SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A2
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
-
For the fiscal year ended February 28, 1997 OR [_] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission file number 1-12680
ORYX TECHNOLOGY CORP.
(Name of Small Business Issuer as specified in its charter)
Delaware 22-2115841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47341 Bayside Parkway, Fremont, California 94538
- -------------------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including area code: (510) 249-1144
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.001 par value NASDAQ/Pacific Stock Exchange
Common Stock Purchase Warrants NASDAQ/Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The names and ages of the Company's directors and executive officers
are as follows:
<TABLE>
<S> <C> <C>
Name Position Age
Philip J. Micciche President, CEO and Director 63
Chief Financial Officer 40
Arvind Patel Chairman of the Board and Director 50
Andrew Intrater Secretary, Treasurer and Director 35
Dr. John H. Abeles Director 52
Jay M. Haft Director 61
Ted. D. Morgan Director 55
</TABLE>
PHILIP J. MICCICHE was elected to serve as the Company's President and
Chief Executive Officer and to serve as a Director of the Company on April 25,
1997. From 1993 through 1995, Mr. Micciche was Chief Executive Officer of AXCIS
Information Networks, a provider of sports information data. From 1990 through
1992, Mr. Micciche was President of Dysan International Corp. and oversaw its
IPO in Hong Kong in 1991. From 1983 through 1990, he held several executive
management positions at Xidex Corp. In one of those positions, Mr. Micciche
brought the division from a loss to a substantial profit in less than 15 months.
From 1983 through 1985, Mr. Micciche was Senior Vice President Marketing at
Xidex Magnetics where sales increased $42M in that 2 year time period (Xidex
merged with Dysan Corp. in 1985). Prior to 1983, Mr. Micciche has held positions
as CEO, Vice President Sales, Product Sales Manager and Chief Engineer for
various companies. Philip Micciche received his BSEE from Northeastern
University in Boston.
ANDREW INTRATER has been employed in various executive capacities with
the Company since its organization in July, 1993 and with Advanced Technology,
Inc. ("ATI"), the Company's predecessor corporation, since 1981. Mr. Intrater
has been Chief Operating officer of ATI since May, 1993, and Chief Operating
Officer, Secretary, Treasurer and a Director of the Company since its
organization. Between September, 1988 and May, 1993, Mr. Intrater served as
President of ATI and has been a Director since 1983. He is currently President
of Oryx's Instruments and Materials subsidiary. Mr. Intrater received his B.S.
in Chemical Engineering from Rutgers University and M.S. in Materials Science
from Columbia University.
ARVIND PATEL served as President and Chief Executive Officer of the
Company from its organization through April 1997. Between July, 1993 and
October, 1993, Mr. Patel served as Executive Chairman of the Company. Mr. Patel
has served as a Director of the Company from its organization to the present. On
April 25, 1997, Mr. Patel resigned as President and CEO and assumed the
responsibilities of Chairman of the Company's Board of Directors. Between
February 1987 and June 1992, Mr. Patel was General Partner of Praktek Corp. and
Managing Director of its affiliate, Praktek Venture Fund, San Francisco,
California, which provided asset management services and financing for various
commercial entities especially those engaged in advanced technology operations.
Prior thereto, between June 1985 and January, 1987, Mr. Patel was President and
Chief Executive Officer of Upstart Computer Corporation, Emeryville, California,
a manufacturer of computer peripheral equipment. Mr. Patel received his B.S. in
Mechanical Engineering and M.B.A. from London University.
MITCHEL UNDERSETH has served as Chief Financial Officer of the Company
since November 1996 with additional responsibilities for human resources. From
August 1992 through November 1996, Mr. Underseth was Chief Financial Officer for
Triptych CD/San Joaquin Packaging in Stockton, California. From March 1990
through April 1992, Mr. Underseth was Chief Financial Officer for Dysan
International/Magnetic L.P. in Hong Kong, a spin-off of Xidex's Flexible Disk
Group. From September 1986 through March 1990, Mr. Underseth was Vice
President-Finance for Xidex Flexible Disk Group and Rigid Oxide Group in Santa
Clara, California. Mr. Underseth received his M.B.A. from the University of
Washington in Seattle and his B.S. in Business from Lewis and Clark College in
Portland, Oregon.
JOHN H. ABELES, M.D., has been a Director of the Company since its
organization in July, 1993 and of ATI commencing October, 1991 and Chairman of
the Board of the Company from October, 1993 until April, 1997. Since March,
1992, Dr. Abeles has been a General Partner of Northlea Partners Ltd. ("Northlea
Partners"), Boca Raton, Florida, a private investment partnership. Since 1980,
Dr. Abeles has been President of MedVest, Inc., Boca Raton, Florida, a business
and financial consulting firm. Dr. Abeles serves on the Board of Directors of
I-Flow Corporation, Irvine, California, a publicly traded company which
manufactures infusion devices, DUSA Pharmaceuticals, Inc., a publicly traded
company which is developing photodynamic therapy products, and Encore Medical,
Inc., Austin, Texas, an orthopedic devices concern.
JAY M. HAFT has served as Director of the Company since February, 1995.
He is a strategic and financial consultant for growth stage companies. He is
active in international corporate finance, mergers and acquisitions, as well as
in the representation of emerging growth companies. He has actively participated
in strategic planning and fund raising for many high-tech companies, leading
edge medical technology companies and technical product, service and marketing
companies. He is a Managing General Partner of Venture Capital Associates, Ltd.
and of Gen Am "1" Venture Fund, a domestic and an international venture capital
fund, respectively. Mr. Haft is also a Director of numerous public and private
corporations, including Robotic Vision Systems, Inc. (OTC), Noise Cancellation
Technologies, Inc. (OTC), Extech, Inc. (OTC), Encore Medical Corporation (OTC),
Viragen, Inc. (OTC), PC Service Source, Inc. (OTC), DUSA Pharmaceuticals, Inc.
(OTC), Oryx Technology Corp. (OTC) and Jenna Lane, Inc. (OTC). He serves as
Chairman of the Board of Noise Cancellation Technologies, Inc., Extech, Inc. and
Jenna Lane, Inc. He is currently of counsel to Parker Duryee Rosoff & Haft, in
New York. He was previously a senior corporate partner of such firm (1989-1994),
and prior to that a founding partner of Wofsey, Certilman, Haft et al.
(1966-1988). He is a member of the Florida Commission for Government
Accountability to the People, National Vice-President of the Miami Ballet and a
Director of the Concert Association of Florida. He is a graduate of Yale College
and Yale Law School.
TED D. MORGAN was elected as a Director of the Company in April 1996.
He serves as Chief Executive Officer of Entrenet Group, LLC. He is Founder and
Managing Partner of Alternative Technologies International ("ATI"), Santa Rosa,
California. ATI is an international financial advisory firm specializing in
services for emerging growth companies with unique proprietary technologies.
Prior to founding ATI, he developed several companies including the Office Club
which merged with Office Depot in 1990.
Board Committees and Meetings
During the fiscal year ended February 28, 1997, there were 8 Meetings
of the Company's Board of Directors. Each Board member attended 90% or more of
the aggregate of the Meetings of the Board of Directors and the Meetings of all
Committees of the Board of Directors on which he served.
The Compensation Committee was established on March 28, 1995. The
members of the Compensation Committee are Dr. John H. Abeles, and Jay M. Haft,
neither of whom are employees of the Company. The Compensation Committee makes
recommendations with respect to compensation of senior officers and granting of
stock options and stock awards.
There is no Nominating Committee of the Board of Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file with the Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent (10%) stockholders are required by Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended February 28, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were complied with in a timely
manner; provided, however, that Mitchel Underseth did not timely file his
initial report on Form 3.
Item 10. Executive Compensation
Cash Compensation
The following table sets forth the total compensation earned by the
Chief Executive Officer and the Company's other executive officers whose total
salary and compensation exceeded $100,000 for services rendered in all
capacities for the year ended February 28, 1997 and for the years ended February
29, 1996 and February 28, 1995.
<TABLE>
<S> <C> <C> <C> <C>
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation
Arvind Patel, 1997 $168,866 $ -- $3,600
President & CEO 1996 $140,996 $ -- $3,600
1995 $128,397 $ -- $ --
Andrew Intrater, 1997 $125,583 $ -- $8,578*
Secretary/Treasurer 1996 $103,063 $ -- $8,578*
1995 $ 93,583 $ -- $8,578*
Andrew Wilson 1997 $ 72,475 $ -- $69,636**
CFO 1996 $108,064 $ -- $ --
1995 $ 97,563 $ -- $ --
</TABLE>
* Other compensation in relation to Mr. Intrater consists of premiums paid on
behalf of Mr. Intrater for term life insurance in the face amount of $1,000,000
which is payable to Mr. Intrater's beneficiary upon his death, less the amount
of the premiums theretofore paid on his behalf which are remitted to the
Company. The table does not include other amounts for personal benefits received
by employees in general. The Company also acquired key man insurance on the life
of Mr. Patel of which it is the beneficiary. The Company believes that the
incremental costs of such benefits to each of the identified executive officers
did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
of such executive officers.
** Other compensation in relation to Mr. Wilson includes payment of four month
separation salary pursuant to a termination agreement and consulting fees
associated with services rendered to the Company's SurgX operations.
The following table sets forth as to the Chief Executive Officer and
each of the executive officers named under the Summary Compensation Table,
certain information with respect to grants of options to purchase shares of
Common Stock of the Company as of and for the year ended February 28, 1997.
OPTION/SAR GRANTS
Year Ended February 28, 1997
<TABLE>
<S> <C> <C> <C> <C>
Number of
Securities % of Total
Underlying Options/SARs Exercise
Option/SARs Granted to or Base
Granted Employees in Price ($Exp.
Number (#) 1997 per share) Date
----------------- ------------------ ---------- ----
Arvind Patel 200,000 34% $1.97 4/1/01
Andrew Intrater 90,000 15% $1.97 4/1/01
Mitchel Underseth 90,000 15% $2.25 11/26/01
</TABLE>
Employment Agreements
The Company entered into an employment agreement with Arvind Patel on
April 15, 1993, providing for annual compensation of $137,000 during the term of
the agreement. The agreement was terminated without cause by the Company on
April 25, 1997. On June 6, 1997, Mr. Patel entered into a separation agreement
with the Company. Under the terms of the separation agreement Mr. Patel will
receive twelve months severance payments payable through April 24, 1998
equivalent to his monthly salary as of April 24, 1997. In 1993, Mr. Patel also
entered into a non-competition agreement with the Company which precludes him
from soliciting customers and employees of the Company for a period of twelve
months following termination of his employment, and also requires Mr. Patel to
maintain the confidentiality of information and proprietary data relating to the
Company and its activities.
The Company has also entered into an employment agreement dated May 3,
1993 with Mr. Andrew Intrater, terminable immediately by either party, providing
for annual compensation of $100,000 during the term of the agreement. In the
event Mr. Intrater is terminated without cause by the Company, he will receive
his annual compensation for six months. Mr. Intrater has also entered into a
non-competition agreement with the Company which precludes his engagement in
competitive activities during the term of his employment, precludes him from
soliciting customers and employees of the Company for a period of twelve months
following termination of his employment, and also requires Mr. Intrater to
maintain the confidentiality of information and proprietary data relating to the
Company and its activities.
The Company has also entered into an employment agreement dated
November 1, 1996 with Mr. Mitchel Underseth, terminable immediately by either
party and providing for annual compensation of $120,000 during the term of the
agreement. Mr. Underseth also received a one-time signing bonus of $25,000. In
the event Mr. Underseth is terminated without cause by the Company, he will
receive his then current monthly salary for a period of six months following the
date of his termination.
During its 1997 fiscal year, the Company established a bonus incentive
program for its executive management personnel pursuant to which executives will
have the opportunity to earn as a bonus up to 35% of their base salary based
upon a combination of individual performance and profitability of the Company or
product line.
There were no bonuses paid pursuant to this program.
The Company currently offers basic health and major medical insurance
to its employees. The Company has adopted a non-contributory 401(k) Plan for its
employees who wish to participate on a voluntary basis, but no retirement,
pension or similar program has been adopted by the Company.
Remuneration of Non-Employee Directors
Each member of the Board of Directors who is not an employee of the
Company is compensated for his services as Director as follows: $750.00 for each
Board Meeting attended in person, and $250.00 for each Board Meeting attended by
telephone.
Description of Incentive and Nonqualified Stock Option Plan
On March 3, 1993, the Company adopted its Incentive and Nonqualified
Stock Option Plan (the "Plan") under which, as subsequently amended, 1,625,000
shares of Common Stock have been reserved for issuance to officers, directors,
employees and consultants of the Company upon exercise of options designated as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986 or upon exercise of nonstatutory options. The primary
purpose of the Plan is to attract and retain capable executives, employees,
directors, advisory board members and other consultants by offering such
individuals a greater personal interest in the Company's business by encouraging
stock ownership. The Plan is administered by a compensation committee consisting
of outside members of the Board of Directors which will determine, among other
things, the persons to be granted options, the number of shares subject to each
option and the option price. The Plan terminates on March 3, 2003.
The exercise price of any incentive stock option granted under the Plan
to an eligible employee must be equal to the fair market value of the shares on
the date of grant, and with respect to persons owning more than 10% of the
outstanding Common Stock, the exercise price may not be less than 110% of the
fair market value of the shares underlying such option on the date of grant. The
Compensation Committee will determine the term of each option and the manner in
which it may be exercised provided that no incentive stock option may be
exercisable more than ten years after the date of grant, except for optionees
who own more than 10% of the Company's Common Stock, in which case the option
may not be for more than five years. Further, no Director of the Company or
other person who is not an employee of the Company will be eligible to receive
incentive stock options. From the date of grant until three months prior to the
exercise, the optionee must be an employee of the Company in order to exercise
any options, except in the case of disability or death of the employee. Options
are not transferable except upon the death of the optionee. In the event of
disability, options must be exercised within twelve months of termination of
employment as determined by the Compensation Committee. Nonqualified options
will have similar terms except the exercise price therefor may not be less than
85% of the fair market value of the shares underlying such options, and the term
of such nonqualified options may not extend beyond ten years and one week. The
Compensation Committee has the power to impose additional limitations,
conditions and restrictions in connection with the grant of any option.
The Company has issued options to purchase an aggregate of 1,364,357
shares of Common Stock of the Company pursuant to the Plan to the following
officers and key employees of the Company (as well as other employees of the
Company) at the weighted average exercise prices described below as of April 30,
1997:
<TABLE>
<S> <C> <C>
Weighted
Average
Number Exercise
Name of Shares Price
Arvind R. Patel 241,569 $1.807
Andrew Wilson 110,719 $1.959
Andrew Intrater 95,625 $1.923
Karen P. Shrier 84,000 $1.072
Ronald N. Spaight 34,656 $1.389
Bernard Hall 60,269 $1.695
James Intrater 52,250 $1.931
Robert Jaynes 30,000 $2.000
Thomas Landgraf 12,000 $1.375
Mitchel Underseth 90,000 $2.250
</TABLE>
Under the terms of the grant, the options will vest in various increments over
various periods following the date of grant, except with respect to Messrs.
Patel, Wilson, A. Intrater, Ms. Shrier and Messrs. Spaight, Hall, J. Intrater,
Jaynes and Landgraf, as to whom options to purchase 64,888, 24,469, 24,375,
11,400, 2,500, 12,269, 12,500, 75,000 and 3,000, respectively, vested at the
date of grant. In addition, in the event of an optionee's disability, all
options granted will immediately vest, and in the event of an optionee's death,
all options will similarly vest but expire one year thereafter. In the event the
optionee voluntarily terminates his or her employment or should such employment
be terminated by the Company, options that are vested through the date of
termination may be exercised for a period of three months following the date of
termination.
Directors' Non-Qualified Stock Option Plan
At the Company's 1996 Annual Stockholders' Meeting, the Company's
stockholders approved the establishment of the 1996 Directors Non-Qualified
Stock Option Plan (the "Directors Plan") providing for grants to the Company's
non-employee Directors ("Outside Directors") in order to attract and retain
Outside Directors who possess a high degree of competence, experience,
leadership and motivation.
A total of 120,000 shares of Common Stock were reserved for issuance to
the Company's Outside Directors upon exercise of non-qualified options. The
Director's Plan is administered by the Compensation Committee of the Company's
Board of Directors, which will at all times consist solely of Outside Directors.
Under the Directors Plan, each Outside Director, namely Dr. Abeles and Messrs.
Haft, Mehta, and Schindler, received options to purchase 30,000 shares of the
Company's Common Stock, effective as of April 1, 1996 or such later date on
which such Outside Director was appointed to the Board of Directors. However,
the grant date of such initial grants was September 20, 1996, the date of the
Company's Annual Meeting of Stockholders at which the Directors Plan was
approved, for purposes of determining the exercise price. Each Outside Director
who joins the Company's Board of Directors subsequent to the approval of the
Directors Plan will initially receive options to purchase 30,000 shares of the
Company's Common Stock, effective as of the date he or she is appointed or
elected to the Company's Board of Directors.
All options granted under the Directors Plan will vest in three equal
annual installments commencing with the date of grant, provided that the Outside
Director continues to serve on the Company's Board of Directors. The exercise
price of the options granted under the Directors Plan will be equal to the fair
market value of the Company's Common Stock on the date of grant. The options are
not transferable except upon the death of the optionee. In the event of an
optionee's disability, all options granted will immediately vest, and in the
event of an optionee's death, all options will similarly vest but expire one
year thereafter. In the event the optionee voluntarily resigns from the Board of
Directors or declines to stand for reelection, options that are vested through
the date of such resignation or declination may be exercised for a period of
three months thereafter. The Directors Plan provides that it may not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act, or the rules thereunder. The Compensation Committee has the power
to impose additional limitations, conditions and restrictions in connection with
the grant of any option.
Additional Grants of Options
On May 10, 1994, the Company issued nonqualified options to Materials
Modification, Inc. and Ms. Renee Ford, consultants to the Company, to purchase
3,000 shares and 9,000 shares of Common Stock of the Company, respectively, at
an exercise price of $1.07 per share. The options were immediately vested and
expire ten years following the date of vesting.
On April 1, 1996, the Company issued a nonqualified option to John
Larson, a consultant to the Company, to purchase 30,000 shares of the Company's
Common Stock at an exercise price of $1.31 per share. The option is presently
fully vested.
Subsidiary Stock Plans
In November 1995, the Company's newly formed, wholly-owned
subsidiaries, Oryx Power Products Corporation, Oryx Instruments and Materials
Corporation and SurgX Corporation, each adopted stock option plans under which
the Board of Directors of each of the subsidiaries granted options to management
to purchase Class B common shares in the subsidiaries at at least their fair
market values as determined by each Board of Directors. Class B common shares
authorized for issuance in each of the Subsidiaries are identical to the
10,000,000 shares of Class A common shares owned by the Company, except the
Class A common shares possess a liquidation preference. The Board of Directors
authorized 1,500,000 million shares of Class B common shares for each of the
three Subsidiaries to be available for issuance under these stock plans. Such
options are not transferable except in the event of a public offering of the
Subsidiaries' stock, and may be repurchased by the Company at its option. Grants
under the plan are for amounts, vesting periods and option terms established by
each subsidiary's Board of Directors.
Subsidiary stock options granted as of February 28, 1997, and which
vest ratably over a five year period, are as follows:
Oryx Instrument and Materials Corporation 1,139,000
Oryx Power Products Corporation 1,381,000
SurgX Corporation 282,000
The sole officer and/or Director of the Company to receive options
pursuant to the Subsidiary stock option program was Andrew Intrater, Secretary,
Treasurer and a Director of the Company, who received options to purchase
340,000 shares of Oryx Instrument and Materials Corporation exercisable at $.45
per share.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of April 30, 1997 (i) by each person
who is known to the Company to be the owner of more than five percent (5%) of
the Company's Common Stock, (ii) by each of the Company's Directors, (iii) by
each of the Company's executive officers, and (iv) by all Directors and
executive officers of the Company as a group. As of April 30, 1997, there were
issued and outstanding 13,124,821 shares of Common Stock of the Company.
<TABLE>
<S> <C> <C>
Number of
Shares of
Common Stock Percent of
Name and Address Beneficially Beneficial
or Identity of Group Owned Ownership
Arvind Patel (1) 272,069 2.1%
47341 Bayside Parkway
Fremont, CA 94538
Andrew Intrater (2) 268,381 2.0%
47341 Bayside Parkway
Fremont, CA 94538
Number of
Shares of
Common Stock Percent of
Name and Address Beneficially Beneficial
or Identity of Group Owned Ownership
Mitchel Underseth (3) 4,500 *
47341 Bayside Parkway
Fremont, CA 94538
John Abeles (4) 499,172 3.8%
2365 Northwest 41st Street
Boca Raton, FL 33431
Jay M. Haft (5) 119,600 1.0%
2 Grove Isle Dr., #1208B
Coconut Grove, FL 33122
Ted D. Morgan (6) 14,850 *
5213 El Mecado Parkway
Santa Rosa, CA 95403
Windstar Investments N.V. (7) 1,002,667 7.6%
200 East Broward Blvd.,
Suite 1900
Fort Lauderdale, FL 33302
Equitable Life Assurance 1,000,000 7.6%
Society
City Place House
55 Basinghall Street
London EC2V 5DR
MR High Octane Fund 842,105 6.4%
c/o Meespierson Fund Services
18-20 North Quay
Douglas, Isle of Man 1M991M
All Officers and Directors
as a Group (6 persons) (8) 1,178,572 9.0%
- -----------------
</TABLE>
* Represents less than 1%.
(1) Includes 129,069 shares subject to stock options exercisable as of
April 30, 1997 or within 60 days thereafter, and 35,000 shares held as
a custodian for Mr. Patel's minor children. Also includes 16,096 shares
of Common Stock issuable upon conversion of the 1996 Bridge Warrant.
(2) Includes 44,297 shares subject to stock options exercisable as of April
30, 1997 or within 60 days thereafter and 500 shares of Common Stock
issuable upon conversion of Warrants.
(3) Represents shares subject to stock options exercisable as of April 30,
1997 or within 60 days thereafter.
(4) Includes 303,008 shares of Common Stock held by Northlea Partners Ltd.,
a consultant to the Company, of which Dr. Abeles is the General
Partner, and 35,000 shares issuable upon conversion of the Company's
Series A Preferred Stock also held by Northlea Partners. Also includes
9,375 shares of Common Stock issuable upon exercise of certain Bridge
Warrants. Includes 25,000 shares of Common Stock issuable upon
conversion of Warrants, held by Northlea Partners. Also includes 30,000
shares subject to other stock options exercisable as of April 30, 1997
or within 60 days thereafter. Also includes 96,789 shares of Common
Stock issuable upon conversion of the 1996 Bridge Warrant.
(5) Includes 30,000 shares subject to stock options.
(6) Represents shares subject to stock options exercisable as of April 30,
1997 or within 60 days thereafter.
(7) Includes 336,000 shares of Common Stock issuable upon conversion of
Warrants.
(8) Includes an aggregate of 435,476 shares issuable upon exercise of
warrants and stock options and conversion of Preferred Stock, included
pursuant to notes (1)-(6).
Item 12. Certain Relationships and Related Transactions.
The Company was incorporated in Delaware on July 26, 1993, and on
September 29, 1993 executed a Plan and Agreement of Merger with Advanced
Technology, Inc. ("ATI"), a New Jersey corporation and the Company's parent
corporation and predecessor. ATI was organized on April 2, 1976 under the laws
of the State of New Jersey. In connection with this merger, the Company
exchanged with the stockholders of ATI an equal number of shares for the
outstanding shares of capital stock of ATI outstanding at the time of the
merger. The nominal number of shares of the Company outstanding at the time of
the merger were canceled as part of the Plan and Agreement of Merger. In
addition, the Company exchanged 45,000 shares of its Series A Preferred Stock
for the 45,000 shares of Series A Preferred Stock that were outstanding of the
predecessor corporation and which had the same designations and preferences that
had been established for the Series A Preferred Stock of the predecessor
corporation.
In May 1993, ATI issued an aggregate of $375,000 principal amount of
its secured promissory notes at an interest rate equal to the published prime
rate of The Wall Street Journal, but not to exceed 9% per annum, and 45,000
shares of its Series A $25 2% Convertible Cumulative Preferred Stock convertible
into 525,000 shares of Common Stock of the Company. The notes were retired from
the proceeds of the Company's public offering completed in April 1994. Northlea
Partners, of which Dr. John Abeles is the General Partner, acquired $25,000
principal amount of such promissory notes and 3,000 shares of Series A Preferred
Stock.
In May 1995, the Company completed a private placement consisting of
2,536,290 shares of Common Stock pursuant to which the Company received proceeds
of approximately $1,900,000. Northlea Partners, Ltd., acquired for a
consideration of $150,000, 200,000 shares of this private placement. Mr. Nitin
T. Mehta, a former Director of the Company, acquired for himself and through his
retirement account set up by Mehta & Co., Inc., 573,334 shares of Common Stock
for a consideration of $430,000 principal amount. Mrs. Judith A. Schindler, wife
of Bruce L. Schindler, a former Director of the Company, acquired for a
consideration of $50,000, 66,667 common shares of this private placement. Jay M.
Haft, a Director of the Company, acquired 89,600 shares of Common Stock for
$67,200 consideration. Andrew Wilson, the Company's former Chief Financial
Officer, acquired 10,000 shares for $7,500 consideration. Arvind Patel, the
Company's former Chief Executive Officer and a Director, acquired for himself
and his two children a total of 40,000 shares for a consideration of $30,000.
In February 1996, the Company issued warrants to purchase 332,551
shares of Common Stock at a per share price of $1.25 in connection with a bridge
loan made to the Company which was subsequently repaid. Northlea Partners, Ltd.
received warrants to purchase 96,789 shares of Common Stock relating to this
bridge loan. Mr. Nitin Mehta received warrants to purchase 117,049 shares of
Common Stock relating to this bridge loan. Arvind Patel received warrants to
purchase 16,096 shares of Common Stock relating to this bridge loan.
Item 13. Exhibits, List and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
10.1 Agreements relating to $5,500,000 borrowing facility dated
May 28 and 29, 1997 (*)(+)
10.2 Letter of Separation Agreement with Arvind Patel (*)
(*) Filed herewith.
(+) Confidential treatment of certain portions of these agreements has been
applied for with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT REQUEST
[*] Denotes information for which confidential treatment has been requested.
Confidential portions omitted have been filed separately with the Commission.
REVOLVING ACCOUNT TRANSFER
AND PURCHASE AGREEMENT
(BATCH)
THIS REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (Batch) (this
"Agreement") dated as of May 29, 1997 is entered into by and between ORYX POWER
PRODUCTS CORPORATION, a Delaware corporation ("Power Products"), ORYX
INSTRUMENTS AND MATERIALS CORPORATION, a Delaware corporation ("I&M
Corporation") (both collectively referred to herein as "Seller") and *, a *
corporation doing business as * ("*"). In consideration of the mutual covenants
and agreements contained herein, Seller and * hereby agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. The following definitions shall apply throughout this
Agreement:
"Account Payment" means that portion of the purchase price paid by * to
Seller from time to time for the Accounts purchased hereunder.
"Account Payment Base" means an amount equal to 85% of Eligible
Accounts.
"Account(s)" means the right of Seller to payment for goods sold or
leased or for services rendered which are not evidenced by a promissory
note or chattel paper, together with anything else defined as an
"account" in the UCC, whether now existing or hereafter created or
arising.
"Account Debtor" means the person or entity which is obligated on an
Account.
"Affiliate" means with respect to any person or entity in question, any
other person or entity owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with
such person or entity in question.
"Availability Pool" means, at the time of determination thereof, the
maximum amount available for an Account Payment to Seller, as
determined in accordance with the Availability Certificate.
"Availability Certificate" means a certificate in the form of Schedule
A attached hereto duly executed by an authorized officer of Seller.
"Base Rate" means the per annum variable rate (based on a year
consisting of 360 days and actual days elapsed) established from time
to time by * without notice to Seller as its Base Rate for purposes of
calculating variable discounts under *'s account transfer agreements.
"Batch Balance" means, at the time of determination thereof; (i) the
sum of all Account Payments paid by * to Seller, plus all fees,
expenses and Discounts owing by Seller hereunder which are deducted
from the Availability Pool from time to time, less (ii) the amount of
all payments and collections received by * on the Accounts purchased
hereunder. If the amount in clause (ii) is greater than the sum of the
amounts in clause (i), the Batch Balance shall be a negative number.
"Bill of Sale" means the Bill of Sale in the form attached hereto as
Schedule A-1 duly executed by an authorized officer of Seller.
"Collateral" has the meaning given it in Subsection 8.1.
"Collection Report" means a report that provides the daily collection
activity detailed by transaction which is in form and detail
satisfactory to * , such detail to include the customer's name, payment
date, invoice number and amount of payment for each transaction.
"Concentration Limit" means the maximum amount of Accounts owing by any
single Account Debtor that may qualify as Eligible Accounts. The
Concentration Limit for any Account Debtor shall be $25,000.00 unless
*, in *'s reasonable discretion, consents otherwise; provided, however,
in no event shall the Concentration Limit for any Account Debtor exceed
twenty-five percent (25%) of the Eligible Accounts.
"Debit Account" means Account No.________________ that Seller has with
_________________ over which * shall have express written authority to
debit pursuant to the terms of the Agreement.
"Default Rate" means a per annum rate of interest equal to the Base
Rate, plus six and one-half percent (6.5%).
"Discount" has the meaning given it in Subsection 4.1.
"Discount Rate" means a variable discount rate equal to the Base Rate
in effect on such day, plus Three and one-half percent (3.5%) per
annum, subject to one or more adjustments during the Term pursuant to
the Performance Based Pricing Addendum attached hereto and made a part
hereof for all purposes; provided, however, in no event shall the
Discount Rate be less than seven percent (7%) per annum and upon the
occurrence of an Event of Default, the Discount Rate shall
automatically be equal to the Default Rate. If the Base Rate changes
after the date hereof, the Discount Rate shall be automatically
increased or decreased, as the case may be, without notice to Seller
from time to time as of the effective time of each change in the Base
Rate.
"Disputed Accounts" has the meaning given it in Subsection 9.5.
"Eligible Accounts" means, at the time of determination thereof, all
Accounts purchased hereunder except the following: (i) any Account
which by its terms is payable more than thirty (30) days from the
invoice date, unless otherwise agreed to in writing by *; (ii) any
Account which has been outstanding for more than ninety (90) days from
the invoice date; (iii) to the extent that the aggregate outstanding
amount owed by any single Account Debtor exceeds the Concentration
Limit, any amount in excess of the Concentration Limit owed by such
Account Debtor; (iv) any Account that is owed by an Account Debtor
which is an Affiliate of Seller or an officer or employee of Seller;
(v) any Account that arises out of a sale made, goods shipped or
services performed outside of the United States or that is owed by an
Account Debtor located outside the United States unless such Account
Debtor is subject to the jurisdiction of courts in the United States
with respect to such Account and unless otherwise agreed to in writing
by *; (vi) any Account that is owed by an Account Debtor which is a
creditor or supplier of Seller; (vii) any Account that is owed by an
Account Debtor which has asserted any defense or offset or which has
contested any liability with respect to such Account; (viii) any
Account owed by an Account Debtor to Seller if more than 25% (in dollar
amount) of such Account Debtor's Accounts owing to Seller are
outstanding for more than ninety (90) days from the invoice date; (ix)
any Account the Account Debtor of which is the United States or any
department, agency or instrumentality thereof, unless the right to
payment under such Account is assigned to * in full compliance with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727); (x) any
Account the Account Debtor of which is any state or any department,
agency or subdivision thereof unless the right to payment under such
Account is assigned to * in full compliance with such state's laws
pertaining to the assignment of claims, if any; (xi) any Account with
respect to which Seller has furnished a payment and/or performance bond
and that portion of any Account representing retainage; (xii) any
Account owing by an Account Debtor for which there has been instituted
a proceeding in bankruptcy or a reorganization under the United States
Bankruptcy Code or other law, whether state or federal, now or
hereafter existing for the relief of debtors; (xiii) any Account with
respect to which goods are placed on consignment or other terms by
reason of which payment by the Account Debtor may be conditioned; and
(xiv) any Account (or portion of an Account) which, * may designate
from time to time, in its reasonable discretion, for exclusion from
Eligible Accounts. In addition to the foregoing, (1) an Account shall
not be deemed an Eligible Account unless each of the representations
and warranties set forth in Section 7 of this Agreement are true and
correct (and remain true and correct at all times) with respect to such
Account, and (2) the gross face amount payable pursuant to the invoice
related to an Account shall be used for purposes of determining the
amount of an Account.
"Environmental Laws" means any and all federal, state and local laws,
regulations, rules, orders, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges or
releases of pollutants or industrial, toxic or hazardous substances
into the environment, or otherwise relating to the manufacture,
processing, treatment, transport or handling of pollutants or
industrial, toxic or hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by Seller or any Affiliate thereof with respect to
which Seller or any Affiliate has a fixed or contingent liability.
"Event of Default" has the meaning given it in Section 12.
"Facility Amount" means the amount of $4,000,000.00; provided, however,
any amount over $3,500,000.00 must be supported by an equal amount of
unused availability under that certain Revolving Credit Promissory Note
of even date herewith payable by the Parent Corporation to the order of
* in the stated principal amount of $1,500,000.00.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting
Standards Board (or any generally recognized successor), consistently
applied throughout the period involved.
"Indemnified Claims" means any and all claims, demands, actions, causes
of action, judgments, suits, liabilities, obligations, losses, damages
and consequential damages, penalties, fines, costs, fees, expenses and
disbursements (including without limitation, fees and expenses of
attorneys and other professional consultants and experts in connection
with any investigation or defense) of every kind or nature, known or
unknown, existing or hereafter arising, foreseeable or unforeseeable,
which may be imposed upon, threatened or asserted against or incurred
or paid by any Indemnified Person at any time and from time to time,
because of or resulting from, in connection with or in any way relating
to or arising out of the purchase of any Account hereunder or any other
transaction, act, omission, event or circumstance in any way connected
with or contemplated by this Agreement or the other Purchase Documents
or any action taken or omitted by any such Indemnified Person under or
in connection with any of the foregoing (including but not limited to
any investigation, litigation, proceeding, enforcement of *'s rights or
defense of *'s actions related to or arising out of this Agreement, the
other Purchase Documents, or the Account Payments or use of the
proceeds thereof), whether or not any Indemnified Person is a party
hereto; provided, however, the term "Indemnified Claims" shall not
include losses incurred by * from the financial inability of the
Account Debtors to pay Accounts.
"Indemnified Persons" shall collectively mean * and its officers,
directors, shareholders, employees, attorneys, representatives, agents,
Affiliates, successors and assigns.
"Inventory" means all goods, now owned or hereafter acquired by Seller
and wherever located, which are held for sale or lease or are to be
furnished under any contract of service (including, but not limited to
raw materials, work in process, finished goods and materials used or
consumed in the manufacture or production thereof, goods in which
Seller has an interest in mass or a joint or other interest or rights
of any kind, and goods which have been returned to or repossessed or
stopped in transit by Seller) and anything else defined as "inventory"
in the UCC.
"Invoices and Related Data" has the meaning given it in Subsection 6.5.
"Obligations" means all indebtedness, obligations and liabilities owing
by Seller to * arising under this Agreement and the other Purchase
Documents, and all other indebtedness, obligations and liabilities
owing by Seller to *, whether presently existing or hereafter arising,
direct or indirect, primary or secondary, joint, several, or joint and
several, fixed or contingent, and whether originally payable to * or to
a third party and subsequently acquired by * (including, without
limitation, all indebtedness, obligations and liabilities of Seller to
* arising by promissory note, indemnity, guaranty, letter of credit or
as established by law or by a court of competent jurisdiction);
provided, that the term "Obligations" does not include any Discounts.
"Parent Corporation" means Oryx Technology Corp., a Delaware
corporation.
"Purchase Documents" means this Agreement and the documents, agreements
and instruments required by * to be executed and delivered in
connection herewith (including, without limitation, all documents,
agreements and instruments evidencing, securing, governing,
guaranteeing and/or pertaining to the Obligations owing hereunder).
"Remittance Address" means __________________________________________.
"Reserve" has the meaning given it in Subsection 5.1.
"Sales Journal" means a report that will provide the daily sales
activity of Seller detailed by transaction which is in form and detail
satisfactory to *, such detail to include the customer's name, date of
sale, invoice number and sales amount for each transaction.
"Subordinated Debt" means indebtedness owing by Seller to a creditor
other than * which has been subordinated and subject in right of
payment to the prior payment of all indebtedness and obligations now or
hereafter owing by Seller to *, such subordination to be evidenced by a
written agreement between Seller and the subordinated creditor which is
in form and substance satisfactory to *.
"Tangible Net Worth" means, as of any date, the amount by which, on a
consolidated basis, the Parent Corporation's total assets exceeds its
total liabilities, plus Subordinated Debt, less any intangible assets
(as defined by GAAP, including, without limitation, trademarks,
patents, copyrights, goodwill, covenants not to compete and customer
lists), less deferred charges.
"Term" has the meaning given it in Subsection 14.4.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) of
ERISA or (ii) any other reportable event described in Section 4043 of
ERISA other than a reportable event not subject to the provision for
30-day notice to the Pension Benefit Guaranty Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA, (b) the
withdrawal of Seller or any Affiliate of Seller from any ERISA Plan
during a plan year in which it was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA, or (c) any event or condition which
might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
ERISA Plan.
"UCC" means the Uniform Commercial Code as in effect in the State of *,
as amended from time to time.
1.2 Construction. Terms defined in the UCC which are used and not otherwise
defined herein shall have the meanings given them in the UCC. The terms
defined in this Agreement which refer to a particular agreement,
instrument or document also refer to and include all renewals,
extensions and modifications of such agreement, instrument or document.
All addenda, exhibits and schedules attached to this Agreement are a
part hereof for all purposes. Words in the singular form shall be
construed to include the plural and vice versa, unless the context
otherwise requires.
1.3 Calculations and Determinations. The Batch Balance shall be increased
by the amount of each Account Payment from the date each such payment
is made by * to Seller and shall be decreased within _____ business
days after * receives and deposits the proceeds of collection of
Accounts. If such collections cause the Batch Balance to be a negative
amount, such negative amount shall be algebraically subtracted in
computing the Availability Pool in line 14 of the Availability
Certificate so as to increase the Availability Pool. The purchase price
for Accounts in Subsection 2.2 shall be calculated, insofar as
determining the increase in the Availability Pool for the purpose of
such calculation, by taking into consideration such Accounts and the
collections thereof without giving effect to the concurrent
fluctuations in the Availability Pool based on other factors, including
without limitation, Account Payments, fees, Discounts, expenses and the
collections of other Accounts. For the purpose of Subsection 14.5, the
amount of "Gross Sales" on and after the Termination Date, as set forth
in each Availability Certificate prepared on or after the Termination
Date, shall be deemed to be zero. Unless otherwise expressly provided
herein or unless * otherwise consents, all financial statements and
reports furnished to * hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in
accordance with GAAP.
SECTION 2. PURCHASES OF ACCOUNTS AND ACCOUNT PAYMENTS
2.1 Account Payments. Subject to the terms of this Agreement, Seller agrees
to offer for sale from time to time and * agrees to purchase all
Accounts of Seller. It is the intention of the parties hereto that all
Accounts sold to * from time to time hereunder will be considered and
sold as one account or batch. The Account Payment paid to Seller at any
time hereunder shall be an amount up to the Availability Pool at such
time, as requested by Seller on the most recent Availability
Certificate delivered to * (or as determined by * on or after the
Termination Date pursuant to Subsection 14.5).
2.2 Purchase Price. Except as set forth herein, the purchase price for
Accounts which are Eligible Accounts at the time of their sale to * is
the amount of increase in the Availability Pool on the date of, and as
a result of, such sales, plus the amount of increase in the
Availability Pool when such Eligible Accounts are collected, less the
respective Discount. The consideration provided by * to Seller for the
purchase of any Accounts which are not Eligible Accounts at the time of
their sale to * is the contingent increase in, and the amount of any
increase in, the Availability Pool if and when such Accounts are
collected, less the respective Discount; provided, however, if any such
Accounts become Eligible Accounts after their sale to *, the
consideration for the purchase of such Accounts shall also include the
amount of increase in the Availability Pool resulting from such
Accounts becoming Eligible Accounts. All Accounts purchased during any
time in which the Account Payment Base exceeds the Facility Amount
shall be deemed to be ineligible Accounts for which the purchase price
shall be as provided in the second sentence of this Subsection 2.2, and
for this purpose such ineligible Accounts may become Eligible Accounts
if and to the extent that the Account Payment Base no longer exceeds
the Facility Amount.
2.3 Notice of Sales. In connection with the initial sale of Accounts
hereunder, Seller shall deliver to * a signed and completed
Availability Certificate and a Bill of Sale which has a detailed aging
of Accounts attached thereto, all in form and detail satisfactory to *.
Seller must give prior written notice to * of any subsequent sales of
Accounts by delivering to * a properly completed Availability
Certificate, together with (i) Seller's Sales Journal listing each
Account originated or generated since the date of the previous
Availability Certificate; (ii) Seller's Collection Report listing all
collections received on Accounts since the date of the previous
Availability Certificate, and (iii) Seller's Debit/Credit memo journal
listing all returns, deductions and disputes on Accounts since the date
of the previous Availability Certificate.
2.4 Verification. Promptly after receiving each Availability Certificate
and other reports required by Subsection 2.3, * shall, based upon such
Availability Certificate and such other information provided or
otherwise available to *, verify and, if necessary, redetermine the
Availability Pool, which verification or redetermination, as the case
may be, shall take effect immediately and remain in effect until the
next such verification or redetermination. If all conditions precedent
to the sale of Accounts and the Account Payment requested by such
Availability Certificate have been met, then * will on the date
specified in such request purchase the subject Accounts and pay the
appropriate Account Payment to Seller by wire or ACH transfer to an
account of Seller, as designated in writing by Seller. *'s acceptance
of the Accounts offered for sale by Seller from time to time hereunder
shall be evidenced by * adjusting the Availability Pool as a result of
the purchase of such Accounts. In the event * does not receive an
appropriately completed Availability Certificate and the other reports
required by Subsection 2.3, * shall have no obligation to verify the
Availability Pool, purchase any further Accounts or pay any additional
Account Payments until such time as * shall have received such
information.
2.5 Sale of Accounts. Seller hereby sells, transfers, assigns and otherwise
conveys to * (as a sale by Seller and a purchase by *, and not as
security for any of the Obligations), without recourse except to the
limited extent expressly provided herein, all right, title, and
interest of Seller in and to the Accounts represented by the invoices
listed on the attachments to any Bill of Sale or Availability
Certificate delivered to * pursuant to this Agreement, together with
all related rights (but not obligations) of Seller with respect
thereto, including all contract rights, guarantees, letters of credit,
liens in favor of Seller, collateral, insurance and other agreements
and arrangements of whatever character from time to time supporting or
securing payment of such Accounts, all of the Invoices and Related Data
(as defined in Subsection 6.5) with respect to such Accounts and right,
title and interest of Seller in any related goods, including Seller's
rights and remedies under * of the UCC. The foregoing sale, transfer,
assignment and conveyance does not constitute and is not intended to
result in an assumption by * of any obligation of Seller or any other
person in connection with Accounts or related rights or under any
agreement or instrument relating thereto. Seller agrees to execute and
deliver such bills of sale, assignments, letters of credit, notices of
assignment, financing statements (including continuation statements)
under the UCC and other documents, and make such entries and markings
in its books and records, and to take all such other actions (including
the negotiation, assignment or transfer of negotiable documents,
letters of credit or other instruments) as * may request to further
evidence or protect the sale and assignments of Accounts and related
rights to * hereunder, as well as *'s interest in any returned goods.
2.6 Excess Batch Balance. The Batch Balance shall not at any time exceed
the lesser of (i) the Account Payment Base, and (ii) the Facility
Amount. If for any reason the Batch Balance should ever exceed the
Account Payment Base or the Facility Amount, whichever is less, all
Accounts purchased by * while such excess exists and continues shall be
deemed to be ineligible Accounts for which the purchase price shall be
as provided in the second sentence of Subsection 2.2, and for this
purpose such ineligible Accounts may become Eligible Accounts if and to
the extent that such excess no longer exists.
SECTION 3. CONDITIONS PRECEDENT
3.1 Conditions Precedent. *'s obligation hereunder to purchase any Accounts
or pay any Account Payment the purchase of any such Accounts (including
the first purchase) under the terms and conditions of Agreement shall
be subject to the conditions precedent that as of the date of any such
purchase or payment and after giving effect thereto: (i) * has received
this Agreement and all other Purchase Documents which have all been
appropriately executed by Seller and all other proper parties; (ii) all
representations and warranties made in this Agreement and the other
Purchase Documents are true on and as of the date of such Account
Payment (except to the extent such representations and warranties are
with respect to financial statements which are delivered to * that
speak as of a particular date and to the extent that the facts upon
which such representations and warranties are based have been changed
by the transactions contemplated in this Agreement) as if such
representations and warranties had been made as of the date of such
purchase of Accounts and Account Payment; (iii) Seller has performed
and complied with agreements and conditions required in the Purchase
Documents to be performed or complied with by it on or prior to the
date of such purchase of Accounts and Account Payment; (iv) no Event of
Default, or an event with which the passage of time or the giving of
notice, or both, shall become an Event of Default, has occurred
hereunder or under any of the other Purchase Documents; (v) there has
been no material adverse change in Seller's financial condition or its
business since the date of the most recent financial statements of
Seller supplied to *; (vi) such purchase of Accounts or Account Payment
shall not be prohibited by any law or a regulation or any order of any
court or governmental agency or authority; and (vii) * shall have
received all fees and expenses owing hereunder.
SECTION 4. DISCOUNTS, FEES, EXPENSES AND TAXES
4.1 Discounts. The purchase price for the Accounts will be reduced by a
discount (the "Discount"). The Discount will be computed on a daily
basis by multiplying the Batch Balance by the Discount Rate in effect
from day to day. Seller hereby authorizes *, in *'s sole discretion, to
make the adjustment to the purchase price of the Accounts from time to
time (but not less frequently than monthly) which is attributable to
the Discount by (i) reducing the Availability Pool; (ii) deducting the
Discount from any Account Payment; (iii) debiting the Debit Account, or
(iv) using any combination of the foregoing.
4.2 Origination Fee. Seller shall pay to * a origination fee in the amount
of seventy-five one hundredths percent (.75%) of Facility Amount, with
50% of such fee payable on or before the 30th day from the date hereof
and 50% of such fee payable on or before the 60th day from the date
hereof. Seller hereby authorizes *, in *'s sole discretion, to deduct
the origination fee from the first Account Payment. The portion of any
up-front deposit delivered to * by Seller which is in excess of *'s
costs and expenses (including, without limitation, attorneys' fees)
may, at *'s option, be applied by * to the payment of the origination
fee. This authorization shall not affect Seller's obligation to pay
such sums to * when due. Seller and * acknowledge and agree that the
origination fee is reasonable compensation to * for making the facility
available under the terms of this Agreement and for no other purpose.
4.3 Servicing Fee. Seller hereby agrees to pay a monthly servicing fee on
the first day of each calendar month during the Term equal to one tenth
of one percent (.50%) based on the average daily Batch Balance during
the immediately preceding month, subject to the Performance Based
Pricing Addendum attached hereto as Exhibit "A". If the first calendar
month covers less than a full month, the servicing fee for such month
shall be prorated. Seller hereby authorizes *, in *'s sole discretion,
to collect the servicing fee (i) by reducing the Availability Pool by
the amount of such fee; (ii) by deducting such fee from the first
Account Payment after such fee is due; (iii) by debiting the Debit
Account, or (iv) by using any combination of the foregoing. Such fee
shall be paid to * so long as this Agreement is in effect. This
authorization shall not affect Seller's obligation to pay such sums to
* when due. Seller and * acknowledge and agree that the availability
fee is reasonable compensation to * for continuing to make the facility
available under the terms of this Agreement and for no other purpose.
4.4 Monthly Fee. Seller hereby agrees to pay to * on the first day of each
calendar month during the Term a monthly fee equal to Five Thousand and
No/100 dollars ($5,000.00) less the Discounts and servicing fee for the
prior month. If the first calendar quarter covers less than a full
quarter, the monthly fee for such quarter shall be prorated. Seller
hereby authorizes *, in *'s sole discretion, to collect the monthly fee
(i) by reducing the Availability Pool by the amount of such fee; (ii)
by deducting such fee from the first Account Payment after such fee is
due; (iii) by debiting the Debit Account, or (iv) by using any
combination of the foregoing. Such fee shall be paid to * so long as
this Agreement is in effect. This authorization shall not affect
Seller's obligation to pay such sums to * when due. Seller and *
acknowledge and agree that the monthly fee is reasonable compensation
to * for continuing to make the facility available under the terms of
this Agreement and for no other purpose.
4.5 Attorneys' Fees. Seller agrees to pay or reimburse * upon demand for
all reasonable attorneys' fees, court costs and other expenses incurred
by * (whether or not litigation is commenced or judgment issued, and if
litigation is commenced whether at trial or any appellate level) in
preparation, negotiation, and enforcement of this Agreement and
protecting or enforcing its ownership interest in the Accounts or its
security interest in the Collateral, in collecting the Accounts, or in
the representation of * in connection with any bankruptcy case or
insolvency proceeding involving Seller, the Collateral or any Account
Debtor. Seller hereby authorizes *, in *'s sole discretion, to collect
such fees, costs and expenses (i) by reducing the Availability Pool;
(ii) by deducting such amounts from any Account Payment(s); (iii) by
debiting the Debit Account, or (iv) by using any combination of the
foregoing. This authorization shall not affect Seller's obligation to
pay such sums to * on demand.
4.6 Expenses. * shall be entitled to reimbursement upon demand for all out
of pocket expenses incurred by * in the course of performing its
functions with respect to this Agreement, including without limitation,
the following: lock box charges, long-distance telephone charges,
postage, credit reports, wire transfers, check copying charges,
overnight mail delivery, UCC and tax lien searches and filing fees.
Seller hereby authorizes *, in *'s sole discretion, to collect such
expenses (i) by reducing the Availability Pool; (ii) by deducting such
amounts from any Account Payment(s); (iii) by debiting the Debit
Account, or (iv) by using any combination of the foregoing. This
authorization shall not affect Seller's obligation to pay such sums to
* on demand.
4.7 Default Rate. All past due amounts owed by Seller to * hereunder,
including but not limited to past due fees and expenses, shall bear
interest at the Default Rate and shall be payable on demand. Seller
hereby authorizes *, in *'s sole discretion, to collect such amounts by
(i) reducing the Availability Pool; (ii) deducting such amounts from
Account Payment(s); (iii) debiting the Debit Account, or (iv) using any
combination of the foregoing. Upon the occurrence of an Event of
Default, all Obligations shall bear interest at the Default Rate. This
authorization shall not affect Seller's obligation to pay such sums to
* on demand.
4.8 Taxes. All taxes and governmental charges of any kind imposed with
respect to the sale of goods or rendering of services relating to the
Accounts shall remain for the account of, and be paid by, Seller.
SECTION 5. RESERVE
5.1 Establishment of Reserve. At any time after the occurrence of an Event
of Default hereunder, * may, at its election, withhold and accumulate
all or any portion of any Account Payment to maintain a reserve
("Reserve") in an amount that * reasonably deems necessary to collect
any Obligations which may become due by Seller to *.
5.2 Offset Against Reserve. Seller hereby authorizes * to offset,
without prior notice to Seller, and charge against the Reserve any
and all Obligations which Seller may owe to *.
5.3 Distribution of the Reserve. To the extent an Event of Default for
which * established the Reserve is cured in a manner reasonably
acceptable to * and * has not exercised *'s rights to terminate this
Agreement because of such Event of Default, * will increase the
Availability Pool by the amount of the Reserve and will no longer be
entitled to withhold and accumulate Account Payments pursuant to
Subsection 5.1 or to offset and charge against the Reserve pursuant to
Subsection 5.2, provided that *'s rights under Section 5 shall be
reinstituted if a subsequent Event of Default occurs.
SECTION 6. REPRESENTATIONS AND WARRANTIES OP SELLER
Each Seller represents and warrants with respect to such Seller, and upon each
delivery to * of an Availability Certificate further represents and warrants as
of the date of delivery of the Availability Certificate, to * as follows:
6.1 Existence. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and
is qualified and authorized to do business and is in good standing in
all states in which such qualification and good standing are necessary.
Seller has all requisite power and authority to execute this Agreement
and the other Purchase Documents to which Seller is a party.
6.2 No Violation of Law. The execution, delivery and performance by Seller
of this Agreement and the other Purchase Documents to which Seller is a
party do not and will not constitute a violation of any applicable law
or of Seller's articles or certificate of incorporation or Bylaws or
any material breach of any other document, agreement or instrument to
which Seller is a party or by which Seller is bound.
6.3 Binding Obligations. The execution, delivery and performance of the
Agreement and the other Purchase Documents to which Seller is a party
have been duly authorized by all necessary corporate action by Seller
and constitute legal, valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights
and except to the extent specific remedies may generally be limited by
equitable principles.
6.4 Executive Office. The address set forth below Seller's signature hereon
is Seller's mailing address, its chief executive office, principal
place of business and the office where all of the books and records
concerning the Accounts are maintained.
6.5 Possession of Invoices and Related Data. Seller has and will retain
possession of the following in trust for the benefit of *
(collectively, the "Invoices and Related Data"): (a) true and correct
copies of all invoices evidencing each Account sold to * hereunder; (b)
evidence of delivery of all goods or completion of all services
relating to each such Account; and (c) a current listing of all open
and unpaid Accounts sold to * hereunder, together with the names,
addresses, contact persons and telephone numbers of each Account Debtor
until such time as * picks up or, at *'s request, Seller delivers to *,
the Invoices and Related Data. Although the Invoices and Related Data
are in the possession of Seller, ownership thereof is transferred to *
contemporaneously with the purchase of the related Accounts.
6.6 True and Correct Information. All information provided by Seller to *
during its evaluation of the transactions anticipated by and in
connection with this Agreement, including applications, reports,
financial statements, and the statements made therein were true and
correct at the time made and remain true and correct at the time that
this Agreement is executed, except to the extent the financial
statements speak as of a particular date.
6.7 Taxes. Seller has filed all federal, state and local tax reports and
returns required by any law or regulation to be filed by it and has
either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the
payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not reasonably
expected. There is no tax lien notice against Seller presently on file,
judgment entered against Seller or levy on or attachment of its
property outstanding or reasonably anticipated.
6.8 Full Disclosure. There is no fact which Seller has not disclosed to *
in writing which could materially adversely affect the properties,
business or financial condition of Seller, the Accounts sold hereunder
or any of the Collateral, or which is necessary to be disclosed in
order to keep any of the representations and warranties contained
herein or in any other Purchase Document from being misleading.
6.9 ERISA Compliance. Seller is in compliance with ERISA concerning
Seller's ERISA Plan, if any, or is not required to contribute to any
"multi-employer plan" as defined in Section 4001 of ERISA.
6.10 Compliance with Laws. Seller is conducting its business in material
compliance with all applicable laws, including but not limited to
applicable Environmental Laws and the Fair Labor Standards Act and has
and is in compliance with all licenses and permits required under any
such laws. Seller does not have any known material contingent liability
under any Environmental Law. Seller will continue to comply in all
material respects with all Environmental Laws now or hereafter
applicable to Seller and shall obtain, at or prior to the time required
by applicable Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its
operations. Seller will promptly furnish to * all written notices of
violation, complaints, penalty assessments, suits or other proceedings
received by Seller with respect to any alleged violation of or
non-compliance with any Environmental Laws.
6.11 Assumed Names. Except as may be listed on Schedule B attached
hereto, Seller does business under no trade or assumed names.
SECTION 7. ACCOUNTS
As to the Accounts of each Seller, such Seller hereby represents and warrants to
* with respect to each Account offered for sale by such Seller to * hereunder as
follows:
7.1 Owner. Seller is the sole owner of such Account, which Account is free
and clear of any liens, claims, equities and encumbrances whatsoever,
and upon the purchase by * of such Account, * will own such Account
free and clear of any liens, claims, equities and encumbrances
whatsoever and the consideration received by Seller from * for such
Account is fair and adequate.
7.2 Authority to Sell. Seller is the sole obligee under such Account and
has full power and is duly authorized to sell, assign and transfer such
Account to * hereunder, and, except as such Account is disclosed to *
as an ineligible Account concurrently with the sale of such Account to
*, the date of sale of such Account is not more than 30 days after the
date of the original invoice relating to such Account.
7.3 Full Payment Expected. Seller has no knowledge of any fact which would
lead it to expect that, at the date of sale of such Account to *, such
Account will not be paid in the full stated amount when due, except as
such Account is disclosed to * as an ineligible Account.
7.4 Bona Fide Account. Such Account is valid and enforceable and arises out
of a bona fide sale or lease of conforming goods or the bona fide
rendition of services by Seller, and all underlying goods have been
delivered to the Account Debtor, or all underlying services have been
rendered by Seller, in complete fulfillment of all of the terms and
conditions of a fully executed, delivered and unexpired contract or
purchase order with the Account Debtor, and the Account Debtor has
accepted the goods or services to which the Account relates, except as
such Account is otherwise disclosed to * as an ineligible Account. Such
Account constitutes the legal, valid and binding payment obligation of
the Account Debtor, enforceable in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally), except as such Account
is disclosed to * as an ineligible Account.
7.5 Payable in U.S. Dollars. Such Account is denominated and payable only
in United States dollars.
7.6 Account is Not Past Due. Such Account is current and not past due as of
the date of sale of such Account to * (except as such Account is
otherwise disclosed to * as an ineligible Account), has not been paid
by or on behalf of the Account Debtor in whole or in part, and, if it
is an Eligible Account, is not and will not be subject to any dispute,
recision, setoff, recoupment, defense or claim by the Account Debtor,
whether relating to price, quality, quantity, workmanship, delay in
delivery, setoff, counterclaim or otherwise, and, if it is an Eligible
Account, the Account Debtor has not and will not claim any defense of
any kind or character (other than bankruptcy or insolvency arising
after the date of such sale of such Account to * hereunder) against
payment of such Account.
7.7 U.S. Account Debtor. As of the date of purchase by * of such Account,
the Account Debtor with respect to such Account is located (within the
meaning of Section 9-103 of the UCC) and has its principal executive
offices within the United States, except as such Account is disclosed
to * as an ineligible Account concurrently with the sale of such
Account to *.
7.8 Remittance Address. The invoice related to such Account sets forth
as its sole address for payment the Remittance Address.
SECTION 8. COLLATERAL
8.1 Grant of Security Interest. In order to secure the payment of all
Obligations, Seller hereby grants to * a security interest in and lien
upon all of Seller's right, title and interest in and to (a) all
Accounts not purchased hereunder and all present and future contracts,
contract rights, chattel paper, documents, instruments, drafts,
acceptances, deposit accounts and general intangibles now or hereafter
owned by Seller (including, without limitation, the Reserve), all money
and other funds of Seller which may now or hereafter come into the
possession, custody or control of * and in any case where an account
arises from the sale of goods, all of Seller's right, interest and
interest in such goods (including, without limitation, all returned or
repossessed goods and all of Seller's rights of stoppage in transit,
replevin and reclamation as unpaid vendor); (b) all Inventory and all
accessions thereto and products thereof and documents therefor; (c) all
books and records pertaining to the foregoing, including but not
limited to computer programs, data, certificates, records, circulation
lists, subscriber lists, advertiser lists, supplier lists, customer
lists, customer and supplier contracts, sales orders, and purchasing
records; and (d) all proceeds of the foregoing, including without
limitation, all insurance payable by reason of loss or damage
(collectively, the "Collateral").
8.2 Perfection. Seller agrees to comply with all applicable laws in order
to perfect *'s security interest in and to the Collateral, to execute
any financing statement(s) or additional documents as * may require and
to deliver to * landlord and or mortgagee lien waivers with respect to
each site where Inventory is located and which is either leased by
Seller or has been mortgaged by Seller, upon request by *.
8.3 Representations and Warranties. Seller represents and warrants to * as
follows with respect to the Collateral:
(a) Seller has not executed any other security agreement currently
affecting the Collateral or any financing statement regarding
the Collateral (other than those in favor of *, those to be
released with the closing of this Facility, those that may
cover Power Products' equipment located in Mexico, those
covering leased equipment or otherwise disclosed to and
consented by * in writing), and no financing statement
executed by Seller is now on file which covers any of the
Collateral (other than in favor of *, those to be released
with the closing of this facility, those that may cover Power
Products' equipment located in Mexico, those covering leased
equipment or as otherwise disclosed to and consented by * in
writing);
(b) All Collateral is and will be owned by Seller, free and clear
of all other liens, encumbrances, security interests and
claims (except as otherwise consented by * in writing), and
shall be kept at address set forth below Seller's signature
hereon and at such other addresses as may be listed in
Schedule C attached hereto, and Seller shall not (without the
written consent of *) remove the Collateral therefrom except
for the purpose of selling or leasing Inventory in the
ordinary course of business.
8.4 Existing Security Interest. In the event a security interest has
heretofore been granted and given to * by Seller in a prior
agreement(s) or document(s) to secure certain obligations, then in such
event, and notwithstanding anything in this Agreement to the contrary,
the lien and security interest herein granted and given to * hereunder
is in renewal and continuation, and not in extinguishment of, all such
prior liens and security interests and continue to be valid and
subsisting liens and security interests to secure all prior, existing
and future Obligations.
SECTION 9. COVENANTS
So long as this Agreement shall be in effect or any of the Obligations shall be
outstanding, Seller agrees and covenants that, unless * shall otherwise consent
in writing:
9.1 Sale of Accounts. Subject to the terms and conditions of this
Agreement, Seller will sell to * hereunder all Accounts existing at the
time of each Availability Certificate permitted or required to be
delivered to * under Subsection 9.14.
9.2 Books and Records. Seller will maintain its books and records in
accordance with GAAP, applied on a consistent basis, at its chief
executive office set forth in Subsection 6.4.
9.3 No Other Liens. Seller will not execute any security agreement or
financing statement covering any of the Accounts purchased hereunder or
the Collateral, other than (i) liens and security interests securing
indebtedness owing to *, (ii) pledges or deposits to secure the payment
of obligations under any worker's compensation laws or similar laws,
(iii) deposits to secure the payment of public or statutory
obligations, (iv) mechanic's, carriers', workman's, repairman's or
other liens arising by operation of law in the ordinary course of
business which secure obligations that are not overdue or are being
contested in good faith and for which Borrower has established adequate
reserves in accordance with generally accepted accounting principles,
(v) liens securing purchase money indebtedness permitted hereunder
provided such lien does not extend beyond the property purchased with
such indebtedness, (vi) liens securing capital leases provided such
lien does not extend beyond the property subject to such lease, and
(vii) liens and security interest existing as of the date hereof which
have been disclosed to and approved by * in writing (including the lien
covering equipment at Power Product's Mexico location and those
financing statements covering leased equipment).
9.4 Notice of False Representation. Seller agrees to notify * immediately
of any breach by Seller of any representation, warranty or covenant
contained herein or in the event any representation or warranty made
herein becomes false at any time.
9.5 Notice of Disputed Account. Seller agrees to notify * immediately of
the assertion by any Account Debtor of any dispute or other claim
(including any defense or offset asserted by any Account Debtor) with
respect to any Account sold to * hereunder, or with respect to any
related goods or services ("Disputed Accounts"). Upon *'s request,
Seller agrees to settle, at its own expense and for the benefit of *,
all Disputed Accounts; provided, that any such settlement shall be made
only with the prior written consent of *.
9.6 Right of Inspection. Seller agrees to permit * to visit its properties
and installations and to examine, audit and make and take away copies
or reproductions of Seller's books and records, at all reasonable
times. Seller also agrees to pay all costs associated with any such
audits, which are currently $700.00 per day, per person, plus
out-of-pocket expenses, but prior to an Event of Default, Seller shall
not be required to pay for more than one such audit per fiscal quarter.
9.7 Notice of Material Change/Litigation. Seller shall promptly notify * in
writing (a) any material adverse change in Seller's financial condition
or its business, and (b) any litigation or claims affecting Seller
which could materially adversely affect the financial condition of
Seller.
9.8 Notice of Name or Address Change. Seller will notify * in writing 30
days prior to any change in (a) the name of Seller or any of the names
under which it is conducting business as specified on Schedule B, (b)
the address of Seller's chief executive office or principal place of
business as described in Subsection 6.4, (c) the location of the office
where the records concerning Accounts are maintained, (d) the opening
of any new place of business or location where Collateral may be kept,
and (e) the closing of any of its existing places of business or
locations described on Schedule C. Seller agrees to execute and deliver
to * financing statements and such other documents as * may request in
order to obtain and/or maintain a perfected security interest in the
Collateral.
9.9 Taxes. Seller will pay and discharge when due all assessments, taxes,
governmental charges and levies, of every kind and nature, imposed upon
Seller or its properties, income or profits, prior to the date
penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Seller's property, income or
profits: provided, however, Seller will not be required to pay and
discharge any such assessment, tax, charge, levy or claim so long as
(i) same shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings timely instituted, and (ii)
Seller shall have established adequate reserves with respect to such
contested assessment, tax, charge, levy or claim in accordance with
generally accepted accounting principles, consistently applied.
9.10 Liquidations; Mergers. Seller shall not merge or consolidate with or
into any other entity (except a merger of Seller into Parent
Corporation or into another subsidiary of the Parent Corporation) or
liquidate, dissolve or otherwise cease conducting business, except in
connection with the sale of substantially all of Power Products' assets
as long as * receives 10 days prior written notice of any such sale by
Power Products.
9.11 Sale of Assets. Seller shall not sell, transfer or otherwise dispose of
its assets, other than (i) inventory in the ordinary course of its
business, (ii) as necessary to replace obsolete equipment, and (iii)
substantially all of the assets of Power Products as long as * receives
10 days prior written notice of any such sale.
9.12 Transfer of Ownership. Seller shall not permit the sale, pledge or
other disposition of any ownership interest in Seller; provided,
however, all the ownership of Power Products may be sold as long as *
receives 10 days prior written notice of any such sale.
9.13 Proper Reporting. Seller agrees to properly reflect the effect of this
Agreement, and all sales of Accounts related thereto, in all financial
reports and disclosures, written or otherwise, provided to Seller's
creditors and other interested parties. Seller specifically agrees that
all Accounts purchased by * hereunder will be excluded from Seller's
reported accounts receivable balances.
9.14 Delivery of Availability Certificate. Seller shall deliver to * an
updated Availability Certificate (i) with each request for an Account
Payment, and (ii) on a weekly basis throughout the Term, whether or not
Seller requests an Account Payment, in each instance accompanied by the
related reports described in Subsection 2.3.
9.15 Accounts Receivable and Accounts Payable Aging. Seller agrees to
deliver to * within three (3) days after each week, an Accounts
Receivable aging report and an Accounts Payable aging report, in form
and detail satisfactory to *.
9.16 Financial Statements. Seller agrees to furnish to * (a) within 90 days
after the last day of each fiscal year of Seller a consolidated
statement of income and a consolidated statement of cash flows of
Seller for such fiscal year, and a consolidated balance sheet of Seller
as of the last day of such fiscal year, together with an auditor's
report thereon by an independent certified public accountant (if Seller
generally obtains such an auditor's report), (b) within 45 days after
the last day of each fiscal quarter of Seller, an unaudited
consolidated statement of income and statement of cash flows of Seller
for such fiscal quarter, and an unaudited consolidated balance sheet of
Seller as of the last day of such fiscal quarter, and (c) within 30
days after the last day of each month, monthly unaudited consolidated
statements of income and statements of cash flows of Seller and any
affiliates for each month an unaudited balance sheets of Seller and any
affiliates as of the end of each month. Seller represents and warrants
that each such statement of income and statement of cash flows will
fairly present, in all material respects, the results of operations and
cash flows of Seller for the period set forth therein, and that each
such balance sheet will fairly present, in all material respects, the
financial condition of Seller as of the date set forth therein, all in
accordance with GAAP, (or, with respect to unaudited financial
statements, in the notes thereto). Seller also agrees to furnish to *,
upon request, such additional financial and business information
concerning Seller and its business as * may reasonably request,
including copies of its Form 941 returns filed with the Internal
Revenue Service and evidence of payment of related taxes.
9.17 Financial Covenants. Seller agrees to maintain the following financial
covenant while this Agreement remains in effect:
(a) Tangible Net Worth. At the end of each fiscal quarter, the
Tangible Net Worth, calculated on a pro forma basis (i.e., add
back purchased Accounts and factored balance), of not less than
$4,250,000.00; provided, however, Seller shall have an opportunity
to cure any breach of this financial covenant within 25 five days
from the earlier of (i) the date which * is due to receive
financial statements which would show a violation of this
covenant, or (ii) the date of *'s receipt of financial statements
showing a violation of such covenant.
SECTION 10. RIGHTS OF *
10.1 Notification of Account Debtors. * shall have the right at any time (i)
after the occurrence of an Event of Default and without notice to
Seller, (ii) if * believes in good faith the prospect for payment or
performance under this Agreement and the other Purchase Documents is
materially impaired, or (iii) * in good faith believes Seller is not
diligently pursuing appropriate collection efforts against a particular
Account Debtor which is delinquent (collectively, the "Notification
Events"), to notify any or all Account Debtors of the sale of the
Accounts to * and to direct such Account Debtors to make payment of all
amounts due or to become due to Seller directly to * to enforce
collection of any Accounts purchased hereunder or collection of any of
the Collateral and to adjust, settle or compromise the amount or
payment thereof. * agrees to attempt to give prior notice to Seller of
*'s notification of Account Debtors based upon clause (i) in the
foregoing sentence but * shall have no liability for failure to provide
any such notice and Seller's obligations hereunder and the provisions
of this Agreement shall not be affected by *'s failure to give any such
notice. * agrees to give prior written notice to Debtor if * notifies
Account Debtors as a result of the Notification Events described in
clause (ii) and (iii) in the first sentence of this Subsection, and to
only notify the Account Debtor which is delinquent if notification is
based solely on clause (iii).
10.2 Collections. All payments and collections of Accounts received by *
shall belong to * as owner of the Accounts.
10.3 Right to Collect. After the occurrence of any Notification Event,
Seller authorizes * to collect, sue for and give releases for and in
the name of Seller or * in *'s sole discretion, all amounts due on
Accounts sold to * hereunder. Seller specifically authorizes * to
endorse, in the name of Seller, all checks, drafts, trade acceptances
or other forms of payment tendered by Account Debtors in payment of
Accounts sold to * hereunder and made payable to Seller. * shall have
no liability to Seller for any mistake in the application of any
payment received with respect to any Account, IT BEING THE SPECIFIC
INTENT OF THE PARTIES HERETO THAT * SHALL HAVE NO LIABILITY HEREUNDER
FOR ITS OWN NEGLIGENCE, except for its own gross negligence and willful
misconduct. After the occurrence of any Notification Event, Seller
hereby waives notice of nonpayment of any Account sold to * hereunder
as well as any and all other notices with respect to such Accounts,
demands or presentations for payment and agrees that * may extend,
renew or modify from time to time the payment of, or vary, reduce the
amount payable under or compromise any of the terms of, any Account
purchased by *, in each case without notice to or the consent of
Seller. After the occurrence of any Notification Event, Seller further
authorizes * (or its designee) to open and remove the contents of any
post office box of Seller which * believes contains mail relating to
Accounts, and in connection therewith or otherwise, to receive, open
and dispose of mail addressed to Seller which * believes may relate to
Accounts, and in order to further assure receipt by * (or its designee)
of mail relating to such Accounts, to notify other parties including
customers and postal authorities to change the address for delivery of
such mail addressed to Seller to such address as * may designate. *
agrees to use reasonable measures to preserve the contents of any such
mail which does not relate to the Accounts of Seller and to deliver
same to Seller (or, at the election of *, to notify Seller of the
address where Seller may take possession of such contents; provided, if
Seller does not take possession of such contents within 30 days after
notice from * to take possession thereof, * may dispose of such
contents without any liability to Seller).
10.4 Power of Attorney. Seller hereby irrevocably appoints * (and any
employee, agent or other person designated by *, any of whom may act
without joinder of the others) as Seller's attorneys-in-fact in
Seller's name, place, place and stead, to take, after the occurrence of
any Notification Event, all actions, execute and deliver all notices,
negotiate such instruments and other documents, as may be necessary or
advisable to permit * (or its designee) to take any and all of the
actions described in this Agreement or to carry out the purpose and
intent thereof, as fully and for all intents and purposes as Seller
could itself do, and hereby ratifies and confirms all that said
attorneys-in-fact may do or cause to be done by virtue hereof,
including, without limitation; (i) to demand, collect, sue for,
recover, receive and give acquittance and receipts for moneys due and
to become due under the Accounts purchased hereunder or the Collateral,
and (ii) to file any claims or take any action or institute any
proceedings which * may deem necessary or appropriate for the
collection and/or preservation of the Accounts purchased hereunder and
the Collateral or otherwise to enforce the rights of * with respect to
the Accounts purchased hereunder and the Collateral. This power of
attorney is irrevocable and deemed coupled with an interest.
10.5 UCC Filings. Seller hereby authorizes * to file, with or without the
signature of Seller, one or more financing or continuation statements,
and amendments thereto, relating to the Collateral. Seller further
agrees that a carbon, photographic or other reproduction of this
Agreement or any financing statement describing any Collateral is
sufficient as a financing statement and may be filed in any
jurisdiction * may deem appropriate.
10.6 Right to Perform. If Seller fails to perform any agreement or
obligation provided herein or in any of the other Purchase Documents
(including without limitation, the payment and discharge of any taxes,
liens or encumbrances affecting the Collateral), * may itself perform,
or cause performance of, such agreement or obligation, and the expenses
of * incurred in connection therewith shall be a part of the
Obligations, secured by the Collateral and payable by Seller on demand.
10.7 Right of Setoff. * shall have the right of setoff against the
Obligations at any and all times and in any and all proceedings and
instances including, but not limited to, bankruptcy, reorganization,
receivership or insolvency of Seller, without prior notice to Seller.
SECTION 11. SERVICING
11.1 Appointment of Servicing Agent. * hereby appoints Seller as servicing
agent for * for the purpose of expediting the collection of past due
Accounts purchased by * hereunder. Seller, as servicing agent, agrees
to maintain an active, on-going and regular dialog with each delinquent
Account Debtor. Seller further agrees, as servicing agent, to utilize
all powers, influences, rights and to take every action within its
control in accordance with its customary practices and applicable law
to expedite the collection of the past due Accounts purchased by *
hereunder and direct such payments exclusively to the Remittance
Address. * reserves the right to terminate Seller as *'s servicing
agent at any time with or without cause or notice to Seller.
11.2 Protection of *'s Rights. Seller, as servicer, shall take no action
which, nor omit to take any action the omission of which, would
substantially impair the rights of * in any Accounts purchased
hereunder by *. Seller, as servicer, agrees to defend at its expense
*'s ownership of the Accounts sold hereunder.
11.3 Proceeds or Returned Goods Received by Seller. All amounts and proceeds
(including instruments and writings) received by Seller at any time in
respect of any Accounts purchased hereafter shall be received in trust
for the benefit of * hereunder, shall be segregated from other funds of
Seller and shall be promptly paid over to * in the same form as so
received (with any necessary endorsement) to be applied in the same
manner as payments received directly by *. If any goods relating to an
Account purchased by * hereunder shall be returned to or repossessed by
Seller, Seller shall give prompt notice thereof to * and shall hold
such goods in trust for *, separate and apart from Seller's own
property, and such goods shall be owned solely by * and be subject to
*'s direction and control. Seller shall properly store and protect such
goods and agrees to cooperate fully with * in any subsequent
disposition thereof for the benefit of *. The provisions of this
Subsection shall survive the termination of this Agreement.
11.4 Delivery of Invoices and Related Data. The Invoices and Related Data,
although owned by *, shall remain in Seller's possession and held in
trust by Seller for the benefit of *. Seller agrees to deliver the
Invoices and Related Data to * upon *'s request and to allow * to visit
its offices to inspect, make copies or take the originalls thereof,
along with any computer data related thereto, at all reasonable times.
11.5 Additional Documentation; Termination. Seller will furnish to *, upon
request, any and all papers, documents and records in its possession or
control related to Accounts purchased by * hereunder, or related to
Seller's business relationship with the respective Account Debtors, and
agrees to cooperate fully with * in all matters related to collection
of Accounts purchased by * hereunder. * reserves the right to terminate
such servicing relationship at any time with or without cause and
without notice to Seller.
SECTION 12. EVENTS OF DEFAULT
An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of one or more of the following:
(a) Seller shall fail to pay as and when due any Obligations owed
to *.
(b) Seller shall breach any covenant or agreement made herein, in
any of the other Purchase Documents or in any other agreement
now or hereafter entered into between Seller and *.
(c) Any warranty or representation made herein or in any of the
other Purchase Documents shall be false or misleading in any
material respect when made.
(d) The occurrence of an event of default under any of the other
Purchase Documents or any other agreement now or hereafter
entered into between Seller and *.
(e) Any report, certificate, schedule, financial statement, profit
and loss statement or other statement furnished by Seller, or
by any other person on behalf of Seller, to * is not true and
correct in any material respect.
(f) The occurrence of any event which permits the acceleration of
the maturity of any indebtedness in excess of $50,000.00 owing
by Seller to any third party under any agreement or
undertaking.
(g) The filing of a voluntary or involuntary case by or against
Seller under the United States Bankruptcy Code or other
present or future federal or state insolvency, bankruptcy or
similar laws, or the appointment of a receiver, trustee,
conservator or custodian for a substantial portion of Seller's
assets and, with respect to an involuntary case, the case is
consented to by Seller or is not dismissed within 60 days
after the effective date thereof.
(h) Seller shall become insolvent, make a transfer in fraud of
creditors or make an assignment for the benefit of creditors.
(i) The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or
with respect to the Collateral.
(j) Seller shall have a federal or state tax lien filed against
any of its properties.
(k) The Collateral or any portion thereof is taken on execution or
other process of law.
(l) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $50,000 exists with respect to any ERISA
Plan of Seller, or (ii) any Termination Event occurs with
respect to any ERISA Plan of Seller and the then current value
of such ERISA Plan's benefit liabilities exceeds the then
current value of such ERISA Plan's assets available for the
payment of such benefit liabilities by more than $50,000.
(m) If any of the obligations of any guarantor under the Purchase
Documents is limited or terminated by operation of law or by
the guarantor, or any such guarantor becomes the subject of an
insolvency proceeding.
(n) The entry against Seller of a final and nonappealable judgment
for the payment of money in excess of $50,000 (not covered by
insurance satisfactory to * in its sole discretion).
Upon the occurrence of an Event of Default described in subsections (g) or (h)
of this Section, all of the Obligations owing by Seller to * (including but not
limited to all fees and discounts owed hereunder) shall thereupon be
automatically and immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Seller.
Upon the occurrence of any other Event of Default, *, at its option, at any time
and from time to time may without notice to Seller declare any or all of the
Obligations owing by Seller to * (including but not limited to all fees and
discounts owed hereunder) immediately due and payable, all without demand,
presentment, notice of demand or of dishonor and nonpayment, or any notice or
declaration of any kind, all of which are hereby expressly waived by Seller.
After the occurrence of any Event of Default, any obligation of * to purchase
any further Accounts hereunder, to pay any further Account Payments hereunder
(except as provided in Subsection 14.5) or to make loans under any other
agreement with Seller may be terminated by * at *'s option to be exercised in
its sole discretion.
SECTION 13. REMEDIES AND APPLICATION OF PROCEEDS
13.1 Remedies. In addition to, and without limitation of, the foregoing
provisions of this Agreement, if an Event of Default shall have
occurred and be continuing, * may from time to time in its discretion,
without limitation and without notice except as expressly provided
below, do any one or more of the following:
(a) Terminate this Agreement; provided that any such termination
shall be subject to Subsections 11.3, 14.4, 14.5 and 14.8.
(b) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, under the other
Purchase Documents or otherwise available to it, all the
rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected
Collateral).
(c) Require Seller to, and Seller hereby agrees that it will at
its expense, assemble all or part of the Collateral as
directed by * and make it available to * at a place to be
designated by * which is reasonably convenient to both
parties.
(d) Reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest created
hereby by any available judicial procedure.
(e) Dispose of, at its office, on the premises of Seller or
elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings.
(f) Buy the Collateral, or any part thereof, at any public sale,
or at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type which
is the subject of widely distributed standard price
quotations.
(g) Apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Seller
hereby consents to any such appointment.
(h) At *'s discretion, retain the Collateral in satisfaction of
the Obligations whenever the circumstances are such that * is
entitled to do so under the UCC or otherwise.
Seller agrees that, to the extent notice of sale shall be required by
law, at least five (5) days notice to Seller of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. * shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. * may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
13.2 Application of Proceeds. If any Event of Default shall have occurred
and be continuing, * may in its discretion apply any Reserve, and any
cash proceeds received by * in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral, to any or
all of the following in such order as * may elect:
(a) To the repayment of reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by *
in connection with (i) the administration of this Agreement;
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any
Collateral; (iii) the exercise or enforcement of any of the
rights of * hereunder, or (iv) the failure of Seller to
perform or observe any of the provisions hereof.
(b) To the payment of the Obligations and the reimbursement of *
for the amount of any obligations of Seller paid or discharged
by *, and of any expenses of * payable by Seller hereunder or
under the other Purchase Documents.
(c) By holding the same as Collateral.
(d) To the payment of any other amounts required by applicable law
(including, without limitation, * of * of the UCC or any
successor or similar, applicable statutory provision).
(e) To the payment or other satisfaction of any liens and other
encumbrances upon any of the Collateral.
(f) By delivery to Seller or to whomsoever shall be lawfully
entitled to receive the same or as a court of competent
jurisdiction shall direct.
SECTION 14. MISCELLANEOUS
14.1 Equitable Relief. Seller acknowledges that in the event that Seller
commits any act or omission which prevents or unreasonably interferes
with: (a) *'s exercise of the rights and privileges arising under the
power of attorney granted under this Agreement; or (b) *'s perfection
of or levy upon the security interest granted in the Collateral,
including any seizure of any Collateral, such conduct will cause
immediate severe, incalculable and irrevocable harm and injury for
which there is no adequate remedy at law, and shall constitute
sufficient grounds to entitle * to an injunction, writ of possession,
or other applicable relief in equity, and to make such application for
such relief in any court of competent jurisdiction, without any prior
notice to Seller.
14.2 Cumulative Rights. All rights, remedies and powers granted to * in this
Agreement, or in any other instrument or agreement given by Seller to *
or otherwise available to * in equity or at law, or accumulative and
may be exercised singularly or concurrently with such other rights as *
may have. These rights may be exercised from time to time as to all or
any part of the Accounts purchased hereunder or the Collateral as * in
its discretion may determine. * shall not be deemed to have waived any
of its rights and remedies unless the waiver is in writing and signed
by *. A waiver by * of a right or remedy under this Agreement on one
occasion is not a waiver of the right or remedy on any subsequent
occasion. The purchase of Accounts by * during the continuance of an
Event of Default shall not obligate * to make any further purchases
during the continuation of such Event of Default.
14.3 Notices. Any notice or communication with respect to this Agreement
shall be in writing sent by (i) personal delivery; (ii) expedited
delivery service with proof of delivery; (iii) United States mail,
postage prepaid, registered or certified mail, or (iv) prepaid
telegram, telex or telecopy, addressed to each party thereto at its
address set forth below their signature hereon or to such other address
or to the attention of such other person as hereafter shall be
designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been
given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at
the address and in the manner provided herein, or in the case of
telegram, telex or telecopy, upon receipt. Seller hereby agrees that *
may publicize the transaction contemplated by this Agreement in
newspapers, trade and similar publications including without
limitation, the publication of a "tombstone".
14.4 Term. The term of this Agreement shall be for one (1) year from the
date hereof (the "Term"). Seller acknowledges that it shall have no
right to terminate this Agreement prior to the end of the Term, that
termination of this Agreement by Seller at any time prior to the end of
the Term would result in the loss by * of benefits under this Agreement
and that the damages incurred by * as a result of such early
termination are and would be difficult and impractical to ascertain.
Therefore, in the event this Agreement is terminated by Seller for any
reason or by * because of an Event of Default during the Term, Seller
shall pay to * an early termination fee, as liquidated damages, in the
amount of three percent (3%) of the Facility Amount. Notwithstanding
the foregoing, in the event that * Base Rate exceeds the Prime Rate
published in The Wall Street Journal by more than 100 basis points for
more than 30 consecutive days (the "Rate Termination Event"), Seller
shall have the right for 30 days after such event to terminate this
Agreement without payment of the termination fee; provided, however,
Seller must notify * in writing of its intention to so terminate within
10 days after the occurrence of a Rate Termination Event. In addition,
Power Products may also terminate this Agreement with respect to itself
without a termination fee as long as I&M does not also terminate this
Agreement prior to the end of the Term and the Parent Corporation does
not terminate financing under the promissory note described in the
Facility Amount definition.
14.5 Termination. Upon termination of this Agreement, Seller shall be
entitled to receive from * the remainder, if any, of the purchase price
for the Accounts provided for in Subsection 2.2 which has not
theretofore been paid to Seller, in accordance with the following
provisions:
(a) * shall pay to Seller, within one (1) business day after the
termination date of this Agreement (the "Termination Date"),
an amount equal to any remaining Availability Pool as of the
Termination Date, less any Discounts, costs and expenses to
which * is entitled hereunder. As additional collections are
received after the Termination Date with respect to Accounts
sold on or before the Termination Date, * will on a weekly
basis during the 180 day period following the Termination Date
recompute the remaining Availability Pool and disburse such
amount to Seller, less any Discounts, costs and expenses to
which * is entitled hereunder. The final computation and
disbursement, if any, will be made as of the 180th day
following the Termination Date, and any final payment due to
Seller will be paid within five (5) business days following
such 180th day.
(b) The provision of Subsection 14.5(a) shall be subject to the
following: (i) * shall have no obligation to make any
computation or to pay any amount pursuant to Subsection
14.5(a) if Seller shall not have provided such information as
* reasonably requests for the purpose of computing the
remaining Availability Pool; and (ii) *'s obligation to pay
any amount to Seller pursuant to Subsection 14.5(a) is subject
to *'s rights under Section 5.
(c) The representations, covenants, agreements, indemnities and
other provisions of the following sections and subsections of
this Agreement shall continue to be effective during the
180-day period referred to in Subsection 14.5(a) and shall
also continue to be effective thereafter to the extent that
other provisions of this Agreement provide for their survival:
4.1, 4.4 - 4.7, 5 - 8, 9.2 - 9.10, 9.13, 9.15 and 10 - 14.
In lieu of the above provisions in this Subsection 14.5, after
termination of this Agreement, * may sell, and Seller may purchase, all
outstanding Accounts purchased hereunder by * if both parties agree to
such action at a mutually agreeable price.
14.6 Notice of Offer. Seller hereby agrees that in the event (a) Seller
receives a written proposal either during or at the end of the Term
from a third party to provide financing or factoring ("Proposed
Refinancing"), (b) the terms of the Proposed Refinancing are acceptable
to Seller, and (c) Seller is considering accepting the Proposed
Refinancing from the offeror (the "Offeror"), Seller will provide * in
writing an outline of the complete terms and conditions of the Proposed
Refinancing. Seller agrees not to accept the Proposed Refinancing from
the Offeror until at least five (5) business days after delivery of the
foregoing item to *.
14.7 Severability. Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be construed,
to be a separate and independent covenant and agreement. If any term or
provision of this Agreement shall to any extent be invalid or
unenforceable, the remainder of the Agreement shall not be affected
thereby.
14.8 Indemnity. Seller hereby indemnifies and agrees to hold the Indemnified
Persons harmless against any breach by Seller of any representation,
warranty, covenant or agreement of Seller contained in this Agreement,
and against any claims or damages arising out of the manufacture, sale,
possession or use of, or otherwise relating to, goods, or the
performance of services, associated with or relating to Accounts or
related rights purchased (or with respect to which a security interest
is granted) hereunder. Seller also hereby indemnifies and agrees to
hold harmless and defend all Indemnified Persons from and against any
and all Indemnified Claims. THE FOREGOING INDEMNIFICATION SHALL APPLY
WHETHER OR NOT SUCH INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY EXTENT
OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT
LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY INDEMNIFIED PERSON, but shall exclude any of the
foregoing resulting from such Indemnified Person's gross negligence or
willful misconduct. If Seller or any third party ever alleges any gross
negligence or willful misconduct by any Indemnified Person, the
indemnification provided for in this Section shall nonetheless be paid
upon demand, subject to later adjustment or reimbursement, until such
time as a court of competent jurisdiction enters a final judgment as to
the extent and affect of the alleged gross negligence or willful
misconduct. Upon notification and demand, Seller agrees to provide
defense of any Indemnified Claim and to pay all costs and expenses of
counsel selected by any Indemnified Person in respect thereof. Any
Indemnified Person against whom any Indemnified Claim may be asserted
reserves the right to settle or compromise any such Indemnified Claim
as such Indemnified Person may determine in its sole discretion, and
the obligations of such Indemnified Person, if any, pursuant to any
such settlement or compromise shall be deemed included within the
Indemnified Claims. Except as specifically provided in this section,
Seller waives all notices from any Indemnified Person. The provisions
of this Section shall survive the termination of this Agreement.
14.9 Benefits; Assignment. All grants, covenants and agreements contained in
this Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however,
that Seller may not delegate or assign any of its duties or obligations
under this Agreement without the prior written consent of * and any
assignment without such consent shall be void. * RESERVES THE RIGHT TO
ASSIGN ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT IN WHOLE OR IN
PART TO ANY PERSON OR ENTITY; provided, however, any assignee of *'s
obligations hereunder must have financial resources, liquidity and
operational expertiese comparable to *. To the extent * assigns its
rights and obligations hereunder to a third party, * shall thereafter
be released from such assigned obligations to Seller and such
assignment shall effect a novation between Seller and such third party.
Without limiting the generality of the foregoing, * may from time to
time grant participations in all or any part of the Obligations to any
person or entity on such terms and conditions as may be determined by *
in its sole and absolute discretion, provided that the grant of such
participation shall not relieve * of its obligations hereunder nor
create any additional obligations of Seller. Seller consents to *
disclosing any financial and any other information available to *
concerning Seller to any prospective participant or assignee as long as
such prospect signs an agreement to maintain the confidentiality of any
such information.
14.10 Captions. The captions in this Agreement are for convenience only and
shall not define or limit the provisions hereof.
14.11 Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF * WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF *. THIS AGREEMENT IS PERFORMABLE
BY THE PARTIES IN * COUNTY, *. SELLER AND * EACH AGREE THAT * COUNTY, *
SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM
ARISING UNDER OR RELATING TO THIS AGREEMENT, AND THAT SUCH COUNTY IS A
CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM. SELLER
AND * EACH CONSENT TO THE PERSNAL JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN * COUNTY, * FOR THE LITIGATION OF ANY SUCH DISPUTE OR
CLAIM. SELLER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
14.12 WAIVER OF JURY TRIAL. SELLER AND * EACH HEREBY IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
14.13 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER PURCHASE DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS AGREEMENT ALSO AMENDS AND SUPERSEDES ANY OF THE TERMS OF
ANY PRIOR WRITTEN AGREEMENTS WITH RESPECT TO THE MATTERS SET FORTH IN
THIS AGREEMENT.
14.14 Amendments. No modification or amendment of or supplement to this
Agreement shall be valid or effective unless the same is in writing and
signed by the party against whom it is sought to be enforced.
14.15 Effectiveness of Agreement. This Agreement shall become effective only
upon acceptance by * at its offices in Fort Worth, * County, * as
evidenced by *'s signature hereon.
14.16 Usury Savings. The parties hereto intend that the transactions covered
hereby are true sales according to the provisions of *, of the * (as
more fully described in Subsection 14.17) and that none of the
Obligations under this Agreement or other Purchase Documents will
constitute loans or credit sales or interest on principal of a loan or
credit sale as determined under applicable laws; provided, however, if
this Agreement or any of the other Purchase Documents are deemed to
require the payment or permit the payment, taking, reserving,
receiving, collection, or charging of any sums constituting interest
under applicable laws, the following provisions of this Subsection will
apply:
(a) It is the intention of the parties hereto to comply strictly
with applicable usury laws; accordingly, notwithstanding any
provision to the contrary in this Agreement or any of the
other Purchase Documents, in no event whatsoever shall this
Agreement or any of the other Purchase Documents require the
payment or permit the payment, taking, reserving, receiving,
collection or charging of any sums constituting interest under
applicable laws which exceed the maximum amount permitted by
such laws. If any such excess interest is called for,
contracted for, charged, taken, reserved, or received in
connection with this Agreement or any of the other Purchase
Documents, or in any communication by * or any other person to
Seller or any other person, or in the event all or part of the
principal or interest shall be prepaid or accelerated, so that
under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for,
charged, taken, reserved, or received on the amount of
principal actually outstanding from time to time under this
Agreement or any of the other Purchase Documents shall exceed
the maximum amount of interest permitted by applicable usury
laws, then in any such event it is agreed as follows: (i) the
provisions of this Subsection shall govern and control; (ii)
neither Seller nor any other person or entity now or hereafter
liable for payments under this Agreement or any of the other
Purchase Documents shall be obligated to pay the amount of
such interest to the extent such interest is in excess of the
maximum amount of interest permitted by applicable usury laws;
(iii) any such excess which is or has been received
notwithstanding this subsection shall be credited against the
then unpaid principal balance of the Obligations under this
Agreement and the other Purchase Documents or, if this
Agreement or any of the other Purchase Documents has been or
would be paid in full by such credit, refunded to Seller, and
(iv) the provisions of this Agreement or any of the other
Purchase Documents, and any communication to Seller, shall
immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other
document, to the maximum lawful rate allowed under applicable
laws as now or hereafter construed by courts having
jurisdiction hereof or thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted
for, charged, taken, reserved, or received in connection
herewith which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate shall be made to the
extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of
this Agreement or any of the other Purchase Documents,
including all prior and subsequent renewals and extensions,
all interest at any time contracted for, charged, taken,
reserved, or received. The terms of this Subsection shall be
deemed to be incorporated into every Purchase Document.
(b) If at any time the rate at which any interest is payable on
any Obligation hereunder exceeds the Maximum Rate, the amount
outstanding hereunder shall bear interest at the Maximum Rate
only, but shall continue to bear interest at the Maximum Rate
until such time as the total amount of interest accrued
hereunder equals (but does not exceed) the total amount of
interest which would have accrued hereunder had there been no
Maximum Rate applicable hereto.
(c) Seller and * agree that * Rev. Civ. Stat. Ann art. 5069 Ch. 15
(which regulates certain revolving loan accounts and revolving
tri-party accounts) shall not apply to any revolving loan
accounts created under this Agreement or maintained in
connection therewith.
(d) To the extent that the interest rate laws of the State of *
are applicable to this Agreement, the applicable interest rate
ceiling is the indicated (weekly) ceiling determined in
accordance with * of the *, as amended, and, to the extent
that this Agreement is deemed an open end account as such term
is defined in * of the *, as amended, * retains the right to
modify the interest rate in accordance with applicable law.
(e) As used in this Subsection; (i) the term "applicable law"
means the laws of the State of * laws or the United States of
America, whichever laws allow the greater interest, as such
laws now exist or may be changed or amended or come into
effect in the future, and (ii) the term "Maximum Rate" means,
at the time of determination, the maximum rate of interest
which, under applicable law, may then be charged on the
Obligations hereunder.
14.17 Applicability of * . Seller and * acknowledge, agree, and fully intend
that the transactions contemplated and covered hereby are true sales
and are covered and governed by the provisions of * of the * Revised
Civil Statutes.
The undersigned have entered into this Agreement as of the date first written
above.
* ORYX POWER PRODUCTS CORPORATION
By: By:
Name: Name:
Title: Title:
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:
Name:
Title:
Address: Address: 47341 Bayside Parkway
Fremont, California 94538
Attn: Attn:
Telecopy No. Telecopy No.(510) 249-1150
<PAGE>
SCHEDULE A
TO REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
Dated May _____, 1997
BY AND BETWEEN
* (d/b/a *),
ORYX POWER PRODUCTS CORPORATION
AND
ORYX INSTRUMENTS AND MATERIALS CORPORATION
Availability Certificate
<TABLE>
<S> <C>
Seller Date
-----
-----
-----
-----
Activity Amount
-----
-----
1. Gross Accounts as of last certificate
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
2. Add: Gross Sales since last certificate (Per attached Sales Journal) (+)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
3. Deduct: Collections since last certificate (Per attached Collection (-)
Journal)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
4. Debit Memos (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
5. Dilutive Credit Memos (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
6. Credit Adjustments (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
7. Gross Accounts as of this certificate (=)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
8. Deduct: Ineligible Accounts (Per Attached) (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
9. Eligible Accounts as of this certificate (=)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
10. Lesser of (i) Account Payment Base (line 9 x 85%), or (ii) $4,000,000.00
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
11. Beginning Batch Balance (Ending Batch Balance as of last certificate)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
12. Deduct: Collections since last certificate (same as line 3) (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
13. Batch Balance before any Account Payment under this certificate (=)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
14. Availability Pool (line 10 less line 13)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
15. Deduct: Account Payment Requested (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
16. Fees, Discounts and Expenses (-)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
17. Remaining Availability Pool (=)
- --------------------------------------------------------------------------------- ----- ------------------------------
- --------------------------------------------------------------------------------- ----- ------------------------------
18. Ending Batch Balance (sum of lines 13, 15 and 16)
- --------------------------------------------------------------------------------- ----- ------------------------------
</TABLE>
Seller, for value received, hereby sells, assigns, transfers and sets over to *
("*") the accounts receivable ("Accounts") represented by (a) the invoices
listed described on the account receivable aging attached to the Bill of Sale
(if any) being delivered concurrently herewith, or (b) the sales journal and
other records attached hereto relating to sales since the date of the last
Availability Certificate delivered by Seller to *, all in accordance with and
subject to the terms and conditions set forth in that certain Revolving Account
and Purchase Transfer Agreement (Batch) dated May ____ ,1997 between Seller and
* (the "Purchase Agreement"), together with all Invoices and Related Data (as
such term is defined in the Purchase Agreement). The undersigned, as an
authorized officer of Seller, represents and warrants to * that (i) the Accounts
arise from the bona fide sales of Seller's products or billings for its
services, and are obligations of Seller's customers, payable at full value; (ii)
all goods and materials have been received by each of Seller's customers or all
services completed to each of customer's satisfaction for which the Accounts
arose; (iii) the goods or services meet the requirements of Seller's customers
(as to quality, quantity, delivery timeliness, etc.); (iv) the Accounts are not
subject to any known offsets, disputes or counterclaims, except as disclosed to
* in writing; (v) the Accounts are Eligible Accounts (as defined in the Purchase
Agreement), except as disclosed to * in writing; (vi) the Accounts are payable
according to terms disclosed and agreed to by *; (vii) the Accounts remain
unpaid when purchased by *; (viii) no Event of Default has occurred under the
Purchase Agreement or any other Purchase Document; (ix) Seller has not converted
any proceeds of previously purchased Accounts, and (x) all representations and
warranties contained in the Purchase Agreement and all other Purchase Documents
are true and correct as of the date hereof.
ORYX POWER PRODUCTS CORPORATION ORYX INSTRUMENTS AND MATERIALS CORPORATION
By: By:
Printed Name: Name:
Title: Title:
<PAGE>
SCHEDULE A-1
BILL OF SALE
The undersigned duly authorized corporate officer of ORYX POWER PRODUCTS
CORPORATION and ORYX INSTRUMENTS AND MATERIALS CORPORATION ("Seller"), on behalf
of Seller, does hereby irrevocably sell, assign, set-over and transfer to *
("*") doing business as * all rights and proceeds of the accounts receivable
represented by the invoices described on the accounts receivable aging attached
hereto, together with all Invoices and Related Data, as such term is defined in
that certain Revolving Account Transfer and Purchase Agreement (Batch) dated May
____, 19 97 between * and Seller.
ORYX POWER PRODUCTS CORPORATION
By:
Printed Name:
Title:
Date:
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:
Name:
Title:
<PAGE>
SCHEDULE B
TO
REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
Dated May _____, 1997
By and Between
*(d/b/a * ),
ORYX POWER PRODUCTS CORPORATION
AND
ORYX INSTRUMENTS AND MATERIALS CORPORATION
Any trade or assumed names referenced in Subsection 6.11 are:
NONE
SCHEDULE C
TO
REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
Dated May ________, 1997
By and Between
* (d/b/a * ),
ORYX POWER PRODUCTS CORPORATION
AND
ORYX INSTRUMENTS AND MATERIALS CORPORATION
The addresses of any other locations of Collateral referenced in Subsection
8.3(b) are:
6001 S. 35th Street
Suite B
McAllen, 78503
1601 Feehanville Drive
Suite 300
Mt. Prospects, IL 60056
Avenue Falcon Lote 6
Manzana 4
Pargue Industrial
Del Norte CD
Reynosa Temp Mexico
<PAGE>
PERFORMANCE BASED PRICING ADDENDUM
to Revolving Account Transfer and Purchase Agreement (Batch) between * ("*") and
ORYX POWER PRODUCTS CORPORATION and ORYX INSTRUMENTS AND MATERIALS CORPORATION
(collectively referred to herein as "Seller") dated May _____, 1997.
This Addendum sets forth the criteria for and the amount of any
adjustment in the Discount Rate and the Servicing Fee as set forth in the above
referenced Revolving Account Transfer and Purchase Agreement (Batch) (the
"Agreement"), the Discount Rate and Servicing Fee set forth therein being
referred to herein as the "Contract Rates" Until changed according to this
Addendum, the Discount Rate set for the initial purchases under the Agreement is
the Base Rate (as defined in the Agreement) plus 1.25% per annum and the initial
Servicing Fee is .10%. The initial Discount Rate and Servicing Fee shall be
known herein as the "Initial Rates".
Beginning after the first three (3) full calendar months after the date
of the Agreement, ("Initial Quarter") and every three (3) months thereafter,
Seller may apply for a change in the Discount Rate and the Servicing Fee (an
"Adjustment"), based on Seller achieving certain financial conditions set forth
in the following table:
<TABLE>
<S> <C> <C> <C> <C> <C>
# PROFIT ROLLING
MOS. OUT 6 MOS.
SERVICING CURRENT OF LAST CUMM.
DISCOUNT FEE RATIO1 DEBT/TNW2 63 PROFIT4
------------------------- ------------------------------------------------------------------------------------------
greater than less than greater than
or equal to or equal to or equal to
BASE RATE+ .75% 0.00 2.50:1 2.00:1 6 $ 350,000.00
1.25% 0.00 2.25:1 2.50:1 4 $ 300,000.00
1.00% 0.05 2.00:1 2.75:1 3 $ 200,000.00
1.20% 0.05 1.50:1 3.25:1 3 $ 100,000.00
1.25% 0.10 1.25:1 3.50:1 N/A $ (5,500,000.00)
2.00% 0.25 1.25:1 4.50:1 N/A $ (6,500,000.00)
3.50% 0.50 N/A N/A N/A N/A
- ------------------
</TABLE>
1 Current Ratio = Current Assets/Current Liabilities calculated on a pro forma
basis (i.e., add back purchased accounts
and factored balance)
2 Debt/TNW = Total Liabilities/Tangible Net Worth calculated on a
pro forma basis (i.e., add back purchased accounts and factored
balance)
3 Profit = Net Income After Taxes (including extraordinary losses and excluding
extraordinary gains) 4 Six Months Cumulative Profit = Last Six Months Net Income
After Taxes (including extraordinary losses and
excluding extraordinary gains)
Within 30 days after the end of Initial Quarter or any successive
quarter, if Seller believes it qualifies for an Adjustment, the attached,
completed certificate shall be prepared by Seller and submitted to *. * shall
have until the 15th day of the following month to verify the qualifications for
the requested Adjustment. If * shall determine, in its reasonable discretion,
that Seller does qualify for the Adjustment, the Adjustment to the Discount Rate
shall become effective for purchases on and after the 1st day of the next month
and the Adjustment to the Servicing Fee shall be effective for such fee due on
the 1st day of the next month. Once the Initial Rates have been adjusted as set
forth herein, monthly certificates shall be submitted certifying the continued
qualification for the Adjustment or another Adjustment as the case may be.
Once an Adjustment has been made, in the event Seller thereafter fails
to timely submit monthly certificates, the then current Discount Rate and
Servicing Fee shall automatically and without notice adjust to the Contract
Rates, effective immediately and shall remain at such rate until Seller shall
submit a monthly certificate to request and qualify for a new Adjustment. *
shall not have any liability for any failure to timely adjust the Discount Rate
or the Servicing Fee without having received a timely certificate from Seller.
ORYX POWER PRODUCTS CORPORATION
By:
Name: Philip Micciche
Title: Chief Executive Officer
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:
Name: Philip Micciche
Title: Chief Executive Officer
*
By:
Name:
Title:
<PAGE>
PERFORMANCE BASED PRICING CERTIFICATE
TO: * (*)
FROM: ORYX POWER PRODUCTS CORPORATION and ORYX INSTRUMENTS AND
MATERIALS CORPORATION
DATE: _______________________________
SUBJECT: Officers' Certificate and Request for Pricing Adjustment to
Revolving Account Transfer and Purchase Agreement (Batch)
dated May ____, 1997.
===============================================================================
In accordance with the above-referenced Revolving Account Transfer and Purchase
Agreement (Batch) by and between * and Seller and in compliance with the Pricing
Criteria detailed in the following schedule, we submit this certificate.
<TABLE>
<S> <C> <C> <C> <C> <C>
# PROFIT ROLLING
MOS. OUT 6 MOS.
SERVICING CURRENT OF LAST CUMM.
DISCOUNT FEE RATIO1 DEBT/TNW2 63 PROFIT4
------------------------- ------------------------------------------------------------------------------------------
greater than less than greater than
or equal to or equal to or equal to
BASE RATE+ .75% 0.00 2.50:1 2.00:1 6 $ 350,000.00
1.25% 0.00 2.25:1 2.50:1 4 $ 300,000.00
1.00% 0.05 2.00:1 2.75:1 3 $ 200,000.00
1.20% 0.05 1.50:1 3.25:1 3 $ 100,000.00
1.25% 0.10 1.25:1 3.50:1 N/A $ (5,500,000.00)
2.00% 0.25 1.25:1 4.50:1 N/A $ (6,500,000.00)
3.50% 0.50 N/A N/A N/A N/A
- ------------------
</TABLE>
1 Current Ratio = Current Assets/Current Liabilities calculated on a pro forma
basis (i.e., add back purchased accounts
and factored balance)
2 Debt/TNW = Total Liabilities/Tangible Net Worth calculated on a
pro forma basis (i.e., add back purchased accounts and factored
balance)
3 Profit = Net Income After Taxes (including extraordinary losses and excluding
extraordinary gains) 4 Six Months Cumulative Profit = Last Six Months Net Income
After Taxes (including extraordinary losses and
excluding extraordinary gains)
ACTUAL RATIOS:
STATEMENT DATE: CURRENT RATIO DEBT/TNW # MOS. 6 MOS.YTD
EARNINGS
<PAGE>
I, the undersigned President of Seller hereby certify that I have examined the
attached Financial Statements dated _______________ and based on my examination,
I certify that:
1) the attached Financial Statements are prepared in accordance with
Generally Accepted Accounting Principals consistently applied and
representing the true and correct condition of Seller in all material
respects,
2) I have calculated the actual criteria and ratios indicated above in
accordance with those statements, and
3) no defaults have occurred under our Revolving Account Transfer and
Purchase Agreement (Batch) which remain unwaived as of this date.
Based on these ratios and in accordance with the above Pricing Schedule, I
hereby request that the pricing on future receivables purchased by * be adjusted
to a Discount Rate of __________________ and future Servicing Fees be equal to
________% according to the Performance Based Pricing Addendum.
ORYX POWER PRODUCTS CORPORATION
By:
Name: Philip Micciche
Title: Chief Executive Officer
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:
Name: Philip Micciche
Title: Chief Executive Officer
Accepted by * to be
effective on purchases
after this _______ day
of _____________, 199___.
By:
Name:
Title:
CONFIDENTIAL TREATMENT REQUESTED
[*] Denotes information for which confidential treatment has been requested.
Confidential portions omitted have been filed separately with the Commission.
REVOLVING CREDIT PROMISSORY NOTE
$1,500,000.00 May 29, 1997
FOR VALUE RECEIVED, on or before May 28, 1998 ("Maturity Date"), the undersigned
and if more than one, each of them, jointly and severally (hereinafter referred
to as "Borrower"), promises to pay to the order of *. ("*") at its offices in *
County, *, at *, the principal amount of ONE MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,500,000.00) ("Total Principal Amount"), or such amount less
than the Total Principal Amount which is outstanding from time to time if the
total amount outstanding under this Revolving Credit Promissory Note ("Note") is
less than the Total Principal Amount, together with interest at the rate set
forth below on such portion of the Total Principal Amount which has been
advanced to Borrower from the date advanced until paid.
Interest Rate. The unpaid principal amount of this Note shall bear interest at a
fluctuating rate per annum which shall from day to day be equal to the lesser of
(a) the Maximum Rate (as hereinafter defined), or (b) a rate ("Contract Rate"),
calculated on the basis of the actual days elapsed but computed as if each year
consisted of 360 days, equal to the sum of (i) the Base Rate of interest ("Base
Rate") as established from time to time by * (which may not be the lowest, best
or most favorable rate of interest which * may charge on loans to its customers)
plus (ii) Two percent (2.0%), each change in the rate to he charged on this Note
to become effective without notice to Borrower on the effective date of each
change in the Maximum Rate or the Base Rate, as the case may be; provided,
however, in no event shall the Contract Rate be less than seven percent (7.0%)
per annum; provided, further that if at any time the Contract Rate shall exceed
the Maximum Rate, thereby causing the interest on this Note to be limited to the
Maximum Rate, then any subsequent reduction in the Base Rate shall not reduce
the rate of interest on this Note below the Maximum Rate until the total amount
of interest accrued on this Note equals the amount of interest which would have
accrued on this Note if the Contract Rate had at all times been in effect. The
term "Maximum Rate", as used herein, shall mean at the particular time in
question the maximum rate of interest which, under applicable law, may then be
charged on this Note. If such maximum rate of interest changes after the date
hereof, the Maximum Rate shall be automatically increased or decreased, as the
case may be, without notice to Borrower from time to time as of the effective
date of each change in such maximum rate. If applicable law ceases to provide
for such a maximum rate of interest, the Maximum Rate shall be equal to the Base
Rate, plus six and one-half percent (6.5%) per annum.
Repayment Terms. The principal of and all accrued but unpaid interest on
this Note shall be due and payable as follows:
(a) interest shall be due and payable monthly as it accrues,
commencing on the 15th day of June, 1997 and continuing on the
15th day of each successive month thereafter during the term
of this Note; and
(b) the outstanding principal balance of this Note, together with
all accrued but unpaid interest, shall be due and payable on
the Maturity Date.
Borrower authorizes * to effect all payments due under this Note by debiting
Account No. * of Borrower at * (the "Debit Account") through the Automated
Clearing House system ("ACH"). Such authorization shall not affect the
obligations of Borrower to make all payments when due hereunder. If on any
payment date there are insufficient funds in the Debit Account to make such
payments in full, Borrower agrees to pay * on demand a $100.00 manual processing
fee. All payments of principal of or interest on this Note shall be made in
lawful money of the United States of America in immediately available funds,
and, if such payments are not made via ACH, shall be made at *'s address
indicated above, or such other place as the holder of this Note shall designate
in writing to Borrower. If any payment of principal of or interest on this Note
shall become due on a day which is not a Business Day (as hereinafter defined),
such payment shall be made on the next succeeding Business Day and any such
extension of time shall be included in computing interest in connection with
such payment. As used herein, the term "Business Day" shall mean any day other
than a Saturday, Sunday or any other day on which *'s office in Fort Worth, * is
closed. All regularly scheduled payments of the indebtedness evidenced by this
Note shall be applied first to any accrued but unpaid interest then due and
payable hereunder and then to the principal amount then due and payable. The
books and records of * shall be prima facie evidence of all outstanding
principal of and accrued and unpaid interest on this Note. To the extent that
any interest is not paid on or before the fifth day after it becomes due and
payable, * may, at its option, add such accrued interest to the principal of
this Note. Notwithstanding anything herein to the contrary, upon an Event of
Default (as hereinafter defined) or at maturity, whether by acceleration or
otherwise, all principal of this Note shall, at the option of *, bear interest
at the Maximum Rate until paid.
Prepayment Penalty. Borrower may from time to time prepay all or any portion of
the outstanding principal balance of this Note without premium or penalty, upon
ten (10) days prior written notice to *, in increments of at least $50,000.00;
provided, however, if (a) all outstanding principal hereunder is prepaid in full
(or no advances ever made under this Note), and (b) Borrower notifies * of
Borrower's intention to terminate financing under this Note prior to the
Maturity Date, then, in addition to such principal prepayment, there shall be
due and owing by Borrower at such time a prepayment penalty equal to 3% of the
Total Principal Amount if such prepayment occurs prior to the Maturity Date.
Furthermore, should Borrower notify * of Borrower's intention to voluntarily
terminate the Purchase Agreement (as hereinafter defined), it shall be deemed
notification by Borrower to * of Borrower's intention to voluntarily terminate
financing under this Note and to prepay this Note in full on the same day of the
effective date of termination of the Purchase Agreement, such prepayment to be
subject to the terms and conditions of the foregoing prepayment penalty.
Notwithstanding the foregoing, in the event the * Base Rate exceeds the Bank
One, *, N.A. Base Rate by more than 100 basis points for more than 30
consecutive days (the "Rate Termination Event"), Seller shall have the right for
30 days after such event to terminate this Agreement without payment of the
termination fee; provided, however, Seller must notify * in writing of its
intention to so terminate within 10 days after the occurrence of a Rate
Termination Event.
Loan Documents. This Note is subject to the terms and conditions set forth in
that certain Loan Agreement of even date herewith by and between Borrower and *
(the "Loan Agreement). This Note, the Loan Agreement and all other documents
evidencing, securing, governing, guaranteeing and/or pertaining to this Note are
hereinafter collectively referred to as the "Loan Documents". The holder of this
Note is entitled to the benefits and security provided in the Loan Documents.
Advances. Subject to the terms of the Loan Agreement, Borrower may request
advances and make payments hereunder from time to time, provided that it is
understood and agreed that the aggregate principal amount outstanding from time
to time hereunder shall not at any time exceed the Total Principal Amount. The
unpaid balance of this Note shall increase and decrease with each new advance or
payment hereunder, as the case may be. This Note shall not be deemed terminated
or canceled prior to the Maturity Date, although the entire principal balance
hereof may from time to time be paid in full. Subject to the terms of this Note
and the other Loan Documents, Borrower may borrow, repay and reborrow hereunder.
Purpose. Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall be
used solely for business, commercial, investment or other similar purposes.
Event of Default. Borrower agrees that upon the occurrence of any
one or more of the following events of default ("Event of
Default"):
(a) failure of Borrower to pay when due any installment of
principal of or interest on this Note or on any other
indebtedness now or hereafter owing by Borrower to *; or
(b) the occurrence of any event of default specified in any of the
other Loan Documents; or
(c) the occurrence of an event of default or the breach of any
term or covenant under that certain account transfer and
purchase agreement of even date herewith between * and
Borrower, as may be amended from time to time (the "Purchase
Agreement") or if the Purchase Agreement terminates or is
terminated by either party for any reason; or
(d) the bankruptcy or insolvency of, the assignment for the
benefit of creditors by, or the appointment of a receiver for
any of the property of, or the liquidation, termination,
dissolution or death or legal incapacity of Borrower;
the holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid interest
on this Note at once due and payable, (ii) refuse to advance any additional
amounts under the Note, (iii) foreclose all liens securing payment hereof, (iv)
pursue any and all other rights, remedies and recourses available to the holder
hereof, including but not limited to any such rights, remedies or recourses
under the other Loan Documents, at law or in equity, or (v) pursue any
combination of the foregoing. The failure to exercise the option to accelerate
the maturity of this Note or any other right remedy or recourse available to the
holder hereof upon the occurrence of an Event of Default hereunder shall not
constitute a waiver of the right of the holder of this Note to exercise the same
at that time or at any subsequent time with respect to such Event of Default or
any other Event of Default. The rights, remedies and recourses of the holder
hereof, as provided in this Note and in any of the other Loan Documents, shall
be cumulative and concurrent and may be pursued separately, successively or
together as often as occasion therefore shall arise, at the sole discretion of
the holder hereof. The acceptance by the holder hereof of any payment under this
Note which is less than the payment in full of all amounts due and payable at
the time of such payment shall not (i) constitute a waiver of or impair, reduce,
release or extinguish any right, remedy or recourse of the holder hereof, or
nullify any prior exercise of any such right, remedy or recourse, or (ii)
impair, reduce, release or extinguish the obligations of any party liable under
any of the other Loan Documents as originally provided herein or therein.
Compliance With Usury Laws. This Note and the other Loan Documents are intended
to be performed in accordance with, and only to the extent permitted by, all
applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note or any of the other Loan Documents, in no event whatsoever
shall this Note or any of the other Loan Documents require the payment or permit
the payment, taking, reserving, receiving, collection or charging of any sums
constituting interest under applicable laws which exceed the maximum amount
permitted by such laws. If any such excess interest is called for, contracted
for, charged, taken, reserved, or received in connection with this Note or any
of the other Loan Documents, or in any communication by * or any other person to
Borrower or any other person, or in the event all or part of the principal or
interest shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of principal
actually outstanding from time to time under this Note or any of the other Loan
Documents shall exceed the maximum amount of interest permitted by applicable
usury laws, then in any such event it is agreed as follows: (i) the provisions
of this Section shall govern and control; (ii) neither Borrower nor any other
person or entity now or hereafter liable for payments under this Note or any of
the other Loan Documents shall be obligated to pay the amount of such interest
to the extent such interest is in excess of the maximum amount of interest
permitted by applicable usury laws; (iii) any such excess which is or has been
received notwithstanding this Section shall be credited against the then unpaid
principal balance of this Note and the other Loan Documents or, if this Note or
any of the other Loan Documents has been or would be paid in full by such
credit, refunded to Borrower, and (iv) the provisions of this Note or any of the
other Loan Documents, and any communication to Borrower, shall immediately be
deemed reformed and such excess interest reduced, without the necessity of
executing any other document, to the maximum lawful rate allowed under
applicable laws as now or hereafter construed by courts having jurisdiction
hereof or thereof. Without limiting the foregoing, all calculations of the rate
of interest contracted for, charged, taken, reserved, or received in connection
herewith which are made for the purpose of determining whether such rate exceeds
the maximum lawful rate shall be made to the extent permitted by applicable laws
by amortizing, prorating, allocating and spreading during the period of the full
term of this Note or any of the other Loan Documents, including all prior and
subsequent renewals and extensions, all interest at any time contracted for,
charged, taken, reserved, or received. The terms of this Section shall be deemed
to be incorporated into every other Loan Document.
Borrower and * agree that * (which regulates certain revolving loan accounts and
revolving tri-party accounts) shall not apply to any revolving loan accounts
created under this Note or maintained in connection therewith.
To the extent that the interest rate laws of the State of * are applicable to
this Note, the applicable interest rate ceiling is the indicated (weekly)
ceiling determined in accordance with * of the *, as amended, and, to the extent
that this Note is deemed an open end account as such term is defined in * of the
*, as amended, * retains the right to modify the interest rate in accordance
with applicable law. As used in this Note, the term "applicable law" means the
laws of the State of * laws or the United States of America, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
Costs of Collection; Waivers. If this Note is placed in the hands of an attorney
for collection, or is collected in whole or in part by suit or through probate,
bankruptcy or other legal proceedings of any kind, Borrower agrees to pay, in
addition to all other sums payable hereunder, all costs and expenses of
collection, including but not limited to reasonable attorneys' fees. Borrower
and any and all endorsers and guarantors of this Note severally waive
presentment for payment, notice of nonpayment, protest, demand, notice of
protest, notice of intent to accelerate, notice of acceleration and dishonor,
diligence in enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral indulgences or partial payments,
either before or after maturity.
Governing Law; Venue; Submission to Jurisdiction. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF * WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THIS NOTE IS PERFORMABLE
IN * COUNTY, *. BORROWER AGREES THAT * COUNTY, * SHALL BE THE EXCLUSIVE VENUE
FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS NOTE,
AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE
OR CLAIM. BORROWER CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN * COUNTY, * FOR THE LITIGATION OF ANY SUCH DISPUTE OR
CLAIM. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED
HEREWITH.
FINAL AGREEMENT. THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN * AND BORROWER WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
BORROWER:
ORYX TECHNOLOGY CORPORATION
By:
Name: Philip Micciche
Title: Chief Executive Officer
CONFIDENTIAL TREATMENT REQUESTED
[*] Denotes information for which confidential treatment has been requested.
Confidential portions omitted have been filed separately with the Commission.
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made as of this 29th day of May, 1997
by and between ORYX TECHNOLOGY CORP., a Delaware corporation ("Borrower") and *,
a * corporation doing business as * ("*"). In connection with the mutual
covenants and agreements contained herein, the parties hereto agrees as follows:
1. Definitions. The following definitions shall apply throughout this
Agreement:
"Affiliate" means with respect to any person or entity in question, any
other person or entity owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with
such person or entity in question.
"Borrowing Base" means an amount equal to 40% of Eligible Inventory.
"Collateral" has the meaning given it in Section 4.
"Credit Facilities" has the meaning given it in Section 2.
"Debit Account" means the bank account of Borrower which Borrower
identifies to * in writing prior to any advances under the Line of
Credit over which * has express written authority to debit pursuant to
this Agreement.
"Eligible Inventory" means as of any date, the aggregate value of all
inventory of raw materials and finished goods (excluding work in
progress and packaging materials, supplies and any advertising costs
capitalized into inventory) then owned by any of the Obligors and held
for sale, lease or other disposition in the ordinary course of its
business, in which * has a first priority lien, excluding (i) inventory
which is damaged, defective, obsolete or otherwise unsaleable in the
ordinary course of business, (ii) inventory which has been returned or
rejected, (iii) inventory subject to any consignment arrangement
between any of the Obligors and any other person or entity, (iv)
inventory which is in transit, (v) inventory not located in the United
States and (vi) inventory which * in * reasonable discretion deems
ineligible. For purposes of this definition, Eligible Inventory shall
be valued at the lower of cost or market value.
"Environmental Laws" means any and all federal, state and local laws,
regulations, rules, orders, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges or
releases of pollutants or industrial, toxic or hazardous substances
into the environment, or otherwise relating to the manufacture,
processing, treatment, transport or handling of pollutants or
industrial, toxic or hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by Borrower or any Affiliate thereof with respect to
which Borrower or any Affiliate has a fixed or contingent liability.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting
Standards Board (or any generally recognized successor), consistently
applied throughout the period involved.
"Guarantors" means SURGX CORPORATION, ORYX INSTRUMENTS AND MATERIALS
CORPORATION, ORYX POWER PRODUCTS CORPORATION (whether one or more).
"Indemnified Claims" means any and all claims, demands, actions, causes
of action, judgments, suits, liabilities, obligations, losses, damages
and consequential damages, penalties, fines, costs, fees, expenses and
disbursements (including without limitation, fees and expenses of
attorneys and other professional consultants and experts in connection
with any investigation or defense) of every kind or nature, known or
unknown, existing or hereafter arising, foreseeable or unforeseeable,
which may be imposed upon, threatened or asserted against or incurred
or paid by any Indemnified Person at any time and from time to time,
because of or resulting from, in connection with or in any way relating
to or arising out of any of the Credit Facilities, the Collateral or
any other transaction, act, omission, event or circumstance in any way
connected with or contemplated by this Agreement or the other Loan
Documents or any action taken or omitted by any such Indemnified Person
under or in connection with any of the foregoing (including but not
limited to any investigation, litigation, proceeding, enforcement of
*'s rights or defense of *'s actions related to or arising out of this
Agreement or the other Loan Documents), whether or not any Indemnified
Person is a party hereto.
"Indemnified Person" shall collectively mean * and its officers,
directors, shareholders, employees, attorneys, representatives, agents,
Affiliates, successors and assigns.
"Line of Credit Amount" is $750,000.00; provided, however the Line of
Credit Amount shall be $1,500,000.00 once * receives the inventory
appraisal described in Subsection 9(c).
"Loan Documents" means this Agreement, the Notes and all other
documents, agreements and instruments required by * to be executed and
delivered in connection herewith (including, without limitation, all
documents, agreements and instruments evidencing, securing, governing,
guaranteeing and/or pertaining to the Notes and the Credit Facilities).
"Notes" has the meaning given it in Section 3.
"Obligors" means Borrower and the Guarantors.
"Purchase Agreement" means that certain account transfer and purchase
agreement of even date herewith between Oryx Power Products
Corporation, Oryx Instruments and Materials Corporation and *, as may
be amended from time to time.
"Subordinated Debt" means indebtedness owing by any Obligor to a
creditor other than * which has been subordinated and subject in right
of payment to the prior payment of all indebtedness and obligations now
or hereafter owing by such Obligor to *, such subordination to be
evidenced by a written agreement between * and the subordinated
creditor which is in form and substance satisfactory to *.
"Tangible Net Worth" means, as of any date, the amount by which the
total assets of Obligors on a consolidated basis exceeds the Obligors'
total liabilities, plus Subordinated Debt, less any intangible assets
(as defined by GAAP, including, without limitation, trademarks,
patents, copyrights, goodwill, covenants not to compete and customer
lists), less deferred charges.
2. Credit Facilities. Subject to the terms and conditions set forth in
this Agreement and the other Loan Documents, * hereby agrees to provide
to Borrower the following Credit Facility or Facilities (whether one or
more, the "Credit Facilities"):
a. Line of Credit. Subject to the terms and conditions set
forth herein, * agrees to provide to
--------------
Borrower a revolving line of credit (the "Line of Credit")
during the period commencing on the date hereof and continuing
through the 30th day prior to the maturity date of the
promissory note evidencing the Line of Credit from time to
time. Borrower may request advances under the Line of Credit;
provided, however, the total principal amount outstanding at
any time under the
-------- -------
Line of Credit shall not exceed the lesser of (i) an amount
equal to the Borrowing Base, or (ii) the Line of Credit
Amount. If at any time the aggregate principal amount
outstanding under the Line of Credit shall exceed an amount
equal to the Borrowing Base, Borrower agrees to immediately
repay to * such excess amount, plus all accrued but unpaid
interest thereon. Borrower may request advances under the Line
of Credit no more often than once each business day. Subject
to the terms and conditions set forth in this Agreement and in
the promissory note evidencing the Line of Credit from time to
time, Borrower may borrow, repay and reborrow under the Line
of Credit. The sums advanced under the Line of Credit shall be
used for working capital purposes.
3. Promissory Notes. Borrower agrees to execute, contemporaneously
herewith, a promissory note payable to the order of *, in form and
substance acceptable to * in * sole and absolute discretion, for each
Credit Facility provided hereunder to evidence the indebtedness owing
by Borrower to * under each such facility (whether one or more,
together with any renewals, extensions and increases thereof, the
"Notes"). Interest on the Notes shall accrue at the rate set forth
therein. The principal of and interest on the Notes shall be due and
payable and may be prepaid in accordance with the terms and conditions
set forth in the Notes and in this Agreement.
4. Collateral. As collateral and security for the indebtedness evidenced
by the Notes and any and all other indebtedness or obligations from
time to time owing by Borrower to *, Borrower and Guarantors shall each
grant to *, its successors and assigns, a first and prior lien and
security interest in and to the property described hereinbelow,
together with any and all PRODUCTS AND PROCEEDS thereof (the
"Collateral"):
a. Accounts. All present and future accounts, contract rights,
chattel paper, documents, instruments, deposit accounts and
general intangibles (including, without limitation, all
patents and patent applications, and all trademarks and
goodwill of the business related to such trademarks, along
with any divisions, renewals or reissues thereof, and
variations or modifications and new applications of the
technology covered by such patents and trademarks) now or
hereafter owned by any of the Obligors, all money and other
funds of any of the Obligors which may now or hereafter come
into the possession, custody or control of Secured Party, all
books of account and customer lists, and in any case where an
account arises from the sale of goods, the interest of
Obligors in such goods.
b. Inventory. All present and hereafter acquired inventory
(including without limitation, all raw materials, work in
process and finished goods) owned by any of the Obligors
wherever located.
c. Equipment. All equipment of whatsoever kind and character now
or hereafter owned by any of the Obligors and used or usable
in any of the Obligor's business, together with all
replacements, accessories, additions, substitutions and
accessions to all of the foregoing.
The term "Collateral" shall also include all records and data relating
to any of the foregoing (including, without limitation, any computer
software on which such records and data may be located). Borrower
agrees to execute, and to cause the Guarantors to execute, such
security agreements, assignments, mortgages, deeds of trust and other
agreements and documents as * shall deem appropriate and otherwise
require from time to time to more fully create and perfect *'s lien and
security interests in the Collateral.
5. Guarantors. As a condition precedent to *'s obligation to provide the
Credit Facilities to Borrower, Borrower agrees to cause the Guarantors
to each execute and deliver to * contemporaneously herewith a guaranty
agreement, in form and substance acceptable to * in *'s sole and
absolute discretion.
6. Fees.
a. Commitment Fee. Borrower shall pay to *a commitment fee in
the amount of $11,250.00. Such fee shall be payable as
follows: (i) $5,625.00 concurrently with the execution hereof;
(ii) $2,812.50 on or before the 30th day after the date of
execution hereof; and (iii) $2,812.50 on or before the 60th
day after the date of execution hereof; provided, however, the
amount due in clause (ii) and (iii) shall in no event be due
unless and until the Line of Credit Amount has been increased
to $1,500,000.00. Borrower hereby authorizes *, in *'s sole
discretion, to collect any such commitment fees (i) by
deducting such fees from the first advance under the subject
Credit Facility, (ii) by debiting the Debit Account, (iii) by
applying that portion of any up-front deposit delivered to *
by Borrower which is in excess of *'s costs and expenses
(including, without limitation, attorneys' fees), or (iv) by
using any combination of the foregoing. This authorization
does not affect Borrower's obligation to pay such sums to *.
Borrower and * acknowledge and agree that the commitment fees
are reasonable compensation to * for making the Credit
Facilities available to Borrower and for no other purpose.
b. Servicing Fee. Borrower agrees to pay * a servicing fee
("Servicing Fee") on the first day of each calendar month
equal to one tenth percent (.10%) per annum (computed on the
basis of a year consisting of 360 days and actual days
elapsed) of the average daily amount outstanding under the
Line of Credit during the immediately preceding calendar
month. If the first calendar month covers less than a full
month, the Servicing Fee for such month shall be prorated.
Borrower hereby authorizes *, in *'s sole discretion, to
collect such Servicing Fee (i) by deducting such fee from the
first advance, if any, under the subject Credit Facility after
such fee is due, (ii) by debiting the Debit Account, or (iii)
by using any combination of the foregoing. This authorization
does not affect Borrower's obligation to pay such sums to *
when due. Borrower and * acknowledge and agree that such fees
are reasonable compensation to * for making the Credit
Facilities available to Borrower and for no other purpose.
c. Monthly Fee. Borrower agrees to pay * a monthly fee ("Monthly
Fee") on the first day of each
------------
calendar month equal to $1,500.00, less the accrued interest
under the Line of Credit and the
----
Servicing Fee which are collected by * in and for the prior
calendar month. Borrower hereby authorizes *, in *'s sole
discretion, to collect such Monthly Fee (i) by deducting such
fee from the first advance, if any, under the subject Credit
Facility after such fee is due, (ii) by debiting the Debit
Account, or (iii) by using any combination of the foregoing.
This authorization does not affect Borrower's obligation to
pay such sums to * when due. Borrower and * acknowledge and
agree that such fees are reasonable compensation to * for
making the Credit Facilities available to Borrower and for no
other purpose.
7. Representations and Warranties. Borrower hereby represents and
warrants, and upon each request for an advance under the Credit
Facilities further represents and warrants, to * as follows:
a. Existence. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the state of
its incorporation and is duly licensed, qualified to do
business and is in good standing in all other states in which
such licensing, qualification and good standing are necessary.
Borrower has all requisite power and authority to execute and
deliver this Agreement and the other Loan Documents to which
it is a party.
b. Binding Obligations. The execution, delivery, and performance
of this Agreement and all of the other Loan Documents by
Borrower have been duly authorized by all necessary action by
Borrower, and constitute legal, valid and binding obligations
of Borrower, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies
may generally be limited by equitable principles.
c. No Consent. The execution, delivery and performance of this
Agreement and the other Loan Documents, and the consummation
of the transactions contemplated hereby and thereby, do not
(i) conflict with, result in a violation of, or constitute a
default under (A) any provision of Borrower's articles or
certificate of incorporation or bylaws, (B) any law,
governmental regulation, court decree or order applicable to
Borrower, or (C ) any other document or agreement to which
Borrower is a party, or (ii) require the consent, approval or
authorization of any third party.
d. Financial Condition. Each financial statement of Obligors
supplied to * fairly presents the financial condition as of
the date of each such statement. There has been no material
adverse change in such financial condition or results of
operations of any of the Obligors subsequent to the date of
the most recent financial statement supplied to *.
e. Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against
or affecting any of the Obligors or the properties of any of
the Obligors, before any court or governmental department,
commission or board, which, if determined adversely to any of
the Obligors, would have a material adverse effect on the
financial condition, properties, or operations of any of the
Obligors.
f. Taxes; Governmental Charges. The Obligors have filed all
federal, state and local tax reports and returns required by
any law or regulation to be filed by it and has either duly
paid all taxes, duties and charges indicated due on the basis
of such returns and reports, or made adequate provision for
the payment thereof, and the assessment of any material amount
of additional taxes in excess of those paid and reported is
not reasonably expected. There is no tax lien notice against
any of the Obligors presently on file.
g. ERISA Compliance. The Obligors are in compliance with ERISA
concerning Borrower's ERISA Plan, if any, or is not required
to contribute to any "multi-employer plan" as defined in
Section 401 of ERISA.
h. Compliance with Laws. The Obligors are each conducting its
respective business in material compliance with all statutes,
rules, regulations and/or ordinances imposed by any
governmental unit upon each Obligor or upon its businesses,
operations and property (including, without limitation, all
Environmental Laws).
8. Conditions Precedent to Advances. *'s obligation to make any advance
under this Agreement and the other
---------------------------------
Loan Documents shall be subject to the conditions precedent that, as of
the date of such advance and after giving effect thereto (i) all
representations and warranties made to * in this Agreement and the
other Loan Documents shall be true and correct, as of and as if made on
such date, except to the extent such representations and warranties are
with respect to financial statements which are delivered to * that
speak as of a particular date, (ii) no material adverse change in the
financial condition of any of the Obligors or their respective business
since the effective date of the most recent financial statements
furnished to * shall have occurred, (iii) no event has occurred and is
continuing, or would result from the requested advance, which with
notice or lapse of time, or both, would constitute an Event of Default
(as hereinafter defined), (iv) *'s receipt of all Loan Documents
appropriately executed by Borrower, Guarantors and all other proper
parties, and (iv) *'s receipt of all fees and expenses owing to * under
this Agreement and the other Loan Documents.
9. Affirmative Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower under this Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) * has no further
commitment to lend hereunder, Borrower agrees and covenants that it
will, unless * shall otherwise consent in writing:
a. Accounts and Records. Maintain the Obligor's books and records
in accordance with generally accepted accounting principles.
b. Right of Inspection. Permit * to visit the Obligors'
properties and installations and to examine, audit and make
and take away copies or reproductions of the Obligor's books
and records, at all reasonable times. Borrower agrees to pay
all costs associated with any such audits, at a rate equal to
$700.00 per day, per person, plus out-of-pocket expenses, but
prior to an Event of Default, Borrower shall not be required
to pay for more than one such audit per fiscal quarter.
c. Inventory Appraisal. Provide * with an appraisal satisfactory
to * of the forced liquidation value of the inventory of Oryx
Instruments and Materials Corporation and Oryx Power Products
Corporation by an appraiser acceptable to * within 30 days
from the date hereof.
d. Landlord's Waiver. Obligors will cause each landlord of real
property leased by the Obligors and where Collateral may be
kept to execute and deliver to *, within 60 days from the
initial advance under the Line of Credit, an agreement
satisfactory in form and substance to * which such landlord
waives any lien or other rights landlord may have in the
Collateral and gives * access to the leased premises.
e. Right to Additional Information. Furnish * with such
additional information and statements, lists of assets and
liabilities, tax returns, and other reports with respect to
each Obligor's financial condition and business operations as
* may request from time to time.
f. Compliance with Laws. Conduct its business, and cause
Guarantors to each conduct their businesses, in an orderly and
efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations
and/or ordinances imposed by any governmental unit upon their
respective businesses, operations and properties (including
without limitation, all Environmental Laws).
g. Taxes. Pay and discharge when due all assessments, taxes,
governmental charges and levies, of ----- every kind and
nature, imposed upon any of the Obligors or their properties,
income or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Obligor's property, income or
profits; provided, however, Obligors will not be required to
pay and discharge any such assessment, tax, charge, levy or
claim so long as (i) same shall be contested in good faith by
appropriate judicial, administrative or other legal
proceedings timely instituted, and (ii) Obligors shall have
established adequate reserves with respect to such contested
assessment, tax, charge, levy or claim in accordance with
generally accepted accounting principles, consistently
applied.
h. Insurance. Maintain, and cause Guarantors to maintain,
insurance, including but not limited to, fire insurance,
comprehensive property damage, public liability, worker's
compensation, business interruption and other insurance deemed
necessary or otherwise required by *.
i. Notice of Material Change/Litigation. Borrower shall promptly
notify * in writing (i) of any material adverse change in the
financial condition of any of the Obligors or their respective
businesses, and (ii) of any litigation or claims against any
Obligor which is reasonably likely to materially affect the
financial condition of such Obligor.
j. Additional Documentation. Execute and deliver, or cause to be
executed and delivered, any and all other agreements,
instruments or documents which * may reasonably request in
order to give effect to the transactions contemplated under
this Agreement and the other Loan Documents.
10. Negative Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower under this Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) * has no further
commitment to lend hereunder, Borrower will not and will cause the
Guarantors to not, without the prior written consent of *:
a. Nature of Business. Make any material change in the nature of
its business as carried on as of the date hereof, except in
connection with the sale of substantially all of the assets or
capital stock of Oryx Power Products Corporation.
b. Liquidations; Mergers; Consolidations; Acquisitions.
Liquidate, merge or consolidate with or into any other entity,
or form or acquire any new subsidiary or acquire by purchase
or otherwise all or substantially all of the assets of any
other entity except a merger of a subsidiary into Borrower or
into any other subsidiary of Borrower.
c. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange
of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of its business and upon fair and
reasonable terms no less favorable to it than would be
obtained in a comparable arm's-length transaction with a
person or entity not an Affiliate.
d. Sale of Assets. Sell, lease, transfer or otherwise dispose of
any of its assets or properties, other than (i) inventory sold
in the ordinary course of business, (ii) as necessary to
replace obsolete equipment, and (iii) all of the stock of Oryx
Power Products Corporation, Borrower agreeing to give * 10
days prior written notice of any such sale of stock.
e. Liens. Create or incur any lien or encumbrance on any of its
assets, other than (i) liens and ----- security interests
securing indebtedness owing to *, (ii) pledges or deposits to
secure the payment of obligations under any worker's
compensation laws or similar laws, (iii) deposits to secure
the payment of public or statutory obligations, (iv)
mechanic's, carriers', workman's, repairman's or other liens
arising by operation of law in the ordinary course of business
which secure obligations that are not overdue or are being
contested in good faith and for which Borrower has established
adequate reserves in accordance with generally accepted
accounting principles, (v) liens securing purchase money
indebtedness permitted hereunder provided such lien does not
extend beyond the property purchased with such indebtedness,
(vi) liens securing capital leases provided such lien does not
extend beyond the property subject to such lease, and (vii)
liens and security interest existing as of the date hereof
which have been disclosed to and approved by * in writing.
f. Indebtedness. Create, incur or assume any indebtedness for
borrowed money or issue or assume ------------ any other note,
debenture, bond or other evidences of indebtedness, or
guarantee any such indebtedness or such evidences of
indebtedness of others, other than (i) borrowings from *, (ii)
current accounts payable and other current obligations (other
than for borrowed money), (iii) borrowings outstanding on the
date hereof which have been disclosed and approved in writing
by *, (iv) inter-company borrowings between the Obligors, (v)
purchase money indebtedness used to purchase equipment which
is secured only by the equipment so purchased, and (vi)
capital lease obligations; provided, however, Borrower agrees
to give * prior notification of any single purchase money
transaction or capital lease in excess of $50,000.00.
g. Transfer of Ownership. Permit the sale, pledge or other
transfer of any of the ownership interest in any of the
Guarantors (except all of the capital stock of Oryx Power
Products Corporation, Borrower agreeing to give * 10 days
prior written notice of any such sale).
h. Change in Management. Permit a change in the senior management
of any Obligor without giving * five (5) days prior written
notice, if possible.
11. Financial Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower under this Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) * has no further
commitment to lend hereunder, Borrower will maintain the following
financial covenant on a consolidated basis with the Guarantors:
a. Tangible Net Worth. At the end of each fiscal quarter, its
Tangible Net Worth, calculated on a pro forma basis (i.e. add
back accounts purchased by * and the factored balance), of not
less than $4,250,000.00.
Borrower shall have an opportunity to cure any breach of this financial
covenant within 25 days from the earlier of (i) the date which * is due
to receive financial statements of Borrower hereunder which would
indicate any breach of this financial covenant, or (ii) the date *
receives receipt of financial statements indicating any breach of this
financial covenant. Unless otherwise specified, all accounting and
financial terms and covenants set forth above are to be determined
according to generally accepted accounting principles, consistently
applied.
12. Reporting Requirements. Until (i) the Notes and all other obligations
and liabilities of Borrower under this Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) * has no further
commitment to lend hereunder, Borrower will, unless * shall otherwise
consent in writing, furnish to *:
a. Financial Statements. Borrower agrees to furnish to * (i)
within 90 days after the last day of ---------------------
each fiscal year of Borrower a consolidated statement of
income and a consolidated statement of cash flows of Borrower
for such fiscal year, and a consolidated balance sheet of
Borrower as of the last day of such fiscal year, together with
an auditor's report thereon by an independent certified public
accountant, and (ii) within 30 days after the last day of each
fiscal month of Borrower, an unaudited consolidated statement
of income and statement of cash flows of Borrower for such
fiscal month, and an unaudited consolidated balance sheet of
Borrower as of the last day of such fiscal month. Borrower
represents and warrants that each such statement of income and
statement of cash flows will fairly present, in all material
respects, the results of operations and cash flows of Borrower
for the period set forth therein, and that each such balance
sheet will fairly present, in all material respects, the
financial condition of Borrower as of the date set forth
therein, all in accordance with GAAP, (or, with respect to
unaudited financial statements, in the notes thereto and
subject to year-end review adjustments).
b. Inventory Maintenance Certificate. An Inventory Maintenance
Certificate, in the form attached hereto as Schedule A, signed
by an officer of the Borrower, and an Inventory Maintenance
Certificate in the form attached hereto as Schedule B, from
each Guarantor, each to be delivered to * within three (3)
business days after the end of each week.
c. Inventory Listing. A list of each of the Obligor's inventory
by location and type (to include the following: raw materials,
work in process and finished goods) within three (3) business
days after the end of each week of each fiscal year, in form
and detail satisfactory to *.
13. Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
a. Failure to Pay Indebtedness. Borrower shall fail to pay as and
when due any part of the principal of, or interest on, the
Notes or any other indebtedness or obligations now or
hereafter owing to * by Borrower.
b. Non-Performance of Covenants. Any of the Obligors shall breach
any covenant or agreement made herein, in any of the other
Loan Documents, in the Purchase Agreement or in any other
agreement now or hereafter entered into between any of the
Obligors and *.
c. False Representation. Any warranty or representation made
herein, in any of the other Loan Documents or in the Purchase
Agreement shall be false or misleading in any material respect
when made.
d. Default Under Other Loan Documents. The occurrence of an event
of default under any of the other Loan Documents, the Purchase
Agreement or any other agreement now or hereafter entered into
between any of the Obligors and *.
e. Untrue Financial Report. Any report, certificate, schedule,
financial statement, profit and loss statement or other
statement furnished by Borrower or any Guarantor, or by any
other person on behalf of Borrower or any Guarantor, to * is
not true and correct in any material respect.
f. Default to Third Party. The occurrence of any event which
permits the acceleration of the maturity of any indebtedness
in excess of $50,000.00 owing by any of the Obligors to any
third party under any agreement or undertaking.
g. Bankruptcy. The filing of a voluntary or involuntary case by
or against any of the Obligors under the United States
Bankruptcy Code or other present or future federal or state
insolvency, bankruptcy or similar laws, or the appointment of
a receiver, trustee, conservator or custodian for a
substantial portion of assets of any of the Obligors and, with
respect to an involuntary case, the case shall be consented to
by such party or is not dismissed within 60 days from the
effective date thereof.
h. Insolvency. Any of the Obligors shall become insolvent, make a
transfer in fraud of creditors or make an assignment for the
benefit of creditors.
i. Involuntary Lien. The filing or commencement of any
involuntary lien, garnishment, attachment or the like shall be
issued against or with respect to the Collateral.
j. Tax Lien. Any of the Obligors shall have a federal or state
tax lien filed against any of its properties.
k. Execution on Collateral. The Collateral or any portion thereof
is taken on execution or other process of law.
l. ERISA Plan. Either (i) any "accumulated funding deficiency"
(as defined in Section 412(a) of the Internal Revenue Code of
1986, as amended) in excess of $50,000 exists with respect to
any ERISA Plan of Borrower, or (ii) any Termination Event
occurs with respect to any ERISA Plan of Borrower and the then
current value of such ERISA Plan's benefit liabilities exceeds
the then current value of such ERISA Plan's assets available
for the payment of such benefit liabilities by more than
$50,000.
n. Guarantor's Obligations. If any of the obligations of any
Guarantor is limited or terminated by operation of law or by
the Guarantor.
o. Judgment. The entry against any of the Obligors of a final and
nonappealable judgment for the payment of money in excess of
$50,000 (not covered by insurance satisfactory to * in * sole
discretion).
p. Termination of Purchase Agreement. The expiration or
termination of the Purchase Agreement by either party, for
whatever reason.
Nothing contained in this Loan Agreement shall be construed to limit
the events of default enumerated in any of the other Loan Documents and
all such events of default shall be cumulative.
14. Remedies. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the
Notes, together with all accrued but unpaid interest thereon, and all
other indebtedness owing to * by Borrower at such time shall, at the
option of *, become immediately due and payable without further notice,
demand, presentation, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest or notice of protest of any
kind, all of which are expressly waived by Borrower, and (b) * may, at
its option, cease further advances under any of the Notes; provided,
however, concurrently and automatically with the occurrence of an Event
of Default under
-------
Subsections (g) and (h) in the Section entitled "Event of Default" (i)
further advances under the Notes
-----------
shall cease, and (ii) the Notes and all other indebtedness owing to *
by Borrower at such time shall, without any action by *, become due and
payable, without further notice, demand, presentation, notice of
dishonor, notice of acceleration, notice of intent to accelerate,
protest or notice of protest of any kind, all of which are expressly
waived by Borrower. All rights and remedies of * set forth in this
Agreement and in any of the other Loan Documents may also be exercised
by *, at its option to be exercised in its sole discretion, upon the
occurrence of an Event of Default.
15. Indemnification. Borrower hereby indemnifies and agrees to hold
harmless and defend all Indemnified
---------------
Persons from and against any and all Indemnified Claims. THE FOREGOING
INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED CLAIMS ARE
IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY
ANY NEGLIGENT ACT OR OMISSION OF ANY INDEMNIFIED PERSON, but shall
exclude any of the foregoing resulting from such Indemnified Person's
gross negligence or willful misconduct. If Borrower or any third party
ever alleges any gross negligence or willful misconduct by any
Indemnified Person, the indemnification provided for in this Section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction
enters a final judgment as to the extent and affect of the alleged
gross negligence or willful misconduct. Upon notification and demand,
Borrower agrees to provide defense of any Indemnified Claim and to pay
all costs and expenses of counsel selected by any Indemnified Person in
respect thereof. Any Indemnified Person against whom any Indemnified
Claim may be asserted reserves the right to settle or compromise any
such Indemnified Claim as such Indemnified Person may determine in its
sole discretion, and the obligations of such Indemnified Person, if
any, pursuant to any such settlement or compromise shall be deemed
included within the Indemnified Claims. Except as specifically provided
in this section, Borrower waives all notices from any Indemnified
Person. The provisions of this Section shall survive the termination of
this Agreement.
16. Rights Cumulative. All rights of * under the terms of this Agreement
shall be cumulative of, and in addition to, the rights of * under any
and all other agreements between Borrower and * (including, but not
limited to, the other Loan Documents), and not in substitution or
diminution of any rights now or hereafter held by * under the terms of
any other agreement.
17. Waiver and Agreement. Neither the failure nor any delay on the part
of * to exercise any right, power
---------------------
or privilege herein or under any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise
of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No waiver of any provision in this Loan Agreement or in any
of the other Loan Documents and no departure by Borrower therefrom
shall be effective unless the same shall be in writing and signed by *,
and then shall be effective only in the specific instance and for the
purpose for which given and to the extent specified in such writing. No
modification or amendment to this Loan Agreement or to any of the other
Loan Documents shall be valid or effective unless the same is signed by
the party against whom it is sought to be enforced.
18. Benefits. This Agreement shall be binding upon and inure to the benefit
of * and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written
consent of *, assign any rights, powers, duties or obligations under
this Loan Agreement or any of the other Loan Documents; provided,
further, that to the extent *'s obligations hereunder or under the
other Loan Documents are assigned, the assignee must have financial
resources, liquidity and operational expertise comparable to *.
19. Notices. All notices, requests, demands or other communications
required or permitted to be given
-------
pursuant to this Agreement shall be in writing and given by (i)
personal delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the signature page hereof and
shall be deemed to have been received either, in the case of personal
delivery, as of the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, or in the case of mail, upon
deposit in a depository receptacle under the care and custody of the
United States Postal Service. Either party shall have the right to
change its address for notice hereunder to any other location within
the continental United States by notice to the other party of such new
address at least thirty (30) days prior to the effective date of such
new address.
20. Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS SHALL BE
----------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF *
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF,
EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER OR
THEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF *. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS ARE PERFORMABLE BY THE PARTIES IN *
COUNTY, *. BORROWER AND * EACH AGREE THAT * COUNTY, * SHALL BE THE
EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR
RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THAT SUCH
COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR
CLAIM. BORROWER AND * EACH CONSENT TO THE PERSONAL JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN * COUNTY, * FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
21. Waiver of Jury Trial. BORROWER AND * EACH HEREBY IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
22. Invalid Provisions. If any provision of this Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable
and the remaining provisions of this Agreement or any of the other Loan
Documents shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance.
23. Expenses. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys' fees) in connection with (i) any
action required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, and (ii) any action in the
enforcement of *'s rights upon the occurrence of Event of Default.
24. Participation of the Credit Facilities. Borrower agrees that * may, at
its option, sell interests in any of the Credit Facilities and its
rights under this Agreement and the other Loan Documents and, in
connection with each such sale, * may disclose any financial and other
information available to * concerning Borrower to each prospective
purchaser and assignee as long as any such prospect executes an
agreement to hold any such information concerning Borrower
confidential.
25. Conflicts. In the event any term or provision hereof is inconsistent
with or conflicts with any provision of the other Loan Documents, the
terms and provisions contained in this Loan Agreement shall be
controlling.
26. Counterparts. This Agreement may be separately executed in any number
of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same
instrument.
27. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES. THIS AGREEMENT ALSO AMENDS AND SUPERSEDES ANY OF
THE TERMS OF ANY PRIOR WRITTEN AGREEMENTS WITH RESPECT TO THE MATTERS
SET FORTH IN THIS AGREEMENT.
EXECUTED as of the date first above written.
BORROWER: *
ORYX TECHNOLOGY CORP. By:
By: Name:
Name: Philip Micciche Title:
Title: Chief Executive Officer
Borrower's Address: *'s Address:
47371 Bayside Parkway
Fremont, California 94538
Attn:
SCHEDULE A
INVENTORY MAINTENANCE CERTIFICATE
COMPANY: ORYX TECHNOLOGY CORP.
<TABLE>
<S> <C>
Financial Statement
Report # _________________ Date: ___________
- ---------------------------------------------------------------------------------------------------------------------------------
1. INVENTORY
-----------------------
-----------------------
a. Raw Materials
------------------- -----------------------
-----------------------
b. Work in Process
------------------- -----------------------
-----------------------
c. Finished Goods
- ---------------------------------------------------------------------------------------------------------------------------------
-----------------------
2. TOTAL GROSS INVENTORY Per This Report (Sum of 2a through 2c)
- ---------------------------------------------------------------------------------------------------------------------------------
-----------------------
3. INELIGIBLE INVENTORY
-----------------------
-----------------------
a. Raw Materials
------------------- -----------------------
-----------------------
b. Work In Process
------------------- -----------------------
-----------------------
c. Finished Goods
------------------- -----------------------
-----------------------
d. Damaged, defective and obsolete inventory
---------------------------------------------------------------- -----------------------
-----------------------
e. Returned or rejected inventory
------------------- -----------------------
-----------------------
f. Consigned Inventory
------------------- -----------------------
-----------------------
g. Inventory In Transit
------------------- -----------------------
-----------------------
h. Inventory not Financed by *
------------------- -----------------------
-----------------------
i. Foreign
------------------- -----------------------
-----------------------
j. Other
------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
4. TOTAL INELIGIBLE INVENTORY For Company Per This Report (Sum of all lines in Section 3 above)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
5. NET ELIGIBLE INVENTORY FOR COMPANY (Line 2 minus Line 4)
- ---------------------------------------------------------------------------------------------------------------------------------
- ------ -----------------------------------------------------------------------------------------------------------------------
6. NET ELIGIBLE INVENTORY FOR ORYX POWER PRODUCTS (See attached Schedule)
- ------ -----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
7. NET ELIGIBLE INVENTORY FOR ORYX INSTRUMENTS & MATERIALS (See attached Schedule)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
8. NET ELIGIBLE INVENTORY FOR SURGX CORPORATION (See attached Schedule)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
9. NET ELIGIBLE INVENTORY (Sum of lines 5-8)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
10. INVENTORY ADVANCE RATE 40%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
11. GROSS INVENTORY AVAILABILITY Per This Report (Line 9 multiplied by Line 10)
- ---------------------------------------------------------------------------------------------------------------------------------
-----------------------
-----------------------
- ----------------------------------------------------------------------------------------------------------
12. Maximum Availability:
Lesser of: a. Facility Amount, or 1,500,000.00
-------------------
b. Line 11
-------------------
-----------------------
ADVANCES
-----------------------
13. Outstanding Balance Per last Report (Line 17 from prior report)
-----------------------
14. LESS: Payments applied since Last Report
-----------------------
15. Balance Prior to New Activity
-----------------------
16. ADD: Advance Request Per This Report
-----------------------
17. NEW OUTSTANDING BALANCE (Not to exceed Line 12)
-----------------------
18. EXCESS AVAILABILITY (Line 12 minus Line 17)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The undersigned, __________________________________________ does hereby certify
that he/she has made a thorough inquiry into all matters certified herein and,
based upon such inquiry does hereby certify that:
1. He/She is the duly elected, qualified and acting ___________________
of the Company.
2. This Maintenance Certificate is being submitted to * pursuant to that
certain Loan Agreement dated May 29, 1997 between the Company and *
(as from time to time as supplemented or amended, the "Agreement").
Terms used or not otherwise defined herein shall have the meanings
assigned to them in the Agreement.
3. All representations and warranties made in the Agreement or any other
instrument, document, certificate or other agreement executed in
connection therewith (collectively, the "Transaction Documents")
delivered on or before the date hereof are true on and as of the date
hereof (except to the extent that the facts upon which such
representations are based have changed by the transaction contemplated
in the Agreement) as if such representations and warranties had been
made as of the date hereof.
4. No Event of Default exists on the date hereof.
5. The Company has performed and complied with all agreements and
conditions required in the Transaction Documents to be performed or
complied with by it on the date hereof.
6. After * makes the advance(s) requested by this Maintenance
Certificate, the aggregate amount of all outstanding advances does not
exceed the lesser of (i) the Facility Amount or (ii) the Maximum
Availability.
7. All information contained in this Maintenance Certificate is true,
correct and completed.
IN WITNESS HEREOF, this instrument is executed by the undersigned as of
_______________________, 19 _______.
------------------------------------------
Name: ____________________________________
Title: ______________________________________
SCHEDULE B
INVENTORY MAINTENANCE CERTIFICATE
COMPANY: _________________________________
<TABLE>
<S> <C>
Financial Statement
Report # _________________ Date: ___________
- ---------------------------------------------------------------------------------------------------------------------------------
1. INVENTORY
------------------------
------------------------
a. Raw Materials
------------------- ------------------------
------------------------
b. Work in Process
------------------- ------------------------
------------------------
c. Finished Goods
- ---------------------------------------------------------------------------------------------------------------------------------
------------------------
2. TOTAL GROSS INVENTORY Per This Report (Sum of 2a through 2c)
- ---------------------------------------------------------------------------------------------------------------------------------
------------------------
3. INELIGIBLE INVENTORY
------------------------
------------------------
a. Raw Materials
------------------- ------------------------
------------------------
b. Work In Process
------------------- ------------------------
------------------------
c. Finished Goods
------------------- ------------------------
------------------------
d. Damaged, defective and obsolete inventory
---------------------------------------------------------------- ------------------------
------------------------
e. Returned or rejected inventory
------------------- ------------------------
------------------------
f. Consigned Inventory
------------------- ------------------------
------------------------
g. Inventory In Transit
------------------- ------------------------
------------------------
h. Inventory not Financed by *
------------------- ------------------------
------------------------
i. Foreign
------------------- ------------------------
------------------------
j. Other
------------------- ------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
4. TOTAL INELIGIBLE INVENTORY Per This Report (Sum of all lines in Section 3 above)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
5. NET ELIGIBLE INVENTORY (Line 2 minus Line 4)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The undersigned, __________________________________________ does hereby certify
that he/she has made a thorough inquiry into all matters certified herein and,
based upon such inquiry does hereby certify that:
1. He/She is the duly elected, qualified and acting
_________________________________of the Company.
2. This Maintenance Certificate is being submitted to * pursuant
to that certain Loan Agreement dated May 29, 1997 between Oryx
Technology Corp. and * (as from time to time as supplemented
or amended, the "Agreement"). Terms used or not otherwise
defined herein shall have the meanings assigned to them in the
Agreement.
3. All information contained in this Maintenance Certificate is
true, correct and completed.
IN WITNESS HEREOF, this instrument is executed by the undersigned as of
_______________________, 19 _______.
------------------------------------------
Name: ____________________________________
Title: ______________________________________
June 6, 1997
Arvind Patel
525 Alvarado
San Francisco, California
Re: Separation Agreement and General Release
Dear Arvind :
This letter summarizes the agreement ("Agreement") that we have reached
with respect to your employment with Oryx Technology Corp., a publicly traded
Delaware corporation ("the Company"). Upon execution of this letter Agreement,
you and the Company agree that the following sets forth the complete
understanding regarding the cessation of your employment with the Company as
President and Chief Executive Officer of the Company and in any other capacity
with the Company or any of its subsidiaries, excluding your remaining as a
member of the Board of Directors and Chairman of the Board.
In return for your execution of this Agreement, you have resigned as
President and CEO of the Company and as an employee of any and all of its
subsidiaries. You will remain as a member of the Company's Board of Directors,
assuming the position as Chairman. In that capacity, you will be responsible for
assisting the Company by helping it to raise money and providing strategic
direction. You will report to and work with Phil Micciche, the new President and
CEO of the Company. In consideration of the release of all your claims and your
other obligations as set forth in this Agreement, the Company agrees to provide
you with 12 months severance payments payable through April 24, 1998 equivalent
to your monthly salary as of April 25, 1997, regardless of whether you obtain
other employment. The Company will continue your health care coverage through
the earlier of (i) April 25, 1998 or (ii) you have found full time other
employment. All severance payments will be made on the same schedule as
compensation is paid to the Company's employees. You cease being a full time
employee at April 25, 1997.
Your 1996 stock option for 200,000 shares is hereby accelerated to
become fully vested. In addition, you hold one additional separate fully vested
non-statutory stock option for 100,000 shares of Company stock with an exercise
price of $1.94, representing the closing bid price on the NASDAQ system on April
24, 1997. All of your options are hereby modified to have a term of ten years
for their exercise from their grant date. You understand that failure to
exercise the options within a limited period of time after you have ceased being
an employee will cause them to be treated as non-statutory options. All of your
options are set forth as Exhibit 1 attached hereto. You agree that you have no
other options than those in such Exhibit 1, and that as of the date hereof, 341,
659 of your options have vested, including the 100,000 recently granted options.
You agree to vote all shares or equity securities which you own or control,
directly or indirectly, of the Company, including any successor corporation
which acquires the Company or into which the Company may be merged and where the
Company is not the surviving entity, held by you or any person who succeeds to
your ownership of the shares in any and all matters as to which the shares are
to be voted or a stockholder consent is solicited as recommended or directed by
the Board of Directors of the Company (determined on the majority vote of the
Board).
You agree that you shall not solicit, or attempt to influence, directly
or indirectly, the vote of any stockholder contrary to or inconsistent with any
decision or position taken by the Board of Directors, including but not limited
to the Board's decision to change the Company's plans to fund or manage the
Company's SurgX operations. You agree to support any such decision of the Board
and to support fully the slate of nominees of the Board of Directors for the
1997 annual meeting and thereafter. You understand that satisfying the
obligations set forth in this paragraph is a condition precedent to the
Company's obligation to make the severance payments described above and that if
you fail to honor such obligations, the Company will be under no further
obligation and have no further liability to continue to make the severance
payments.
You may keep your voice mail at the Company until the earlier of April
25, 1998 or you obtain employment at another company. Subject to Phil Micciche's
prior aproval in each instance, secretarial assistance may be available for your
use on Company business by the Company. You may retain the fax machine in your
possession.
You understand and agree that you are otherwise ineligible to receive
any severance, continued health care coverage, stock, or stock options in the
Company and that the aforementioned amounts represent more than the Company is
obligated to provide you. You further agree that this offer is made as a part of
a settlement specific to you. You agree that you have returned all Company owned
property in your actual or constructive possession to the Company.
In consideration for the benefits described above, you, on behalf of
yourself, your agents, assignees, attorneys, heirs, executors, and
administrators, hereby release the Company and its successors, assigns, parents,
subsidiaries, divisions, affiliates, officers, directors, shareholders,
employees, agents, and representatives from:
(a) any and all claims, liens, demands, causes of action, obligations,
damages and liabilities, known or unknown, of any nature whatsoever, that you
may have now or may hereafter claim to have against the Company or its
successors, assigns, parents, subsidiaries, divisions, affiliates, officers,
directors, shareholders, employees, agents, and representatives, arising
directly or indirectly out of, or in any way connected with or based upon, or
related in any way to, any and all claims under any state or federal
discrimination statute including, but not limited to, age, physical or mental
disability, medical condition, and any other claims covered under the California
Fair Employment and Housing Act, the federal Age Discrimination in Employment
Act (as amended by the Older Workers' Benefit Protection Act), and any claims of
wrongful termination under state or federal law, including claims for expenses
and attorneys' fees in connection with such claims; and
(b) any and all claims, liens, demands, causes of action, obligations,
damages and liabilities, known or unknown, of any nature whatsoever, that you
may have now or may hereafter claim to have against the Company or its
successors, assigns, parents, subsidiaries, divisions, affiliates, officers,
directors, shareholders, employees, agents, and representatives, arising
directly or indirectly out of, or in any way connected with or based upon, or
related in any way to your employment with the Company, the termination of your
employment, or to any physical or mental harm or distress from such employment
or termination of such employment, including, without limitation, any and all
claims under California or federal statutory or decisional law pertaining to
wrongful discharge, discrimination, or breach of public policy.
You waive all rights and remedies under Section 1542 of the California
Civil Code, which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in its favor at the time of
executing the release, which if known by it must have
materially affected its settlement with the debtor.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing herein changes the Company's obligations to indemnify you as required
under California Labor Code Section 2802 or any applicable Company insurance
policy affecting its officers, directors, and/or employees. You agree that if
the facts with respect to which this Agreement is executed are found hereafter
to be different from the facts which you now believe to be true, you expressly
accept and assume the risk of such possible differences in facts and agree that
this Agreement shall be and remain effective notwithstanding such differences in
facts.
You understand and agree that during the course of your employment, you
had access to proprietary or confidential information belonging to the Company.
You understand and agree that you will not disclose, transfer, publish or
otherwise use, either directly or indirectly, any of such information.
You and the Company agree that confidentiality of the existence and
terms of this Agreement is of the essence. You shall not disclose the terms and
this Agreement, including without limitation, the nature and payment of
consideration referred to in this Agreement, to any third party other than your
legal counsel, tax advisor, and/or members of your immediate family. You further
agree to make no voluntary statements regarding this Agreement except as may be
necessary for the purposes of audit, taxation returns or other disclosures
required by law or as may be reasonably necessary to conduct personal financial
business, and to take no other action whatsoever which might reasonably be
expected to result in any disclosure whatsoever concerning this Agreement. You
also agree not to advise, assist or influence in any manner whatsoever any other
past, present or future employee of the Company in asserting any claim against
the Company or in filing, preparing to file or prosecuting any lawsuit, charges,
complaints, petitions or other accusatory pleadings against the Company with any
governmental agency or in any court, provided, however, that providing testimony
or documents pursuant to a valid subpoena shall not be considered a breach of
this provision.
In the event that any dispute arises with respect to the
interpretation, enforcement or alleged breach of this Agreement, you and the
Company agree to resolve such dispute through arbitration conducted before a
single arbitrator according to the arbitration rules of the American Arbitration
Association. The arbitration will be held in Palo Alto, California, and the
prevailing party shall be entitled to recover its reasonable costs and
attorneys' fees incurred in connection with such arbitration.
This Agreement shall inure to the benefit of and be binding upon each
of the parties hereto and upon their successors, heirs and assigns.
This Agreement is entered into by each party hereto without any
admission of liability to each other, but solely for the purpose of avoiding
further uncertainty, controversy and legal expense. Without limiting the
foregoing, neither this Agreement nor any consideration paid by either party
therefor, nor anything contained in this Agreement, shall be taken or construed
to be an inference of admission by the Company with respect to any claims that
could be alleged.
You and the Company both warrant that no promise, inducement or
agreement not expressed herein has been made in connection with this Agreement;
that this Agreement constitutes the entire agreement between them, and cancels
and supersedes all prior communications or understandings between them with
respect to the subject matter of this Agreement. This Agreement may only be
varied or modified by a written document executed by you and the Company.
You acknowledge that you are aware that under the Older Workers'
Benefit Protection Act, you have twenty-one (21) calendar days to decide whether
to enter into this Agreement. You acknowledge and agree that you have been
allowed twenty-one-(21) calendar days to consider this Agreement or, if you
execute it prior to the expiration of that twenty-one (21) day period, you
voluntarily waived any time remaining. You further acknowledge that you are
aware that under the Older Workers' Benefit Protection Act you may revoke this
Agreement within seven (7) calendar days after it is signed. You further agree
that this Agreement shall not be effective until after this revocation period
has expired and that you are aware that in the event you timely exercise your
right of rescission, you will have no rights under this Agreement.
You acknowledge and agree that you have had had the opportunity to
consult with the advisor of your choice with respect to the matters which are
the subject of this Agreement. You further agree that you have entered into this
Agreement freely and voluntarily.
This Agreement shall in all respects be interpreted, enforced and
governed under the laws of the State of California.
In the event that any provision of this Agreement be declared or be
determined in a court of competent jurisdiction to be illegal, invalid or
unenforceable, the legality, validity and enforceability of the remaining parts,
terms or provisions shall not be affected thereby, and said illegal,
unenforceable or invalid part, term or provision shall be deemed not to be a
part of this Agreement.
Please indicate your acceptance of this Agreement by executing below on
the signature line. A fully executed copy of this Agreement will be returned to
you for your records.
ORYX TECHNOLOGY CORP.
Dated: June ___, 1997 By __________________________
Phil Micciche
President and Chief Executive Officer
Dated: June ___, 1997 By __________________________
Arvind Patel
Exhibit 1 Schedule and Copy of Options
6/6/97 Patel Employment Severance 62375
ARVIND PATEL STOCK OPTION STATUS
4/25/97
<TABLE>
<S> <C> <C> <C> <C> <C>
Award # Award Date # Options Exercise Price # Vested @ 4/26/97 # With Full
- ------- ---------- --------- -------------- ------------------ -----------
Acceleration
000021 4/26/93 39,000 $1.00 37,172 39,000
000053 2/28/95 2,569 $1.36 2,569 2,569
000101 4/1/96 200,000 $1.97 87,500 200,000
4/25/97 100,000 $1.94 0 100,000
------- - -------
4/25/97 341,569 127,241 341,569
======= ======= =======
</TABLE>
