an advance for the
amount of your purchase price.
Advances for used goods. If your line of credit applies to the purchase of used
goods, we will make advances for your purchase of used goods. We will make these
advances under the following conditions:
1. You agree to request an advance by supplying us with the bill of sale
and other evidence of your ownership (such as certificate of title for
a vehicle), satisfactory to us, for the goods being purchased. At our
option, you may supply us with copies of these documents.
2. We are not obligated to make advances for more than 80 percent of the
trade-in value of the goods as determined by the NADA publication for
the month in which such advance is requested, if the goods are
vehicles, or that percentage of your purchase price, if the goods are
not vehicles.
3. If the goods are used vehicles, the vehicles cannot be used as
demonstrators and must fall within the following model years _________
______________________________________________________________________
Reduction of outstanding debt. You agree to pay us immediately the amount we
have advanced on your line of credit for the purchase of goods when you have
sold those goods.
New goods. If you have not sold new goods within 90 days of the date we
made an advance for the purchase of those goods, you agree to make an
immediate principal payment of 10 percent of the amount of the advance, due
and payable by _______. You agree to make additional principal payments of
10 percent of the amount of the advance every 90 days thereafter until the
goods are sold. If the goods have not been sold within ______ of the date
we made an advance for the purchase of those goods, you agree to pay us
immediately in full the balance you owe on that advance.
Used goods. If you have not sold used goods within 90 days of the date we
made an advance for the purchase of those goods, you agree to make an
immediate principal payment of 10 percent of the amount of the advance, due
and payable by______. You agree to make additional principal payments of 10
percent of the amount of the advance every 90 days thereafter until the
goods are sold. If the goods have not been sold within 360 days of the date
we made an advance for the purchase of those goods, you agree to pay us
immediately in full the balance that you owe on that advance.
Security for your line of credit. As security for all of your indebtedness to us
under this agreement and for all of your other present or future indebtedness to
us, including indirect and contingent obligations, you grant us a security
interest in all present and future vehicles, whether new or used, however
acquired, whether or not obtained through an advance made to you or on your
behalf as provided under this agreement, together with all additions and
accessions to the vehicles, including, but not limited to, the following
property:
In addition, you grant us a security interest in all documents relating to those
vehicles and goods; any after-acquired similar property; all proceeds of the
property, including chattel paper; any returned or unearned premiums on the
property; any deposit now or in the future held by us in which you have an
interest; and any property, or a consumer's household goods, securing any other
loans with us. Any other security agreement that you have entered with us will
continue to be in effect. Any prior security interest that you have granted to
us will continue to be in effect.
<PAGE>
Exhibit 10.3.4. (Page 4)
Your obligations regarding the security. You agree to keep the property securing
this line of credit free and clear of any debt, lien, security interest,
encumbrance or claim, except those stated below. You represent that the only
debts, liens, security interests, encumbrances or claims on the property are
these:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Your Corporate Resolution. You agree, before requesting your initial advance and
as a condition to our issuing such advance, to provide us with a corporate
resolution duly signed by a person or persons with appropriate authority
evidencing the authority of your officers or agents to request advances or
otherwise transact business with us in connection with this agreement. If you
are a corporation, such corporate resolution must be signed by your secretary or
assistant secretary, include duly adopted resolutions of your Board of Directors
so authorizing such officers and certify that each such officer holds the office
beside his or her name.
Previous agreements. If you have an existing floor plan line of credit agreement
with us that has an outstanding balance, that agreement will contiue in effect
until you have paid all sums that you owe us under that agreement for advances,
interest, and other charges. The available amount of credit that you have under
this agreement will be reduced by the amount of your outstanding balance under
the earlier agreement.
Documents from you. You agree to supply us with copies of any present or future
agreements you have with your suppliers. You agree to deliver to us original
title documents (e.g. certificates of title, manufacturer's statements of
origin, bills of sale on any property in which we have a security interest)
whenever we request. You agree to deliver these documents to us promptly.
Power of attorney. You grant us a power of attorney to execute in your name any
documents we believe are necessary or helpful to perfect or protect our security
interest or to sell or transfer any of the property in which we have a security
interest. You agree that this power cannot be cancelled as long as you are
indebted to us.
Other creditors. You agree to give us ten days written notice before obtaining
floor plan financing from any other person. You also agree to give us copies of
any agreements you have with other creditors.
Location of the security. You agree not to change the location or use of the
property securing this loan without obtaining our written permission in advance.
Disposing of the security. You agree not to sell, transfer, or dispose of the
property securing this line of credit except in the ordinary course of business,
without our prior written permission. You also agree to let us receive, endorse,
and apply any payments resulting from transfer or disposal of the property. You
agree not to release any of the property securing this line of credit (including
inventory) without our prior written permission.
Demonstrators. If you plan to use any of the property securing this line of
credit as a demonstration model, you must first give us notice in writing of
your intention to do so and provide us with a written description of the
property to be so used.
Repairs and taxes. You agree to safeguard the property securing this loan and
keep tangible property in good repair. You promise to pay all taxes, liens, and
assessments on the property.
Property Insurance. You agree to maintain property insurance on the property
securing this line of credit. If necessary, you agree to obtain insurance to
protect the goods while in transit. You agree that between you and us, you bear
all risk of loss as to the goods. You may apply for insurance through any
insurer you choose, or our requirements may be satisfied by insurance you
already have on the property. We have the right to reject an insurer for
reasonable cause.
Policy requirements. Benefits under the insurance policy will be payable to you
and to us according to our interest in the property. Any policy has to provide
for at least ten days written notice of cancellation to us.
<PAGE>
Exhibit 10.3.4 (Page 5)
Regions Bank
Floor Plan Financing Agreement
Additional Loan Terms
- - --------------------------------------------------------------------------------
If we buy insurance. If you don't or can't insure the property, we have the
right to buy coverage insuring only our interest OR insuring both your and our
interest. In either case, we may demand reimbursement from you or make an
advance to pay the cost. However, we have no obligation to acquire, maintain, or
replace any policy.
Proceeds of the insurance. You agree that all proceeds of credit or property
insurance, including any refund of premiums, will be applied to reduce your debt
to us. You also agree to let us receive, endorse, and apply any such payments.
Information about sales. At our request, you agree to tell us the name and
address of any person who buys or has brought any of the goods securing this
line of credit. You also agree to deliver to us all of the documents you have
concerning any sale. You agree to give us this information and these documents
promptly.
Your warranty on advances. You agree that you will not request an advance or
cause a request to be made on your behalf unless you are in strict compliance
with all of the terms of this agreement. You agree that each request by you for
an advance will constitute your new promise and representation that you are in
strict compliance with all terms of this agreement
Security documents and costs. You agree to sign at any time, any documents we
request in order to perfect or protect our security interest. You agree to pay
reasonable costs related to perfecting or protecting our security interest,
including filing fees and reasonable attorney's fees. A reproduction of this
signed agreement or a signed financing statement is sufficient as a financing
statement. You authorize us to add any information to this agreement which would
be necessary to make it an effective financing statement.
List of goods. We may, from time to time, give you a listing of the goods for
which we have made an advance or a listing of the amount of the outstanding
balance on your line of credit. You agree to examine this list within three
business days of when you receive it and notify us immediately in writing if you
claim any of the information is wrong. If you fail to notify us, you agree that
you may not question or dispute the accuracy of any information on the list.
Our rights to the security. You may not take any action that would give someone
else a security interest in the property securing this line of credit unless we
agree in writing. You agree that our claims to the property securing this line
of credit take precedence over any other claims, except those listed above. You
agree that we may at any reasonable time inspect and audit the property and
inspect, audit, and photocopy any documents relating to the property.
Notice of shipment or receipt of goods. At our request, you agree to give us
notice of the shipment or your receipt, or both, of any goods for which we have
made an advance.
Credit information. In addition to any credit reports that we usually make in
the ordinary course of business, you authorize us to give any information we
have about this line of credit and you to any of your present or future
suppliers and other creditors.
Notices. We will send any notices to you at the address you have given us in
this agreement unless you have requested that we send notices to you at a
different address. You agree that we do not have to honor any request to send
notices to a different address if you do not make that request in writing. We
will have a reasonable time to change our records after we receive your request
and may continue to send notices to your previous address until our records are
changed. Until our records are changed, you agree that any notices addressed to
your prior address shall be binding upon you. You agree that we have given you
notice when we have deposited in the mail, postage prepaid, the notice addressed
to you. You agree that any notice to us must be in writing, mailed to the
address under "Place of Agreement" above and that it is not effective until we
actually receive it.
Credit limit. You agree not to request or use a request to be made for advances
which would exceed your available aggregate line of credit. If your aggregate
line of credit is apportioned among different suppliers or among new or used
goods, you also agree not to request or cause a request to be made for advances
which would exceed the amount available under the applicable separate limit on
your line of credit. We do not have to make any advance that would exceed any
limit on all or part of your line of credit. We may, at our discretion, allow
advances exceeding your available line of credit, in the aggregate or as
apportioned. We do not have to allow such an advance however, even if we have
done so on previous occasions.
<PAGE>
Exhibit 10.3.4 (Page 6)
Reduction of line of credit. We can lower the amount of your line of credit
whenever we sincerely believe that your ability to repay us all or part of the
amount of your line of credit has changed or that the value of our security
interest has changed. If we choose to reduce all or part of your line of credit
(but not call your entire debt due immediately), we will notify you that your
line of credit has been reduced. If you owe us an amount in excess of the
reduced line of credit, you will not have any available line of credit for
advances and must immediately pay us the amount in excess of the reduced line of
credit.
Cancellation of line of credit. This agreement may be cancelled with or without
cause, as to future advances, by either party giving the other party thirty days
written notice. The agreement will continue in effect for all debt incurred
before the effective date of cancellation.
Reevaluation of line of credit. We may reevaluate your line of credit at any
time. You agree to supply us with any information we request relating to your
creditworthiness or financial condition and the security for this agreement. If
you fail to respond promptly or completely, we may immediately and without
notice reduce or terminate your line of credit.
Commercial Base Rate. The Commercial Base rate is the rate announced by Regions
Financial Corp. from time to time as its variable commercial lending index rate.
Regions Financial Corp. determines the Commercial Base Rate at its discretion.
We are an affiliate of Regions Financial Corp. The name of the announced
variable commercial lending index rate may change. If the name does change, your
interest rate will be dependent upon the variable commercial lending index rate
as announced, whatever its new name.
About the Commercial Base Rate. The Commercial Base Rate is an index. We make
loans at rates above, below, or equal to the Commercial Base Rate. We make no
representation or agreement that your interest rate or finance charge is or will
ever be above, below, or equal to any other customers' interest rate or finance
charge.
Change of terms. You agree that we may change any term or condition of this
agreement by giving you at least thirty days prior written notice. You expressly
agree and understand that any such change shall be applicable to the balance
outstanding as of the effective date of the change. You may refuse to accept
such change and terminate your line of credit by notifying us in writing at
least one day prior to the effective date of change.
Waiver of your rights. To the extent permitted by law, you individually and
together waive:
* All rights of exemption under the laws of this or any other state in the
property securing this line of credit
* Notice of the acceptance of the guaranty; and
* Demand, presentment, notice or dishonor, protest, and suit.
Your compliance. You may agree that if we do not insist upon strict compliance
with the terms of this agreement, we will not have waived or otherwise given up
our right to insist upon your strict compliance at a later date.
When we can call your account due. We may, to the extent permitted by law or
this agreement, call your entire account immediately due and payable if you are
in default. You will be in default if:
* You do not make a payment due even if we have previously allowed you to
make late payments;
* You fail to perform one or more of your obligations to us, under this or
any other agreement;
* You or your guarantor (s), if any, misrepresented a fact in requesting this
or any other loan with us;
* You default on any obligation to any creditor;
* You or your guarantor(s), if any, are bankrupt or insolvent, or a monetary
judgment, tax lien, or garnishment is applied to one of you; or any of your
property is attached;
* There is a change in the financial affairs of anyone who is liable for this
line of credit that we believe will increase our risk of not being repaid;
* Any of the property securing this line of credit is lost, stolen, damaged,
destroyed, sold, encumbered, seized, or attached;
* We sincerely believe that you will be unable to repay us or that our
security interest is unsafe;
* You or your guarantor(s), if any, die or cease to exist; or
* A corporation, partnership, or other entity liable for this line of credit
changes its legal name without obtaining our prior written authorization,
ceases doing business; is dissolved, merged, or consolidated.
<PAGE>
Exhibit 10.3.4 (Page 7)
If we call your account due, we will have all the rights given to us under this
agreement together with the rights of a secured party to declare this and all
other obligations you have with us due at once.
If we call your account due, you and your guarantor(s) agree that we may
immediately apply or set off any deposits or security held by us toward payment
of your debt.
We may decide not to demand immediate payment or to terminate your line of
credit. If we do, we still have the right to demand immediate payment or to
terminate your line of credit at a later date.
Beneficiary. No third party shall have any legally enforceable right in this
Agreement. Nothing contained in the Agreement shall create any contractual
relationship between Regions Bank and any person or entity other than the
borrower.
General Deposits. Nothing in this Agreement shall be construed to create a
written agreement between the borrower and Regions Bank which would require that
monies advanced pursuant to this agreement be paid only to a particular
identified or identifiable person or that any such advances be made and payable
only for a specific or particular purpose. Any deposits if advanced pursuant to
the terms of this Agreement shall constitute general deposits and shall not
constitute special deposits or deposits in escrow or trust. The parties hereto
expressly disclaim any fiduciary or trust relationship between them or any third
party.
Collection costs and attorney's fees. If you are in default and we have to refer
your account to an attorney who is not our salaried employee to sue or take
other steps to collect or secure this debt, you and your guarantor (s) agree to
pay our reasonable costs, including a reasonable attorney's fee.
Unenforceable provisions. If any section of this agreement is not enforceable,
that will not affect the validity of any other section. However, if the
enactment of expiration of any applicable law has the effect of rendering any
provision of this agreement unenforceable according to its terms, at our option,
we may choose to declare your account due at once.
Damages limited. You agree that we are not liable for incidental or
consequential damages, including without limitation, lost sales or lost profits,
arising from our breach of this agreement or our failure to make advances.
Governing law. You agree that this agreement will be interpreted under and
governed by Alabama law.
Entire agreement. You agree that this written agreement plus any other documents
that you signed when you signed this agreement contain the entire agreement
between you and us. We have not made any promises or representations to you that
are not stated in this agreement or those other documents.
Exhibit 10.3.5
APPLE HOMES CORP. FIRST NATIONAL BANK & TRUST
3633 WHEELER RD. COMPANY Line of Credit No.__________
AUGUSTA, GA 30809 316 WEST HILL STREET Date January 27, 1999
THOMSON, GA 30824 Max. Credit Amt. $100,000.00
Loan Ref. No. BL1112752901
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS
"I" Includes each borrower "You" means the lender, its successors & assigns
above, joint & severally
You have extended to me a line of credit in the
AMOUNT of ONE HUNDRED THOUSAND AND NO/100 $ 100,000.00
You will make loans to me from time to time until 09:00 a. m. on August 27,
1999**. Although the line of credit expires on that date, I will remain
obligated to perform all my duties under this agreement so long as I owe you any
money advanced according to the terms of this agreement, as evidenced by any
note or notes I have signed promising to repay these amounts.
This line of credit is an agreement between you and me. It is not intended
that any third party receive any benefit from this agreement, whether direct
payment, reliance for future payment or in any other manner. This agreement is
not a letter of credit.
1. AMOUNT: This line of credit is:
[X] OBLIGATORY: You may not refuse to make a loan to me under this line of
credit unless one of the following occurs:
a. have borrowed the maximum amount available to me;
b. This line of credit has expired;
c. I have defaulted on the note (or notes) which show my indebtedness
under this line of credit;
d. I have violated any term of this line of credit or any note or either
agreement entered into in connection with this line of credit;
e.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
[ ] DISCRETIONARY: You may refuse to make a loan to me under this line of
credit one the aggregate outstanding advances equal or exceed
_______________________________. $____________________________.
Subject to the obligatory or discretionary limitations above, this line of
credit is:
[X]Open End (Business or Agricultural only): I may borrow up to the maximum
amount of principal more than one time.
[ ]Closed End: I may borrow up to the maximum only one time.
2. PROMISSORY NOTE: I will repay any advances made according to this line of
credit agreement as set out in the promissory note I signed January 27,
1999, or any note(s) I sign at a later time which represent advances under
this agreement. The note(s) set(s) the terms relating to maturity, interest
rate, repayment and advances. If indicated on the promissory note, the
advances will be made as follows: PER CUSTOMER REQUEST AND LOAN OFFICER
APPROVAL.__________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
3. RELATED DOCUMENTS: I have signed the following documents in connection with
this line of credit and note(s) entered into in accordance with this line
of credit:
[X] security agreement dated January 27, 1999 [X] UCCI SIGNED 1/27/99
[ ] mortgage dated __________________________ [ ] ____________________
[X] guaranty dated January 27, 1999 [ ] ____________________
<PAGE>
Exhibit 10.3.5
4. REMEDIES: If I am in default on the note(s), you may:
a. take any action as provided in the related documents;
b. without notice to me, terminate this line of credit;
By selecting any of these remedies, you do not give up your right to
later use any other remedy. By deciding not to use any remedy, should
you default, you do not waive your right to later consider the event a
default, if it happens again.
5. COSTS AND FEES: If you hire an attorney to enforce this agreement, I will
pay your reasonable attorney's fees, where permitted by law. I will pay
your court costs and costs of collection, where permitted by law.
6. COVENANTS: For as long as this line of credit is in effect or I owe you
money for advances made in accordance with the line of credit, I will do
the following:
a. maintain books and records of my operations relating to the need for
this line of credit;
b. permit you or any of your representatives to inspect and/or copy these
records;
c. provide to you any documentation requested by you which support the
reason for making any advance under this line of credit;
d. permit you to make any advance payable to the seller (or seller and
me) of any items being purchased with that advance;
e.
----------------------------------------------------------------------
----------------------------------------------------------------------
7. NOTICES: All notices or other correspondence with me should be sent to my
address stated above. The notice or correspondence shall be effective when
deposited in the mail, first class, or delivered to me in person.
8. MISCELLANEOUS: This line of credit may not be changed except by a written
agreement signed by you and me. The law of the state in which you are
located will govern this agreement. Any term of this agreement which is
contrary to applicable law will not be effective, unless the law permits
you and me to agree to such a variation.
SIGNATURES: I AGREE TO THE TERMS OF
THIS LINE OF CREDIT AND HAVE RECEIVED
A COPY ON TODAY'S DATE.
FOR THE LENDER
/S/ Mike Carrington APPLE HOMES CORP
- - ------------------- ----------------
MIKE CARRINGTON
Title ASSISTANT VICE PRESIDENT By /S/ E. Samuel Evans
- - ------------------------------ ----------------------
E. SAMUEL EVANS, PRESIDENT
<PAGE>
ADDITIONAL TERMS OF THE NOTE
DEFINITIONS - As used on pages 1 and 2, "[X]" means the terms that apply to this
loan. "I", "me", or "my" means each Borrower who signs this note and each other
person or legal entity (including guarantors, endorsers, and sureties) who
agrees to pay this note (together referred to as "us"). "You" or "your" means
the Lender and its successors and assigns.
APPLICABLE LAW - The law in the state of Georgia will govern this agreement. Any
term of this agreement which is contrary to applicable law will not be
effective, unless the law permits you and me to agree to such a variation. If
any provision of this agreement cannot be enforced according to its terms, this
fact will not effect the enforceability of the remainder of this agreement. No
modification of this agreement may be made without your express written consent.
Time is of the essence in this agreement.
PAYMENTS - Each payment I make on this note will first reduce the amount I owe
you for charges which are neither interest nor principal. The remainder of each
payment will then reduce accrued unpaid interest and then unpaid principal. If
you and I agree to a different application of payments, we will describe our
agreement on this note. I may prepay a part of, or the entire balance of this
loan without penalty, unless we specify to the contrary on this note. Any
partial prepayment will not excuse or reduce any later scheduled payment until
this note is paid in full (unless, when I make the prepayment, you and I agree
in writing to the contrary).
INTEREST - Interest accrues on the principal remaining unpaid from time to time,
until paid in full. If I receive the principal in more than one advance, each
advance will start to earn interest only when I receive the advance. The
interest rate in effect on this note at any given time will apply to the entire
principal sum outstanding at that time. Notwithstanding anything to the
contrary, I do not agree to pay and you do not intend to charge any rate of
interest that is higher than the maximum rate of interest you could charge under
applicable law for the extension of credit that is agreed to in this note
(either before or after maturity). If any notice of interest accrual is sent and
is in error, we mutually agree to correct it, and if you actually collect more
interest than is allowed by law and this agreement, you agree to refund it to
me.
INDEX RATE - The index will serve only as a device for setting the interest rate
on this note. You do not guarantee by selecting this index, or the margin, that
the interest rate on this note will be the same rate you charge on any other
loans or class of loans you make to me or other borrowers.
POST MATURITY RATE - For purposes of deciding when the "Post Maturity Rate"
(shown on page 1) applies, the term "maturity" means the date of the last
scheduled payment indicated on page 1 of this note or the date you accelerate
payment on the note, whichever is earlier.
SINGLE ADVANCE LOANS - If this is a single advance loan, you and I expect that
you will make only one advance of principal. However, you may add other amounts
to the principal if you make any payments described in the "PAYMENTS BY LENDER"
paragraph on page 2.
MULTIPLE ADVANCE LOANS - If this is a multiple advance loan, you and I expect
that you will make more than one advance of principal. If this is closed end
credit, repaying a part of the principal will not entitle me to additional
credit.
SET-OFF - I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you. "Right to receive money
from you" means:
(1) any deposit account balance I have with you;
(2) any money owed to me on an item presented to you or in your possession
for collection or exchange; and,
(3) any repurchase agreement or other nondeposit obligation.
<PAGE>
"Any amount due and payable under this note" means the total amount of
which you are entitled to demand payment under the terms of this note at the
time you set-off. This total includes any balance the due date for which you
properly accelerate under this note.
If my right to receive money from you is also owned by someone who has not
agreed to pay this note, your right of set-off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set-off does not apply to an account or other
obligation where my rights are only as a representative. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set-off this debt against any of my accounts. I agree to hold
you harmless from any such claims arising as a result of your exercise of your
right to set-off.
DEFAULT - I will be in default if any one or more of the following occur: (1) I
fail to make a payment on time or in the amount due; (2) I fail to keep the
Property insured, if required; (3) I fail to pay, or keep any promise, on any
debt or agreement I have with you; (4) any other creditor of mine attempts to
collect any debt I owe him through court proceedings; (5) I die, am declared
incompetent, make an assignment for the benefit of creditors, or become
insolvent (either because my liabilities exceed my assets or I am unable to pay
debts as they become due); (6) I make any written statement or provide any
financial information that is untrue or inaccurate at the time it was provided;
(7) I do or fail to do something which causes you to believe you will have
difficulty collecting the amount I owe you; (8) any collateral securing this
note is used in a manner or for a purpose which threatens confiscation by a
legal authority; (9) I change my name or assume an additional name without first
notifying you before making such a change; (10) I fail to plant, cultivate, and
harvest crops in due season; (11) any loan proceeds are used for a purpose that
will contribute to excessive erosion of highly erodible land or to the
conversion of wetlands to produce an agricultural commodity, as further
explained in 7 C.F.R Part 1940, Subpart G, Exhibit M.
REMEDIES - If I am in default on this note you have, but are not limited to, the
following remedies:
(1) You may demand immediate payment of all I owe you under this note
(principal, accrued unpaid interest and other accrued unpaid charges).
(2) You may set-off this debt against any right I have to the payment of
money from you, subject to the terms of the "SET-OFF" paragraph
herein.
(3) You may demand security, additional security, or additional parties to
be obligated to pay this note as a condition for not using any other
remedy.
(4) You may refuse to make advances to me or allow purchases on credit by
me.
(5) You may use any remedy you have under state or federal law.
(6) You may make use of any remedy given to you in any agreement securing
this note.
By selecting any one or more of these remedies you do not give up your right to
use later any other remedy. By waiving your right to declare an event to be a
default, you do not waive your right to consider later the event default if it
continues or happens again.
<PAGE>
COLLECTION COSTS AND ATTORNEY'S FEES - I agree to pay all costs of collection,
replevin or any other or similar type of cost if I am in default. In addition,
if you hire an attorney to collect this note, I also agree t pay any fee, not to
exceed 15 percent of the principal and interest then owed, you incur with such
attorney plus court costs (except here prohibited by law). To the extent
permitted by the United States Bankruptcy Code, I also agree to pay the
reasonable attorney's fees and costs you incur to collect this debt as awarded
by any court exercising jurisdiction under the Bankruptcy Code.
WAIVER- I give up my rights to require you to do certain things. I will not
require you to:
(1) demand payment of amounts due (presentmen
(2) obtain official certification of nonpayment (protest);
(3) give notice that amounts due have not been paid (notice of dishonor);
or
(4) give me notice prior to seizure of my personal property when you are
seeking to foreclose a secured interest in any of my personal property
used to secure a commercial transaction.
I waive any defenses I have based on suretyship or impairment of
collateral.
OBLIGATIONS INDEPENDENT - I understand that I must pay this note even if someone
else has also agreed to pay it (by, for example, signing this form or a separate
guarantee or endorsement). You may sue me alone, or anyone else who is obligated
on this note, or any number of us together, to collect this note. You may
without notice release any party to this agreement without releasing any other
party. If you give up any of your rights, with or without notice, it will not
affect my duty to pay this note. Any extension of new credit to any of us, o r
renewal of this note by all or less than all of us will not release me from my
duty to pay it. (Of course, you are entitled to only one payment in full.) I
agree that you may at your option extend this note or the debt represented by
this note, or any portion of the note or debt, from time to time without limit
or notice and for any term without affecting my liability for payment of the
note. I will not assign my obligation under this agreement without your prior
written approval.
CREDIT INFORMATION - I agree and authorize you to obtain credit information
about me from time to time (for example, by requesting a credit report) and to
report to others your credit experience with me (such as a credit reporting
agency). I agree to provide you, upon request, any financial statement or
information you may deem necessary. I warrant that the financial statements and
information I provide to you are or will be accurate, correct and complete.
SIGNATURES AND SEALS: IN WITNESS WHEREOF, I HAVE SIGNED MY NAME AND AFFIXED MY
SEAL ON THIS 27TH DAY OF January, 1999. BY DOING SO, I AGREE TO THE TERMS OF
THIS NOTE (INCLUDING THOSE ON PAGES 1 AND 2) I HAVE RECEIVED A COPY ON TODAY'S
DATE.
APPLE HOMES CORP (seal) ________________________________(seal)
- - ---------------- ------
By:/s/ E. SAMUEL EVANS (seal) ________________________________(seal)
- - ---------------------- ------
E. SAMUEL EVANS, PRESIDENT
_______________________________(seal) ________________________________(seal)
SIGNATURE FOR LENDER: X /s/ Mike Carrington
- - -------------------------------------------
MIKE CARRINGTON
Exhibit 10.3.6
APPLE HOMES CORP. FIRST NATIONAL BANK & TRUST
3633 WHEELER RD SUITE 140 COMPANY Loan Number
AUGUSTA, GA 30909 316 WEST HILL STREET Date
THOMSON, GA 30824 Maturity Date
Loan Amount $75,000.00
Renewal of 404296800
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS
"I" Includes each borrower "You" means the lender, its successors & assigns
above, joint & severally TAX ID NO. 58-2157634
For value received, I promise to pay to you, or your order, at your address
listed above the PRINICPAL sum of Seventy-Five thousand and 00/100 Dollars $
75,000.00
[ ] Single Advance: I will receive all of this principal sum on_______________.
No additional advances are contemplated under this note.
[X] Multiple Advance: The principal sum shown above is the maximum amount of
principal I can borrow under this note. On 6/21/1999 I will receive the
amount of $30,011.87 and future principal advances are contemplated.
Conditions: The conditions for future advances are SUBJECT TO THE
GUIDELINES IN THE ATTACHED FLOOR PLAN AND SECURITY AGREEMENT EXECUTED APRIL
3, 1996. MONTHLY INTEREST PAYMENTS MUST BE CURRENT
[X] Open End Credit: You and I agree that I may borrow up to the maximum
amount of principal more than one time. This feature is subject to all
other conditions and expires on 06/21/2000.
[ ] Open End Credit: You and I agree that I may borrow up to the maximum
only one time (and subject to all other conditions).
INTEREST: I agree to pay interest on the outstanding principal balance from
06/21/1999 at the rate of 9.750% per year until ANY CHANGES IN THE PRIME
INTEREST RATE.
[X] Variable Rate: This rate may then change as stated below:
[X] Index Rate: The future rate will be 2.00% ABOVE the following index rate:
FIRST BANK OF GEORGIA PRIME INTEREST RATE
[ ] No Index: The future index rate will not be subject to any internal or
external index. It will be entirely in your control.
[X] Frequency and Timing: The rate on this note may change as often as DAILY. A
change in the interest rate will take effect IMMEDIATELY.
[ ] Limitations: During the term of this loan, the applicable annual interest
rate will not be more than _____________ % or less than _______________ %.
The rate may not change more than ___________% each________________ .
Effect of Variable Rate: A change in the interest rate will have the following
effect on the payments:
[ ] The amount of each scheduled payment will change
[X] The amount of the final payment will change.
[ ] _____________________________________.
ACCRUAL METHOD: Interest will be calculated on a Actual / 360 basis.
POSTMATURITY RATE: I agree to pay interest on the unpaid balance of this note
owing after maturity, and until paid in full, as stated below:
[ ] on the same fixed or variable rate basis in effect before maturity
(as indicated above)
[X] at a rate equal to 16.00% ANNUM.
[ ] LATE CHARGE: If a payment is more than ____ days after it is due, I
agree to pay a late charge of _______________.
[X] ADDITIONAL CHARGES: In addition to interest, I agree to pay the
following charges which [ ] are [X] are not included in the principal
amount above: $25.00 PER UNIT FLOORED FEE.
PAYMENTS: I agree to pay this note as follows:
[X] Interest: I agree to pay accrued interest MONTHLY BEGINNING JULY 15, 1999.
<PAGE>
Exhibit 10.3.6. (Page 2)
[X] Principal: I agree to pay the principal AS INVENTORY IS SOLD WITH THE
BALANCE TO BE PAID IN FULL ON OR BEFORE JUNE 21, 2000.
[ ] Installments: I agree to pay this note in _________ payments. The first
payment will be in the amount of $_________________ and will be due
_________________. A payment of $_________ will be due
_____________________ ____________________ thereafter. The final payment of
the entire unpaid balance of principal and interest will be due
_______________.
[ ] If checked, and this loan is secured by a first lien on real estate, then
any accrued interest not paid when due (whether due by reason of a schedule
of payments or due because of lenders demand) will become part of the
principal thereafter, and will near interest at the interest rate in effect
from time to time as provided for in this agreement.
ADDITIONAL TERMS:
SUBJECT TO A FLOOR PLAN AND SECURITY AGREEMENT DATED APRIL 3, 1996, DESCRIBING
COLLATERAL AS BEING ALL USED MOBILE HOMES HELD FOR SALE AND ACQUIRED FROM
MANUFACTURERS, DISTRIBUTORS AND SELLERS, BY WAY OR REPLACEMENT, SUBSTITUTION,
ADDITION OR OTHERWISE AND ALL ADDITIONS AND ACCESSIONS THERETO AND ALL PROCEEDS
OF SUCH MOBILE HOMES, INCUDING INSURANCE PROCEEDS.
THIS NOTE IS ALSO GUARANTEED BY E. SAMUEL EVANS, INDIVIDUALLY AND HARDY A.
LANIRE, INDIVIDUALLY.
[X] SECURITY: This note is separately secured by (describe separate document by
type and date):
FLOOR PLAN AND SECURITY AGREEMENT DATED APRIL 3, 1996.
This section if for your internal use. Failure to list a separate document does
not mean the agreement will not secure this note.)
PURPOSE: The purpose of this loan is RENEW #404296800 ORIG BUSINESS LOC (FLOOR
PLAN). SIGNATURES AND SEALS: IN WITNESS WHEREOF, I HAVE SIGNED MY NAME AND
AFFIXED MY SEAL ON THIS 21st DAY OF June 1999. BY DOING SO, I AGREE TO THE TERMS
OF THIS NOTE (INCLUDING THOSE ON PAGE 2). I HAVE RECEIVED A COPY ON TODAY'S
DATE.
EVANS-LANIER INC DBA APPLE HMS 58-2157634
Signature for Lender /s/ Danny Taylor (Seal)
- - -------------------- ---------------- ------
DANNY TAYLOR, SECRETARY
/s/ Heyward Horton, Jr (Seal)
- - ---------------------- ------
HEYWARD HORTON, JR /clm
_____________________________________(Seal)
_____________________________________(Seal)
Exhibit 10.4
MAYFAIR HOMES CORPORATION
Equity Incentive Plan
---------------------
Section 1. Purpose
- - ------------------
The purpose of the Mayfair Homes Corporation Equity Incentive Plan (the "Plan")
is to attract and retain key employees, to provide an incentive for them to
achieve long-range performance goals and to enable them to participate in the
long-term growth of the Company.
Section 2. Definitions
- - ----------------------
"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock, Stock, Stock Unit or Other Stock-Based Award awarded under the
Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such Code.
"Committee" means a committee of not less than two members of the Board
appointed by the Board to administer the Plan. In the absence of the appointment
by the Board of a Committee, the term "Committee as used herein shall mean the
Board
"Common Stock" or "Stock" means the Common Stock, $.002 par value of the
Company.
"Company" means Mayfair Homes Corporation
"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, "Designated Beneficiary"
shall mean the Participant's estate.
"Effective Date" means April 26, 1996.
<PAGE>
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 that is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option
"Other Stock-Based Award" means an Award, other than an Option, Stock
Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a
Common Stock element and awarded to a Participant under Section I 1.
"Participant" means a person selected by the Committee to receive an Award
under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock, which may be earned by
the achievement of performance goals, awarded to a Participant under Section 8.
"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934, as amended, or any successor provision.
"Restricted Period" means the period of time during which an award may be
forfeited to the Company pursuant to the terms and conditions of such Award.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by referenced to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
<PAGE>
Section 3. Administration
- - -------------------------
The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the Committee
shall fix the maximum amount of such Awards for the group and a maximum for any
one Participant.
Section 4. Eligibility
- - ----------------------
All employees, consultants and non-employee directors of the Company or any
Affiliate capable of contributing significantly to the successful performance of
the Company, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan. Incentive Stock Options may be
awarded only to persons eligible to receive such Options under the Code.
Section 5. Stock Available for Awards
- - -------------------------------------
(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 1,000,000 shares of Common Stock. If any Award in respect of
shares of Common Stock expires or is terminated unexercised or is forfeited
without the Participant having had the benefits of ownership (other than voting
rights), the shares subject to such Award, to the extent of such expiration,
termination or forfeiture, shall again be available for award under the Plan.
Common Stock issued through the assumption or substitution of outstanding grants
from an acquired company shall not reduce the shares available for Awards under
the Plan. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Notwithstanding any other provision of the Plan, no more than 1,000,000
shares of Common Stock shall be cumulatively available for the award of
Incentive Stock Options; provided that, to the extent an Incentive Stock Option
expires or is terminated unexercised or is forfeited for any reason, the shares
that were subject to such option may again be awarded as Incentive Stock
Options.
(e) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
<PAGE>
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee (subject, in the case of Incentive
Stock Options, to any limitations required under the Code) shall equitably
adjust any or all of (i) the number and kind of shares in respect of which
Awards may be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Committee
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
Section 6. Stock Options
- - ------------------------
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder, and no Incentive Stock Option may be granted hereunder more than ten
years after the Effective Date.
(b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award with respect to Incentive Stock Options.
Nonstatutory Stock Options may be granted at such prices as the Committee may
determine.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions with respect to the exercise of
Options, including conditions relating to applicable federal or state securities
laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, valued
at their Fair Market Value on the date of delivery, or such other lawful
consideration as the Committee may determine. In addition to the method of
payment set forth above, and in lieu of any cash payment required thereunder,
the option price for the shares for which options a-Fe exercised may be paid by
surrendering the option agreement in exchange for the number of shares of Common
Stock equal to the product (i) the number of shares a to which the option
agreement is being exercised, multiplied by (ii) a fraction, the numerator of
which is the Fair Market Value of the Common Stock less the option price and the
denominator of which is the Fair Market Value.
<PAGE>
(e) The Committee may provide that, subject to such conditions as it
considers appropriate, upon the delivery of shares to the Company in payment of
an Option, the Participant automatically be awarded an Option for up to the
number of shares so delivered.
Section 7. Stock Appreciation Rights
- - ------------------------------------
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs granted in
tandem with Options shall have an exercise price not less than the exercise
price of the related Option. SARs granted alone and unrelated to an Option may
be granted at such exercise prices as the Committee may determine.
(b) An SAR related to an Option that can only be exercised during limited
periods following a change in control of the Company may entitle the Participant
to receive an amount based upon the highest price paid or offered for Common
Stock in any transaction relating to the change in control or paid during the
thirty-day period immediately preceding the occurrence of the change in control
in any transaction reported in the stock market in which the Common Stock is
normally traded.
Section 8. Performance Shares
- - -----------------------------
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for such
Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems suitable
in recognition of usual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
<PAGE>
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares that have been earned
on the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
Section 9. Restricted Stock
- - ---------------------------
(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
Section 10. Stock Units
- - -----------------------
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.
Section 11. Other Stock-Based Awards
- - ------------------------------------
(a) Subject to the provisions of the Plan, the Committee may make other
awards of Common Stock and other awards that are valued in whole or in part by
reference to, or are otherwise based on, Common Stock, including without
limitation convertible preferred stock, convertible debentures, exchangeable
securities and Common Stock awards or options. Other Stock-Based Awards may be
granted either alone or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan.
<PAGE>
(b) The Committee may establish performance goals, which may be based on
performance goals related to book value, subsidiary performance or such other
criteria as the Committee may determine, Restricted Periods, Performance Cycles,
conversion prices, maturities and security, if any, for any Other Stock-Based
Award. Other Stock- Based Awards may be sold to Participants at the face value
thereof or any discount therefrom or awarded for no consideration or such
minimum consideration as may be required by applicable law.
Section 12. General Provisions Applicable to Awards
- - ---------------------------------------------------
(a) Reporting Person Limitations. Notwithstanding any other provision of
the Plan, to the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, as amended, and any successor
provision, Awards made to a Reporting Person shall not be transferable by such
person other than by will or the laws of descent and distribution or pursuant to
a qualified domestic relations order, as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder.
(b) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provision of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(c) Committee Discretion. Each type of Award may be made alone, in addition
to or in relation to any other type of Award. The terms of each type of Award
need not be identical, and the Committee need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(d) Settlement. The Committee shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company, Awards
or other property. The Committee may permit a participant to defer all or any
portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(e) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
<PAGE>
(f) Termination of Employment. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of employment
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(g) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company, the Committee in its
discretion may, at the time an Award is made or at any time thereafter, take one
or more of the following actions: (i) provide for the acceleration of any time
period relating to the exercise or realization of the Award, (ii) provide for
the purchase of the Award upon the Participant's request for an amount of cash
or other property that could have been received upon the exercise or realization
of the Award had the Award been currently exercisable or payable, (iii) adjust
the terms of the Award in the manner determined by the Committee to reflect the
change in control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the Committee
may consider suitable and in the best interests of the Company.
(i) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
(j) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.
(k) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or converting an Incentive Stock
Option to a Nonstatutory Stock Option, provided that the Participants consent to
such action shall be required unless the Committee determines that the action,
taking into account any related action, would not materially and adversely
affect the Participant.
Section 13. Miscellaneous
- - -------------------------
<PAGE>
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant from any liability or claim under
the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective on the Effective Date. Prior to such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, subject to any shareholder approval that the
Board determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of New York.
Exhibit 10.5
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
Effective Date: 02/01/1999
This document is a description of the Plan. It is intended
that the language be clear and understandable. The law
governing plans is very complicated. Consequently, the
language in the law and the Plan is very technical and
legal. The government requires that the Plan document and
this description contain much of the same language. If this
description says something different from what the Plan
says, the Plan must be followed. A copy of the Plan is
available for inspection by contacting the Plan
Administrator, whose telephone number is on the Plan
Information Page.
Date Prepared: February 16, 1999
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
TABLE OF CONTENTS
I. PLAN INFORMATION ....................................................... 1
II. ELIGIBILITY REQUIREMENTS ............................................... 2
III. PLAN CONTRIBUTIONS ..................................................... 3
Generally: ............................................................. 3
Elective Deferral Contributions: ....................................... 3
Profit Sharing Contributions:........................................... 3
Additional Contributions: .............................................. 4
Compensation: ......................................................... 4
IV. PLAN BENEFITS AND METHODS OF PAYMENTS .................................. 5
Distributions: ......................................................... 5
Hardship Distributions: ................................................ 5
Rollover Contributions: ................................................ 6
Payment of Your Distribution: .......................................... 6
Amount and Form of Payment of Your Distribution: ...................... 7
V. PLAN ADMINISTRATION .................................................... 9
Plan Operation: ........................................................ 9
Plan Administrator: .................................................... 9
Trustee: ............................................................... 9
Investment of Plan Assets: ............................................. 9
Plan Insurance: ........................................................ 10
VI. LOSS OR DENIAL OF BENEFITS ............................................. 11
Vesting :............................................................... 11
Break in Service: ...................................................... 12
Beneficiary Designation: ............................................... 12
VII. TERMINATION OF THE PLAN ................................................ 13
VIII. YOUR RIGHTS UNDER ERISA ............................................... 14
LOAN ADDENDUM ............................................................... 16
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
I. PLAN INFORMATION.
Plan Name: Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
Employer: Apple Homes Corp., Inc.
Address: 3633 Wheeler Road, Suite 140 Augusta, GA
30909
Employer Identification Number
of Plan Sponsor: 13-3525328
Plan Serial Number: 001
Type of Plan: 401 (k) Profit Sharing Plan
Normal Retirement Age: 65 with 5 participation years
Trustee(s): State Street Bank & Trust Company
Business Address: Two Heritage Drive
Quincy, MA 02171
Plan Administrator and
Plan Sponsor Apple Homes Corp., Inc.
Business Address: 3633 Wheeler Road, Suite 140
Augusta, GA 30909
Phone Number: (706) 650-2015
Agent for service of legal
process: Plan Administrator (see above)
Note: Service of legal process may be made
upon a Plan Trustee or the Plan
Administrator.
Ending Date of Plan's Year: December 3 1
Summary Plan Description
Page 1
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
II. ELIGIBILITY REQUIREMENTS.
After you start work, and have completed the required period of service for
eligibility, you will enter the Plan on the next entry date.
To be eligible to become a participant in the Plan, you must, as of these dates:
January 1, July I
1. have completed 6 Month(s) of Service.
2. have attained age 21.
3. not be covered by a collective bargaining agreement (i.e., not in a union).
4. not be a nonresident alien and not earning any U.S. income.
5. All individuals, in a class of employees normally eligible, who are
employed on February 1, 1999, will be eligible to participate in the Plan
immediately. All other employees hired after February 1, 1999 will be
required to meet the above eligibility requirements.
Summary Plan Description
Page 2
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
III. PLAN CONTRIBUTIONS.
Once you have satisfied the eligibility requirements, you become a Participant
automatically.
Generally:
- - ----------
The amount of Contributions to the Plan are determined by the sum of Elective
Deferral Contributions, Profit Sharing Contributions, Rollover Contributions,
and additional contributions which may be made by the employer during the year.
Your social security benefits are paid by the government and are in addition to
the benefits paid from the Plan. The existence of this Plan and the
contributions made to it will not affect your social security benefits in any
way.
Elective Deferral Contributions:
- - --------------------------------
You may elect to reduce your salary and have the amount contributed to the
Trust. The amount may not be more than the lesser of:
1. 15% of your pay and the amount of your Cash Bonus, or
2. $ 1 0000 as adjusted to reflect annual federal cost of living increases, or
3. such lesser amount as determined by the discrimination tests for the Plan.
You may choose to begin Elective Deferral Contributions on 1/1, 7/1.
Your election will be effective with the 1st pay period following the period in
which you make the election. Your election will remain in effect until modified
or terminated by you. You can modify your election effective 1/1, 7/1. You may
terminate your deferrals at any time. Contact your Plan Administrator for the
deadline for making modification requests. Because it is a Cash or Deferred
Arrangement, this Plan must meet special tests which assure that highly
compensated employees do not make significantly more Elective Deferral
Contributions to the Plan than non-highly compensated employees. If, under the
test, the contributions of the highly compensated employees exceed the amount
permitted, the employer must either return some of the Elective Deferral
Contributions, or make additional contributions on behalf of certain
participants. The additional contributions will be treated as Elective Deferral
Contributions. You may not contribute more than $10000 (as adjusted under
Federal Law) to all 40 1(k) type plans to which you belong. You must apply to
your Plan Administrator in writing for a refund of any Elective Deferral
Contribution by 03/01.
Profit Sharing Contributions:
- - -----------------------------
Summary Plan Description
Page 3
<PAGE>
Apple Homes Corp., Inc.
40 1(k) Profit Sharing Plan
The Employer may decide to make additional contributions which will be subject
to the "Vesting Schedule" shown in Section VI below. The Profit Sharing
Contribution will be allocated to your account in the ratio that your
compensation bears to the compensation of all participants. Forfeitures of this
contribution shall be allocated with the Profit Sharing Contribution.
Additional Contributions:
- - -------------------------
The employer may make special contributions to enable the Elective Deferral
Contributions to pass discrimination tests required under the Internal Revenue
Code. These contributions are called Qualified Non-Elective Contributions in the
Plan Document and Adoption Agreement and will be made in the manner required for
the purpose of passing the tests.
Compensation:
- - -------------
All your contributions are based on the amount you are paid.
Your pay or eamings are the sum of your W-2 eamings and amounts deferred through
a salary deferral agreement under an IRC 401(k) Plan, through a Cafeteria Plan
under IRC 125, a SEP under 402(h), or through an annuity under IRC 403(b).
The amount of your compensation which will be used for plan purposes will be
that to you durtng the Plan Year beginning each January 1 and ending each 31.
Summary Plan Description
Page 4
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
IV. PLAN BENEFITS AND METHODS OF PAYMENTS.
Distributions:
- - --------------
You may elect to receive a distribution from the 40 1 (k) Plan if you:
1. Separate from service,
2. Die,
3. Become disabled, or
4. Attain age 591/2.
Also, you may receive a distribution of your salary deferral contributions:
1. If the Plan terminates and there is no successor Plan, or
2. If the employer or most of his working assets are sold to another unrelated
company, or
3. If the employer sells its interest in a subsidiary to another unrelated
company, or
4. If you have a `financial hardship". (Note: Applicable to Salary Deferral
Contributions, as defined below, only.)
When you are ready to begin receiving your benefit, contact the Plan
Administrator. The Plan cannot compel you to take a distribution, unless your
benefit is less than $5,000.
Hardship Distributions:
- - -----------------------
You may receive a distribution of Elective Deferrals (and eamings thereon
accrued as of December 31, 1988) in the event of hardship. The following is a
general explanation of the rules for such a distribution.
Contact the Plan Administrator for complete details and application. This is a
taxable distribution.
Hardship is defined as an immediate and heavy financial need where you lack
other available resources. You will need to receive your spouse's consent to the
distribution.
The following are the only financial needs considered immediate and heavy for
which you may receive a hardship distribution:
o incurred or necessary medical expenses of the Employee, the Employee's
spouse, children, or dependents;
o the purchase (excluding mortgage payments) of a principal residence for the
Employee;
o payment of tuition for the next 12 months of post-secondary education for
the Employee, the Employee's spouse, children or dependents;
Summary Plan Description
Page 5
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
o the prevention of eviction of the Employee from, or a foreclosure on the
mortgage of, the Employee's principal residence.
In order to qualify for a hardship distribution, you must first obtain all other
types of distributions and all nontaxable loans permitted under all plans
maintained by the Employer.
Your right to make Elective Deferrals will be suspended for twelve months after
the receipt of the hardship distribution.
The amount you may receive may not be in excess of the amount of an immediate
and heavy financial need, or the amount of your Elective Deferrals.
The amount of Elective Deferrals you will be allowed to make for the taxable
year immediately following the taxable year of the hardship distribution, may
not be in excess of the applicable limit under Section 402(g) of the Code (the
$7,000 limit adjusted for cost of living) for that taxable year, less the amount
of your Elective Deferrals made in the taxable year of the hardship
distribution.
The determination of the existence of financial hardship, and the amount
required to be distributed to meet the need created by the hardship, shall be
made in a nondiscriminatory manner by the Plan Administrator according to the
written rules and regulations of the Plan.
To apply for a financial hardship distribution you must:
1. Complete an application for the Plan Administrator,
2. Provide proof to the Administrator of expenditures showing the amount of
the withdrawal needed, and
3. Provide proof to the Administrator, such as bank statements, showing that
there are no other financial resources available to meet the expense.
Rollover Contributions:
- - -----------------------
You may apply to the Plan Administrator asking the Plan to receive a
contribution of a distribution to you from another qualified plan. If the Plan
accepts this money, it is called a Rollover Contribution.
Payment of Your Distribution:
- - -----------------------------
Summary Plan Description
Page 6
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
Once you become eligible for a distribution and elect to receive it, the Trustee
will be instructed to pay it out.
The amount of this distribution will be the vested portion of your plan money.
It cannot be specified exactly how long it will take for you to receive this
distribution, for two reasons:
1. In the daily valuation system the Plan Administrator will generally know
the value of your account, however, the assets will need to be liquidated
in order for you to receive payment. This may take a period of time. Some
types of assets may take a longer period of time to liquidate an others.
Publicly traded stocks and mutual funds generally are easily liquidated.
2. After you leave, the Plan Administrator must calculate your exact years of
vesting, prepare a final statement of your account, prepare an IRS form
showing how it is taxable, and have a check prepared.
Of course, your employer is interested in paying benefits when due, but must do
so in an orderly course of business. For this reason, it is anticipated that any
distribution will take a reasonable length of time.
Amount and Form of Payment of Your Distribution:
- - ------------------------------------------------
The amount of your benefit in this Plan depends on the amount in your account
and the extent to which you are vested in that amount.
The benefit forms available are: 1. Lump Sum, 2. Installment Payments.
You can defer paying taxes on all or a portion of your distribution by
requesting that the Plan transfer it directly to an Individual Retirement
Account or a Qualified Plan. This is called a direct rollover.
If you elect a direct rollover from this plan to your new plan or IRA, no money
will be withheld for payment of federal income taxes. At the time of your
distribution you will want to be sure to speak with the Plan Administrator as to
how you can accomplish a direct rollover.
If you do not elect to make a direct rollover to a Qualified Defined
Contribution Plan or IRA, the Employer will be required to withhold 20% of any
monies you receive to pay federal income taxes.
You may still receive your money and then decide to roll it over, as long as you
do so within 60 days of the date of payment. But the withholding will have
already occurred at the time of distribution and you will pay taxes on this
amount as well as any other amount you do not rollover. If you decide to
Summary Plan Description
Page 7
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
rollover the whole distribution including the amount that was withheld, you must
provide other money to replace the amount withheld. The withholding will be
credited against any income tax you owe for the year, and when you file your
income tax return, you may get a refund of the amount withheld.
If you are ever going to receive a distribution, be sure to review carefully the
Notice of Taxation of Distribution that you will receive from your Plan
Administrator.
If you keep all or a part of your distribution, then you must show the payment
as income on your tax return for that year. You or your tax preparer should
calculate the tax when you prepare the return.
If you have applied for and received a Hardship Distribution, the amount must be
reported by you as income in the year it was received. A Hardship Distribution
will always be given to you as a lump sum.
If you are under 59 1/2 when you receive a distribution, you will be liable for
an early distribution tax unless you roll the amount into an Individual
Retirement Account.
The Plan Administrator cannot give you legal or tax advice. You should rely on
your own personal tax advisor when the time comes to decide on how you wish to
take distribution and to determine the tax consequences of receiving a
distribution.
Summary Plan Description
Page 8
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
V. PLAN ADMINISTRATION.
Plan Operation:
- - ---------------
Your employer makes contributions to the Plan. These contributions can never go
back to the employer. The Trustee, each year, tells the Plan Administrator what
the trust is worth and the Plan Administrator then must divide the funds among
all of the plan participants accounts. The Plan Administrator may issue a
statement of his account to each participant. The Plan Administrator must give
the value of your account to you if you request it in writing.
Plan Administrator:
- - -------------------
The plan is administered by the Plan Administrator, whose name is typed on the
Plan Information page. Your employer has appointed the Plan Administrator and
can change the Plan Administrator at any time. The Plan Administrator has the
sole and ultimate responsibility to interpret Plan provisions and determine Plan
Benefits, and is responsible for such things as keeping plan records and
reporting to government agencies.
Trustee:
- - --------
Your plan is funded by a Trust. The name of the Trustee is typed on the Plan
Information page. Your employer has appointed the Trustee and can change the
Trustee at any time. The job of the Trustee is to safe keep the fund of money in
the Plan and to invest the money.
Investment of Plan Assets:
- - --------------------------
In your Plan each Participant has an Individual Investment Account. This account
will hold the Salary Deferral Contributions, additional contributions, and
Profit Sharing Contributions allocable to the Participant. Rollover
Contributions will also be included.
You must direct the Trustee as to how your assets are to be invested. The
employer and Plan Administrator will select a series of mutual funds or pooled
investment accounts for you to invest in. You may direct the investment of your
account assets into any investment permitted by regulation and the policy of the
Plan. Note that the Plan Administrator, the Employer, and the Trustee will not
provide investment advice. You are totally responsible for any investment
selection which you make.
Summary Plan Description
Page 9
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
Your Employer is not responsible for the financial gains or losses to your
account which result from your directions.
Plan Insurance:
- - ---------------
You may have heard that the government provides insurance to pay pension
benefits if a Plan fails. This Plan is not eligible for such insurance because
contributions are made right into your own account. If the Plan terminates or
your employer goes out of business, you will be entitled to receive all the
benefits in your account at the time. This amount could be more or less than the
total amount of contributions made to your account depending on your investment
experience.
Summary Plan Description
Page 10
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
VI. LOSS OR DENIAL OF BENEFITS.
You should be aware that some actions by you or the employer may result in a
loss or denial of benefits from your Plan.
Also, because a 401(k) Plan must pass special nondiscrimination tests, sometimes
your contributions will have to be returned to you as excess contributions which
the plan cannot continue to hold. If the Plan returns contributions, you will
have to pay income taxes on them.
Vesting:
- - --------
Your plan has a Vesting Schedule that establishes what percentage of your Profit
Sharing Contribution is nonforfeitable if you leave the employer.
Forfeitures of Profit Sharing Contributions will be reallocated in the same
manner as current Profit Sharing Contributions.
The vesting schedule is based on Covered Years of Service. A Covered Year of
Service is any 12 month period ending on the plan year end during which you
worked for the employer at least 1000 hours.
Vesting Schedule
Covered Years of Service: Percentage of Account Vested:
Less than 1 0%
1 but less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
If you have reached Normal Retirement Age, if you die, if you are totally and
permanently disabled, or if the Plan is terminated then your balance of these
funds becomes 100% vested. This means that you or your beneficiaries get the
entire value of your accounts. You are always 100% vested in you Elective
Deferral contributions to the Plan.
Summary Plan Description
Page 11
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
Break in Service:
- - -----------------
Once you have become a participant in the Plan, you will remain a participant
until a year (which ends on December 31) passes, during which you did not work
500 hours. This is called a 1 year break in service. If you return before having
5 consecutive 1 year breaks in service, then you continue to participate in the
Plan as if you had never left the employer.
Other circumstances which may cause either a reduction or denial of benefits:
A. If the employer amends the Plan to reduce future contributions, then your
account will not grow at the same rate.
B. If the employer terminates the Plan, then your account will have no further
contributions.
C. If your salary decreases, then your allocation of the contribution will be
less.
D. If the Plan investments do poorly, then your account balance will decrease.
E. If you receive a loan from the Plan which you fail to repay, then your
account balance will be offset by the loan.
Beneficiary Designation:
- - ------------------------
If you die before benefits are distributed to you, the Trustee will pay out the
whole amount to the beneficiary you have set forth on the beneficiary
designation form on file with the Employer.
Make sure you keep this form current.
Summary Plan Description
Page 12
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
VII. TERMINATION OF THE PLAN.
While the Plan is intended to be permanent, the employer reserves the right to
amend or terminate the Plan. If the Plan is terminated, you will immediately
become 100% vested in all your benefits in the Plan.
Summary Plan Description
Page 13
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
VIII. YOUR RIGHTS UNDER ERISA.
As a participant in this plan you are entitled to certain rights and protections
under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA
provides that all plan participants shall be entitled to examine, without
charge, at the Plan Administrators office and at other specified locations all
plan documents, including insurance contracts, collective bargaining agreements
and copies of all documents filed by the Plan with the U.S. Department of Labor,
such as detailed annual reports and Plan descriptions.
Obtain copies of all plan documents and other plan information upon written
request to the Plan Administrator. The Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plans annual financial report. The Plan Administrator
is required by law to furnish each participant with a copy of this summary
annual report.
In addition to creating rights for plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your plan, called Fiduciaries of the Plan, have a duty to
do so prudently and in the interest of you and other plan participants and
beneficiaries. No one, including your employer, your union, or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a pension benefit or exercising your rights under ERISA.
If your claim for a pension benefit is denied in whole or in part you must
receive a written explanation of the reason for the denial. You have the right
to have the Plan reviewed and reconsider your claim. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if you request
materials from the Plan and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $110 a day until you
receive the materials, unless the materials were not sent because of reasons
beyond the control of the Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
the Plan fiduciaries misuse the Plans money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in Federal Court. The Court will decide who pays
Court Cost and Legal Fees. If you are successful the Court may order the person
you have sued to pay these costs and fees. If you lose, the Court may order you
to pay these costs and fees, for example, if it finds your claim is frivolous.
Summary Plan Description
Page 14
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
The Plan Administrator has the sole and ultimate authority to define and
interpret plan language, terms and documentation.
If you have any questions about your plan, you should contact the Plan
Administrator.
If you have any questions about this statement or about your rights under ERISA,
you should contact the nearest area office of the U.S. Labor-Management Services
Administration, Department of Labor.
Summary Plan Description
Page 15
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
SUMMARY PLAN DESCRIPTION
PARTICIPANT LOAN ADDENDUM
You may apply for a loan under the Retirement Plan. This information sheet has
been prepared to give you some general information concerning these loans. You
may apply for a loan by obtaining a loan application form from your Plan
Administrator.
1. The maximum loan you may borrow may not exceed the lesser of 50% of your
vested interest in the Plan or $50,000 (reduced by the excess of the highest
loan balance held by you in the last 12 months, over the outstanding balance on
the date of the loan) less your current loan balance. The minimum loan you may
borrow will not be less than $ 1,000.00 (minimum may not exceed $ 1,000.00).
2. The interest rate will be the prevailing rate found by the Plan
Administrator. It will be the average of the rate used for similar personal loan
transactions used by several commercial banks in the general geographic area of
the Plan.
3. The maximum loan term is 5 years, unless you certify that you are going to
use it to purchase your primary residence. In that case, the maximum term for a
home loan is 30 years. A loan to purchase a primary residence is not a mortgage,
and does not permit you to take a deduction on your personal income taxes.
4. The loan will be fully amortized and secured by the vested balance of your
account in the Plan.
5. Loan amounts will first be taken from money attributed to rollovers, then
pro-rata from all other accounts until liquidated, until the loan amount
requested has been taken.
6. All loans must be fully amortized, principal and interest, and must be paid
through regular payroll deductions. Loan payments will be deposited to your plan
accounts in the reverse order to that in #5 according to current fund elections.
7. When you take a loan from the plan you will be pledging your account balance
to repay the entire balance of the loan if you should default.
8. You may prepay the total outstanding balance of your loan at any time. There
is no prepayment penalty. Partial prepayments are not allowed.
Summary Plan Description
Page 16
<PAGE>
Apple Homes Corp., Inc.
401(k) Profit Sharing Plan
9. Since payments are made by payroll deductions, default occurs when you no
longer are receiving a paycheck from the Company, and you fail to make payments.
If you are still an employee, but are on an unpaid leave of absence, you may
continue to make the regular payments by personal check. Default will occur if
you fail to send in your check. If you fail to make up the payments you owe,
default occurs. The amount outstanding will be deemed distributed to you as
income. However, the loan will continue to be held as an asset of the Plan.
10. If you terminate your employment with a remaining loan balance, or if you
otherwise default on your loan, the balance will be immediately due and payable.
If you do not pay off the loan, the outstanding amount will be deducted from
your account balance upon its distribution to you. The amount of the loan
balance would then be a taxable distribution from the Plan and may also be
subject to a 10% early distribution penalty if you are not at least 59 1/2. Your
employer will be required to withhold 20% of the amount of your loan in default
for payment of Federal Income Taxes. This withholding will be paid from your
remaining vested account balance at the time of distribution. You should consult
a tax advisor if this occurs to determine its effect on your taxes. Note that if
the loan is deemed to be distributed as taxable income to you, and you are not
otherwise entitled to receive a distribution, the loan will remain part of your
account balance.
11. Further information concerning the loans is contained in the Loan
Application, the Promissory Note, and the Truth-in-Lending Disclosure Statement,
if applicable, copies of which are provided by the Plan Administrator.
12. Provisions for loans are subject to change by the Plan Administrator at any
time. Any future changes will not affect existing loans unless required by law.
13. Generally, interest repayments are not deductible.
Summary Plan Description
Page 17
Exhibit 10.6.1
STATE OF GEORGIA
COUNTY OF McDUFFIE
A G R E E M E N T
This Agreement, made and entered into this, the 27th day of December 1994,
by and between Apple Homes, Inc., a Georgia corporation, having its principal
place of business in Richmond County, Georgia, and Hardy A. Lanier, a resident
of McDuffie County, Georgia,
W I T N E S S E T H:
Whereas, Apple Homes, Inc. is or shall be the registered owner of 80% of
the issued and outstanding stock of Evans-Lanier, Inc., and the said Hardy A.
Lanier is or shall be the registered owner of 20% of such issued and outstanding
stock; and
Whereas, Evans-Lanier, Inc. shall own and operate a retail mobile home
sales lot on West Hill Street in the city of Thomson, McDuffie County, Georgia,
doing business as Apple Homes, Thomson Branch; and
Whereas, the said Hardy A. Lanier has paid unto Evans unto Evans-Lanier,
Inc., the sum of $25,000.00 for the purchase of 20% of the issued and
outstanding stock of said corporation; and
Whereas, the parties hereto are desirous of outlining and formalizing an
operating agreement with respect to said retail sales lot, and they have,
therefore, agreed between themselves as follows:
1. In return for the payment by the said Hardy A. Lanier for the purchase
of said stock, it is agreed that he, the said Hardy A. Lanier, shall be entitled
to receive 20% of all net profit derived from the operation of said mobile home
sales lot, to include, but not limited to, sales of mobile homes, both new and
used; sales of tires and axles; volume discount rebates paid unto the
corporation by manufacturers. It is agreed that such distribution shall be made
unto the said Hardy A. Lanier on a quarterly basis, beginning at the end of the
first calendar quarter of 1995, and continuing at the end of each and every
subsequent quarter thereafter.
Further it is agreed that the said Hardy A. Lanier shall be furnished
office space in the office unit of said corporation located on the sales lot in
Thomson, McDuffie County, Georgia, for the purpose of his conducting sales and
the operation of his mobile home servicing and land clearing business.
It is agreed and understood by the parties hereto that, should the said
Hardy A. Lanier fail to perform the services hereinabove described in a
satisfactory manner and fashion, then the said Evans-Lanier, Inc., D/B/A Apple
Homes, Thomson Branch, shall be authorized to engage other parties to accomplish
such.
Additionally, the said Hardy A. Lanier, D/B/A Lanier's Mobile Home Services
and Land Clearing shall be paid and compensated for any and all such
contemplated services actually performed at rates to be agreed upon between the
parties hereto at the time of the performance of said work and services.
<PAGE>
In witness whereof, the parties hereto have hereunto set their hands and
affixed their seals on this, the 27th day of December 1994.
Witness:
/s/ William M. Wheeler
- - ----------------------
Sworn to and subscribed before
Me, this, the 27th day of December 1994.
/s/ Pamela S. Brown /s/ Hardy A. Lanier
- - ------------------- -------------------
Pamela S. Brown Hardy A. Lanier
Notary Public, McDuffie County, Georgia
My Commission Expires December 6, 1998
Witness:
/s/ Pamela S. Brown Apple Homes, Inc.
- - ------------------- -----------------
Sworn to and subscribed before
Me, this, the 27th day of December 1994.
By: /s/ E. Samuel Evans, President
- - ----------------------------------
/s/ William M. Wheeler
- - ----------------------
<PAGE>
Apple Homes
Corporation 3633 Wheeler Road, Suite 140
Augusta, GA 30909
(706) 650-2015
FAX (706) 650-0629
STATE OF GEORGIA
COUNTY OF RICHMOND
AMENDMENT
This amendment is made to the agreement entered into on the 27th day of
December, 1994, by and between Mayfair Homes Corporation, a Delaware Corporation
now known as Apple Homes Corporation, with its principal place of business
located at 3633 Wheeler Road, Suite 140, Augusta, Georgia 30909, hereinafter
referred to as "Apple" and Hardy A. Lanier, a resident of McDuffie County,
Georgia, hereinafter referred to as "Lanier".
WITNESSETH
This amendment affects only those sections addressed herewith. The original
agreement stays in affect in every way except for these amendments:
1. The payment of any dividends is at the discretion of the officers of
the company.
2. It is agreed that 25-33% of the net profits of said company,
(Evans-Lanier, Inc.), will remain in working capital until a minimum
of $100,000 working capital exist.
3. Further, it is agreed that bonuses and management fees will be at the
discretion of the officers of Evans-Lanier, Inc. and will be paid
quarterly depending on the profitability of the company.
In witness whereof, the parties hereto set their hands and affixed their
seals on this the I" day of April, 1998.
/s/ E. Samuel Evans /s/ Hardy A. Lanier
- - ------------------- -------------------
E. Samuel Evans Hardy A. Lanier
President
Apple Homes Corporation
Exhibit 10.6.2
STATE OF GEORGIA
COUNTY OF RICHMOND
AGREEMENT
This Agreement, made and entered into this 16TH day of December, 1996, by
and between Mayfair Homes Corporation, a Delaware Corporation, having its
principal place of business at 3633 Wheeler Rd, Ste 140, Augusta, GA 30909,
hereinafter referred to as "Mayfair" and Chad A. Aycock, a resident of 3180
Washington Rd, Thomson, GA 30824, hereinafter referred to as "Aycock".
WITNESSETH
Whereas, Mayfair is the registered owner of 200 shares of stock of Big
Daddy's Mobile Homes, Inc., said shares constituting 100% of the issued and
outstanding stock of said corporation; and
Whereas, Aycock is desirous of obtaining 40 shares constituting 2O%
ownership of Big Daddy's Mobile Homes, Inc., and
Whereas, the parties hereto are desirous of outlining and formalizing an
operating Agreement with respect to said retail lot located at 1819 Gordon Hwy,
Augusta, Richmond County, Georgia, and they have, therefore, agreed between
themselves as follows:
1. Mayfair hereby conveys 40 shares of stock (representing 20% ownership)
of Big Daddy's Mobile Homes, Inc., to Aycock for the purchase price of
$25,000.00. Said purchase price shall be paid in the following fashion:
$10,000.00 (Ten-thousand) payable in cash at closing and a demand note for the
remaining $ 15,000.00 (Fifteen-thousand).
<PAGE>
2. In return for the payment by Aycock for said interest, it is agreed that
Aycock shall be entitled to receive 20% of all net profits derived from the
operation of said sales center, to include, but not limited to, sales of
manufactured homes, both new and used, sales of wheels and axles, and volume
rebates paid unto the corporation by the manufacturers. It is agreed that such
distribution shall be made to Aycock on a quarterly basis beginning with the
quarter ending March 30, 1997, and continuing at the end of each subsequent
quarter thereafter. It is further agreed that the $ 15,000.00 note from Aycock
to Mayfair shall be deducted from said distributions.
3. It is further agreed that the effective takeover date by Aycock shall be
January 1, 1997. All sales, bills, transaction prior to date belong to Mayfair.
Sales shall be construed as those applications and or deposits given prior to
the end of December 30, 1996.
4. Mayfair Homes Corporation is responsible to furnish wholesale and retail
financing.
In Witness whereof, the parties hereto have hereunto set their hands and
affixed their seals on this the 16TH day of December 1996.
/s/ Scarlett D. Brown /s/ Chad A. Aycock
- - --------------------- ------------------
WITNESS CHAD A. AYCOCK
/s/ Frances M. Kelley MAYFAIR HOMES CORPORATION
- - ---------------------
WITNESS BY: /s/ E. Samuel Evans
-----------------------
E. SAMUEL EVANS, PRESIDENT
<PAGE>
Apple Homes
Corporation 3633 Wheeler Road, Suite 140
Augusta, GA 30909
(706) 650-2015
FAX (706) 650-0629
STATE OF GEORGIA
COUNTY OF RICHMOND
AMENDMENT
This amendment is made to the agreement entered into on the 16th day of
December, 1996, by and between Mayfair Homes Corporation, a Delaware Corporation
now known as Apple Homes Corporation, with its principal place of business
located at 3633 Wheeler Road, Suite 140, Augusta, Georgia 30909, hereinafter
referred to as "Apple" and Chad A. Aycock, a resident of 3 1 80 Washington Road,
Thomson, Georgia 30824, hereinafter referred to as "Aycock".
WITNESSETH
This amendment affects only those sections addressed herewith. The original
agreement stays in affect in every way except for these amendments:
1. The payment of any dividends is at the discretion of the officers of
the company.
2. It is agreed that 25-33% of the net profits of said company, (Big
Daddy's Mobile Homes, Inc.), will remain in working capital until a
minimum of $100,000 working capital exist.
3. Further, it is agreed that bonuses and management fees will be at the
discretion of the officers of Big Daddy's Mobile Homes, Inc. and will
be paid quarterly depending on the profitability of the company.
In witness whereof, the parties hereto set their hands and affixed their
seals on this the I" day of April, 1998.
/s/ E. Samuel Evans /s/ Chad A. Aycock
E. Samuel Evans Chad A. Aycock
President
Apple Homes Corporation
Exhibit 10.6.3
STATE OF GEORGIA
COUNTY OF MCDUFFIE
AGREEMENT
This Agreement, made and entered into this 1st day of September, 1996, by
and between Mayfair Homes Corporation, a Delaware Corporation, with its
principal place of business at 3633 Wheeler Road, Suite 140, Augusta, GA 30909,
hereinafter referred to as "Mayfair" and Carolyn M Stratton, a resident of 2933
Milledgeville Road, Augusta, GA 30904, hereinafter referred to as "Stratton",
WITNESSETH
Whereas, Mayfair owns and operates a retail sales center at 2933 Milledgeville
Road doing business under the Trade Name of "Apple Homes",
And, whereas Stratton is desirous of obtaining a 20% partnership agreement with
Mayfair to manage and operate said sales center,
And, whereas the parties hereto are desirous of outlining and formalizing an
operating agreement with respect to said retail sales center, and they have
therefore, agreed between themselves as f follows:
1. Mayfair hereby conveys twenty percent (20%) of said sales center to
Stratton for the purchase price of $ 25,000. Said purchase price shall be paid
in the following fashion: Ten thousand dollars in cash and a demand note for $
15,000.
2. In return for the payment by Stratton for said interest, it is agreed
that Stratton shall be entitled to receive 20% of all net profit derived from
the operation of said mobile home sales lot, to include, but not limited to,
sales of manufactured homes, both new and used, sales of tires and axles, and
volume rebates paid unto the corporation by the manufacturers. It is agreed that
such distribution shall be made to Stratton on a quarterly basis beginning with
the last quarter of 1996, and continuing at the end of each and every subsequent
quarter thereafter. It is further agreed that the $ 15,000 note from Stratton to
Mayfair be deducted from said distributions.
3. It is further agreed that Stratton and associated companies i.e.
"Stratton Home Transport" shall have the option to do the deliveries and set-ups
of the homes sold off of said sales center as long as said services are done in
a satisfactory manner and at competitive prices, and
4. It is agreed and anticipated that this agreement be assigned to a
corporation to be created by both parties by January of 1997.
In witness whereof, the parties hereto set their hands and affixed their
seals on this, the 1st day of September 1996.
/s/Donald Eustace /s/ Carolyn M. Stratton
- - ----------------- -----------------------
Carolyn M. Stratton
/s/Pamela Westbrook /s/ E. Samuel Evans
- - ------------------- -------------------
MAYFAIR HOMES CORPORATION
E SAMUEL EVANS
PRESIDENT
<PAGE>
Apple Homes
Corporation
3633 Wheeler Road, Suite 140
Augusta, GA 30909
(706) 650-2015
FAX (706) 650-0629
STATE OF GEORGIA
COUNTY OF RICHMOND
AMENDMENT
This amendment is made to the agreement entered into on the 1st day of
September, 1996, by and between Mayfair Homes Corporation, a Delaware
Corporation now known as Apple Homes Corporation, with its principal place of
business located at 3633 Wheeler Road, Suite 140, Augusta, Georgia 30909,
hereinafter referred to as "Apple" and Carolyn Stratton, a resident of 2933
Milledgeville Road, Augusta, Georgia 30904, hereinafter referred to as
"Stratton".
WITNESSETH
This amendment affects only those sections addressed herewith. The original
agreement stays in affect in every way except for these amendments:
1. The payment of any dividends is at the discretion of the officers of
the company.
2. It is agreed that 25-33% of the net profits of said company, (J.C.
Homes), will remain in working capital until a minimum of $100,000
working capital exists.
3. Further, it is agreed that bonuses and management fees will be at the
discretion of the officers of J.C. Homes and will be paid quarterly
depending on the profitability of the company.
In witness whereof, the parties hereto set their hands and affixed their
seals on this the 1st day of April 1998.
/s/ E. Samuel Evans /s/ Carolyn M. Stratton
E. Samuel Evans Carolyn M. Stratton
President President
Apple Homes Corporation J.C. Homes, Inc.
<TABLE>
<CAPTION>
Exhibit 11
Earnings per share calculation
March 31, 1999
1999 1998 1997
---- ---- ----
Basic EPS:
<S> <C> <C> <C>
Income available to common stockholders $ 104,304 $ (51,531) $ (439,526)
Weighted average # of shares outstanding 1,925,012 1,491,423 1,109,669
----------- ----------- -----------
Basic EPS $ 0.0542 $ 0.0346 $ 0.3961
=========== =========== ===========
Diluted EPS:
Income available to common stockholders $ 104,304 $ (51,531) $ 439,526
Adjusted for interest charge on
convertible debentures:
10% interest 3/3/98-6/30/98 on 300,000 7,500
7/98 conversion (62,500)
-----------
10% interest 7/98-12/3/98 on 237,500 9,896
12/4/98 conversion (12,500)
-----------
10% interest 12/4/98-2/20/99 on 225,000 5,001
2/21/99 conversion (2,500)
-----------
10% interest 2/21/99-3/31/99 on 222,500 2,472
-----------
24,868 30,000 30,000
Adjusted for income tax effect @ 40.00% (9,947) 12,000 12,000
----------- --------- -----------
14,921 14,921 18,000 18,000
---------- --------- -----------
$ 119,225 $ (33,531) $ (421,526)
---------- --------- -----------
Weighted average # of shares outstanding 2,126,605 1,731,423 1,349,669
---------- --------- -----------
Diluted EPS $ 0.561 $ 0.0194 $ 0.3123
---------- --------- -----------
antidilutive antidilutive antidilutive
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 618,808
<SECURITIES> 0
<RECEIVABLES> 1,800,768
<ALLOWANCES> 29,791
<INVENTORY> 8,504,912
<CURRENT-ASSETS> 10,834,415
<PP&E> 1,463,485
<DEPRECIATION> 130,945
<TOTAL-ASSETS> 12,966,393
<CURRENT-LIABILITIES> 9,602,978
<BONDS> 988,330
0
0
<COMMON> 4,183
<OTHER-SE> 2,278,523
<TOTAL-LIABILITY-AND-EQUITY> 12,966,393
<SALES> 9,140,675
<TOTAL-REVENUES> 9,444,909
<CGS> 7,539,428
<TOTAL-COSTS> 9,436,151
<OTHER-EXPENSES> 10,749
<LOSS-PROVISION> 14,374
<INTEREST-EXPENSE> 177,535
<INCOME-PRETAX> 8,758
<INCOME-TAX> 6,413
<INCOME-CONTINUING> (8,404)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,404)
<EPS-BASIC> (0.004)
<EPS-DILUTED> 0
</TABLE>
