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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 31, 1997
CHEMTRAK, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-19479 77-0295388
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
929 E. ARQUES AVENUE
SUNNYVALE, CA 94086-4520
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(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICER)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 773-8156
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 5. Other Events.
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On December 31, 1997 the Registrant entered into an Equipment Financing
Agreement (the "Agreement") with Pentech Financial Services, Inc. ("Pentech")
pursuant to which Pentech has committed up to $1,000,000 to the Registrant under
an Equipment Financing Commitment (the "Commitment") secured by all of the
Registrant's fixed assets. The terms of the Agreement provide that the
Registrant will make payments of 3.767% on any advances thereunder payable in 30
monthly installments, with an additional final payment equal to 12% of the
advance due and payable upon the expiration of any such 30-month payment period.
The commitment represented by the Agreement will expire on January 31, 1998, but
may be extended by Pentech for a period of 90 days upon a review of the
Registrant's financial condition at the expiration date.
Also on December 31, 1997 the Registrant requested an advance of $500,000
(the "First Advance Amount") under the Commitment to be used for general
corporate purposes and the nationwide roll-out of the Registrant's recently
introduced Parent's Alert(R) Home Drug Test Service. In accordance with the
terms of the Agreement, the First Advance Amount will be due and payable in 30
monthly installments of $18,835 each, commencing on February 1, 1998, with a
final payment of $60,000 due and payable upon the expiration of the
aforementioned 30-month payment period.
The terms of the Commitment provide that an additional $250,000 (the
"Second Advance Amount") will be made available to the Registrant under the
Commitment upon the successful closing of a private placement of the
Registrant's equity securities in the minimum amount of $1.5 million by
January 15, 1998. Pentech has agreed, however, to make available to the
Registrant the Second Advance Amount if the Registrant closes a private
placement of its equity securities in the minimum amount of $1.3 million by
January 30, 1998. In addition, the final $250,000 (the "Third Advance Amount")
will be made available to the Registrant under the Commitment upon the
successful closing of a second private placement of the Registrant's equity
securities in the minimum amount of $1.8 million by April 30, 1998.
Item 7. Financial Statements and Exhibits.
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(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
10.1 Equipment Financing Agreement, dated as of December 31, 1997,
between Pentech Financial Services, Inc. and ChemTrak, Inc.
10.2 Equipment Financing Commitment, dated as of December 31, 1997,
from Pentech Financial Services, Inc. to ChemTrak, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHEMTRAK, INC.
Dated: January 14, 1998 By: /s/ Donald V. Fluken
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Donald V. Fluken
Vice President, Secretary and
Chief Financial Officer
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EXHIBIT 10.1
PENTECH FINANCIAL SERVICES, INC.
Equipment Financing Agreement
EFA # 200061
THIS EQUIPMENT FINANCING AGREEMENT ("agreement") is dated as of the date set
forth at the foot hereof and is between PENTECH FINANCIAL SERVICES, INC..
("Secured Party") and the debtor designated at the foot hereof ("Debtor").
1. EQUIPMENT; SECURITY INTEREST. The terms and conditions of this agreement
cover each item of machinery, equipment and other property (individually an
"Item" or "Item of Equipment" and collectively the "Equipment") described in a
schedule now or hereafter executed by the parties hereto and made a part hereof
(individually a "Schedule" and collectively the "Schedules"). Debtor hereby
grants Secured Party a security interest in and to all Debtor's right, title and
interest in and to the Equipment under the Uniform Commercial Code, such grant
with respect to an Item of Equipment to be as of Debtor's execution of a
related equipment financing commitment referencing this agreement or, if Debtor
then has no interest in such Item, as of such subsequent time as Debtor acquires
an interest in the Item. Such security interest is granted by Debtor to secure
performance by Debtor of Debtor's obligations to Secured Party hereunder and
under any other agreements under which Debtor has or may hereafter have
obligations to Secured Party. Debtor will ensure that such security interest
will be and remain a sole and valid first lien security interest subject only to
the lien of current taxes and assessments not in default but only if such taxes
are entitled to priority as a matter of law.
2. DEBTOR'S OBLIGATIONS. The obligations of Debtor under this agreement
respecting an Item of Equipment, except the obligation to pay installment
payments with respect thereto which will commence as set forth in paragraph 3
below, commence upon the grant to Secured Party of a security interest in the
Item. Debtor's obligations hereunder with respect to an Item of Equipment and
Secured Party's security interest therein will continue until payment of all
amounts due, and performance of all terms and conditions required, hereunder
with respect thereto; provided, however, that if this agreement is then in
default said obligations and security interest will continue during the
continuance of said default. Upon termination of Secured Party's security
interest in an Item of Equipment, Secured Party will execute such release of
interest with respect thereto as Debtor reasonably requests.
3. INSTALLMENT PAYMENTS AND OTHER PAYMENTS. Debtor will repay advances Secured
Party makes on account of the Equipment together with interest in installment
payments in the amounts and at the times set forth in the Schedules, whether or
not Secured Party has rendered an invoice therefor, at the office of Secured
Party set forth at the foot hereof, or to such person and/or at such other place
as Secured Party may from time to time designate on notice to Debtor. Any other
amounts required to be paid Secured Party by Debtor hereunder are due upon
Debtor's receipt of Secured Party's invoice therefor and will be payable as
directed in the invoice. Payments under this agreement may be applied to
Debtor's then accrued obligations to Secured Party in such order as Secured
Party may choose.
4. NET AGREEMENT; NO OFFSET; SURVIVAL. This agreement is a net agreement, and
Debtor will not be entitled to any abatement of installment payments or other
payments due hereunder or any reduction thereof under any circumstances or for
any reason whatsoever. Debtor hereby waives any and all existing and future
claims, as offsets, against any installment payments or other payments due
hereunder and agrees to pay the installment payments and other amounts due
hereunder as and when due regardless of any offset or claim which may be
asserted by Debtor or on its behalf. The obligations and liabilities of Debtor
hereunder will survive the termination of this agreement.
5. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT.
DEBTOR ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND
ACQUIRED SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT SECURED PARTY IS NOT AND
WILL NOT BE THE VENDOR OF ANY EQUIPMENT AND THAT SECURED PARTY HAS NOT MADE AND
WILL NOT MAKE ANY AGREEMENT, REPRESENTATION OR WARRANTY WITH RESPECT TO THE
MERCHANTABILITY, CONDITION, QUALIFICATION OR FITNESS FOR A PARTICULAR PURPOSE OR
VALUE OF THE EQUIPMENT OR ANY OTHER MATTER WITH RESPECT THERETO IN ANY RESPECT
WHATSOEVER.
6. NO AGENCY. DEBTOR ACKNOWLEDGES THAT NO AGENT OF THE MANUFACTURER OR OTHER
SUPPLIER OF AN ITEM OF EQUIPMENT OR OF ANY FINANCIAL INTERMEDIARY IN CONNECTION
WITH THIS AGREEMENT IS AN AGENT OF SECURED PARTY. SECURED PARTY IS NOT BOUND BY
A REPRESENTATION OF ANY SUCH PARTY AND, AS CONTEMPLATED IN PARAGRAPH 27 BELOW,
THE ENTIRE AGREEMENT OF SECURED PARTY AND DEBTOR CONCERNING THE FINANCING OF THE
EQUIPMENT IS CONTAINED IN THIS AGREEMENT AS IT MAY BE AMENDED AS PROVIDED IN
THAT PARAGRAPH.
7. ACCEPTANCE. Execution by Debtor and Secured Party of a Schedule covering
the Equipment or any Items thereof will conclusively establish that such
Equipment has been included under and will be subject to all the terms and
conditions of this agreement. If Debtor has not furnished Secured Party with a
Schedule by the earlier of fourteen (14) days after receipt thereof or
expiration of the commitment period set forth in the applicable equipment
financing commitment, Secured Party may terminate its obligation to advance
funds as to the applicable Equipment.
8. LOCATION; INSPECTION; USE. Debtor will keep, or in the case of motor
vehicles, permanently garage and not remove from the United States, as
appropriate, each Item of Equipment in Debtor's possession and control at the
Equipment Location designated in the applicable Schedule, or at such other
location to which such Item of Equipment may have been moved with the prior
written consent of Secured Party. Whenever requested by Secured Party, Debtor
will advise Secured Party as to the exact location of an Item of Equipment.
Secured Party will have the right to inspect the Equipment and observe its use
during normal business hours and to enter into and upon the premises where the
Equipment may be located for such purpose. The Equipment will at all times be
used solely for commercial or business purposes and operated in a careful and
proper manner and in compliance with all
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applicable laws, ordinances, rules and regulations, all conditions and
requirements of the policy or policies of insurance required to be carried by
Debtor under the terms of this agreement and all manufacturer's instructions and
warranty requirements. Any modifications or additions to the Equipment required
by any such governmental edict or insurance policy will be promptly made by
Debtor.
9. ALTERATIONS; SECURITY INTEREST COVERAGE. Without the prior written consent
of Secured Party, Debtor will not make any alterations, additions or
improvements to any Item of Equipment which detract from its economic value or
functional utility, except as may be required pursuant to paragraph 8 above.
Secured Party's security interest in the Equipment will include all
modifications and additions thereto and replacements and substitutions therefor,
in whole or in part. Such reference to replacements and substitutions will not
grant Debtor greater rights to replace or substitute than are provided in
paragraph 11 below or as may be allowed upon the prior written consent of
Secured Party.
10. MAINTENANCE. Debtor will maintain the Equipment in good repair, condition
and working order. Debtor also will cause each Item of Equipment for which a
service contract is generally available to the covered by such a contract which
provides coverages typical as to property of the type involved and is issued by
a competent servicing entity.
11. LOSS AND DAMAGE; CASUALTY VALUE. In the event of the loss of, theft of,
requisition of, damage to or destruction of an Item of Equipment ("Casualty
Occurrence") Debtor will give Secured Party prompt notice thereof and will
thereafter place such Item in good repair, condition and working order;
provided, however, that if such Item is determined by Secured Party to be lost,
stolen, destroyed or damaged beyond repair, is requisitioned or suffers a
constructive total loss as defined in any applicable insurance policy carried by
Debtor in accordance with paragraph 14 below, Debtor, at Secured Party's option,
will (a) replace the Item with like equipment in good repair, condition and
working order whereupon such replacement equipment will be deemed such Item for
all purposes hereof or (b) pay Secured Party the "Casualty Value" of such Item
which will equal the total of (i) all installment payments and other amounts due
from Debtor to Secured Party at the time of such payment and (ii) each future
installment payment due with respect to such Item with each such payment other
than any final uneven payment discounted at eight percent (8%) per annum simple
interest from the date due to the date of such payment. Any final uneven payment
will be due without discount. The discounting contemplated in this paragraph
will be in accordance with the Financial Compound Interest and Annuity Tables,
Sixth Edition published by the Financial Publishing Company. Upon such
replacement or payment, as appropriate, this agreement and Secured Party's
security interest will terminate with, and only with, respect to the Item of
Equipment so replaced or as to which such payment is made in accordance with
paragraph 2 above.
12. TITLING; REGISTRATION. Each Item of Equipment subject to title registration
laws will at all times be titled and/or registered by Debtor as Secured Party's
agent and attorney-in-fact with full power and authority to register (but
without power to affect title to) the Equipment in such manner and in such
jurisdiction or jurisdictions as Secured Party directs. Debtor will promptly
notify Secured Party of any necessary or advisable retitling and/or
reregistration of an Item of Equipment in a jurisdiction other than one in which
such Item is then titled and/or registered. Any and all documents of title will
be furnished or caused to be furnished Secured Party by Debtor within sixty (60)
days of the date any titling or registering or retitling or reregistering, as
appropriate, is directed by Secured Party.
13. TAXES. Debtor will make all filings as to and pay when due all personal
property and other ad valorem taxes and all other taxes, fees, charges and
assessments based on the ownership or use of the Equipment and will pay as
directed by Secured Party or reimburse Secured Party for all taxes, including,
but not limited to, gross receipts taxes (exclusive of federal and state taxes
based on Secured Party's net income, unless such net income taxes are in
substitution for or relieve Debtor from any taxes which Debtor would otherwise
be obligated to pay under the terms of this paragraph 13), fees, charges and
assessments whatsoever, however designated, whether based on the installment
payments or other amounts due hereunder, levied, assessed or imposed upon the
Equipment or otherwise related hereto or to the Equipment, now or hereafter
levied, assessed or imposed under the authority of a federal, state or local
taxing jurisdiction, regardless of when and by whom payable. Filings with
respect to such other amounts will, at Secured Party's option, be made by
Secured Party or by Debtor as directed by Secured Party.
14. INSURANCE. Debtor will procure and continuously maintain all risk insurance
against loss of or damage to the Equipment from any cause whatsoever for not
less than the full replacement value thereof naming Secured Party as Loss Payee.
Such insurance must be in a form and with companies approved by Secured Party,
must provide at least thirty (30) days advance written notice to Secured Party
of cancellation, change or modification in any term, condition or amount of
protection provided therein, must provide full breach of warranty protection and
must provide that the coverage is "primary coverage" (does not require
contribution from any other applicable coverage). Debtor will provide Secured
Party with an original policy or certificate evidencing such insurance. In the
event of an assignment of this agreement by Secured Party of which Debtor has
notice, Debtor will cause such insurance to provide the same protection to the
assignee as its interest may appear. The proceeds of such insurance, at the
option of Secured Party or such assignee, as appropriate, will be applied toward
(a) the repair or replacement of the appropriate Item or Items of Equipment, (b)
payment of the Casualty Value thereof or (c) payment of, or as provision for,
satisfaction of any other accrued obligations of Debtor hereunder. Debtor hereby
appoints Secured Party as Debtor's attorney-in-fact with full power and
authority to do all things, including, but not limited to, making claims,
receiving payments and endorsing documents, checks or drafts, necessary to
secure payments due under any policy contemplated hereby on account of a
Casualty Occurrence. Debtor and Secured Party contemplate that the jurisdictions
where the Equipment will be located will not impose any liability upon Secured
Party for personal injury and/or property damage resulting out of the
possession, use, operation or condition of the Equipment. In the event Secured
Party determines that such is not or may not be the case with respect to a given
jurisdiction, Debtor will provide Secured Party with public liability and
property damage coverage applicable to the Equipment in such amounts and in such
form as Secured Party requires.
15. SECURED PARTY'S PAYMENT. If Debtor fails to pay any amounts due hereunder
or to perform any of its other obligations under this agreement, Secured Party
may, at its option, but without any obligation to do so, pay such amounts or
perform such obligations, and Debtor will reimburse Secured Party the amount of
such payment or cost of such performance.
16. INDEMNITY. Debtor does hereby assume liability for and does agree to
indemnify, defend, protect, save and keep harmless Secured Party from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including court costs and legal
expenses, of whatever kind and nature, imposed on, incurred by or asserted
against Secured Party (whether or not also indemnified against by any other
person) in any way relating to or arising out of this agreement or the
manufacture, financing, ownership, delivery, possession, use, operation,
condition or disposition of the Equipment by Secured Party or Debtor, including,
without limitation, any claim alleging latent and other defects, whether or not
discoverable by Secured Party or Debtor, and any other claim arising out of
strict liability in tort, whether or not in either instance relating to an event
occurring while Debtor remains obligated under this agreement, and any claim for
patent, trademark or copyright infringement. Debtor agrees to give Secured Party
and Secured Party agrees to give Debtor notice of any claim or liability hereby
indemnified against promptly following learning thereof.
17. DEFAULT. Any of the following will constitute an event of default here
under: (a) Debtor's failure to pay when due any installment payment or other
amount due hereunder, which failure continues for ten (10) days after the due
date thereof; (b) Debtor's default in performing any other obligation, term or
condition of this agreement or any other agreement between Debtor and Secured
Party or default under any further agreement providing security for the
performance by Debtor of its obligations hereunder, provided such default has
continued for more than twenty (20) days, except as provided in (c) and (d)
hereinbelow, or, without limiting the generality of subparagraph (1)
hereinbelow, default under any lease or any mortgage or other instrument
contemplating the provision of financial accommodation applicable to the real
estate where an Item of Equipment is located; (c) any writ or order of
attachment or execution or other legal process being levied on or charged
against any Item of Equipment and not being released or satisfied within ten
(10) days; (d) Debtor's failure to comply with its obligations under paragraph
14 above or any transfer by Debtor in violation of paragraph 21 below; (e)
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a non-appealable judgement for the payment of money in excess of $100,000 being
rendered by a court of record against Debtor which Debtor does not discharge or
make provision for discharge in accordance with the terms thereof within ninety
(90) days from the date of entry thereof; (f) death or judicial declaration of
incompetency of Debtor, if an individual; (g) the filing by Debtor of a petition
under the Bankruptcy Act or any amendment thereto or under any other insolvency
law or law providing for the relief of debtors, including, without limitation, a
petition for reorganization, arrangement or extension, or the commission by
Debtor of an act of bankruptcy; (h) the filing against Debtor of any such
petition not dismissed or permanently stayed within thirty (30) days of the
filing thereof; (i) the voluntary or involuntary making of an assignment of
substantial portion of its assets by Debtor for the benefit of creditors,
appointment of a receiver or trustee for Debtor or for any of Debtor's assets,
institution by or against Debtor or any other type of insolvency proceeding
(under the Bankruptcy Code or otherwise) or of any formal or informal proceeding
for dissolution, liquidation, settlement of claims against or winding up of the
affairs of Debtor, Debtor's cessation of business activities or the making by
Debtor of a transfer of all or a material portion of Debtor's assets or
inventory not in the ordinary course of business; (j) the occurrence of any
event described in parts (e), (f), (g), (h) or (i) hereinabove with respect to
any guarantor or other party liable for payment or performance of this
agreement; (k) any certificate, statement, representation, warranty or audit
heretofore or hereafter furnished with respect hereto by or on behalf of Debtor
or any guarantor or other party liable for payment or performance of this
agreement proving to have been false in any material respect at the time as of
which the facts therein set forth were stated or certified or having omitted any
substantial contingent or unliquidated liability or claim against Debtor or any
such guarantor or other party; (l) breach by Debtor of any lease or agreement
providing financial accommodation under which Debtor or its property is bound or
(m) a transfer of effective control of Debtor, if an organization.
18. REMEDIES. Upon the occurrence of an event of default, Secured Party will
have the rights, options, duties and remedies of a secured party, and Debtor
will have the rights and duties of a debtor, under the Uniform Commercial Code
(regardless of whether such Code or a law similar thereto has been enacted in a
jurisdiction wherein the rights or remedies are asserted) and, without limiting
the foregoing, Secured Party may exercise any one or more of the following
remedies: (a) declare the Casualty Value or such lesser amount as may be set by
law immediately due and payable with respect to any or all Items of Equipment
without notice or demand to Debtor; (b) sue from time to time for and recover
all installment payments and other payments then accrued and which accrue during
the pendency of such action with respect to any or all Items of Equipment; (c)
take possession of and, if deemed appropriate, render unusable any or all Items
of Equipment, without demand or notice, wherever same may be located, without
any court order or other process of law and without liability for any damages
occasioned by such taking of possession and remove, keep and store the same or
use and operate or lease the same until sold; (d) require Debtor to assemble any
or all Items of Equipment at the Equipment Location therefor, such location to
which such Equipment may have been moved with the written consent of Secured
Party or such other location in reasonable proximity to either of the foregoing
as Secured Party designates; (e) upon ten days notice to Debtor or such other
notice as may be required by law, sell or otherwise dispose of any Item of
Equipment, whether or not in Secured Party's possession, in a commercially
reasonable manner at public or private sale at any place deemed appropriate and
apply the net proceeds of such sale, after deducting all costs of such sale,
including, but not limited to, costs of transportation, repossession, storage,
refurbishing, advertising and broker's fees, to the obligations of Debtor to
Secured Party hereunder or otherwise, with Debtor remaining liable for any
deficiency and with any excess being returned to Debtor; (f) upon thirty (30)
days notice to Debtor, retain any repossessed or assembled Items of Equipment as
Secured Party's own property in full satisfaction of Debtor's liability for the
installment payments due hereunder with respect thereto, provided that Debtor
will have the right to redeem such Items by payment in full of its obligations
to Secured Party hereunder or otherwise or to require Secured Party to sell or
otherwise dispose of such Items in the manner set forth in subparagraph (e)
hereinabove upon notice to Secured Party within such thirty (30) day period or
(g) utilize any other remedy available to Secured Party under the Uniform
Commercial Code or similar provision of law or otherwise at law or in equity.
No right or remedy conferred herein is exclusive of any other right or remedy
conferred herein or by law; but all such remedies are cumulative of every other
right or remedy conferred hereunder or at law or in equity, by statute or
otherwise, and may be exercised concurrently or separately from time to time.
Any sale contemplated by subparagraph (e) of this paragraph 18 may be adjourned
from time to time by announcement at the time and place appointed for such sale,
or for any such adjourned sale, without further published notice, and Secured
Party may bid and become the purchaser at any such sale. Any sale of an Item of
Equipment, whether under said subparagraph or by virtue of judicial proceedings,
will operate to divest all right, title, interest, claim and demand whatsoever,
either at law or in equity, of Debtor in and to said Item and will be a
perpetual bar to any claim against such Item, both at law and in equity, against
Debtor and all persons claiming by, through or under Debtor.
19. DISCONTINUANCE OF REMEDIES. If Secured Party proceeds to enforce any right
under this agreement and such proceedings are discontinued or abandoned for any
reason or are determined adversely, then and in every such case Debtor and
Secured Party will be restored to their former positions and rights thereunder.
20. SECURED PARTY'S EXPENSES. Debtor will pay Secured Party all costs and
expenses, including attorney's fees and court costs and sales costs not offset
against sales proceeds under paragraph 18 above, incurred by Secured Party in
exercising any of its rights or remedies hereunder or enforcing any of the
terms, conditions or provisions hereof. This obligation includes the payment or
reimbursement of all such amounts whether an action is ultimately filed and
whether an action filed is ultimately dismissed.
21. ASSIGNMENT. Without the prior written consent of Secured Party, Debtor will
not sell, lease, pledge or hypothecate, except as provided in this agreement, an
Item of Equipment or any interest therein or assign, transfer, pledge or
hypothecate this agreement or any interest in this agreement or permit the
Equipment to be subject to any lien, charge or encumbrance of any nature except
the security interest of Secured Party contemplated hereby. Debtor's interest
herein is not assignable and will not be assigned or transferred by operation of
law. Consent to any of the foregoing prohibited acts applies only in the given
instance and is not a consent to any subsequent like act by Debtor or any
person.
All rights of Secured Party hereunder may be assigned pledged, mortgaged,
transferred or otherwise disposed of, either in whole or in part, without notice
to Debtor but always, however, subject to the rights of Debtor under this
agreement. If Debtor is given notice of any such assignment, Debtor will
acknowledge receipt thereof in writing. In the event Secured Party assigns this
agreement or the installment payments due or to become due hereunder or any
other interest herein, whether as security for any of its indebtedness or
otherwise, no breach or default by Secured Party hereunder or pursuant to any
other agreement between Secured Party and Debtor, should there be one, will
excuse performance by Debtor of any provision hereof, it being understood that
in the event of such default or breach by Secured Party that Debtor will pursue
any rights on account thereof solely against Secured Party. No such assignee,
unless such assignee agrees in writing, will be obligated to perform any duty,
covenant or condition required to be performed by Secured Party in connection
with this agreement.
Subject always to the foregoing, this agreement insures to the benefit of, and
is binding upon, the heirs, legatees, personal representatives, successors and
assigns of the parties hereto.
22. MARKINGS; PERSONAL PROPERTY. If Secured Party supplies Debtor with labels,
plates, decals or other markings stating that Secured Party has an interest in
the Equipment, Debtor will affix and keep the same prominently displayed on the
Equipment or will otherwise make the Equipment or its then location or
locations, as appropriate, at Secured Party's request to indicate Secured
Party's security interest in the Equipment. The Equipment is, and at all times
will remain, personal property notwithstanding that the Equipment or any Item
thereof may now be, or hereafter become, in any manner affixed or attached to,
or embedded in, or permanently resting upon real property or any improvement
thereof or attached in any manner to what is permanent as by means of cement,
plaster, nails, bolts, screws or otherwise. If requested by Secured Party,
Debtor will obtain and deliver to Secured
<PAGE>
Party waivers of interest or liens in recordable form satisfactory to Secured
Party from all persons claiming any interest in the real property on which an
Item of Equipment is or is to be installed or located.
23. LATE CHARGE. If Debtor fails to pay any installment payment or any other
sum to be paid by Debtor to Secured Party within seven (7) days of when due,
Debtor will pay to Secured Party (a) Secured Party's collection costs paid third
parties relevant to the collection thereof and (b) interest on such unpaid
installment or other amount at the rate of eighteen percent (18%) per annum, or
at such greater or lesser contract rate as may be applicable, computed from the
date due to the date paid.
24. NON-WAIVER. No covenant or condition of this agreement can be waived except
by the written consent of Secured Party. Forbearance or indulgence by Secured
Party in regard to any breach hereunder will not constitute a waiver of the
related covenant or condition to be performed by Debtor.
25. ADDITIONAL DOCUMENTS. In connection with and in order to perfect and
evidence the security interest in the Equipment granted Secured Party hereunder
Debtor will execute and deliver to Secured Party such financing statements and
similar documents as Secured Party requests. Debtor authorizes Secured Party
where permitted by law to make filings of such financing statements without
Debtor's signature. Debtor further will furnish Secured Party (a) a fiscal year
end financial statement including balance sheet and profit and loss statement
within one hundred twenty (120) days of the close of each fiscal year, (b) any
other information normally provided by Debtor to the public and (c) such other
financial data or information relative to this agreement and the Equipment,
including, without limitation, copies of vendor proposals and purchase orders
and agreements, listings of serial numbers or other identification data and
confirmations of such information, as Secured Party may from time to time
reasonably request. Debtor will procure and/or execute, have executed,
acknowledge, have acknowledged, deliver to Secured Party, record and file such
other documents and showings as Secured Party deems necessary or desirable to
protect its interest in and rights under this agreement and interest in the
Equipment. Debtor will pay as directed by Secured Party or reimburse Secured
Party for all filing, search, title report, legal and other fees incurred by
Secured Party in connection with any documents to be provided by Debtor pursuant
to this paragraph or paragraph 22 and any further similar documents Secured
Party may procure.
26. DEBTOR'S WARRANTIES. Debtor certifies and warrants that the financial data
and other information which Debtor has submitted, or will submit, to Secured
Party in connection with this agreement is, or will be at time of delivery, as
appropriate, a true and complete statement of the matters therein contained.
Debtor further certifies and warrants that (a) this agreement has been duly
authorized by Debtor and when executed and delivered by the person signing on
behalf of Debtor below will constitute the legal, valid and binding obligation,
contract and agreement of Debtor enforceable against Debtor in accordance with
its respective terms; (b) this agreement and each and every showing provided by
or on behalf of Debtor in connection herewith may be relied upon by Secured
Party in accordance with the terms thereof notwithstanding the failure of
Debtor or other applicable party to ensure proper attestation thereto, whether
by absence of a seal or acknowledgment or otherwise; (c) Debtor has the right,
power and authority to grant a security interest in the Equipment to Secured
Party for the uses and purposes herein set forth and (d) each Item of Equipment
will, at the time such Item becomes subject hereto, be in good repair, condition
and working order.
27. ENTIRE AGREEMENT. This instrument constitutes the entire agreement between
Secured Party and Debtor and will not be amended, altered or changed except by a
written agreement signed by the parties.
28. NOTICES. Notices under this agreement must be in writing and must be mailed
by United States mail, certified mail with return receipt requested, duly
addressed, with postage prepaid, to the party involved at its respective address
set forth at the foot hereof or at such other address as such party may provide
on notice to the other from time to time. Notices will be effective when
deposited. Each party will promptly notify the other of any change in the first
party's address.
29. GENDER; NUMBER; JOINT AND SEVERAL LIABILITY. Whenever the context of this
agreement requires, the neuter gender includes the feminine or masculine and the
singular number includes the plural; and whenever the words "Secured Party" are
used herein, they include all assignees of Secured Party, it being understood
that specific reference to "assignee" in paragraph 14 above is for further
emphasis. If there is more than one Debtor named in this agreement, the
liability of each will be joint and several.
30. TITLES. The titles to the paragraphs of this agreement are solely for the
convenience of the parties and are not an aid in the interpretation of the
instrument.
31. GOVERNING LAW; VENUE. This agreement will be governed and construed in
accordance with the law of the State of California. Venue for any action
related to this agreement will be in an appropriate court in Santa Clara County,
California, to which Debtor consents, or in another court selected by Secured
Party which has jurisdiction over the parties. In the event any provision
hereof is declared invalid, such provision will be deemed severable from the
remaining provisions of this agreement which will remain in full force and
effect.
32. TIME. Time is of the essence of this agreement and each and all of its
provisions.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of
____________________________________________________.
(date)
PENTECH FINANCIAL SERVICES, INC. CHEMTRAK, INC..(Debtor)
(Secured Party)
By:____________________________ By: _____________________________
(Title)________________________ (Title) _________________________
ADDRESS: 310 WEST HAMILTON AVE #202 ADDRESS: 929 E. ARQUEZ AVE.
CAMPBELL, CA. 95008 SUNNYVALE, CA 94086
<PAGE>
EXHIBIT 10.2
PENTECH FINANCIAL SERVICES,INC.
EQUIPMENT FINANCING COMMITMENT
EFA No 200061
Subject to the terms set forth in this commitment, the following equipment
financing transaction is agreed to by the undersigned Debtor and PENTECH
-------
FINANCIAL SERVICES, INC. ("Secured Party") in connection with the terms of the
- -------------------------
Equipment Financing Agreement herein referenced (the "Agreement").
Equipment Financing
Agreement: Dated as of DECEMBER , 1997
---------------------------
Equipment (all Equipment to be acceptable to Secured Party):
Commitment Amount: $1,000,000.00 of which $500,000.00 is made available
--------------
immediately, $250,000.00 to be made available to the
Company upon the successful closing of a private
placement(s) in a minimum amount of $1,500,000.00 prior
to January 15, 1998, and the final $250,000.00 will be
available after the closing of an additional equity round
of at least $1,500,000.00 by April 30, 1998.
Installment Payments: 30 payments of 3.767% of advance payable monthly in
-- -----
advance, PLUS A FINAL PAYMENT EQUAL TO 12 % OF THE
ADVANCE.
First such payment(s) are due at time of scheduling.
Commitment Expiration
Date: January 31, 1998. As more fully explained below,
----------------
Secured Party has no obligation to make any advance with
respect to Equipment not covered by a Schedule to the
Agreement executed by Secured Party and Debtor on or
prior to this date.
Debtor will comply with, procure, execute and/or have executed, acknowledge,
have acknowledged, deliver to Secured Party, record and file any documents set
forth in Exhibit A or accompanying this commitment. The form, substance and
sufficiency of all documents and showings employed in documenting the
contemplated financing transaction must be acceptable to Secured Party and its
counsel. Debtor will do likewise as to such further documents and showings as
Secured Party and its counsel may now or hereafter deem necessary or advisable
to protect Secured Party's rights under the Agreement and interest in the
Equipment. Debtor will pay as directed by Secured Party or reimburse Secured
Party for all searches, filings, title reports, attorney's services and other
charges incurred by Secured Party in connection with all such documents and
showings and any similar documents and showings Secured Party may procure.
Secured Party may, at its option, terminate its obligations to Debtor hereunder
with respect to any and all unscheduled Items of Equipment: (a) at or
subsequent to the Commitment Expiration Date, (b) upon the advent of a material
adverse change in Debtor's financial condition or Debtor's probable ability to
perform its obligations under the Agreement, (c) if the Agreement or any other
agreement under which Debtor has obligations to Secured Party is in default or
an event which with the giving of notice or lapse of time or both would
constitute such a default has occurred and is continuing or (d) with respect to
which more than fifteen percent (15%) would be advanced for shipping costs,
installation charges and design costs by giving Debtor written notice of such
termination.
ACCEPTED AND AGREED to as of:
_____________________________
PENTECH FINANCIAL SERVICES, INC. CHEMTRAK, INC.
By: ________________________________ By:______________________________
(Title)______________________________ (Title)__________________________
Address: 310 WEST HAMILTON AVE Address: 929 E ARQUEZ AVE.
CAMPBELL, CA. 95008 SUNNYVALE, CA 94086
<PAGE>
EXHIBIT A TO EQUIPMENT FINANCING COMMITMENT
Accepted by Debtor as of December ____, 1997
Page 1 of 2
--- ---
These provisions hereby become part of the Equipment Financing Commitment
between Pentech Financial Services, Inc., Secured Party, and CHEMTRAK, INC.,
--------------
Debtor., dated December ____, 1997.
In addition to the terms of the Agreement, Debtor further agrees to the
following additional provisions:
1. UCC SEARCH/RELEASES
-------------------
The Secured Party may search all public records of Debtor to locate and
identify any conflicting liens against the above referenced Equipment.
Releases from any intervening parties holding a security interest in said
Equipment shall be required prior to funding provided herein.
2. TYPE OF FINANCING
-----------------
This is a net equipment financing transaction whereby maintenance,
insurance, property taxes, and all items of a similar nature are for the
account of the Debtor.
3. EXPENSES
--------
All expenses associated with the completion of this Agreement including,
but not limited to, UCC filing fees and searches, documentation costs,
legal expenses, and equipment verification costs are for the account
of the debtor.
4. MASTER AGREEMENT
----------------
This is a Master Equipment Financing Agreement whereby Schedules may be
funded as equipment is delivered. Each Schedule to the Agreement, however,
shall cover equipment with a minimum aggregate cost of $50,000.00.
---------
5. INSTALLMENT PAYMENT AMOUNT
--------------------------
The installment payment amount of $37.67 per $1,000.00 of advance payable
-----
monthly in advance is based on the current Wall Street Journal prime rate
amount of 8.5%. Once a Schedule is funded, however, the installment payment
---
remains fixed for the duration of the term.
6. COMMITMENT EXPIRATION DATE
--------------------------
The commitment expiration date of January 31, 1998, may be extended ninety
(90) days upon review by Secured Party of the Debtor's then current
financial condition. Debtor agrees to provide Secured Party such financial
information and other information Secured Party may reasonably request to
evaluate Debtor's financial condition for purposes of granting such
extension.
1
<PAGE>
7. COMMITMENT FEE DEPOSIT
----------------------
Debtor shall provide Secured Party a $10,000.00 commitment fee deposit,
-----------
receipt of which is hereby acknowledged. This deposit shall be applied to
the advance payments due for the last Schedule funded under this Agreement.
Any unapplied balance as of the commitment expiration date may be retained
by Secured Party.
8. MONTHLY FINANCIAL STATEMENTS
----------------------------
Debtor agrees to provide Secured Party the Debtor's internally prepared
financial statements on an ongoing basis not later than fifteen (15) days
after the close of each month of Debtor's fiscal year. Upon request by
Secured Party, Debtor also agrees to provide any other pertinent and
reasonable information as Secured Party may deem necessary to evaluate
Debtor's future financial condition.
9. ANNUAL FINANCIAL STATEMENTS
---------------------------
Debtor agrees to provide Secured Party the Debtor's annual financial
statements within ninety (90) days of the close of Debtor's fiscal year
end.
10. SCHEDULES
---------
There shall be three (3) Draws to the Agreement covering equipment with a
maximum aggregate cost of $1,000,000.00.
-------------
2
