FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement (this "Amendment")
is made and entered into as of October _, 1999 (the "Effective Date"), by and
among Finantra Capital, Inc., a Delaware corporation ("Finantra"), Travelers
Acquisition Corporation, a Florida corporation (the "Buyer"), the Shareholders
whose names appear on the signature pages attached hereto (the "Sellers") and
Travelers Investment Corporation, a California corporation (the "Corporation").
Terms with initial capital letters used in this Amendment and not otherwise
defined herein shall have the same meanings set forth in the Agreement.
RECITALS
A. Finantra, the Buyer, the Sellers and the Corporation entered into a
Stock Purchase Agreement (the "Agreement"), pursuant to which the Buyer is to
purchase from the Sellers, and the Sellers are to sell to the Buyer, all of the
issued and outstanding common stock of the Corporation.
B. Finantra, the Buyer, the Sellers and the Corporation now wish to
amend the Agreement to reflect certain modifications made, and additional
provisions added, as a result of continued negotiations between the parties.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Modifications to Agreement: The Agreement is hereby amended and
modified as follows:
1.1 Section 2.6 of the Agreement shall be deleted in its entirety
and replaced with the following:
"Closing Date" shall mean the date on which the Closing occurs;
provided, however, that for operations and financial reporting purposes
only, the Closing Date shall be September 30, 1999.
1.2 Section 4.2.1 of the Agreement shall be deleted in its entirety
and replaced with the following:
Sources of Cash Due at Closing: The cash due at Closing shall be
derived by the Buyer utilizing Debt obtained from Finova Capital
Corporation and BHC Interim Funding, L.P. (collectively, the "Senior
Lender") who will secure the Debt at their option with joint or
separate superior liens on the tangible and intangible assets of the
Corporation and Subsidiaries and such other forms of collateral which
the Senior Lender deems appropriate and necessary including but not
limited to a pledge of the Shares of the common stock in the
Corporation and/or Subsidiaries. Subject to the provisions of Section
10.5 hereof, the Sellers agree that the Debt of the Senior Lender
shall be superior to the Notes and their security and the Sellers
agree to execute all
documentation reasonably required by Senior Lender confirming the
subordinate nature of the Notes, including Subordination Agreements in
a form acceptable to the Sellers. The balance of the cash due at
Closing shall be cash from the Buyer. "Debt" shall mean financing
provided by the Senior Lender to fund the purchase of the Corporation's
stock or its ongoing operations. Prior to the Closing Date, the Buyer
shall provide the Sellers with operating projections that demonstrate
the Buyer's ability to repay the Debt and the Notes.
1.3 Section 4.3 of the Agreement shall be deleted in its entirety
and replaced with the following:
Purchase Price Adjustment. The Purchase Price for the Shares shall be
adjusted upward on a dollar-for-dollar basis to the extent the
stockholders' equity of the Corporation as of September 30, 1999 (the
"September 30 Stockholders' Equity") exceeds Twelve Million One Hundred
Twenty-Eight Thousand Two Hundred Eighty-One Dollars ($12,128,281) and
downward on a dollar-for-dollar basis to the extent the September 30
Stockholders' Equity is below Twelve Million One Hundred Twenty-Eight
Thousand Two Hundred Eighty-One Dollars ($12,128,281). The
determination of September 30 Stockholders' Equity shall be made by
Deloitte & Touche LLP, the outside independent accountants of the
Corporation ("Deloitte"), in accordance with GAAP consistently applied
with the 1998 year end audit of the Corporation's financial statements.
The determination shall be made within sixty (60) days of the Closing
Date. In arriving at such determination no adjustment to reserves for
the items mentioned in Section 18.1.3 shall be made as the parties
intend to separately deal with those matters as indicated in that
section. Deloitte's determination shall be deemed final and binding
upon each of the parties hereto. Any upward adjustment to the Purchase
Price made pursuant to this Section 4.3 shall first be offset against
any indemnification claim made by the Buyer or Finantra pursuant to
Section 18.1. Any downward adjustment to the Purchase Price shall be
offset against the next ensuing principal payments on the Notes and
shall be subject to the limitations set forth in Section 18.7
1.4 Section 10.4 of the Agreement shall be deleted in its entirety
and replaced with the following:
Minimum Stockholders' Equitv: During the Note Period, Finantra shall at
all times maintain stockholders' equity, as determined in accordance
with GAAP, of at least Eleven Million Five Hundred Thousand Dollars
($11,500,000.00). Failure to meet this threshold amount at all times
during the Note Period shall constitute a material default under the
Notes, and Finantra shall provide prompt written notice of such default
to each Seller. During the Note Period, (i) each of the Buyer and
Finantra shall deliver to each Seller annual, quarterly and monthly
financial statements, and (ii) Finantra shall deliver to each Seller
any Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed
by it with the SEC.
2
1.5 Immediately following Section 10.4 of the Agreement, a new
Section 10.5 shall be added thereto, which shall consist of the following:
10.5 Cap on Senior Lender Debt. During the Note Period, the Buyer shall
not cause or permit the outstanding principal amount of any debt owing
from Buyer to Senior Lender to exceed at any time the aggregate sum of
$30,000,000.00 (the "Senior Lender Debt Cap"). The Senior Lender Debt
Cap shall be increased on a dollar-for-dollar basis by the amount of
any prepayment made by the Buyer against the aggregate principal
amount of the Notes, which prepayment if made shall be applied on a
pro rata basis to all of the Notes.
1.6 Section 15 of the Agreement shall be deleted in its entirety
and replaced with the following:
CLOSING: The Closing of this transaction shall take place at the
offices of Xxxx, Forward, Xxxxxxxx & Scripps LLP, 000 Xxxx Xxxxxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, at 10:00 a.m. on October 29,
1999.
1.7 Section 17.2 of the Agreement shall be deleted in its entirety
and replaced with the following:
by the Buyer or Sellers, if the Closing shall not have taken place on
or before October 29, 1999, provided, however, that the right to
terminate this Agreement under this provision shall not be available to
any Party whose failure to fulfill any obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to
occur on or before such date;
1.8 Section 18.1.3 of the Agreement shall be deleted in its
entirety and replaced with the following:
The Corporation's dispute with the Maryland Consumer Protection
Division regarding payments received by the Corporation under certain
contracts it purchased from Interlink Travel Network, Inc., or the
default on the Corporation's leases by Scrub-a-Club, Inc.; provided,
however, that the indemnification obligations of the Sellers under this
Section 18.1.3 shall be limited (i) to the extent to which the
applicable Losses exceed the amount reserved on the Corporation's
Financial Statements in relation to such Losses as of the Closing Date,
and (ii) by the applicable provisions of and handled pursuant to
Section 18.7; but provided, further, that any amount by which such
reserves exceed such Losses shall be deemed an adjustment to the
Purchase Price and distributed to the Sellers, in accordance with their
pro rata ownership of the Shares set forth on Schedule 3, concurrently
with the Buyer's final payment on the Notes. The applicable Losses and
the excess by which such reserves exceed such Losses shall be
determined by Deloitte, in accordance with GAAP, as of the date 23
months following the Closing Date. The adjustments to purchase price
provided for herein shall be netted against adjustments to purchase
3
price, if any, attributable to the provisions of Section 4.3.
1.9 Section 18.8 of the Agreement shall be deleted in its entirety
and replaced with the following:
Indemnification Pavment Adjustments. Any payments made under this
Section 18 shall be net of related tax effects, taking into account any
deductions available to the indemnified party for their payment or
accrual of the loss amount, and net of insurance proceeds received or
to be received by the indemnified party on account of such
indemnification claim. The parties shall diligently submit claims and
pursue recovery of any Losses covered or potentially covered by the
past or present insurance policies of Sellers, the Corporation or
Buyer, as appropriate.
1.10 Section 22.1 of the Agreement shall be deleted in its
entirety and replaced with the following:
The Sellers and the Buyer acknowledge and understand that the
Corporation's "S" corporation status terminated, and beneficial
ownership ofthe Shares was transferred, effective as of September 30,
1999. Immediately prior to September 30, 1999, the Corporation shall
have declared a dividend to each Seller (the "Closing Dividend") in an
amount equal to (a) that portion of the Corporation's income attributed
to such Seller during the period commencing on January 1, 1999 and
ending on September 30, 1999 (the "Short Tax Year"), less (b) the
amount of any dividends declared by the Corporation and paid to such
Seller during the Short Tax Year. The Closing Dividend shall be
calculated and paid by the Corporation no later than one month
following the Closing Date. The declaration of the Closing Dividend by
the Corporation pursuant to this Section 22.1 shall not cause the
September 30 Stockholders' Equity to fall below Twelve Million One
Hundred Twenty-Eight Thousand Two Hundred Eighty-One Dollars
($12,128,281).
1.11 Section 22.2 of the Agreement shall be deleted in
its entirety and replaced with the following:
Following the Closing, the Buyer and the Corporation shall provide to
the Sellers' accountants, without charge, such information from the
Corporation's books and records as may be reasonably necessary for the
preparation of such Sellers' tax returns for the Short Tax Year (the
"Short Year Tax Returns"). Each Seller shall be solely responsible for
his or her own accountants fees and costs incurred in preparing such
Short Year Tax Returns and any tax shown to be due thereon. All
expenses of the Corporation shall be determined as if its taxable year
closed on September 30, 1999.
1.12 Section 22.4 of the Agreement shall be deleted in its
entirety and replaced with the following:
4
Certain of the Sellers are nonresidents of California. The Corporation
and such Sellers have heretofore entered into agreements at the request
of such nonresident Sellers pursuant to which such nonresident Sellers
have executed a group nonresident return election on FTB Form 3865 or
its equivalent, and pursuant thereto the Corporation prepares and files
group nonresident estimated tax returns (FTB Form 540-ES or its
equivalent) and group nonresident tax returns on behalf of each
Nonresident Seller (FTB Form 540 NR or its equivalent). In keeping with
this prior practice, the Corporation pays the taxes shown out of funds
withheld from nonresident Sellers. The Buyer and the Corporation agree
that the Corporation shall prepare and file a quarterly estimate group
return for the calendar quarter ending on September 30, 1999 and a
final group return for the year in which the Closing occurs and shall
charge any tax due against the amounts next coming due to nonresident
Sellers under the terms of the Notes.
2. Other Provisions Unmodified. Except as expressly modified hereby,
the rights, obligations and terms of the Agreement shall remain unmodified and
in full force and effect. In the event of a conflict between the Amendment and
the Agreement, the Amendment shall be controlling.
3. Counterparts. This Amendment may be executed in several
counterparts, and all so executed shall constitute an agreement, binding on all
the parties hereto, notwithstanding that all of the parties are not signatory to
the original or the same counterpart.
[intentionallY left blank]
5
IN WITNESS WHEREOF, this Amendment is made and entered into as of the
Effective Date.
FINANTRA:
FINANTRA CAPITAL, INC., a Delaware corporation
By:
----------------------------
Xxxxxx Press. Chairman
BUYER:
TRAVELERS ACQUISITION CORPORATION, a Florida
corporation
By:
----------------------------
Xxxxxx Press. Chairman
SELLERS:
------------------------
XXXX XXXXX
------------------------
XXXXXX RRADA
XXXXX FAMILY TRUST
By:
--------------------
------------------------
XXXXXXX XXXX
------------------------
X.X. XXXXXX
[Signature page to First Amendment to Stock Purchase Agreement]
6
X.X. XXXXXX VOTING TRUST FBO
XXXXX XXXXX
By:
------------------------
X.X. XXXXXX VOTING TRUST FBO
XXXXX XXXXXX
By:
------------------------
---------------------------
XXXXX XxXXXXX
---------------------------
XXXXX XxXXXXX
XxXXXXX CHILDREN'S TRUST
By:
------------------------
---------------------------
XXX XXXXXXXX
---------------------------
XXXXXXXX XXXXXXXX
XXXXXX & XXXXXXXX X. XXXXX
FAMILY TRUST
By:
------------------------
---------------------------
XXXXXX XXXXXX
---------------------------
XXXXXX XXXXXXXX
[Signature page to Stock Purchase Agreement]
7
XXXX X. & XXXX X. XXXXXX FAMILY
TRUST
By:
------------------------
XXXXX XXXXXX
By:
------------------------
Xxxx Xxxxxx, Special Administrator of the
Estate of Xxxxx Xxxxxx
THE XXXXX XXX XXXXXX-XXXXXXX FAMILY
TRUST
By:
-------------------------
THE XXXXXX XXX XXXXXX FAMILY TRUST
By:
-------------------------
XXXXXX TRUST DTD 3/23/95 (XXX XXXXXX)
By:
--------------------------
CORPORATION:
TRAVELERS INVESTMENT CORPORATION, a
California corooration
By:
--------------------------
Xxxxx Xxxxx. President
[Signature page to Stock Purchase Agreement]
8
