SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 18, 1996
IMGE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-8354 95-2094565
(Commission File No.) (I.R.S. Employer
Identification No.)
100 Century Blvd.
West Palm Beach, FL 33417
(Address and Zip Code of Principal Executive Offices)
(561) 640-3133
Registrant's telephone number, including area code
285 Tanglewood Crossing
Lawrence, New York 11559
(Former name or former address,
if changed since last report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Report of Independent Certified Public Accountants, dated July
22, 1996, and the accompanying balance sheets of Seagate
Peripherals, Inc. - Storage Systems Division as of December 31,
1995 and May 31, 1996, and the related statements of operations,
divisional equity and cash flows for the year ended December 31,
1995 and five months ended May 31, 1996 and 1995.
(b) Proforma Financial Information
IMGE, Inc. and Subsidiaries Proforma Condensed Combined Financial
Statements.
(c) Exhibits.
Description of Documents
10.1 Agreement, dated June 18, 1996, between nStor
Corporation, Inc. ("nStor") and IMGE, Inc. ("IMGE").
10.2 Asset Purchase Agreement, dated as of May 23, 1996,
between Seagate Peripherals, Inc. ("Seagate"), as
seller and Intelligent Manufacturing Systems, Inc.
("IMS"), as purchaser.
10.3 Amendment No.1 to the Asset Purchase Agreement, as of
June 4, 1996, between Seagate and IMS.
10.4 Assignment of Asset Purchase Agreement by IMS to nStor.
10.5 Consent to Assignment of Asset Purchase Agreement by
Seagate.
10.6 Shareholders Agreement, dated June 18, 1996, among
nStor, IMGE and Smith.
10.7 $316,000 Promissory Note from nStor to IMGE.
10.8 $1,500,000 Promissory Note from nStor to IMGE.
2
10.9 Continuing Unlimited Guaranty by Smith regarding
$316,000 Promissory Note.
10.10 Continuing Unlimited Guaranty by Smith regarding
$1,500,000 Promissory Note.
10.11 Hypothecation Security Agreement by Smith regarding
$316,000 Promissory Note.
10.12 Hypothecation Security Agreement by Smith regarding
$1,500,000 Promissory Note.
10.13 Letter Agreement among nStor, Smith and IMGE.
10.14 Letter to nStor, dated June 18, 1996, by IMGE.
SIGNATURE
Pursuant to the requirements of the Securities and
Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
IMGE, INC.
(Registrant)
/s/ Mark Levy
_________________________
Mark Levy, President
Date: August 30, 1996
3
SEAGATE PERIPHERALS, INC. -
STORAGE SYSTEMS DIVISION
FINANCIAL STATEMENTS
As of and for Year Ended December 31, 1995
and Five Months Ended May 31, 1996 and 1995
Seagate Peripherals, Inc. - Storage Systems Division
Contents
Report of independent certified public accountants 3
Financial statements
Balance sheets 4
Statements of operations 5
Statements of divisional equity 6
Statements of cash flows 7
Summary of significant accounting policies 8-9
Notes to financial statements 10-11
-2-
Report of Independent Certified Public Accountants
Seagate Peripherals, Inc. - Storage Systems Division
Lake Mary, Florida
We have audited the accompanying balance sheet of Seagate
Peripherals, Inc. - Storage Systems Division as of December 31,
1995, and the related statements of operations, divisional equity
and cash flows for the year ended December 31, 1995. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Seagate
Peripherals, Inc. - Storage Systems Division at December 31, 1995,
and the results of its operations and its cash flows for the year
ended December 31, 1995 in conformity with generally accepted
accounting principles.
BDO Seidman, LLP
July 22, 1996
-3-
Seagate Peripherals, Inc. - Storage Systems Division
Balance Sheets
May 31, Dec. 31,
1996 1995
---------- ----------
(unaudited)
ASSETS
Current:
Inventories (Note 2) $ 894,372 $1,803,435
Property and equipment, net (Note 3) 775,560 808,408
---------- ----------
$1,669,932 $2,611,843
========== ==========
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accrued warranty expense $ 355,500 $ 360,053
---------- ----------
Commitments (Note 4) - -
Divisional equity:
Division control 5,093,165 4,692,104
Accumulated deficit (3,778,733) (2,440,314)
---------- ----------
Total divisional equity 1,314,432 2,251,790
---------- ----------
$1,669,932 $2,611,843
========== ==========
See accompanying summary of significant accounting policies
and notes to financial statements.
-4-
Seagate Peripherals, Inc. - Storage Systems Division
Statements of Operations
Five months
ended May 31, Year ended
----------------------- Dec. 31,
1996 1995 1995
---------- ---------- -----------
(unaudited) (unaudited)
Sales $5,281,000 $4,679,000 $14,645,000
Cost of sales 4,226,894 3,605,372 10,982,454
---------- ---------- -----------
Gross profit 1,054,106 1,073,628 3,662,546
Operating expenses 2,392,525 2,997,845 6,102,860
---------- ---------- -----------
Net loss ($1,338,419) ($1,924,217) ($ 2,440,314)
========== ========== ===========
See accompanying summary of significant accounting policies
and notes to financial statements.
-5-
Seagate Peripherals, Inc. - Storage Systems Division
Statements of Divisionl Equity
Division Accumulated
Control Deficit
---------- -----------
Balance, January 1, 1995 $2,101,880 $ -
Net change in division control
account 2,590,224 -
Net loss - (2,440,314)
---------- ----------
Balance, December 31, 1995 4,692,104 (2,440,314)
Net change in division control
account 401,061 -
Net loss - (1,338,419)
---------- ----------
Balance, May 31, 1996 (unaudited) $5,093,165 ($3,778,733)
========== ==========
See accompanying summary of significant accounting policies
and notes to financial statements.
-6-
Seagate Peripherals, Inc. - Storage Systems Division
Statements of Cash Flows
Five months Year
ended May 31, ended
---------------------- Dec. 31,
1996 1995 1995
---------- ---------- ----------
(unaudited) (unaudited)
Cash flows from
operating activities:
Net loss ($1,338,419) ($1,924,217) ($2,440,314)
Adjustments to reconcile
net loss to net cash
used for operating
activities:
Depreciation 84,149 80,414 192,993
Provision for inven-
tory obsolescence (50,106) (13,069) 89,453
Cash provided by
(used for):
Inventories 959,169 (709,618) (676,541)
Accrued warranty
expense (4,553) 125,022 300,053
---------- ---------- ----------
Net cash used for
operating activities (349,760) (2,441,468) (2,534,356)
Cash flows from investing
activities:
Purchase of property
and equipment (51,301) (23,278) (55,868)
Cash flows from financing
activities:
Net change in division
control account 401,061 2,464,746 2,590,224
Net change in cash - - -
Cash, beginning of period - - -
---------- ---------- ----------
Cash, end of period $ - $ - $ -
========== ========== ==========
See accompanying summary of significant accounting policies
and notes to financial statements.
-7-
Seagate Peripherals, Inc. - Storage Systems Division
Summary of Significant Accounting Policies
Inventories
Inventories are valued at the lower of cost or market. Cost
is determined by the first-in, first-out method.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is
computed over the estimated useful lives of the assets by the
straight-line method for financial reporting purposes.
Revenue Recognition
Sales are recognized upon shipment of products to customers.
Income Taxes
The Division accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," as if it was a separate
taxpayer. This requires recognition of estimated income taxes
payable or refundable on income tax returns for the current
year and for the estimated future tax effect attributable to
temporary differences and carryforwards. Measurement of
deferred income tax is based on enacted tax laws including tax
rates, with the measurement of deferred income tax assets
being reduced by available tax benefits not expected to be
realized. A full valuation allowance related to the tax
benefits related to the Division's net losses for tax purposes
has been provided due to uncertainty as to whether those tax
benefits will be realized.
Division Control
Accounts receivable and accounts payable resulting from the
operations of the Division are collected and paid by other
divisions of Seagate Peripherals, Inc. and therefore have not
been recorded on the accompanying financial statements. The
Division's cash flows from operating and investing activities
are financed by Seagate Peripherals, Inc. The cumulative
amount financed by Seagate Peripherals as of each balance
sheet date has been recorded in the equity section of the
Division's balance sheets in the division control account.
-8-
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
period reported. Actual results could differ from those
estimates.
Financial Instruments
Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about financial
instruments. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information
available to management as of December 31, 1995.
The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. These
financial instruments include accrued expenses. Fair values
were assumed to approximate carrying values for these
financial instruments since they are short term in nature and
their carrying amounts approximate fair values or they are
receivable or payable on demand.
Interim Financial Statements
The financial statements for the five months ended May 31,
1995 and 1996 are unaudited but, in the opinion of management,
include all adjustments, consisting of only normal recurring
accruals, necessary for fair presentation of financial
position and results of operations. Results for the interim
period are not necessarily indicative of the results for a
full year.
New Accounting Standards
The Division has adopted the provisions of Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"),
Accounting for the Impairment of Long Lived Assets and for
Long-Lived Assets to be Disposed of, during its fiscal year
ending December 31, 1996. SFAS No. 121 requires the
recognition and measurement of impairment to long-lived assets
and certain identifiable intangible assets whenever events or
changes in circumstances indicate that the carrying amount of
those assets may not be recoverable.
-9-
Seagate Peripherals, Inc. - Storage Systems Division
Notes to Financial Statements
1. Business
Seagate Peripherals, Inc. - Storage Systems Division (the
"Division") was formed near the end of 1994 for the purpose of
manufacturing and distributing fault-tolerant data storage devices
for computer network environments. The Division's products are
sold through a network of original equipment manufacturers and
distributors located worldwide. The Division's headquarters and
manufacturing facility are located in Lake Mary, Florida.
As a division of Seagate Peripherals, the Division shared a common
sales and treasury function with several other Seagate Peripherals,
Inc. divisions. The accounts receivable and accounts payable
generated by the Division's operations are recorded on the
financial statements of another division. The division purchases
a majority of its materials from other Seagate Peripherals, Inc.
divisions.
On May 31, 1996, the management of Seagate Peripherals, Inc.
entered into an agreement to sell substantially all of the
Division's business assets for approximately $2,071,000.
2. Inventories
Inventories are summarized as follows:
May 31, Dec. 31,
1996 1995
-------- ----------
Raw materials $645,994 $ 910,716
Work-in-process 44,485 544,288
Finished goods 284,937 479,581
-------- ----------
975,416 1,934,585
Less reserve for inventory
obsolescence 81,044 131,150
-------- ----------
$894,372 $1,803,435
======== ==========
-10-
3. Property and Equipment
Property and equipment are summarized as follows:
Useful Dec. 31,
Lives 1995
---------- ----------
Leasehold improvements 5 years $ 83,783
Machinery and equipment 5-15 years 1,117,738
Furniture and fixtures 7 years 120,416
----------
1,321,937
Less accumulated depreciation 513,529
----------
$ 808,408
==========
4. Leases
The Division leases its operating facilities under operating leases
which expire at various dates through April 1997. At December 31,
1995, future minimum rental payments under operating leases that
have initial or remaining terms in excess of one year are as
follows:
1996 $162,756
1997 54,252
--------
$217,008
========
Rent expense was $261,684 for the year ended December 31, 1995.
5. Economic Dependence
For the year ended December 31, 1995, the Division had three
customers which comprised approximately $1,625,000, $6,071,000 and
$1,595,000, or 11%, 41% and 11%, respectively, of total sales.
-11-
IMGE, INC. AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Effective June 3, 1996, nStor Corporation, Inc.
("nStor"), a newly formed 80% owned subsidiary of IMGE, Inc. ("the
Company"), acquired certain assets and assumed certain liabilities
("Seagate Division") of Seagate Peripherals, Inc. ("Seagate") for
a purchase price of $1,300,000, consisting of $500,000 in cash and
an estimated $800,000 royalty liability to the seller, payable
based upon sales of certain storage systems by nStor during the
period from October 1, 1996 through December 31, 1997.
The acquisition will be accounted for as a purchase, with
assets acquired and liabilities assumed recorded at fair value and
the results of Seagate Division's operations included in the
Company's consolidated financial statements from the date of
acquisition.
The following unaudited condensed combined financial
statements of the Company are derived from, and should be read in
conjunction with, the Company's historical balance sheet at April
30, 1996 and the Company's Statements of Operations for the six
months ended April 30, 1996 and the year ended October 31, 1995, as
presented in the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1996 and Annual Report on Form 10-K for the
year ended October 31, 1995. It should also be read in conjunction
with Seagate Division's historical balance sheet at May 31, 1996
and Seagate Division's historical Statements of Operations for the
five months ended May 31, 1996 and the year ended December 31,
1995, included elsewhere herein.
The unaudited proforma condensed combined balance sheet
at April 30, 1996 gives effect to the acquisition as if it had
occurred on that date. The unaudited proforma condensed combined
statements of operations for the six months ended April 30, 1996
and the year ended October 31, 1995 give effect to this transaction
as if it had occurred as of November 1, 1994.
The historical Statements of Operations of Seagate
Division for the six months ended May 31, 1996 and the year ended
December 31, 1995, which are included in the Proforma Condensed
Combined Statements of Operations, both include the one month
period ended December 31, 1995. Operating results for that month
are summarized as follows (in thousands):
F-1
Sales $1,666
Cost of sales 1,193
------
Gross profit 473
Operating expenses 487
------
Net loss ($ 14)
======
The proforma condensed combined financial statements do
not purport to be indicative of the results of operations or
financial position which would have actually been reported had the
transaction been consummated on the dates indicated, or which may
be reported in the future.
F-2
IMGE, INC. AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)
Historical
------------------
Seagate IMGE,
Division Inc. Proforma
May April Adjust-
ASSETS 31, 1996 30, 1996 ments Proforma
- ------ -------- -------- -------- --------
Current assets:
Cash $ - $ 9,630 ($500)(1) $ 8,714
(416)(3)
Accounts receivable - 34 - 34
Inventories 894 - 416 (3) 1,310
Investment in IMNET
Systems, Inc. - 2,436 - 2,436
------ ------- ---- -------
Total current assets 894 12,100 (500) 12,494
Property and equip-
ment, net 776 - (440)(2) 336
Intellectual property - - 526 (2) 526
------ ------- ---- -------
$1,670 $12,100 ($414) $13,356
====== ======= ==== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ - $ 26 $ - $ 26
Accrued warrranty
expense 356 - - 356
Royalty liability - - 800 (2) 800
Notes payable - 648 - 648
------ ------- ---- -------
Total current
liabilities 356 674 800 1,830
Convertible notes
payable - 486 - 486
Minority interest - - 100 (2) 100
------ ------- ---- -------
Total liabilities 356 1,160 900 2,416
(500)(1))
Stockholders' equity 1,314 10,940 (814)(2)) 10,940
------ ------- ---- -------
$1,670 $12,100 ($414) $13,356
====== ======= ==== =======
F-3
IMGE, INC. AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Historical
-----------------
Seagate IMGE,
Division Inc.
Six Six
Months Months Pro-
Ended Ended forma
May 31, Apr.30, Adjust-
1996 1996 ments Proforma
-------- -------- ------- ----------
Sales $6,947 $ $ $ 6,947
Cost of sales 5,420 5,420
-------- -------- ------- ----------
Gross profit 1,527 1,527
Operating expenses (2,879) (125) 36 (4) (2,968)
Gain from sale of
Imnet Systems, Inc. 9,640 9,640
Interest and other income,
net of interest expense 80 (25)(5) 55
-------- -------- ------- ----------
Net income (loss) ($1,352) $9,595 $ 11 $8,254
======== ======== ======= ==========
Net income per common
share $0.55 $0.47
======== ==========
Average number of common
shares outstanding 17,600,477 17,600,477
========== ==========
__________
See accompanying Proforma Adjustments
F-4
IMGE, INC. AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Historical
-----------------
Seagate IMGE,
Division Inc.
Year Year Pro-
Ended Ended forma
Dec.31, Oct.31, Adjust-
1995 1995 ments Proforma
-------- -------- ------- ----------
Sales $14,645 $ $ $14,645
Cost of sales 10,982 10,982
-------- -------- ------- ----------
Gross profit 3,663 3,663
Operating expenses (6,103) (86) 85 (4) (6,104)
Interest and other income,
net of interest expense 25 (50)(5) (25)
Minority interest 100 (6) 100
-------- -------- ------- ----------
Net income (loss) ($2,440) ($ 61) $ 135 ($2,366)
======== ======== ======= ==========
Net loss per common
share $0.00 ($0.13)
======== ==========
Average number of common
shares outstanding 17,600,477 17,600,477
========== ==========
__________
See accompanying Proforma Adjustments
F-5
Proforma Adjustments
Condensed Combined Balance Sheet:
(1) To record the acquisition of Seagate Division.
(2) To reflect the allocation of the purchase price on the basis
of the estimated fair value of the net assets acquired. The
components of the purchase price and its allocation to the
assets and liabilities of Seagate Division are as follows (in
thousands):
Components of purchase price:
Cash $ 500
Royalty liability, representing an estimate of
future payments that are required to be made
to the seller based upon sales of certain
storage systems by nStor during the period
from October 1, 1996 through December 31, 1997 800
------
Total purchase price to be allocated $1,300
======
Allocation of purchase price:
Equity of Seagate Division $1,314
Decrease to property and equipment (440)
Increase to intellectual property 526
Minority interest in nStor (100)
------
Net purchase price $1,300
======
(3) To record additional inventory purchased from Seagate at
closing that was not included in Seagate Division's balance
sheet prior to the purchase.
Condensed Combined Statements of Operations:
(4) To adjust Seagate Division's historical operating expenses
for the change in the carrying amount of net assets resulting
from the allocation of the purchase price as described in
proforma adjustment (2) to the proforma condensed combined
balance sheet relating to (in thousands):
F-6
Six Months Year
Ended Ended
May 31, Dec. 31,
1996 1995
---------- --------
Reduced depreciation of equipment $ 54 $120
Amortization of intellectual
property over 15 years (18) (35)
------- ----
$ 36 $ 85
======= ====
(5) To reduce interest income by the cost that would have been
incurred to finance the acquisition of Seagate Division.
(6) To record 20% minority interest in the proforma net loss of
nStor.
F-7
Exhibit 10.1 AGREEMENT
AGREEMENT made this 18th day of June, 1996, by and between
nStor Corporation, Inc., a Delaware corporation (hereinafter
sometimes referred to as "Seller" or the "Corporation") and
IMGE, INC., a Delaware corporation (hereinafter sometimes referred
to as "Purchaser").
W I T N E S S E T H:
1. Agreement to Sell and Purchase. FOR AND IN CONSIDERATION
of the covenants and agreements of Seller and Purchaser herein
contained, the sum of $10.00 and other good and valuable
considerations from each of the parties hereto to the other, the
receipt and sufficiency of which are hereby acknowledged and
subject to and in reliance upon the representations, warranties,
conditions and agreements of Seller herein contained, Seller hereby
agrees to authorize (if not heretofore authorized) and to issue,
sell and convey unto Purchaser, and Purchaser hereby agrees to
subscribe for, purchase and acquire from Seller 1,200 shares (the
"Shares") of the common stock of the Corporation. In this
connection, Seller hereby represents and warrants to Purchaser that
the Shares represent (or upon authorization and issuance [i.e., at
or prior to the closing hereunder (the "Closing")] shall represent)
eighty percent (80%) of the authorized, issued and outstanding
shares (of each and every class) of the capital stock of the
Corporation.
2. Purchase Price; Method of Payment; Adjustments.
A. The purchase price (the "Purchase Price") to be paid
for the shares shall be the sum of Five Hundred Thousand and
No/100 Dollars ($500,000.00).
B. The Purchase Price shall be paid by Purchaser to
Seller at the Closing by wire transfer.
3. Representations and Warranties of Seller. Seller
hereby represents, warrants, covenants and agrees to and with the
Purchaser (which representations, warranties, covenants and
agreements are agreed by the parties to be material to the
Purchaser and which representations and warranties shall also be
true and correct in all respects on the "Closing Date" (as said
term is hereinafter defined) and shall survive the Closing) that:
A. Seller has the power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated herein. This Agreement is legally binding on Seller
in accordance with its terms. Seller has the power and authority
to authorize, issue, sell and convey the Shares to be transferred
by it hereunder.
B. The Corporation is a corporation duly organized and
validly existing and in good standing under the laws of the State
of Delaware, and qualified to do business in and in good standing
under the laws of the State of Florida and all other jurisdictions
in which the character of its properties or the nature of its
business make such qualification necessary or proper. The
Corporation has the power and authority to conduct its business and
own its properties as now conducted and owned.
C. The Shares are (or as of the Closing shall be) duly
and validly authorized and issued and, upon payment of the Purchase
Price therefor, the Shares shall be fully paid and non-assessable.
There are (and as of the Closing shall be) no outstanding options
or rights to purchase any additional shares (or other debt or
equity interest[s]), as the case may be, of the Corporation, or any
warrants to subscribe for, or securities convertible into, any
stock (or other debt or equity interest[s]), as the case may be, of
the Corporation.
D. The Corporation has not, is not, and as of the
Closing will not have, engaged in or conducted any business other
than business connected with or incident to the ownership of its
properties and assets as disclosed herein.
E. The Corporation has no assets or liabilities,
contingent or otherwise, except those listed in Schedule "A",
annexed hereto and made a part hereof. Except in the ordinary
course of business, no assets have been acquired, disposed of, or
liabilities incurred, since the compilation of the Schedules
referred to in this Agreement.
F. The Corporation has duly and timely filed all
federal, state and local tax returns required to be filed by it, if
any, including, if applicable, those with respect to income,
withholding, social security, intangible personal property,
unemployment, sales and other taxes and has paid (x) all taxes
which have become due pursuant to such returns or otherwise and/or
pursuant to any assessment received by it and (y) all other taxes,
governmental charges, penalties, interest and fines accrued, due or
payable by it. There has been no audit of the federal or state
income tax returns of the Corporation. The Corporation has
delivered to Purchaser true, correct and complete copies of all tax
returns in which the operations of the Corporation are reflected.
G. Except in the ordinary course of business and as
disclosed on Schedule "B" annexed hereto and forming a part hereof,
the Corporation has not pledged, hypothecated, encumbered or
granted any security interest in any of its assets or properties.
H. The Corporation is not a party to any contract,
commitment or understanding which affects, or may affect, its
business, properties, assets, operations or condition, financial or
otherwise, or which imposes or may impose any liability or
obligation upon it, except as incurred in the ordinary course of
business, or as disclosed on Schedule "C" annexed hereto and
forming a part hereof.
I. Except as set forth in Schedule "C", the Corporation
does not have in effect any written or oral agreement or commitment
which would bind the Corporation, including without limitation:
(i) Contracts or agreements for the purchase, sale,
lease (as lessee or lessor), mortgage (as mortgagee or mortgagor),
or license (as licensee or licensor) of any assets (except assets
purchased, leased or sold in the ordinary course of business);
(ii) With any labor union;
(iii) For any bonus, pension, retirement, profit
sharing, stock option or similar plan; or
(iv) With any officer, director, shareholder or any
associate of the Corporation.
The Corporation has complied with all the provisions
of all agreements and commitments to which it is a party and is not
in default under any thereof, nor has a notice of such default been
received by the Corporation.
J. Except as disclosed on Schedule "D" annexed hereto
and forming a part hereof, there are no actions, suits, claims,
litigation or proceedings pending or, to the knowledge of the
Corporation, threatened against, affecting or relating to the
Corporation, its business or any of its properties, at law or in
equity or before or by any federal, state, municipal or other
governmental instrumentality; nor does the Corporation know or have
any reasonable grounds to know of any basis for any such action,
suit, claim, litigation or proceeding or of any governmental
investigations relative to the Corporation, its business or any of
its properties.
K. Except as set forth on Schedule "E" annexed hereto
and forming a part hereof, the Corporation has not:
(i) Issued, sold, or agreed to be or become
obligated in any manner to issue or sell any of its securities
other than (a) the Shares to be authorized, issued and sold to
Purchaser hereunder, and (b) the shares of stock which are owned by
R. Daniel Smith on the date hereof; or
(ii) Granted or agreed to grant any increase in
compensation or paid or agreed to pay any bonus to any of its
directors or officers or granted or agreed to grant any material
increase in compensation or to pay any bonus to any of its agents
or employees; or
(iii) Declared or paid any dividends or distributions
of any type; or
(iv) Made any changes in its articles of
incorporation or by-laws.
L. Through the Closing Date , except as Purchaser may
consent in writing and except as to any transactions incident to
the transactions contemplated by this Agreement, the Corporation
shall only conduct its business in the ordinary course and in its
customary manner, shall perform when due all of its obligations
under its existing licenses, permits, contracts and agreements and
in accordance with all applicable laws, statutes, ordinances,
codes, rules, and regulations, and shall not incur any further
liabilities or acquire any other assets or properties. At Closing,
the assets, liabilities and financial condition of the Corporation
shall be in substantially the same condition as existed on the
Effective Date of this Agreement.
M. The Corporation has only those bank accounts listed
in Schedule "F" annexed hereto and forming a part hereof. Without
the prior written consent of Purchaser, the Corporation will not,
except in the ordinary course of business, effect any change in any
of said accounts.
N. [Intentionally deleted]
O. The Corporation has no subsidiaries.
P. At Closing, the Corporation will have good and
marketable title to all its property and assets, real and personal,
and same are subject to no mortgage, pledge, lien, encumbrance,
security interest and/or charge, except those incurred in the
ordinary course of business and disclosed to and approved by
Purchaser, (except for those liabilities disclosed on Schedule "C"
hereto).
Q. The list of all employees of the Corporation
attached hereto as Schedule "G" annexed hereto and forming a part
hereof and the amount of compensation to which each is entitled, as
set forth therein, is complete and accurate.
R. The records of the Corporation contain copies of:
(i.) all contracts of any nature which will or might
bind the Corporation after the closing; and
(ii.) all policies of fire and liability insurance,
if any, including extended coverage, if any, and other forms of
insurance, if any, which now cover and which have heretofore
covered the Corporation and/or its properties.
All of said contracts and policies accurately
reflect the terms and conditions thereof; there are no defaults
thereunder; and there has been continuous insurance coverage of the
Corporation and its properties since the Corporation commenced its
operations.
S. The records of the Corporation accurately reflect a
true and complete record of the Corporation's accounts receivable
and payable and business activities.
T. [Intentionally Deleted].
U. The Corporation has made no intentional misstatement
or misrepresentation of fact to any of the Corporation's customers,
nor done any act with respect to any such customer which might give
rise to any cause of action under state or federal law in regard to
same.
V. The consummation of the transactions contemplated
herein and the performance of this Agreement will not result in any
breach of, or constitute a default under, any mortgage, deed of
trust, lease, bank loan or credit agreement, corporate charter,
by-laws or other instruments to which the Corporation is a party or
by which the Corporation may be bound or affected.
W. The Corporation has received no notice of violation
of law or municipal ordinance which will or might affect the
ability of the Corporation to conduct its business.
X. No judgments have been confessed against the
Corporation and there have been no assignments of rights in the
Corporation's property for other than Corporation purposes.
Y. No registration with, application to, approval of,
or other action by, any federal, state or other governmental
commission or regulatory body is required in connection with this
Agreement or the authorization, issuance, sale or delivery of the
Shares to be issued and sold to Purchaser hereunder, or, if
required, the same has been (or, as of the Closing, shall be)
completed and/or obtained in accordance with the requirements of
the regulatory body having jurisdiction in the premises.
Z. [Intentionally Deleted].
AA. The Corporation is a Delaware corporation, duly
organized, operating and currently existing under the Delaware
Corporation Law.
BB. All consents and disclosures necessary to effectuate
the transaction contemplated by this Agreement have been obtained
and made.
CC. No circumstances exist which would provide grounds
for voluntary or involuntary dissolution of the Corporation by
decree or otherwise.
DD. The Corporation has made no assignment for the
benefit of creditors, nor done any act in contravention of the
Corporation's articles of incorporation, as amended, (the "Articles
of Incorporation"), or the Corporation's by-laws, as amended, (the
"By-Laws") which would impair the ability of the Corporation to
carry on its business.
EE. Upon payment by Purchaser to the Corporation of the
Purchase Price for the Shares to be issued and sold to Purchaser
hereunder, Purchaser shall acquire good and valid title to the
Shares free and clear of all liens, claims, equities, encumbrances,
warrants, pledges, calls, commitments, security interests and other
rights, agreements and interests.
FF. No representation or warranty by Seller in this
Agreement, nor any statement or certificate furnished or to be
furnished to the Purchaser pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any
knowingly untrue statement of a material fact, or omits or will
omit to state a material fact necessary to make the statements
contained therein not misleading.
The foregoing representations, warranties, covenants and
agreements are made with the knowledge and expectation that
Purchaser is and shall be placing reliance thereon and that same
constitute material inducements to the Purchaser's execution of
this Agreement and consummation of the transactions contemplated
herein. All representations and warranties shall survive the
Closing. In the event that Purchaser shall determine following the
Closing hereunder that any representation or warranty of the
Corporation contained in this Agreement, or any representation or
warranty of the Corporation or any director, officer, employee,
agent or attorney of or for the Corporation contained in any
certificate, schedule or other document delivered pursuant to this
Agreement or in connection with the transaction contemplated herein
shall have been untrue, inaccurate, incomplete or misleading in any
material respect either when made, or in the event that Purchaser
shall determine following the Closing hereunder that any of the
representations or warranties of Seagate Peripherals, Inc.
("Seagate") contained in that certain Asset Purchase Agreement
dated as of May 23, 1996, as amended, between Seagate, as seller,
and Intelligent Manufacturing Systems, Inc. ("IMS"), as buyer or
purchaser, shall have been untrue, inaccurate, incomplete or
misleading in any material respect either when made or as of the
closing under said agreement, or in the event that the Corporation
shall have failed (either prior to or within 60 days following the
Closing hereunder) to secure the acknowledgement from Seagate
referred to in Subsection 5D(ii)(aa) below, or in the event that
the Corporation shall have failed (either prior to or within 60
days following the Closing hereunder) to secure the lessor's
consent referred to in Subsection 5D(ii)(bb) below, then, in either
of such events, and as Purchaser's sole remedy for a breach of this
Agreement, Purchaser shall have the absolute right to rescind the
transaction contemplated in this Agreement and to receive an
immediate refund of the full Purchase Price paid by Purchaser for
the Shares, together with interest thereon, at the rate of twelve
percent (12%) per annum, computed from the Closing Date hereunder
until the date upon which such refund shall have been received by
Purchaser. The right of recision granted to Purchaser as aforesaid
shall be deemed to have been exercised by Purchaser upon the
delivery by (or on behalf of) Purchaser to the President or any
Vice President of the Corporation, or to the Secretary or any
Assistant Secretary of the Corporation, of a written demand for
recision. Within sixty (60) days following the delivery of such
demand for recision, the full Purchase Price paid by Purchaser for
the Shares, together with interest thereon computed as aforesaid,
shall be due and payable in full. If not sooner exercised by
Purchaser, the aforesaid right of recision shall expire, terminate
and cease to have any further force or effect upon the expiration
of sixty (60) days following the Closing Date.
4. [Intentionally Deleted.]
5. Conditions Precedent to Purchaser's Obligations. All
obligations of the Purchaser under this Agreement are subject to
and contingent upon the fulfillment (or written waiver by
Purchaser), at or prior to the Closing, of each of the following
conditions, each being material:
A. Each representation and warranty of the Seller
contained in this Agreement, or in any certificate, schedule or
other document delivered pursuant hereto or in connection with the
transaction contemplated herein shall be true and accurate when
made and shall be deemed to have been made again as of the time of
Closing, shall then be true and accurate and shall survive such
Closing.
B. Seller shall have complied with all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by the Seller on or before the Closing Date.
C. Seller's Articles of Incorporation shall authorize
(or as of the Closing the same shall have been amended to the
satisfaction of Purchaser so as to authorize) the issuance of the
Shares, which such Shares are (or as of the Closing shall be) of
the same class, and confer (or as of the Closing shall confer) upon
the holder thereof the same rights, preferences and privileges, as
all shares of common stock of the Corporation which had theretofore
been authorized and issued by the Corporation. Without limiting
the generality of the foregoing, the Shares are (or as of the
Closing shall be) of the same class, and confer (or as of the
Closing shall confer) the same rights, preferences and privileges
as the shares of stock which the Corporation did heretofore issue
to R. Daniel Smith. To the extent that amendments of the Articles
of Incorporation shall be necessary to accomplish the foregoing,
such amendments shall be filed prior to the Closing with the
Secretary of State of Delaware (and/or other required filing
office[s]) and with the Secretary of State of Florida. A certified
copy of the duly filed amendments (i.e., certified by the Delaware
and Florida Secretaries of State) shall be delivered to Purchaser
at the Closing.
D. Either:
(i) the Corporation shall have received a valid,
legally binding, enforceable and unconditional assignment of the
rights of the buyer or purchaser under, and the Corporation shall
have duly consummated the transaction contemplated in, that certain
Asset Purchase Agreement dated as of May 23, 1996, as amended,
between Seagate, as seller, and IMS, as buyer or purchaser, and
satisfactory (i.e., to Purchaser) evidence thereof shall have been
delivered to Purchaser at Closing; or
(ii) the Corporation shall have duly acquired from
IMS (i.e., immediately following IMS's acquisition of same from
Seagate) all assets which IMS contracted to acquire from Seagate
pursuant to the aforesaid Asset Purchase Agreement dated as of May
23, 1996, and in connection therewith, (aa) Seagate shall have
acknowledged and agreed (by valid, legally binding and enforceable
written agreement) that the Corporation shall be entitled to rely
upon and enforce all representations, warranties, covenants and
agreements of Seagate contained in said Asset Purchase Agreement,
i.e., as if the Corporation had been an original signatory to said
Asset Purchase Agreement, and (bb) the lessor of the premises in
which the Corporation's business activities shall be conducted
following the Closing (said premises having the street address of
450 Technology Park Drive, Lake Mary, Florida) shall have consented
to the assignment by IMS to the Corporation of the lease pertaining
to said premises.
E. The Corporation shall have executed (where
appropriate or required) and delivered to Purchaser, and Purchaser
shall have received and approved (as to form and substance) such
stock certificates, stock transfer powers, board of director and
shareholder resolutions (or certificates thereof), bills of sale,
assignments, affidavits, certificates, instruments and documents as
Purchaser's attorney may deem necessary or desirable in order (i)
to effectuate the authorization of the Shares and the issuance,
sale, conveyance and delivery to Purchaser of good and marketable
title to the Shares in accordance with the terms of this Agreement
and (ii) otherwise to consummate the transaction contemplated
herein.
F. The Corporation shall have caused its president and
chief executive officer to execute, in his individual capacity and
to the best of his knowledge (and not in a representative capacity)
and to deliver to Purchaser a certificate, in affidavit form, dated
as of the Closing Date, stating the following:
(i) That the representations and warranties of the
Corporation as set forth in this Agreement and in the certificates,
schedules and other document delivered pursuant hereto or in
connection with the transaction contemplated herein are true,
complete and accurate in all material respects and do not omit any
fact or statement necessary to prevent same from being misleading;
(ii) That except as may be specified, the individual
executing such certificate does not know or have any reasonable
grounds to know of a litigation, proceeding or governmental
investigation pending against or relating to the Corporation or its
properties or business.
(iii) That the Corporation has complete and
unrestricted power to authorize, issue, sell, convey and deliver to
Purchaser the Shares to be authorized, issued, sold, conveyed and
delivered by the Corporation pursuant to the terms of this
Agreement.
(iv) The individual executing such certificate does
not have any knowledge that the instruments executed and to be
delivered to the Purchaser hereunder are not valid in accordance
with their terms and do not effectively vest in the Purchaser good
and marketable title to the Shares as contemplated by this
Agreement.
6. Brokers. Seller represents and warrants to the Purchaser
to Seller that there are no brokers or finders entitled to a
commission or fee on account of this transaction. Each party does
hereby indemnify and hold the other harmless against and in respect
to any claim for brokerage or other commissions relative to this
Agreement or to the transactions contemplated hereby for any
actions occasioned by it.
7. Closing. Provided that this Agreement shall not
theretofore have been terminated pursuant to any provision hereof,
the transaction contemplated in the Agreement shall be consummated
at a closing (the "Closing") which shall take place at the offices
of Mateer & Harbert, P.A., Orlando, Florida, at 11:00 a.m. on the
18th day of June, 1996 (the "Closing Date"), or at such other date
and/or other place as the parties may mutually agree. At the
Closing, the Corporation shall issue and deliver to Purchaser a
duly executed certificate representing all of the Shares referred
to in Paragraph 1 above, the documents referred to in Subparagraphs
5C, 5D, 5E and 5F above, together with such other, further and
additional documents, instruments and agreements deemed necessary
by Purchaser in order to effectuate and/or evidence the
authorization (if necessary), issuance, sale, conveyance and
delivery of the Shares by the Corporation to Purchaser.
8. Cooperation. Prior to and after the Closing Date, the
Corporation shall cooperate with Purchaser and shall execute and
deliver such other, further and additional documents, instruments,
agreements and the like as may be requested by Purchaser in order
to fully effectuate the intent hereof.
9. Indemnification. Notwithstanding the Closing and
regardless of any investigation at any time made by or on behalf of
Purchaser or any information which Purchaser may have, The
Corporation does hereby agree that it will indemnify and save and
hold Purchaser and its successors and assigns harmless from and
against any and all claims, expenses, costs, damages, losses and
liabilities (including reasonable attorneys' fees) which may at any
time be asserted against or suffered by Purchaser, whether before
or after the Closing, as a result of, on account of, or arising
from any misrepresentation, breach of warranty, or non-fulfillment
of any agreement on the part of the Corporation under this
Agreement, or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished to
Purchaser in connection herewith including, but not limited to, all
actions, suits, proceedings, demands, assessments, judgments, costs
and expenses incident to any of the foregoing, including reasonable
attorney's fees at all stages of the proceedings.
10. Miscellaneous.
A. On or before the Closing Date, and except as
Purchaser may otherwise consent in writing, the Corporation shall
repay and discharge any and all debts, liabilities and obligations
owing by the Corporation, as applicable, to its sole existing
shareholder (i.e., R. Daniel Smith) and to any of its affiliates,
directors, officers and/or employees. In addition, the Corporation
shall present for payment, as applicable, to its sole existing
shareholder and to its affiliates, directors, officers and
employees (and the Corporation shall cause said shareholder,
affiliates, directors, officers and employees, as applicable, to
fully pay) all notes, debts, accounts and other liabilities payable
by them, or any of them, to the Corporation. It is the intent of
this paragraph that all intercompany debt (i.e. between the
Corporation, on the one hand, and the Corporation's sole existing
shareholder and the Corporation's affiliates, directors, officers
and/or employees, on the other hand) shall be fully settled, paid
and discharged on or prior to the Closing Date. It is further
understood and agreed that the obligations of the Corporation
pursuant to this paragraph shall survive the Closing.
B. All documentary stamp taxes and other transfer taxes
required to be paid in connection with the consummation of the
transactions contemplated herein shall be paid by Seller.
C. [Intentionally Deleted.]
D. In the event that Purchaser shall be obligated to
close this transaction but shall fail, refuse or neglect to do so
within the time herein specified and in the event that Purchaser
shall fail to cure such default within fifteen (15) days following
receipt of written notice thereof from Seller, and provided that
the Corporation is not then in default in the performance of any
its obligations hereunder, then, and in such event, the Corporation
shall be entitled to recover from Purchaser the sum of $50,000.00
as liquidated and agreed damages, and not as a penalty, and as
Seller's sole and exclusive remedy.
E. In the event that the Corporation shall be in
default of any of the provisions of this Agreement and in the event
that the Corporation shall fail to cure such default within fifteen
(15) days following receipt of notice thereof from Purchaser, then
and in that event, the Purchaser shall be entitled: (i) to seek
specific performance of this Agreement without prejudice to
Purchaser's right to recover damages and/or any other available
relief; (ii) to receive an immediate refund of all sums paid or
deposited by Purchaser in connection with this transaction without
prejudice to Purchaser's right to recover damages and/or any other
available relief; (iii) to recover monetary damages from the
Corporation (including reimbursements of any and all out-of-pocket
expenses paid or incurred by Purchaser in connection with the
negotiation and preparation of this Agreement); and/or (iv) to
pursue any and all other rights and remedies available to Purchaser
at law and/or in equity.
F. [Intentionally Deleted.]
G. [Intentionally Deleted.]
H. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior discussions,
understandings or agreements between the parties. No modification
amendment or termination of this Agreement nor any waiver of any of
the obligations or rights of any party hereto shall be enforceable
unless in writing and duly executed by the party to be bound
thereby.
I. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and
assigns.
J. It is the express intention and agreement of the
parties to this Agreement that all covenants, agreements,
statements, representations and warranties made by the Corporation
or any of its directors, officers, employees, agents and/or
attorneys in this Agreement or in any certificate, schedule or
other document delivered pursuant to this Agreement or in
connection with the transaction contemplated herein shall survive
the Closing.
K. Failure by Purchaser or Seller to insist upon or
enforce any of its rights hereto shall not constitute a waiver
thereof.
L. This Agreement shall be governed by and construed
under the laws of the State of Florida.
M. The Article headings as herein used are for
convenience of reference only and shall not be deemed to vary the
content of this Agreement or the covenants, agreements,
representations and warranties herein set forth or limit the
provisions or scope of any Article.
N. The Corporation agrees that it will, at any time,
prior to, at or after Closing, duly execute and deliver to
Purchaser any additional documents and instruments which Purchaser
may reasonably determine are necessary in connection with the
consummation of the purchase and sale contemplated herein.
O. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or entity may require.
P. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall
not be necessary that the signature of, or on behalf of, each
party, or that the signatures of the persons required to bind any
party, appear on one or more such counterpart. All counterparts
shall collectively constitute a single agreement.
Q. All notices, requests, consents and other
communications hereunder shall be in writing and shall be
personally delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid:
(i) If to Purchaser, c/o Mr. Mark F. Levy at 100
Century Boulevard, West Palm Beach, Florida 33417, with a copy to
David J. Wiener, Esq., Levy, Kneen, Mariani, Curtin, Wiener,
Kornfeld & del Russo, P.A., Suite 1000, 1400 Centrepark Boulevard,
West Palm Beach, Florida 33401, or to such other address as may
have been furnished by Purchaser to Seller in writing; and
(ii) If to Seller, c/o R. Daniel Smith at 450
Technology Park Drive, Lake Mary, Florida 32746, with a copy to
Thomas R. Harbert, Esq., Mateer & Harbert, P.A., 225 E. Robinson
St., Suite 600, Orlando, Florida 32801, or to such other address as
may have been furnished by Seller to Purchaser in writing.
Any such notice, request, consent or other
communications shall be deemed delivered and/or received at such
time as it is personally delivered or on the third business day
after it is so mailed, as the case may be.
R. This Agreement shall be deemed effective and where
applicable the phrase "Effective Date" shall mean the date upon
which this Agreement shall have been duly executed by the last of
the parties executing this Agreement.
S. The schedules and exhibits referred to and/or
attached to this Agreement are incorporated herein in full by
reference.
T. If two copies of this Agreement are not
countersigned by and delivered to Purchaser on or before the ___
day of June, 1996 at 5:00 P.M., then, at Purchaser's option, this
Agreement shall be null and void and have no force or effect.
U. Purchaser shall have the right to assign its rights
and interests under this Agreement, provided, however, that any
such assignment shall be in writing and notice thereof shall be
given to Seller, whereupon Purchaser shall be relieved of all
liability under this Agreement, and the assignee(s), only, shall be
fully responsible therefor.
V. In the event that there is any litigation arising
out of this Agreement, the prevailing party shall be entitled to
recover all costs incurred therein, including reasonable attorneys'
fees (at all levels of legal proceedings).
W. Purchaser and Seller acknowledge that they have
read, understand and have had the opportunity to be advised by
legal counsel as to each and every one of the terms, conditions and
restrictions and the effect of all of the provisions of this
Agreement and each of the Purchaser and Seller agrees to the
enforcement of any and all of these provisions and executes this
Agreement with full knowledge of same. Should any provision of
this Agreement require judicial interpretation, it is agreed that
the Court interpreting or construing the provision shall not apply
any rule of construction which might otherwise require this
document to be construed more strictly against the party who itself
or through its agent prepared this document. Typewritten or
handwritten provisions inserted in this Agreement which are
initialed by the parties shall control over all printed provisions
of this Agreement in conflict therewith.
X. Purchaser represents to Seller that it has assets in
excess of $500,000.00.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
Signed, sealed and delivered The Corporation:
in the presence of:
nStor Corporation, Inc., a
Delaware corporation
/s/ Thomas R. Harbert By: /s/ R. Daniel Smith
Print Name:Thomas R. Harbert R. Daniel Smith, President
/s/ Beth McArthur
Print Name:Beth McArthur [CORPORATE SEAL]
Purchaser:
IMGE, Inc., a Delaware corporation
/s/ Thomas R. Harbert By: /s/ Mark F. Levy
Print Name: Thomas R. Harbert Mark F. Levy, V Pres.
/s/ Beth McArthur
Print Name: Beth McArthur [CORPORATE SEAL]
Exhibit 10.2
ASSET PURCHASE AGREEMENT
BETWEEN
SEAGATE PERIPHERALS, INC.
AND
INTELLIGENT MANUFACTURING SYSTEMS, INC.
TABLE OF CONTENTS
Page
1. PURCHASE AND CONSIDERATION. . . . . . . . . . . . . . . . .1
1.1 Purchase of Selected Assets. . . . . . . . . . . . . .1
1.2 Assignment of Contracts. . . . . . . . . . . . . . . .2
1.3 Excluded Assets and Liability. . . . . . . . . . . . .2
1.4 Assumption of Liabilities. . . . . . . . . . . . . . .3
1.5 Purchase Price . . . . . . . . . . . . . . . . . . . .4
1.6 Terms of Payment . . . . . . . . . . . . . . . . . . .4
1.7 Instruments of Transfer. . . . . . . . . . . . . . . .4
1.8 Purchase Price Allocation. . . . . . . . . . . . . . .4
1.9 Transfer Taxes . . . . . . . . . . . . . . . . . . . .4
1.10 Proration of Certain Items . . . . . . . . . . . . . .5
2. TECHNOLOGY LICENSE. . . . . . . . . . . . . . . . . . . . .5
2.1 Grant of License . . . . . . . . . . . . . . . . . . .5
2.2 Payment of Royalties . . . . . . . . . . . . . . . . .5
2.3 Assignment of License. . . . . . . . . . . . . . . . .5
2.4 Survival . . . . . . . . . . . . . . . . . . . . . . .5
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.1 The Closing. . . . . . . . . . . . . . . . . . . . . .5
3.2 Actions at the Closing . . . . . . . . . . . . . . . .5
4. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . .6
4.1 Organization; Authority. . . . . . . . . . . . . . . .6
4.2 Authority. . . . . . . . . . . . . . . . . . . . . . .6
4.3 Effect of Agreement. . . . . . . . . . . . . . . . . .6
4.4 Title to Selected Assets . . . . . . . . . . . . . . .7
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . .7
4.6 Intellectual Property. . . . . . . . . . . . . . . . .7
4.7 Employees. . . . . . . . . . . . . . . . . . . . . . .7
4.8 Brokers or Finders . . . . . . . . . . . . . . . . . .7
4.9 Financial Information. . . . . . . . . . . . . . . . .8
4.10 Operation in the Ordinary Course . . . . . . . . . . .8
4.11 Compliance with Law. . . . . . . . . . . . . . . . . .8
4.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . .8
4.13 Licenses and Permits . . . . . . . . . . . . . . . . .8
4.14 Execution of Lease . . . . . . . . . . . . . . . . . .8
4.15 Performance of Contracts . . . . . . . . . . . . . . .8
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . .9
5.1 Organization . . . . . . . . . . . . . . . . . . . . .9
5.2 Authority. . . . . . . . . . . . . . . . . . . . . . .9
5.3 Brokers or Finders . . . . . . . . . . . . . . . . . .9
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . .9
6. COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . .9
6.1 Operation of Business Prior to Closing Date. . . . . .9
6.2 Access and Assistance. . . . . . . . . . . . . . . . 10
6.3 Use of MRP and Voicemail Systems . . . . . . . . . . 10
6.4 Future Disc Drive Purchases. . . . . . . . . . . . . 10
6.5 No Actions to Make Representations Untrue. . . . . . 10
6.6 Legal Requirements . . . . . . . . . . . . . . . . . 10
6.7 Consummation of Transaction. . . . . . . . . . . . . 11
6.8 Employment by Purchaser of Business Employees. . . . 11
6.9 Due Diligence/Confidentiality. . . . . . . . . . . . 11
6.10 Notice of Certain Events . . . . . . . . . . . . . . 12
6.11 Waiver of Bulk Sales Notice Compliance . . . . . . . 12
6.12 Subsequent Actions . . . . . . . . . . . . . . . . . 12
6.13 Tax Returns; Taxes . . . . . . . . . . . . . . . . . 12
6.14 Updating of Disclosure Letter. . . . . . . . . . . . 12
6.15 Covenant Not to Compete. . . . . . . . . . . . . . . 12
7. COVENANTS OF PURCHASER. . . . . . . . . . . . . . . . . . 13
7.1 No Actions to Make Representations and Warranties Untrue13
7.2 Compliance with Legal Requirements . . . . . . . . . 13
8. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . 13
8.1 Public Disclosure. . . . . . . . . . . . . . . . . . 13
8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . 14
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER . . . . 14
9.1 Representations, Warranties and Covenants. . . . . . 14
9.2 Certificate. . . . . . . . . . . . . . . . . . . . . 14
9.3 Governmental Approvals . . . . . . . . . . . . . . . 14
9.4 Closing Documents. . . . . . . . . . . . . . . . . . 14
9.5 No Litigation. . . . . . . . . . . . . . . . . . . . 15
9.6 Execution of Lease . . . . . . . . . . . . . . . . . 15
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. . . 15
10.1 Representations, Warranties and Covenants. . . . . . 15
10.2 Certificate. . . . . . . . . . . . . . . . . . . . . 15
10.3 Governmental Approvals . . . . . . . . . . . . . . . 15
10.4 Closing Documents. . . . . . . . . . . . . . . . . . 15
10.5 No Litigation. . . . . . . . . . . . . . . . . . . . 15
10.6 Certificates . . . . . . . . . . . . . . . . . . . . 16
10.7 Execution of Lease . . . . . . . . . . . . . . . . . 16
10.8 Agreement Termination. . . . . . . . . . . . . . . . 16
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 16
11.1 Indemnification. . . . . . . . . . . . . . . . . . . 16
11.2 Notice of Claim. . . . . . . . . . . . . . . . . . . 16
11.3 Response to Notice of Claim. . . . . . . . . . . . . 16
11.4 Survival . . . . . . . . . . . . . . . . . . . . . . 16
12. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . 17
12.1 Survival of Representations, Warranties and Covenants17
12.2 Assignment, Successors and Assigns . . . . . . . . . 17
12.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 17
12.4 Alterations and Waivers. . . . . . . . . . . . . . . 18
12.5 Governing Law. . . . . . . . . . . . . . . . . . . . 18
12.6 Severability . . . . . . . . . . . . . . . . . . . . 18
12.7 No Third-Party Beneficiaries . . . . . . . . . . . . 18
12.8 Integration and Entire Agreement . . . . . . . . . . 18
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . 18
12.10 Headings. . . . . . . . . . . . . . . . . . . . 18
12.11 Specific Performance. . . . . . . . . . . . . . 18
12.12 Arbitration . . . . . . . . . . . . . . . . . . 18
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is dated as of
May 23, 1996, between SEAGATE PERIPHERALS, INC., a Delaware
corporation ("Seller"), INTELLIGENT MANUFACTURING SYSTEMS, INC., a
Florida corporation ("Purchaser").
RECITALS:
A. Seller operates the Conner Storage Systems Division
("CSS") which is engaged in the business of the design, manufacture
and sale of storage systems (the "Business").
B. Purchaser desires to purchase from Seller and Seller
desires to sell to Purchaser, on the terms and subject to the
conditions of this Agreement, selected assets, liabilities and
goodwill of CSS.
NOW, THEREFORE, in consideration of the representations,
warranties and agreements herein contained, and other good and
valuable consideration, the receipt, adequacy and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. PURCHASE AND CONSIDERATION
1.1 Purchase of Selected Assets. Subject to the terms and
conditions of this Agreement and except as provided in Section 1.3
hereof, Seller agrees to transfer, convey, assign and deliver to
Purchaser on the Closing Date (as defined in Section 2.1 below),
and Purchaser agrees to buy from Seller, free and clear of all
encumbrances, except the interests of Purchaser arising hereunder,
the following selected assets and properties, owned or leased by
Seller and pertaining to the Business (the "Selected Assets"):
1.1.1 all of the fixed assets, equipment, furniture and
fixtures of the Business, including without limitation, the
telephone system, computers, test equipment, office furniture,
copiers and related equipment set forth on Schedule 1.1.1. hereto;
1.1.2 all new CFP1080, CFP2105, CFP2107, CFP4207 disc
drives as set forth on Schedule 1.1.2 and subject to Section 1.6;
1.1.3 the inventory of new cabinets, controllers,
supplies, work in process, parts inventory and finished goods as
set forth on Schedule 1.1.3;
1.1.4 the inventory of repair and customer evaluation
products and parts, including hard disc drives as set forth on
Schedule 1.1.4;
1.1.5 all trade secrets, trade names and trademarks and
other intellectual property, and all manuals as set forth on
Schedule 1.1.5;
1.1.6 subject to the provisions of Section 1.1.7 below,
all books and records of the Business, including all sales and
advertising materials, marketing literature, customer lists and
purchasing records; and
1.1.7 the right to use the name "Conner Storage Systems"
for a period of one year from the date of this Agreement solely in
conjunction with Selected Assets acquired from Seller. Purchaser
shall not use the name "Conner" as all or part of the name of any
separate business established by Purchaser.
1.2 Assignment of Contracts. Seller will assign to Purchaser
and Purchaser will assume and perform Seller's obligations under
the following agreements ("Assumed Contracts"):
1.2.1 real property lease (the "Lease") for the facility
(the "Facility") located at 450 Technology Park Drive, Lake Mary,
Florida 32746, set forth on Schedule 1.2.1 hereto. In the event
that Seller cannot obtain any necessary third party consent to the
assignment of Seller's obligations under the Lease, Seller shall
use its best efforts to sublease, and Purchaser will sublease, such
real property on the same terms as those set forth in the original
real property lease;
1.2.2 all open purchase orders and contracts for disc
drives issued on or before the Closing Date in connection with the
Business set forth on Schedule 1.2.2 hereto;
1.2.3 all non-disc drive open purchase orders and
contracts issued on or before the Closing Date in connection with
the Business set forth on Schedule 1.2.3 hereto, each such
assignment subject to Seller's good faith efforts to obtain such
assignment;
1.2.4 all warranty, return and service obligations of CSS
customers and vendors as set forth on Schedule 1.2.4 hereto;
1.2.5 SCSI Accessed Fault Tolerant Enclosures
Specification License (the "SCSI License") between Intel
Corporation and Conner Peripheral Corporation. Seller will use its
good faith efforts to obtain the consent of Intel Corporation to
the assignment of Seller's rights in the SCSI License to Purchaser;
and
1.2.6 all open customer orders received in connection with
the Business set forth on Schedule 1.2.6 hereto on or before the
Closing Date.
1.3 Excluded Assets and Liability. Seller shall retain and
Purchaser shall not acquire or assume the following ("Excluded
Assets" and "Excluded Liabilities"):
1.3.1 corporate minute books, financial books and records,
and tax returns of Seller other than those relating to the
Business;
1.3.2 all accounts receivable, any cash, bank accounts,
deposits with utilities or suppliers and joint MIS facilities
currently shared with other facilities of Seller will remain the
property of Seller; provided that Purchaser shall be entitled to
receive any accounts receivable for Selected Assets which are
subject to open customer orders as of the Closing Date.
1.3.3 subject only to Section 1.4.3 hereof, all accounts
payable for items delivered to CSS before the Closing Date will
remain the property or obligation of Seller;
1.3.4 all losses, costs, expenses, claims, liabilities,
deficiencies, judgments and damages ("Losses") arising out of,
resulting from, or incident to, acts or events occurring before the
Closing Date related to the Selected Assets;
1.3.5 all Losses arising out of, resulting from, or
incident to, acts or events occurring before the Closing Date
related to the Assumed Contracts assigned to Purchaser;
1.3.6 any salaries, wages, commissions, bonuses, benefits
and other amounts payable to Seller's employees of the Business
through the Closing Date; and
1.3.7 all Losses and liabilities not expressly assumed
pursuant to Section 1.4 below.
1.4 Assumption of Liabilities. On the Closing Date,
Purchaser will assume the following, and only the following
liabilities of Seller:
1.4.1 all Losses arising out of, resulting from, or
incident to, acts or events occurring after the Closing Date
related to the Selected Assets;
1.4.2 all Losses arising out of, resulting from, or
incident to, acts or events occurring after the Closing Date
related to the Assumed Contracts assigned to Purchaser;
1.4.3 all accounts payable incurred by Seller relating to
goods ordered in the conduct of the Business with Purchaser's
written consent after the date of execution of this Agreement but
not received prior to the Closing Date;
1.4.4 all liabilities, responsibilities and obligations in
respect to litigation brought or claims made under any legal theory
whatsoever against Seller and/or Purchaser by or on behalf of third
parties, including without limitation any government, which result
from occurrences arising after the Closing with respect to the
conduct of the Business or ownership of the Selected Assets by
Purchaser; and
1.4.5 any liability to Seller's employees in its CSS
division hired by Purchaser whether direct or indirect, accrued or
absolute, or contingent or otherwise, relating to any event,
occurrence or set of facts arising after the Closing Date.
1.5 Purchase Price. The purchase price for the Selected
Assets and Assumed Contracts shall be $2,640,360.00 plus the
royalty payments due under the Technology License (as defined
below) (the "Purchase Price"). The parties shall increase or
decrease the portion of the Purchase Price due under Section 1.6.5
to reflect changes in the quantity of Selected Assets based on CSS
inventory fluctuations after the date of execution of this
Agreement and before the Closing Date. The amount of such increase
or decrease shall be determined in accordance with the value of the
Selected Assets added to or subtracted from the CSS inventory, as
set forth on the appropriate Schedule to this Agreement.
1.6 Terms of Payment. Purchaser shall pay to Seller the
Purchase Price in immediately available funds according to the
following schedule:
1.6.1 $250,000 upon Seller's and Purchaser's execution of
this Agreement;
1.6.2 $250,000 at the Closing;
1.6.3 $200,000 at the Closing as partial payment for an
initial delivery by Seller to Purchaser of a portion of the disc
drives set forth on Schedule 1.1.2 valued by Seller at $300,000;
1.6.4 $100,000 on or before September 30, 1996; and
1.6.5 $1,840,360, payable in installments on or before
September 30, 1996 and subject to Section 1.5. Upon receipt of
each such installment, Seller will release to Purchaser an
equivalent number of disc drives from those set forth in Schedules
1.1.2 and 1.2.2 not previously acquired by Purchaser. Title to
each disc drive will transfer from Seller to Purchaser on the date
of Seller's receipt of payment therefor from Purchaser, provided,
however, that Seller reserves the right to offset against disc
drive payments amounts due under Section 6.8.3 of this Agreement.
1.7 Instruments of Transfer. The sale, assignment, transfer,
conveyance and delivery of the Selected Assets shall be made by
such bills of sale and other instruments of assignment, transfer
and conveyance prepared by Seller and in form and substance
reasonably required by Purchaser.
1.8 Purchase Price Allocation. Each of the parties agrees to
report this transaction for state, federal and other tax purposes
in accordance with the allocation of the Purchase Price reflected
in Section 1.6, and not to file any tax return or report or
otherwise take a position with federal, state or other tax
authorities which is inconsistent with such allocation.
1.9 Transfer Taxes. All sales, use, value-added, gross
receipts, excise, registration, stamp duty, transfer or other
similar taxes or governmental fees ("Transfer Taxes") imposed or
levied by reason of, in connection with or attributable to this
Agreement and the transactions contemplated hereby shall be borne
equally by Seller and Purchaser. The parties shall cooperate with
each other to the extent reasonably requested and legally permitted
to minimize any Transfer Taxes.
1.10 Proration of Certain Items. There shall be apportioned
between Seller and Purchase as of 12:01 a.m. the day following the
Closing Date all real and personal property taxes, gross receipts
taxes, sales and use taxes (except for Transfer Taxes), inventory
and ad valorem taxes, rent, utility charges, equipment lease
payments and all other charges customarily apportioned in
connection with a transfer of real property. The parties shall
estimate such prorations at the Closing based upon the most recent
assessments and the appropriate party shall make payment therefor
at the Closing, with any adjustments based on actual assessments
rendered thereafter to be paid by the appropriate party promptly
after receipt of written notice thereof.
2. TECHNOLOGY LICENSE.
2.1 Grant of License. Seller hereby grants Purchaser an
exclusive license (the "Technology License") to use Seller's
technical data, know-how, technical drawings, designs, software
code, specifications, written procedures and other intellectual
property (the "Technology") related to the Business as it exists on
the Closing Date, which license shall be deemed assigned to
Purchaser effective upon the date Seller receives full payment from
Purchaser of all "Royalties" (as defined below).
2.2 Payment of Royalties. Within 30 days after the end of
each calendar quarter during the period of October 1, 1996 through
December 31, 1997, Purchaser shall pay Seller royalties (the
"Royalties") equal to 5% of Purchaser's gross revenues for such
quarter derived directly or indirectly from sales of all storage
subsystems and software (excluding disc drives) which use,
incorporate, are based on or were produced in connection with the
use of the Technology, and from all payments or consideration
booked as revenues in respect of the licensing or like disposition
of the Technology.
2.3 Assignment of License. Under no circumstance may
Purchaser enter into a sublicense of its rights and obligations
under the Technology License before January 30, 1998 without
Seller's prior written consent, unless Purchaser has paid Seller at
least $800,000 in Royalties.
2.4 Survival. This Section 2 shall survive the Closing.
3. CLOSING.
3.1 The Closing. The transactions contemplated by this
Agreement shall be consummated (the "Closing") at the offices of
Mateer & Harbert, P.A., 225 E. Robinson St., Suite 600, Orlando,
Florida 32801, on May 31, 1996, or at such other time or place as
the parties shall mutually agree (the "Closing Date").
3.2 Actions at the Closing. At the Closing:
3.2.1 Purchaser will deliver a cashier's check or proof of
wire transfer payable to the Seller pursuant to Sections 1.5 and
1.6 hereof; and
3.2.2 Seller will execute and deliver to the Purchaser a
bill of sale and assignment of assets and all other affidavits,
bills of sale, endorsements, assignments and other instruments as
necessary or appropriate in Purchaser's reasonable discretion to
sell, convey, assign, transfer and deliver to Purchaser good title,
free and clear of all liens or encumbrances, to all the Selected
Assets and to evidence the due execution, delivery and performance
of the Agreement and satisfaction of the conditions and obligations
of the Seller hereunder.
Simultaneously with the Closing, Seller, through its officers,
agents and employees, shall put Purchaser into full possession and
enjoyment of the Selected Assets and Assumed Contracts to be
conveyed and transferred by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Except as set forth in Exhibit A (the "Disclosure Letter"),
Seller represents and warrants to Purchaser as follows:
4.1 Organization; Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. Seller has all requisite corporate power
and authority to, and is entitled to, carry on the Business as now
conducted and to own or lease the Selected Assets and properties
represented by the Assumed Contracts. Seller is qualified to do
business in all foreign jurisdictions in which it is required to be
so qualified, except where the failure so to be qualified would not
have a material adverse effect on the Business, Selected Assets or
Assumed Contracts.
4.2 Authority. Seller has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action of Seller. This Agreement has been duly
executed and delivered by and constitutes the valid and binding
obligation, enforceable in accordance with its terms, of Seller.
Seller will deliver to Purchaser at closing such corporate
resolutions and other documents reasonably required by Purchaser to
evidence Seller's authority to consummate this transaction.
4.3 Effect of Agreement. The execution and delivery of this
Agreement by Seller do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not, conflict with, result in a breach of, constitute
a default under or violation of, or result in the creation of any
lien, charge or encumbrance against the Selected Assets or Assumed
Contracts pursuant to any provision of the Articles of
Incorporation or Bylaws of Seller, and any law or regulation of any
governmental authority or any provision of any agreement, judgment
or decree affecting Seller, the Selected Assets or Assumed
Contracts, nor will it give to any other person or entity any
interests or rights of any kind, including rights of termination,
acceleration, or cancellation, in or with respect to any of the
Selected Assets or Assumed Contracts.
Except as specifically disclosed by Seller to Purchaser in
writing with respect to the Assumed Contracts or as other wise set
forth in this Agreement, no consent of any person not a party to
this Agreement and no consent of any governmental authority is
required to be obtained on the part of the Seller to permit the
consummation of the transactions contemplated by this Agreement,
including the transfer to Purchaser of all right, title and
interest in and to the Selected Assets, free and clear of any
liens.
4.4 Title to Selected Assets. Seller has good and marketable
title to all of the Selected Assets, all of the Selected Assets are
free and clear of restrictions on or conditions to transfer or
assignment, and at the Closing, Seller will sell, convey, assign,
transfer and deliver to Purchaser good title to all of the Selected
Assets free and clear of any mortgages, liens, pledges,
encumbrances, claims, conditions and restrictions. Seller will
warrant and defend the title to the Selected Assets against the
lawful claims of all persons whomsoever. All of the Selected
Assets are located at the Facility.
4.5 Litigation. There is no action, suit, or investigation
in progress or pending before any court or governmental agency
against Seller in connection with the Selected Assets or Assumed
Contracts, nor to Seller's knowledge after due inquiry, is there
any basis for any such claim, suit or other proceeding. There is
no suit, action, investigation or other proceeding commenced,
pending or, to Seller's knowledge, threatened against or affecting
Seller in any court or before any tribunal or governmental body, in
which it is sought to restrain or prohibit the ability of Seller to
perform the material obligations required of it under this
Agreement or the consummation of the transactions contemplated
herein.
4.6 Intellectual Property. Seller has taken all necessary
steps to protect its proprietary, confidential and trade secret
rights regarding the intellectual property set forth on Schedule
1.1.5 hereto and, none of such rights has heretofore been assigned,
transferred, licensed or otherwise made available to any third
party. To Seller's knowledge, no proceedings have been instituted
or, to the knowledge of Seller after due inquiry, threatened, nor
has any claim been made, against Seller alleging any such
infringement or violation of such intellectual property. For the
intellectual property listed on Schedule 1.1.5 which Seller uses,
but does not own, Seller is licensed to use and transfer such
intellectual property and is not in breach of, or default under,
such license agreements and no breach or default will occur as a
result of the transactions contemplated herein.
4.7 Employees. Schedule 4.7 contains a list of the names,
titles, job description, aggregate annual compensation and
severance benefits of certain persons employed by Seller in the
Business ("Business Employees"). Seller has no written employment
contract with any of the Business Employees except as set forth on
Schedule 4.7.
4.8 Brokers or Finders. Seller is not obligated, directly or
indirectly, to any person for brokerage or finders' fees, agents'
commissions or any similar charges in connection with this
Agreement.
4.9 Financial Information. Seller has previously furnished
to Purchaser true and correct copies of the unaudited financial
statements of the Business covering the period from January 1,
1995, through March 31, 1996 (the "Financial Information"). To the
best of Seller's knowledge, the Financial Information is accurately
derived from the financial books and records of Seller and fairly
presents the results of operations and the financial condition
purported to be reflected therein in conformity with Seller's
internal financial reporting standards consistently applied.
Seller makes no representations or warranties with respect to
financial forecasts contained in or implied by the Financial
Information.
4.10 Operation in the Ordinary Course. Since July 1, 1995,
the Business has been operated, and, as of the Closing Date will
have been operated, in the ordinary course, except to the extent
that Purchaser has otherwise agreed (or may prior to the Closing
Date otherwise agree) in writing or as is expressly contemplated by
this Agreement.
4.11 Compliance with Law. Seller's conduct of the Business
does not violate any law, statute, ordinance, rule, regulation,
code, license, permit, guideline, order, arbitration award,
judgment or decree, including, without limitation, civil rights
legislation, equal employment opportunity legislation, occupational
safety and health legislation, legislation pertaining to illegal
bribes or kickbacks, and Purchaser will not after the Closing incur
any liability or obligation as a result of any such violation or
default existing at the Closing or arising or accruing thereafter
but based upon conditions existing at the Closing.
4.12 Taxes. There is no tax audit or examination now pending
or, to the Seller's knowledge, threatened with respect to Seller
which to Seller's knowledge would have a material adverse impact on
Seller's ability to perform its obligations under this Agreement.
4.13 Licenses and Permits. Seller holds all licenses and
permits required by federal, state or local governmental agencies
and essential for the operation of the Business.
4.14 Execution of Lease. Seller and the landlord of the
Facility shall have consented to the lease or sublease of the
Facility to purchaser on the same terms provided to Seller
immediately before the Closing Date.
4.15 Performance of Contracts. Seller is not in default
under, nor has it breached any provision of, any contract,
agreement, lease, permit, license, instrument, indenture, or other
obligation of the Seller pertaining to the Selected Assets or
Assumed Contracts, and there are no oral modifications or past
practices inconsistent with the written terms of any of the
foregoing. All of such contracts, agreements, leases, permits,
licenses, instruments, indentures and other obligations are
presently in full force and effect. To the knowledge of Seller,
the other parties to such contracts, agreements, leases, permits,
licenses, instruments, indentures or other obligations have
complied with their obligations thereunder and are not in breach
thereof. Seller has fully performed each such term, condition and
covenant of each such contract, agreement, lease, permit, license,
instrument, indenture or other obligation required to be performed
on or prior to the date hereof. Seller knows of no state of facts
which, with the giving of notice or the passing of time; or both,
would give rise to any default.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as follows:
5.1 Organization. Purchaser is a corporation duly organized
and validly existing under the laws of the State of Florida.
Purchaser has all requisite corporate power and authority to, and
is entitled to, carry on its business as now conducted and to own
or lease its properties as and in the places where such business is
now conducted and such properties are now owned, leased or
operated. Purchaser is qualified to do business in all foreign
jurisdictions in which it is required to be so qualified, except
where the failure so to be qualified would not have a material
adverse effect on the business or assets of Purchaser.
5.2 Authority. Purchaser has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby have been duly authorized by
all requisite corporate action of Purchaser. This Agreement has
been duly executed and delivered by and constitutes the valid and
binding obligation, enforceable in accordance with its terms, of
Purchaser.
5.3 Brokers or Finders. Purchaser is not obligated directly
or indirectly, to any person for brokerage or finders' fee, agents'
commissions or similar charges in connection with this Agreement.
5.4 Litigation. To Purchaser's knowledge, there is no suit,
action, investigation or other proceedings commenced, pending or
threatened against or affecting Purchaser in any court or before
any tribunal or governmental body, in which it is sought to
restrain, prohibit or adversely affect the ability of Purchaser to
perform the obligations required of it under this Agreement or the
consummation of the transactions contemplated herein.
6. COVENANTS OF SELLER.
The Seller covenants and agrees as follows:
6.1 Operation of Business Prior to Closing Date. During the
period from the date of this Agreement up to the Closing Date,
Seller shall use its best efforts to (i) use the Selected Assets in
the usual, regular and ordinary course and in substantially the
same manner as heretofore used, (ii) preserve existing business
relationships with Business Employees and others directly involved
with the Business, (iii) conduct the Business in compliance with
all applicable laws and regulations, (iv) maintain insurance
against loss or damage to the Selected Assets and such other
insurance with respect to the Selected Assets as has heretofore
been maintained, (v) not sell, dispose of or encumber or enter into
any agreement for the sale, disposition or encumbrance of, all or
any part of the Selected Assets, except in the ordinary course of
business, (vi) not enter into any employment contract with a
Business Employee or increase the annual compensation of a Business
Employee, (vii) perform in all material respects all of its
obligations under the Assumed Contracts, and (viii) not voluntarily
take action which would make the representations and warranties
contained in Section 3 untrue. Seller will not enter into any
contract or commitment with respect to the Selected Assets or the
Assumed Contracts, other than in the ordinary course of business,
without Purchaser's prior written consent.
6.2 Access and Assistance. From the date of execution of
this Agreement and up to the Closing Date, Seller will continue to
make available to and allow Purchaser and its authorized agents
access to Seller's business records and shall cause Seller's
employees and agents to reasonably cooperate with Purchaser in an
examination of the Selected Assets and Assumed Contracts and to
disclose to and discuss with Purchaser the financial condition and
business operations of the Business.
6.3 Use of MRP and Voicemail Systems. Seller shall provide
Purchaser with reasonable use of the MRP and voice mail systems
currently on Seller's computers in the San Jose, California and
Lake Mary, Florida facilities shared by Seller and CSS without
additional charge from the Closing Date and up to the earlier of
ninety (90) days after the Closing Date or when Seller ceases to
utilize such systems.
6.4 Future Disc Drive Purchases.
6.4.1 On or after the Closing Date, Purchaser may
acquire the disc drive models listed on Schedule 1.2.2 from Seller
at prices less than or equal to those listed on Schedule 1.2.2.
Seller will process Purchaser's disc drive orders in accordance
with Seller's then existing standard procedure. Seller will
deliver such disc drives to Purchaser in accordance with
Purchaser's instructions to the extent reasonably feasible.
Purchaser acknowledges that Seller cannot guarantee the future
availability of its disc drives nor that Seller will produce such
disc drives for any specific period of time. All disc drives will
be subject to prior sale. Seller may terminate the production of
any disc drives at any time at its sole discretion.
6.4.2 Within thirty (30) days after the Closing Date,
Seller and Purchaser will enter into an Original Equipment
Manufacturer Agreement ("OEM Agreement") concerning Purchaser's
acquisition of new disc drive models not currently produced by
Seller in CSS products. These replacement disc drives, their
prices, terms and conditions, as well as such other terms,
including product information, credit, payment, prices and original
equipment manufacturer certification will be set forth in the OEM
Agreement.
6.5 No Actions to Make Representations Untrue. Seller shall
not take any action that would result in any of the representations
and warranties of Seller set forth in this Agreement becoming
materially untrue or in any of the conditions of the Closing set
forth in Section 9 not being satisfied.
6.6 Legal Requirements. Seller will comply promptly with all
legal requirements which may be imposed on Seller with respect to
the consummation of the transactions contemplated by this Agreement
and will promptly cooperate with and furnish information to the
Purchaser in connection with any such requirements imposed upon the
Purchaser in connection with the consummation of the transactions
contemplated by this Agreement. Seller obtain (and will cooperate
with the Purchaser in obtaining) any consent, approval, order or
authorization of, or any registration, declaration or filing with,
any governmental entity or other person, required to be obtained or
made by Seller (or by the Purchaser) in connection with the taking
of any action contemplated by this Agreement, except where Seller
is exempted from taking such action by the terms of this Agreement.
6.7 Consummation of Transaction. Seller will execute and
deliver, or cause to be executed and delivered, such affidavits and
bills of sale, endorsements, assignments, consents and other
instruments reasonably necessary to put Purchaser in possession of
the Selected Assets and Assumed Contracts acquired hereunder.
6.8 Employment by Purchaser of Business Employees.
6.8.1 Negotiation with Business Employees. On or
after the date of execution of this Agreement, Purchaser may
negotiate with Business Employees for their employment with
Purchaser to be effective on the Closing Date. Seller shall assist
Purchaser in hiring and retaining the services of current Business
Employees whom Purchaser desires to employ. All Business Employees
will remain on Seller's payroll, through and including the Closing
Date, unless they voluntarily terminate their employment.
6.8.2 No Obligation to Hire Business Employees.
Seller understands and agrees that (a) Purchaser is under no
obligation to offer employment with Purchaser to any employees of
Seller, (b) it is within the sole discretion of Purchaser to
determine to whom offers of employment with Purchaser will be
extended and from whom such offers will be withheld, (c) it is
within the sole discretion of Purchaser to determine the terms of
employment to be offered to such employees, and (d) those employees
of Seller who are given offers of employment with Purchaser will
become new employees of Purchaser to be effective on the Closing
Date for all purposes, including but not limited to that of
determining their eligibility for Purchaser's employment benefits.
6.8.3 Severance Costs for Remaining Business
Employees. Seller will discharge its obligation, if any, to pay
accrued salary, accrued vacation, employee benefits, insurance
premiums and other contractual severance benefits ("Severance
Costs") with respect to all Business Employees not hired by
Purchaser on or before the Closing Date; provided that Purchaser
will reimburse Seller for that portion of the aggregate Severance
Costs which exceeds $100,000. Notwithstanding the foregoing,
Seller will pay all Severance Costs associated with Seller's
termination of the employment of Joel Appelbaum and Bernie Wu
without reimbursement from Purchaser.
6.9 Due Diligence/Confidentiality. From the date of
execution of this Agreement and up to the Closing Date, Purchaser,
its attorneys, accountants and representatives will have access to
all information relevant to the business, operations, accounts,
records, contracts, inventory, fixed assets and customers of the
Business; including without limitation, copies of Price
Waterhouse's compliance testing work papers relating to Seller's
review of the Business. Purchaser acknowledges that its
satisfactory completion of due diligence is not a pre-condition to
the Closing.
6.10 Notice of Certain Events. Seller shall promptly notify
Purchaser of any material adverse change to the Selected Assets or
Assumed Contracts which occurs subsequent to the date of execution
of this Agreement and prior to the Closing Date.
6.11 Waiver of Bulk Sales Notice Compliance. Purchaser waives
compliance with the notice and other provisions of any laws
relating to bulk sales and bulk transfer of assets which may be
applicable to the transactions contemplated by this Agreement.
Seller agrees to pay all valid accounts payable relating to the
Business for the time period preceding the Closing.
6.12 Subsequent Actions. After the Closing Date, and from
time to time, Seller shall, promptly upon request by Purchaser,
execute and deliver such other instruments of sale transfer,
conveyance and/or assignment and take such action as Purchaser may
reasonably request in order more effectively to transfer, convey
and assign to Purchaser, or to confirm Purchaser's title to, the
Selected Assets and Assumed Contracts to Purchaser and to put
Purchaser in possession and control thereof and to assist Purchaser
in exercising all rights with respect thereto. All such documents
shall be in form reasonably satisfactory to Seller's legal counsel.
6.13 Tax Returns; Taxes. Seller agrees to continue to timely
file all federal, state and local tax returns relating to any
taxes required to be filed by it in connection with its ownership
of the Selected Assets and Assumed Contracts before the Closing
Date and, subject to Section 1.9, to pay all taxes due pursuant to
such returns and reports.
6.14 Updating of Disclosure Letter. Seller shall deliver to
Purchaser at least one full day prior to the Closing Date a
Supplemental Disclosure Letter which shall reflect any changes or
additions required to update the disclosure set forth in the
Disclosure Letter to make it true and correct as of the Closing
Date.
6.15 Covenant Not to Compete. For a period of three years
from the Closing Date, and provided Purchaser is not in breach of
the Technology License, Seller, its affiliates, and each of them,
shall not, individually or collectively, anywhere in the world,
6.15.1 directly or indirectly compete with Purchaser
in a business utilizing the technology covered by the Technology
License;
6.15.2 solicit for employment, or advise or recommend
to any other person that such person employ, or solicit for
employment, any Business Employee hired by Purchaser on or before
the Closing Date without Purchaser's written consent, which may be
granted or withheld in Purchaser's sole discretion;
6.15.3 Seller acknowledges that the duration and
geographic scope of this covenant not to compete is reasonable and
that this covenant not to compete is a material inducement to
Purchaser entering into this Agreement. If for any reason any
court of competent jurisdiction shall find the provisions of this
Section 6.13 unreasonable in duration or in geographic scope, the
prohibitions herein shall be restricted to such time and geographic
areas as such court determines to be reasonable; and
6.15.4 Seller and its affiliates, jointly and
severally, recognize that any breach of this Section 6.15 by any of
them is likely to result in irreparable injury to Purchaser and
agree that Purchaser shall be entitled, if it so elects, to
institute and prosecute proceedings, either in law or in equity, to
obtain damages for any breach of this Agreement by any of them, or
to enjoin any of them from activities in violation of this
Agreement. The rights and remedies provided in this Section in
favor of Purchaser shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights and
remedies available to Purchaser under this Agreement and the
instruments and agreements delivered pursuant to this Agreement.
For purposes of this Agreement, the term "affiliates" shall
mean any person or entity that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with, Seller.
7. COVENANTS OF PURCHASER.
Purchaser covenants and agrees as follows:
7.1 No Actions to Make Representations and Warranties Untrue.
The Purchaser shall not take any action that would result in any of
the representations and warranties of the Purchaser set forth in
this Agreement becoming materially untrue or in any of the
conditions to the Closing set forth in Section 9 not being
substantially satisfied.
7.2 Compliance with Legal Requirements. The Purchaser will
take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to the
consummation of the transactions contemplated by this Agreement and
will promptly cooperate with and furnish information to Seller in
connection with any such requirements imposed upon Seller in
connection with the consummation of the transactions contemplated
by this Agreement. The Purchaser will take all reasonable actions
necessary to obtain (and will cooperate with Seller in obtaining)
any consent, approval, order or authorization of, or any
registration, declaration or filing with, any governmental entity,
domestic or foreign, or other person, required to be obtained or
made by the Purchaser (or by Seller) in connection with the taking
of any action contemplated by this Agreement.
8. ADDITIONAL AGREEMENTS.
8.1 Public Disclosure. Before the date of execution of this
Agreement neither Purchaser nor Seller shall, and each shall direct
its representatives not to, directly or indirectly, make any
comment, statement or communication with respect to, or otherwise
disclose or permit the disclosure of the existence of, discussions
regarding a possible transaction between the parties hereto or any
of the terms, conditions or other aspects of the transactions
contemplated by this Agreement, except as required by law or
necessary to communicate with their respective attorneys and
consultants. If a party to this Agreement is required by law or
reporting obligations of a regulatory inquiry to make any such
disclosure, it shall first provide to the other party the contents
of the proposed disclosure, the reasons why such disclosure is
required by them and the time and place that the disclosure will be
made. Prior to the date of execution of this Agreement, each party
will prepare mutually acceptable press releases for immediate
dissemination upon Closing.
8.2 Expenses. Except as otherwise provided in this
Agreement, each party will bear its own expenses incident to the
negotiation and execution of this Agreement and the transactions
contemplated hereby, including, without limitation, all fees of its
legal counsel, accountants, consultants, brokers and investment
brokers, whether or not such transactions are consummated.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
The obligations of Seller to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by
Seller.
9.1 Representations, Warranties and Covenants. The
representations and warranties of Purchaser in this Agreement shall
be true and correct on and as of the Closing Date as though such
representations and warranties were made on and as of such date and
Purchaser shall have performed and complied with all covenants,
obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Date.
9.2 Certificate. Seller shall have been provided with a
certificate executed by the President, Chief Executive Officer or
Chief Financial Officer of Purchaser to the effect that, as of the
Closing Date:
9.2.1 all representations and warranties made by
Purchaser under this Agreement are true and complete; and
9.2.2 all covenants, obligations and conditions of
this Agreement to be performed by Purchaser on or before such date
have been so performed.
9.3 Governmental Approvals. All consents, approvals, orders
and authorizations of, and registrations, declarations and filings
with, and expirations of waiting periods imposed by, any
governmental entity, domestic or foreign, necessary for the
consummation of the transactions contemplated by this Agreement
shall have been obtained or filed or have occurred.
9.4 Closing Documents. Seller shall have received all
closing documents required to be delivered to it pursuant to this
Agreement.
9.5 No Litigation. No action, suit, proceeding or
investigation shall be pending or threatened before any government
entity, domestic or foreign, to restrain or prohibit, or to obtain
specific damages, in respect of this Agreement or the consummation
of the transactions contemplated hereby.
9.6 Execution of Lease. Purchaser shall have entered into
and executed a lease or sublease for the Facility, provided such
terms need not be more favorable to Purchaser than those provided
to Seller under the Lease, upon terms and conditions acceptable to
Purchaser in its sole discretion.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by
Purchaser.
10.1 Representations, Warranties and Covenants. The
representations and warranties of Seller in this Agreement shall be
true and correct on and as of the Closing Date as though such
representations and warranties were made on and as of such date and
Seller shall have performed and complied with all covenants,
obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing Date.
10.2 Certificate. Purchaser shall have been provided with a
certificate executed by an authorized officer of Seller to the
effect that, as of the Closing Date:
10.2.1 all representations and warranties made by
Seller under this Agreement are true and complete; and
10.2.2 all covenants, obligations and conditions of
this Agreement to be performed by Seller on or before such date
have been so performed.
10.3 Governmental Approvals. All consents, approvals, orders
and authorizations of, and registrations, declarations and filings
with, and expirations of waiting periods imposed by, any
governmental entity, domestic or foreign, necessary for the
consummation by Seller of the transactions contemplated by this
Agreement shall have been obtained or filed or have occurred.
10.4 Closing Documents. Purchaser shall have received all
closing documents required to be delivered to it pursuant to this
Agreement.
10.5 No Litigation. No action, suit, proceeding or
investigation shall be pending or threatened before any government
entity, domestic or foreign, to restrain or prohibit, or to obtain
specific damages, in respect of this Agreement or the consummation
by Seller of the transactions contemplated hereby.
10.6 Certificates. Seller shall have obtained certificates of
good standing from the Delaware and Florida Secretaries of State as
to the good standing of Seller and from the Delaware and Florida
tax authorities as to due payment by Seller of all taxes due, and
shall have provided Purchaser with true and correct certified
copies thereof.
10.7 Execution of Lease. Prior to the Closing, the landlord
of the Facility shall have consented in writing and Seller shall
have executed a lease or sublease of the Facility to Purchaser, in
form and substance reasonably satisfactory to Purchaser, and on the
same terms provided in the lease between Fleet National Bank, N.A.
and Archive Corporation dated as of May 1, 1992, as amended,
provided such terms need not be more favorable to Purchaser than
those provided to Seller under the Lease.
10.8 Agreement Termination. If any of the following
conditions are not waived in writing by Purchaser or, through no
fault of Purchaser, satisfied by Purchaser by the Closing Date,
this Agreement shall terminate and all monies paid by Purchaser to
Seller pursuant to Section 1.6 of this Agreement shall be returned
to Purchaser by Seller and neither party shall have any further
rights, duties or obligations to the other as a result of this
Agreement: (a) the Selected Assets are not significantly damaged,
destroyed or lost; and (b) the conditions forth in Sections 10.1
through 10.7 have been met.
11. INDEMNIFICATION.
11.1 Indemnification. Each of the parties (individually the
"Indemnifying Party") to this Agreement hereby agrees to indemnify
and hold harmless the other party (individually the "Indemnified
Party") from and against all third-party claims or actions for
losses, damages, liabilities, costs and expenses, including
reasonable attorneys fees and costs (collectively, an
"Indemnifiable Loss"), arising from any material breach of such
other party's representations, warranties and covenants contained
herein.
11.2 Notice of Claim. If and when the Indemnified Party
wants to assert a claim for an Indemnifiable Loss against the
Indemnifying Party pursuant to this Article 11, the Indemnified
Party shall deliver to the Indemnifying Party a statement signed by
an executive officer of the Indemnified Party (the "Notice of
Claim") which states: (i) the amount of the Indemnifiable Loss, as
paid or estimated; (ii) the individuals items of loss, damage,
liability, cost, expense or deficiency comprising the Indemnifiable
Loss; (iii) the date the Indemnified Party paid or expects to pay
the Indemnifiable Loss; and (iv) the basis under this Agreement for
the Indemnifiable Loss.
11.3 Response to Notice of Claim. The Indemnifying Party
shall have 15 days (excluding weekends and holidays )from the date
of its receipt of the Notice of Claim to respond to such notice.
Claims set forth in a Notice of Claim and not resolved or paid
within 60 days following the date of receipt of the Notice of Claim
shall be submitted to arbitration in accordance with Section 12.12
of this Agreement.
11.4 Survival. This Article 11 shall survive the Closing.
12. MISCELLANEOUS PROVISIONS.
12.1 Survival of Representations, Warranties and Covenants.
The respective representations, warranties and covenants of each
party hereto contained herein shall survive the Closing.
12.2 Assignment, Successors and Assigns.
12.2.1 This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns.
12.2.2 Neither party to this Agreement may assign its
rights and obligations hereunder without the other party's prior
written consent.
12.3 Notices. All notices or other communications which are
required or may be given pursuant to the terms of this Agreement
shall be in writing, shall be effective upon receipt, and shall be
delivered by Federal Express or a similar courier, personal
delivery or certified or registered air mail, addressed as follows:
If to Seller: Seagate Peripherals, Inc.
3081 Zanker Road
San Jose, California 95134
Attn: Peter G. Knight
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Larry W. Sonsini, Esq.
If to Purchaser: Intelligent Manufacturing Systems, Inc.
541 South Orlando Ave., Suite 310
Maitland, Florida 32751
Attn: R. Daniel Smith
with a copy to: Thomas R. Harbert, Esq.
Mateer & Harbert, P.A.
225 E. Robinson St., Suite 600
Orlando, Florida 32801
Any of the addresses or addressees set forth above may be changed
from time to time by written notice from the party requesting the
change.
12.4 Alterations and Waivers. The waiver, amendment or
modification of any provision of this Agreement or any right, power
or remedy hereunder, whether by agreement of the parties or by
custom, course of dealing or trade practice, shall not be effective
unless m writing and signed by the party against whom enforcement
of such waiver, amendment or modification is sought.
12.5 Governing Law. This agreement shall be construed,
governed and enforced in accordance with the laws of the State of
Florida, without reference to its choice of law provisions. The
parties hereby acknowledge that jurisdiction and venue for any
action or proceeding brought to enforce or interpret the terms of
this Agreement shall lie in the state or federal courts sitting in
Orange County, Florida.
12.6 Severability. In the event any provision of this
Agreement or the application of any such provision shall be held to
be prohibited or unenforceable in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability. The remaining provisions of
this Agreement shall remain in full, force and effect, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. The parties shall use their best efforts to replace
the provision that is contrary to law with a legal one
approximating to the extent possible the original intent of the
parties.
12.7 No Third-Party Beneficiaries. Nothing contained in this
Agreement shall be construed to give any person other than
Purchaser and Seller any legal or equitable right, remedy or claim
under or with respect to this Agreement, the Selected Assets or the
Assumed Contracts.
12.8 Integration and Entire Agreement. This Agreement, the
Non-Disclosure Agreement and the Exhibit A, Schedules and other
documents referred to herein set forth the entire understanding
between the parties and supersede all previous and contemporaneous
written or oral negotiations, commitments, understandings, and
agreements relating to the subject matter hereof and merge all
prior and contemporaneous discussions between the parties. No
party shall be bound by any definition, condition, representation,
warranty, covenant or provision other than as contained herein.
12.9 Counterparts. For the convenience of the parties, this
Agreement May be executed in one or more counterparts; each of
which shall be deemed an Original, but all of which together
constitute one and the same instrument.
12.10 Headings. All Section headings and captions are
inserted solely for convenience of reference, are not to be
considered a part of this Agreement and shall not affect the
meaning or interpretation hereof.
12.11 Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for any
breach of the provisions of thus Agreement and agree that the
obligations of the parties hereunder shall be specifically
enforceable.
12.12 Arbitration. Except as otherwise allowed under
Section 6.15 of this Agreement, the parties agree to resolve all
disputes arising under the terms of this Agreement which cannot be
resolved by direct negotiation, by resort to the alternate dispute
resolution procedures set forth in this Section; provided, however,
that either party may apply to a court of competent jurisdiction
for the issuance of a temporary injunction in order to maintain the
status quo ante during the pendency of alternate dispute resolution
proceedings. The parties agree that the dispute will first be
submitted to non-binding mediation in accordance with the rules of
the Florida Bar. If the parties are unable to agree upon a
mediator or if mediation is unsuccessful, then the dispute shall be
submitted to binding arbitration in accordance with the rules of
the American Arbitration Association. If either party refuses to
join in a request for the appointment of the mediator or arbitrator
within ten days after notice from the other party, then the party
giving notice may proceed with the application for the appointment
of a mediator or arbitrator ex parte. The parties agree that the
cost of mediation will be divided equally between them. The cost
of arbitration will be divided equally between the parties, unless,
the arbitrator, in its discretion, determines that the
nonprevailing party should bear the cost of arbitration. The
arbitrator shall award attorneys fees to the prevailing party.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
"SELLER"
SEAGATE PERIPHERALS, INC.,
a Delaware corporation
By: /s/ Peter G. Knight
Title: Senior Vice President
"PURCHASER"
INTELLIGENT MANUFACTURING SYSTEMS, INC.,
a Florida corporation
By: /s/ R. Daniel Smith
Title: Chief Executive Officer
Exhibit 10.3
AMENDMENT NO. 1 TO THE
ASSET PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Asset Purchase
Agreement between Seagate Peripherals, Inc. ("Seller") and
Intelligent Manufacturing Systems, Inc. ("Purchaser") dated May 23,
1996 (the "Agreement") is entered into by and between Seller and
Purchaser effective as of June 4, 1996.
WHEREAS, subject to the terms of the Agreement, Seller agreed
to sell to Purchaser, and Purchaser agreed to buy from Seller,
certain selected assets (the "Selected Assets") of Seller
associated with Seller's Conner Storage Systems Division.
WHEREAS, the parties intend to amend the Agreement to clarify
their understanding prior to the Closing under the Agreement.
WHEREAS, the consideration to be received by Seller from
Purchaser under Sections 1.5 and 1.6 of the Agreement shall
serve as consideration for this Amendment.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions. Whereas the defined terms set forth herein
shall have the same meaning given them in the Agreement, unless
otherwise defined herein.
2. Trademark Registrations. Within 30 days after the date
of this Amendment, and without further consideration, Seller will
execute such documents necessary to register Purchaser as owner of
the trademarks set forth on Schedule 1.1.5 of the Agreement.
3. Assignment of Contracts. Section 1.2.6 of the Agreement
shall be restated in its entirety to read as follows:
All open customer orders and contracts received in
connection with the Business set forth on Schedule 1.2.6
hereto on or before the Closing Date.
4. Excluded Assets and Liability. Section 1.3 of the
Agreement shall be amended to add a Section 1.3.8 which shall read
in its entirety as follows:
1.3.8 All Losses arising out of, resulting from or
incident to, acts or events occurring before the Closing
Date related to the Technology licensed to Purchaser
pursuant to Section 2 below.
5. Purchase Price. Section 1.5 of the Agreement is amended
in its entirety to read as set forth below:
The purchase price for the Selected Assets and Assumed
Contracts shall be $2,048,190.00 plus the royalty
payments due under the Technology License (as defined
below) (the "Purchase Price"). The parties shall
increase or decrease the portion of the Purchase Price
due under Section 1.6.5 to reflect changes in the
quantity of Selected Assets based on CSS inventory
fluctuations after the date of execution of this
Agreement and before the Closing Date. The amount of
such increase or decrease shall be determined in
accordance with the value of the Selected Assets added to
or subtracted from the CSS inventory, as set forth on the
appropriate Schedule to this Agreement.
6. Terms of Payment. Section 1.6 of the Agreement is
amended in its entirety to read as set forth below:
Purchaser shall pay to Seller the Purchase Price in
immediately available funds according to the following
schedule:
1.6.1 $250,000 upon Seller's and Purchaser's
execution of this Agreement;
1.6.2 $250,000 at the Closing;
1.6.3 $315,770 at the Closing as partial payment for
an initial delivery by Seller to Purchaser of
a portion of the disc drives set forth on
Schedule 1.1.2 valued by Seller at $415,770;
1.6.4 $100,000 on or before September 30, 1996; and
1.6.5 $1,132,420, payable in installments on or
before September 30, 1996 and subject to
Section 1.5. Upon receipt of each such
installment, Seller will release to Purchaser
an equivalent number of disc drives from those
set forth in Schedules 1.1.2 and 1.2.2 not
previously acquired by Purchaser. Title to
each disc drive will transfer from Seller to
Purchaser on the date of Seller's receipt of
payment therefor from Purchaser, provided,
however, that Seller reserves the right to
offset against disc drive payments amounts due
under Section 6.8.3 of this Agreement.
7. Technology License.
7.1 Grant of License. Section 2.1 of the Agreement
shall be amended in its entirety to read as follows:
Seller hereby grants Purchaser an exclusive license
(the "Technology License") to use and reproduce
Seller's technical data, know-how, technical
drawings, designs, software code (including source
code and object code), specifications, written
procedures and other intellectual property as more
fully described on Schedule 2.1 hereto (the
"Technology") related to the Business as its exists
on the Closing Date. Upon payment of the
"Royalties" as defined below, Seller will assign
all of its right, title and interest in and to the
Technology to Purchaser free and clear of any liens
or encumbrances. Seller shall execute such
documents of conveyance and assignment (including
without limitation, assignments of any federal or
state copyright and trademark registrations) as may
be reasonably required by counsel for Purchaser to
properly vest unencumbered title to the Technology
in Purchaser. The cost of transferring the
Technology (excluding the respective parties'
attorney's fees) shall be split equally between the
parties.
7.2 Payment of Royalties. Section 2.2 of the Agreement
shall be amended in its entirety to read as follows:
Within 30 days after the end of each calendar
quarter during the period of October 1, 1996
through December 31, 1997, Purchaser shall pay
Seller royalties (the "Royalties") equal to 5% of
the Purchaser's Gross Revenues for such quarter.
Gross Revenues shall be defined as all monetary
amounts booked as revenue which are derived
directly or indirectly from (i) sales, licensing,
leasing or other transfer of all storage subsystems
and software (excluding disk drives) which use,
incorporate, are based on or were produced in
connection with the use of the Technology, and
(ii) the licensing or like disposition of the
Technology.
7.3 Assignment of License. Section 2.3 of the Agreement
shall be amended in its entirety to read as follows:
Under no circumstance may Purchaser sublicense or
assign its rights and obligations under this
Section 2 before January 30, 1998 without Seller's
prior written consent, unless Purchaser has paid
Seller at least $800,000 in Royalties.
Notwithstanding the above, Seller hereby consents
to Purchaser's proposed sublicense of the
Technology to Siemens Nixdorf International.
8. Representations and Warranties of Seller.
8.1 Effect of Agreement. Section 4.3 of the Agreement
shall be amended in its entirety to read as follows:
The execution and delivery of this Agreement by
Seller do not, and the consummation of the
transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with,
result in a breach of, constitute a default under
or violation of, or result in the creation of any
lien, charge or encumbrance against the Technology,
Selected Assets or Assumed Contracts pursuant to
any provision of the Articles of Incorporation or
Bylaws of Seller, and any law or regulation of any
governmental authority or any provision of any
agreement, judgment or decree affecting the
Technology, Selected Assets or Assumed Contracts,
nor will it give to any other person or entity any
interests or rights of any kind, including rights
of termination, acceleration, or cancellation, in
or with respect to any of the Technology, Selected
Assets or Assumed Contracts.
Except as specifically disclosed by Seller to
Purchaser in writing with respect to the Assumed
Contracts or as otherwise set forth in this
Agreement, no consent of any person not a party to
this Agreement and no consent of any governmental
authority is required to be obtained on the part of
the Seller to permit the consummation of the
transactions contemplated by this Agreement,
including the transfer to Purchaser of all right,
title and interest in and to the Selected Assets,
free and clear of any liens.
8.2 Title to Selected Assets. Section 4.4 of the
Agreement shall be amended in its entirety to read as follows:
Seller has good and marketable title to the
Technology and all of the Selected Assets, the
Technology and all of the Selected Assets are free
and clear of restrictions on or conditions to
transfer or assignment, and at the Closing, Seller
will sell, convey, assign, transfer and deliver to
Purchaser good title to the Technology and all of
the Selected Assets free and clear of any
mortgages, liens, pledges, encumbrances, claims,
conditions and restrictions. Seller will warrant
and defend the title to all of the Selected Assets
against the lawful claims of all persons
whomsoever. All of the Selected Assets are located
at the Facility.
8.3 Litigation. Section 4.5 of the Agreement shall be
amended in its entirety to read as follows:
There is no action, suit, or investigation in
progress or pending before any court or
governmental agency against Seller in connection
with the Technology, Selected Assets or Assumed
Contracts, nor to Seller's knowledge after due
inquiry, is there any basis for any such claim,
suit or other proceeding. There is no suit,
action, investigation or other proceeding
commenced, pending or, to Seller's knowledge,
threatened against or affecting Seller in any court
or before any tribunal or governmental body, in
which it is sought to restrain or prohibit the
ability of Seller to perform the material
obligations required of it under this Agreement or
the consummation of the transactions contemplated
herein.
8.4 Intellectual Property. Section 4.6 of the Agreement
shall be amended in its entirety to read as follows:
Seller has taken all necessary steps to protect its
proprietary, confidential and trade secret rights
regarding the intellectual property set forth on
Schedule 1.1.5 hereto and the Technology and, none
of such rights has heretofore been assigned,
transferred, licensed or otherwise made available
to any third party. To Seller's knowledge, no
proceedings have been instituted or, to the
knowledge of Seller after due inquiry, threatened,
nor has any claim been made, against Seller
alleging any such infringement or violation of a
third-party's rights as a result of Seller's use of
such intellectual property or the Technology. For
the intellectual property listed on Schedule 1.1.5
which Seller uses, but does not own, Seller is
licensed to use and transfer such intellectual
property and is not in breach of, or default under,
such license agreements and no breach or default
will occur as a result of the transactions
contemplated herein.
8.5 Performance of Contracts. Section 4.15 of the
Agreement shall be amended in its entirety to read as follows:
Seller is not in default under, nor has it breached
any provision of, any contract, agreement, lease,
permit, license, instrument, indenture, or other
obligation of Seller pertaining to the Technology,
Selected Assets or Assumed Contracts, and there are
no oral modifications or past practices
inconsistent with the written terms of any of the
foregoing. All of such contracts, agreements,
leases, permits, licenses, instruments, indentures
and other obligations are presently in full force
and effect. To the knowledge of Seller, the other
parties to such contracts, agreements, leases,
permits, licenses, instruments, indentures or other
obligations have complied with their obligations
thereunder and are not in breach thereof. Seller
has fully performed each such term, condition and
covenant of each such contract, agreement, lease,
permit, license, instrument, indenture or other
obligation required to be performed on or prior to
the date hereof. Seller knows of no state of facts
which, with the giving of notice or the passing of
time; or both, would give rise to any default.
9. Covenants of Seller. Section 6.12 of the Agreement shall
be restated in its entirety to read as follows:
After the Closing Date, and from time to time, Seller
shall, promptly upon request by Purchaser, execute and
deliver such other instruments of sale, transfer,
conveyance and/or assignment and take such action as
Purchaser may reasonably request in order more
effectively to transfer, convey and assign to Purchaser,
or to confirm Purchaser's title to, the Technology,
Selected Assets and Assumed Contracts and to put
Purchaser in possession and control thereof and to assist
Purchaser in exercising all rights with respect thereto.
All such documents shall be in form reasonably
satisfactory to Seller's legal counsel.
10. Agreement Termination. Section 10.8 shall be amended in
its entirety as follows:
This Agreement shall terminate and all monies paid by
Purchaser to Seller pursuant to Section 1.6 of this
Agreement shall be returned to Purchaser by Seller and
neither party shall have any further rights, duties or
obligations to the other as a result of this Agreement if
through no fault of Purchaser: (a) the Selected Assets
are significantly damaged, destroyed or lost before the
Closing; or (b) the conditions set forth in Sections 10.1
through 10.7 have not been met as of the Closing Date.
11. Indemnification. Section 11.3 of the Agreement shall be
amended to read in its entirety as follows:
The Indemnifying Party shall have 15 days (excluding
weekends and holidays) from the date of its receipt of
the Notice of Claim to respond to such notice. If the
Indemnifying Party fails to object in writing to a Notice
of Claim within such fifteen (15) day period, the
validity of the claim shall be deemed admitted by the
Indemnifying Party. Claims set forth in a Notice of
Claim and not resolved or paid within 60 days following
the date of receipt of the Notice of Claim shall be
submitted to arbitration in accordance with Section 12.12
of this agreement.
12. Miscellaneous Provisions.
12.1 Survival of Representations, Warranties and
Covenants. Section 12.1 of the Agreement shall be amended in its
entirety to read as follows:
The terms of this Agreement, and the respective
representations, warranties and covenants of each
party hereto contained herein shall survive the
Closing.
12.2 Counterparts. Section 12.9 of the Agreement shall
be amended in its entirety to read as follows:
For the convenience of the parties, this Agreement
may be executed in one or more counterparts; each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
13. No Supplemental Disclosure Letter. Seller represents and
warrants to Purchaser that the Supplemental Disclosure Letter set
forth as Exhibit A to this Amendment is true and correct as of the
date hereof.
14. Remainder of Page Blank. The following sentence shall be
added to the end of page 19 of the Agreement:
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
15. This Amendment may be executed in one or more
counterparts; each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Except as amended hereby, the Agreement shall remain in full
force and effect. The foregoing is hereby executed as of the date
first set forth above.
"SELLER"
SEAGATE PERIPHERALS, INC.
a Delaware corporation
By: /s/ Peter G. Knight
Title: Senior Vice President
"PURCHASER"
INTELLIGENT MANUFACTURING SYSTEMS, INC.
a Florida corporation
By: /s/ R. Daniel Smith
Title: Chief Executive Officer
EXHIBIT 10.4
ASSIGNMENT OF ASSET PURCHASE AGREEMENT
FOR AND IN CONSIDERATION of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged, the
undersigned INTELLIGENT MANUFACTURING SYSTEMS, INC., a Florida
corporation ("IMS"), does hereby assign, transfer and convey unto
nStor CORPORATION, INC., a Delaware corporation ("nStor"), all of
the Purchaser's rights, duties and obligations under the Asset
Purchase Agreement between Seagate Peripherals, Inc. and IMS dated
as of May 23, 1996, as amended (the "Agreement").
The undersigned nStor does hereby assume and agree to be bound
by and to perform all of the obligations, liabilities and duties of
IMS under the Agreement and does hereby indemnify and agree to hold
IMS harmless from and in respect to any liability or obligation
suffered by IMS under or by reason of the Agreement.
Dated as of the 3 day of June, 1996
INTELLIGENT MANUFACTURING SYSTEMS, INC.
/s/ R. Daniel Smith
By:__________________________________
R. DANIEL SMITH
Chief Executive Officer
nStor CORPORATION, INC.
/s/ R. Daniel Smith
By:_________________________________
R. DANIEL SMITH
Chief Executive Officer
Exhibit 10.5
CONSENT TO ASSIGNMENT OF ASSET PURCHASE AGREEMENT
SEAGATE PERIPHERALS, INC. ("Seagate"), Seller under that
certain Asset Purchase Agreement between Seagate and INTELLIGENT
MANUFACTURING SYSTEMS, INC. ("IMS") as Purchaser, dated as of May
23, 1996, as amended (the "Agreement"), hereby consents to the
assignment of all of the purchaser's rights, duties and obligations
under the Agreement from IMS to nStor Corporation, Inc., a Delaware
corporation; provided however, that consent to this Assignment
shall not be deemed to be a release of IMS from its obligations
under the Agreement. IMS agrees to be responsible for any failure
by nStor to perform Purchaser's obligations under the Agreement.
Dated as of the 3 day of June, 1996.
SEAGATE PERIPHERALS, INC.
/s/ Peter G. Knight
By:________________________________
PETER G. KNIGHT
SENIOR VICE PRESIDENT
Agreed to an accepted as of the 3 day of June, 1996.
INTELLIGENT MANUFACTURING SYSTEMS, INC.
/s/ R. Daniel Smith
By:_______________________________
R. DANIEL SMITH
Chief Executive Officer
Exhibit 10.6
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT has been made and entered into as
of the 18th day of June, 1996, by and among nStor Corporation,
Inc., a Delaware corporation (hereinafter sometimes referred to as
the ("CORPORATION"), IMGE, INC., a Delaware corporation
(hereinafter sometimes referred to as "IMGE") and R. DANIEL SMITH
(hereinafter sometimes referred to as "SMITH").
W I T N E S S E T H:
WHEREAS, nStor Corporation, Inc. is a corporation duly
organized and existing under the laws of the State of Delaware; and
WHEREAS, IMGE owns and holds one thousand two hundred (1,200)
shares of the common stock of the CORPORATION, and SMITH owns and
holds three hundred ( 300 ) shares of the common stock of the
CORPORATION, said shares being all of the shares of the CORPORATION
which have been issued and are outstanding to date; and
WHEREAS, IMGE and SMITH (hereinafter sometimes collectively
referred to as the "Shareholders") desire to memorialize and
confirm certain understandings and agreements which they have
reached relative to the disposition of the proceeds to be derived
in the event of the dissolution and liquidation of the CORPORATION;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and undertakings herein contained and other good and
valuable consideration, the receipt and sufficiency whereof is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. In the event that, at any time, the CORPORATION shall be
dissolved, whether by the election of the directors and/or
shareholders of the CORPORATION to do so, or by operation of law,
or otherwise, then, in such event, the liquid assets of the
CORPORATION and the proceeds derived from the liquidation of the
CORPORATION's other assets shall, after payment of all other proper
debts and obligations of the CORPORATION, be applied and
distributed to the Shareholders in the following order of priority,
to wit:
First, to IMGE, until the total amount distributed to
IMGE shall equal $500,000.00;
Second, (to the extent that any funds remain after the
distribution referred to above) to SMITH, until the total amount
distributed to SMITH shall equal $125,000.00; and
Third, (to the extent that any funds remain after the
distributions referred to above), 80% of such remaining funds to
IMGE and 20% of such remaining funds to SMITH, pari passu.
2. Arbitration. In the event of any dispute between the
Shareholders arising out of this Agreement, the same shall be
submitted for arbitration to the American Arbitration Association
in accordance with its rules and regulations, with whose
determination the parties hereto agree to be bound. The
arbitration shall be conducted in the City of West Palm Beach,
Florida.
3. No Inconsistencies in Articles or By-laws. During the
continuance of this Agreement, the parties hereto shall vote
continuously to prevent the Articles of Incorporation and By-laws
of the CORPORATION from containing any provision which is or may be
inconsistent with the terms of this Agreement.
4. Endorsement of Certificates. Simultaneously with the
execution of this Agreement, the certificates representing the
shares of the stock of the CORPORATION owned by the parties hereto
shall be temporarily surrendered to the Secretary of the
CORPORATION for the purpose of adding the following endorsement on
each share certificate:
"The shares represented by this certificate
are subject to the terms of a Shareholder's
Agreement, dated the 18 day of June 1996,
which Shareholder's Agreement contains, inter
alia, provisions dealing with the disposition
of proceeds derived upon the dissolution and
liquidation of the CORPORATION. A copy of
said Shareholder's Agreement is on file in the
office of the CORPORATION and may be obtained
without charge upon written request therefor."
The share certificates surrendered as aforesaid shall be
returned to the Shareholders immediately following the addition of
the aforesaid endorsement thereon.
5. Binding on Successors. This Agreement shall be binding
upon and operate for the benefit of the parties hereto and their
respective heirs, successors, assigns and legal representatives.
6. Miscellaneous.
(A) If any section, sub-section, sentence, clause,
phrase or portion of this Agreement shall, for any reason, be held
invalid or unconstitutional by any court of competent jurisdiction,
such portion shall be deemed a separate, distinct and independent
provision and such holding shall not affect the validity of the
remaining portions hereof which shall be enforced to the fullest
extent permitted by law.
(B) INTENTIONALLY DELETED.
(C) This Agreement shall be construed in accordance with
the laws of the State of Florida notwithstanding the residence or
domicile of any of the parties hereto now or in the future.
(D) Any notice required by this Agreement shall be
deemed to have been served if sent registered or certified mail,
addressed to the party to whom such notice is intended to be given,
at the address set forth above or at such other address as each
party shall have previously furnished, in writing, to the Secretary
of the CORPORATION.
(E) This document contains the entire Agreement of the
parties hereto with respect to the matters set forth herein and may
not be changed, modified or cancelled except by written instrument,
duly executed by all of said parties.
(F) In the event that any legal action is instituted to
enforce the provisions hereof, the prevailing party shall be
entitled to recover, and the non-prevailing party shall be
obligated to pay, all costs incurred including attorney's fees at
all levels of proceedings.
(G) Whenever the pronouns "he" or "his" are used herein
they shall also be deemed to mean "she" or "her" or "it" or "its"
whenever applicable. Words in the singular shall be read and
construed as though in the plural and words in the plural shall be
read and construed as though in the singular in all cases where
they would so apply.
(H) IMGE represents and warrants that it is acquiring
its shares for its own account and not for the purpose of reselling
the issues.
(I) IMGE shall have the right of first refusal to
purchase Smith's stock in the event Smith receives an offer to
purchase his stock upon terms acceptable to him. IMGE will
exercise its rights by giving Smith written notice of its intent
within 30 days after Smith notifies IMGE in writing of such offer.
Failure to exercise such rights within said 30 day period shall
result in IMGE's rights hereunder being waived.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals and the CORPORATION has caused these presents to be
executed on its behalf and its corporate seal hereunto affixed by
its duly authorized officers the day and year first above written.
Signed, sealed and delivered
in the presence of:
nSTOR CORPORATION, a Delaware corporation
/s/ Thomas R. Harbert By: /s/ R. Daniel Smith
Thomas R. Harbert R. Daniel Smith, President
/s/ Dorothy Harper
Dorothy Harper
CORPORATE SEAL
IMGE, INC., a Delaware
corporation
/s/ Thomas R. Harbert By: /s/ Mark F. Levy
Thomas R. Harbert Mark F. Levy, V President
/s/ Dorothy Harper
Dorothy Harper
/s/ Thomas R. Harbert /s/ R. Daniel Smith
Thomas R. Harbert R. DANIEL SMITH
/s/ Dorothy Harper
Dorothy Harper
Exhibit 10.7
PROMISSORY NOTE
U.S. $316,000.00 June 18, 1996
FOR VALUE RECEIVED, nStor Corporation, Inc., a
Delaware corporation qualified to do business in the State of
Florida (hereinafter referred to as the "Maker"), promises to pay
to the order of IMGE, INC., a Delaware corporation (hereinafter
referred to as the "Payee"), the principal sum of THREE HUNDRED
SIXTEEN THOUSAND AND NO/100 DOLLARS (U.S.$316,000.00), or so much
thereof as shall have been advanced and/or readvanced by the Payee
to the Maker and shall then be outstanding, together with interest
thereon as hereinafter set forth.
I. Interest. During the period commencing on the date
hereof and ending on and including the Maturity Date of this Note,
the principal balance outstanding hereunder shall bear interest at
the rate of ten percent (10%) per annum computed on the basis of a
365 day year for the actual number of days outstanding.
II. Maturity Date. The Maker agrees to pay the entire
outstanding principal balance of the indebtedness evidenced by this
Note together with all accrued but unpaid interest thereon on the
17th day of September, 1996 (the "Maturity Date").
III. Prepayment. Maker shall have the right to prepay the
indebtedness evidenced by this Note in whole or in part at any time
without penalty or premium.
IV. Security Agreement. This Note is being executed and
delivered by Maker to Payee contemporaneously with the execution
and delivery of a certain Security Agreement (the "Security
Agreement") bearing even date herewith from Maker, as "Debtor", to
Payee, as "Secured Party", as security for and securing the
indebtedness evidenced by this Note and the other obligations of
the Maker to the Payee (collectively the "Obligations") under the
Security Agreement and the other financing agreements (the
"Financing Agreements") executed by Maker to or with Payee in
conjunction therewith.
V. Default, Etc. The occurrence of any one or more of the
following events, circumstances, or conditions shall constitute a
default hereunder: (i) failure of the Maker to pay to the Payee
promptly, on the date when the same shall become due (whether at
scheduled maturity, upon acceleration or otherwise) any part of the
Obligations including, but not limited to, any installment of
interest or of any other fees or charges due under this Note or any
other instrument evidencing or securing the Obligations and the
continuation of such failure to pay for a period of ten (10) days;
or (ii) the occurrence of any other default under this Note, the
Security Agreement, the Financing Agreements or any other document,
instrument, agreement or security agreement executed by Maker to or
with Payee in conjunction herewith and/or therewith and the
continuation of such default following the giving of any notice
and/or the expiration of any grace period which may be required
and/or provided for herein or therein; or (iii) the occurrence of
any default under any security agreement which is or may be prior
to the lien of the Security Agreement; or (iv) the occurrence of
any default on the part of Maker under any other promissory note or
security agreement, or under any other loan, financing or other
agreement which Maker has heretofore entered into with and/or
executed in favor of Payee, or which Maker may hereafter enter into
with and/or execute in favor of Payee; or (v) [intentionally
deleted]; or (vi) [intentionally deleted]; or (vii) the filing or
institution by or against Maker of any petition or proceeding under
any state or federal bankruptcy, insolvency or other similar law,
statute, etc.; or (viii) the occurrence of any material adverse
change in the condition, financial or otherwise, of Maker. Upon or
at any time after the occurrence of any such default, the
indebtedness evidenced by this Note and/or any note(s) or other
obligation(s) which may be taken in renewal, extension,
substitution, or modification of all or any part of the
indebtedness evidenced hereby and all other Obligations of the
Maker to the Payee, howsoever created and existing, shall
immediately become due and payable without demand upon or notice to
the Maker, and the Payee shall be entitled to exercise the other
remedies set forth in the Security Agreement, the Financing
Agreements or as provided by law.
VI. Interest on Delinquent Payments. In the event that Maker
shall fail to pay any installment of interest hereunder within
four (4) business days following the date upon which such
installment shall have first become due and payable, then, in such
event, in addition to any and all other rights and remedies
available to Payee hereunder, Payee shall be entitled to receive
from Maker, and Maker shall be obligated to pay to Payee, interest
on such unpaid installment computed from the original due date of
such installment at the rate set forth in Paragraph I above,
provided, however, that upon and following the occurrence of any
default under this Note (including any default resulting from the
continuation of Maker's failure to pay any installment of interest
following the expiration of the ten [10] day grace period referred
to in Clause [i] of Paragraph V above), interest on such unpaid
installment of interest and on the outstanding principal balance of
the indebtedness evidenced by this Note shall be computed at the
Default Rate set forth in Paragraph XIII below.
VII. Setoff, Etc. Upon the occurrence and during the
continuance of any default hereunder, the Payee is authorized,
without notice to the Maker (the giving of notice being expressly
waived by the Maker) to set off and apply any indebtedness owing by
the Payee to the Maker against the indebtedness evidenced by this
Note, although such indebtedness then be contingent or unmatured.
The Payee agrees to notify the Maker after any such setoff and
application; provided, however, the failure to give such notice
shall not affect the validity of such setoff and application. The
rights of the Payee under this Paragraph VII are in addition to
other rights and remedies which the Payee may have.
VIII. Transfer of Note, Etc. The Payee may transfer this
Note and deliver to the transferee(s) all or any of the property
then held by the Payee as security for the indebtedness evidenced
by this Note and the transferee(s) shall thereupon become vested
with all the powers and rights herein given to the Payee with
respect thereto; and the Payee shall thereafter be forever relieved
and fully discharged from any liability or responsibility in the
matter, but the Payee shall retain all rights and powers hereby
given with respect to any property not so transferred.
IX. Waiver of Presentment, Etc. The Maker hereby waives
presentment for payment, demand, notice of dishonor and protest and
agrees that (a) any Collateral, lien and/or right of setoff
securing any indebtedness evidenced by this Note may, from time to
time, in whole or in part, be exchanged or released, and any person
liable on or with respect to this Note may be released -- all
without notice to or further reservations of rights against the
Maker, any endorser, surety or guarantor and all without in any way
affecting or releasing the liability of the Maker, any endorser,
surety or guarantor, and (b) none of the terms or provisions hereof
may be waived, altered, modified or amended except as the Payee may
consent thereto in writing.
X. Expenses, Etc. The Maker hereby agrees to pay all
out-of-pocket costs and expenses, including reasonable attorneys'
fees, incurred by the Payee in the collection of the indebtedness
evidenced by this Note or in enforcing any of the rights, powers,
remedies, and privileges of the Payee hereunder whether or not suit
be brought.
XI. Place of Payment, Etc. Both principal and interest of
this Note shall be payable in lawful currency of the United States
of America to the Payee at 100 Century Boulevard, West Palm Beach,
Florida 33417, or such other address designated by Holder from time
to time, in immediately available funds without deduction for or on
account of any present or future taxes, duties or other charges
levied or imposed on this Note, the proceeds hereof, or on the
Maker or holder hereof by any government, or any instrumentality,
authority or political subdivision thereof. The Maker agrees, upon
the request of the Payee, to pay all such taxes (other than taxes
on or measured by net income of the holder thereof), duties, and
other charges in addition to the principal and interest evidenced
by this Note.
XII. Maximum Interest Rate, Etc. Nothing contained in this
Note or in any other document, instrument or agreement between the
parties hereto shall be deemed to establish or require the payment
of a rate of interest in excess of the lesser of (a) seventeen and
five-tenths percent (17.5%) per annum, or (b) the maximum lending
rate now or at any time hereafter permitted to be charged on
similar loans or extensions of credit made by any lender or
creditor in the State of Florida ("Maximum Rate"). In the event
that the rate of interest so contracted to be paid should exceed
the Maximum Rate, whether as a result of its terms, or as a result
of fluctuation, acceleration of the maturity hereof or otherwise,
the rate of interest to be paid hereunder shall be automatically
reduced to the Maximum Rate and so much of any interest reserved,
charged or taken as would cause the same to exceed the Maximum Rate
shall be deemed not to be a credit against interest but rather a
payment on account of and be automatically credited against
outstanding principal evidenced hereby regardless of how the same
may appear on the Payee's or the Maker's books or records or any
memoranda of whatever nature evidencing the same; provided,
however, no such application shall operate to cure or as a waiver
of any event of default occasioning acceleration.
XIII. Default Rate, Etc. Following the occurrence and
during the continuance of any default hereunder, accrued interest
and outstanding principal shall bear interest at an annual rate
equal to the lesser of:
(a) the Maximum Rate; or
(b) the greater of:
(i) the "Wall Street Journal Prime Rate" (as said
term is hereinafter defined) plus five percent (5%) per annum; or
(ii) fifteen percent (15%) per annum.
As used herein, the term "Wall Street Journal Prime Rate"
shall mean and refer to the so-called prime rate of interest as
published by the Wall Street Journal from time to time. In the
event that the Wall Street Journal shall cease to be published or
shall cease to publish the prime rate of interest, then, in such
event, the term "Wall Street Journal Prime Rate" shall be deemed to
mean and refer to the prime rate of interest as published by any
other publication selected by the holder of this Note in the
exercise of such holder's reasonable discretion.
XIV. Governing Law, Etc. This Note was executed and delivered
by Maker to Payee in the State of Florida. The Maker agrees that
this Note shall be deemed to have been made under and shall be
governed by the laws of the State of Florida in all respects,
including matters of construction, validity, and performance. If
any provision of this Note shall be deemed unenforceable under
applicable law, such provision shall be ineffective, but only to
the extent of such unenforceability, without invalidating the
remainder of such provision or the remaining provisions of this
Note. All of the terms and provisions of this Note shall be
applicable to and be binding upon each and every maker, endorser,
surety, guarantor, all other persons who are or may become liable
for the payment of the indebtedness evidenced hereby and their
heirs, personal representatives, successors or assigns (provided,
however, this reference to "assigns" shall not be deemed or
construed to authorize or permit any assignment by the Maker).
nSTOR CORPORATION, INC.,
a Delaware corporation
By: /s/ R. Daniel Smith
R. Daniel Smith, President
(CORPORATE SEAL)
Maker's Address:
450 Technology Park Dr.
Lake Mary, FL 32746
<PAGE>
Exhibit 10.8
PROMISSORY NOTE
U.S. $1,500,000.00 June 18, 1996
FOR VALUE RECEIVED, nStor Corporation, Inc., a Delaware
corporation qualified to do business in the State of Florida
(hereinafter referred to as the "Maker"), promises to pay to the
order of IMGE, INC., a Delaware corporation (hereinafter referred
to as the "Payee"), the principal sum of ONE MILLION FIVE HUNDRED
THOUSAND AND NO/100ths DOLLARS (U.S.$1,500,000.00), or so much
thereof as shall have been advanced and/or readvanced by the Payee
or the then holder of this Note to the Maker and shall then be
outstanding, together with interest thereon as hereinafter set
forth.
I. Interest. During the period commencing on the date
hereof and ending on and including the Maturity Date of this Note,
the principal balance outstanding hereunder shall bear interest at
the rate of ten percent (10%) per annum computed on the basis of a
365 day year for the actual number of days outstanding. Interest
computed at the rate set forth above shall be payable monthly in
arrears on the 1st day of each month during the term of this Note,
commencing on the 1st day of July, 1996.
II. Maturity Date. The Maker agrees to pay the entire
outstanding principal balance of the indebtedness evidenced by this
Note together with all accrued but unpaid interest thereon on the
17th day of June, 1999 (the "Maturity Date").
III. Prepayment. Maker shall have the right to prepay the
indebtedness evidenced by this Note in whole or in part at any time
without penalty or premium.
IV. Security Agreement. This Note is being executed and
delivered by Maker to Payee contemporaneously with the execution
and delivery of a certain Security Agreement (the "Security
Agreement") bearing even date herewith from Maker, as "Debtor", to
Payee, as "Secured Party", as security for and securing the
indebtedness evidenced by this Note and the other obligations of
the Maker to the Payee (collectively the "Obligations") under the
Security Agreement and the other financing agreements (the
"Financing Agreements") executed by Maker to or with Payee in
conjunction therewith.
V. Default, Etc. The occurrence of any one or more of the
following events, circumstances, or conditions shall constitute a
default hereunder: (i) failure of the Maker to pay to the holder
of this Note promptly, on the date when the same shall become due
(whether at scheduled maturity, upon acceleration or otherwise) any
part of the Obligations including, but not limited to, any
installment of interest or of any other fees or charges due under
this Note or any other instrument evidencing or securing the
Obligations and the continuation of such failure to pay for a
period of ten (10) days; or (ii) the occurrence of any other
default under this Note, the Security Agreement, the Financing
Agreements or any other document, instrument, agreement or security
agreement executed by Maker to or with Payee in conjunction
herewith and/or therewith and the continuation of such default
following the giving of any notice and/or the expiration of any
grace period which may be required and/or provided for herein or
therein; or (iii) the occurrence of any default under any security
agreement which is or may be prior to the lien of the Security
Agreement; or (iv) the occurrence of any default on the part of
Maker under any other promissory note or security agreement, or
under any other loan, financing or other agreement which Maker has
heretofore entered into with and/or executed in favor of Payee, or
which Maker may hereafter enter into with and/or execute in favor
of Payee or the then holder of this Note; or (v) [intentionally
deleted]; or (vi) [intentionally deleted]; or (vii) the filing or
institution by or against Maker of any petition or proceeding under
any state or federal bankruptcy, insolvency or other similar law,
statute, etc.; or (viii) the occurrence of any material adverse
change in the condition, financial or otherwise, of Maker. Upon or
at any time after the occurrence of any such default, the
indebtedness evidenced by this Note and/or any note(s) or other
obligation(s) which may be taken in renewal, extension,
substitution, or modification of all or any part of the
indebtedness evidenced hereby and all other Obligations of the
Maker to the Payee or the then holder of this Note, howsoever
created and existing, shall immediately become due and payable
without demand upon or notice to the Maker, and the Payee or the
then holder of this Note shall be entitled to exercise the other
remedies set forth in the Security Agreement, the Financing
Agreements or as provided by law.
VI. Interest on Delinquent Payments. In the event that Maker
shall fail to pay any installment of interest hereunder within
four (4) business days following the date upon which such
installment shall have first become due and payable, then, in such
event, in addition to any and all other rights and remedies
available hereunder to Payee or the then holder of this Note, Payee
or the then holder of this Note shall be entitled to receive from
Maker, and Maker shall be obligated to pay to Payee or such holder,
interest on such unpaid installment computed from the original due
date of such installment at the rate set forth in Paragraph I
above, provided, however, that upon and following the occurrence of
any default under this Note (including any default resulting from
the continuation of Maker's failure to pay any installment of
interest following the expiration of the ten [10] day grace period
referred to in Clause [i] of Paragraph V above), interest on such
unpaid installment of interest and on the outstanding principal
balance of the indebtedness evidenced by this Note shall be
computed at the Default Rate set forth in Paragraph XIII below.
VII. Setoff, Etc. Upon the occurrence and during the
continuance of any default hereunder, Payee or then holder of this
Note is authorized, without notice to the Maker (the giving of
notice being expressly waived by the Maker) to set off and apply
any indebtedness owing by Payee or such holder to the Maker against
the indebtedness evidenced by this Note, although such indebtedness
then be contingent or unmatured. Payee or such holder shall be
obligated to notify the Maker after any such setoff and
application; provided, however, the failure to give such notice
shall not affect the validity of such setoff and application. The
rights of Payee or such holder under this Paragraph VII are in
addition to other rights and remedies which Payee or such holder
may have.
VIII. Transfer of Note, Etc. Payee and any subsequent
holder of this Note may transfer this Note and deliver to the
transferee(s) all or any of the property then held by the
transferor as security for the indebtedness evidenced by this Note
and the transferee(s) shall thereupon become vested with all the
powers and rights herein given to the transferor with respect
thereto; and the transferor shall thereafter be forever relieved
and fully discharged from any liability or responsibility in the
matter, but the transferor shall retain all rights and powers
hereby given with respect to any property not so transferred.
IX. Waiver of Presentment, Etc. The Maker hereby waives
presentment for payment, demand, notice of dishonor and protest and
agrees that (a) any Collateral, lien and/or right of setoff
securing any indebtedness evidenced by this Note may, from time to
time, in whole or in part, be exchanged or released, and any person
liable on or with respect to this Note may be released -- all
without notice to or further reservations of rights against the
Maker, any endorser, surety or guarantor and all without in any way
affecting or releasing the liability of the Maker, any endorser,
surety or guarantor, and (b) none of the terms or provisions hereof
may be waived, altered, modified or amended except as Payee or the
then holder of this Note may consent thereto in writing.
X. Expenses, Etc. The Maker hereby agrees to pay all
out-of-pocket costs and expenses, including reasonable attorneys'
fees, incurred by Payee or the then holder of this Note in the
collection of the indebtedness evidenced by this Note or in
enforcing any of the rights, powers, remedies, and privileges of
Payee or such holder hereunder whether or not suit be brought.
XI. Place of Payment, Etc. Both principal and interest of
this Note shall be payable in lawful currency of the United States
of America to the Payee at 100 Century Boulevard, West Palm Beach,
Florida 33417, or such other address designated by the then holder
of this Note from time to time, in immediately available funds
without deduction for or on account of any present or future taxes,
duties or other charges levied or imposed on this Note, the
proceeds hereof, or on the Maker or the holder hereof by any
government, or any instrumentality, authority or political
subdivision thereof. The Maker agrees, upon the request of the
holder hereof, to pay all such taxes (other than taxes on or
measured by net income of the holder hereof), duties, and other
charges in addition to the principal and interest evidenced by this
Note.
XII. Maximum Interest Rate, Etc. Nothing contained in this
Note or in any other document, instrument or agreement between the
parties hereto shall be deemed to establish or require the payment
of a rate of interest in excess of the lesser of (a) seventeen and
five-tenths percent (17.5%) per annum, or (b) the maximum lending
rate now or at any time hereafter permitted to be charged on
similar loans or extensions of credit made by any lender or
creditor in the State of Florida ("Maximum Rate"). In the event
that the rate of interest so contracted to be paid should exceed
the Maximum Rate, whether as a result of its terms, or as a result
of fluctuation, acceleration of the maturity hereof or otherwise,
the rate of interest to be paid hereunder shall be automatically
reduced to the Maximum Rate and so much of any interest reserved,
charged or taken as would cause the same to exceed the Maximum Rate
shall be deemed not to be a credit against interest but rather a
payment on account of and be automatically credited against
outstanding principal evidenced hereby regardless of how the same
may appear on Maker's or Payee's books or records or any memoranda
of whatever nature evidencing the same, or on the books, records or
memoranda of the then holder of this Note; provided, however, no
such application shall operate to cure or as a waiver of any event
of default occasioning acceleration.
XIII. Default Rate, Etc. Following the occurrence and
during the continuance of any default hereunder, accrued interest
and outstanding principal shall bear interest at an annual rate
equal to the lesser of:
(a) the Maximum Rate; or
(b) the greater of:
(i) the "Wall Street Journal Prime Rate" (as said
term is hereinafter defined) plus five percent (5%) per annum; or
(ii) fifteen percent (15%) per annum.
As used herein, the term "Wall Street Journal Prime Rate"
shall mean and refer to the so-called prime rate of interest as
published by the Wall Street Journal from time to time. In the
event that the Wall Street Journal shall cease to be published or
shall cease to publish the prime rate of interest, then, in such
event, the term "Wall Street Journal Prime Rate" shall be deemed to
mean and refer to the prime rate of interest as published by any
other publication selected by the then holder of this Note in the
exercise of such holder's reasonable discretion.
XIV. Advances and Re-Advances. Subject to the conditions and
limitations set forth below, Maker shall be entitled to receive
from time to time, and, by accepting this Note, Payee, for itself
and all subsequent holders of this Note, shall be deemed to have
agreed to advance and/or re-advance, loan proceeds under this Note
on a revolving credit basis, and all sums so advanced and/or
re-advanced shall be deemed to be a part of the principal balance
of the indebtedness evidenced by this Note and shall be deemed to
be secured by the Security Agreement and any other documents,
instruments and/or agreements which may now or hereafter secure
this Note. Anything in the foregoing to the contrary
notwithstanding, it is understood and agreed that Maker shall have
no right to request or receive any advance or re-advance of loan
proceeds, and the holder of this Note shall have no obligation to
disburse same:
(a) if Maker shall then be in default under this Note or
under the Security Agreement or under any other document,
instrument or agreement which may then secure this Note; or
(b) if the effect of such advance will be to cause the
principal balance outstanding hereunder (including any sum[s] which
may have been added [or which will imminently be added] to such
principal balance pursuant to any provision of this Note or of the
Security Agreement or of any other document, instrument or
agreement which may now or hereafter secure this Note) to exceed
the sum of $1,500,000.00; or
As a further condition precedent to Maker's right to
receive any advance or re-advance of loan proceeds hereunder, Maker
shall be required to serve a written request for such advance or
re-advance upon the holder hereof not less than one (1) banking day
prior to the date upon which Maker desires to receive such advance
or re-advance.
XV. Governing Law, Etc. This Note was executed and delivered
by Maker to Payee in the State of Florida. The Maker agrees that
this Note shall be deemed to have been made under and shall be
governed by the laws of the State of Florida in all respects,
including matters of construction, validity, and performance. If
any provision of this Note shall be deemed unenforceable under
applicable law, such provision shall be ineffective, but only to
the extent of such unenforceability, without invalidating the
remainder of such provision or the remaining provisions of this
Note. All of the terms and provisions of this Note shall be
applicable to and be binding upon each and every maker, endorser,
surety, guarantor, all other persons who are or may become liable
for the payment of the indebtedness evidenced hereby and their
heirs, personal representatives, successors or assigns (provided,
however, this reference to "assigns" shall not be deemed or
construed to authorize or permit any assignment by the Maker).
XVI. Notice and Cure Period. Notwithstanding any provision
contained herein to the contrary, Lender agrees to give Borrower
written notice of a monetary default hereunder and five days to
cure such default before enforcing any of its rights hereunder;
provided, however, that Lender shall not be required to give more
than two such notices in any 12-month period.
nStor Corporation, Inc.,
a Delaware corporation
By: /s/ R. Daniel Smith
R. Daniel Smith, President
(CORPORATE SEAL)
Maker's Address:
450 Technology Park Dr.
Lake Mary, FL 32746
Exhibit 10.9
CONTINUING UNLIMITED GUARANTY
FOR VALUABLE CONSIDERATION, and in order to induce IMGE, INC.,
a Delaware corporation (hereinafter called "Lender") to make a
certain loan or loans (the "Loan[s]") to nStor Corporation, Inc.,
a Delaware corporation (hereinafter called "Borrower"), the
undersigned (hereinafter called "Guarantor"), for himself, his
heirs, personal representatives and successors does hereby
unconditionally guarantee to Lender and its successors,
participants, endorsees and/or assigns, the due performance by
Borrower of any and all obligations, and the full and prompt
payment, whether at maturity or by acceleration or otherwise, of
any and all "indebtedness" (as said term is hereinafter defined) of
Borrower to Lender, including, without limiting the generality of
the foregoing, the indebtedness of Borrower to Lender in respect of
a loan in the principal amount of $316,000.00 evidenced by a
Promissory Note in that amount bearing even date herewith.
The term "indebtedness" is used herein in its most
comprehensive sense, and includes any and all advances, debts,
obligations and liabilities of Borrower heretofore, now or
hereafter made, incurred or created, whether voluntary or
involuntary, and howsoever arising, whether due or not, absolute or
contingent, liquidated or non-liquidated, whether Borrower may be
liable individually or jointly with another or others, whether
recovery upon such obligations may be or hereafter become barred by
any statute of limitations, or whether such obligations may be or
hereafter become otherwise unenforceable, TOGETHER WITH all accrued
interest on the foregoing and all costs and expenses, including
attorneys' fees, incurred by the Lender in enforcing or collecting
the same. This is a continuing Guaranty relating to said
obligations, including those arising under subsequent or successive
transactions between Borrower and Lender which shall either
continue or increase the indebtedness or from time to time renew it
after it has been satisfied, and is not limited as to amount. This
Guaranty cannot be revoked, terminated, rescinded or avoided by
Guarantor and shall continue in full force until all of the
indebtedness of Borrower to Lender has been paid in full and
completely discharged and satisfied.
The obligations of Guarantor hereunder are independent of the
obligations of Borrower to Lender. A separate action or actions
may be brought and prosecuted against Guarantor, whether or not an
action be brought against Borrower or whether or not any other
guarantor(s) be joined in any such action or actions. Guarantor
waives the benefit of any statute of limitations affecting his
liability hereunder or the enforcement thereof. This is a guaranty
of payment and not of collection.
Guarantor acknowledges that the Loan(s) referred to herein is
(are) a binding obligation(s) of the Borrower. Guarantor
authorizes Lender, without notice to or demand upon the Guarantor
and without in any manner affecting their liability hereunder, from
time to time and on any number of occasions, (a) to renew, amend,
compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the indebtedness or
any part thereof, including increasing or decreasing of the rate of
interest thereon or otherwise to change, waive, suspend, cancel, or
compromise any of the terms or provisions of any instrument
evidencing securing, guaranteeing, or describing the indebtedness
or any part thereof; (b) to take and hold security for the payment
of this Guaranty and/or the indebtedness guaranteed hereunder and
to exchange, enforce, waive and release any such security; (c) to
apply such security and direct the order or manner of sale thereof
as Lender, in its sole, absolute and unfettered discretion, may
determine; (d) to release or substitute any one or more of the
indorsers or other guarantor, if any, with or without specifically
reserving its rights against any other indorsers or guarantor(s)
(including Guarantor) not so released or substituted; (e) to make
optional future advances to the Borrower, whether evidenced by
future advance agreements or notes; (f) to exercise any rights or
remedies available to Lender under any instrument or agreement
evidencing, securing, guaranteeing or describing the indebtedness;
and/or (g) to assign, in whole or in part, this Guaranty and any
instrument or agreement evidencing, securing, guaranteeing or
describing the indebtedness.
Guarantor waives any right to require Lender, prior to
Lender's exercising any rights or remedies against Guarantor
hereunder or in connection with the indebtedness of Borrower to
Lender, (a) to proceed against Borrower; (b) to proceed against or
exhaust any security held from Borrower; or (c) to pursue any other
remedy in Lender's power whatsoever.
Guarantor shall have no right to subrogation (and Guarantor
hereby absolutely, irrevocably and unconditionally waives any such
right to subrogation) and Guarantor also waives any right to
enforce any remedy which Lender now has or may hereafter have
against Borrower and Guarantor further waives any benefit of, and
any right to participate in, any security for the indebtedness of
Borrower to Lender now or hereafter held by Lender. Guarantor
waives all presentments, demands for performance, notices of
non-performance, protests, notices of dishonor and notices of
acceptance of this Guaranty and of the existence, creation or
incurring of new or additional indebtedness by Borrower to Lender.
Guarantor hereby agrees to indemnify Lender from and against any
and all losses, costs and/or expenses (including reasonable
attorneys fees and court costs at all levels of proceedings) which
may be sustained or incurred by Lender by reason of the assertion
by Guarantor of any defense hereunder based upon any such action or
inaction of the Borrower.
Guarantor covenants to use his best efforts to cause Borrower
(a) to maintain and preserve the enforceability of any instruments
now or hereafter executed in favor of Lender, and (b) to refrain
from taking any action of any kind which might be the basis for a
claim that Guarantor has any defense hereunder other than payment
and performance in full of all obligations, including payment in
full of all indebtedness of Borrower to Lender.
Guarantor waives any right or claim of right to cause a
marshaling of Borrower's assets or to require Lender to proceed
against the Guarantor in any particular order. Lender shall be
entitled to take action against Guarantor without in any manner
affecting the obligations of any other guarantor not then being
proceeded against. No delay on the part of Lender in the exercise
of any right, power or privilege granted to Lender under any
document, instrument or agreement executed by or with Borrower or
under this Guaranty shall operate as a waiver of any such
privilege, power or right. No act, delay, omission or course of
dealing between Lender and Borrower and/or Lender and Guarantor
shall be deemed a waiver of any of Lender's rights, privileges, or
remedies under this Guaranty, and no waiver, change, modification,
or discharge of this Guaranty or any obligations created hereby
shall be effective unless in writing signed by Lender. Each
written waiver, if any, shall apply only with respect to the
specific instance involved and shall in no way impair the rights of
Lender or the obligations of Guarantor to Lender in any other
respect at any one time or cause Lender, at any time thereafter, to
have to give notice to Guarantor before being able to exercise of
its rights or remedies against Borrower and/or Guarantor.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time payment of the indebtedness, or
any part thereof, shall be rescinded or shall otherwise be required
to be restored or returned by Lender upon Borrower's insolvency,
bankruptcy, reorganization or otherwise, all as though such payment
has not been made, notwithstanding any termination hereof or the
cancellation of any instrument evidencing, securing or guaranteeing
the indebtedness.
Guarantor shall keep, and shall cause the Borrower to keep,
accurate records and books of account in accordance with generally
accepted accounting principles and will permit, and will cause the
Borrower to permit, the Lender, by its agents, accountants and
attorneys, to examine such records and books of account and to
discuss the affairs, finances and accounts of the Guarantor with
the officers, employees or other appropriate representatives of
Guarantor, at such reasonable times as may be requested by the
Lender.
Any obligation of Borrower now or hereafter held by the
Guarantor is hereby subordinated to the indebtedness of Borrower to
Lender and no such obligation shall be paid in whole or in part as
long as there exists any indebtedness of Borrower to Lender;
provided, however, if Lender so requests, any indebtedness of
Borrower to the Guarantor, shall be collected, enforced, and
received by Guarantor as trustee for Lender and be paid over to
Lender on account of the indebtedness of Borrower to Lender, but
without reducing or affecting in any manner the liability of
Guarantor under this Guaranty.
Upon the default of Borrower with respect to any of its
obligations or indebtedness to Lender in connection with the
Loan(s) or in case Borrower or Guarantor shall become insolvent or
shall make an assignment for the benefit of creditors, or if a
petition in bankruptcy or for reorganization or for an arrangement
shall be filed by or against Borrower or Guarantor, or in the event
of the dissolution, merger, or discontinuance of business of
Borrower or any Guarantor, or in the event of the appointment of a
receiver for Borrower or for Guarantor or their respective
properties, or in the event that a judgment shall be obtained or
warrant of attachment issued against Borrower or Guarantor or any
property of either of them and the same shall not be satisfied or
discharged within ten (10) days thereafter either by payment or by
bonding, or the event of any default by Borrower under any of the
instruments or agreements evidencing, securing, guaranteeing or
describing the indebtedness, or in the event of any default by
Guarantor under the terms of any agreement (other than this
Guaranty) between such Guarantor and Lender, then, in any of such
events, all or any part of the obligations, liabilities and
indebtedness of Borrower and/or of Guarantor to Lender, whether
direct or contingent, and of every kind and description, shall,
without requirement of notice or demand upon Guarantor, at the
option of Lender, become immediately due and payable and shall be
paid forthwith to Lender by Guarantor.
Guarantor agrees that it shall not be necessary for Lender to
inquire into the powers of Borrower or of the officers or agents
acting or purporting to act in Borrower's behalf, and any
indebtedness made or created and any one or more of them and their
heirs, personal representatives and successors.
Guarantor acknowledges that he has executed this Guaranty in
order to induce the Lender to make the Loan(s) to Borrower
heretofore described and he acknowledges that but for the execution
and delivery of this Guaranty, said Loan(s) would not have been
made and that the Lender is relying and shall continue to rely on
this Guaranty when making said Loan(s).
Lender shall have the right to assign this Guaranty and this
Guaranty shall, without further reference or assignment, pass to,
and may be relied upon and enforced by, any successor or
participant or assignee of the Lender in connection with any
indebtedness or obligations of the Borrower.
This Guaranty has been accepted at the offices of Lender in
Palm Beach, Florida and shall, for all purposes by governed by and
construed in accordance with the laws of the State of Florida and
shall be deemed to be executed and delivered in addition and
cumulative to and not in substitution of, any other guaranties of
whatever nature heretofore executed and delivered by Guarantor to
Lender. Guarantor hereby submits to the jurisdiction of the state
and federal courts in the State of Florida for purposes of any
action arising from or growing out of this Guaranty, and further
agree that the venue of any action may be laid in Palm Beach
County, Florida. Nothing contained in the Guaranty, however, shall
be deemed to constitute or to imply the existence of, any agreement
by Lender to bring an action only in said courts or to restrict in
any way any of the rights or remedies of Lender to enforce the
terms of this Guaranty as, when and where Lender shall deem
appropriate in its sole discretion.
Notwithstanding anything in this Guaranty to the contrary, but
subject to qualifications hereinbelow set forth, Lender, by its
acceptance of this Guaranty, shall be deemed to have agreed that
(i) Guarantor shall be liable upon the indebtedness to the full
extent (but only to the extent) of the security therefor, the same
being all properties (whether real or personal), rights, estates
and interests now or at any time hereafter securing the payment of
all sums which may become due and payable under this Guaranty,
including, without limiting the generality of the foregoing, the
collateral pledged and assigned by Guarantor to Lender pursuant to
that certain Hypothecation Security Agreement bearing even date
herewith (the above-referenced properties, rights, estates,
interests and collateral being hereinafter sometimes collectively
referred to as the "Security Property"), (ii) if default occurs in
the timely and proper payment of all or any part of the sums which
may become due and payable under this Guaranty or in the timely and
proper performance of any of the other obligations of Guarantor
under this Guaranty, any judicial proceedings brought by Lender
against Guarantor shall be limited to the preservation, enforcement
and/or foreclosure of the liens, security titles, estates,
assignments, rights and security interests now or at any time
hereafter securing the payment of the sums which may become due and
payable under this Guaranty, and no attachment, execution or other
writ of process shall be sought, issued or levied upon any assets,
properties or funds of Guarantor other than the Security Property
except with respect to the liability described below in this
section, and (iii) in the event of a foreclosure of such liens,
security titles, estates, assignments, rights or security interests
securing the payment of the sums which may become due and payable
under this Guaranty, whether by judicial proceedings or exercise of
power of sale, no judgment for any deficiency upon the indebtedness
guaranteed hereunder shall be sought or obtained by Lender against
Guarantor, except with respect to the liability described below in
this section; provided, however, that, notwithstanding the
foregoing provisions of this section, Guarantor shall be fully and
personally liable and subject to legal action for fraud or
intentional misrepresentation by Guarantor or any agent, employee
or other person authorized or apparently authorized to make
statements or representations on behalf of Guarantor, to the full
extent of any actual losses, damages and expenses of Lender on
account thereof. Nothing contained in this section shall (i) be
deemed to be a release or impairment of (x) the indebtedness or
other obligations of the Borrower under the Promissory Note and/or
other Loan Documents, or (y) the lien granted to Lender upon the
Security Property, or (ii) in case of any default by Borrower or
Guarantor, preclude Lender from exercising any of the rights or
remedies granted to Lender under the Loan Documents, or preclude
Lender from exercising any of the rights or remedies granted to
Lender under the Hypothecation Security Agreement executed and
delivered by Guarantor, or preclude Lender from enforcing any of
the other rights of Lender except as stated in this section.
LENDER, BY ITS ACCEPTANCE HEREOF, AND GUARANTOR HEREBY
VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTIONS OR PROCEEDINGS ARISING UNDER THIS
GUARANTY OR CONCERNING THE INDEBTEDNESS OR ANY COLLATERAL THEREFOR
OR PERTAINING TO ANY TRANSACTION RELATED HERETO OR CONTEMPLATED
HEREIN, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS
ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM. GUARANTOR ACKNOWLEDGES
THAT GUARANTOR HAS BEEN REPRESENTED BY AN ATTORNEY OR HAVE HAD THE
OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS
JURY TRIAL WAIVER AND GUARANTOR UNDERSTANDS THE LEGAL EFFECT OF
THIS WAIVER.
IN WITNESS WHEREOF, the undersigned Guarantor has hereunto set
his hand and seal this 18 day of June, 1996.
Grantor:
Signed, sealed and delivered
in the presence of:
/s/ Thomas R. Harbert /s/ R. Daniel Smith
Print Name of Witness Below: R. Daniel Smith, Individually
Thomas R. Harbert
/s/ Dorothy Harper
Print Name of Witness Below:
Dorothy Harper
STATE OF FLORIDA )
) SS:
COUNTY OF )
The foregoing instrument was acknowledged before me this 18th
day of June, 1996, by R. Daniel Smith, who is personally known to
me or who has produced as identification
and who did not take an oath.
/s/ Thomas R. Harbert
NOTARY PUBLIC
Print Name: Thomas R. Harbert
Commission Number: #CC393595
My Commission Expires: July 18, 1998
(NOTARIAL SEAL)
Exhibit 10.10
CONTINUING UNLIMITED GUARANTY
FOR VALUABLE CONSIDERATION, and in order to induce IMGE, INC.,
a Delaware corporation (hereinafter called "Lender") to make a
certain loan or loans (the "Loan[s]") to nStor Corporation, Inc.,
a Delaware corporation (hereinafter called "Borrower"), the
undersigned (hereinafter called "Guarantor"), for himself, his
heirs, personal representatives and successors does hereby
unconditionally guarantee to Lender and its successors,
participants, endorsees and/or assigns, the due performance by
Borrower of any and all obligations, and the full and prompt
payment, whether at maturity or by acceleration or otherwise, of
any and all "indebtedness" (as said term is hereinafter defined) of
Borrower to Lender, including, without limiting the generality of
the foregoing, the indebtedness of Borrower to Lender in respect of
a loan in the principal amount of $1,500,000.00 evidenced by a
Promissory Note in that amount bearing even date herewith.
The term "indebtedness" is used herein in its most
comprehensive sense, and includes any and all advances, debts,
obligations and liabilities of Borrower heretofore, now or
hereafter made, incurred or created, whether voluntary or
involuntary, and howsoever arising, whether due or not, absolute or
contingent, liquidated or non-liquidated, whether Borrower may be
liable individually or jointly with another or others, whether
recovery upon such obligations may be or hereafter become barred by
any statute of limitations, or whether such obligations may be or
hereafter become otherwise unenforceable, TOGETHER WITH all accrued
interest on the foregoing and all costs and expenses, including
attorneys' fees, incurred by the Lender in enforcing or collecting
the same. This is a continuing Guaranty relating to said
obligations, including those arising under subsequent or successive
transactions between Borrower and Lender which shall either
continue or increase the indebtedness or from time to time renew it
after it has been satisfied, and is not limited as to amount. This
Guaranty cannot be revoked, terminated, rescinded or avoided by
Guarantor and shall continue in full force until all of the
indebtedness of Borrower to Lender has been paid in full and
completely discharged and satisfied.
The obligations of Guarantor hereunder are independent of the
obligations of Borrower to Lender. A separate action or actions
may be brought and prosecuted against Guarantor, whether or not an
action be brought against Borrower or whether or not any other
guarantor(s) be joined in any such action or actions. Guarantor
waives the benefit of any statute of limitations affecting his
liability hereunder or the enforcement thereof. This is a guaranty
of payment and not of collection.
Guarantor acknowledges that the Loan(s) referred to herein is
(are) a binding obligation(s) of the Borrower. Guarantor
authorizes Lender, without notice to or demand upon the Guarantor
and without in any manner affecting their liability hereunder, from
time to time and on any number of occasions, (a) to renew, amend,
compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the indebtedness or
any part thereof, including increasing or decreasing of the rate of
interest thereon or otherwise to change, waive, suspend, cancel, or
compromise any of the terms or provisions of any instrument
evidencing securing, guaranteeing, or describing the indebtedness
or any part thereof; (b) to take and hold security for the payment
of this Guaranty and/or the indebtedness guaranteed hereunder and
to exchange, enforce, waive and release any such security; (c) to
apply such security and direct the order or manner of sale thereof
as Lender, in its sole, absolute and unfettered discretion, may
determine; (d) to release or substitute any one or more of the
indorsers or other guarantor, if any, with or without specifically
reserving its rights against any other indorsers or guarantor(s)
(including Guarantor) not so released or substituted; (e) to make
optional future advances to the Borrower, whether evidenced by
future advance agreements or notes; (f) to exercise any rights or
remedies available to Lender under any instrument or agreement
evidencing, securing, guaranteeing or describing the indebtedness;
and/or (g) to assign, in whole or in part, this Guaranty and any
instrument or agreement evidencing, securing, guaranteeing or
describing the indebtedness.
Guarantor waives any right to require Lender, prior to
Lender's exercising any rights or remedies against Guarantor
hereunder or in connection with the indebtedness of Borrower to
Lender, (a) to proceed against Borrower; (b) to proceed against or
exhaust any security held from Borrower; or (c) to pursue any other
remedy in Lender's power whatsoever.
Guarantor shall have no right to subrogation (and Guarantor
hereby absolutely, irrevocably and unconditionally waives any such
right to subrogation) and Guarantor also waives any right to
enforce any remedy which Lender now has or may hereafter have
against Borrower and Guarantor further waives any benefit of, and
any right to participate in, any security for the indebtedness of
Borrower to Lender now or hereafter held by Lender. Guarantor
waives all presentments, demands for performance, notices of
non-performance, protests, notices of dishonor and notices of
acceptance of this Guaranty and of the existence, creation or
incurring of new or additional indebtedness by Borrower to Lender.
Guarantor hereby agrees to indemnify Lender from and against any
and all losses, costs and/or expenses (including reasonable
attorneys fees and court costs at all levels of proceedings) which
may be sustained or incurred by Lender by reason of the assertion
by Guarantor of any defense hereunder based upon any such action or
inaction of the Borrower.
Guarantor covenants to use its best efforts to cause Borrower
(a) to maintain and preserve the enforceability of any instruments
now or hereafter executed in favor of Lender, and (b) to refrain
from taking any action of any kind which might be the basis for a
claim that Guarantor has any defense hereunder other than payment
and performance in full of all obligations, including payment in
full of all indebtedness of Borrower to Lender.
Guarantor waives any right or claim of right to cause a
marshaling of Borrower's assets or to require Lender to proceed
against the Guarantor in any particular order. Lender shall be
entitled to take action against Guarantor without in any manner
affecting the obligations of any other guarantor not then being
proceeded against. No delay on the part of Lender in the exercise
of any right, power or privilege granted to Lender under any
document, instrument or agreement executed by or with Borrower or
under this Guaranty shall operate as a waiver of any such
privilege, power or right. No act, delay, omission or course of
dealing between Lender and Borrower and/or Lender and Guarantor
shall be deemed a waiver of any of Lender's rights, privileges, or
remedies under this Guaranty, and no waiver, change, modification,
or discharge of this Guaranty or any obligations created hereby
shall be effective unless in writing signed by Lender. Each
written waiver, if any, shall apply only with respect to the
specific instance involved and shall in no way impair the rights of
Lender or the obligations of Guarantor to Lender in any other
respect at any one time or cause Lender, at any time thereafter, to
have to give notice to Guarantor before being able to exercise of
its rights or remedies against Borrower and/or Guarantor.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time payment of the indebtedness, or
any part thereof, shall be rescinded or shall otherwise be required
to be restored or returned by Lender upon Borrower's insolvency,
bankruptcy, reorganization or otherwise, all as though such payment
has not been made, notwithstanding any termination hereof or the
cancellation of any instrument evidencing, securing or guaranteeing
the indebtedness.
Guarantor shall keep, and shall cause the Borrower to keep,
accurate records and books of account in accordance with generally
accepted accounting principles and will permit, and will cause the
Borrower to permit, the Lender, by its agents, accountants and
attorneys, to examine such records and books of account and to
discuss the affairs, finances and accounts of the Guarantor with
the officers, employees or other appropriate representatives of
Guarantor, at such reasonable times as may be requested by the
Lender.
Any obligation of Borrower now or hereafter held by the
Guarantor is hereby subordinated to the indebtedness of Borrower to
Lender and no such obligation shall be paid in whole or in part as
long as there exists any indebtedness of Borrower to Lender;
provided, however, if Lender so requests, any indebtedness of
Borrower to the Guarantor, shall be collected, enforced, and
received by Guarantor as trustee for Lender and be paid over to
Lender on account of the indebtedness of Borrower to Lender, but
without reducing or affecting in any manner the liability of
Guarantor under this Guaranty.
Upon the default of Borrower with respect to any of its
obligations or indebtedness to Lender in connection with the
Loan(s) or in case Borrower or Guarantor shall become insolvent or
shall make an assignment for the benefit of creditors, or if a
petition in bankruptcy or for reorganization or for an arrangement
shall be filed by or against Borrower or Guarantor, or in the event
of the dissolution, merger, or discontinuance of business of
Borrower or any Guarantor, or in the event of the appointment of a
receiver for Borrower or for Guarantor or their respective
properties, or in the event that a judgment shall be obtained or
warrant of attachment issued against Borrower or Guarantor or any
property of either of them and the same shall not be satisfied or
discharged within ten (10) days thereafter either by payment or by
bonding, or the event of any default by Borrower under any of the
instruments or agreements evidencing, securing, guaranteeing or
describing the indebtedness, or in the event of any default by
Guarantor under the terms of any agreement (other than this
Guaranty) between such Guarantor and Lender, then, in any of such
events, all or any part of the obligations, liabilities and
indebtedness of Borrower and/or of Guarantor to Lender, whether
direct or contingent, and of every kind and description, shall,
without requirement of notice or demand upon Guarantor, at the
option of Lender, become immediately due and payable and shall be
paid forthwith to Lender by Guarantor.
Guarantor agrees that it shall not be necessary for Lender to
inquire into the powers of Borrower or of the officers or agents
acting or purporting to act in Borrower's behalf, and any
indebtedness made or created and any one or more of them and their
heirs, personal representatives and successors.
Guarantor acknowledges that he has executed this Guaranty in
order to induce the Lender to make the Loan(s) to Borrower
heretofore described and he acknowledges that but for the execution
and delivery of this Guaranty, said Loan(s) would not have been
made and that the Lender is relying and shall continue to rely on
this Guaranty when making said Loan(s).
Lender shall have the right to assign this Guaranty and this
Guaranty shall, without further reference or assignment, pass to,
and may be relied upon and enforced by, any successor or
participant or assignee of the Lender in connection with any
indebtedness or obligations of the Borrower.
This Guaranty has been accepted at the offices of Lender in
Palm Beach, Florida and shall, for all purposes by governed by and
construed in accordance with the laws of the State of Florida and
shall be deemed to be executed and delivered in addition and
cumulative to and not in substitution of, any other guaranties of
whatever nature heretofore executed and delivered by Guarantor to
Lender. Guarantor hereby submits to the jurisdiction of the state
and federal courts in the State of Florida for purposes of any
action arising from or growing out of this Guaranty, and further
agree that the venue of any action may be laid in Palm Beach
County, Florida. Nothing contained in the Guaranty, however, shall
be deemed to constitute or to imply the existence of, any agreement
by Lender to bring an action only in said courts or to restrict in
any way any of the rights or remedies of Lender to enforce the
terms of this Guaranty as, when and where Lender shall deem
appropriate in its sole discretion.
Notwithstanding anything in this Guaranty to the contrary, but
subject to qualifications hereinbelow set forth, Lender, by its
acceptance of this Guaranty, shall be deemed to have agreed that
(i) Guarantor shall be liable upon the indebtedness to the full
extent (but only to the extent) of the security therefor, the same
being all properties (whether real or personal), rights, estates
and interests now or at any time hereafter securing the payment of
all sums which may become due and payable under this Guaranty,
including, without limiting the generality of the foregoing, the
collateral pledged and assigned by Guarantor to Lender pursuant to
that certain Hypothecation Security Agreement bearing even date
herewith (the above-referenced properties, rights, estates,
interests and collateral being hereinafter sometimes collectively
referred to as the "Security Property"), (ii) if default occurs in
the timely and proper payment of all or any part of the sums which
may become due and payable under this Guaranty or in the timely and
proper performance of any of the other obligations of Guarantor
under this Guaranty, any judicial proceedings brought by Lender
against Guarantor shall be limited to the preservation, enforcement
and/or foreclosure of the liens, security titles, estates,
assignments, rights and security interests now or at any time
hereafter securing the payment of the sums which may become due and
payable under this Guaranty, and no attachment, execution or other
writ of process shall be sought, issued or levied upon any assets,
properties or funds of Guarantor other than the Security Property
except with respect to the liability described below in this
section, and (iii) in the event of a foreclosure of such liens,
security titles, estates, assignments, rights or security interests
securing the payment of the sums which may become due and payable
under this Guaranty, whether by judicial proceedings or exercise of
power of sale, no judgment for any deficiency upon the indebtedness
guaranteed hereunder shall be sought or obtained by Lender against
Guarantor, except with respect to the liability described below in
this section; provided, however, that, notwithstanding the
foregoing provisions of this section, Guarantor shall be fully and
personally liable and subject to legal action for fraud or
intentional misrepresentation by Guarantor or any agent, employee
or other person authorized or apparently authorized to make
statements or representations on behalf of Guarantor, to the full
extent of any actual losses, damages and expenses of Lender on
account thereof. Nothing contained in this section shall (i) be
deemed to be a release or impairment of (x) the indebtedness or
other obligations of the Borrower under the Promissory Note and/or
other Loan Documents, or (y) the lien granted to Lender upon the
Security Property, or (ii) in case of any default by Borrower or
Guarantor, preclude Lender from exercising any of the rights or
remedies granted to Lender under the Loan Documents, or preclude
Lender from exercising any of the rights or remedies granted to
Lender under the Hypothecation Security Agreement executed and
delivered by Guarantor, or preclude Lender from enforcing any of
the other rights of Lender except as stated in this section.
LENDER, BY ITS ACCEPTANCE HEREOF, AND GUARANTOR HEREBY
VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTIONS OR PROCEEDINGS ARISING UNDER THIS
GUARANTY OR CONCERNING THE INDEBTEDNESS OR ANY COLLATERAL THEREFOR
OR PERTAINING TO ANY TRANSACTION RELATED HERETO OR CONTEMPLATED
HEREIN, REGARDLESS OF WHETHER SUCH ACTION OR PROCEEDING CONCERNS
ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM. GUARANTOR ACKNOWLEDGES
THAT GUARANTOR HAS BEEN REPRESENTED BY AN ATTORNEY OR HAVE HAD THE
OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS
JURY TRIAL WAIVER AND GUARANTOR UNDERSTANDS THE LEGAL EFFECT OF
THIS WAIVER.
Notwithstanding any provision contained herein to the
contrary, on the date which is sixty (60) days from the date of
this Agreement and provided that Lender has not exercised its right
of rescission pursuant to the Agreement between Lender and Borrower
of even date herewith, and provided further that no event of
default exists under the Promissory Note which remains uncured
after the expiration of any applicable notice and cure period, this
Agreement shall automatically terminate and be of no further force
or effect.
IN WITNESS WHEREOF, the undersigned Guarantor has hereunto set
his hand and seal this 18 day of June, 1996.
Signed, sealed and delivered Guarantor:
in the presence of:
/s/ Thomas R. Harbert /s/ R. Daniel Smith
Print Name of Witness Below: R. Daniel Smith, Individually
Thomas R. Harbert
/s/ Dorothy Harper
Print Name of Witness Below:
Dorothy Harper
STATE OF FLORIDA )
) SS:
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this 18th
day of June, 1996, by R. Daniel Smith, who is personally known to
me or who has produced as identification
and who did not take an oath.
/s/ Thomas R. Harbert
NOTARY PUBLIC
Print Name: Thomas R. Harbert
Commission Number: #CC393595
My Commission Expires: July 18, 1998
(NOTARIAL SEAL)
Exhibit 10.11
HYPOTHECATION SECURITY AGREEMENT
Orlando , Florida
June 18 , 1996
KNOW ALL MEN BY THESE PRESENTS that, in order to secure
payment of all sums and performance of all duties and obligations
(hereinafter collectively referred to as the "Liabilities") on the
part of the undersigned (or either or any of the undersigned, if
more than one) to be paid and performed under and pursuant to, or
as guarantor of, that certain Promissory Note dated June 18 , 1996
in the principal amount of Three Hundred Sixteen Thousand and
No/100 Dollars ($316,000.00) executed and delivered by nStor
Corporation, Inc., a Delaware corporation and in favor of IMGE,
INC., a Delaware corporation (hereinafter referred to as "Lender"),
the undersigned warrant to and agree with Lender that Lender has
and shall have a lien upon, security title to, and a security
interest in the following property which has been or is hereby
pledged, assigned and/or conveyed to, and/or deposited with and/or
delivered to Lender:
All capital stock of each and every
class in nStor Corporation, Inc.,
which is owned by the undersigned
together with all cash, stock and other dividends, proceeds and
other distributions, all rights to subscribe for securities, and
all other rights, privileges, profits, proceeds and other benefits
incident to, declared, paid, disbursed, distributed or granted in
connection with any property hereinabove described or referred to
(all the foregoing hereinafter sometimes collectively called the
"Collateral").
As used herein, the term "Liabilities" means and includes all
indebtednesses, liabilities and obligations (primary, secondary,
direct, contingent, sole, joint or several), of the undersigned, or
any of them, to the Lender, whether due or to become due and
whether now or hereafter contracted or existing. The undersigned
waive notice of the contracting, creation and existence of all and
any of the Liabilities.
Each of the undersigned warrants to the Lender that such
undersigned is the sole and lawful owner of the collateral pledged
by it(him) hereunder, free of all claims and liens other than the
security interest hereunder, with full right to deliver, pledge,
assign, convey, and transfer such property to the Lender as
Collateral hereunder.
Lender shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by applicable
statute, and shall be deemed to have exercised reasonable care if
it takes such action for that purpose as the undersigned (or if
more than one, such of the undersigned as the Lender shall have
knowledge has an ownership interest in such Collateral) shall
reasonably request in writing, but no omission to do any act not so
requested shall be deemed a failure to exercise reasonable care,
and no omission to comply with any such request shall of itself be
deemed a failure to exercise reasonable care. Lender shall not be
bound to take any steps necessary to preserve any rights in the
Collateral against prior parties, if any, and the undersigned shall
take all necessary steps for such purposes. Lender or its nominee
need not collect interest on or principal of any Collateral or give
any notice with respect to it.
Lender shall have, but shall not be limited to, the following
rights, each of which may be exercised only after an event of
default under the Promissory Note which remains uncured after the
expiration of any applicable notice and cure period: (1) to
transfer all or any part of the Collateral into the name of the
Lender or its nominee at the expense of the undersigned, with or
without disclosing that such Collateral is subject to the lien,
security title and security interest hereunder; (2) to notify the
parties obligated in any of the Collateral to make payment to
Lender of any amounts due or to become due thereon or thereunder;
(3) to enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or make any compromise or settlement it deems desirable
with reference to any of the Collateral, or extend or renew from
time to time and for any period (whether or not longer than the
original period) any indebtedness evidenced thereby; and (4) to
take possession and control of any proceeds of the Collateral.
Lender may, from time to time, without notice to the
undersigned, or any of them, (a) retain or obtain security title to
or a security interest in any property, in addition to the
Collateral, to secure any of the Liabilities; (b) retain or obtain
the primary or secondary obligation or liability of any party or
parties, in addition to the undersigned or any of them, with
respect to any of the Liabilities; (c) extend or renew for any
period (whether or not longer than the original period) or exchange
any of the Liabilities or release or compromise any of the
Liabilities or any party or parties primarily or secondarily liable
thereon; (d) release Lender's security title to and security
interest in all or any of the collateral or any other property, in
addition to the Collateral which secures any of the Liabilities and
permit any substitutions or exchange for same; and (e) resort to
the Collateral for payment of any of the Liabilities, whether or
not Lender shall have resorted to any other property or shall have
proceeded against any party primarily or secondarily liable on any
of the Liabilities.
Upon non-payment when due (whether by acceleration or
otherwise) of any amount payable on any of the Liabilities, or upon
the happening of any event which, under the aforementioned
Promissory Note or the guaranty of the undersigned thereof, gives
Lender any right to declare any of the Liabilities due and payable,
the Lender (i) shall have and may exercise without demand any and
all the rights and remedies granted to a secured party upon default
under the Uniform Commercial Code or otherwise available to Lender,
including those available under any agreement or other written
instrument evidencing or securing or otherwise relating to any of
the Liabilities or any security therefor; and (ii) may, without
demand or notice of any kind, appropriate and apply toward payment
of such of the Liabilities, and in such order of application, as
Lender may from time to time elect, any balances, credits,
deposits, accounts, items, or monies of the undersigned, or any of
them. If any notification of intended disposition of any of the
Collateral or of any other intended action is required by law, such
notification shall be deemed reasonably and properly given if
mailed at least five days before such disposition or other intended
action, postage prepaid, addressed to the undersigned (or if more
than one, to such of the undersigned as Lender shall have
acknowledge has an ownership interest in such Collateral), at the
address of such undersigned appearing in the records of the Lender.
Any proceeds of any disposition of any of the Collateral may be
applied by Lender to the payment of expenses in connection with the
Collateral, including reasonable attorneys' fees and court costs,
and any balance of such proceeds may be applied by Lender toward
the payment of such of the Liabilities, and in such order of
application, as the Lender may from time to time elect. All rights
and remedies of the Lender expressed herein are in addition to all
other rights and remedies possessed by it, including those under
any other agreement or instrument relating to any of the
Liabilities or any security therefor. No waiver by Lender of any
of its rights or remedies or of any default shall operate as a
waiver of any other right or remedy or of any other default or of
the same right or remedy or of the same default on a future
occasion. No delay or omission on the part of Lender in exercising
any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lender of any right or remedy shall
preclude any other or further exercise thereof or the exercise of
any other right or remedy. No action of Lender permitted hereunder
or under any agreement or instrument relating to any of the
Liabilities or any security therefor shall impair or affect the
rights of Lender in and to the Collateral. The singular when used
herein shall include the plural and the neuter shall include
masculine and feminine. If more than one party shall execute this
Agreement, the term "undersigned" shall mean all parties signing
this Agreement and each of the, jointly and severally.
Upon payment in full of the principal, interest and all other
indebtedness evidenced and/or secured by the Promissory Note
referred to herein, this Agreement shall terminate and be of no
further force or effect.
This Agreement shall be binding upon the heirs, executors,
administrators and assigns of each of the undersigned. This
Agreement has been delivered in the State of Florida and shall be
construed in accordance with the laws of Florida.
The undersigned specifically retains his rights to vote the
stock pledged to Lender pursuant to this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
Signed, sealed and delivered
in the presence of:
/s/ Thomas R. Harbert /s/ R. Daniel Smith
Print Name: Thomas R. Harbert R. Daniel Smith
/s/ Dorothy Harper
Print Name: Dorothy Harper
STATE OF FLORIDA )
)SS
COUNTY OF )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to
take acknowledgments, personally appeared R. Daniel Smith, who
executed the foregoing instrument and he acknowledged before me
that he executed the same freely and voluntarily. He is personally
known to me or has produced as identification
and did/did not take an oath.
WITNESS my hand and official seal in the County and State last
aforesaid this 18th day of June, 1996 .
/s/ Thomas R. Harbert
Notary Public
(NOTARIAL SEAL) My Commission Expires: July 18, 1998
# CC393595
Exhibit 10.12
HYPOTHECATION SECURITY AGREEMENT
Orlando, Florida
June 18, 1996
KNOW ALL MEN BY THESE PRESENTS that, in order to secure
payment of all sums and performance of all duties and obligations
(hereinafter collectively referred to as the "Liabilities") on the
part of the undersigned (or either or any of the undersigned, if
more than one) to be paid and performed under and pursuant to, or
as guarantor of, that certain Promissory Note dated June 18, 1996
in the principal amount of One Million Five Hundred Thousand and
No/100 Dollars ($1,500,000.00) executed and delivered by nStor
Corporation, Inc., a Delaware corporation and in favor of IMGE,
INC., a Delaware corporation (hereinafter referred to as "Lender"),
the undersigned warrant to and agree with Lender that Lender has
and shall have a lien upon, security title to, and a security
interest in the following property which has been or is hereby
pledged, assigned and/or conveyed to, and/or deposited with and/or
delivered to Lender:
All capital stock of each and every
class in nStor Corporation, Inc.,
which is owned by the undersigned
together with all cash, stock and other dividends, proceeds and
other distributions, all rights to subscribe for securities, and
all other rights, privileges, profits, proceeds and other benefits
incident to, declared, paid, disbursed, distributed or granted in
connection with any property hereinabove described or referred to
(all the foregoing hereinafter sometimes collectively called the
"Collateral").
As used herein, the term "Liabilities" means and includes all
indebtednesses, liabilities and obligations (primary, secondary,
direct, contingent, sole, joint or several), of the undersigned, or
any of them, to the Lender, whether due or to become due and
whether now or hereafter contracted or existing. The undersigned
waive notice of the contracting, creation and existence of all and
any of the Liabilities.
Each of the undersigned warrants to the Lender that such
undersigned is the sole and lawful owner of the collateral pledged
by it(him) hereunder, free of all claims and liens other than the
security interest hereunder, with full right to deliver, pledge,
assign, convey, and transfer such property to the Lender as
Collateral hereunder.
Lender shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by applicable
statute, and shall be deemed to have exercised reasonable care if
it takes such action for that purpose as the undersigned (or if
more than one, such of the undersigned as the Lender shall have
knowledge has an ownership interest in such Collateral) shall
reasonably request in writing, but no omission to do any act not so
requested shall be deemed a failure to exercise reasonable care,
and no omission to comply with any such request shall of itself be
deemed a failure to exercise reasonable care. Lender shall not be
bound to take any steps necessary to preserve any rights in the
Collateral against prior parties, if any, and the undersigned shall
take all necessary steps for such purposes. Lender or its nominee
need not collect interest on or principal of any Collateral or give
any notice with respect to it.
Lender shall have, but shall not be limited to, the following
rights, each of which may be exercised only after an event of
default under the Promissory Note which remains uncured after any
applicable notice and cure period: (1) to transfer all or any part
of the Collateral into the name of the Lender or its nominee at the
expense of the undersigned, with or without disclosing that such
Collateral is subject to the lien, security title and security
interest hereunder; (2) to notify the parties obligated in any of
the Collateral to make payment to Lender of any amounts due or to
become due thereon or thereunder; (3) to enforce collection of any
of the Collateral by suit or otherwise, and surrender, release or
exchange all or any part thereof, or make any compromise or
settlement it deems desirable with reference to any of the
Collateral, or extend or renew from time to time and for any period
(whether or not longer than the original period) any indebtedness
evidenced thereby; and (4) to take possession and control of any
proceeds of the Collateral.
Lender may, from time to time, without notice to the
undersigned, or any of them, (a) retain or obtain security title to
or a security interest in any property, in addition to the
Collateral, to secure any of the Liabilities; (b) retain or obtain
the primary or secondary obligation or liability of any party or
parties, in addition to the undersigned or any of them, with
respect to any of the Liabilities; (c) extend or renew for any
period (whether or not longer than the original period) or exchange
any of the Liabilities or release or compromise any of the
Liabilities or any party or parties primarily or secondarily liable
thereon; (d) release Lender's security title to and security
interest in all or any of the collateral or any other property, in
addition to the Collateral which secures any of the Liabilities and
permit any substitutions or exchange for same; and (e) resort to
the Collateral for payment of any of the Liabilities, whether or
not Lender shall have resorted to any other property or shall have
proceeded against any party primarily or secondarily liable on any
of the Liabilities.
Upon non-payment when due (whether by acceleration or
otherwise) of any amount payable on any of the Liabilities, or upon
the happening of any event which, under the aforementioned
Promissory Note or the guaranty of the undersigned thereof, gives
Lender any right to declare any of the Liabilities due and payable,
the Lender (i) shall have and may exercise without demand any and
all the rights and remedies granted to a secured party upon default
under the Uniform Commercial Code or otherwise available to Lender,
including those available under any agreement or other written
instrument evidencing or securing or otherwise relating to any of
the Liabilities or any security therefor; and (ii) may, without
demand or notice of any kind, appropriate and apply toward payment
of such of the Liabilities, and in such order of application, as
Lender may from time to time elect, any balances, credits,
deposits, accounts, items, or monies of the undersigned, or any of
them. If any notification of intended disposition of any of the
Collateral or of any other intended action is required by law, such
notification shall be deemed reasonably and properly given if
mailed at least five days before such disposition or other intended
action, postage prepaid, addressed to the undersigned (or if more
than one, to such of the undersigned as Lender shall have
acknowledge has an ownership interest in such Collateral), at the
address of such undersigned appearing in the records of the Lender.
Any proceeds of any disposition of any of the Collateral may be
applied by Lender to the payment of expenses in connection with the
Collateral, including reasonable attorneys' fees and court costs,
and any balance of such proceeds may be applied by Lender toward
the payment of such of the Liabilities, and in such order of
application, as the Lender may from time to time elect. All rights
and remedies of the Lender expressed herein are in addition to all
other rights and remedies possessed by it, including those under
any other agreement or instrument relating to any of the
Liabilities or any security therefor. No waiver by Lender of any
of its rights or remedies or of any default shall operate as a
waiver of any other right or remedy or of any other default or of
the same right or remedy or of the same default on a future
occasion. No delay or omission on the part of Lender in exercising
any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lender of any right or remedy shall
preclude any other or further exercise thereof or the exercise of
any other right or remedy. No action of Lender permitted hereunder
or under any agreement or instrument relating to any of the
Liabilities or any security therefor shall impair or affect the
rights of Lender in and to the Collateral. The singular when used
herein shall include the plural and the neuter shall include
masculine and feminine. If more than one party shall execute this
Agreement, the term "undersigned" shall mean all parties signing
this Agreement and each of the, jointly and severally.
On the date which is sixty (60) days from the date of this
Agreement, and provided that Lender has not exercised its right of
rescission pursuant to the Agreement between Lender and Borrower of
even date herewith, and provided further that no event of default
exists under the Promissory Note which remains uncured after any
applicable notice and cure period, this Agreement shall
automatically terminate and be of no further force or effect.
This Agreement shall be binding upon the heirs, executors,
administrators and assigns of each of the undersigned. This
Agreement has been delivered in the State of Florida and shall be
construed in accordance with the laws of Florida.
The undersigned specifically reserves the right to vote the
stock pledged to Lender pursuant to this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
Signed, sealed and delivered
in the presence of:
/s/ Thomas R. Harbert /s/ R. Daniel Smith
Print Name: Thomas R. Harbert R. Daniel Smith
/s/ Dorothy Harper
Print Name: Dorothy Harper
STATE OF FLORIDA )
)SS
COUNTY OF )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to
take acknowledgments, personally appeared R. Daniel Smith, who
executed the foregoing instrument and he acknowledged before me
that he executed the same freely and voluntarily. He is personally
known to me or has produced as identification
and did/did not take an oath.
WITNESS my hand and official seal in the County and State last
aforesaid this 18th day of June, 1996 .
/s/ Thomas R. Harbert
Notary Public
(NOTARIAL SEAL) My Commission Expires: June 18, 1998
# CC393595
Exhibit 10.13
LETTER AGREEMENT
The purpose of this letter agreement is to set forth the terms
and provisions of the Employment Agreement to be entered into
within 60 days from the date hereof between nStor Corporation,
Inc., and R. Daniel Smith:
1. Smith's base salary shall be $150,000.00 per year with
annual increases to be based on performance of the company.
2. Smith shall participate in a bonus compensation package
providing for distribution to him of 20% of the cumulative net
operating profit of the company.
3. Smith shall be named President/CEO of the company and
shall serve on the Board of Directors of the company.
4. The term of the Agreement shall be for a minimum of three
years.
5. The Agreement shall contain a standard non-compete
agreement and the parties acknowledge that Smith's participation as
CEO of Intelligent Manufacturing Systems, Inc., is not a competitor
of the company.
6. The Employment Agreement shall contain such other terms
and provisions as are mutually agreeable to the parties.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals the date and year first above-written.
nSTOR CORPORATION, INC.
By: /s/ R. Daniel Smith
R. Daniel Smith
R. Daniel Smith
Consented to As Majority
Shareholder; IMGE, INC.
/s/ Mark F. Levy
Mark F. Levy, V. President
Exhibit 10.14
IMGE, INC.
100 CENTURY BOULEVARD
WEST PALM BEACH, FL 33417
June 18, 1996
nStor Corporation, Inc.
450 Technology Park Dr.
Lake Mary, FL 92746
RE: $1,500,000.00 Revolving Line of Credit
Gentlemen:
Reference is made to that certain $1.5 million revolving
promissory note bearing even date herewith (the "Revolving Note")
executed by nStor Corporation, Inc., as "Maker", in favor of IMGE,
Inc., as "Payee". Reference is also made to that certain Agreement
bearing even date herewith (the "Acquisition Agreement") between
nStor Corporation, Inc., as "Seller", and IMGE, Inc., as
"Purchaser", pertaining to the issuance and sale by Seller to
Purchaser of certain shares of stock in nStor Corporation, Inc.
Notwithstanding anything to the contrary contained in the
Revolving Note or in any other document, instrument or agreement
between nStor Corporation, Inc. ("nStor") and IMGE, Inc. ("IMGE"),
it is hereby expressly understood and agreed that until such time
as IMGE shall have waived the right of rescission granted to it
pursuant to the last unnumbered subparagraph in Paragraph 3 of the
Acquisition Agreement (either by affirmative election to waive such
right of rescission, or by permitting such right of rescission to
lapse and expire without exercising same), the maximum principal
amount which nStor shall be permitted borrow under the Revolving
Note shall be the sum of $250,000.00.
It is further understood and agreed that, without the prior
written consent of IMGE (which consent shall be discretionary with
IMGE), sums borrowed under the Revolving Note shall be utilized
solely to pay nStor's normal operating expenses. In particular,
and without limiting the generality of the foregoing, no sums
borrowed under the Revolving Note, either before or after the
waiver or expiration of the aforesaid right of rescission, shall be
utilized to return or repay any capital contribution(s) or loan(s)
which may have been made to nStor or any of its affiliates by R.
Daniel Smith or by any other shareholder or principal of nStor or
such affiliates, or to make any other distributions or payments to
Mr. Smith or such other shareholder(s) or principal(s), i.e., other
than normal salary at the rate which was in effect prior to the
date of this letter.)
Kindly countersign this letter in the place designated below
in order to acknowledge and confirm your agreement as aforesaid.
Very truly yours,
IMGE, INC.
/s/ Mark F. Levy
By:__________________________________
Mark F. Levy, President
Confirmed, acknowledged and agreed:
nStor Corporation, Inc.
/s/ R. Daniel Smith
By:___________________________________
R. Daniel Smith, Presient
