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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 1999
FIX-CORP INTERNATIONAL, INC.
----------------------------
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Delaware 000-23369 34-1783774
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(State or other juris-diction of (Commission File Number) (IRS Employer Identification Number)
incorporation)
</TABLE>
1835 James Parkway
Heath, Ohio 43056
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(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 740-928-8999; 888-928-8999
3637 S. Green Road
Beachwood, Ohio 44122
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(Former name or former address, if changed since last report) (zip code)
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Item 1. Change in Control of Registrant.
On Friday, April 23, 1999, the United States Bankruptcy Court for the
Southern District of Ohio (the "Court") approved Fix-Corp International, Inc.'s
board of directors' decision to enter into an agreement with the Philadelphia,
PA-based management consulting firm of Hershhorn & Trichon, LLC ("H&T").
Pursuant to the agreement, the Company elected Mark P. Hershhorn as a director
and the Chief Executive Officer and Chairman of the Board of the Company. Mr.
Hershhorn will replace S. Darwin Noll as a director, who resigned effective as
of March 12, 1999. Along with the appointment of Mr. Hershhorn, James L. Trichon
was named Executive Vice President and Constantinos I. Costalas was named Chief
Operating Officer of the Company.
Mr. Hershhorn, age 49, is also the Chairman and Chief Executive Officer
of CKS & Associates, a management consulting firm as well as the President of
H&T, which provides consulting advice on corporate restructurings, marketing and
strategic growth initiatives to senior management of companies. Mr. Hershhorn
has also served as President and Chief Executive Officer and Director of
National Media Corporation (a NYSE company), and Chairman of National Media's
International subsidiary, Quantum International Limited, which operated in over
70 countries around the world. Prior to that, Mr. Hershhorn served as President
and Chief Operating Officer of Buckeye Communications, Inc.
Mr. Trichon, age 54, also serves as the President and Chief Executive
Officer of Triam, Inc., a contract management, consulting and business
development firm. He is also a partner of H&T.
Mr. Costalas, age 63, served as Vice Chairman and Chief Operating
Officer of National Media Corporation from 1994 until January 1999. Prior to
1994, he served as Chairman of the Board, President, and Chief Executive Officer
of Glendale Bancorporation, a commercial bank.
H&T entered into the employment agreement with the Company for a three
year term commencing on March 12, 1999 and ending on March 31, 2002, renewable
for successive one year terms. Under the agreement, H&T will be paid a base
annual wage of $450,000 plus certain benefits and incentive compensation under a
plan to be established by the Board (including an option which was granted to
H&T to purchase 2,000,000 shares of the Company's Common Stock for a cost of
$.56 per share).
Also, on April 23, 1999, the Company received Court approval for a
post-petition bridge loan financing arrangement, which the Company's Board of
Directors had previously approved on April 8, 1999. This post-petition,
short-term bridge loan financing facility is being provided by The Hershhorn
Group (which is also Philadelphia, PA-based and is owned and controlled by Mr.
Hershhorn) using its own funds. The financing provides for a credit line of up
to $750,000 to be drawn down by the Company. To date, $330,000 has been drawn
down. The financing documents provide for a promissory note bearing interest at
the so-called "prime rate" charged by National City Bank, NA (Ohio) plus 4%,
with interest payable monthly commencing May 1, 1999, as well as security
agreements and the issuance of a Common Stock Series "A" purchase warrant. The
Note matures on October 9, 1999.
The Hershhorn Group loan is secured, but is subordinated to the prior
security positions of the Company's two primary secured lenders, Coast Business
Credit, Inc. and Medallion Capital, Inc. In that regard, The Hershhorn Group has
a secured third position on all the Company's U.S. assets and a second position
on its Canadian assets. As additional compensation for providing the bridge
loan, The Hershhorn Group will receive the Common Stock Series "A" purchase
warrant which, when exercised, entitles the holder to purchase 3,000,000 shares
of the Company's fully-paid, non-accessible $.001 par value common stock at an
exercise price of $.62 per share (being 120% of the
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closing price on the electronic bulletin board as of the close of business on
April 22, 1999). The expiration date of the warrant is December 31, 2005.
As of this date, Mr. Hershhorn, directly and/or through his ownership
interest in H&T and The Hershhorn Group, has the following direct and indirect
beneficial ownership of Fix-Corp International, Inc.:
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Number of Shares of Common
Stock owned directly by
Mr. Hershhorn 35,000 shares
Options in favor of H&T to
purchase Common Stock* 2,000,000 shares
Common Stock Series "A"
Purchase Warrant issued
directly to Mr. Hershhorn** 3,000,000 shares
(or the Hershhorn Group) ---------
Total of Mr. Hershhorn's Beneficial
Ownership Interest in Fix-Corp
International, Inc. 5,035,000 shares
Fix-Corp International, Inc.
Shares Issued and Outstanding
as of May 1, 1999*** 31,319,894 shares
----------
Total of shares outstanding plus shares beneficially owned by
Mr.
Hershhorn 36,354,894 shares
% of shares of Fix-Corp International,
Inc. beneficially owned by Mr.
Hershhorn 13.84%
</TABLE>
====================
The Court also issued an order authorizing the rejection of the
Company's employment contract with Mark Fixler, the Company's founder, a current
director, and its former Chief Executive Officer. Mr. Fixler further agreed that
he had no claim for damages against the Company arising from the rejection of
his employment contract and waived the $2 million severance benefit, health
insurance, and automobile allowance provided for in his employment contract.
Additionally, Mr. Fixler's annual salary was reduced from $300,000 to $150,000
through December 31, 1999. Mr. Fixler, in June 1998, canceled an option to
purchase four million shares of the Company's stock. Mr. Fixler
- --------
* These options may only be exercised if a management-sponsored plan of
reorganization is approved by the Court. See Section 6 of the Employment
Agreement filed herewith.
** The first 2,250,000 shares to which this Warrant applies may be
purchased on or before the Call Day (as defined in the Warrant). The remaining
750,000 shares may be purchased subject to conditions specified in the Warrant.
See Section 14 of the Warrant filed herewith.
*** Not fully diluted. Information received from Company's
Transfer Agent.
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will continue to be bound by the noncompetition and confidential information
provisions of his employment agreement.
====================
Item 7. Financial Statements and Exhibits
(c) Exhibits.
(1) Employment Agreement by and between Fix-Corp
International, Inc. and Hershhorn & Trichon, LLC dated as
of March 12, 1999
(2) Promissory Note made by Fix-Corp International, Inc. in
favor of The Hershhorn Group dated April 22, 1999 in the
amount of $750,000
(3) Security Agreement dated April 22, 1999 by and among
Fix-Corp International, Inc., Pallet Technology, Inc.,
Polystyle Industries, Inc., Fixcor Industries, Inc. and
The Hershhorn Group
(4) Fix-Corp International, Inc. Common Stock Series "A"
Purchase Warrant dated April 22, 1999 - to be filed by
amendment
(5) Press release dated April 27, 1999 with respect to
"Fix-Corp International, Inc. Gets Approval From
Bankruptcy Court for New Director, Officers and New
Financing"
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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 5, 1999 FIX-CORP INTERNATIONAL, INC.
By: /s/ MARK P. HERSHHORN
----------------------------------
Mark P. Hershhorn
Chairman and Chief Executive
Officer
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Exhibit 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered as of
March 12, 1999, by and between FIX-CORP INTERNATIONAL, INC. (the "Company"), a
Delaware Corporation, Hershhorn & Trichon, L.L.C. ("H&T"), a Pennsylvania
limited liability company, and the individual shareholders of the Company whose
names appear as signators below (the "Shareholders").
BACKGROUND
The Company has recently filed a petition under Chapter 11 of the
United States Bankruptcy Code and is operating as a debtor in possession. The
Company desires to employ H&T to provide senior executive employment to the
Company and H&T desires to accept such an assignment on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and intending to be legally bound, the Company and H&T hereby
agree:
1. ENGAGEMENT. The Company hereby engages H&T and H&T hereby agrees to
perform employment during the Initial and any Renewal Term(as those terms are
defined below) -
2. EMPLOYMENT. H&T will provide the employment of its three members to
perform the following roles for the Company:
(a) Mark P. Hershhorn - Chairman of the Board and Chief Executive
Officer;
(b) James L. Trichon - Executive Vice President;
(c) Constantinos I. Costalas - Chief Operating Officer.
The members of H&T (the "Executives") will accept such employment with the
Company and will perform and fullfill such duties that are reasonably assigned
to them by the Chief Executive Officer and the Board of Directors of the Company
("the Board"), and will devote their best efforts and attention to the
performance and fulfillment of their duties and to the advancement of the
interests of the Company, subject only to the direction, approval, control and
directives of the Chief Executive Officer and the Board of Directors (the
"Employment"). Nothing contained herein shall be construed, however, to prevent
the Executives from trading in or managing, for their own accounts and benefit,
in stocks, bonds, securities, real-estate, commodities or other forms of
investments
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(subject to law and Company policy with respect to trading in competitive
securities).
3. PLACE OF PERFORMANCE. The Company acknowledges that H&T will perform the
employment from its headquarters in the Philadelphia, Pennsylvania metropolitan
area, except as otherwise required by the Board of Directors. The Company will
furnish H&T with office space, secretarial assistance and such other
administrative facilities and services as are reasonably necessary, sufficient
and satisfactory to H&T for the performance of the employment.
4. TERM. H&T's engagement under this Agreement will commence as of March
12, 1999 (the "Commencement Date") and will, unless sooner terminated in
accordance with the provisions hereof, continue uninterrupted for an initial
three-year term (the "Initial Term"), which will expire on March 31, 2002.
Thereafter, the Initial Term will be automatically renewed for successive
one-year periods (a "Renewal Term") unless terminated by either party upon sixty
(60) days' written notice prior to the end of the Initial or any Renewal Term.
5. COMPENSATION.
(a) BASE ANNUAL WAGE. During the Initial Term, H&T will be paid a base
annual wage of $450,000 (the "Base Wage") which will be payable in equal monthly
installments during the Term. The Base Wage may be increased from time to time
by the Board of Directors as conditions warrant including, but not limited to,
H&T's performance record.
(b) INCENTIVE COMPENSATION. The Board of Directors will establish a
plan (the "Plan") for the purpose of providing incentive compensation to H&T.
The amount of the incentive compensation payable under the Plan will be based on
performance in accordance with the provisions of the Plan as determined by the
Compensation Committee of the Board of Directors. Incentive compensation payable
under this subparagraph will be paid at the normal time for payment of executive
bonuses.
(c) HEALTH INSURANCE AND OTHER BENEFITS. During the Initial and any
Renewal Term, the Company will cause the Executives to receive or be reimbursed
for all employee benefits offered by the Company to its Senior Executives and
key management employees, including, without limitation, all pension, profit
sharing, stock options, retirement, salary continuation, deferred compensation,
disability insurance, hospitalization insurance, major medical insurance,
medical reimbursement, survivor income, life insurance
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and any other benefit plan or arrangement established and maintained by the
Company, subject to the rules and regulations then in effect regarding
participation therein. Unless such change is required by Federal, state, or
local law, the Company will not make any changes in any employee benefit plan or
arrangement that would result in a disproportionately greater reduction in the
rights of, or benefits to, the Executives as compared with any other senior
executive of the Company.
(d) REIMBURSEMENT OF EXPENSES. H&T will be reimbursed for ordinary and
reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of employment, provided that H&T will submit to
the company such statements and other evidence supporting said expenses as the
Company may reasonably require.
6. STOCK OPTIONS.
(a) The Company hereby grants to H&T non-qualified options (the
"Options") to purchase 2,000,000 shares (the "Shares") of the Company common
stock, $.01 par value, which Options may be exercised by H&T if but only if a
management sponsored plan of reorganization is approved in which event the
Options may be exercised at any time during the five years following the data of
this Agreement. subject to the same terms that would apply if the options were
granted under the Company's 1997 Stock Option Plan (the "Stock Option Plan").
(b) The exercise price of the Options will be the closing price of the
Company's common stock as listed in the NASDAQ Bulletin Board Exchange as of
March 12, 1999 ($0.56/share).
(c) If, at any time the Company shall determine to register (other than
a registration statement on Form S-8 or S-4 or similar form) any of its common
stock, the Company will, subject to the further provisions herein set forth,
promptly give written notice thereof to H&T; and include in such registration
statement all the Shares specified in a written request made by H&T within 15
days after the receipt or such written notice tram the Company; provided,
however, that H&T shall have such notice and registration rights only to the
extent that the Company does not have an effective registration statement
covering the shares. Such registration shall provide for the sale of the shares
included therein from time to time during the six months (the "Sale Date") from
the effective date of the Registration Statement, subject to the provisions
hereinafter set forth. All registration, filing, qualification and printing
expenses incurred in connection with the Registration Statement shall be for the
account of the Company,
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provided that all fees and disbursements of counsel retained by H&T with respect
to such Registration Statement and all brokerage or similar commissions or
discounts incurred by H&T in connection with the sale of the Shares shall be for
the account of H&T in connection with the sale of the Shares shall be for the
account of H&T. The Company shall have no obligation to declare the Registration
Statement effective. If the offering included in such Registration Statement is
underwritten, H&T at the election of the underwriter shall either include such
Shares in such underwritten offering, reduce the number of securities registered
or delay his offering in any case upon such terms and conditions as determined
by the underwriter in its sole discretion. If the offering is delayed, the six
month period referred to above shall commence upon the expiration of any such
delay.
(d) Should H&T be terminated for cause before the Options are
exercised, the Options shall expire and thereafter become null and void.
7. TERMINATION FOR CAUSE.
(a) Subject to the provisions of subparagraph (b) below, the Company
may discharge H&T and the Executives for "Cause" (as that term is defined below)
and thereby terminate H&T's engagement under this Agreement.
(b) For purposes of this Agreement, the Company shall have "Cause" to
terminate H&T's engagement if H&T or the Executives, in the reasonable judgment
of the Company, (i) materially breach any of its/their duties or obligations
under this Agreement and has not cured or commenced in good faith to cure such
breech within thirty days after notice; (ii) embezzles or converts to their own
use any funds of the Company or any client or customer of the Company; (iii)
converts to their own use or unreasonably destroys any property or the Company,
without the Company's consent; (iv) is habitually intoxicated or is diagnosed by
an independent medical doctor to be addicted to a controlled substance or any
drug whatsoever.
(c) Notwithstanding the foregoing, H&T shall not be deemed to have been
terminated for Cause unless and until H&T has first received thirty (30) days'
prior written notice from the Company specifying the nature of the Cause alleged
(the "Intent to Dismiss Notice") and H&T and the Executives shall have failed to
cure or commenced in good faith to cure any such breach within thirty days after
the receipt of the intent to Dismiss Notice.
8. TERMINATION WITHOUT CAUSE/FOR GOOD REASON. In the event
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that the Company shall terminate this Agreement without Cause or H&T shall
terminate this Agreement for "Good Reason", as that term is defined in Paragraph
8(c), then the Company shall:
(a) Pay H&T as severance pay the remainder, if any, of the Base Wage
for the first year of the contract term which shall be payable in monthly
installments until such amount is paid in full;
(b) Maintain in full force and effect all employee benefits then being
afforded to H&T's Executives for a period of six (6) months after termination or
for the balance of the first year of the Term, whichever is less. In the event
that H&T's participation in any such benefit plan or program is barred or
otherwise prohibited by law, the Company shall arrange to provide H&T with
benefits substantially similar to those which H&T is entitled to receive under
such plans and programs.
(c) For purposes of this paragraph 8, "Good Reason" means the failure
by the Company to comply with the material provisions of this Agreement which
failure is not cured within thirty (30) days following the giving of written
notice thereof to the Company's Board of Directors ("Notice of Termination for
Good Reason").
9. DISPUTE RESOLUTION. In the event that H&T disputes the Company's
determination that Cause exists for terminating this Agreement, or the Company
disputes H&T's determination that Good Reason exists for termination of this
Agreement, either party disputing such a determination shall serve the other
with written notice of such dispute ("Dispute Notice") within thirty (30) days
after receipt of the Dismissal Notice or Notice of Termination for Good Reason,
as the case may be. Within fifteen (15) days thereafter, H&T or the Company, as
the case may be, shall, in accordance with the Rules of the American
Arbitration Association ("AAA"), file an application with the AAA for
arbitration of the dispute, the costs thereof to be shared equally by H&T and
the Company.
10. [Intentionally omitted].
11. [Intentionally omitted].
12. RESTRICTIVE COVENANT.
(a) During the Term of this Agreement and for a period of six (6)
months following termination of this Agreement pursuant to Paragraphs 7 or 8,
H&T Executives undertake and agree
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that they shall not compete, directly or indirectly or participate as a
director, officer, employee, representative or otherwise, or as stockholder,
partner or joint venture, or have any director or have any direct or indirect
financial interest in any business competing directly with the pallet business
of Company or any of its subsidiaries with any geographical area in which the
business of the Company or its subsidiaries is being conducted during the Term
of the Agreement.
(b) Should the duration, geographical area or range of prescribed
activities contained in subparagraph (a) above be held unreasonable by any court
of competent jurisdiction, then such duration, geographical area or range of
prescribed activities shall be modified to such degree as to make it or them
reasonable and enforceable.
13. TRADE SECRETS. During the Term hereof and after termination or
expiration of this Agreement for any reason, H&T and the Executives shall not
disclose, divulge, copy or otherwise use any trade secret of the Company or its
subsidiaries other than any knowledge or information already known to H&T
prior to this Agreement, it being acknowledged that all such new information
and materials compiled or obtained by or disclosed to H&T while
employed by the Company or its subsidiaries hereunder or otherwise are
confidential and the exclusive property of the Company and its subsidiaries.
14. INJUNCTIVE RELIEF. The parties hereto agree that the remedy at law for
any breach of the provisions of Paragraph 12 will be inadequate and that the
Company or any of its subsidiaries or other successors or assigns shall be
entitled to injunctive relief without bond. Such injunctive relief shall
not be exclusive, but shall be in addition to any other rights and remedies of
the Company or any of its subsidiaries or successors or assigns might have for
such breach.
15. COUNSEL FEES AND INDEMNIFICATION.
(a) In the event that it becomes necessary or desirable for H&T to
retain legal counsel and/or incur other costs and expenses in connection with
the enforcement of any and all their rights under this Agreement, including
participation in any proceeding contesting the validity or enforceability of
this Agreement and any arbitration proceeding pursuant to Paragraph 9, H&T shall
be entitled to recover from the Company their reasonable attorney's fees and
costs and expenses in connection with the enforcement of their rights. No fees
shall be payable if the Company is successful on the merits.
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(b) The Company shall indemnify and hold H&T and the Executives
harmless to the maximum extent permitted by the law against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees
incurred by H&T and/or the Executives, in connection with the defense of, or as
a result of, any action or proceeding (or any appeal from any action or
proceeding) in which H&T and/or the Executives is/are made or is/are threatened
to be made a party by reason of any act or omission of H&T and the Executives in
their capacity as an officer, director, or employee of the Company, regardless
of whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor. Expenses (including attorneys'
fees) incurred by H&T and the Executives in defending any civil, criminal,
administrative, or investigative action, suit or proceeding shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of H&T and the Executives to
repay such amount if it shall ultimately be determined that they are not
entitled to be indemnified by the Company as authorized in this Paragraph 15(b).
16. MISCELLANEOUS.
(a) NOTICES. Any notice, demand or communication required or permitted
under this Agreement shall be in writing and shall either be hand-delivered to
the other party or mailed to the addresses set forth below by registered or
certified mail, return receipt requested, or sent by overnight express mail or
courier or facsimile to such address, if a party has a facsimile machine. Notice
shall be deemed to have been given and received when so hand-delivered or after
three business days when so deposited in the U.S. Mail, or when transmitted and
received by facsimile or sent by express mail properly addressed to the other
party. The Addresses are:
To H&T and/or the Executives:
Hershhorn & Trichon, LLC
C/o Mark P. Hershhorn
2228 East Deerfield Drive
Upper Providence, Pa. 19063
To the Company:
3647 South Green Road
Suite 201
Beachwood, Ohio 44122
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(b) ENFORCEABILITY. If any provision of this Agreement shall be held
invalid or unenforceable, in whole or in part, such provisions shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
(c) BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, including their respective heirs, executors,
successors and assigns, except that this Agreement may not be assigned by H&T.
(d) WAIVER OR BREACH. No waiver by either party of any condition or of
the breach by the other of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any condition, or the breach of any other term or covenant set forth
in this Agreement. Moreover, the failure of this party to exercise any right
hereunder shall not bar the later exercise thereof.
(e) GOVERNING LAW AND INTERPRETATION. This Agreement shall be governed
by the internal laws of the Commonwealth of Pennsylvania. Each of the parties
agrees that he or it, as the case may be, shall deal fairly and in good faith
with the other party in performing, observing and complying with the covenants,
promises, duties, obligations, terms and conditions to be performed, observed or
complied with by him or it, as the case may be, hereunder; and that this
Agreement shall be interpreted, construed and enforced in accordance with the
foregoing covenant notwithstanding any law to the contrary.
(f) HEADINGS. The headings of the various sections and paragraphs have
been included herein for convenience only and shall not be considered in
interpreting this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed and delivered by and through their
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authorized representatives.
FIX-CORP INTERNATIONAL, INC. ATTEST:
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By:_________________________________ _____________________________________
[An authorized officer] [SEAL]
HERSHHORN & TRICHON, LLC
By:_________________________________ _____________________________________
Mark P. Hershhorn Witness
Manager
____________________________________ _____________________________________
Mark P. Hershhorn Witness
____________________________________ _____________________________________
James L. Trichon Witness
____________________________________ _____________________________________
Constantinos I. Costalas Witness
____________________________________ _____________________________________
Mark Fixler Witness
____________________________________ _____________________________________
Lawrence Schmelzer Witness
____________________________________ _____________________________________
Michael DiSanto Witness
</TABLE>
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<TABLE>
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____________________________________ _____________________________________
Andrew Press Witness
____________________________________ _____________________________________
Gary DeLaurentis Witness
</TABLE>
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Exhibit 2
PROMISSORY NOTE
$750,000.00 April 22, 1999
Philadelphia, Pennsylvania
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY, the
undersigned (each jointly and severally if more than one person and herein
referred to and obligated as "Debtor") promises to pay to the order of THE
HERSHHORN GROUP ("Bank") at its offices in Philadelphia, Pennsylvania, or at any
other location that Bank may designate, in lawful money of the United States,
the Principal sum of Seven hundred fifty thousand---and---00/100 Dollars, or
such lesser amount which may be advanced to Debtor by Bank in its sole and
absolute discretion, which shall, if not sooner paid, be payable on October 9,
1999. Interest shall accrue from the date of the first draw on the unpaid
principal balance outstanding, from time to time, at the rate of 4% above the
prime rate of interest of National City Bank of Ohio (as defined below).
Interest shall be payable monthly commencing May 1, 1999, and thereafter on the
same day of each succeeding month.
SECURITY INTEREST: Debtor hereby grants to Bank a lien on and security interest
in and to all property of Debtor, except the stock of the subsidiaries of
Fix-Corp International, Inc., as security for the prompt payment as and when due
of all amounts owing under this Note, including any renewals, extensions and/or
modifications thereof, together with all other existing and future liabilities
and obligations of Debtor to Bank (including without limitation any debt,
liability or obligation owing from Debtor to others which Bank may obtain by
assignment or otherwise) and out of whatever transactions arising (herein
collectively called the "Obligations") . This lien and security interest
includes, without limitation, any balance or share belonging to Debtor of any
deposit, agency, trust, escrow or other account with Bank, and any other amounts
which may be owing from time to time by Bank to Debtor. The lien of the security
interest granted by Debtor shall be subordinate to the liens of Coast Business
Credit and Medalian Capital, Inc.
INTEREST ACCRUAL - Interest shall be calculated hereunder for the actual number
of days that the principal is outstanding, based on a year of three hundred and
sixty-five (365) days, unless otherwise specified. If interest is calculated by
Bank's prime rate of interest, the term "prime rate of interest" shall mean that
rate of interest charged by National City Bank of Ohio, from time to time, as
its prime rate of interest, which may not be the lowest rate of
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National City's prime rate of interest shall become effective on the day that
National City enters the change on its books. Interest shall continue to accrue
on the principal at the rate(s) specified above notwithstanding any demand for
payment, acceleration and/or the entry of judgment against Debtor, until all
principal has been paid in full.
PREPAYMENTS - Unless otherwise agreed to in writing by Debtor, this Note may be
prepaid, in whole or in part, without penalty. However, if this Note is payable
in installments, any prepayment shall be applied to the installments payable
hereunder in their inverse order of maturity (last installment due credited
first) and the number of installments shall be correspondingly reduced. No
prepayment shall reduce the amount of or relieve Debtor from paying any
scheduled installment until the principal and interest of this Note has been
paid in full.
LATE PAYMENTS - If any payment of principal or interest is not received in full
by Bank within fifteen (15) days after the due date thereof, there shall be
added to the Obligations a late charge equal to four (4%) percent of the amount
past due.
EVENTS OF DEFAULT - Each of the following shall constitute an "Event of
Default": (1) the nonpayment when due of any amount payable under this Note or
of any amount when due under or on any of the Obligations, or the failure of
Debtor to observe or perform any agreement of any nature whatsoever with Bank;
of (2) any information or signature furnished to Bank by Debtor in connection
with any of the Obligations is materially false or incorrect.
BANK'S RIGHTS UPON DEFAULT - Upon the occurrence of any Event of Default, and
upon the giving of five (5) days prior written notice to Debtor, Bank may do any
or all of the following: (1) Accelerate the maturity of this Note and all
amounts payable hereunder and demand immediate payment thereof; (2) Exercise all
of the rights and remedies of a secured party under the Ohio Uniform Commercial
Code (or under the laws of any other jurisdiction in which any collateral
security for the Obligations may be located), and all of its rights and remedies
under any security agreement, pledge agreement, mortgage, power, or other
document issued in connection with or arising out of or relating to any of the
Obligations (the "Loan Documents") .
APPLICATION OF FUNDS - All sums realized by Bank on account of the Obligations,
from whatever source received, shall be applied first to any fees and expenses
(including attorneys' fees) incurred by Bank, second to accrued and unpaid
interest and late charges, and then to principal. Debtor waives and releases any
right to require
2
<PAGE> 3
Bank to collect any of the Obligations from any collateral under any theory of
marshalling of assets or otherwise. Debtor authorizes Bank to apply the proceeds
of any collateral in which Obligor has any right, title or interest against any
of the Obligations in any manner or order that Bank may determine.
PAYMENT OF COSTS AND ATTORNEYS' FEES - Debtor shall be liable, and shall
reimburse Bank on demand, for all attorneys' fees and expenses incurred by Bank
in the event that Bank engages an attorney to represent it in connection with
(1) any alleged default by Debtor under any of the Loan Documents issued in
connection with or arising out of any of the Obligations, (2) the enforcement of
any of the Bank's rights and remedies under any of the Loan Documents, (3) any
potential and/or actual bankruptcy or other insolvency proceedings commenced by
or against Debtor and/or (4) any potential and/or actual litigation arising out
of or related to any of the foregoing, the Loan Documents or any of the
Obligations. Debtor shall also be liable and shall reimburse Bank on demand for
all other costs and expenses incurred by Bank in connection with the collection,
preservation and/or liquidation of any collateral security for any of the
Obligations and/or in the enforcement of Debtor's obligations under any of the
Loan Documents.
MISCELLANEOUS - Debtor hereby waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand. To the extent permitted by law, Debtor
hereby waives and releases all errors, defects and imperfections in any
proceedings instituted by Bank under the terms of this Note. The rights and
privileges of Bank under this Note shall inure to the benefit of its successors
and assigns. All representations, warranties and agreements of Debtor made in
connection with this Note shall bind Debtor's personal representatives, heirs,
successors and assigns. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein. The
waiver or failure of Bank to exercise any right or remedy to which it may be
entitled in any Event of Default shall not be deemed to be a waiver in any
subsequent Event of Default. The rights and remedies of Bank under this Note and
the other Loan Documents shall be in addition to any other rights and remedies
available to Bank at law or in equity, all of which may be exercised singly or
concurrently. This Note has been delivered to and accepted by Bank in Ohio and
shall be governed by the laws of that State. The parties agree to the exclusive
jurisdiction of the federal and state courts located in Ohio in connection with
any matter arising hereunder, including the collection and enforcement hereof,
except as Bank may otherwise elect.
3
<PAGE> 4
IN WITNESS WHEREOF, Debtor has duly executed this Note the day and year
first above written and has hereunto set hand and seal .
<TABLE>
<CAPTION>
FIX-CORP INTERNATIONAL, INC. ATTEST:
<S> <C>
By: /s/ James L. Trichon /s/ M???
------------------------------------------ --------------------------------
[SEAL]
PALLET TECHNOLOGY, INC. ATTEST:
By: /s/ James L. Trichon /s/ M???
------------------------------------------ --------------------------------
[SEAL]
POLYSTYLE INDUSTRIES, INC. ATTEST:
By: /s/ James L. Trichon /s/ M???
------------------------------------------ --------------------------------
[SEAL]
FIXCOR INDUSTRIES, INC. ATTEST:
By: /s/ James L. Trichon /s/ M???
------------------------------------------ --------------------------------
[SEAL]
</TABLE>
4
<PAGE> 1
Exhibit 3
SECURITY AGREEMENT
THIS AGREEMENT made this 22nd day of April, 1999 between the undersigned,
of 1835 James Parkway, Heath, Ohio, all corporations organized and existing
under the laws of the State of Delaware, (hereinafter referred to and obligated
as the "Undersigned"), and THE HERSHHORN GROUP, with an offices at 2228 E.
Deerfield Drive, Upper Providence, PA 19063 (hereinafter "Bank"), the address at
which information concerning Bank's security interests hereunder may be
obtained.
1. THE COLLATERAL
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY, and as
security for the prompt payment and performance of all Obligations (as defined
in Paragraph 2 below), the Undersigned hereby grants and conveys to Bank a
continuing security interest in and lien upon:
1.1 All of the Undersigned's new and used Inventory (as that term is now or
hereafter defined in the Ohio Uniform Commercial Code, hereinafter the "UCC")
now owned or hereafter acquired by the Undersigned, including all raw materials,
work in process and materials used, produced or consumed in the Undersigned's
business; all tangible personal property held by the Undersigned for sale,
consignment or lease in the normal course of the Undersigned's business, or to
be furnished under contracts of service; all tangible personal property which
the Undersigned has so consigned, leased or furnished; all tangible personal
property sold by the Undersigned on a sale or return basis; all tangible
personal property returned to the Undersigned or repossessed by the Undersigned
following a sale, consignment or lease thereof by the Undersigned; and all
Documents of Title (as that term is defined in the UCC) or certificates of title
or origin and all tangible personal property represented thereby;
1.2 All Accounts, Chattel Paper, General Intangibles and Instruments (as
those terms are now or hereafter defined in the UCC), now owned or hereafter
acquired by the Undersigned, whether now existing or hereafter arising; all
guaranties, sureties and endorsements of the Undersigned' s existing and
future Accounts, Chattel Paper and Instruments; all security or collateral held
or taken by the Undersigned to secure the payment and/or satisfaction of any
Account, Chattel Paper or Instrument, including any returned or repossessed
goods; and all goods surrendered to the Undersigned at the end of any lease or
rental term; However, Bank shall not have a lien on the stock of the
subsidiaries of Fix-Corp International, Inc.
<PAGE> 2
1.3 All rights in connection with the residual value of any Inventory
leased, rented, sold, consigned or otherwise disposed of, including but not
limited to, the proceeds of any third party's option to purchase such Inventory;
and
1.4 All of the Undersigned's new and used machinery, equipment, furniture
and fixtures now or hereafter owned or possessed by the Undersigned, whether or
not affixed or to be affixed to real estate and including all replacements and
substitutions of all or any of the foregoing, as well as accessions,
accessories, parts and goods appurtenant to the property described; all jigs,
tools, dies, replacement parts, tool and die designs, patents, processes, trade
names, trademarks, service marks, copyrights, licenses and all General
Intangibles and Choses in Action (as these terms are defined in the UCC), now or
hereafter affixed thereto, arising therefrom, used in connection therewith, or
related to the possession, use, or operation thereof.
1.5 All property of the Undersigned;
including all replacements and substitutions of all or any of the foregoing; all
accessions, accessories, parts and goods appurtenant to the property described;
all patents, processes, trade names, trademarks, service marks, copyrights and
licenses now or hereafter affixed thereto, arising therefrom, used in connection
therewith, or related to the possession, use, manufacture, processing,
advertisement, sale, consignment, lease, other disposition or operation thereof;
all of the Undersigned's rights in consignment agreements, sale agreements,
lease agreements, rental agreements and other agreements arising out of or
relating to the Undersigned's lease, sale, rental, consignment or other
disposition of the said property or any portion thereof (the term "Account"
shall also be deemed to include all rights to payment arising out of or related
to any and all consignment, sale, lease and rental agreements in which the
Undersigned is the consignor, seller, or lessor, and this Agreement shall be
considered an assignment of all such agreements); all insurance thereon and the
proceeds of such insurance; and all cash and non-cash proceeds of all of the
foregoing. All of the property described in this Paragraph 1 is hereinafter
collectively referred to as the "Collateral."
2. OBLIGATIONS SECURED
The Collateral secures all of the following:
2.1 The liabilities of the Undersigned to Bank evidenced by note executed
on or about the date hereof, together with any interest thereon at the rate
specified therein (the "Debt Instrument").
<PAGE> 3
2.2 The liabilities of the Undersigned to Bank arising out of the existing
loan and/or advances thereunder, if any, made by Bank to the Undersigned or any
of them.
2.3 All other existing liabilities and obligations of the Undersigned or
any of them to Bank, whether absolute or contingent, direct or indirect, sole,
joint or several, of any nature whatsoever, and out of whatever transactions
arising, including without limitation any debt, liability or obligation owing
from the Undersigned to others which Bank may obtain by assignment or otherwise,
and continuing interest accruing on any of the foregoing, and any costs, legal
fees and expenses incurred by Bank in the enforcement of any of the foregoing.
2.4 Full and complete performance by the Undersigned of the warranties,
representations and covenants herein set forth and all warranties,
representations and covenants set forth in any documents executed and/or
delivered in connection herewith.
2.5 Performance by the Undersigned of all warranties, representations, and
covenants set forth in the Debt Instrument, in the documents evidencing the
liabilities specified in Subparagraph 2.1, 2.2 2.3 and/or 2.4 above, and in any
documents executed and/or delivered in conjunction with any of the foregoing.
All of the foregoing liabilities and obligations are hereinafter collectively
referred to as the "Obligations." The security interests granted herein shall
continue in full force and effect until all of the Obligations have been
satisfied in full.
3. WARRANTIES, REPRESENTATIONS AND COVENANTS
In order to induce Bank to enter into this Agreement, the
Undersigned warrants, represents and covenants and, until all of
the Obligations have been satisfied in full, continues to warrant,
represent and covenant, as follows:
3.1 The Undersigned will execute upon Bank's request such UCC financing
statements, lease assignment forms, lessee notifications, Account Debtor (which
is herein defined as any and all persons obligated as makers, endorsers,
guarantors or sureties on any Account, Chattel Paper or Instrument)
notifications and other documents as are deemed necessary or desirable to
perfect and maintain perfected the liens and security interests granted herein.
3.2 If the Collateral includes any property for which a Document or
Certificate of Title is issuable, the Undersigned will present to Bank an
appropriate Document or Certificate of Title for
3
<PAGE> 4
such Collateral, within three days after the Undersigned obtains possession of
such Collateral, and the Undersigned will cause a notation of the lien and
security interest granted to Bank herein to be made and noted on such Document
or Certificate of Title.
3.3 If any or all of the Collateral is purchased or to be purchased by the
Undersigned with the proceeds of any of the Obligations, the Undersigned will
join with Bank in executing all notices and other documents necessary to enable
Bank to obtain a Purchase Money Security Interest in such Collateral, subject to
any prior lien of Coast Business Credit, Inc. and Medallion Capital, Inc.
3.4 The Undersigned's principal place of business and the place where the
Undersigned keeps the Collateral and its Books and Records (as defined in
Subparagraph 3.5 below) relating to its Inventory, Accounts, Chattel Paper and
Instruments is the address stated after the name of the Undersigned above. The
Undersigned will immediately advise Bank in writing of any change in any of the
Undersigned's place(s) of business, the opening of any new or additional
place(s) of business, and the locations of all places wherein the Undersigned
keeps the Undersigned's Books and Records.
3.5 The Undersigned shall keep complete and accurate Books and Records (as
used herein, the term "Books and Records" shall be defined to include all of the
Undersigned's books of original and final entry, including computer programs,
software, stored material and data banks associated with or arising out of the
Undersigned's business, operations and/or record keeping) and make all necessary
entries therein to reflect the transactions and facts giving rise to its
Inventory, Accounts, Chattel Paper and Instruments and all payments, credits and
adjustments applicable thereto. The Undersigned agrees to mark its Books and
Records in such fashion as to indicate the security interests granted to Bank
herein. The Undersigned shall permit Bank, its officers, employees and agents to
have reasonable access to all of the Undersigned's Books and Records and any
other records pertaining to the Undersigned's business which Bank may request.
3.6 If any of the Undersigned's Accounts, Contracts, or Contract Rights
arise out of a contract with the United States government or any department,
agency or instrumentality thereof, the Undersigned will immediately notify Bank
thereof in writing and execute any and all instruments and take any and all
steps required by Bank in order that the security interests of Bank hereunder in
all Accounts arising thereunder, and in the proceeds thereof, shall be protected
under the provisions of the Federal Assignment of Claims Act, subject to
existing liens of Coast and Medallion.
4
<PAGE> 5
3.7 The Undersigned will permit Bank to inspect and audit the Collateral at
any time and from time to time.
3.8 The Undersigned is duly organized, validly existing and in good
standing under the laws of the State shown above, has the power and authority to
make and perform this Agreement, and is duly qualified in all jurisdictions in
which it conducts business or where such qualification is required. The
execution, delivery and performance of this Agreement, the Debt Instrument, and
all other documents required hereunder or delivered in conjunction herewith have
been duly authorized by all requisite corporate or partnership action and will
not violate any provision of law or regulation, or of the Articles of
Incorporation, By-Laws or Partnership Agreement of the Undersigned, or any
agreement, indenture or instrument to which the Undersigned is a party. This
Agreement, the Debt Instrument, and all documents evidencing the Obligations
hereunder arising herefrom or related hereto, when executed and delivered by the
Undersigned, will be legal, valid and binding obligations of the Undersigned,
enforceable against the Undersigned in accordance with their respective terms.
4. [INTENTIONALLY OMITTED.]
5. [INTENTIONALLY OMITTED.]
6. [INTENTIONALLY OMITTED.]
7. EVENTS OF DEFAULT
Each of the following shall be an "Event of Default" hereunder:
7.1 The nonpayment as and when due of any amount payable under or on any of
the Obligations and all accrued interest thereon or the failure of any Obligor
(the term "Obligor," as used herein, shall include the Undersigned and all other
persons liable, either absolutely or contingently, on the Obligations, including
endorsers, sureties and guarantors) at any time to observe or perform any of its
warranties, representations or covenants contained in this Agreement, the Debt
Instrument, the Obligations, or any other document or instrument related thereto
or arising therefrom .
7.2 If any signature, statement, warranty, representation or covenant made
by any Obligor heretofore or hereafter in any application, exhibit, statement,
certificate or other document executed or delivered pursuant to or in connection
with the Obligations was or is materially incorrect, incomplete, false or
5
<PAGE> 6
misleading .
7.3 The failure of any Obligor to observe or perform any agreement of any
nature whatsoever with Bank.
8. BANK'S RIGHTS UPON DEFAULT
Upon or after the occurrence of any Event of Default, Bank may do any
or all of the following, all of which rights and remedies shall be cumulative
and any and all of which may be exercised from time to time and as often as Bank
shall deem necessary or desirable:
8.1 Exercise any or all rights, privileges and remedies available to Bank
under this Agreement, the Debt Instrument, and of a secured party under the UCC
(which remedies shall be cumulative), as well as those under any other
applicable agreement with respect to any of the Collateral then held for the
Obligations, and to apply such monies and the net proceeds of the Collateral to
any of the Obligations then due Bank as provided below.
8.2 Declare the entire unpaid amount of such of the Obligations as are not
then due and payable to become immediately due and payable, without notice to or
demand on any Obligor.
8.3 The waiver of any Event of Default or Bank's failure to exercise any
right or remedy hereunder shall not be deemed a waiver of any subsequent Event
of Default or of the right to exercise that or any other right or remedy
available to Bank.
9. PAYMENT OF COSTS AND ATTORNEYS' FEES
The Undersigned shall be liable, and shall reimburse Bank on demand,
for all attorneys' fees and expenses incurred by Bank in the event that Bank
engages an attorney to represent it in connection with (1) any alleged default
by any Obligor under any of the Loan Documents issued in connection with or
arising out of any of the Obligations, (2) the enforcement of any of Bank's
rights and remedies under any of the Loan Documents, (3) any potential and/or
actual bankruptcy or other insolvency proceedings commenced by or against any
Obligor and/or (4) any potential and/or actual litigation arising out of or
related to any of the foregoing, the Loan Documents or any of the Obligations,
the Undersigned shall also be liable and shall reimburse Bank on demand for all
other costs and expenses incurred by Bank in connection with the collection,
preservation and/or liquidation of any collateral security for any of the
Obligations and/or in the enforcement of any Obligor's obligations under any of
the Loan Documents.
6
<PAGE> 7
10. MISCELLANEOUS
10.1 This Agreement shall inure to the benefit of, and is and shall
continue to be binding upon, the parties, their successors, endorsers, personal
representatives, receivers, trustees, heirs and assigns, but nothing contained
herein shall be construed to permit the Undersigned to assign this Agreement or
any of the Undersigned's rights or obligations hereunder without first obtaining
Bank's prior written approval.
10.2 All warranties, representations and covenants of the Undersigned
contained in this Agreement are joint and several if the Undersigned is more
than one person, and shall bind the Undersigned's personal representatives,
heirs, successors and assigns and shall remain in full force and effect until
the Obligations are paid in full and all of the undertakings of the Undersigned
hereunder have been satisfactorily performed in full.
10.3 This Agreement and the Debt Instrument have been executed pursuant to,
delivered in and shall be governed by and construed under the laws of the State
of Ohio. The parties acknowledge the exclusive jurisdiction of the federal,
state and local courts located within the State of Ohio over controversies
arising from or relating to this Agreement, except as Bank may otherwise elect.
10.4 If any provision of this Agreement shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof.
10.5 The rights, powers and remedies of Bank hereunder are
cumulative and not alternative and shall not be exhausted by the
single assertion or exercise thereof and the failure of Bank to
exercise any such right, power or remedy will not be deemed a
waiver thereof nor preclude any further or additional exercise of
such right, power or remedy at any other time. The waiver of any
default hereunder shall not be deemed to be a waiver of any
subsequent default.
10.6 No modifications of this Agreement shall be binding or enforceable
unless in writing and signed by duly authorized representatives of the
Undersigned and Bank.
IN WITNESS WHEREOF, the parties have hereunto caused this
7
<PAGE> 8
Agreement to be duly executed and sealed as of the day and year
first above written.
FIX-CORP INTERNATIONAL, INC. Attest:
By: /s/ James L. Trichon /s/ MH
------------------------------ ---------------------------
[SEAL]
PALLET TECHNOLOGY, INC. ATTEST:
By: /s/ James L. Trichon /s/ MH
------------------------------ ---------------------------
[SEAL]
POLYSTYLE INDUSTRIES, INC. ATTEST:
By: /s/ James L. Trichon /s/ MH
------------------------------ ---------------------------
[SEAL]
FIXCOR INDUSTRIES, INC. ATTEST:
By: /s/ James L. Trichon /s/ MH
------------------------------ ---------------------------
[SEAL]
THE HERSHHORN GROUP
By: /s/ MH
------------------------------
(Name and Title)
16
<PAGE> 1
EXHIBIT 5
FOR IMMEDIATE RELEASE FOR MORE INFORMATION,
CONTACT:
FIX-CORP INTERNATIONAL, INC. Mark P. Hershhorn 610-892-9771
[OTC:BB:FIXC] James L. Trichon 215-851-8830
FIX-CORP INTERNATIONAL GETS APPROVAL FROM BANKRUPTCY
COURT FOR NEW DIRECTOR, OFFICERS AND NEW FINANCING
Heath, Ohio, April 27, 1999 - On Friday, April 23, 1999, the United States
Bankruptcy Court for the Southern District of Ohio approved Fix-Corp
International, Inc.'s board of directors' decision to enter into an
agreement with the Philadelphia-based management consulting firm of
Hershhorn & Trichon, LLC ("H & T"). Pursuant to the agreement, the Company
elected Mark P. Hershhorn as a director and the Chief Executive Officer and
Chairman of the Board of the Company. Mr. Hershhorn will replace S. Darwin
Noll as a director, who resigned effective as of March 12, 1999. Along with
the appointment of Mr. Hershhorn, James L. Trichon was named Executive Vice
President and Constantinos I Costalas was named Chief Operating Officer of
the Company.
Mr. Hershhorn, age 49, is also the Chairman and Chief Executive Officer of CKS &
Associates, a management consulting firm as well as the President of H & T. Mr.
Hershhorn has also served as President and Chief Executive Officer and Director
of National Media Corporation (a NYSE company), and Chairman of National Media's
International subsidiary, Quatum International Limited. Prior to that, Mr.
Hershhorn served as President and Chief Operating Officer of Buckeye
Communications, Inc.
Mr. Trichon, age 54, also serves as the President and Chief Executive Officer of
Triam, Inc., a contract management, consulting and business development firm. He
is also a partner of H and T.
Mr. Costalas, age 63, served as Vice Chairman and Chief Operating Officer of
National Media Corporation from 1994 until January 1999. Prior to that, he
served as Chairman of the Board, President, arid Chief Executive Officer of
Glendale Bancorporation, a commercial bank.
H & T entered into the employment agreement with the Company for a three year
term ending on March 31, 2002. renewable for successive one year terms. Under
the agreement, H & T will be paid a base annual wage of $450,000 plus certain
benefits and incentive compensation under a plan to be established by the Board
(including an option to be granted to purchase 2,000,000 shares of the Company's
Common Stock for a cost of $.56 per share).
The Bankruptcy Court also issued an order authorizing the rejection of the
Company's employment contract with Mark Fixler, the company's founder, a current
director, and its Chief Executive Officer. Mr. Fixler further agreed that he had
no claim for damages against the Company arising from the rejection of his
employment contract and waived the $2 million severance benefit, health
insurance, and automobile allowance provided for in his employment contract.
Additionally, Mr. Fixler's
<PAGE> 2
annual salary was reduced from $300,000 to $150,000 through December 31, 1999.
Mr. Fixler, in June 1998, canceled an option to purchase four million shares of
the Company's stock. Mr. Fixler will continue to be bound by the noncompetition
and confidential information provisions of his employment agreement.
The Bankruptcy Court also issued an order authorizing post-petition financing by
the Company and its subsidiaries. Such financing is conditioned upon the
Company's immediately commencing discussions with Chatham Partners, Inc.
("Chatham") with respect to the validity of a judgment of approximately
$4,474,000 Chatham obtained against the Company in New York state court. The
subject judgment, which caused the Company to seek protection under the
Bankruptcy Code, arose from a disputed December 1996 agreement pursuant to which
Chatham was to act as the Company's exclusive financial advisor and placement
agent for a private placement of ut to $5 million of debt securities.
Fix-Corp International, Inc. is an international environmental-based recycler of
post-consumer high density polyethylene (HDPE) and producer of recycled
post-consumer plastic resin pellets for use in the manufacture of injection
molded plastic products through its wholly-owned subsidiary, Fixcor Industries,
Inc. In addition, the Company through its Pallet Technology, Inc. subsidiary,
manufactures high-performance plastic for the industrial marketplace. The
Company is also under a worldwide licensing agreement with Allied Signal to
reclaim and recycle both oil and plastic from post-consumer HDPE motor oil
containers through its wholly owned subsidiary Fixcor Recovery Systems, Inc. The
Company is based in Heath, Ohio and can be be found on the World Wide Web as
www.fix-corp.com.
Certain statements contained in this release, including, without limitation,
statements containing the words "believes," "anticipates," "expects" or word of
similar import, constitute "forward looking statements" without the meaning of
the Privates Securities Litigation Reform Act of 1995. Such forward looking
statements involve unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward looking statements. Such factors include,
among others, the possibility that settlement discussions with Chatham
Partners, Inc. may fail. Given these uncertainties, readers of the release and
investors are cautioned not to place undue reliance on such forward looking
statements. The Company disclaims any obligation to update such factors or to
publicly announce the result of any revisions to any forward looking statements
contained herein to reflect future events or developments.
