SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 17, 2000
Resource America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-4408 72-0654145
(State of or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
1521 Locust Street, 4th Floor, Philadelphia, PA 19102
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (215) 546-5005
Item 5 Other Events
On May 17, 2000, the Company and its wholly-owned subsidiary, FLI
Holdings, Inc., entered into an agreement with European American Bank and AEL
Leasing Co., Inc., both subsidiaries of ABN AMRO Bank N.V., providing for AEL
Leasing's purchase of all of the outstanding capital stock of Fidelity Leasing,
Inc., the Company's commercial equipment leasing subsidiary. The total
consideration will be approximately $151 million, including repayment of
intercompany indebtedness.
The purchase price will be payable in cash at closing, except for an
estimated $10 million that will be paid by a promissory note. The principal
balance of the promissory note will be equal to Fidelity Leasing's net
investment in lease receivables that are aged more than 90 days, are on Fidelity
Leasing's credit watch list or have an outstanding balance of $200,000 or more
and would be risk rated "not pass" under the purchasers' credit policies. The
note will be payable to the extent that payments are received on these lease
receivables.
Consummation of the transaction is subject to a number of conditions,
including (i) receipt of regulatory approvals, (ii) an audit by Fidelity
Leasing's independent accountants of Fidelity Leasing's financial statements as
of and for the seven months ended April 30, 2000 disclosing no adverse findings
since Fidelity Leasing's financial statements as of and for the six months ended
March 31, 2000 and (iii) execution by certain Fidelity Leasing employees of
employment agreements. In addition, the stock purchase agreement may be
terminated by either purchasers or sellers if the transaction is not consummated
by September 30, 2000.
The stock purchase agreement contains customary representations and
warranties from the purchasers and the sellers. The purchasers have agreed to
indemnify the Company for losses resulting from a breach of any representation,
warranty or covenant given by them in the stock purchase agreement and the
sellers (including the Company), in turn, have agreed to indemnify the
purchasers against losses resulting from a breach of any representation,
warranty or covenant given by them in the stock purchase agreement. The sellers
have also agreed to indemnify the purchasers against (i) credit losses, if any,
on Fidelity Leasing's existing portfolio of leases over a three year period
(excluding leases included in determining the principal amount of the note) to
the extent they exceed 1.25% per annum of the outstanding net receivables
balance of such leases and (ii) the amount, if any, by which the realization of
Fidelity Leasing's lease residuals (excluding leases included in determining the
principal amount of the note) is less than 130% of the booked residual values
(in the case of fair market value purchase option leases) or 100% of booked
residual values (in the case of fixed or capped purchase option leases) for each
of the four years following the closing. Of the total consideration received by
the Company, $10,000,000 will be held in escrow for four years following closing
as security for the sellers' indemnifications.
Employees of Fidelity Leasing hold options to purchase approximately
15% of Fidelity Leasing's stock. The Company anticipates purchasing these
options before closing.
Item 7 Financial Statements and Exhibits
(c) Exhibits
2 Stock Purchase Agreement dated May 17, 2000 among Resource
America, Inc., FLI Holdings, Inc., European American Bank and
AEL Leasing Co., Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
May 18, 2000 RESOURCE AMERICA, INC.
By: /s/ Steven J. Kessler
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Steven J. Kessler
Senior Vice President and
Chief Financial Officer