UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES ACT
OF 1934
FOR THE TRANSITION PERIOD FROM TO
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Commission File Number: 0-9083
Enercorp, Inc.
--------------
(Exact name of Registrant as specified in its Charter)
Colorado 84-0768802
- ------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
7001 Orchard Lake Road, Suite 424
West Bloomfield, Michigan 48322
- --------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
(248) 851-5651
-----------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding at September 30, 1997: 590,897
<PAGE>
Enercorp, Inc.
Form 10-Q Filing for the Second Quarter Ended September 30, 1997
INDEX
Page
Number
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Statements of Assets and Liabilities
September 30, 1997 (Unaudited) and June 30, 1997 4
Schedule of Investments (Unaudited), September 30, 1997 5-6
Schedule of Investments June 30, 1997 7-8
Statements of Operations (Unaudited) for the Three
Months Ended September 30, 1997 and 1996 9
Statements of Cash Flows (Unaudited) for the Three
Months Ended September 30, 1997 and 1996 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
2
<PAGE>
Enercorp, Inc.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim unaudited condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and do
not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have
been included, and the disclosures are adequate to make the information
presented not misleading. Operating results for the three months ended
September 30, 1997 are not necessarily indicative of the results that
may be expected for the year ended June 30, 1998. These statements
should be read in conjunction with the financial statements and notes
thereto included in the Annual 10-K Report (filed with the Securities
and Exchange Commission) for the year ended June 30, 1997.
3
<PAGE>
Enercorp, Inc.
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1997 1997
------------- -------------
<S> <C> <C>
Investments, at fair value, cost of $1,623,388 at
September 30, 1997 and June 30, 1997 4,131,110 4,287,148
Cash 16,013 99
Accounts receivable - related parties -0- 2,985
Accrued interest receivable - net of allowance for
uncollectible interest receivable of $13,089 and $12,477
at September 30, 1997 and June 30, 1997, respectively 12,328 18,273
Note receivable - related parties net of allowance for
uncollectible notes receivable of $23,147 at September
30, 1997 and June 30, 1997 207,715 207,715
Furniture and fixtures, net of accumulated depreciation
of $5,263 and $4,747 at September 30, 1997 and
June 30, 1997, respectively 3,673 4,189
Other assets 1,486 3,693
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$ 4,372,325 $ 4,524,102
============= =============
LIABILITIES AND NET ASSETS
Liabilities
Note payable - bank $ 1,799,549 $ 1,712,900
Accounts payable and accrued liabilities 73,966 51,238
Deferred tax liability 307,000 395,000
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2,180,515 2,159,138
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Net assets
Common stock, no par value: 10,000,000 shares
authorized, 590,897 shares issued and outstanding
September 30, 1997 and June 30, 1997 1,468,251 1,468,251
Preferred stock, no par value: 1,000,000 shares
authorized, -0- issued and outstanding -0- -0-
Accumulated deficit (931,163) (861,049)
Unrealized net gain on investments, net of deferred
income taxes of $853,000 and $906,000 at
September 30, 1997 and June 30, 1997, respectively 1,654,722 1,757,762
------------- -------------
2,191,810 2,364,964
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$ 4,372,325 $ 4,524,102
============= =============
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Schedule of Investments
September 30, 1997
Restrictions Number Cost
Expiration as to of and/or Fair
Company Description of Business Date Resale Shares Owned Equity Value
<S> <C> <C> <C> <C>
AFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product
Development 1,751 $ - $ 2
10,000,000 106,477 9,000
Williams Controls, Inc.* Manufacturer of sensors, (e) 400,000 60,000 855,000
controls and communication (e) 850,000 127,500 1,816,875
systems (e) 330,000 412,500 705,375
(b) 5/97 (e) 30,000 108,750 57,000
(b) 10/97 (e) 50,000 125,000 95,000
Ajay Sports, Inc.* Golf & Casual Furniture Manufacturer 1,764,706 600,000 297,794
(b) 12/96 100,000 37,500 16,875
Preferred Stocks - Public Market Method of Valuation (d)
Ajay Sports, Inc.* Golf & Casual Furniture Manufacturer 2,000 20,000 8,100
Warrants and Stock Options - Board Appraisal Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product Development (c) 300,000 - -
Williams Controls, Inc.* Manufacturer of sensors, controls 11/(c)97 150,000 - 265,275
and communication systems 08/(c)99 25,000 - -
05/(c)00 25,000 - -
09/(c)99 50,000 - -
----------- -----------
1,597,727 4,126,296
See notes to financial statements
</TABLE>
5 (Continued)
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Schedule of Investments
September 30, 1997
Restrictions Number Cost
Expiration as to of and/or Fair
Date Resale Shares Owned Equity Value
Company Description of Business
<S> <C> <C> <C> <C>
UNAFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
Vitro Diagnostics Holding Company 10,000,000 5,000 -
Immune Response, Inc. Diagnostic Test Kits 300 1,500 24
Proconnextions, Inc. Sports Memorabilia Marketing (a) 191,610 19,161 4,790
----------- -----------
Sub-total - UNAFFILIATED COMPANIES 25,661 4,814
----------- -----------
Total - ALL COMPANIES $ 1,623,388 $ 4,131,110
=========== ===========
(a) Non-public company whose securities are privately owned.
(b) May be sold under the provisions of Rule 144 of the Securities Act of
1933 after a holding period which expires in the month indicated.
(c) No public market exists for this security.
(d) A discount factor as determined by the Company's Board of Directors has
been applied to those stocks valued by the public market method which
have restrictions as to resale.
(e) Pledged as collateral against a line of credit with Comerica Bank.
* This entity is considered an affiliated company since the Company owns
more than 5% but less than 25% of the Investee company's outstanding
common stock. Because of this, the Company would be affected by a sales
limitation of one percent of the investee's outstanding common stock
during any three-month period, or the average of the last four weeks'
trading volume, whichever is greater.
See notes to financial statements
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Schedule of Investments
June 30, 1997
Restrictions Number Cost
Expiration as to of and/or Fair
Company Description of Business Date Resale Shares Owned Equity Value
<S> <C> <C> <C> <C>
AFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product Development 1,751 $ - $ 2
10,000,000 106,477 9,000
Williams Controls, Inc.* Manufacturer of sensors, controls (f) 400,000 60,000 866,160
and communication systems (f) 850,000 127,500 1,840,590
(f) 330,000 412,500 714,582
(b) 5/97 (f) 30,000 108,750 57,744
(b) 10/97 (f) 50,000 125,000 96,240
Ajay Sports, Inc.* Golf & Casual Furniture Manufacturer 1,764,706 600,000 397,059
(b) 12/96 100,000 37,500 22,500
Preferred Stocks - Public Market Method of Valuation (d)
Ajay Sports, Inc.* Golf & Casual Furniture Manufacturer 2,000 20,000 9,000
Warrants and Stock Options - Board Appraisal Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product Development (c) 300,000 - -
Williams Controls, Inc.* Manufacturer of sensors, controls 11/(c)97 150,000 - 269,460
and communication systems 08/(c)(e) 25,000 - -
05/(c)00 25,000 - -
09/(c)99 50,000 - -
----------- -----------
1,597,727 4,282,337
See notes to financial statements
</TABLE>
(Continued)
7
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Schedule of Investments (Continued)
June 30, 1997
Restrictions Number Cost
Expiration as to of and/or Fair
Date Resale Shares Owned Equity Value
<S> <C> <C> <C> <C>
Company Description of Business
UNAFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
Immune Response, Inc. Holding Company 10,000,000 5,000 -
Vitro Diagnostics Diagnostic Test Kits 300 1,500 21
Proconnextions, Inc. Sports Memorabilia Marketing (a) 191,610 19,161 4,790
----------- -----------
Sub-total - UNAFFILIATED COMPANIES 25,661 4,811
----------- -----------
Total - ALL COMPANIES $ 1,623,388 $ 4,287,148
=========== ===========
(a) Non-public company whose securities are privately owned.
(b) May be sold under the provisions of Rule 144 of the Securities Act of
1933 after a holding period which expires in the month indicated.
(c) No public market for this security exists.
(d) A discount factor as determined by the Company's Board of Directors has
been applied to those stocks valued by the public market method which
have restrictions as to resale.
(e) 75% currently vested; 25% vesting 8/97.
(f) Pledged as collateral against a line of credit with NBD Bank as of June
30, 1997.
* This entity is considered an affiliated company since the Company owns
more than 5% but less than 25% of the Investee company's outstanding
common stock. Because of this, the Company would be affected by a sales
limitation of one percent of the investee's outstanding common stock
during any three-month period, or the average of the last four weeks'
trading volume, whichever is greater.
See notes to financial statements
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Statements of Operations
For the Three Months
Ended September 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
REVENUES
Interest income $ -0- $ 824
Interest income from related entities 5,606 152
Consulting fees from related companies -0- 672
Dividend income from affiliated company -0- 500
------------ ------------
5,606 2,148
------------ ------------
EXPENSES
Salaries - officer 21,750 18,000
Staff salaries -0- 9,600
Legal, accounting and other professional fees 7,100 4,314
Interest expense - other 71,924 35,277
Bad debt expense 613 613
Other general and administrative expenses 9,334 14,334
------------ ------------
110,721 82,138
------------ ------------
Net (loss) from operations before taxes (105,115) (79,990)
Income tax expense (benefit) 35,000 27,000
------------ ------------
Net (loss) from operations after taxes (70,115) (52,990)
------------ ------------
Net unrealized gain (loss) on investments (156,038) 1,160,460
before taxes
Income tax expense (benefit) 18,000 (395,000)
------------ ------------
Net unrealized gain on investment after taxes (138,038) 765,460
------------ ------------
Increase in net assets $ (208,153) $ 712,470
============ ============
Increase in net assets per share $ (0.35) $ 1.21
============ ============
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Enercorp, Inc.
Statements of Cash Flows
For the Three Months
Ended September 30,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Increase in net assets $ (208,153) $ 712,470
------------ -----------
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation 516 519
Bad debt provision on notes receivable
and interest net of write offs 613 612
Unrealized (gain) on investments 156,038 (1,160,460)
(Increase) in accounts receivable - related party 2,985 (3,523)
(Increase) in interest receivable 5,332 (968)
Decrease in other assets 2,208 3,374
Increase (decrease) in accounts payable and
accrued expenses 22,727 13,132
Increase in deferred taxes (53,000) 368,000
------------ -----------
Total adjustments 137,418 (779,314)
------------ -----------
Net cash (used) by operating activities (70,735) (66,844)
------------ -----------
Cash flows from investing activities:
Issuance of notes receivable -0- (200,000)
Purchase of furniture and fixtures -0- (3,514)
------------ -----------
Net cash (used) by investing activities 0 (203,514)
------------ -----------
Cash flows from financing activities:
Proceeds from notes payable 86,649 282,300
------------ -----------
Net cash provided by investing activities 86,649 282,300
------------ -----------
Increase in cash 15,914 11,942
Cash, beginning of period 99 495
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Cash, end of period 16,013 12,437
============ ===========
Supplemental disclosures of cash flow information:
Interest paid 23,484 23,484
============ ===========
</TABLE>
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Material Changes in Financial Condition:
----------------------------------------
Net assets decreased by $208,153 during the first quarter ended
September 30, 1997 from June 30, 1997. This compares to an increase in
net assets of $712,470 during the first quarter ended September 30,
1996. The decrease during the quarter was due mainly to a decrease in
the fair market value of the Registrant's investment in its largest
investee, Williams Controls, Inc. ("Williams"), which represented 92% of
the Registrant's investments (at fair value) at September 30, 1997.
In July 1997, the Registrant was approved for a $2,250,000 line of
credit at 3/4% over prime with Comerica Bank ("Comerica"), replacing the
NBD loan. The collateral for the line of credit is all of the shares of
Williams Controls common stock owned by the Registrant (1,660,000) and
all of the shares of common stock of Ajay Sports, Inc. ("Ajay") owned by
the Registrant (1,864,706). Borrowing is limited to 50% of the fair
market value of the collateral, except that the maximum amount that can
be borrowed against the Ajay stock is $400,000. This loan expires in
July, 1998. The balance of the Registrant's note payable to Comerica as
of September 30, 1997 was $1,799,549.
On September 27, 1996 the Registrant loaned Ajay Sports, Inc. ("Ajay")
$200,000 for working capital. This loan is a 90 day note with an
interest rate of NBD's prime rate plus 1%. In December 1997 the
Registrant changed this note to a demand note. In July 1997, Ajay
entered into a new loan agreement with Wells Fargo Bank. One of the
conditions of the loan was that any outstanding loans to Ajay made by
the Registrant be subordinated to the position of Wells Fargo Bank. As
such, the Registrant signed a Subordination Agreement with Wells Fargo
Bank at the time of closing of Ajay's loan with Wells Fargo Bank. The
subordination conditions can only be removed and the $200,000 loan from
the Registrant to Ajay can only be repaid if certain financial and
operating conditions are met. The balance of this note at September
30,1997 was $200,000. The accrued interest on the note at September 30,
1997 was $7,964.
The Registrant's liquidity is affected primarily by the business
success, securities prices and marketability of its investee companies
and by the amount and timing of new or incremental investments it makes.
11
<PAGE>
At September 30, 1997 the Registrant's borrowing availability against
the Comerica line of credit was $346,518. The Registrant has several
options for continued cash flow including selling some shares of Ajay or
Williams common stock.
Material Changes in Results of Operations:
------------------------------------------
The Registrant's revenues were $5,606 and $2,148 for first quarter ended
September 30, 1997 and 1996, respectively. The increase in revenues for
the quarter, compared with the prior year's quarter, is due mainly to an
increase in interest income from related companies.
The Registrant recorded an unrealized loss on investments of $156,038
for the first quarter ended September 30, 1997 compared to a gain of
$1,160,460 for the first quarter ended September 30, 1996. This is
mainly due to the changes in fair market value of the Registrant's
investment in Williams.
Williams Controls, Inc. - Investee Company
------------------------------------------
The Registrant's largest investee company, Williams Controls, is a
publicly held company (Nasdaq: WMCO) in which the Registrant owns common
stock and options. Management recognizes that there is risk associated
with its lack of diversification due to its large investment
concentration in Williams. Williams Controls, Inc., through its
subsidiary companies, manufactures and markets sensors, controls and
communication systems for the transportation, telecommunication and
agricultural industries.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
12
<PAGE>
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On November 7, 1997, the Registrant exercised 150,000 options of
Williams Controls, Inc. at $.41 per share for the same amount of shares of
common stock.
Item 6. Exhibits and Reports on Form 8-K
10.1 Master Revolving Note dated July 30, 1997, among Registrant as
borrower and Comerica Bank as lender.
10.2 Advance Formula Agreement
10.3 Security Agreement
10.4 Guaranty of repayment by Robert R. Hebard
10.5 Guaranty of repayment by Thomas W. Itin
Exhibit 27 Financial Data Schedule
13
<PAGE>
Enercorp, Inc.
Form 10-Q
For the Second Quarter Ended September 30, 1997
Signature Page
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 thereunto duly authorized.
Enercorp, Inc.
---------------------
(Registrant)
BY s\Robert R. Hebard
--------------------------------------
Robert R. Hebard
President and Chief Financial Officer
Date: November 12, 1997
14
MASTER REVOLVING NOTE
Variable Rate-Demand (Business and Commercial Loans Only)
- ----------------- --------------- =============================================
OBLIGOR # NOTE # TAX IDENTIFICATION NO.
84-0768802
- ----------------- --------------- =============================================
- ----------------- --------------- ---------------------- ======================
AMOUNT NOTE DATE MATURITY DATE
$2,250,000 Detroit,MI July 30, 1997 ON DEMAND
- ----------------- --------------- ---------------------- ======================
For Value Received, the undersigned promise(s) to pay ON DEMAND to the
order of Comerica Bank ("Bank"), at any office of the Bank in the State of
Michigan, Two Million Two Hundred Fifty Thousand Dollars (U.S.) (or that portion
of it advanced by the Bank and not repaid as later provided) with interest until
demand or an Event of Default, as later defined, at a per annum rate equal to
the Bank's prime rate from time to time in effect plus 3/4% per annum and after
that at a rate equal to the rate of interest otherwise prevailing under this
Note plus 3% per annum (but in no event in excess of the maximum rate permitted
by law). The Bank's "prime rate" is that annual rate of interest so designated
by the Bank and which is changed by the Bank from time to time. Interest rate
changes will be effective for interest computation purposes as and when the
Bank's prime rate changes. Interest shall be calculated on the basis of a
360-day year for the actual number of days the principal is outstanding. Unless
sooner demanded, accrued interest on this Note shall be payable on the 1st day
of each month commencing September 1, 1997. If the frequency of interest
payments is not otherwise specified, accrued interest on this Note shall be
payable monthly on the first day of each month, unless sooner demanded. If any
payment of principal or interest under this Note shall be payable on a day other
than a day on which the Bank is open for business, this payment shall be
extended to the next succeeding business day and interest shall be payable at
the rate specified in this Note during this extension. A late payment charge
equal to 5% of each late payment may be charged on any payment not received by
the Bank within 10 calendar days after the payment due date, but acceptance of
payment of this charge shall not waive any Default under this Note.
<PAGE>
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==============================================================================
5
The principal amount payable under this Note shall be the sum of all
advances made by the Bank to or at the request of the undersigned, less
principal payments actually received in cash by the Bank. The books and records
of the Bank shall be the best evidence of the principal amount and the unpaid
interest amount owing at any time under this Note and shall be conclusive absent
manifest error. No interest shall accrue under this Note until the date of the
first advance made by the Bank; after that interest on all advances shall accrue
and be computed on the principal balance outstanding from time to time under
this Note until the same is paid in full. At no time shall the Bank be under any
obligation to make any advances to the undersigned pursuant to this Note
(notwithstanding anything expressed or implied in this Note or elsewhere to the
contrary, including without limit if the Bank supplies the undersigned with a
borrowing formula) and the Bank, at any time and from time to time, without
notice, and in its sole discretion, may refuse to make advances to the
undersigned without incurring any liability due to this refusal and without
affecting the undersigned's liability under this Note for any and all amounts
advanced.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every mortgage, security
agreement, pledge, assignment and other security or collateral agreement which
has been, or will at any time(s) later be, executed by any (or all) of the
undersigned to or for the benefit of the Bank (collectively "Collateral").
Notwithstanding the above, to the extent that any portion of the Indebtedness is
a consumer loan, that portion shall not be secured by any mortgage on or other
security interest in the undersigned's principal dwelling which is not a
purchase money security interest as to that portion, unless expressly provided
to the contrary in another place.
<PAGE>
==============================================================================
If the undersigned (or any of them) or any guarantor under a guaranty
of all or part of the Indebtedness ("guarantor") (a) fail(s) to pay any of
the Indebtedness when due, by maturity, acceleration or otherwise, or fail(s)
to pay any Indebtedness owing on a demand basis upon demand; or (b) fail(s)
to comply with any of the terms or provisions of any agreement between the
undersigned (or any of them) or any such guarantor and the Bank; or (c)
become(s) insolvent or the subject of a voluntary or involuntary proceeding
in bankruptcy, or a reorganization, arrangement or creditor composition
proceeding, (if a business entity) cease(s) doing business as a going
concern, (if a natural person) die(s) or become(s) incompetent, (if a
partnership) dissolve(s) or any general partner of it dies, becomes
incompetent or becomes the subject of a bankruptcy proceeding or (if a
corporation) is the subject of a dissolution, merger or consolidation; or (d)
if any warranty or representation made by any of the undersigned or any
guarantor in connection with this Note or any of the Indebtedness shall be
discovered to be untrue or incomplete; or (e) if there is any termination,
notice of termination, or breach of any guaranty, pledge, collateral
assignment or subordination agreement relating to all or any part of the
Indebtedness; or (f) if there is any failure by any of the undersigned or any
guarantor to pay when due any of its indebtedness (other than to the Bank) or
in the observance or performance of any term, covenant or condition in any
document evidencing, securing or relating to such indebtedness; or (g) if the
Bank deems itself insecure believing that the prospect of payment of this
Note or any of the Indebtedness is impaired or shall fear deterioration,
removal or waste of any of the Collateral; or (h) if there is filed or issued
a levy or writ of attachment or garnishment or other like judicial process
upon the undersigned (or any of them) or any guarantor or any of the
Collateral, including without limit, any accounts of the undersigned (or any
of them) or any guarantor with the Bank, then the Bank, upon the occurrence
of any of these events (each a "Default"), may at its option and without
prior notice to the undersigned (or any of them), declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any
provisions contained in the evidence of it to the contrary), sell or
liquidate all or any portion of the Collateral, set off against the
Indebtedness any amounts owing by the Bank to the undersigned (or any of
them), charge interest at the default rate provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the
rights and remedies granted to the Bank by any agreement with the undersigned
(or any of them) or given to it under applicable law.
==============================================================================
The undersigned acknowledge(s) that this Note matures upon issuance, and
that the Bank, at any time, without notice, and without reason, may demand that
this Note be immediately paid in full. The demand nature of this Note shall not
be deemed modified by reference to a Default in this Note or in any agreement to
a default by the undersigned or to the occurrence of an event of default
(collectively an "Event of Default"). For purposes of this Note, to the extent
there is reference to an Event of Default this reference is for the purpose of
permitting the Bank to accelerate Indebtedness not on a demand basis and to
receive interest at the default rate provided in the document evidencing the
relevant Indebtedness. It is expressly agreed that the Bank may exercise its
demand rights under this Note whether or not an Event of Default has occurred.
The Bank, with or without reason and without notice, may from time to time make
demand for partial payments under this Note and these demands shall not preclude
the Bank from demanding at any time that this Note be immediately paid in full.
All payments under this Note shall be in immediately available United States
funds, without setoff or counterclaim.
If this Note is signed by two or more parties (whether by all as makers or
by one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
<PAGE>
==============================================================================
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-606 of the Uniform Commercial Code
and waive(s) all other suretyship defenses or right to discharge. The
undersigned agree(s) that the Bank has the right to sell, assign, or grant
participations, or any interest, in any or all of the Indebtedness, and that, in
connection with this right, but without limiting its ability to make other
disclosures to the full extent allowable, the Bank may disclose all documents
and information which the Bank now or later has relating to the undersigned or
the Indebtedness.
==============================================================================
The undersigned agree(s) to reimburse the holder or owner of this Note for
any and all costs and expenses (including without limit, court costs, legal
expenses and reasonable attorney fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted, whether at
the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to this
Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, endorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN.
<PAGE>
==============================================================================
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
==============================================================================
For Corporations or Partnerships
ENERCORP, INC.
Address:
7001 Orchard Lake Road, Suite 424 By:
West Bloomfield, MI 48322-3608 Robert R. Hebard
Its: President
By:
Frances B. Bucholz
Its: Secretary
For Individuals, Sole Proprietorships, Trusts, or Estates
Address:
- --------------------------------- ------------------------------------------
For Bank Use Only
- --------------------------------- ------------------------------------------
- ------------------- ------------- ------------------------------------------
LOAN OFFICER LOAN GROUP
INITIALS NAME
- ------------------- ------------- ------------------------------------------
- ------------------- ------------- ------------------------------------------
LOAN OFFICER I.D. LOAN GROUP
NO. NO.
- ------------------- ------------- ------------------------------------------
Execution Copy
ADVANCE FORMULA AGREEMENT
THIS AGREEMENT is made this day of July, 1997, by Enercorp, Inc.
("Debtor") to COMERICA BANK ("Bank"), a Michigan banking corporation of 500
Woodward Avenue, Detroit, Michigan 48226.
For and in consideration of the loans and other credit which Debtor may
now or hereafter obtain or request from Bank which are secured pursuant to a
Security Agreement dated July , 1997 ("Security Agreement"), and for other good
and valuable consideration, Debtor agrees as follows:
1. FORMULA LOANS. The credit which Bank may now or hereafter extend to
Debtor subject to the limitations of this Agreement and to the
conditions and limitations of any other agreement between Debtor and
Bank is identified as follows:
$2,250,000 secured, demand line of credit
and any extensions, renewals or substitutions, whether in a greater or
lesser amount, including any letters of credit issued thereunder ("Formula
Loans").
2. ADVANCE FORMULA. Debtor warrants and agrees that Debtor's indebtedness
to Bank for the Formula Loans shall never exceed the sum of:
(a) fifty percent (50%) of the market value (as determined by the Bank
from time to time) of Eligible Securities consisting of shares of
the common stock of Williams Controls; and
(b) the lesser of (i) fifty percent (50%) of the market value (as
determined by the Bank from time to time) of Eligible Securities
consisting of shares of the common stock of Ajay Sports, Inc. and
(ii) Four Hundred Thousand Dollars ($400,000).
"Eligible Securities" shall mean securities owned by the Debtor in which
the Bank has a first priority security interest and which are not subject to
other liens or encumbrances.
3. FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are
exceeded at any time, Debtor shall, within five days of demand by Bank,
at Debtor's option, either (a) pay Bank sums sufficient to reduce the
Formula Loans by the amount of such excess, or, (b) provide to Bank
additional Eligible Securities consisting of common stock of Williams
Controls and Ajay Sports, Inc. so that the provisions of paragraph 2
will be complied with. In addition, if Bank in its sole discretion
shall so agree, Debtor may provide Bank additional collateral in the
form of cash or other property with a value, as determined by Bank,
that when added to the elements set forth in paragraph 2 will
constitute compliance with said limitations.
<PAGE>
3
32379.3 wpd
4. INSPECTIONS; COMPLIANCE. Debtor shall permit Bank and its designees
from time to time to make such inspections and audits, and to obtain
such confirmations or other information, with respect to any of the
Collateral as Bank is entitled to make or obtain under the Security
Agreement, and shall reimburse Bank on demand for all costs and
expenses incurred by Bank in connection with such inspections and
audits. Debtor shall further comply with all of the other terms and
conditions of the Security Agreement.
5. DEFAULT. Any failure by Debtor to comply with this Agreement shall
constitute a default under the Formula Loans and under the Security
Agreement and the Indebtedness, as defined therein.
6. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or
terminated only in writing duly executed by Debtor and Bank. No delay
by Bank in requiring Debtor's compliance herewith shall constitute a
waiver of such right. The rights granted to Bank hereunder are
cumulative, and in addition to any other rights Bank may have by
agreement or under applicable law. This Agreement shall supersede and
replace in their entirety any prior advance formula agreements in
effect between Bank and Debtor.
7. DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary
set forth in this Agreement, in the event that the Formula Loans are at
any time on a demand basis, Debtor hereby acknowledge and agree that
the formula set forth in paragraph 2 hereof is merely for advisory and
guidance purposes and Bank shall not be obligated to make any loans or
advances under the Formula Loans, and, notwithstanding the terms of
paragraph 3 above, Bank may at any time, at its option, demand payment
of any or all of the Formula Loans, whereupon the same shall become due
and payable.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
Chief Executive Office Address: DEBTOR:
ENERCORP, INC.
7001 Orchard Lake Road
By:
Suite 424
West Bloomfield, MI 48322-3608
Its:
Accepted and Approved:
COMERICA BANK
By:
Its:
SECURITY AGREEMENT
(Negotiable Collateral)
For value received, the undersigned ("Debtor") assigns, transfers,
delivers, and pledges to Comerica Bank, a Michigan banking corporation, whose
address is 100 Renaissance Center, Detroit, Michigan 48243 ("Bank"), a
continuing security interest in (a) the following securities, stocks, bonds,
notes, instruments, documents of title, and/or other property; (b) interest,
dividends, increase, profits, new securities or other increments, distributions
or rights of any kind received on account of this property; (c) Debtor's
Property in Possession of Bank; and (d) all property substituted therefor or for
any part thereof, all records (including computer software) pertaining thereto
and all rights, products or Proceeds thereof (whether cash or non-cash Proceeds)
resulting from any sale or exchange or transfer thereof or arising by virtue of
ownership thereof (such as, but not limited to, the rights to additional or
other securities or property upon any corporate reorganization, merger,
consolidation, liquidation, or dissolution, offering of stock rights, stock
split or stock or liquidating dividend or the rights to any goods evidenced by
such property or insurance proceeds with respect thereto), and all subscription,
voting, and preferential rights:
1,660,000 shares of the common stock of Williams Controls, Inc.
1,864,000 shares of the common stock of Ajay Sports, Inc.
to secure payment of any and all sums, indebtedness and liabilities of any and
every kind now owing or later to become due to the Bank from Enercorp, Inc.
("Borrower") and Debtor or any or all of them during the term of this Agreement,
however created, incurred, evidenced, acquired or arising, whether under any
note(s), guaranty(ies), letter of credit agreement(s), evidence(s) of
indebtedness or under any other instrument, obligation, guaranty, contract or
agreement or dealing of any and every kind now existing or later entered into
between the Debtor or the Borrower and the Bank, or otherwise, and whether
direct, indirect, primary, secondary, fixed, contingent, joint or several, due
or to become due, together with interest and charges, and including, without
limit, all present and future indebtedness or obligations of third parties to
the Bank which is guaranteed by the Debtor or the Borrower or any or all of them
and the present or future indebtedness originally owing by the Debtor or the
Borrower or any or all of them to third parties and assigned by third parties to
the Bank, and any and all renewals, extensions or modifications of any of them
(the "Indebtedness").
1. Definitions. As used in this Agreement:
1.1 "Collateral" means any and all property of Debtor in which Bank now
has or by this Agreement now or later acquires a security interest.
<PAGE>
4
1.2 "Debtor's Property in Possession of Bank" means goods, instruments,
documents, policies and certificates of insurance, deposits, money
or other property now owned or later acquired by Debtor or in which
Debtor now has or later acquires an interest and which are now or
later in possession of Bank, or as to which Bank now or later
controls possession by documents or otherwise.
1.3 "Environmental Law" means any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to
regulate or improve health, safety, or the environment,
including, without limit, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
USC 9601 et seq.), the Resource Conservation and Recovery Act, as
amended (42 USC 6901 et seq.), and the Michigan Environmental
Response Act, as amended (MCL 299.601 et seq.).
1.4 "Hazardous Materials" means each and all of the following: hazardous
materials and/or substances as defined in any Environmental Law,
petroleum, petroleum by-products, natural gas, flammable explosives,
radioactive materials, and toxic materials.
1.5 "Proceeds" has the meaning assigned it in Article 9 of the Uniform
Commercial Code, as of the date of this Agreement, and also
includes, without limit, cash or other property which were proceeds
and are recovered by a bankruptcy trustee or otherwise as a
preferential transfer by Debtor.
1.6 "Uniform Commercial Code" means Act No. 174 of the Michigan
Public Acts of 1962, as amended.
1.7 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Article 9 (or,
absent definition in Article 9, in any other Article) of the Uniform
Commercial Code, as of the date of this Agreement.
2. Warranties, Covenants and Agreements. Debtor warrants, covenants and
agrees as follows:
2.1 Bank at its option may disburse loan proceeds directly to the seller
of any Collateral to be acquired with proceeds of loans from Bank.
2.2 Bank, at its option, may require delivery of any Collateral to Bank
at any time with such endorsements or assignments of the Collateral
as Bank may request.
2.3 Debtor shall (a) keep adequate records of the Collateral and other
records as Bank shall determine to be appropriate; and (b) allow
Bank to examine, inspect and make abstracts from, or copy any of
Debtor's books and records (relating to the Collateral or otherwise
and whether printed or in magnetic tape or discs or in other machine
readable form).
<PAGE>
2.4 At any time and without notice, the Bank may (a) cause the
Collateral or any portion of it to be transferred to its name or
to the name of its nominee or nominees; (b) receive or collect by
legal proceedings or otherwise all dividends, interest, principal
payments and other sums and all other distributions at any time
payable or receivable on account of the Collateral, and hold the
same as Collateral, or apply the same to the Indebtedness, the
manner and distribution of the application to be in the sole
discretion of the Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting the
Collateral, and deposit or surrender control of the Collateral,
and accept other property in exchange for the Collateral and hold
or apply the property or money so received in accordance with the
provisions of this Agreement.
2.5 The Bank may assign any of the Indebtedness and deliver all or any
part of the Collateral to its assignee, who then shall have with
respect to the Collateral so delivered all the rights and powers of
the Bank under this Agreement, and after that the Bank shall be
fully discharged from all liability and responsibility with respect
to the Collateral so delivered.
2.6 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of
(a) the ultimate sale or exchange thereof, or
(b) presentation, collection, renewal, or registration of
transfer thereof, or
(c) loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing therewith
preliminary to sale or exchange, such redelivery shall be
in trust for the benefit of Bank and shall not constitute a
release of Bank's security interest therein or in the
proceeds or products thereof unless Bank specifically so
agrees in writing. If Debtor requests any such redelivery,
Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to
Bank. Any proceeds of Collateral coming into Debtor's
possession as a result of any such redelivery shall be held
in trust for Bank and forthwith delivered to Bank for
application on the Indebtedness. Bank may (if, in its sole
discretion, it elects to do so) deliver the Collateral or
any part of the Collateral to Debtor, and such delivery by
Bank shall discharge Bank from any and all liability or
responsibility for such Collateral.
2.7 Debtor acknowledges and agrees that the Bank has no obligation to
acquire or perfect any lien on or security interest in any asset(s),
whether realty or personalty, to secure payment of the Indebtedness,
and Debtor is not relying upon assets in which the Bank has or may
have a lien or security interest for payment of the Indebtedness.
<PAGE>
2.8 Debtor shall at the request of Bank (a) mark its records and the
Collateral to clearly indicate the security interest of Bank
under this Agreement, and (b) deliver to Bank all accounting and
other records pertaining to, and all writings evidencing, the
Collateral or any portion of it, together with all books, records
and documents of Debtor related to it in whatever form kept by
Debtor, whether printed or in magnetic tape or discs or in other
machine readable form or otherwise, and all forms, programs,
software and other materials and instructions necessary or useful
to Bank, to monitor the Collateral or enforce its rights under
this Agreement.
2.9 At the time any Collateral becomes, or is represented to be,
subject to a security interest in favor of Bank, Debtor shall be
deemed to have warranted that (a) Debtor is the lawful owner of
the Collateral and has the right and authority to subject it to a
security interest granted to Bank; (b) none of the Collateral is
subject to any security interest other than that in favor of Bank
and there are no financing statements on file, other than in
favor of Bank; and (c) Debtor acquired its rights in the
Collateral in the ordinary course of its business.
2.10 Debtor will keep the Collateral free at all times from any and
all claims, liens, security interests and encumbrances other than
those in favor of Bank. Debtor will not, without the prior
written consent of Bank, sell, transfer or lease, or permit or
suffer to be sold, transferred or leased, any or all of the
Collateral. Bank or its agents or attorneys may at all reasonable
times inspect the Collateral and may enter upon all premises
where the Collateral is kept or might be located.
2.11 Debtor shall take or cause to be taken and execute or cause to be
executed all financing statements, endorsements, assignments and
other writings requested by Bank to establish, maintain,
reinstate, and/or continue the perfected and first priority
status of the security interest of Bank in the Collateral or to
implement or further effectuate the terms or purpose of this
Agreement, although the failure of the Debtor to do so shall not
affect in any way Bank's perfected and first priority security
interest in the Collateral, and will on demand pay all costs and
expenses of filing and recording, including the costs of any
record searches, deemed necessary by Bank from time to time, to
establish or determine the validity and the priority of Bank's
security interest. Debtor further makes, constitutes and appoints
Bank its true and lawful attorney-in-fact with full power of
substitution to take any action in furtherance of this Agreement,
including, without limitation, the signing of financing
statements, endorsing of instruments, and the execution and
delivery of all documents and agreements necessary to obtain or
accomplish any protection for or collection or disposition of any
part of the Collateral. Such appointment shall be deemed
irrevocable and coupled with an interest.
<PAGE>
2.12 Debtor will pay promptly and within the time that they can be
paid without interest or penalty all taxes, assessments and
similar imposts and charges which at any time are or may become a
lien, charge, or encumbrance upon any of the Collateral, except
to the extent contested in good faith and bonded in a manner
satisfactory to Bank. If Debtor fails to pay any of these taxes,
assessments or other charges in the time provided above, Bank has
the option (but not the obligation) to do so and Debtor agrees to
repay all amounts so expended by Bank immediately upon demand,
together with interest at the highest default rate which could be
charged by Bank to Debtor on any Indebtedness.
2.13 If at any time the outstanding principal balance of the
Indebtedness exceeds 50% of the value of the Collateral, as such
value is determined from time to time in the sole, but reasonable
discretion of Bank (herein called the "Margin Requirement"),
Debtor shall, upon five (5) days prior written notice from Bank,
pay or cause to be paid to Bank an amount sufficient to reduce
the Indebtedness such that the remaining principal outstanding
thereunder is equal to or less than the Margin Requirement. Bank
shall apply payments made under this paragraph in payment of the
Indebtedness in such order and manner of application as Bank in
its sole discretion elects. In the alternative, Debtor may
provide or cause to be provided to Bank additional collateral in
the form of cash or other property acceptable to Bank and with a
value, as determined by Bank, that when added to the Collateral
will constitute compliance with the Margin Requirement.
2.14 If any of the Collateral (or any records concerning the
Collateral) is located or kept by Debtor on leased premises,
Debtor will: (a) provide a complete and correct copy of all
applicable leases to Bank, (b) furnish or cause to be furnished
to Bank from each landlord under such leases a lessor's
acknowledgment and subordination in form satisfactory to Bank
authorizing, on Default, Bank's entry on such premises to enforce
its rights and remedies under this Agreement and (c) comply with
all such leases. Debtor's rights under all such leases shall
further be part of the Collateral, and included in the security
interest granted to Bank hereunder.
<PAGE>
2.15 Debtor agrees to reimburse Bank upon demand for all fees and
expenses incurred by Bank (a) in seeking to collect the
Indebtedness or any part of it (through formal or informal
collection actions, workouts or otherwise), in defending the
validity or priority of its security interest, or in pursuing its
rights and remedies under this Agreement or under any other
agreement between Bank and Debtor; (b) in connection with any
proceeding (including, without limit, bankruptcy, insolvency,
administrative, appellate, or probate proceedings or any lawsuit)
in which Bank at any time is involved as a result of any lending
relationship or other financial accommodation involving Bank and
Debtor; or (c) incurred by Bank during the continuance of an
Event of Default, which fees and expenses relate to or would not
have been incurred but for any lending relationship or other
financial accommodation involving Bank and Debtor. The fees and
expenses include, without limit, court costs, legal expenses,
reasonable attorneys' fees, paralegal fees, internal transfer
charges for in-house attorneys and paralegals and other services,
and audit expenses.
2.16 Debtor at all times shall be in strict compliance with all
applicable laws.
2.17 (a) Debtor is and shall be in strict compliance with all
Environmental Laws. There are not and will not be Hazardous
Materials on, in or under any real or personal property
("Property") now or at any time owned, occupied, or
operated by Debtor which in any manner violates any
Environmental Law or which could be subject to remediation
pursuant to any Environmental Law. Debtor has not disposed
of, manufactured, treated, stored, handled, used,
transported, or generated Hazardous Materials, and shall
not in the future do any of the above acts in violation of
any Environmental Law.
(b) Debtor shall promptly conduct all investigations, testing,
removal and other actions necessary to clean up and remove all
Hazardous Materials on or affecting the Property in accordance
with all Environmental Laws. These actions will not be deemed
to cure any breach of this Section.
(c) Debtor shall defend, indemnify and hold harmless Bank, its
employees, agents, shareholders, officers, and directors
from and against any and all claims, damages, fines,
expenses, liabilities or causes of action of whatever kind,
including without limit consultant fees, legal expenses,
and reasonable attorneys' fees, suffered by any of them as
a direct or indirect result of any actual or asserted
violation of any Environmental Law or of any remediation
relating to the Property required by any Environmental Law.
(d) Upon ten days notice to Debtor (except in an emergency or
where not practical under applicable law), Bank may (but is
not obligated to) enter on the Property or take such other
actions as it deems appropriate to inspect, test for, clean
up, remove, minimize the impact of, or advise governmental
agencies of the possible existence of any Hazardous
Materials upon Bank's receipt of any notice from any source
asserting the existence of any Hazardous Materials in
violation of Environmental Laws. All costs and expenses so
incurred by Bank, including without limit consultant fees,
legal expenses and reasonable attorneys' fees, shall be
payable by Debtor upon demand, together with interest at
the highest default rate which could be charged by Bank to
Debtor on any Indebtedness.
(e) The provisions of this section shall survive the repayment of
the Indebtedness, the satisfaction of all other obligations of
Debtor to Bank, the discharge or termination by Bank of any
lien or security interest from Debtor, and the foreclosure of
or exercise of rights as to any Collateral.
<PAGE>
2.18 Debtor acknowledges and agrees that if any Guaranty is executed by
the Debtor in connection with or related to this Agreement, all
waivers contained in that Guaranty shall be and are incorporated by
reference into this Agreement.
3. Collection of Proceeds.
3.1 Immediately upon notice to Debtor by Bank and at all times after
that, Debtor agrees to hold in trust for Bank all payments
received in connection with the Collateral and from the sale,
lease or other disposition of any Collateral, all rights by way
of suretyship or guaranty and all rights in the nature of a
mortgage, lien or security interest which Debtor now has or may
later acquire regarding the Collateral. Debtor agrees to collect
and enforce payment of all Collateral until Bank shall direct
Debtor to the contrary and, from and after this direction, Debtor
agrees to fully and promptly cooperate and assist Bank (or any
other person as Bank shall designate) in the collection and
enforcement of all Collateral. Immediately upon notice to such
effect to Debtor by Bank and at all times after that, Debtor
agrees to (a) endorse to Bank and immediately deliver to Bank all
payments received by Debtor on Collateral or from the sale, lease
or other disposition of any Collateral or arising from any other
rights or interests of Debtor in the Collateral, in the form
received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's
possession or later coming into Debtor's possession through
enforcement of Debtor's rights or interests.
3.2 Debtor irrevocably authorizes Bank or any Bank employee or agent to
endorse the name of Debtor upon any Collateral, checks, or other
items which are received in payment of any Collateral, and to do any
and all things necessary in order to reduce these items to money.
3.3 Bank shall have no duty as to the collection or protection of
Collateral or the proceeds of it, nor as to the preservation of
any related rights, beyond the use of reasonable care in the
custody and preservation of Collateral in the possession of Bank.
Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to Debtor's Property in
Possession of Bank.
<PAGE>
3.4 For the purpose of calculating interest on the Indebtedness,
Debtor understands that Bank imposes a minimum one business day
delay in crediting payments received by Bank against the
Indebtedness to allow time for collection and Debtor agrees that
Bank may, at Bank's option, make such credits only when payments
are actually collected by Bank in immediately available funds.
Any credit of payment by Bank prior to receipt by Bank of
immediately available funds is conditional upon Bank's receipt of
those funds. For the purpose of calculating the principal amount
which Debtor may request to borrow from Bank under any borrowing
arrangements with Bank, Debtor understands that Bank may, at
Bank's option, use a method different from that used for the
purpose of calculating interest.
4. Defaults, Enforcement and Application of Proceeds.
4.1 Upon the occurrence of any of the following events (each an "Event
of Default"), Debtor shall be in default under this Agreement:
(a) Any failure or neglect to comply with, or breach of, any of
the terms, provisions, warranties or covenants of this
Agreement, or any other agreement or commitment between Debtor
or any guarantor of any of the Indebtedness ("guarantor") and
Bank; or
(b) Any failure to pay the Indebtedness when due, or such
portion of it as may be due, by acceleration or otherwise;
or
(c) Any warranty, representation, financial statement or other
information made, given or furnished to Bank by or on behalf
of Debtor or any guarantor shall be, or shall prove to have
been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of
any of the Collateral, or the issuance or filing of any
attachment, levy, garnishment or the commencement of any
proceeding in connection with any of the Collateral or of any
other judicial process of, upon or in respect of Debtor or any
guarantor or any of the Collateral; or
(e) Sale or other disposition by Debtor or guarantor of any
substantial portion of its assets or property or voluntary
suspension of the transaction of business by Debtor or any
guarantor, or death, dissolution, termination of existence,
merger, consolidation, insolvency, business failure or
assignment for the benefit of creditors of or by Debtor or
any guarantor; or commencement of any proceedings under any
state or federal bankruptcy or insolvency laws or laws for
the relief of debtors by or against Debtor or any
guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part
of the property of Debtor or any guarantor; or
(f) Any termination or notice of termination of any guaranty of
collection or payment of, or any breach, termination or notice
of termination of any subordination agreement, pledge, or
collateral assignment relating to, all or any part of the
Indebtedness; or
<PAGE>
(g) Any failure by Debtor or any guarantor to pay when due any of
its indebtedness (other than to Bank) or in the observance or
performance of any term, covenant or condition in any
agreement evidencing, securing or relating to that
indebtedness; or
(h) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment
of the Indebtedness or performance of this Agreement is
impaired or shall fear deterioration, removal or waste of the
Collateral.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have
and may exercise any one or more of the following rights and
remedies:
(a) exercise all the rights and remedies upon default, in
foreclosure and otherwise, available to secured parties under
the provisions of the Uniform Commercial Code and other
applicable law;
(b) institute legal proceedings to foreclose upon and against the
lien and security interest granted by this Agreement, to
recover judgment for all amounts then due and owing as
Indebtedness, and to collect the same out of any of the
Collateral or the proceeds of any sale of it;
(c) institute legal proceedings for the sale, under the
judgment or decree of any court of competent jurisdiction,
of any or all of the Collateral; and/or
(d) personally or by agents, attorneys, or appointment of a
receiver, enter upon any premises where the Collateral or any
part of it may then be located, and take possession of all or
any part of it and/or render it unusable; and without being
responsible for loss or damage to such Collateral,
<PAGE>
(i) hold, store, and keep idle, or lease, operate,
remove or otherwise use or permit the use of
the Collateral or any part of it, for that time
and upon those terms as Bank, in its sole
discretion, deems to be in its own best
interest, and demand, collect and retain all
resulting earnings and other sums due and to
become due from any party, accounting only for
net earnings, if any (unless the Collateral is
retained in satisfaction of the Indebtedness,
in which case no accounting will be necessary),
arising from that use (which net earnings may
be applied against the Indebtedness) and
charging against all receipts from the use of
the Collateral or from its sale, by court
proceedings or pursuant to subsection (ii)
below, all other costs, expenses, charges,
damages and other losses resulting from that
use; and/or
(ii) sell, lease, dispose of, or cause to be sold,
leased or disposed of, all or any part of the
Collateral at one or more public or private
sales, leasings or other dispositions, at
places and times and on terms and conditions as
Bank may deem fit, without any previous demand
or advertisement; and except as provided in
this Agreement, all notice of sale, lease or
other disposition, and advertisement, and other
notice or demand, any right or equity of
redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power
and authority of Bank to sell, lease or
otherwise dispose of the Collateral or as to
the application by Bank of the proceeds of sale
or otherwise, which would otherwise be required
by, or available to Debtor under, applicable
law are expressly waived by Debtor to the
fullest extent permitted.
At any sale pursuant to this Section 4.2, whether under the
power of sale, by virtue of judicial proceedings or otherwise,
it shall not be necessary for Bank or a public officer under
order of a court to have present physical or constructive
possession of the Collateral to be sold. The recitals
contained in any conveyances and receipts made and given by
Bank or the public officer to any purchaser at any sale made
pursuant to this Agreement shall, to the extent permitted by
applicable law, conclusively establish the truth and accuracy
of the matters stated (including, without limit, as to the
amounts of the principal of and interest on the Indebtedness,
the accrual and nonpayment of it and advertisement and conduct
of the sale); and all prerequisites to the sale shall be
presumed to have been satisfied and performed. Upon any sale
of any of the Collateral, the receipt of the officer making
the sale under judicial proceedings or of Bank shall be
sufficient discharge to the purchaser for the purchase money,
and the purchaser shall not be obligated to see to the
application of the money. Any sale of any of the Collateral
under this Agreement shall be a perpetual bar against Debtor
with respect to that Collateral.
4.3 Debtor shall (at any time) at the request of Bank, notify the
obligors of the security interest of Bank in any Collateral and
direct payment of it to Bank. Bank may, itself, upon the occurrence
of any Event of Default so notify and direct any obligor and may
take control of any proceeds to which it may be entitled under this
Agreement.
<PAGE>
4.4 The proceeds of any sale or other disposition of Collateral
authorized by this Agreement shall be applied by Bank first upon
all expenses authorized by the Uniform Commercial Code and all
reasonable attorney fees and legal expenses incurred by Bank; the
balance of the proceeds of the sale or other disposition shall be
applied in the payment of the Indebtedness, first to interest,
then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Debtor or to such other
person(s) as may be entitled to it under applicable law. Debtor
shall remain liable for any deficiency, which it shall pay to
Bank immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed,
to preclude Bank from pursuing any other remedy provided by law
for the collection of any or all of the Indebtedness or for the
recovery of any other sum to which Bank may be or become entitled
for the breach of this Agreement by Debtor. Nothing in this
Agreement shall reduce or release in any way any rights or
security interests of Bank contained in any existing agreement
between Debtor and Bank, nor shall anything in this Agreement
modify the terms of any Indebtedness owing to Bank on a demand
basis.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any employee or agent of Bank
(which appointment is coupled with an interest) the true and lawful
attorney of Debtor (with full power of substitution) in the name,
place and stead of, and at the expense of, Debtor:
(a) to demand, receive, sue for and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of
the Collateral;
(b) with respect to any Collateral, to assent to any or all
extensions or postponements of the time of its payment or
any other indulgence in connection with it, to the
substitution, exchange, or release of Collateral, to the
addition or release of any party primarily or secondarily
liable, to the acceptance of partial payments on it and the
settlement, compromise or adjustment of it, all in a manner
and at times as Bank shall deem advisable;
<PAGE>
(c) to make all necessary transfers of all or any part of the
Collateral in connection with any sale, lease or other
disposition made pursuant to this Agreement;
(d) to adjust and compromise any insurance loss on the
Collateral and to endorse checks or drafts payable to
Debtor in connection with the insurance;
(e) to execute and deliver for value all necessary or
appropriate bills of sale, assignments and other
instruments in connection with any sale, lease or other
disposition of the Collateral. Debtor ratifies and confirms
all that its said attorney (or any substitute) shall
lawfully do under this Agreement. Nevertheless, if
requested by Bank or a purchaser or lessee, Debtor shall
ratify and confirm any sale, lease or other disposition by
executing and delivering to Bank or the purchaser or lessee
all proper bills of sale, assignments, releases, leases and
other instruments as may be designated in any request; and
(f) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect or continue the
security interests granted in this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient
to Bank and Debtor.
5. Miscellaneous.
5.1 This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Michigan.
5.2 This Agreement shall be terminated only by the filing of a
termination statement in accordance with the applicable
provisions of the Uniform Commercial Code, but the obligations
contained in Section 2.17 of this Agreement shall survive
termination. Until terminated, the security interest created by
this Agreement shall continue in full force and effect and shall
secure and be applicable to all advances now or later made by
Bank to Debtor, whether or not Debtor is indebted to Bank
immediately prior to the time of any advance, and to all other
Indebtedness.
<PAGE>
5.3 Notwithstanding any prior revocation, termination, surrender or
discharge of this Agreement, the effectiveness of this Agreement
shall automatically continue or be reinstated, as the case may
be, in the event that (a) any payment received or credit given by
the Bank in respect of the Indebtedness is returned, disgorged or
rescinded as a preference, impermissible setoff, fraudulent
conveyance, diversion of trust funds, or otherwise under any
applicable state or federal law, including, without limitation,
laws pertaining to bankruptcy or insolvency, in which case this
Agreement shall be enforceable against Debtor as if the returned,
disgorged or rescinded payment or credit had not been received or
given, whether or not the Bank relied upon this payment or credit
or changed its position as a consequence of it; or (b) any
liability is imposed, or sought to be imposed, against the Bank
relating to the environmental condition of, or the presence of
Hazardous Materials on, in or about, any Property given as
Collateral to the Bank whether this condition is known or
unknown, now exists or subsequently arises (excluding only
conditions which arise after any acquisition by the Bank of any
such Property, by foreclosure, in lieu of foreclosure or
otherwise, to the extent due to the wrongful act or omission of
the Bank), in which case this Agreement shall be enforceable to
the extent of all liability, costs and expenses (including
without limit reasonable attorney fees) incurred by the Bank as
the direct or indirect result of any environmental condition or
Hazardous Materials. In the event of continuation or
reinstatement of this Agreement, Debtor agree(s) upon demand by
the Bank to execute and deliver to the Bank those documents which
the Bank determines are appropriate to further evidence (in the
public records or otherwise) this continuation or reinstatement,
although the failure of Debtor to do so shall not affect in any
way the reinstatement or continuation. If Debtor does not execute
and deliver to the Bank upon demand such documents, the Bank and
each Bank officer is irrevocably appointed (which appointment is
coupled with an interest) the true and lawful attorney of Debtor
(with full power of substitution) to execute and deliver such
documents in the name and on behalf of Debtor.
5.4 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and
assigns and to any other holder who derives from Bank title to or an
interest in the Indebtedness or any portion of it, and shall bind
Debtor and the heirs, legal representatives, successors and assigns
of Debtor.
5.5 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities
given to or conferred upon Bank are made or given jointly and
severally.
5.6 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness at
any time(s) either before or after maturity or demand without notice
to anyone.
5.7 Bank assumes no duty of performance or other responsibility under
any contracts contained within the Collateral.
<PAGE>
5.8 In the event that applicable law shall obligate Bank to give
prior notice to Debtor of any action to be taken under this
Agreement, Debtor agrees that a written notice given to it at
least five days before the date of the act shall be reasonable
notice of the act and, specifically, reasonable notification of
the time and place of any public sale or of the time after which
any private sale, lease or other disposition is to be made,
unless a shorter notice period is reasonable under the
circumstances. A notice shall be deemed to be given under this
Agreement when delivered to Debtor or when placed in an envelope
addressed to Debtor and deposited, with postage prepaid, in a
post office or official depository under the exclusive care and
custody of the United States Postal Service. The mailing shall be
registered, certified, or first class mail.
5.9 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.10 No single or partial exercise, or delay in the exercise, of any
right or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement.
5.11 The unenforceability of any provision of this Agreement shall not
affect the enforceability of the remainder of this Agreement.
5.12 No waiver, consent, modification or change of the terms of this
Agreement shall bind the Debtor or the Bank unless in writing and
signed by the waiving party or an authorized officer of the waiving
party, and then this waiver, consent, modification or change shall
be effective only in the specific instance and for the specific
purpose given.
5.13 This Agreement constitutes the entire agreement of Debtor and Bank
with respect to the subject matter of this Agreement.
5.14 To the extent that any of the Indebtedness is payable upon
demand, nothing contained in this Agreement shall modify the
terms and conditions of that Indebtedness nor shall anything
contained in this Agreement prevent Bank from making demand,
without notice and with or without reason, for immediate payment
of any or all of that Indebtedness at any time(s), whether or not
an Event of Default has occurred.
6. Statement of Business Name, Residence and Location of Collateral.
Debtor warrants, covenants and agrees as follows:
6.1 Debtor's chief executive office is located in the County of
Oakland.
Mailing Address: 7001 Orchard Lake Road, Suite 424, West
Bloomfield, MI 48322-3608
<PAGE>
This location is (check one box): |_| Owned |X| Leased by
the Debtor.
6.2 If Debtor is an individual or sole proprietor, Debtor's residence
(if any) is located in the County of ________
--------------------.
Mailing Address:__________________________________________.
No. and Street City State Zip Code
6.3 Any other place of business and/or residence of Debtor are
indicated below:___________________________________
-------------------------------------------------------
------------------------------------------------------.
6.4 Debtor's correct legal name is set forth at the end of this
Agreement. During the past five years, Debtor has not conducted
business under any other name except as set forth in any
appropriately labeled schedule attached to this Agreement.
6.5 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by
law shall be given to, or made upon, Debtor at the address indicated
in Section 6.2 above.
6.6 _____________________________________________________________.
No. and Street City State Zip Code
6.7 Debtor will give Bank not less than ninety (90) days prior written
notice of all contemplated changes in Debtor's name, identity,
corporate structure, and/or any of the above addresses, but the
giving of this notice shall not cure any default caused by this
change.
7. Jury Waiver.
7.1 DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR
MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY
WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
8. Special Provisions Applicable to this Agreement. (None, if left blank)
<PAGE>
Dated and delivered on:
July 30, 1997 ENERCORP, INC.
at Detroit, Michigan
By:___________________________
Its:_________________________
By:___________________________
Its:_________________________
Guaranty Of Collection
As of July ____, 1997, the undersigned, for value received, unconditionally and
absolutely guarantee(s) to Comerica Bank ("Bank"), a Michigan banking
corporation, collection of all existing and future indebtedness ("Indebtedness")
to the Bank of Enercorp, Inc., a Colorado corporation ("Borrower"). Indebtedness
includes without limit any and all obligations or liabilities of the Borrower to
the Bank, whether absolute or contingent, direct or indirect, voluntary or
involuntary, liquidated or unliquidated, joint or several, known or unknown; any
and all indebtedness, obligations or liabilities for which Borrower would
otherwise be liable to the Bank were it not for the invalidity, irregularity or
unenforceability of them by reason of any bankruptcy, insolvency or other law or
order of any kind, or for any other reason; any and all amendments,
modifications, renewals and/or extensions of any of the above; and all costs of
collecting Indebtedness, including, without limit, attorney fees. Any reference
in this Guaranty to attorney fees shall be deemed a reference to reasonable
fees, charges, costs and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise. All costs shall be payable immediately by the
undersigned when incurred by the Bank, without demand, and until paid shall bear
interest a the highest per annum rate applicable to any of the Indebtedness, but
not in excess of the maximum rate permitted by law.
1. LIMITATION: The total obligation of the undersigned under this Guaranty is
UNLIMITED unless specifically limited in the Additional Provisions of this
Guaranty, and this obligation (whether unlimited or limited to the extent
specified in the Additional Provisions) shall include, IN ADDITION TO any
limited amount of principal guaranteed, all interest on that limited amount, and
all costs incurred by the Bank in collection efforts against the Borrower and/or
the undersigned or otherwise incurred by the Bank in any way relating to the
Indebtedness, or this Guaranty, including without limit attorney fees. The
undersigned agree(s) that (a) this limitation shall not be a limitation on the
amount of Borrower's Indebtedness to the Bank; (b) any payments by the
undersigned shall not reduce the maximum liability of the undersigned under this
Guaranty unless written notice to that effect is actually received by the Bank
at, or prior to, the time of the payment; and (c) the liability of the
undersigned to the Bank shall at all times be deemed to be the aggregate
liability of the undersigned under this Guaranty and any other guaranties
previously or subsequently given to the Bank by the undersigned and not
expressly revoked, modified or invalidated in writing.
2. NATURE OF GUARANTY: This is a continuing Guaranty and remains effective
whether the Indebtedness is from time to time reduced and later increased or
entirely extinguished and later reincurred. The undersigned deliver(s) this
Guaranty based solely on the undersigned's independent investigation of (or
decision not to investigate) the financial condition of Borrower and is (are)
not relying on any information furnished by the Bank. The undersigned assume(s)
full responsibility for obtaining any further information concerning the
Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate now or later. The
undersigned knowingly accept(s) the full range of risk encompassed in this
Guaranty, which risk includes, without limit, the possibility that Borrower may
incur Indebtedness to the Bank after the financial condition of the Borrower, or
the Borrower's ability to pay debts as they mature, has deteriorated. This
Guaranty is a guaranty of collection and Bank shall have all rights and remedies
available to the holder of a guaranty of collection. Notwithstanding any
limitations on Bank under applicable law with respect to guaranties of
collection, Bank shall be entitled immediately to proceed against the
undersigned under this Guaranty: (i) if Bank shall have reduced its claim
against Borrower to judgment and after Bank shall have exercised commercially
reasonable efforts to collect, repossess, sell, liquidate or otherwise dispose
of the collateral securing Borrower's obligations to Bank, execution has been
returned unsatisfied; (ii) if more than thirty (30) days have elapsed since any
obligation included as part of the Indebtedness shall have matured (whether at
maturity or at any accelerated or extended payment date or otherwise); (iii) if
the undersigned shall have contested his liability under this Guaranty or denied
that he has any liability under this Guaranty; (iv) if Bank in good faith
determines that failure to proceed would cause Bank to lose any material rights
or remedies against the undersigned at a later date or would materially
jeopardize Bank's ability to enforce and/or realize upon this Guaranty at a
later date or if Bank is precluded from exercising rights against any material
portion of the collateral securing Borrower's obligations to Bank; (v) if the
undersigned has become insolvent, filed a voluntary petition in bankruptcy or
filed an answer to a creditor's petition or other petition filed against him
admitting the material allegations thereof for an adjudication in bankruptcy; or
(vi) it is apparent to Bank in the exercise of its reasonable discretion that it
is useless to proceed against Borrower.
3. APPLICATION OF PAYMENTS: The undersigned authorize(s) the Bank, either before
or after termination of this Guaranty, without notice to or demand on the
undersigned and without affecting the undersigned's liability under this
Guaranty, from time to time to: (a) apply any security and direct the order or
manner of sale; and (b) apply payments received by the Bank from the Borrower to
any indebtedness of the Borrower to the Bank, in such order as the Bank shall
determine in its sole discretion, whether or not this indebtedness is covered by
this Guaranty, and the undersigned waive(s) any provision of law regarding
application of payments which specifies otherwise. The undersigned agree(s) to
provide to the Bank copies of the undersigned's financial statements upon
request.
4. SECURITY: The undersigned grant(s) to the Bank a security interest in and the
right of setoff as to any and all property of the undersigned now or later in
the possession of the Bank. The undersigned further assign(s) to the Bank as
collateral for the obligations of the undersigned under this Guaranty all claims
of any nature that the undersigned now or later has (have) against the Borrower
(other than any claim under a deed of trust or mortgage covering California real
property) with full right on the part of the Bank, in its own name or in the
name of the undersigned, to collect and enforce these claims. The undersigned
agree(s) that no security now or later held by the Bank for the payment of any
Indebtedness, whether from the Borrower, any guarantor, or otherwise, and
whether in the nature of a security interest, pledge, lien, assignment, setoff,
suretyship, guaranty, indemnity, insurance or otherwise, shall affect in any
manner the unconditional obligation of the undersigned under this Guaranty, and
the Bank, in its sole discretion, without notice to the undersigned, may
release, exchange, enforce and otherwise deal with any security without
affecting in any manner the unconditional obligation of the undersigned under
this Guaranty. The undersigned acknowledge(s) and agree(s) that the Bank has no
obligation to acquire or perfect any lien on or security interest in any
asset(s), whether realty or personalty, to secure payment of the Indebtedness,
and the undersigned is (are) not relying upon any asset(s) in which the Bank has
or may have a lien or security interest for payment of the Indebtedness.
<PAGE>
2
5. OTHER GUARANTORS: If any Indebtedness is guaranteed by two or more
guarantors, the obligation of the undersigned shall be several and also joint,
each with all and also each with any one or more of the others, and may be
enforced at the option of the Bank against each severally, any two or more
jointly, or some severally and some jointly. The Bank, in its sole discretion,
may release any one or more of the guarantors for any consideration which it
deems adequate, and may fail or elect not to prove a claim against the estate of
any bankrupt, insolvent, incompetent or deceased guarantor; and after that,
without notice to any guarantor, the Bank may extend or renew any or all
Indebtedness and may permit the Borrower to incur additional Indebtedness,
without affecting in any manner the unconditional obligation of the remaining
guarantor(s). The undersigned acknowledge(s) that the effectiveness of this
Guaranty is not conditioned on any or all of the indebtedness being guaranteed
by anyone else.
6. TERMINATION: Any of the undersigned may terminate their obligation under this
Guaranty as to future Indebtedness (except as provided below) by (and only by)
delivering written notice of termination to an officer of the Bank and receiving
from an officer of the Bank written acknowledgment of delivery; provided,
however, the termination shall not be effective until the opening of business on
the fifth (5th) day ("effective date") following written acknowledgment of
delivery. Any termination shall not affect in any way the unconditional
obligations of the remaining guarantor(s), whether or not the termination is
known to the remaining guarantor(s). Any termination shall not affect in any way
the unconditional obligations of the terminating guarantor(s) as to any
Indebtedness existing at the effective date of termination or any Indebtedness
created after that pursuant to any commitment or agreement of the Bank or
pursuant to any Borrower loan with the Bank existing at the effective date of
termination (whether advances or readvances by the Bank after the effective date
of termination are optional or obligatory), or any modifications, extensions or
renewals of any of this Indebtedness, whether in whole or in part, and as to all
of this Indebtedness and modifications, extensions or renewals of it, this
Guaranty shall continue effective until the same shall have been fully paid. The
Bank has no duty to give notice of termination by any guarantor(s) to any
remaining guarantor(s). The undersigned shall indemnify the Bank against all
claims, damages, costs and expenses, including, without limit, attorney fees,
incurred by the Bank in connection with any suit, claim or action against the
Bank arising out of any modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit in connection with the
termination of this Guaranty.
7. REINSTATEMENT: Notwithstanding any prior revocation, termination, surrender
or discharge of this Guaranty (or of any lien, pledge or security interest
securing this Guaranty) in whole or in part, the effectiveness of this Guaranty,
and of all liens, pledges and security interests securing this Guaranty, shall
automatically continue or be reinstated in the event that any payment received
or credit given by the Bank in respect of the Indebtedness is returned,
disgorged or rescinded under any applicable state or federal law, including,
without limitation, laws pertaining to bankruptcy or insolvency, in which case
this Guaranty, and all liens, pledges and security interests securing this
Guaranty, shall be enforceable against the undersigned as if the returned,
disgorged or rescinded payment or credit had not been received or given by the
Bank, and whether or not the Bank relied upon this payment or credit or changed
its position as a consequence of it. In the event of continuation or
reinstatement of this Guaranty and the liens, pledges and security interests
securing it, the undersigned agree(s) upon demand by the Bank, to execute and
deliver to the Bank those documents which the Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of the undersigned to do so shall not affect
in any way the reinstatement or continuation. If the undersigned do(es) not
execute and deliver to the Bank upon demand such documents, the Bank and each
Bank officer is irrevocably appointed (which appointment is coupled with an
interest) the true and lawful attorney of the undersigned (with full power of
substitution) to execute and deliver such documents in the name and on behalf of
the undersigned.
8. WAIVERS: The undersigned waive(s) any right to require the Bank to: (a)
proceed against any person or property; (b) give notice of the terms, time and
place of any public or private sale of personal property security held from the
Borrower or any other person, or otherwise comply with the provisions of Section
9-504 of the Michigan or other applicable Uniform Commercial Code; or (c) pursue
any other remedy in the Bank's power. The undersigned waive(s) notice of
acceptance of this Guaranty and presentment, demand, protest, notice of protest,
dishonor, notice of dishonor, notice of default, notice of intent to accelerate
or demand payment of any Indebtedness, any and all other notices to which the
undersigned might otherwise be entitled, and diligence in collecting any
Indebtedness, and agree(s) that the Bank may, once or any number of times,
modify the terms of any Indebtedness, compromise, extend, increase, accelerate,
renew or forbear to enforce payment of any or all Indebtedness, or permit the
Borrower to incur additional Indebtedness, all without notice to the undersigned
and without affecting in any manner the unconditional obligation of the
undersigned under this Guaranty.
The undersigned unconditionally and irrevocably waive(s) each and every
defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of
the undersigned under this Guaranty, and acknowledge(s) that each such
waiver is by this reference incorporated into each security agreement,
collateral assignment, pledge and/or other document from the undersigned now
or later securing this Guaranty and/or the Indebtedness, and acknowledge(s)
that as of the date of this Guaranty no such defense or setoff exists.
9. WAIVER OF SUBROGATION: The undersigned waive(s) any and all rights (whether
by subrogation, indemnity, reimbursement, or otherwise) to recover from the
Borrower any amounts paid by the undersigned pursuant to this Guaranty, until
the Indebtedness has been paid in full.
10. SALE/ASSIGNMENT: The undersigned acknowledge(s) that the Bank has the right
to sell, assign, transfer, negotiate, or grant participations in all or any part
of the Indebtedness and any related obligations, including, without limit, this
Guaranty, without notice to the undersigned and that the Bank may disclose any
documents and information which the Bank now has or later acquires relating to
the undersigned or to the Borrower in connection with such sale, assignment,
transfer, negotiation, or grant. The undersigned agree(s) that the Bank may
provide information relating to this Guaranty or relating to the undersigned to
the Bank's parent, affiliates, subsidiaries and service providers.
11. GENERAL: This Guaranty constitutes the entire agreement of the undersigned
and the Bank with respect to the subject matter of this Guaranty. No waiver,
consent, modification or change of the terms of the Guaranty shall bind any
of the undersigned or the Bank unless in writing and signed by the waiving
party or an authorized officer of the waiving party, and then this waiver,
consent, modification or change shall be effective only in the specific
instance and for the specific purpose given. This Guaranty shall inure to
the benefit of the Bank and its successors and assigns and shall be binding
on the undersigned and the undersigned's heirs, legal representatives,
successors and assigns including, without limit, any debtor in possession or
trustee in bankruptcy for any of the undersigned. The undersigned has (have)
knowingly and voluntarily entered into this Guaranty in good faith for the
purpose of inducing the Bank to extend credit or make other financial
accommodations to the Borrower. If any provision of this Guaranty is
unenforceable in whole or in part for any reason, the remaining provisions
shall continue to be effective. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
<PAGE>
3
12. HEADINGS: Headings in this Agreement are included for the convenience of
reference only and shall not constitute a part of this Agreement for any
purpose.
13. ADDITIONAL PROVISIONS:
14. JURY TRIAL WAIVER: THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY,
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY OR THE INDEBTEDNESS.
IN WITNESS WHEREOF, Guarantor(s) has (have) signed and delivered this Guaranty
the day and year first written above.
GUARANTOR(S): ROBERT R. HEBARD
GUARANTOR NAME TYPED/PRINTED
WITNESSES:
- ------------------------------------------------------
By:
SIGNATURE OF SIGNATURE OF
Its:
TITLE (IF APPLICABLE)
- ------------------------------------------------------
By:
SIGNATURE OF SIGNATURE OF
Its:
TITLE (IF APPLICABLE)
GUARANTOR'S ADDRESS:
7001 Orchard Lake Road, Suite 424
STREET ADDRESS
West Bloomfield, MI 48322-3608
CITY STATE ZIP CODE
Guaranty Of Collection
As of July ____, 1997, the undersigned, for value received, unconditionally and
absolutely guarantee(s) to Comerica Bank ("Bank"), a Michigan banking
corporation, collection of all existing and future indebtedness ("Indebtedness")
to the Bank of Enercorp, Inc., a Colorado corporation ("Borrower"). Indebtedness
includes without limit any and all obligations or liabilities of the Borrower to
the Bank, whether absolute or contingent, direct or indirect, voluntary or
involuntary, liquidated or unliquidated, joint or several, known or unknown; any
and all indebtedness, obligations or liabilities for which Borrower would
otherwise be liable to the Bank were it not for the invalidity, irregularity or
unenforceability of them by reason of any bankruptcy, insolvency or other law or
order of any kind, or for any other reason; any and all amendments,
modifications, renewals and/or extensions of any of the above; and all costs of
collecting Indebtedness, including, without limit, attorney fees. Any reference
in this Guaranty to attorney fees shall be deemed a reference to reasonable
fees, charges, costs and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise. All costs shall be payable immediately by the
undersigned when incurred by the Bank, without demand, and until paid shall bear
interest a the highest per annum rate applicable to any of the Indebtedness, but
not in excess of the maximum rate permitted by law.
1. LIMITATION: The total obligation of the undersigned under this Guaranty is
UNLIMITED unless specifically limited in the Additional Provisions of this
Guaranty, and this obligation (whether unlimited or limited to the extent
specified in the Additional Provisions) shall include, IN ADDITION TO any
limited amount of principal guaranteed, all interest on that limited amount, and
all costs incurred by the Bank in collection efforts against the Borrower and/or
the undersigned or otherwise incurred by the Bank in any way relating to the
Indebtedness, or this Guaranty, including without limit attorney fees. The
undersigned agree(s) that (a) this limitation shall not be a limitation on the
amount of Borrower's Indebtedness to the Bank; (b) any payments by the
undersigned shall not reduce the maximum liability of the undersigned under this
Guaranty unless written notice to that effect is actually received by the Bank
at, or prior to, the time of the payment; and (c) the liability of the
undersigned to the Bank shall at all times be deemed to be the aggregate
liability of the undersigned under this Guaranty and any other guaranties
previously or subsequently given to the Bank by the undersigned and not
expressly revoked, modified or invalidated in writing.
2. NATURE OF GUARANTY: This is a continuing Guaranty and remains effective
whether the Indebtedness is from time to time reduced and later increased or
entirely extinguished and later reincurred. The undersigned deliver(s) this
Guaranty based solely on the undersigned's independent investigation of (or
decision not to investigate) the financial condition of Borrower and is (are)
not relying on any information furnished by the Bank. The undersigned assume(s)
full responsibility for obtaining any further information concerning the
Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate now or later. The
undersigned knowingly accept(s) the full range of risk encompassed in this
Guaranty, which risk includes, without limit, the possibility that Borrower may
incur Indebtedness to the Bank after the financial condition of the Borrower, or
the Borrower's ability to pay debts as they mature, has deteriorated. This
Guaranty is a guaranty of collection and Bank shall have all rights and remedies
available to the holder of a guaranty of collection. Notwithstanding any
limitations on Bank under applicable law with respect to guaranties of
collection, Bank shall be entitled immediately to proceed against the
undersigned under this Guaranty: (i) if Bank shall have reduced its claim
against Borrower to judgment and after Bank shall have exercised commercially
reasonable efforts to collect, repossess, sell, liquidate or otherwise dispose
of the collateral securing Borrower's obligations to Bank, execution has been
returned unsatisfied; (ii) if more than thirty (30) days have elapsed since any
obligation included as part of the Indebtedness shall have matured (whether at
maturity or at any accelerated or extended payment date or otherwise); (iii) if
the undersigned shall have contested his liability under this Guaranty or denied
that he has any liability under this Guaranty; (iv) if Bank in good faith
determines that failure to proceed would cause Bank to lose any material rights
or remedies against the undersigned at a later date or would materially
jeopardize Bank's ability to enforce and/or realize upon this Guaranty at a
later date or if Bank is precluded from exercising rights against any material
portion of the collateral securing Borrower's obligations to Bank; (v) if the
undersigned has become insolvent, filed a voluntary petition in bankruptcy or
filed an answer to a creditor's petition or other petition filed against him
admitting the material allegations thereof for an adjudication in bankruptcy; or
(vi) it is apparent to Bank in the exercise of its reasonable discretion that it
is useless to proceed against Borrower.
3. APPLICATION OF PAYMENTS: The undersigned authorize(s) the Bank, either before
or after termination of this Guaranty, without notice to or demand on the
undersigned and without affecting the undersigned's liability under this
Guaranty, from time to time to: (a) apply any security and direct the order or
manner of sale; and (b) apply payments received by the Bank from the Borrower to
any indebtedness of the Borrower to the Bank, in such order as the Bank shall
determine in its sole discretion, whether or not this indebtedness is covered by
this Guaranty, and the undersigned waive(s) any provision of law regarding
application of payments which specifies otherwise. The undersigned agree(s) to
provide to the Bank copies of the undersigned's financial statements upon
request.
4. SECURITY: The undersigned grant(s) to the Bank a security interest in and the
right of setoff as to any and all property of the undersigned now or later in
the possession of the Bank. The undersigned further assign(s) to the Bank as
collateral for the obligations of the undersigned under this Guaranty all claims
of any nature that the undersigned now or later has (have) against the Borrower
(other than any claim under a deed of trust or mortgage covering California real
property) with full right on the part of the Bank, in its own name or in the
name of the undersigned, to collect and enforce these claims. The undersigned
agree(s) that no security now or later held by the Bank for the payment of any
Indebtedness, whether from the Borrower, any guarantor, or otherwise, and
whether in the nature of a security interest, pledge, lien, assignment, setoff,
suretyship, guaranty, indemnity, insurance or otherwise, shall affect in any
manner the unconditional obligation of the undersigned under this Guaranty, and
the Bank, in its sole discretion, without notice to the undersigned, may
release, exchange, enforce and otherwise deal with any security without
affecting in any manner the unconditional obligation of the undersigned under
this Guaranty. The undersigned acknowledge(s) and agree(s) that the Bank has no
obligation to acquire or perfect any lien on or security interest in any
asset(s), whether realty or personalty, to secure payment of the Indebtedness,
and the undersigned is (are) not relying upon any asset(s) in which the Bank has
or may have a lien or security interest for payment of the Indebtedness.
<PAGE>
2
5. OTHER GUARANTORS: If any Indebtedness is guaranteed by two or more
guarantors, the obligation of the undersigned shall be several and also joint,
each with all and also each with any one or more of the others, and may be
enforced at the option of the Bank against each severally, any two or more
jointly, or some severally and some jointly. The Bank, in its sole discretion,
may release any one or more of the guarantors for any consideration which it
deems adequate, and may fail or elect not to prove a claim against the estate of
any bankrupt, insolvent, incompetent or deceased guarantor; and after that,
without notice to any guarantor, the Bank may extend or renew any or all
Indebtedness and may permit the Borrower to incur additional Indebtedness,
without affecting in any manner the unconditional obligation of the remaining
guarantor(s). The undersigned acknowledge(s) that the effectiveness of this
Guaranty is not conditioned on any or all of the indebtedness being guaranteed
by anyone else.
6. TERMINATION: Any of the undersigned may terminate their obligation under this
Guaranty as to future Indebtedness (except as provided below) by (and only by)
delivering written notice of termination to an officer of the Bank and receiving
from an officer of the Bank written acknowledgment of delivery; provided,
however, the termination shall not be effective until the opening of business on
the fifth (5th) day ("effective date") following written acknowledgment of
delivery. Any termination shall not affect in any way the unconditional
obligations of the remaining guarantor(s), whether or not the termination is
known to the remaining guarantor(s). Any termination shall not affect in any way
the unconditional obligations of the terminating guarantor(s) as to any
Indebtedness existing at the effective date of termination or any Indebtedness
created after that pursuant to any commitment or agreement of the Bank or
pursuant to any Borrower loan with the Bank existing at the effective date of
termination (whether advances or readvances by the Bank after the effective date
of termination are optional or obligatory), or any modifications, extensions or
renewals of any of this Indebtedness, whether in whole or in part, and as to all
of this Indebtedness and modifications, extensions or renewals of it, this
Guaranty shall continue effective until the same shall have been fully paid. The
Bank has no duty to give notice of termination by any guarantor(s) to any
remaining guarantor(s). The undersigned shall indemnify the Bank against all
claims, damages, costs and expenses, including, without limit, attorney fees,
incurred by the Bank in connection with any suit, claim or action against the
Bank arising out of any modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit in connection with the
termination of this Guaranty.
7. REINSTATEMENT: Notwithstanding any prior revocation, termination, surrender
or discharge of this Guaranty (or of any lien, pledge or security interest
securing this Guaranty) in whole or in part, the effectiveness of this Guaranty,
and of all liens, pledges and security interests securing this Guaranty, shall
automatically continue or be reinstated in the event that any payment received
or credit given by the Bank in respect of the Indebtedness is returned,
disgorged or rescinded under any applicable state or federal law, including,
without limitation, laws pertaining to bankruptcy or insolvency, in which case
this Guaranty, and all liens, pledges and security interests securing this
Guaranty, shall be enforceable against the undersigned as if the returned,
disgorged or rescinded payment or credit had not been received or given by the
Bank, and whether or not the Bank relied upon this payment or credit or changed
its position as a consequence of it. In the event of continuation or
reinstatement of this Guaranty and the liens, pledges and security interests
securing it, the undersigned agree(s) upon demand by the Bank, to execute and
deliver to the Bank those documents which the Bank determines are appropriate to
further evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of the undersigned to do so shall not affect
in any way the reinstatement or continuation. If the undersigned do(es) not
execute and deliver to the Bank upon demand such documents, the Bank and each
Bank officer is irrevocably appointed (which appointment is coupled with an
interest) the true and lawful attorney of the undersigned (with full power of
substitution) to execute and deliver such documents in the name and on behalf of
the undersigned.
8. WAIVERS: The undersigned waive(s) any right to require the Bank to: (a)
proceed against any person or property; (b) give notice of the terms, time and
place of any public or private sale of personal property security held from the
Borrower or any other person, or otherwise comply with the provisions of Section
9-504 of the Michigan or other applicable Uniform Commercial Code; or (c) pursue
any other remedy in the Bank's power. The undersigned waive(s) notice of
acceptance of this Guaranty and presentment, demand, protest, notice of protest,
dishonor, notice of dishonor, notice of default, notice of intent to accelerate
or demand payment of any Indebtedness, any and all other notices to which the
undersigned might otherwise be entitled, and diligence in collecting any
Indebtedness, and agree(s) that the Bank may, once or any number of times,
modify the terms of any Indebtedness, compromise, extend, increase, accelerate,
renew or forbear to enforce payment of any or all Indebtedness, or permit the
Borrower to incur additional Indebtedness, all without notice to the undersigned
and without affecting in any manner the unconditional obligation of the
undersigned under this Guaranty.
The undersigned unconditionally and irrevocably waive(s) each and every
defense and setoff of any nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in any way the obligation of
the undersigned under this Guaranty, and acknowledge(s) that each such
waiver is by this reference incorporated into each security agreement,
collateral assignment, pledge and/or other document from the undersigned now
or later securing this Guaranty and/or the Indebtedness, and acknowledge(s)
that as of the date of this Guaranty no such defense or setoff exists.
9. WAIVER OF SUBROGATION: The undersigned waive(s) any and all rights (whether
by subrogation, indemnity, reimbursement, or otherwise) to recover from the
Borrower any amounts paid by the undersigned pursuant to this Guaranty until the
Indebtedness has been paid in full.
10. SALE/ASSIGNMENT: The undersigned acknowledge(s) that the Bank has the right
to sell, assign, transfer, negotiate, or grant participations in all or any part
of the Indebtedness and any related obligations, including, without limit, this
Guaranty, without notice to the undersigned and that the Bank may disclose any
documents and information which the Bank now has or later acquires relating to
the undersigned or to the Borrower in connection with such sale, assignment,
transfer, negotiation, or grant. The undersigned agree(s) that the Bank may
provide information relating to this Guaranty or relating to the undersigned to
the Bank's parent, affiliates, subsidiaries and service providers.
11. GENERAL: This Guaranty constitutes the entire agreement of the undersigned
and the Bank with respect to the subject matter of this Guaranty. No waiver,
consent, modification or change of the terms of the Guaranty shall bind any of
the undersigned or the Bank unless in writing and signed by the waiving party or
an authorized officer of the waiving party, and then this waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given. This Guaranty shall inure to the benefit of the Bank
and its successors and assigns and shall be binding on the undersigned and the
undersigned's heirs, legal representatives, successors and assigns including,
without limit, any debtor in possession or trustee in bankruptcy for any of the
undersigned. The undersigned has (have) knowingly and voluntarily entered into
this Guaranty in good faith for the purpose of inducing the Bank to extend
credit or make other financial accommodations to the Borrower. If any provision
of this Guaranty is unenforceable in whole or in part for any reason, the
remaining provisions shall continue to be effective. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
<PAGE>
3
12. HEADINGS: Headings in this Agreement are included for the convenience of
reference only and shall not constitute a part of this Agreement for any
purpose.
13. ADDITIONAL PROVISIONS:
14. JURY TRIAL WAIVER: THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY,
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY OR THE INDEBTEDNESS.
IN WITNESS WHEREOF, Guarantor(s) has (have) signed and delivered this Guaranty
the day and year first written above.
GUARANTOR(S): THOMAS W. ITIN
GUARANTOR NAME TYPED/PRINTED
WITNESSES:
- ------------------------------------------------------
By:
SIGNATURE OF SIGNATURE OF
Its:
TITLE (IF APPLICABLE)
- ------------------------------------------------------
By:
SIGNATURE OF SIGNATURE OF
Its:
TITLE (IF APPLICABLE)
GUARANTOR'S ADDRESS:
7001 Orchard Lake Road, Suite 424
STREET ADDRESS
West Bloomfield, MI 48322-3608
CITY STATE ZIP CODE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000313116
<NAME> Enercorp, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 16,013
<SECURITIES> 4,131,110
<RECEIVABLES> 256,279
<ALLOWANCES> (36,236)
<INVENTORY> 0
<CURRENT-ASSETS> 4,368,652
<PP&E> 8,935
<DEPRECIATION> (5,262)
<TOTAL-ASSETS> 4,372,325
<CURRENT-LIABILITIES> 2,180,515
<BONDS> 0
0
0
<COMMON> 1,468,251
<OTHER-SE> 723,559
<TOTAL-LIABILITY-AND-EQUITY> 4,372,325
<SALES> 0
<TOTAL-REVENUES> 5,606
<CGS> 0
<TOTAL-COSTS> 38,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,924
<INCOME-PRETAX> (261,153)
<INCOME-TAX> (53,000)
<INCOME-CONTINUING> (208,153)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (208,153)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> (0.35)
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