UNITED STATES 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): July 14, 2006
ADSOUTH PARTNERS, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-33135 68-0448219
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1141 South Rogers Circle, Suite 11, Boca Raton, FL 33487
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 750-0410
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
On July 14, 2006, the Company entered into an employment agreement with Harlan
Press, effective July 17, 2006. Pursuant to the agreement, Mr. Press will serve
as the Company's chairman and chief operating officer for a five-year term
commencing July 17, 2006, for which he will receive a base salary of $208,000
per annum and a monthly automobile allowance of $1,000. Mr. Press is eligible to
receive an annual bonus at the discretion of the compensation committee. The
agreement contemplates Mr. Press continuing as a director during the term of his
employment. In the event of the Company terminates Mr. Press' employment, other
than as a result of his disability or a termination for cause, Mr. Press is
entitled to severance pay equal to one month's salary, including his automobile
allowance, for every month worked, up to a maximum of twelve months. Pursuant to
the terms of a loan agreement entered into on July, 14, 2006, Mr. Press has
agreed to a voluntary deferral of 50% of his base salary.
On July 14, 2006 the Company entered into an amended employment agreement with
Anton Lee Wingeier, the Company's chief executive and chief financial officer.
Pursuant to the agreement, Mr. Wingeier will serve as chief executive and chief
financial officer through December 31, 2011 for which he will receive a base
salary of $225,000 per annum and a monthly automobile allowance of $1,200. The
agreement also replaces bonuses due to Mr. Wingeier under his existing
agreements, including any bonuses from the sale of the Company's product sector,
with a $200,000 bonus, of which $50,000 has been paid, $50,000 is due on July
31, 2006 and the remaining $100,000 will be paid in ten bi-weekly installments
of $10,000 beginning August 1, 2006. Mr. Wingeier is eligible to receive an
annual bonus at the discretion of the compensation committee. In the event of
the Company terminates Mr. Wingeier's employment, other than as a result of his
disability or a termination for cause, Mr. Wingeier is entitled to severance pay
equal to one month's salary, including his automobile allowance, for every month
worked, up to twelve months. Pursuant to the terms of a loan agreement entered
into on July, 14, 2006, Mr. Wingeier agreed to a voluntary deferral of 10% of
his base salary.
On July 14, 2006, the Company's majority-owned subsidiary, Genco Power
Solutions, Inc. ("Genco"), entered into amended and restated employment
agreements with Dale C. Branham, who is Genco's president, and Keith A. Straub,
who is Genco's senior executive vice president. The agreements have a term of
five years and provide for a base salary of $185,000 per annum and a monthly
automobile allowance of $900 plus a mileage allowance, and a commission equal to
..75% of Genco's net sales, based on collections by Genco. Commissions previously
earned and not paid under a prior employment agreement with each of Mr. Branham
and Mr. Straub will be paid in ten equal bi-weekly installments. Mr. Branham and
Mr. Straub were each granted options to purchase up to 150,000 shares of the
Company's common stock at an exercise price of $.30 per share and contemplates
the issuance of options to purchase an additional 350,000 subject to
compensation committee approval, provided, that if the options to purchase
350,000 shares are not granted, the Company will provide other compensation in
lieu of the options. In the event of the Company terminates Mr. Branham's or Mr.
Straub's employment, other than as a result of his disability or a termination
for cause, Mr. Branham or Mr. Straub is entitled to severance pay equal to
twenty-four month's base salary plus automobile allowance.
On July 14, 2006, Genco entered into a loan agreement with HSK Funding, Inc. and
New Valu, Inc., non-affiliated lenders, which provides for a $1,000,000 loan
commitment secured by all of Genco's assets. Genco paid $30,000 as a loan
commitment fee to the lenders and $7,500 was paid for legal fees related to the
loan. The loan bears interest at 12% per annum. Commencing August 14, 2006,
Genco is required to make monthly payments of $50,000 plus accrued interest and
on the 14th day of each month thereafter until April 14, 2007, when the entire
unpaid balance plus accrued interest is due and payable. The loan is guaranteed
by the Company and the guarantee is secured by a pledge of the Company's stock
in Genco. In addition, the Company agreed to pledge 2,250,000 shares of the
stock of MFC Development Corp. ("MFC"), which are issuable pursuant to a
previously reported asset purchase agreement between the Company and MFC as
additional security for the loan and for the loan made by New Valu, Inc. to
Genco on May 8, 2006. In connection with the loan, Genco issued warrants to HSK
to purchase up to 10% of Genco common stock for the price of $.01 per share. The
Company shall have the right to require the warrantholder to sell 50% of the
shares represented by the warrant for $300,000 by giving notice to the warrant
holder before January 15, 2007. Any default under the terms of this loan will
also be a default under the terms of the May 8, 2006 loan. Pursuant to this
agreement, the Company agreed to elect a director designated by the lender to
its board of directors and to elect a second director at the next meeting of
stockholders. The lender has not yet advised the Company of its designee.
As a condition to the loan agreement, Mr. Press agreed to voluntarily defer 50%
of his salary and Mr. Wingeier agreed to voluntarily defer 10% of his salary
until the earlier of March 31, 2007 or the date the loan is repaid. In
connection with the loan, Mr. Acunto, a consultant to the Company, entered into
a letter agreement whereby until the loan is paid-off, he voluntarily agreed to
limit his commission payment to 2% of Genco's revenues and up to a maximum of
$45,000 per month until certain operating goals are achieved with the balance
being deferred.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On July 13, 2006, the board of directors elected Harlan Press, a director who,
since June 6, 2006, has served as chairman of the board of directors, as chief
operating officer, and elected Anton Lee Wingeier as a director. Mr. Press' and
Mr. Wingeier's employment agreements are described under "Item 1.01. Entry into
a Definitive Material Agreement."
From April 2000 through March 2006, Mr. Press was the vice-president and
treasurer of Concord Camera Corp., a designer, developer, manufacturer and
distributor of image capture devices and related products. Mr. Press joined
Concord Camera in April 1994 and has served in various capacities including
corporate controller and chief accounting officer. Mr. Press is a member of the
American Institute of Certified Public Accountants, the New York State Society
of Certified Public Accountants and the Financial Executives Institute. Mr.
Press has been a director of the Company since August 2005.
Anton Lee Wingeier has served as our chief executive officer since June 2006,
chief financial officer since April 1, 2004, and corporate secretary since
August 2004. He also served as a director from August 2004 until August 2005.
From April 2000 to April 2004, Mr. Wingeier managed his own accounting firm,
specializing in SEC compliance matters and strategic merger and acquisition
services. For six years prior to that, Mr. Wingeier was director of SEC
reporting and vice-president of finance for Sagemark Companies Ltd.
Item 8.01 Other Events.
As previously reported, on May 15, 2006, the Company was served in an action in
the Bankruptcy Court in the State of New Jersey by N.V.E., Inc. ("NVE"). Other
defendants in the action are John Acunto, Jr., a principal stockholder and
former chief executive officer, John Cammarano, a former chief executive
officer, Anton Lee Wingeier, the Company's chief financial officer and three
other employees of the Company. The complaint arises from a letter agreement
dated May 12, 2005, pursuant to which the Company performed services for NVE
relating to NVE's advertising campaign. The complaint alleges that the Company
breached the contract in fraudulently invoicing NVE for advertising services.
The complaint also alleges that the Company's conduct constituted criminal
activity and includes a claim under the Racketeer Influenced and Corrupt
Organizations Act (generally known as RICO) and its state law equivalent, and
seeks damages in excess of $2,000,000 plus costs, with claims for treble damages
and punitive damages. The Company believes that the allegations of the complaint
are without merit. The Company believes that it has meritorious defenses to the
other claims alleged and intends to vigorously defend the action.
On July 17, 2004, the court dismissed with prejudice, the RICO and conversion
claims against the Company and the individual defendants. The fraud claims were
dismissed against all defendants, with the plaintiff having the right to replead
those claims within 30 days. The claims based on breach of contract and the
claims seeking an accounting were not dismissed against the Company.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description of Exhibit
99.1 Terms of Employment of Harlan Press with Adsouth Partners,
Inc., dated July 14, 2006
99.2 Amended and Restated Terms of Employment of Anton Lee Wingeier
with Adsouth Partners, Inc., dated July 14, 2006
99.3 Amended and Restated Terms of Employment of Dale C. Branham
with Genco Power Solutions, Inc., dated July 14, 2006
99.4 Amended and Restated Terms of Employment of Keith A. Straub
with Genco Power Solutions, Inc., dated July 14, 2006
99.5 Loan Agreement between Genco Power Solutions, Inc. and HSK
Funding, Inc. and New Valu, 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.
ADSOUTH PARTNERS, INC.
(Registrant)
July 18, 2006 By:s/ Anton Lee Wingeier
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Anton Lee Wingeier, CEO