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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
[ ] EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
COMMISSION FILE NUMBER 0-20866
WILSHIRE TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<CAPTION>
CALIFORNIA 33-0433823
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
</TABLE>
5861 EDISON PLACE
CARLSBAD, CALIFORNIA 92008
(Address of principal executive offices)
(760) 929-7200
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X] No
[ ]
The number of shares outstanding of the registrant's only class of
Common Stock, no par value, was 12,943,385 on September 30, 1998.
Transitional Small Business Disclosure Format. Yes [ ] No [X]
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WILSHIRE TECHNOLOGIES, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of 3
August 31, 1998 and November 30, 1997
Condensed Consolidated Statements of Operations 4
for the Three Months Ended August 31, 1998 and
August 31, 1997
Condensed Consolidated Statements of Operations 5
for the Nine Months ended August 31, 1998 and
August 31, 1997
Condensed Consolidated Statements of Cash Flows 6
for the Nine Months Ended August 31, 1998 and
August 31, 1997
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 9
or Plan of Operation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
August 31, November 30,
1998 1997
------------ ------------
ASSETS (Note 4) (Unaudited) (Note)
<S> <C> <C>
Current assets:
Cash $ 27,000 $ 137,000
Accounts receivable trade, less allowance for doubtful
accounts of $5,000 at August 31, 1998
and November 30, 1997, respectively 280,000 335,000
Inventories (Note 2) 1,215,000 1,037,000
Current portion of note receivable (Note 3) 174,000 198,000
Other current assets 294,000 262,000
------------ ------------
Total current assets 1,990,000 1,969,000
Property and equipment, less accumulated depreciation
of $924,000 and $778,000 at May 31, 1998 and
November 30, 1997, respectively 3,051,000 1,293,000
Note receivable from the sale of discontinued business
less current portion (Note 3) -- 111,000
Debt issue costs, net (Note 4) 64,000 --
Goodwill, less accumulated amortization of $354,000
and $323,000 at August 31, 1998 and November 30,
1997, respectively 388,000 419,000
Patents and trademarks, net 122,000 115,000
------------ ------------
$ 5,615,000 $ 3,907,000
============ ============
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
Accounts payable $ 273,000 $ 625,000
Accrued expenses 220,000 372,000
Interest payable 343,000 330,000
Line of credit (Note 4) 7,713,000 3,750,000
------------ ------------
Total current liabilities 8,549,000 5,077,000
Net capital deficiency
Preferred stock, no par value, 2,000,000 shares authorized
and none issued and outstanding -- --
Common stock, no par value, 50,000,000 shares
authorized; 12,943,385 shares issued and
outstanding at August 31, 1998 and
November 30, 1997 25,907,000 25,907,000
Common stock warrants 349,000 301,000
Accumulated deficit (29,190,000) (27,378,000)
------------ ------------
Net capital deficiency (2,934,000) (1,170,000)
------------ ------------
$ 5,615,000 $ 3,907,000
============ ============
</TABLE>
Note: The condensed consolidated balance sheet at November 30, 1997 has
been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.
See accompanying notes.
3
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 934,000 $ 1,011,000
Cost of sales 796,000 765,000
------------ ------------
Gross profit 138,000 246,000
Operating expenses:
Marketing and selling 149,000 147,000
General and administrative 413,000 340,000
Research and development 40,000 123,000
------------ ------------
Total operating expenses 602,000 610,000
------------ ------------
Loss from operations (464,000) (364,000)
Other income -- --
Interest income (expense), net (261,000) (76,000)
------------ ------------
Loss before provision
for state income taxes (725,000) (440,000)
Provision for state income taxes - current -- --
------------ ------------
Net loss $ (725,000) $ (440,000)
============ ============
Weighted average shares outstanding 12,943,000 12,943,000
============ ============
Basic and diluted loss per share $ (0.06) $ (0.03)
============ ============
</TABLE>
See accompanying notes.
4
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended August 31,
-----------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 3,019,000 $ 2,602,000
Cost of sales 2,437,000 1,976,000
------------ ------------
Gross profit 582,000 626,000
Operating expenses:
Marketing and selling 396,000 424,000
General and administrative 1,219,000 946,000
Research and development 189,000 313,000
------------ ------------
Total operating expenses 1,804,000 1,683,000
------------ ------------
Loss from operations (1,222,000) (1,057,000)
Other income 1,000 --
Interest income (expense), net (590,000) (195,000)
------------ ------------
Loss before provision
for state income taxes (1,811,000) (1,252,000)
Provision for state income taxes - current 1,000 1,000
------------ ------------
Net loss $ (1,812,000) $ (1,253,000)
============ ============
Weighted average shares outstanding 12,943,000 12,943,000
============ ============
Basic and diluted loss per share $ (0.14) $ (0.10)
============ ============
</TABLE>
See accompanying notes.
5
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended August 31,
---------------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,812,000) $(1,253,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 184,000 168,000
Provision for loss on accounts receivable -- (1,000)
Net change in operating assets and liabilities:
Decrease in accounts receivable 55,000 4,000
Increase in inventories (178,000) (510,000)
(Increase) decrease in other current assets (32,000) 9,000
Increase (decrease) in accounts payable and
accrued expenses (504,000) 17,000
Increase in interest payable 13,000 197,000
----------- -----------
Net cash used in operating activities (2,274,000) (1,369,000)
----------- -----------
INVESTING ACTIVITIES
Purchase of equipment (1,904,000) (298,000)
Decrease in note receivable from sale of discontinued operations 135,000 130,000
Increase in other assets (14,000) (15,000)
----------- -----------
Net cash used in investing activities (1,783,000) (183,000)
----------- -----------
FINANCING ACTIVITIES
Proceeds from line of credit 3,963,000 1,500,000
Warrants issued to majority shareholder 48,000 --
Debt issue costs, net (64,000) --
----------- -----------
Net cash provided by financing activities 3,947,000 1,500,000
----------- -----------
NET DECREASE IN CASH (110,000) (52,000)
CASH - BEGINNING OF PERIOD 137,000 189,000
----------- -----------
CASH - END OF PERIOD $ 27,000 $ 137,000
=========== ===========
</TABLE>
See accompanying notes.
6
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Wilshire Technologies, Inc. (the "Company") develops, manufactures and markets
engineered polymer products for industrial clean room use. The Company, based in
Carlsbad, California, markets products through its Wilshire Contamination
Control Division, and manufactures certain of its products in its wholly-owned
Mexican subsidiary, Wilshire International de Mexico S.A. de C.V. During 1996,
the Company divested its Medical Products and Transdermal Products divisions and
has since focused primarily on products used in industrial clean rooms, such as
gloves and contamination control products.
BASIS OF PRESENTATION
The accompanying condensed consolidated unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB for quarterly
reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the quarter and nine months ended August 31, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending November 30, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB for the fiscal year ended November 30, 1997.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary. Significant intercompany amounts and transactions
have been eliminated.
During the period ending February 28, 1998, the Company adopted Statement of
Financial Standards (SFAS) No. 128, Earnings Per Share. The adoption of this
statement did not have a material impact since the Company has reported losses
and the impact of common stock equivalents is not included in the net loss per
share calculations as their effect is anti-dilutive or not required.
2. FINANCIAL STATEMENT INFORMATION
Inventories consist of the following:
<TABLE>
<CAPTION>
AUGUST 31, NOVEMBER 30,
1998 1997
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<S> <C> <C>
Raw materials $ 442,000 $ 156,000
Work in process 94,000 265,000
Finished goods 679,000 616,000
========== ==========
$1,215,000 $1,037,000
========== ==========
</TABLE>
7
<PAGE> 8
3. NOTE RECEIVABLE
In March 1996, the Board of Directors authorized management to proceed with the
sale of the assets of the Medical Products division which was completed on June
30, 1996, pursuant to a Purchase of Assets and Assumption of Sublease Agreement
with Acacia Laboratories of Texas, Inc. The disposition of this business has
been accounted for as a discontinued operation. Pursuant to the sale of its
Medical Products division, the Company received a $540,000 secured note, payable
over 36 months, and bearing interest at a rate of 5% per annum.
4. LINE OF CREDIT
On January 5, 1996, the Company and Trilon Dominion Partners LLC ("Trilon
Dominion") entered into a Credit Agreement (the "Agreement") for a credit line
of $1,000,000 secured by the Company's assets. Under the terms of the Agreement,
the principal was due on June 30, 1996 and the interest was payable monthly at a
rate of prime plus 3.75%. In connection with the loan, the Company issued Trilon
Dominion a five-year warrant that entitles Trilon Dominion to purchase 100,000
shares of the Company's authorized but unissued common stock at an exercise
price of $0.75 per share, subject to adjustment to protect against dilution. The
warrant is exercisable immediately and expires on January 5, 2001. Also, under
the terms of the Agreement, the Company issued Trilon Dominion a second
five-year warrant which became exercisable when the Company amended the
Agreement on June 30, 1996 to extend the termination date to December 31, 1996.
The second warrant entitles Trilon Dominion to purchase 25,000 shares of the
Company's authorized but unissued common stock at an exercise price equal to the
closing price on June 30, 1996, which was $1.75 per share and it expires on
January 5, 2001.
The Agreement was amended further on September 30, 1996, April 15, 1997, and
September 19, 1997. Each amendment increased the credit line by $1,000,000, up
to a total of $4,000,000, and extended the termination date, up to a termination
date of June 30, 1998. Trilon Dominion received a warrant to purchase 100,000
shares at the market price with each credit line increase, and a warrant to
purchase 25,000 shares at the market price with each termination date extension.
Warrants for 225,000 shares were issued in each of fiscal years 1996 and 1997.
The Company recorded the estimated fair value of the warrants issued in fiscal
year 1997 at $0.07 per underlying common share with a corresponding charge to
earnings of $16,000 in fiscal 1997.
On January 7, 1998, February 17, 1998, and March 10, 1998, the Company and
Trilon Dominion completed Demand Notes, each for $250,000 at an interest rate of
12.25%, to fund the Company's ongoing operations until a new credit facility
could be completed.
On March 31, 1998 the Company and Trilon Dominion completed an Amended and
Restated Credit Agreement and Revolving Line of Credit (the "Amended Agreement")
which included the principal of $4,000,000 from the previous Agreement and
Amendments, the principal of $750,000 from the three Demand Notes, the accrued
interest and management fees of $543,297 on the Agreement and Notes, and a new
credit line commitment of $2,200,000. Under the terms of the Amended Agreement,
the principal of $7,493,297 is due on December 31, 1998, and the interest is
payable quarterly at an annual rate of 11.5%. In connection with the Amended
Agreement, the Company paid Trilon Dominion $100,000 for debt issuance costs and
issued Trilon Dominion a five-year warrant that entitles Trilon Dominion to
purchase 650,000 shares of the Company's authorized but unissued common stock at
an exercise price of $0.41 per share, subject to adjustment to protect against
dilution. The warrant is exercisable immediately and expires on March 31, 2003.
The Company recorded the estimated fair value of the warrant to purchase 650,000
shares as a debt issuance cost in the second quarter of fiscal year 1998 at
$0.07 per underlying common share. Also, under the terms of the Amended
Agreement, the Company issued Trilon Dominion a second five-year warrant which
will become exercisable if the Company does not pay the principal and interest
due on December 31, 1998 and expires on March 31, 2003. The second warrant
entitles Trilon Dominion to purchase 250,000 shares of the Company's
8
<PAGE> 9
authorized but unissued common stock at an exercise price equal to the market
price on December 31, 1998.
On August 5, 1998, September 1, 1998, and October 1, 1998, the Company and
Trilon Dominion completed Demand Notes at an interest rate of 11.5% to fund the
Company's ongoing operations. The August and September notes each were in the
amount of $220,000 and the October note was in the amount of $250,000.
5. COMMITMENTS AND CONTINGENCIES
BREAST IMPLANT LITIGATION
During the first nine months of 1998, there have been no significant
developments in the Breast Implant Litigation. For information regarding legal
proceedings, refer to the information contained in the Company's Annual Report
on Form 10-KSB for the fiscal year ended November 30, 1997, under Note 6 to the
financial statements included therein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During fiscal year 1998, the Company has focused primarily on completing
construction of the equipment for the new glove production line and installing
that equipment in the Company's leased plant facility in Tijuana, Mexico. The
installation phase has been completed, and the equipment is now in the start-up
phase. Management expects the line to begin production of the Company's
DuraCLEAN(R) polyurethane gloves in the fourth quarter of 1998.
In addition, the Company has improved the performance of its contamination
control business during fiscal year 1998 by introducing the new UltraSOLV(TM)
ScrubPAD and Chamber Cleaning Kit for maintenance of equipment used in the
industrial electronics industry, increasing sales of the UltraSOLV(TM) Rollers
to a major computer disk drive manufacturer, and reducing production costs by
moving some manufacturing operations to Tijuana, Mexico. As a result, sales of
contamination control products are up 13% and gross profit is up 16% for the
first nine months of fiscal year 1998 versus the same period in 1997.
From time to time the Company may report, through its press releases and/or
Securities and Exchange Commission filings, certain forward-looking statements
that are subject to risks and uncertainties. Important factors that could cause
actual results to differ materially from those projected by such forward-looking
statements are set forth in Exhibit 99 to the Company's Annual Report on Form
10-KSB for the fiscal year ended November 30, 1996. These include operating
losses, liquidity, reliance on major distributors, new product development,
competition, technological change, patents, trade secrets, product liability,
dependence on key suppliers, and dependence on key personnel.
RESULTS OF OPERATIONS
NET SALES
The Company markets its products directly to end users through an internal sales
force utilizing outside distributors. Revenue for all sales is recognized when
title transfers, generally when products are shipped.
9
<PAGE> 10
Quarter
Net sales decreased by $77,000 (7.6%) to $934,000 in the third quarter of 1998
from $1,011,000 in the third quarter of 1997, due to reduced shipments of
contamination control wipers which offset increases in sales of other
contamination control products, including swabs, rollers, and scrub pads.
Nine Months
Net Sales increased by $417,000 (16.0%) to $3,019,000 in the first nine months
of 1998 from $2,602,000 in the same period of 1997 due to increased sales of
contamination control rollers and scrub pads, which offset lower sales of swabs
and wipers. The sales increase also was related to an abnormal inventory
reduction by a major distributor of contamination control wipers in the first
quarter of 1997.
GROSS PROFIT
Quarter
Gross profit decreased by $108,000 to $138,000 in the third quarter of 1998 from
$246,000 in the third quarter of 1997, primarily due to increased glove plant
expenses. Gross profit margin as a percent of sales decreased to 14.8% in the
third quarter of 1998 from 24.3% in the third quarter of 1997. Excluding the
impact of the glove sales and the related cost of sales on gross profit, the
gross profit margin as a percent of sales increased to 33.2% in the third
quarter of 1998 from 30.9% in the third quarter of 1997.
Nine Months
Gross profit decreased by $44,000 to $582,000 in the first nine months of 1998
from $626,000 in the same period of 1997, primarily due to increased glove plant
expenses. Gross profit margin as a percent of sales decreased to 19.3% in the
first nine months of 1998 from 24.1% in the same period of 1997. Excluding the
impact of the glove sales and the related cost of sales on gross profit, the
gross profit margin as a percent of sales increased to 32.7% in the first nine
months of 1998 from 32.1% in the first nine months of 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses include additional costs related to
the Company's marketing activities and administrative costs (such as executive
and office salaries, related payroll expenses, investor relations, professional
fees, supplies and utilities).
Selling, general and administrative expenses increased by $75,000 (13.3%) to
$562,000 in the third quarter of 1998 from $487,000 in the third quarter of
1997. In the first nine months of 1998, selling, general and administrative
expenses increased by $245,000 (17.9%) to $1,615,000 from $1,370,000 in the same
period of 1997.
The increase in both periods was primarily due to additional personnel expenses.
RESEARCH AND DEVELOPMENT
Research and development expenses decreased $83,000 (67.5%) to $40,000 in the
third quarter of 1998 from $123,000 in the third quarter of 1997. In the first
nine months of 1998, research and development expenses decreased by $124,000
(39.6%) to $189,000 from $313,000 in the same period of 1997. The decline in
both periods was primarily due to decreased project expenses.
10
<PAGE> 11
As a percentage of sales, research and development expenses were 4.4% in the
third quarter of 1998, compared to 12.2% in the third quarter of 1997. For the
first nine months of 1998, research and development expenses as a percentage of
sales were 6.3%, compared to 12.0% in the same period of 1997.
INTEREST INCOME (EXPENSE), NET
The Company reported higher interest expense in the third quarter and nine
months of 1998 versus the same period of 1997 due to increased debt outstanding.
The interest expense was related primarily to the line of credit due to Trilon
Dominion Partners, LLC. (see Note 4).
INCOME TAXES
For the quarters and nine months ended August 31, 1998 and August 31, 1997, the
Company sustained losses for both financial reporting and income tax purposes. A
tax provision of $1,000 related to state income taxes was recorded in the
financial statements for 1998 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
Management assesses the Company's liquidity by its ability to generate cash to
fund its operations. Significant factors in the management of liquidity are:
funds generated by operations; levels of accounts receivable, inventories,
accounts payable and capital expenditures; adequate lines of credit; and
financial flexibility to attract long-term capital on satisfactory terms.
During 1997 and the first nine months of 1998, the Company has not generated
sufficient cash from operations to fund its working capital and equipment
purchase requirements. Net cash used in operating activities was $2,274,000 in
the first nine months of 1998 versus net cash used in operating activities of
$1,369,000 in the first nine months of 1997. The increase in the cash used in
operating activities was due to an increase in the net loss primarily due to
higher interest expense, payments on accounts payable and a reduction in
interest payable related to the Amended Agreement with Trilon Dominion.
Net cash used in investing activities was $1,783,000 in the first nine months of
1998, versus net cash used in investing activities of $183,000 in the first nine
months of 1997. The increase in cash used resulted from the purchase of glove
production equipment.
Net cash provided by financing activities was $3,947,000 in the first nine
months of 1998 versus $1,500,000 in the first nine months of 1997. The debt
financing in both years was obtained from Trilon Dominion Partners, LLC.
On January 5, 1996, the Company and Trilon Dominion entered into an Agreement
for a credit line of $1,000,000 secured by the Company's assets. Under the terms
of the Agreement, the principal was due on June 30, 1996 and the interest was
payable monthly at a rate of prime plus 3.75%. The Agreement was amended on June
30, 1996, September 30, 1996, April 15, 1997, and September 19, 1997 to a total
credit line of $4 million and a termination date of June 30, 1998. See Note 4 to
the financial statements for details of the Agreement and Amendments.
On January 7, 1998, February 17, 1998, and March 10, 1998 the Company and Trilon
Dominion completed Demand Notes, each for $250,000 at an interest rate of
12.25%, to fund the Company's ongoing operations until a new credit facility
could be completed.
11
<PAGE> 12
On March 31, 1998 the Company and Trilon Dominion completed an Amended and
Restated Credit Agreement and Revolving Line of Credit (the "Amended Agreement")
which included the principal of $4,000,000 from the previous Agreement and
Amendments, the principal of $750,000 from the three Demand Notes, the accrued
interest and management fees of $543,297 on the Agreement and Notes, and a new
credit line commitment of $2,200,000. Under the terms of the Amended Agreement,
the principal of $7,493,297 is due on December 31, 1998, and the interest is
payable quarterly at an annual rate of 11.5%. In connection with the Amended
Agreement, the Company paid Trilon Dominion $100,000 for debt issuance costs and
issued Trilon Dominion a five-year warrant that entitles Trilon Dominion to
purchase 650,000 shares of the Company's authorized but unissued common stock at
an exercise price of $0.41 per share, subject to adjustment to protect against
dilution. The warrant is exercisable immediately and expires on March 31, 2003.
The Company recorded the estimated fair value of the warrant to purchase 650,000
shares as a debt issuance cost in the second quarter of fiscal year 1998 at
$0.07 per underlying common share. Also, under the terms of the Amended
Agreement, the Company issued Trilon Dominion a second five-year warrant which
will become exercisable if the Company does not pay the principal and interest
due on December 31, 1998 and expires on March 31, 2003. The second warrant
entitles Trilon Dominion to purchase 250,000 shares of the Company's authorized
but unissued common stock at an exercise price equal to the market price on
December 31, 1998.
On August 5, 1998, September 1, 1998, and October 1, 1998, the Company and
Trilon Dominion completed Demand Notes at an interest rate of 11.5% to fund the
Company's ongoing operations. The August and September notes each were in the
amount of $220,000 and the October note was in the amount of $250,000.
12
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
For information regarding legal proceedings, refer to the information
contained in the Company's annual report on Form 10-KSB for the
fiscal year ended November 30, 1997 under the heading, "Legal
Proceedings" and Note 6 to the financial statements therein.
ITEM 2. CHANGES IN SECURITIES:
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
ITEM 5. OTHER INFORMATION:
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.116 Employment Agreement dated May 18, 1998, between the
Registrant and Mr. Paul Fennell.
10.117 Sales Representative Agreement dated June 1, 1998 between
the Registrant and Exxustech, Inc.
10.118 Exclusive Product Supply Agreement dated July 28, 1998
between the Registrant and Time Release Sciences, Inc.
10.119 Independent Consultant Agreement dated August 5, 1998
between the Registrant and Percura, Inc.
10.120 Employment Agreement dated August 17, 1998 between the
Registrant and Mr. Kevin Mulvihill.
10.121 Demand Note dated August 5, 1998 between the Registrant
and Trilon Dominion Partners, L.L.C.
10.122 Demand Note dated September 1, 1998 between the Registrant
and Trilon Dominion Partners, L.L.C.
10.123 Demand Note dated October 1, 1998 between the Registrant
and Trilon Dominion Partners, L.L.C.
(b) REPORTS ON FORM 8-K:
None
13
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SIGNATURES
In accordance with requirements of the Securities Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WILSHIRE TECHNOLOGIES, INC.
Dated: October 12, 1998 By: /s/ James W. Klingler
---------------------------------
James W. Klingler
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
<S> <C> <C>
10.116 Employment Agreement dated May 18, 1998, between the 16
Registrant and Mr. Paul Fennell.
10.117 Sales Representative Agreement dated June 1, 1998 24
between the Registrant and Exxustech, Inc.
10.118 Exclusive Product Supply Agreement dated July 28, 1998 34
between the Registrant and Time Release Sciences, Inc.
10.119 Independent Consultant Agreement dated August 5, 1998 42
between the Registrant and Percura, Inc.
10.120 Employment Agreement dated August 17, 1998 between the 47
Registrant and Mr. Kevin Mulvihill.
10.121 Demand Note dated August 5, 1998 between the Registrant and 56
Trilon Dominion Partners, L.L.C.
10.122 Demand Note dated September 1, 1998 between the Registrant and 57
Trilon Dominion Partners, L.L.C.
10.123 Demand Note dated October 1, 1998 between the Registrant and 58
Trilon Dominion Partners, L.L.C.
</TABLE>
15
<PAGE> 1
EXHIBIT 10.116
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of May 18, 1998 (the
"Agreement") by and between Wilshire Technologies, Inc., a California
corporation (the "Company") and Paul Fennell, an individual residing at San
Diego, California ("Executive").
The Company and Executive desire to set forth the terms and
conditions on which (i) the Company shall employ Executive as Vice President of
Operations (ii) Executive shall render services to the Company, and (iii) the
Company shall compensate Executive for such services.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. Employment.
The Company hereby employs Executive and Executive hereby
accepts such employment to perform executive services as hereinafter provided
for the period from May 18, 1998 through May 17, 1999. Commencing May 18, 1999,
the period of employment shall be automatically extended from year to year for
additional periods of one year each unless the Company or Executive at least
three months prior to the time the Agreement would otherwise have expired shall
give the other party written notice of intention not to extend the employment.
The original one-year period of this Agreement and any extensions thereof are
hereinafter referred to as the "Term".
2. Duties and Responsibilities.
2.1 During the Term Executive shall devote his full attention
and expend his best efforts, energies, and skills, on a full-time basis, to the
business of the Company and any corporation controlled by the Company (each a
"Subsidiary"). For purposes of this Agreement, the term the "Company" shall mean
the Company and all Subsidiaries.
2.2 During the Term Executive shall serve as the Vice
President of Operations of the Company. In the performance of his
responsibilities hereunder, Executive shall be subject to all of the Company's
policies, rules and regulations applicable to its executives of comparable
status, shall report directly to the President and Chief Executive Officer of
the Company (the "CEO") and shall be subject to the direction and control of the
CEO.
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2.3 Executive's services shall be rendered principally in or
from an office located in the Carlsbad, California, area. Nevertheless,
Executive agrees to make such trips out of the area, for limited periods, as are
reasonably incident to the performance of his duties.
2.4 Without first obtaining the written permission of the CEO
in each instance, Executive will not authorize or permit the Company to engage
the services of, or engage in any business activity with, or provide any
financial or other benefit to, any affiliate of Executive. The phrase "affiliate
of Executive" as used in this Section shall mean and include Executive's family
by blood or marriage (including, without limitation, parents, spouse, siblings,
children and in-laws), and any business or business entity which is directly or
indirectly owned or controlled by Executive or any member of Executive's family
or in which Executive or any member of Executive's family has any direct or
indirect financial interest whatsoever.
2.5 In order to induce the Company to enter into this
Agreement, Executive represents and warrants to the Company that (a) Executive
is not a party or subject to any employment agreement or arrangement with any
other person, firm, company, corporation or other business entity, (b) Executive
is subject to no restraint, limitation or restriction by virtue of any agreement
or arrangement, or by virtue of any law or otherwise which would impair
Executive's right or ability to remain in the employ of the Company, or to
perform fully his duties and obligations pursuant to this Agreement, and (c) to
the best of Executive's knowledge, no material litigation is pending or
threatened against any business or business entity owned or controlled or
formerly owned or controlled by Executive.
3. Compensation.
3.1 During the Term the Company shall pay Executive a salary
at an annual rate of $89,000, subject to review after one year, and an
automobile allowance of $6,000 per year, payable in installments in accordance
with the Company's regular practice, but not less often than monthly.
3.2 The Company hereby grants Executive a ten-year
Non-Qualified Stock Option under the Company's 1995 Stock Option Plan to
purchase 50,000 shares of the common stock of the Company at the option exercise
price of $0.56 per share. The option shall vest immediately as to 16,666 shares,
vests on May 18, 1999 as to an additional 16,666 shares, vests on May 18, 2000
as to the remaining 16,667 shares, and has the other terms and conditions set
forth in the Non-Qualified Stock Option Agreement attached to this Agreement,
and incorporated herein by reference.
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3.3 Executive shall be entitled to reasonable periods of paid
sick leave, two weeks paid vacation per year and holidays in accordance with the
Company's regular policy.
3.4 Executive is authorized to incur reasonable expenses in
the performance of his duties hereunder, including, but not limited to, Mexican
insurance for his personal vehicle used to travel to Mexico, and expenses of a
cell phone used for Company business. The Company shall reimburse Executive for
such expenses upon the presentation by Executive, not less frequently than
monthly, of signed, itemized accounts of such expenditures and vouchers, all in
accordance with the Company's procedures and policies as adopted and in effect
from time to time and applicable to its executives of comparable status.
3.5 The Company shall provide Executive, at the Company's
expense, participation in group medical, dental, accident, disability and life
insurance plans of the Company and other standard benefits as may be provided by
the Company from time to time to its executives of comparable status, subject
to, and to the extent that, Executive is eligible under such benefit plans in
accordance with their respective terms.
3.6 If the Company requires the Employee to work in Mexico
more than 180 days in a calendar year and the Employee therefore is subject to
Mexican non-resident income taxes, and if such Mexican non-resident income taxes
plus the U.S. federal and California state income taxes the Employee pays exceed
the amount of combined U.S. federal and California state income taxes that the
Employee would have paid on a proforma basis if he had worked in the U.S. for
the full year, then the Company will pay to the Employee such excess, including
an amount for additional income taxes due on the payment, with the intention of
making the Employee whole.
4. Termination.
4.1 The Company may terminate Executive's employment under
this Agreement at any time for Cause. "Cause" shall exist for such termination
if Executive (i) is adjudicated guilty of illegal activities by a court of
competent jurisdiction, (ii) commits any act of fraud or intentional
misrepresentation, (iii) has, in the reasonable judgment of the CEO, engaged in
serious misconduct, which misconduct has or would, if generally known,
materially adversely affect the good will or reputation of the Company and which
misconduct Executive has not cured or altered to the satisfaction of the CEO
within ten days following notice by the CEO to Executive regarding such
misconduct, (iv) refused to follow any lawful directive of the CEO to Executive
concerning material aspect of the Company's business, (v) has made any
misrepresentation to the Company under Section 2.5 hereof, or (vi) has been
incapable to perform his duties under this Agreement for at least three
consecutive months.
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4.2 The Company may terminate Executive's employment under
this Agreement at any time without Cause.
4.3 If the Company terminates Executive's employment pursuant
to the provisions of Section 4.2 hereof, or if the Company does not agree to
extend Executive's employment pursuant to the provisions of Paragraph 1 hereof,
Executive shall receive as his severance an amount equal to six months of
Executive's then salary, payable in six equal monthly installments. The first
payment shall be made on Executive's regular pay day immediately following the
date of termination.
4.4 If Executive does not agree to extend his employment
pursuant to the provisions of Paragraph 1 hereof, Executive shall receive no
severance pay.
4.5 Death of Executive. In the event Executive shall die at
any time during the Term, this Agreement shall terminate. In such event the
estate of Executive shall forthwith receive any salary accrued or unpaid to the
date of his death.
5. Restrictive Covenants.
5.1 Executive acknowledges that (i) he has a major
responsibility for the administration, development and growth of the Company's
business, (ii) his work for the Company will bring him into close contact with
confidential information of the Company and its customers, and (iii) the
agreements and covenants contained in this Section 5 are essential to protect
the business interests of the Company and that the Company will not enter into
this Agreement but for such agreements and covenants. Accordingly, Executive
covenants and agrees as follows:
5.1.a Except as otherwise provided for in this
Agreement, during the Term Executive shall not, directly or indirectly, within
any state, province or other political subdivision of the United States or any
other country in which the Company is conducting business, compete with respect
to any services or products of the Company which are either offered or are being
developed by the Company (the "Company's Business"), or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as partner, shareholder, owner,
officer, director, employee, principal, agent, creditor, trustee, consultant,
co-venturer or otherwise), any individual, corporation, firm, association,
partnership, joint venture or other business entity, which competes with the
Company's Business; provided, however, that Executive may own, solely as an
investment, not more than one (1%) percent of any class of securities of any
publicly owned corporation.
5.1.b During, and for one year after, the Term,
Executive shall not, directly or indirectly, (i) induce or attempt to influence
any employee of the Company to leave its employ, (ii) aid or agree to aid any
competitor, customer or suppliers of the Company in any attempt to hire any
person who shall have been employed by the Company within the one year period
preceding such requested aid, or
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(iii) induce or attempt to influence any person or business entity who was a
customer or supplier of the Company during any portion of said period to
transact business with a competitor of the Company.
5.1.c During the Term and thereafter, Executive
shall not disclose to anyone any information about the affairs of the Company,
including, without limitation, trade secrets, trade "know-how", inventions,
customer lists, business plans, operational methods, pricing policies, marketing
plans, sales plans, identity of suppliers or customers, sales, profits or other
financial information, which is confidential to the Company or is not generally
known in the relevant trade, nor shall Executive make use of any such
information for his own benefit.
5.2 Executive acknowledges and agrees that in the event of a
violation or threatened violation of any of the provisions of Section 5.1 (the
"Restrictive Covenants") the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
5.3 If any of the Restrictive Covenants, or any part thereof,
is held to be invalid or unenforceable, the same shall not affect the remainder
of the covenant or covenants, which shall be given full effect, without regard
to the invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or scope and/or area of such provision
and, in its reduced form, such provision shall then be enforceable.
5.4 The parties hereto intend to and hereby confer
jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. In the
event that the courts of any one or more of such jurisdictions shall hold such
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the Company's right to the relief
provided above in the courts of any other jurisdictions, within the geographical
scope of such Restrictive Covenants, as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
6. Insurance.
6.1 The Company may, from time to time, apply for and take
out, in its own name and at its own expense, life, health, accident, disability
or other insurance upon Executive in any sum or sums that it may deem necessary
to protect its interests, and
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Executive agrees to aid and cooperate in all reasonable respects with the
Company in procuring any and all such insurance, including without limitation,
submitting to the usual and customary medical examinations, and by filling out,
executing and delivering such applications and other instruments in writing as
may be reasonably required by an insurance company or companies to which an
application or applications for such insurance may be made by or for the
Company. In order to induce the Company to enter into this Agreement, Executive
represents and warrants to the Company that to the best of his knowledge
Executive is insurable at standard (non-rated) premiums.
7. Miscellaneous.
7.1 This Agreement is a personal contract, and the rights and
interests of Executive hereunder may not be sold, transferred, assigned, pledged
or hypothecated except as otherwise expressly permitted by the provisions of
this Agreement. Executive shall not under any circumstances have any option or
right to require payment hereunder otherwise than in accordance with the terms
hereof. Except as otherwise expressly provided herein, Executive shall not have
any power of anticipation, alienation or assignment of payments contemplated
hereunder, and all rights and benefits of Executive shall be for the sole
personal benefit of Executive, and no other person shall acquire any right,
title or interest hereunder by reason of any sale, assignment, transfer, claim
or judgment or bankruptcy proceedings against Executive, provided, however, that
in the event of Executive's death, Executive's estate, legal representatives or
beneficiaries (as the case may be) shall have the right to receive all of the
benefits that accrued to Executive pursuant to, and in accordance with, the
terms of this Agreement.
7.2 The Company shall have the right to assign this Agreement
to any successor of substantially all of its business or assets which assumes
the Company's obligations hereunder.
7.3 Any notice required or permitted to be given pursuant to
this Agreement shall be in writing and shall be delivered personally, sent by
facsimile transmission, receipt requested, by nationally recognized overnight
courier for next business day delivery, or sent by registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below, or at such other addresses as such party shall
designate by notice to the other in the manner provided herein for giving
notice.
If to the Company: Wilshire Technologies, Inc.
5861 Edison Place
Carlsbad, California 92008
If to the Executive: Paul Fennell
10680 Oakbend Drive
San Diego, CA 92131
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7.4 This Agreement may not be changed, amended, terminated or
superseded except by an agreement in writing, nor may any of the provisions
hereof be waived except by an instrument in writing, in any such case signed by
the party against whom enforcement of any change, amendment, termination,
waiver, modification, extension or discharge is sought.
7.5 Except as otherwise provided herein, this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of California, without giving any effect to the principles of conflicts of
laws.
7.6 All descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
7.7 If any provision of this Agreement, or part thereof, is
held to be unenforceable, the remainder of this Agreement or provision, as the
case may be, shall nevertheless remain in full force and effect.
7.8 Each of the parties hereto shall at any time and from time
to time hereafter, upon the reasonable request of the other, take such further
action and execute, acknowledge and deliver all such instruments of further
assurance as may be necessary to carry out the provisions of this Agreement.
7.9 This Agreement contains the entire agreement and
understanding between the Company and Executive with respect to the subject
matter hereof. No representations or warranties of any kind or nature relating
to the Company or its affiliates or their respective businesses, assets,
liabilities, operations, future plans or prospects have been made by or on
behalf of Company to Executive; nor have any representations or warranties of
any kind or nature been made by Executive to the Company, except as expressly
set forth in this Agreement.
8. Authorization by Board of Directors.
The execution and delivery of this Agreement by and on behalf
of the Company has been authorized by the Company's Board of Directors at a
meeting duly held on April 30, 1998.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereinabove written.
WILSHIRE TECHNOLOGIES, INC.
By: /s/ John Van Egmond
--------------------------------
Title: President and Chief
Executive Officer
EXECUTIVE
/s/ Paul Fennell
-----------------------------------
Paul Fennell
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EXHIBIT 10.117
WILSHIRE TECHNOLOGIES, INC.
SALES REPRESENTATIVE AGREEMENT
THIS SALES REPRESENTATIVE AGREEMENT ("this Agreement") is made
effective on the 1st day of June, 1998 ("Effective Date"), by and between
WILSHIRE TECHNOLOGIES, INC. ("WTI"), a California Corporation having its
principal place of business at 5861 Edison Place, Carlsbad, California 92008,
and EXXUSTECH, INC. ("Representative"), a California corporation having its
principal office at 15951 Los Gatos Boulevard, Suite A, Los Gatos, California
95032.
1. APPOINTMENT AND ACCEPTANCE
WTI hereby appoints Representative, subject to the terms and conditions
set forth in this Agreement, as its exclusive master sales representative for
the promotion and solicitation of sales of WTI Products to Customers as defined
in this Agreement. Representative hereby accepts such appointment and agrees to
exert its best efforts to promote and solicit such Products. It is understood
and acknowledged between the parties that Representative shall not be an
employee of WTI and that the relationship between WTI and Representative shall
be strictly that of principal and independent contractor.
2. PRODUCTS
The Products covered by this Agreement shall be WTI Products listed on
Exhibit A attached hereto and made a part of this Agreement ("the Products").
WTI retains the right to add or delete products from Exhibit A, and to modify,
alter, or improve the Products in its sole discretion, provided that WTI shall
provide reasonable advance notice of such changes to Representative.
3. TERRITORY
Representative shall promote and solicit orders for the purchase of the
Products from Customers in the United States of America ("the Territory").
4. CUSTOMERS
Representative shall promote and solicit orders for the purchase of the
Products from (i) capital equipment users ("End Users") within the Territory
operating in the industry segments listed on Exhibit B attached hereto, (ii)
original equipment manufacturers ("OEMs") which manufacture and sell capital
equipment to such End Users, and (iii) distributors appointed by WTI to resell
the Products to such End Users and OEMs ("Enrolled Distributors") pursuant to
the discounts and commissions set forth on Exhibits C and D attached hereto (End
Users, OEMs and Enrolled Distributors together referred to as "Customers").
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5. WTI'S RESPONSIBILITIES
WTI shall:
5.1 timely pay commissions due Representative, including the submission
of commission reports, invoices and other documentation detailing the Customer
sales transactions covered by such commission payments;
5.2 manufacture quality and competitively priced Products;
5.3 provide marketing support for the Products and furnish, without
charge, marketing, advertising and sales promotion assistance in the form of
catalog information, specification sheets, price lists, promotional literature,
and other commercial information which WTI has or may develop to assist the sale
of the Products;
5.4 conduct facility tours to prospective Customers which have been
approved and qualified by WTI;
5.5 forward all inquiries from prospective or existing Customers in the
Territory to Representative for handling and follow-up; and
5.6 enroll distributors to resell the Products ("Enrolled
Distributors") according to the guidelines set forth on Exhibit C.
5.7 reimburse Representative for reasonable travel expenses incurred at
the request of WTI, and subject to advance approval by WTI.
WTI reserves the right to determine the extent of its support
activities, as set forth in this Article 5, but will give careful consideration
to recommendations made by Representative.
6. REPRESENTATIVE'S RESPONSIBILITIES
Representative shall:
6.1 maintain a competent sales organization and adequate office
facilities to insure active and aggressive solicitation of orders for the
purchase of the Products from Customers located in the Territory;
6.2 use its best efforts to solicit, promote and secure Customer orders
to purchase the Products;
6.3 actively recruit and use its best efforts to support Enrolled
Distributors;
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6.4 participate in any training courses or meetings conducted by WTI
for Representative;
6.5 solicit orders for the Products in accordance with current WTI
prices, discounts, warranties, and other terms and conditions of sale which
shall be furnished by WTI. Such terms and conditions shall be subject to change
at any time, but WTI shall promptly notify Representative of any such changes;
6.6 supply WTI with current and prospective Customer correspondence,
Customer activity reports, sales forecasts, and such other information which WTI
may request from time to time;
6.7 provide WTI with marketing information and data, including
competitive product literature and pricing, and lost order reports;
6.8 make recommendations for new products or enhancements which will
better meet the requirements of Customers in the Territory;
6.9 participate and assist WTI in the resolution of customer-related
problems;
6.10 use best efforts to advise WTI of any substantial changes in the
status, organization or personnel of Customers in the Territory; and
6.11 focus its efforts on the promotion and sale of the Products.
Representative shall not, without prior written consent of WTI, undertake to
promote or solicit orders for competitive products of the type, specification
and capability of the Products.
7. LIMITATIONS ON THE REPRESENTATIVE'S AUTHORITY
Representative shall not exceed the express authority given to it under
this Agreement and shall not in any event:
7.1 make any attempt to bind WTI in any way, including entering into
any contract on behalf of WTI or making account adjustments or returned Product
allowances without the prior written authorization of WTI; or
7.2 use the trademark or trade name "Wilshire Technologies, Inc." or
"Wilshire Contamination Control" or other proprietary WTI names and marks in
Representative's business name, title or designation. However, during the term
of this Agreement, Representative shall have the right to indicate to the public
that it is an authorized Representative of WTI and to advertise the Products
within the Territory under the trademarks or trade names that WTI may adopt from
time to time. In no event shall this Agreement be construed as granting
Representative any right, title or interest in WTI's trademarks.
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8. ACCEPTANCE OF ORDERS
All orders or proposed contracts for the sale of the Products shall be
made directly between WTI and the Customer and shall be binding on WTI only when
accepted by it in writing. All quotations made to Customers by Representative
must contain a statement to this effect. As between the parties to this
Agreement, WTI shall have the right, in his sole discretion, to refuse to submit
a proposal to any prospective Customer, to reject any order, or to cancel any
order in whole or in part after acceptance without liability to Representative.
9. COMMISSIONS
Commissions shall be paid to Representative on the following basis:
9.1 WTI shall pay Representative commissions on net order prices, and
such commissions shall become earned at invoice date and payable on or before
the fifteenth (15) day of the month next following Customer's payment of WTI's
invoice. The term "Net Order price" means the list price of the invoiced Product
less discounts, transportation charges, taxes, returns, start-up services,
trade-in allowances, special packaging adders, or other similar items. However,
in the event that WTI subsequently refunds or credits to Customer all or any
portion of the Net Order price, WTI shall debit or charge Representative's
commission account in the amount of the commission applicable to such refund or
credit.
9.2 Commissions on Product orders from Customers shall be paid
according to the commission schedules set forth in Exhibit D attached hereto and
made a part of this Agreement, provided that the order is accepted by WTI prior
to the effective date of the termination of this Agreement and the Product is
shipped by WTI within four (4) months following such termination date.
9.3 All expenses incurred by Representative in connection with the
operation of Representative's business, including but not limited to the Product
promotion and Customer order solicitation activities undertaken by
Representative pursuant to this Agreement, shall be for the account of
Representative. Representative understands and acknowledges that his sole and
exclusive compensation from WTI shall be a commission entitlement as provided in
Section 9 of this Agreement and Exhibits C and D attached hereto.
10. CONFIDENTIALITY
All financial, engineering, marketing or other information made
available pursuant to this Agreement shall be used solely and exclusively for
the purpose of marketing and support of the Products and shall be treated as
confidential by the parties. Both Representative and WTI agree to take such
reasonable precautions as may be necessary to prevent the disclosure thereof to
any third party, except insofar as such information shall be in the public
domain at the time of such disclosure.
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11. DURATION.
11.1 This Agreement shall take effect on the Effective Date and
continue in effect for a period of one (1) year from the Effective Date. The
Agreement shall continue in full force and effect from year to year thereafter
unless terminated or modified as hereinafter provided.
11.2 After the first year, this Agreement may be terminated by either
party upon six (6) months written notice if termination notice is given prior to
the second anniversary of this contract. After the second year, this Agreement
may be terminated by either party upon nine (9) months written notice.
11.3 Either party shall have the right to immediately terminate this
Agreement in the event the other party materially breaches any article of this
Agreement and such breach remains uncured for a period of sixty (60) following
its receipt of written notice from the non-breaching party.
11.4 Upon notification of termination, Representative shall promptly
supply WTI with a list of all Customers, copies of all outstanding quotations,
and copies of all correspondence pertinent to the proper handling of Customer
negotiations. Representative shall immediately return any WTI property such as
data sheets, price books, catalogs and demonstrators.
12. ASSIGNMENT
12.1 This Agreement and the mutual obligations and duties of the
parties hereunder may not be assigned or transferred by either party without the
prior written consent of the other party to this Agreement, except that either
party may assign this Agreement in connection with a merger or the sale of
substantially all the assets of such party, provided that the assignee is at
least capable, financially and otherwise, of performing this Agreement as the
assigning party at that time.
12.2 If WTI sells the rights to any of the Products ("Affected
Products") to a company which does not accept the assignment of this Agreement
for those Affected Products, then WTI shall be entitled to immediately terminate
the Agreement with respect to the Affected Products, in consideration of paying
Representative a final Commission equivalent to the Commission earned by the
Representative on those Affected Products in the six (6) months immediately
prior to the sale of such Affected Product rights. Such payment shall be
representative sole and exclusive compensation for such termination of the
Agreement with respect to the Affected Products.
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13. INDEMNIFICATION
13.1 WTI agrees to indemnify and defend Representative against and save
Representative harmless from any and all claims, demands, losses, costs or
expenses made against or sustained by Representative by reason of any act of
WTI, its affiliates, or any agent or employee thereof, or arising on account of
warranty claims, product liability claims or failure to perform claims provided
Representative promptly delivers to WTI any notices or papers served on
Representative in a proceeding covered by this indemnity.
13.2 Representative agrees to indemnify and defend WTI against, and
save WTI harmless from, any and all claims, demands, losses, costs, or expenses
made against or sustained by WTI by reason of any act of Representative, its
affiliates, or any agent or employee thereof.
14. NO WAIVER
The failure of either party hereto to enforce any of the provisions of
this Agreement or any right or remedy conferred by law shall not be deemed a
waiver of any such provision, right or remedy.
15. COMPLETE AGREEMENT
This Agreement constitutes the complete and final understanding between
the parties with respect to the subject matter, and supersedes and cancels any
prior agreements or representations, whether written or oral.
16. APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the
laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
WILSHIRE TECHNOLOGIES, INC. EXXUSTECH, INC.
By: /s/ John Van Egmond By: /s/ Stanley R. Goldfarb
- ---------------------------------- ---------------------------
John Van Egmond Stanley R. Goldfarb
Title: President & CEO Title: President
- ---------------------------------- ------------------------
Date: 7/27/98 Date: 7/27/98
----------------------------- -------------------------
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MANUFACTURER'S REPRESENTATIVE AGREEMENT
BETWEEN WTI AND EXXUSTECH
EXHIBIT A
THE PRODUCTS
ScrubPAD HT4500 Series, All
Sponge HT4754 and HT4753 (ScrubKIT Sales)
Wipers HT4790-5, and HT4790HD in ScrubKIT Sales
Mini-Sponges HT6600-10 Series, All
Swabs HT1702-50, 1714-50, 1732-50
HT1700-5, 1701-5
Kits HT4500 ScrubKIT Sampler
HT6000 PipePREPkit Sampler
Rollers HT5020X-HD (Wafer and Media Sales)
Gloves 13000 Series, All ScrubKIT Sales of Gloves
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MANUFACTURER'S REPRESENTATIVE AGREEMENT
BETWEEN WTI AND EXXUSTECH
EXHIBIT B
CUSTOMERS/INDUSTRY SEGMENTS
OEM and Representative Sales
Master Representative sales through OEM relationship with High Vacuum Equipment
Manufacturers and High Vacuum Dealers as WTI's exclusive Representative for such
relationships in the United States of America.
Markets to be served by OEMs and High VAC Dealers:
Semiconductor Equipment Glass and Quartz Equipment
Thin Film Microcircuits High VAC Equipment Thin Film Head Wafer Equipment
Disk Media Equipment Flat Panel Display Equipment
High VAC Equipment Components Shields and Targets
Production/Rework
Master Representative Sales
Master Representative Sponsorship for sales through WTI's Enrolled Distributors,
domestic and international, in the United States of America. Sponsorship
includes support of Product introduction at senior management and engineering in
targeted semiconductor, thin film, flat panel display and disk media accounts;
training for sales to such accounts; development of promotion, presentations and
collateral; production of showcases and seminars; and actual site sales support
in primary accounts.
Markets to be served by Enrolled Distributors:
Semiconductor FABs Glass and Quartz Manufacturing
Thin Film Microcircuit Production Thin Film Head Wafer FABs
Disk Media FABs Flat Panel Display FABs
Medical Devices (CVD) High VAC Component Cleaning Services
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MANUFACTURER'S REPRESENTATIVE AGREEMENT
BETWEEN WTI AND EXXUSTECH
EXHIBIT C
DISCOUNT AND COMMISSION SCHEDULE
Under this agreement, Representative and WTI can mutually agree to sell accounts
on a distribution, OEM distribution, direct representative, or dealer resale
basis, or through sponsorship of an Enrolled Distributor sale via individual
customer preference:
1. Representative Distribution sales are made from Representative stock of WTI
Products which Representative is entitled to purchase from WTI at 40% discount
from WTI's published suggested list pricing. Representative bills and services
the account through Representative personnel.
2. Representative Direct Representative Sales are made from WTI Stock of WTI
Product at 28% commission on WTI's published suggested list pricing. WTI
delivers and bills customer upon receipt of credit approval, and commissions are
payable in accordance with section 9 of this Agreement.
a. Representative can choose to use High Vacuum Dealer Network to
service customers per terms in Item 2. above, and WTI will pay 16% commission to
that dealer and 12% to Representative on WTI published suggested list pricing.
b. All commissions, per the terms in Item 2., will be reduced by any
discounts provided to the customer, such discounts of commissions will be split
60% for Dealer and 40% for Representative. WTI will only participate in
discounts on a case-by-case basis.
3. Representative OEM Distribution sales, as WTI or private labeled product sold
by equipment companies' third party product distribution groups at 28% discount
from WTI's Suggested List Pricing, will be commissioned to Representative on net
sales to the OEM at 12% for all Products and kits listed in Exhibit A.
4. All Representative sales are subject to credit review and approval by WTI CFO
prior to acknowledgment of orders and start of delivery schedules.
5. Representative Sponsorship apply to all sales of Products listed in Exhibit A
as commissions on net stocking sales to Enrolled Distributors in accordance with
Exhibit D of this Agreement.
6. Commissions apply only to Products sold to and used in the United States of
America.
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<PAGE> 10
MANUFACTURER'S REPRESENTATIVE AGREEMENT
BETWEEN WTI AND EXXUSTECH
EXHIBIT D
COMMISSION SCHEDULE FOR SALES THROUGH ENROLLED DISTRIBUTORS
<TABLE>
<CAPTION>
Part Number Series Representative's Commission
- ------------------ ---------------------------
<S> <C>
HT4500 7%
HT4700 10%
HT6600-10 10%
HT1702-50, HT1714-50 10%
HT1729-50, HT1732-50 10%
HT1700-5, HT1701-5 10%
HT4500-10 10%
HT4500CES 10%
HT5020X-HD 10%
*13000 10%
</TABLE>
* When part of kits containing ScrubPADs.
<PAGE> 1
EXHIBIT 10.118
EXCLUSIVE PRODUCT SUPPLY AGREEMENT
This Exclusive Product Supply Agreement ("this Agreement") for high density
hydrophilic foam is made effective on the 28th day of July, 1998 ("Effective
Date") by and between Wilshire Technologies, Inc. ("WTI"), a California
corporation with a place of business at 5681 Edison Place, Carlsbad, California
92008 and Time Release Sciences, Inc. ("TRS"), a New York corporation with a
place of business at 1889 Maryland Avenue, Niagara Falls, New York 14305.
RECITALS
WHEREAS, WTI is a manufacturer and supplier of clean room and contamination
control products used for specialized applications in the electronics and
medical device industries;
WHEREAS, TRS is a manufacturer of high density hydrophilic foam;
WHEREAS, WTI desires to purchase such hydrophilic foam material from TRS; and
WHEREAS, TRS wishes to supply WTI's requirements of the hydrophilic foam
material.
NOW THEREFORE, the parties hereto agree as follows:
1.0 DEFINITIONS.
1.1 Minimum Annual Quantity shall mean the minimum annual quantity of
the Products and the Additional Products which WTI is obligated to purchase from
TRS as set forth on Exhibit A attached hereto. The Minimum Annual Quantities of
the Product shall include purchases of the Product by TMP Technologies, Inc.
("TMP") when used by TMP in manufacturing products sold to WTI. If the price per
board foot of the Product sold to TMP is different from the price referenced in
paragraph 5.1, then the calculation of the quantity of the Product purchased by
TMP shall be based on the price paid by TMP to TRS.
1.2 Product(s) shall mean the 8.3 pound high density hydrophilic foam
product current manufactured by TRS and designated by WTI Part Numbers 3270018
and 3270056, and any products substantially similar to the Product(s).
1.3 Additional Product(s) shall mean the 5.6 pound medium density
hydrophilic foam product current manufactured by TRS and designated by WTI Part
Number 3270010.
<PAGE> 2
1.4 Specification shall mean the Product and the Additional Product
specifications attached to this Agreement as Exhibit B.
2.0 TERM.
2.1 The term of this Agreement shall be for a period of three (3) years
commencing on the Effective Date above and ending automatically at the
expiration of this period.
2.2 If WTI and TRS expressly agree in writing to renew this Agreement
prior to the foregoing expiration date, this Agreement shall continue in full
force and effect for one or more successive one (1) year renewal periods.
3.0 SUPPLY AND PURCHASE.
3.1 WTI agrees that it will purchase the Minimum Annual Quantities. In
the event that WTI fails to purchase the Minimum Annual Quantity in a particular
year, TRS shall be entitled to convert this Agreement to a nonexclusive supply
agreement (and Section 3.3 below shall be rendered null and void). Conversion to
nonexclusivity will constitute TRS' exclusive remedy for WTI's failure to
purchase the Annual Minimum Quantity in a particular year (and WTI will not be
held to any further minimum purchase requirement following such conversion).
3.2 TRS will use its best efforts to supply the Minimum Annual
Quantities and any additional quantities forecasted by WTI pursuant to Section 4
below.
3.3 TRS agrees that it will not supply the Product to any other
customer which manufactures and/or sells products for clean room and/or
contamination control markets during the term of this Agreement. TRS agrees that
it will not supply the Product to any other customer which manufactures and/or
sells products for clean room and/or contamination control markets for a period
of six (6) months following the termination or expiration of this Agreement,
provided that WTI has purchased 80% or more of the Minimum Annual Quantities in
the year immediately preceding the date of termination.
4.0 PURCHASE ORDERS/FORECASTS
During the first week of each month, WTI shall forward to TRS a three
(3) month rolling forecast of Product and Additional Product requirements
designating the quantities of the Product and the Additional Product which WTI
intends to sell in such period. Product and Additional Product requirements
scheduled for delivery in months 1 and 2 of the rolling forecast will be
considered firm orders and may not be rescheduled or canceled by WTI.
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<PAGE> 3
5.0 PRICES AND PAYMENT
5.1 The price of the Product and the Additional Product will be $3.24
per board foot and $2.03 per board foot, respectively, provided that that WTI
and TRS may adjust such price during the term of this Agreement by mutual
agreement.
5.2 All payments for the Product and the Additional Product shall be
due thirty (30) days from the date of TRS' shipment to WTI.
6.0 DELIVERY/RISK OF LOSS
6.1 Delivery of all Product and Additional Product ordered by WTI shall
be made F.O.B. point of shipment. WTI shall be responsible for the payment of
all freight and insurance charges.
6.2 Title and risk of loss to the Product and the Additional Product
shall pass to WTI when TRS gives possession to the carrier at the F.O.B. point
of shipment.
7.0 TECHNICAL ASSISTANCE.
TRS shall provide technical assistance as required without additional
charge to WTI.
8.0 WARRANTIES.
TRS warrants that the Product and the Additional Product will be free
from defects in material and workmanship and conform to the Specification for a
period of six (6) months from the date of delivery. TRS HEREBY DISCLAIMS ALL
OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR PURPOSE.
9.0 CONFIDENTIALITY.
9.1 To the extent that WTI and TRS must disclose confidential
information not generally known in the industry to each other as a consequence
of the performance of this Agreement, the parties shall clearly identify such
information upon disclosure. If such disclosure is made in writing, each page
thereof containing such information shall be marked with the legend
"Confidential Information" or similar designation. If such disclosure is made
orally or visually, each party shall identify the data or material disclosed as
"Confidential Information" or similar designation at the time of disclosure, and
such oral or visual disclosure shall be reduced to writing promptly by the
disclosing party no later than thirty (30) days after disclosure. Each party
shall use such Confidential Information only for the purposes of fulfilling its
obligations under this Agreement and shall take reasonable precautions to limit
the disclosure of Confidential Information. Such
3
<PAGE> 4
information shall be disclosed only to those employees, agents, representatives
and suppliers having a need to know Confidential Information in connection with
their performance of this Agreement.
9.2 Neither WTI nor TRS shall be liable for disclosure or use of
Confidential Information if:
(a) the Information was known to a party prior to its receipt
of the Information from the other party;
(b) the Information became known or available to a party from
an independent third party source under no obligation of secrecy with respect
thereto;
(c) the Information became part of the public domain in any
way without breach of the Agreement; and
(d) the Information was disclosed by a party in accordance
with the written approval of the other party.
10.0 TERMINATION
Notwithstanding the provisions of Section 2, this Agreement may be
terminated immediately by written notice upon the occurrence of any of the
following events:
(i) by TRS or WTI in the event proceedings are instituted by or against
the other party in bankruptcy or under in solvency laws; or
(ii) by TRS or WTI in the event of a breach of any material term of the
Agreement by the other party and failure to cure such breach within forty-five
(45) days after such party's receipt of written notice detailing such breach.
11.0 ARBITRATION
Any and all controversies or disputes between the parties arising under
any Section of this Agreement shall be submitted to an arbitrator for final and
binding resolution in accordance with the commercial arbitration rules of the
American Arbitration Association. The site of the arbitration shall be at
Buffalo, New York and the law of the State of New York shall be applied by the
arbitrators.
12.0 INTELLECTUAL PROPERTY INFRINGEMENT
12.1 TRS shall at its own expense defend, or at its option settle, any
claim, suit or proceeding brought against WTI based on an allegation that the
Product or the Additional Product supplied hereunder constitutes a direct or
contributory infringement of any copyright, trade secret or claim of a United
States patent held by a third party.
4
<PAGE> 5
This obligation shall be effective only if WTI shall have made all payments then
due hereunder or if TRS is notified promptly in writing and given authority,
information and assistance for the defense of such claim, suit or proceeding. In
the event Product or Additional Product supplied by TRS hereunder become the
subject of a claim, suit or proceeding for infringement of a copyright, trade
secret or claim of a United States patent held by a third party, or in the event
of any adjudication that the Product or Additional Product so infringes, then
TRS shall at its option either (a) procure the right to continue using said
Product or Additional Product; or (b) replace it with non-infringing Product or
Additional Product; or (c) modify it so that it becomes non-infringing; or (d)
as a last resort, accept the return of the Product or Additional Product in bun
stock and refund the purchase price of all Product or Additional Product
returned in bun stock and purchased by WTI under this Agreement.
12.2 This indemnity does not apply to the following:
a. patented processes formed by the Product or the Additional
Product in conjunction with products not sold by TRS or
another product produced thereby;
b. combinations of the Product or the Additional Product with
another product not furnished hereunder unless TRS is a
contributory infringer; or
c. any settlements of a suit or proceeding made without TRS's
written consent.
13.0 LIMITATION OF LIABILITY
In no event shall WTI or TRS be liable to the other for any special,
indirect, incidental or consequential damages.
14.0 GENERAL
14.1 Force Majeure. Neither TRS nor WTI shall be liable for failure to
perform or for delay in performance due to fire, flood, strike, act or God, act
of any governmental authority, embargo or other reasonably unforeseeable cause.
In the event of delay in performance due to any such cause, the date of delivery
or time for completion will be extended by a period of time reasonably necessary
to overcome the effect of such delay.
14.2 Notices. All notices permitted or required under this Agreement
shall be sent via facsimile, certified mail or courier to the signature parties
at the addresses set forth above.
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<PAGE> 6
14.3 Independent Contractor Status. Nothing contained in this Agreement
shall be construed as creating a partnership or joint venture between the
parties. The relationship of TRS to WTI shall at all times be that of an
independent contractor. Neither party to this Agreement shall have any implied
or express rights or authority to assume or create any obligations on behalf of
or in the name of the other party.
14.4 Assignment. This Agreement and the mutual obligations and duties
of the parties hereunder may not be assigned or transferred by either party
without the prior written consent of the other party to this Agreement, except
that either party may assign this Agreement in connection with a merger or the
sale of substantially all the assets of such party, provided that the assignee
is at least capable, financially and otherwise, of performing this Agreement as
the assigning party at that time.
14.5 Entire Agreement. This Agreement (including the referenced
Exhibits) contains the complete understanding of the parties with respect to the
development, manufacture and sale of the Product and the Additional Product.
This Agreement supersedes all previous agreements and understandings between the
parties with respect to the subject of the Agreement including but not limited
to the March 25, 1998 letter between Alan Seacord and Fred Silver, and may be
amended or supplemented only by another writing signed by the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
WILSHIRE TECHNOLOGIES, INC. TIME RELEASE SCIENCES, INC.
By: /s/ John Van Egmond By: /s/ Fred Silver
------------------------------- --------------------------------
John Van Egmond Fred Silver
Title: President & CEO Title: President
---------------------------- -----------------------------
Date: 7/28/98 Date: 7/29/98
----------------------------- ------------------------------
6
<PAGE> 7
EXCLUSIVE PRODUCT SUPPLY AGREEMENT
BETWEEN WTI AND TRS DATED JULY 28, 1998
EXHIBIT A
Minimum Annual Quantities
of the Product and the Additional Product Combined (a)
(i) Year One: $ 700,000.
(ii) Year Two: $1,000,000.
(iii) Year Three: $1,300,000.
Note (a): The Minimum Annual Quantities of the Product shall include purchases
of the Product by TMP when used by TMP in manufacturing products sold to WTI.
7
<PAGE> 8
EXCLUSIVE PRODUCT SUPPLY AGREEMENT
BETWEEN WTI AND TRS DATED JULY 28, 1998
EXHIBIT B
Specification
8
<PAGE> 1
EXHIBIT 10.119
INDEPENDENT CONSULTANT AGREEMENT
THIS INDEPENDENT CONSULTANT AGREEMENT ("this Agreement") is
made effective this 5th day of August, 1998 ("the Effective Date") by and
between WILSHIRE TECHNOLOGIES, INC. ("Company"), a California corporation with
its principal place of business at 5861 Edison Place, Carlsbad, California
92008, and Percura, Inc. ("Consultant"), a California corporation with a
principal place of residence at 19142 S. Mesa Drive, Villa Park, California
92861.
RECITAL
Consultant desires to perform, and Company desires to have Consultant
perform, certain services as an independent Consultant to Company.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, the Company and Consultant hereby agree as follows:
1. Duties and Performance. Consultant will perform the
services (the "Services") for the Company described in Exhibit A to this
Agreement, as may be amended from time to time. Consultant will make regular
reports to Company concerning the progress of the Services and may be required
to perform the Services at Company's offices in Carlsbad, California, at the
Company's manufacturing facility in Tijuana, Mexico, or such other places as
Company may specify. Until Company advises Consultant otherwise, Consultant's
primary contact at Company will be Paul Fennell. While Consultant will perform
the Services under the general direction of Company, Consultant will determine
the manner and means by which the Services are accomplished.
2. Payment. As compensation for the performance of the
Services, the Company will (i) pay fees to Consultant at the hourly rate of
$125.00 per hour during the term of this Agreement, and (ii) reimburse
Consultant for all expenses incurred by Consultant in performing the Services,
as further specified in Section 3 below. All such payments will be made by
Company no later than fifteen (15) days following Company's receipt of
Consultant's invoice.
3. Reimbursement of Expenses. Consultant shall be entitled to
prompt reimbursement for reasonable travel and other business expenses incurred
in connection with the performance of the Services, provided, however, that (i)
Company shall have the right to require Consultant to supply reasonable
documentation supporting the incurrence of such expenses, (ii) Consultant shall
obtain the approval of the Company prior to incurring any individual expense in
an amount greater than $250.00, and (iii) all travel arrangements must be made
by Company through Company's travel vendors unless otherwise agreed by Company.
<PAGE> 2
4. Term and Termination. This Agreement shall commence on the
Effective Date and have a term of approximately five (5) months, expiring
automatically upon the completion of two hundred (200) hours of work.
Thereafter, this Agreement may be extended for additional periods by mutual
agreement in writing of Company and Consultant. Notwithstanding the foregoing,
Company shall have the right to terminate this Agreement for convenience at any
time during the term of the Agreement, with or without cause, upon thirty (30)
days prior written notice to Consultant. Either party may terminate this
Agreement prior to its expiration in the event of a breach by the other party of
this Agreement if such breach continues uncured for a period of seven (7) days
after written notice.
5. Relationship of Parties.
(a) Independent Consultant. Consultant's
relationship to the Company under this Agreement shall be solely that of an
independent Consultant, and the parties shall conduct themselves accordingly.
All services which Consultant renders to any customer of the Company during the
term of this Agreement shall be rendered on behalf of the Company, and
Consultant's sole compensation for all such services shall be from the Company
pursuant to this Agreement. This Agreement is not intended to create an
employment relationship, nor do the parties intend to create a partnership or
joint venture.
(b) Taxes. Inasmuch as Consultant is an independent
Consultant and not an employee of Company, no amounts shall be withheld from any
payments under this Agreement for federal, state, local, FICA, FUTA, hospital
insurance, SDI or other taxes unless required by applicable law. Consultant
assumes full responsibility for, and shall indemnify and hold harmless Company
against, the payment of all taxes, penalties and interest arising from the
payments made to Consultant under this Agreement.
6. Company Property.
(a) Definition. For the purposes of this Agreement,
"Company Property" shall mean all computer programs, product specifications,
technical data, formulas, concepts, compilations of information, marketing
plans, equipment, strategies, forecasts and customer lists (and documentation
related to the foregoing), provided to Consultant by Company, or any other work
made or developed by Consultant in connection with the performance of the
Services.
(b) Ownership of Company Property. To the extent
that the Company Property delivered hereunder includes material subject to
copyright, Consultant agrees that the such work is done as a "work for hire" as
that term is defined under U.S. copyright law, and that as a result, Company
shall own all copyrights in the work. To the extent that the Company Property
does not qualify as a work for hire under applicable law, and to the extent that
the Company Property includes material subject to copyright, patent, trade
secret, or other proprietary right protection, Consultant hereby irrevocably
transfers and assigns to Company, its successors and assigns, all right, title,
and interest in and to the Company Property, including but
2
<PAGE> 3
not limited to all copyrights, patents, trade secrets, trademarks, and other
proprietary rights therein (including renewals thereof). Consultant shall
execute and deliver such instruments and take such other action as may be
required and requested by Company to carry out the assignment contemplated by
this paragraph, including requiring any of its employees to execute and deliver
such instruments for the benefit of Company. Any documents, magnetically or
optically encoded media, or other materials created by Consultant pursuant to
this Agreement shall be owned by Company and subject to the terms of this
paragraph.
(c) Agreement to Treat Confidential. Consultant
agrees to treat all Company Property as "Confidential Information," as defined
in Section 7 below.
(d) Return of Materials. Upon termination or
expiration of this Agreement, Consultant shall deliver promptly to Company all
Company Property in Consultant's possession or under Consultant's control.
7. Confidential Information. Consultant acknowledges that
Consultant will acquire information and materials from Company and knowledge
about the technology, business, products, strategies, customers, clients and
suppliers of Company and that all such knowledge, information and materials
acquired and the existence, terms and conditions of this Agreement are and will
be trade secrets and confidential and proprietary information of Company
(collectively "Confidential Information"). Consultant agrees to hold all such
Confidential Information in strict confidence, not to disclose it to others or
use it in any way, commercially or otherwise, except in performing the Services,
and not to allow any unauthorized person access to such Confidential
Information. Notwithstanding the foregoing, Consultant will have no obligation
to maintain the confidentiality of any information which is (b) generally known
in the industry in which the Company transacts business, (b) acquired from
public sources, or (c) becomes part of the public domain without fault of
Consultant.
8. Proprietary Information of Others. Consultant hereby agrees
that he will not intentionally bring into the Company premises or use in any way
for the benefit of the Company any information which Consultant has reason to
believe is or may be the confidential information of a past employer or any
other third party.
9. Injunctive Relief. Consultant acknowledges and agrees that
it would be difficult to fully compensate the Company for damages resulting from
the breach or threatened breach of the foregoing provisions of this Sections 6,
7, or 8 and, accordingly, that the Company shall be entitled to seek temporary
and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such provisions upon proving
that it has suffered or that there is a substantial probability that it will
suffer irreparable harm and without the necessity of posting any bond or other
undertaking.
10. Notices. Any notices under this Agreement will be sent by
certified or registered mail, return receipt requested, to the address set forth
on the first page of this Agreement or to any other address designated by the
other party in writing.
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<PAGE> 4
11. Assignment. Consultant may not assign Consultant's rights
or delegate Consultant's duties under this Agreement either in whole or in part
without the prior written consent of Company. Further, Consultant shall not
retain the services or assistance of any third party independent contractor to
perform the Services without the prior written consent of Company.
12. Governing Law; Severability. This Agreement will be
governed by and construed in accordance with the laws of the State of California
excluding that body of law pertaining to conflicts of law. If any provision of
this Agreement is for any reason found to be unenforceable, the remainder of
this Agreement will continue in full force and effect.
13. Complete Understanding; Modification. This Agreement,
together with each version of Exhibit A executed by the parties, constitutes the
complete and exclusive understanding and agreement of the parties and supersedes
all previous negotiations, agreements and other communications, whether oral or
written, with respect to the subject matter hereof. This Agreement shall not be
modified in any way except in a writing signed by both parties.
14. Survival. Consultant's obligations under Sections 5(b),
6(b), 6(c), 6(d), 7 and 9 shall survive expiration or termination of this
Agreement.
15. Attorneys' Fees. The prevailing party in any suit or other
proceeding brought to enforce any provisions of this Agreement, shall be
entitled to recover from the other party all costs and expenses of the
proceeding and investigation (not limited to court costs), including attorneys'
fees at the hourly rates usually charged by that party's attorneys.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
WILSHIRE TECHNOLOGIES, INC. PERCURA, INC.
By: /s/ John Van Egmond By: /s/ James Wright
------------------------------- --------------------------------
Title: President & CEO Title: President
---------------------------- -----------------------------
4
<PAGE> 5
INDEPENDENT CONSULTANT AGREEMENT
BETWEEN WILSHIRE TECHNOLOGIES AND PERCURA
EXHIBIT A
Description of the Services to be Performed:
See Attached Letter to Jim Wright from Paul Fennell dated August 5, 1998
Wilshire Technologies, Inc.
By: /s/ John Van Egmond
-------------------------------
Title: President & CEO
----------------------------
Percura, Inc.
By: /s/ James Wright
-------------------------------
Title: President
----------------------------
5
<PAGE> 1
EXHIBIT 10.120
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of August 17, 1998 (the
"Agreement") by and between Wilshire Technologies, Inc., a California
corporation (the "Company") and Kevin Mulvihill, an individual residing at
Westlake Village, California ("Executive").
The Company and Executive desire to set forth the terms and
conditions on which: (i) the Company shall employ Executive as Executive Vice
President, (ii) Executive shall render services to the Company, and (iii) the
Company shall compensate Executive for such services.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. Employment.
The Company hereby employs Executive and Executive hereby
accepts such employment to perform executive services as hereinafter provided
for the period from August 17, 1998 through August 16, 1999. Commencing August
17, 1999, the period of employment shall be automatically extended from year to
year for additional periods of one year each unless the Company or Executive at
least ninety days prior to the time the Agreement would otherwise have expired
shall give the other party written notice of intention not to extend the
employment. The original one-year period of this Agreement and any extensions
thereof are hereinafter referred to as the "Term".
2. Duties and Responsibilities.
2.1 During the Term Executive shall devote his full attention
and expend his best efforts, energies, and skills, on a full-time basis, to the
business of the Company and any corporation controlled by the Company (each a
"Subsidiary"). For purposes of this Agreement, the term the "Company" shall mean
the Company and all Subsidiaries.
2.2 During the Term Executive shall serve as the Executive
Vice President of the Company. In the performance of his responsibilities
hereunder, Executive shall be subject to all of the Company's policies, rules
and regulations applicable to its executives of comparable status, shall report
directly to the President and Chief Executive Officer of the Company (the
"President") and shall be subject to the direction and control of the President
and the Board of Directors of the Company (the "Board").
1
<PAGE> 2
2.3 Executive's services shall be rendered principally in or
from an office located in the Carlsbad, California, area. Nevertheless,
Executive agrees to make such trips out of the area, for limited periods, as are
reasonably incident to the performance of his duties.
2.4 Without first obtaining the written permission of the
President in each instance, Executive will not authorize or permit the Company
to engage the services of, or engage in any business activity with, or provide
any financial or other benefit to, any affiliate of Executive. The phrase
"affiliate of Executive" as used in this Section shall mean and include
Executive's family by blood or marriage (including, without limitation, parents,
spouse, siblings, children and in-laws), and any business or business entity
which is directly or indirectly owned or controlled by Executive or any member
of Executive's family or in which Executive or any member of Executive's family
has any direct or indirect financial interest whatsoever.
2.5 In order to induce the Company to enter into this
Agreement, Executive represents and warrants to the Company that (a) Executive
is not a party or subject to any employment agreement or arrangement with any
other person, firm, company, corporation or other business entity, (b) Executive
is subject to no restraint, limitation or restriction by virtue of any agreement
or arrangement, or by virtue of any law or otherwise which would impair
Executive's right or ability to remain in the employ of the Company, or to
perform fully his duties and obligations pursuant to this Agreement, and (c) to
the best of Executive's knowledge, no material litigation is pending or
threatened against any business or business entity owned or controlled or
formerly owned or controlled by Executive.
3. Compensation.
3.1 During the Term the Company shall pay Executive a salary
at an annual rate of $165,000, subject to review after six months, payable in
installments in accordance with the Company's regular practice, but not less
often than monthly.
3.2 Executive shall be entitled to reasonable periods of paid
sick leave, three weeks paid vacation per year and holidays in accordance with
the Company's regular policy.
3.3 Executive is authorized to incur reasonable expenses in
the performance of his duties hereunder. The Company shall reimburse Executive
for such expenses upon the presentation by Executive, not less frequently than
monthly, of signed, itemized accounts of such expenditures and vouchers, all in
accordance with the Company's procedures and policies as adopted and in effect
from time to time and applicable to its executives of comparable status.
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<PAGE> 3
3.4 The Company shall provide Executive, at the Company's
expense, participation in group medical, dental, accident, disability and life
insurance plans of the Company and other standard benefits as may be provided by
the Company from time to time to its executives of comparable status, subject
to, and to the extent that, Executive is eligible under such benefit plans in
accordance with their respective terms.
3.5 The Company hereby grants Executive a Non-Qualified Stock
Option under the Company's 1995 Stock Option Plan to purchase 500,000 shares of
the common stock of the Company at the option exercise price of $0.56 per share.
The option shall vest on August 17, 1999 as to 125,000 shares, and shall vest on
August 17 of the years 2000, 2001, and 2002 as to an additional 125,000 shares
on each such date. The option expires on August 17, 2008, and has the other
terms and conditions set forth in the Non-Qualified Stock Option Agreement
attached to this Agreement as Attachment A, and incorporated herein by
reference.
3.6 Executive shall receive a bonus in accordance with the
terms of the Bonus Plan attached to this Agreement as Attachment B and
incorporated herein by this reference.
3.7 During the Term, Employer shall pay Executive a
non-accountable car allowance of $600 per month. Executive shall be responsible
for the payment of any income taxes owed on such amount because of his personal
use of the car.
4. Relocation
4.1 The Company will reimburse the Executive for the monthly
cost of a reasonably priced furnished apartment in the Carlsbad area for a
period of up to one (1) year.
4.2 The Company will reimburse the Executive for reasonable
moving expenses incurred to move to the Carlsbad area. The moving expenses will
include all packing and shipping expenses and utility hook-up expenses.
4.3 If the Executive sells his residence in Westlake Village
and purchases a residence in the Carlsbad area, the Company will reimburse the
Executive for reasonable closing costs associated with the purchase of the
Carlsbad-area residence, including escrow fees, loan origination fees, and loan
interest points prevailing in the area. In addition, if the prevailing mortgage
interest rates are higher than 7.625% per year for a 30-year fixed rate mortgage
in the amount of $320,000, the Company will reimburse the Executive for the
amount of loan interest points paid to reduce the mortgage interest rate to
7.625% for a 30-year fixed rate mortgage in the amount of $320,000.
3
<PAGE> 4
5. Termination.
5.1 The Company may terminate Executive's employment under
this Agreement at any time for Cause. "Cause" shall exist for such termination
if Executive (i) is adjudicated guilty of illegal activities by a court of
competent jurisdiction, (ii) commits any act of fraud or intentional
misrepresentation, (iii) has, in the reasonable judgment of the CEO or the
Board, engaged in serious misconduct, which misconduct has or would, if
generally known, materially adversely affect the good will or reputation of the
Company and which misconduct Executive has not cured or altered to the
satisfaction of the CEO or the Board within ten days following notice by the CEO
or the Board to Executive regarding such misconduct, (iv) refused to follow any
lawful directive of the CEO or the Board to Executive concerning material aspect
of the Company's business, (v) has made any misrepresentation to the Company
under Section 2.5 hereof, or (vi) has been incapable to perform his duties under
this Agreement for at least three consecutive months.
5.2 The Company may terminate Executive's employment under
this Agreement at any time without Cause.
5.3 If the Company terminates Executive's employment pursuant
to the provisions of Section 5.2 hereof, or if the Company does not agree to
extend Executive's employment pursuant to the provisions of Paragraph 1 hereof,
Executive shall receive as his severance an amount equal to nine months of
Executive's then salary, payable in nine equal monthly installments. The first
payment shall be made on Executive's regular pay day immediately following the
date of termination.
5.4 If Executive does not agree to extend his employment
pursuant to the provisions of Paragraph 1 hereof, Executive shall receive no
severance pay.
5.5 Death of Executive. In the event Executive shall die at
any time during the Term, this Agreement shall terminate. In such event the
estate of Executive shall forthwith receive any salary accrued or unpaid to the
date of his death.
6. Restrictive Covenants.
6.1 Executive acknowledges that (i) he has a major
responsibility for the administration, development and growth of the Company's
business, (ii) his work for the Company will bring him into close contact with
confidential information of the Company and its customers, and (iii) the
agreements and covenants contained in this Section 6 are essential to protect
the business interests of the Company and that the Company will not enter into
this Agreement but for such agreements and covenants. Accordingly, Executive
covenants and agrees as follows:
4
<PAGE> 5
6.1.a Except as otherwise provided for in this
Agreement, during the Term Executive shall not, directly or indirectly, within
any state, province or other political subdivision of the United States or any
other country in which the Company is conducting business, compete with respect
to any services or products of the Company which are either offered or are being
developed by the Company (the "Company's Business"), or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as partner, shareholder, owner,
officer, director, employee, principal, agent, creditor, trustee, consultant,
co-venturer or otherwise), any individual, corporation, firm, association,
partnership, joint venture or other business entity, which competes with the
Company's Business; provided, however, that Executive may own, solely as an
investment, not more than one (1%) percent of any class of securities of any
publicly owned corporation.
6.1.b During, and for one year after, the Term,
Executive shall not, directly or indirectly, (i) induce or attempt to influence
any employee of the Company to leave its employ, (ii) aid or agree to aid any
competitor, customer or suppliers of the Company in any attempt to hire any
person who shall have been employed by the Company within the one year period
preceding such requested aid, or (iii) induce or attempt to influence any person
or business entity who was a customer or supplier of the Company during any
portion of said period to transact business with a competitor of the Company.
6.1.c During the Term and thereafter, Executive
shall not disclose to anyone any information about the affairs of the Company,
including, without limitation, trade secrets, trade "know-how", inventions,
customer lists, business plans, operational methods, pricing policies, marketing
plans, sales plans, identity of suppliers or customers, sales, profits or other
financial information, which is confidential to the Company or is not generally
known in the relevant trade, nor shall Executive make use of any such
information for his own benefit.
6.2 Executive acknowledges and agrees that in the event of a
violation or threatened violation of any of the provisions of Section 6.1 (the
"Restrictive Covenants") the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other rights and remedies which may
be available at law or in equity.
6.3 If any of the Restrictive Covenants, or any part thereof,
is held to be invalid or unenforceable, the same shall not affect the remainder
of the covenant or covenants, which shall be given full effect, without regard
to the invalid or unenforceable portions. Without limiting the generality of the
foregoing, if any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making
5
<PAGE> 6
such determination shall have the power to reduce the duration and/or scope
and/or area of such provision and, in its reduced form, such provision shall
then be enforceable.
6.4 The parties hereto intend to and hereby confer
jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. In the
event that the courts of any one or more of such jurisdictions shall hold such
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the Company's right to the relief
provided above in the courts of any other jurisdictions, within the geographical
scope of such Restrictive Covenants, as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
7. Insurance.
The Company may, from time to time, apply for and take out, in
its own name and at its own expense, life, health, accident, disability or other
insurance upon Executive in any sum or sums that it may deem necessary to
protect its interests, and Executive agrees to aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter into
this Agreement, Executive represents and warrants to the Company that to the
best of his knowledge Executive is insurable at standard (non-rated) premiums.
8. Amendment.
The Company and Executive contemplate that Executive may
become the Company's President at some time during the Term. The parties agree
that, while this is the mutual desire, neither party is legally obligated to
enter into the new relationship. However, if Executive is promoted to the
position of President, the parties agree that concurrently with such promotion
the Agreement shall automatically and without further action by either party be
deemed amended prospectively from the date of such promotion, as follows:
(a) "Executive Vice President" in the second paragraph on page
1 shall become "President".
6
<PAGE> 7
(b) Section 2.2 shall read in its entirety as follows:
"2.2 During the Term Executive shall serve as the
President of the Company. In the performance of his
responsibilities hereunder, Executive shall be
subject to all of the Company's policies, rules and
regulations applicable to its executives of
comparable status, shall report directly to the Board
of Directors of the Company (the "Board") and shall
be subject to the direction and control of the
Board."
(c) "President" in the first sentence of Section 2.4 shall
become "the Board of Directors";
(d) "$165,000" in Section 3.1 shall become "$185,000";
(e) "Nine" wherever it appears in Section 5.3 shall become
"twelve".
9. Miscellaneous.
9.1 This Agreement is a personal contract, and the rights and
interests of Executive hereunder may not be sold, transferred, assigned, pledged
or hypothecated except as otherwise expressly permitted by the provisions of
this Agreement. Executive shall not under any circumstances have any option or
right to require payment hereunder otherwise than in accordance with the terms
hereof. Except as otherwise expressly provided herein, Executive shall not have
any power of anticipation, alienation or assignment of payments contemplated
hereunder, and all rights and benefits of Executive shall be for the sole
personal benefit of Executive, and no other person shall acquire any right,
title or interest hereunder by reason of any sale, assignment, transfer, claim
or judgment or bankruptcy proceedings against Executive, provided, however, that
in the event of Executive's death, Executive's estate, legal representatives or
beneficiaries (as the case may be) shall have the right to receive all of the
benefits that accrued to Executive pursuant to, and in accordance with, the
terms of this Agreement.
9.2 The Company shall have the right to assign this Agreement
to any successor of substantially all of its business or assets which assumes
the Company's obligations hereunder.
9.3 Any notice required or permitted to be given pursuant to
this Agreement shall be in writing and shall be delivered personally, sent by
facsimile transmission, receipt requested, by nationally recognized overnight
courier for next business day delivery, or sent by registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below, or at such other addresses as such party shall
designate by notice to the other in the manner provided herein for giving
notice.
7
<PAGE> 8
If to the Company: Wilshire Technologies, Inc.
5861 Edison Place
Carlsbad, California 92008
If to the Executive: Kevin Mulvihill
31915 Watergate Court
Westlake Village, California 91361
9.4 This Agreement may not be changed, amended, terminated or
superseded except by an agreement in writing, nor may any of the provisions
hereof be waived except by an instrument in writing, in any such case signed by
the party against whom enforcement of any change, amendment, termination,
waiver, modification, extension or discharge is sought.
9.5 Except as otherwise provided herein, this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of California, without giving any effect to the principles of conflicts of
laws.
9.6 All descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
9.7 If any provision of this Agreement, or part thereof, is
held to be unenforceable, the remainder of this Agreement or provision, as the
case may be, shall nevertheless remain in full force and effect.
9.8 Each of the parties hereto shall at any time and from time
to time hereafter, upon the reasonable request of the other, take such further
action and execute, acknowledge and deliver all such instruments of further
assurance as may be necessary to carry out the provisions of this Agreement.
9.9 This Agreement contains the entire agreement and
understanding between the Company and Executive with respect to the subject
matter hereof. No representations or warranties of any kind or nature relating
to the Company or its affiliates or their respective businesses, assets,
liabilities, operations, future plans or prospects have been made by or on
behalf of Company to Executive; nor have any representations or warranties of
any kind or nature been made by Executive to the Company, except as expressly
set forth in this Agreement.
10. Authorization by Board of Directors.
The execution and delivery of this Agreement by and on behalf
of the Company has been authorized by the Company's Board of Directors at a
meeting duly held on August 11, 1998.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date hereinabove written.
WILSHIRE TECHNOLOGIES, INC.
By: /s/ John Van Egmond
---------------------------------
John Van Egmond
Title: President and Chief
Executive Officer
EXECUTIVE
/s/ Kevin Mulvihill
------------------------------------
Kevin Mulvihill
9
<PAGE> 1
EXHIBIT 10.121
DEMAND NOTE
$220,000.00 New York, New York
August 5, 1998
FOR VALUE RECEIVED, the undersigned, Wilshire Technologies, Inc. a
California corporation (hereinafter referred to as "Borrower"), hereby
unconditionally PROMISES TO PAY to the order to TRILON DOMINION PARTNERS, LLC, a
Delaware limited liability company ("Lender"), at 245 Park Avenue, 28th Floor,
New York, NY 10167, or at such other place as the holder of this Demand Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of Two Hundred
Twenty Thousand and 00/100, DOLLARS ($220,000.00), together with interest on the
unpaid principal amount of this Demand Note outstanding from time to time from
the date hereof, at a rate per annum equal to the Prime rate of interest of 8.5%
plus 3.0%, or the highest rate permitted by law, whichever shall be less.
The principal amount of the indebtedness evidenced hereby shall be
payable on demand. Interest thereon shall be paid when principal is paid from
the date hereof until such principal amount is paid in full at such interest
rate as specified above. Following failure to pay on demand, Borrower agrees to
pay interest on any overdue payment of principal at a rate per annum equal to
the stated interest rate plus 5%, or the highest rate permitted by law,
whichever shall be less. All interest calculations shall be computed on the
basis of a 360 day year.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
Borrower shall have no right to make any off-set against or deduct from
any payment due under this Demand Note.
Principal and interest may be prepaid at any time without penalty.
This Demand Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of such change is
sought.
All covenants of Borrower in this Demand Note and all rights of the
holder under this Demand Note shall bind Borrower and its successors and
assigns, and all such covenants and rights shall inure to the benefit of the
holder of this Demand Note and its successors and assigns.
This Demand Note has been delivered and accepted at New York, New York
and shall be interpreted, governed by, and construed in accordance with, the
laws of the State of New York.
Wilshire Technologies, Inc.
By: /s/ James W. Klingler
--------------------------------
Name: James W. Klingler
Title: VP & CFO
<PAGE> 1
EXHIBIT 10.122
DEMAND NOTE
$220,000.00 New York, New York
September 1, 1998
FOR VALUE RECEIVED, the undersigned, Wilshire Technologies, Inc. a
California corporation (hereinafter referred to as "Borrower"), hereby
unconditionally PROMISES TO PAY to the order to TRILON DOMINION PARTNERS, LLC, a
Delaware limited liability company ("Lender"), at 245 Park Avenue, 28th Floor,
New York, NY 10167, or at such other place as the holder of this Demand Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of Two Hundred
Twenty Thousand and 00/100, DOLLARS ($220,000.00), together with interest on the
unpaid principal amount of this Demand Note outstanding from time to time from
the date hereof, at a rate per annum equal to the Prime rate of interest of 8.5%
plus 3.0%, or the highest rate permitted by law, whichever shall be less.
The principal amount of the indebtedness evidenced hereby shall be
payable on demand. Interest thereon shall be paid when principal is paid from
the date hereof until such principal amount is paid in full at such interest
rate as specified above. Following failure to pay on demand, Borrower agrees to
pay interest on any overdue payment of principal at a rate per annum equal to
the stated interest rate plus 5%, or the highest rate permitted by law,
whichever shall be less. All interest calculations shall be computed on the
basis of a 360 day year.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
Borrower shall have no right to make any off-set against or deduct from
any payment due under this Demand Note.
Principal and interest may be prepaid at any time without penalty.
This Demand Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of such change is
sought.
All covenants of Borrower in this Demand Note and all rights of the
holder under this Demand Note shall bind Borrower and its successors and
assigns, and all such covenants and rights shall inure to the benefit of the
holder of this Demand Note and its successors and assigns.
This Demand Note has been delivered and accepted at New York, New York
and shall be interpreted, governed by, and construed in accordance with, the
laws of the State of New York.
Wilshire Technologies, Inc.
By: /s/ James W. Klingler
---------------------------------
Name: James W. Klingler
Title: VP & CFO
<PAGE> 1
EXHIBIT 10.123
DEMAND NOTE
$250,000.00 New York, New York
October 1, 1998
FOR VALUE RECEIVED, the undersigned, Wilshire Technologies, Inc. a
California corporation (hereinafter referred to as "Borrower"), hereby
unconditionally PROMISES TO PAY to the order to TRILON DOMINION PARTNERS, LLC, a
Delaware limited liability company ("Lender"), at 245 Park Avenue, 28th Floor,
New York, NY 10167, or at such other place as the holder of this Demand Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of Two Hundred
Fifty Thousand and 00/100, DOLLARS ($250,000.00), together with interest on the
unpaid principal amount of this Demand Note outstanding from time to time from
the date hereof, at a rate per annum equal to the Prime rate of interest of 8.5%
plus 3.0%, or the highest rate permitted by law, whichever shall be less.
The principal amount of the indebtedness evidenced hereby shall be
payable on demand. Interest thereon shall be paid when principal is paid from
the date hereof until such principal amount is paid in full at such interest
rate as specified above. Following failure to pay on demand, Borrower agrees to
pay interest on any overdue payment of principal at a rate per annum equal to
the stated interest rate plus 5%, or the highest rate permitted by law,
whichever shall be less. All interest calculations shall be computed on the
basis of a 360 day year.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
Borrower shall have no right to make any off-set against or deduct from
any payment due under this Demand Note.
Principal and interest may be prepaid at any time without penalty.
This Demand Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of such change is
sought.
All covenants of Borrower in this Demand Note and all rights of the
holder under this Demand Note shall bind Borrower and its successors and
assigns, and all such covenants and rights shall inure to the benefit of the
holder of this Demand Note and its successors and assigns.
This Demand Note has been delivered and accepted at New York, New York
and shall be interpreted, governed by, and construed in accordance with, the
laws of the State of New York.
Wilshire Technologies, Inc.
By: /s/ James W. Klingler
---------------------------------
Name: James W. Klingler
Title: VP & CFO
<TABLE> <S> <C>
<ARTICLE> 5
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-QSB FOR THE QUARTER ENDED AUGUST 31,1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-QSB AND THE ACCOMPANYING NOTES THERETO.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 27
<SECURITIES> 0
<RECEIVABLES> 285
<ALLOWANCES> 5
<INVENTORY> 1215
<CURRENT-ASSETS> 1990
<PP&E> 3975
<DEPRECIATION> 924
<TOTAL-ASSETS> 5615
<CURRENT-LIABILITIES> 8549
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0
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<COMMON> 25907
<OTHER-SE> 28841
<TOTAL-LIABILITY-AND-EQUITY> 5615
<SALES> 3019
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<CGS> 2437
<TOTAL-COSTS> 4241
<OTHER-EXPENSES> (1)
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (1811)
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