AGREEMENT
THIS AGREEMENT is made and entered into by and between MEDLEY CREDIT
ACCEPTANCE CORP., a Delaware corporation ["Medley"] XXXXXXXXX XXXXXX ["Xxxxxx"]
and XXX XXXXXXXX ["Xxxxxxxx"] [throughout this Agreement Medley, Horwin and
Xxxxxxxx may be referred to collectively as "Parties" for convenience].
WITNESSETH:
WHEREAS, Medley is a corporation organized and existing under the laws
of the State of Delaware and having its principal office located in Miami, Dade
County, Florida, and
WHEREAS, Medley is engaged in the financing business and desires to
expand its current business into the field of accounts receivable factoring,
and
WHEREAS, Horwin and Xxxxxxxx are well known authorities and have
substantial experience in the factoring of commercial account receivables, and
WHEREAS, Medley is desirous of establishing a subsidiary for the
purpose of engaging in the business of account receivable factoring and desires
to employ Horwin as the President and Chief Executive Officer of said
subsidiary to have the responsibility of managing the day to day operations of
said subsidiary, and Xxxxxxxx as its Vice President, and
WHEREAS, Horwin and Xxxxxxxx are desirous of becoming employed by the
subsidiary to be formed.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration, the parties
agree as follows:
1. Recitals: The above and foregoing recitals are true and correct and
are incorporated herein.
2. Establishment of Subsidiary: Following the execution of this
Agreement Medley shall cause to be formed a corporation having the name
American Factors Group, Inc. or such other name as would be acceptable to the
Parties ["Subsidiary"]. The corporation shall be formed as follows:
A. The corporation shall be organized pursuant to the laws of
the State of Florida.
B. The corporation shall be authorized to issue one million
shares of common stock with each share having a par value of $.001 per share.
C. Distribution of Stock in Subsidiary: The Subsidiary shall
upon its
formation issue its common capital stock as follows:
Medley . . . . . . . . . . . . . . . . . . . . 480,000 shares
Horwin ........................................100,000 shares
Xxxxxxxx .......................................20,000 shares
D. Board of Directors of Subsidiary: The Subsidiary shall have a Board
of Directors consisting of five (5) persons. The initial Board of Directors
shall be as
follows: Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxx
Xxxxxx X. Press
Xxxxxxx X. Xxxxxxx
Xxxxx Xxxxxxxxx
E. Officers of Subsidiary: The Subsidiary shall have the
following initial
officers: President: Xxxx Xxxxxx
Vice President: Xxx Xxxxxxxx
Secretary: Xxxxxx X. Press
Treasurer: Xxxxxx X. Press
3. Employment of Xxxxxxxx: Xxxxxx shall be employed by the Subsidiary
pursuant to a written Employment Agreement containing the following terms and
conditions in addition to such other terms as may be required by Medley:
A. Duties: Horwin will be employed as the Company's President
and Chief Executive Officer responsible for the development, refinement and
implementation of the Subsidiary's account receivable factoring business
including the compliance of such program with all applicable laws, rules and
regulations within the jurisdictions that it shall operate.
B. Term: Three Years.
C. Compensation: Horwin shall receive as compensation the sum
of $5,000.00 per month during the first three months of his employment and
thereafter the sum of $120,000.00 per annum together with such other benefits
as may be established from time to time by Medley.
4. Employment of Xxxxxxxx: Xxxxxxxx shall be employed by the
Subsidiary pursuant to a written Employment Agreement containing the following
terms and conditions in addition to such other terms as may be required by
Medley:
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A. Duties: Xxxxxxxx will be employed as the Company's Vice
President.
B. Term: Three Years.
C. Compensation: Xxxxxxxx shall receive as compensation the
sum of $96,000.00 per annum.
5. Horwin's and Xxxxxxxx'x Right to Exchange Common Shares in
Subsidiary for Common Shares in Medley:
A. First Year: Commencing sixty (60) days following the
establishment of the Subsidiary, at the election of Horwin and Xxxxxxxx, Xxxxxx
will exchange two thousand (2,000) shares of its Common Shares for two thousand
(2,000) shares of the Common Shares of the Subsidiary Prorata owned by Horwin
and Xxxxxxxx in any month that the Subsidiary's net sales volume exceeds One
Million Dollars per month. For the purpose of this Agreement the term Net Sales
Volume shall be defined as: the total amount of accounts receivable purchased
in any calendar month. In addition, during the first year following the first
sixty (60) days, should the net sales volume of the Subsidiary exceed One
Million Five Hundred Thousand Dollars ~n any month, Horwin and Xxxxxxxx Prorata
shall have the right to exchange an additional three thousand (3,000) shares of
the Common Stock of the Subsidiary for three thousand (3,000) shares of Medley
Common Stock.
B. Commencing fourteen (14) months following the
establishment of the Subsidiary and for a period of twelve (12) months
thereafter, Horwin and Xxxxxxxx Prorata may exchange four thousand (4,000)
shares of the Subsidiary's Common Stock for four thousand (4,000) shares of
Medley's Common Stock in each month where the nets sales volume of the
Subsidiary exceeds Two Million Dollars per month
C. Commencing twenty seven (27) months following the
establishment of the Subsidiary Horwin and Xxxxxxxx Prorata, shall have the
right to exchange up to four thousand (4,000) shares per month of any Common
Shares ~n the Subsidiary still owned by him which have not previously been
exchanged in any month where the net volume of the Subsidiary exceeds Three
Million Dollars ($3,000,000.00) per month. The exchanges described above shall
be made on a non-cumulative quarterly basis until such time as Horwin and
Xxxxxxxx have exchanged all of the Common Shares in the Subsidiary for Common
Shares in Medley.
6. Additional Compensation to Horwin and Xxxxxxxx: Following
Commencement of the Employment of Horwin and Xxxxxxxx they will receive
collectively a bonus in the total sum of Sixty Thousand Dollars ($60,000.00)
within seven (7) days of the close of the first month that they achieve a net
sales volume of Seven Hundred Thousand Dollars ($700,000.00) per month for the
Subsidiary. Provided Horwin and Xxxxxxxx are still in the employ of the
Subsidiary fourteen (14) months from its establishment and the net sales volume
of the Subsidiary in the first fourteen
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(14) months was the sum of Twenty Five Million Dollars ($25,000,000.00) or more
Horwin and Xxxxxxxx shall collectively receive an additional bonus in the sum
of Forty Thousand Dollars ($40,000.00).
7. Establishment of Credit Committee for Subsidiary: Upon the
formation of the Subsidiary, the Subsidiary shall form a Credit Committee to
establish underwriting criteria and guidelines with respect to credit and
factoring policies to be utilized in factoring client account receivables. The
initial Credit Committee shall consist of:
Xxxxxx X. Press
Xxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxx Xxxxxxxx
Medley Designee
8. Attendance at Medley's Board Meetings and Election to Board:
Following the establishment of the Subsidiary, Horwin shall be authorized to
attend all Board meetings of Medley as an invited guest. At such time as the
Board of Medley is expanded to nine (9) or more members, Horwin shall be
elected to the Board of Directors of Medley.
9. Medley's Incentive Stock Option Prouram: Medley shall establish for
the Employees of the Subsidiary a Cash Bonus and Incentive Stock Option Program
["ISOP"] whereby the Employees of the Subsidiary shall be entitled to a
collective distribution of Medley's Common Shares based upon the Subsidiary's
return on capital in excess of its cost of capital as follows:
Return Number of Shares Bonus
------ ---------------- -----
In excess of 20% 20,000 - 0 -
In excess of 25% 25,000 $ 6,250.00
In excess of 30% 30,000 $15,000.00
In excess of 35% 35,000 $17,500.00
In excess of 40% 40,000 $30,000.00
In excess of 45% 45,000 $45,000.00
In excess of 50% 50,000 $62,500.00
In excess of 55% 55,000 $68,750.00
In excess of 60% 60,000 $90,000.00
The distribution of the Incentive Stock Option Shares shall be
determined based upon the performance of the individual officers of the
Subsidiary during the year for which the return was calculated based upon an
objective standard determined by the Subsidiary's Board of Directors. Each
option shall be exercisable to the Employee within four (4) years from its
issuance at a price equal to Fair Market Value.
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10. Conditions Precedent: Each of the following shall constitute a
condition precedent to the obligations of Medley under the terms of this
Agreement:
A. The establishment of the Subsidiary
B. The execution of an Employment Agreement by Horwin and
Xxxxxxxx in a form acceptable to Medley.
C. All of the representations of Horwin shall be true and
correct and accurate as of the date of the execution of this Agreement.
In the event any of the aforesaid conditions precedent shall not have
occurred then, unless Medley shall have waived the occurrence or existence of
any such conditions precedent in writing, Medley may terminate this Agreement
and all parties to this Agreement shall be relieved of any further liability or
obligation hereunder.
11. Line of Credit: Medley agrees to use its best efforts to obtain
the necessary lines of credit for the Subsidiary in order for the Subsidiary to
achieve the net sales volume set forth in this Agreement.
12. Notices: All notices, requests, demands, waivers, consents,
approvals or other communications required or permitted hereunder shall be in
writing and shall be deemed to have been given when received if delivered
personally or by recognized overnight carrier, or three (3) days after being
sent if sent by certified or registered mail, postage prepaid, return receipt
requested, to the following addresses:
If to the Company: Medley Credit Acceptance Corp.
Attention: Xxxxxx X. Press
1 000 Xxxxx xx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
If to the Employees: Xxxxxxxxx Xxxxxx
0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxxxx 00000
Xxx Xxxxxxxx
00000 00xx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
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13. Miscellaneous Provisions:
A. Captions and Paragraph Headings: Captions and paragraph
headings contained in this Contract are for convenience and reference only and
in no way define, describe, extend or limit the copy or intent of this Contract
nor the intent of any provision hereof.
B. Counterparts: This Contract may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same Contract.
C. Binding Effect: This Contract shall enure to the benefit
of and shall be binding upon the parties hereto and their respective heirs,
personal representatives, successors and assigns. However, under no
circumstances shall this Contract be assignable by Horwin.
D. Entire Agreement: This Contract constitutes the entire
understanding agreement between the parties and may not be changed, altered or
modified, except by an instrument in writing signed by all parties against whom
and enforcement of such Contract would be sought. In the event any provision of
this Contract shall be determined by appropriate judicial authority to be
illegal or otherwise invalid, such provision, shall be given its nearest legal
meaning or be construed or deleted as such authority determines. The remainder
of this Contract shall be construed to be in full force and effect. This
Contract shall not be modified unless said modification is in writing and
signed by the party to be charged.
E. Governing Law and Venue: This Contract shall be construed
and interpreted according to the laws of the State of Florida. Venue for any
litigation hereunder shall be in Dade County, Florida.
F. Joint Preparation: The preparation of this Contract has
been a joint effort of the parties and the resulting documents shall not,
solely as a matter of judicial construction, be construed ,more severely
against one of the parties than the other.
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G. Attorney's Fees: In the event of any litigation arising
out of or relating to this Contract, the unsuccessful party in such litigation
shall pay to the successful party all costs and expenses incurred therein by
the successful party, including, without limitation, reasonable attorney's fees
and costs at the trial and appellate court level.
IN WITNESS WHEREOF, the parties have hereunto set theirs hands and
seals this 4th day of March, 1998.
Witnesses: MEDLEY CREDIT ACCEPTANCE CORP.
___________________ By:________________________________
Xxxxxx X. Press, President
___________________
___________________ ___________________________________
Xxxx Xxxxxx
___________________
___________________________________
___________________ Xxx Xxxxxxxx
___________________
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