Exhibit 10.5
CirTran Corportion
Form 10-KSB
PURCHASE AGREEMENT
(Circuit Technology Loan)
This PURCHASE AGREEMENT (the "Agreement") is made as of May
1, 2000, by and between IMPERIAL BANK. a California banking
corporation ("Seller"), and ABACAS VENTURES, INC., a Delaware
corporation ("Buyer").
RECITALS:
A. Seller has previously extended a loan to CIRCUIT
TECHNOLOGY, INC., a Utah corporation ("Borrower"), in the original
principal amount of up to Four Million Five Hundred Thousand and
No/100 Dollars ($4,500,000.00) (the "Loan"). The Loan is governed
and evidenced by Security and Loan Agreement (Accounts Receivable
and/or Inventory), dated April 6, 1998, as supplemented by that
certain Addendum to Security and Loan Agreement, dated April 6,
1998, each by and between Seller and Borrower (the "Loan
Agreement").
B. The Loan is also secured by a General Security Agreement
(Tangible and Intangible Personal Property), dated April 6, 1998,
from Borrower, as debtor, to Seller, as secured party (the
"Security Agreement"). In connection with the execution and
delivery of the Loan Agreement and the Security Agreement a Form
UCC-1 Financing Statement was filed with the Utah Department of
Commerce, Division of Corporations and Commercial Code on May 6,
1998 as File No. 98-604016 (the "Utah Financing Statement") and a
Form UCC-1 Financing Statement was filed with the Colorado
Secretary of State - UCC Division on March 24, 1999 as File No.
19992016402 M (the "Colorado Financing Statement".
C. As a condition to the extension of the Loan, Seller and
several unrelated parties entered into certain subordination and
intercreditor agreements pertaining to the priority of, and other
matters related to, the security interest of the Loan Agreement
and the Security Agreement as more fully described in the
Assignment of Loan and Loan Documents of even date herewith (the
"Subordination Agreements).
D. On March 3, 1999, each of Xxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx
and Xxxxx X. Kokozyoin, (collectively, the "Guarantor") executed
and delivered to Seller a Continuing Guarantee, whereby such
persons agreed to unconditionally guaranty Borrower's obligations
to Seller with regard to the Loan (collectively, the
"Guaranties"). As collateral security for his Continuing
Guarantee, lebab Xxxxxxxx executed and delivered to Seller a
General Security Agreement (Tangible and Intangible Personal
Property) and certain related documents, dated March 3, 1999, from
Iehab Hawatmch, as debtor, to Seller, as secured party (the
"Guarantor Security Agreement"), whereby lehab Xxxxxxxx pledged
his right, title and interest in and to 200,000 common shares of
the capital stock of Chequemate International, Inc. to Seller.
E. Effective as of April 5, 1999, Borrower and Seller agreed
to modify the Loan and the Loan Documents pursuant to that certain
First Amendment to Security and Loan Agreement and Addendum to
Security and Loan Agreement and Waiver (the "First Amendment").
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F. The Loan Agreement, Security Agreement, Utah Financing
Statement, Colorado Financing Statement the Subordination Agreements,
Guaranties, Guarantor Security Agreement and First Amendment. as
the foregoing documents, instruments and agreements have been modified
by the First Amendment, and all other documents related to the Loan, are
referred to herein as the "Loan Documents".
G. During the administration of the Loan, certain defaults on
the part of Borrower have occurred and are continuing and Buyer
now wishes to purchase from Seller the Loan Documents together
with the indebtedness governed, evidenced and secured thereby, at
a significantly discounted purchase price.
H. At the request of and as an accommodation to Borrower,
Seller has agreed to sell and transfer to Buyer the Loan Documents
together with the indebtedness governed, evidenced and secured
thereby, all upon the terms and conditions set forth in this
Agreement which include such discounted purchase price
AGREEMENTS:
NOW, THEREFORE, in consideration of the agreements,
covenants, and conditions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Sale and Purchase. Seller agrees to sell and assign to
Buyer, and Buyer agrees to purchase and accept from Seller for the
Purchase Price on and subject to the terms and conditions set
forth in this Agreement:
(a) Loan Documents. All of Seller's rights, titles, claims
and interests in and to the Loan and the Loan Documents; and
(b) Other Rights. All of the rights, titles, interests,
privileges, and appurtenances owned or held by Seller, if any,
which are in any way related to or used in connection with, the
Loan.
The Loan and Loan Documents shall be assigned and transferred to
Buyer at the Closing WITHOUT RECOURSE AGAINST SELLER, and with no
representations or warranties of any kind by Seller, express or
implied, except as explicitly set forth herein. IN PURCHASING THE
LOAN, BUYER ACKNOWLEDGES THAT THE LOAN IS IN DEFAULT AND THAT
BUYER IS ACQUIRING THE LOAN IN ITS CURRENT STATUS "AS IS".
2. Purchase Price.
(a) Purchase Price. The total purchase price (the "Purchase
Price") that Buyer agrees to pay Seller for the Loan and Loan
Documents is the sum of the following amounts:
(i) $1,100,000.00 at the Closing; and
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(ii) an additional $100,000.00 on May 15, 2000.
(b) Method of Payment. The Purchase Price shall be payable by
wire transfer of immediately available funds to Seller's account
at Imperial Bank, ABA No. 000000000, Account No. 2505-100529,
Reference "Circuit Technology Loan No. 716065625-3" on or before
2:00 p.m. (Pacific Standard Time) on the foregoing dates.
(c) Security for Deferred Purchase Price. The obligation of
Buyer to pay the remaining balance of the Purchase Price shall be
evidenced by a Promissory Note (the "Buyer Notice) and secured by
a Pledge and Security Agreement (the "Buyer Security Agreement")
covering the Loan and the Loan Documents, each in the form
attached hereto as Exhibit A and B, respectively. The Promissory
Note, Buyer Security Agreement, and any Form UCC-1 Financing
Statements or other documents reasonably required by Seller to
create, maintain and perfect its security interest in and to the
Loan and the Loan Documents shall be executed by Buyer and
delivered to Seller at the Closing as provided herein,
3. Closing. The closing ("Closing") of the sale and purchase
of the Loan and Loan Documents shall occur in the offices of Xxxxx
& Xxxxxx L.L.P. in Salt Lake City, Utah, or such other place as
may be agreed to by the parties on May 1, 2000 (the "Closing
Date"). As of the date hereof, all payments received from Seller
with respect to the Loan, whether in Seller's lockbox or otherwise,
shall be for the account of Buyer.
4. Seller's Closing Obligations. At the Closing, Seller shall
deliver the following to Buyer:
(a) Assignment. An original Assignment of Loan and Loan
Documents (Circuit Technology Loan) in the form attached hereto as
Exhibit C.
(b) Loan Agreement. The original executed Loan Agreement;
(c) Security Agreement. The original executed Security
Agreement, together with fully executed UCC-3 Forms of Assignment
for the Utah Financing Statement and Colorado Financing Statement.
(d) Guaranties. The original executed Guaranties.
(e) Guarantor Security Agreement. The original executed
Guarantor Security Agreement, together with the share certificates
representing the 200,000 common shares of the Capital Stock
of Chequemate International, Inc., all original executed
irrevocable stock powers delivered in connection therewith, and an
original executed Federal Reserve Form U-1 and related documents.
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(f) Loan Documents. The remaining original Loan Documents,
together with appropriate assignments in favor of Buyer, without
recourse and without any warranties or representations of any
kind, except as provided herein.
The deliveries described in this Paragraph 4 will be made directly
to Buyer or its counsel, as directed by Buyer, or in accordance
with Section 5(c) below, may be retained at Seller's election, as
collateral pursuant to the terms of the Buyer's Security Agreement
To the extent any documents delivered by Seller need to be
recorded or filed in any manner in any public office, Buyer, and
not Seller will be responsible for all such filings and
recordings.
5. Buyer's Obligations. At the Closing, Buyer shall,
deliver the following to Seller, or cause Borrower to deliver to
Seller:
(a) Promissory Note. The original executed Promissory Note.
(b) Buyer's Security Agreement. The original executed Buyer
Security Agreement, together with such fully executed Form UCC-1
Financing Statements and other documents as Seller may reasonably
require.
(c) Collateral Documents. Pursuant to the terms of the
Buyer's Security Agreement, the Loan Agreement, Security
Agreement, Guaranties, Guarantor Security Agreement and other Loan
Documents
(d) Purchase Price. The Purchase Price in accordance with
Section 2 hereof.
(e) Borrower Release. That certain General Release Agreement
by land between Borrower and Seller of even date herewith.
The deliveries described in this Paragraph 5 will be made directly
to Seller or its counsel, as directed by Seller. To the extent any
documents delivered by Buyer need to be recorded or filed in any
manner in any public office, Seller, and not Buyer, will be
responsible for all such filings and recordings.
6. Representations and Warranties.
(a) Representations and Warranties of Seller. As of the date
hereof and as of the Closing, Seller represents and warrants to Buyer
that:
(i) Due Organization. Seller is a banking corporation duly
organized~ validly existing and in good standing under the laws of
the State of California. Seller has the right, power, legal
capacity and authority to execute and deliver this Agreement, and
to perform its obligations under this Agreement, and all related
documents, instruments, and certificates. This Agreement has been
duly and validly executed and delivered by Seller. No approval of
any person or entity is required for the execution of this
Agreement by Seller or the consummation of any of the transaction
contemplated by the Agreement.
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(ii) Due Authorization As of the Closing, this Agreement, and
all related documents, instruments, and certificates will have
been duly authorized by all necessary action on the part of
Seller. Seller shall obtain all such written consents and
approvals, if any, as may be 'necessary or required to permit
Seller to perform Seller's obligations under this Agreement The
individual or individuals executing this Agreement and any and all
documents contemplated in it on behalf of Seller has or have the
legal power, right and actual authority to bind Seller to the
terms and conditions in the Agreement and in those documents.
(iii) Enforceability. This Agreement, and all related
documents, instruments, and certificates have been duly executed
and delivered by Seller and constitute the legal, valid and
binding agreements of Seller, enforceable against Seller in
accordance with their respective terms.
(iv) No Violation. Neither the execution, delivery or
performance by Seller of this Agreement and all related documents,
instruments and certificates, nor the consummation by Seller of
the transactions contemplated hereby or thereby, nor compliance by
Seller with the provisions hereof or thereof:
(A) conflicts with, or results in the breach of any provision
of, or is inconsistent with Seller's articles of organization; or
(B) contravenes or violates any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or awarded
presently in effect and applicable to Seller, or
(C) results in a breach at or constitutes a default (with or
without the giving of notice or the lapse of time or both) under
any indenture, mortgage or agreement for borrowed money to which
Seller is a party or any other agreement or instrument to which
Seller is a party or by which Seller or Seller's property is bound
or affected; or
(D) that requires any consent or approval of any
governmental authority or third party with respect to Seller.
(v) Holder. Seller is the sole holder of the Loan Agreement and
Loan Documents and has good right and title to sell the Loan and
the Loan Documents to Buyer. Seller has not previously assigned or
encumbered the Loan Documents.
(vi) No Amendments. The Loan Documents constitute all of the
agreements with Borrower pertaining to the Loan, and the Loan
Documents have not been amended or modified, except as described
in this Agreement.
(vii) Payments. As of the date of this Agreement, the unpaid
principal balance of the Loan is $2,670,657.40, and as of the date
of this Agreement,interest in the amount of $152,934.18 has
accrued on such outstanding principal balance.
(vii) Execution. The Loan Documents and any other document made and
given by the Seller in connection therewith and herewith have
been duly authorized, executed, delivered, and are
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legally enforceable against Seller according to their terms.
(b) Limitation on Representations and Warranties of Seller.
Except for the express representations and warranties of Seller
set forth in Paragraph 6(a) of this Agreement, Buyer confirms,
acknowledges, and agrees that Seller: (i) makes no representation
or warranty with respect to, and assumes no responsibility with
respect to any statement, warranties or representations made by
Borrower in or in connection with, the Loan or any Loan Document;
(ii) makes no representation or warranty, and assumes no
responsibility with respect to, the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan or
any Loan Document or any other instrument or document finished
pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of Borrower or any Guarantor; and (iv) makes no representation or
warranty and assumes no responsibility with respect to the
performance or observance by Borrower or any Guarantor of any of
its obligations with respect to the Loan or under any Loan
Document or any other instrument or document furnished pursuant
thereto.
(c) Representations and Warranties of Buyer. As of the date
hereof and as of the
Closing, Buyer represents and warrants to Seller that:
(i) Due Organization. Buyer is a corporation duly
organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer has
the right, power, legal. capacity and authority to execute and
deliver this Agreement, and to perform its obligations under this
Agreement, and all related documents, instruments, and
certificates. This Agreement has been duly and validly executed
and delivered by Buyer. No approval of any person or entity is
required for the execution of this Agreement by Buyer or the
consummation of any of the transaction contemplated by the
Agreement
(ii) Due Authorization. As of the Closing, this Agreement,
and all related documents, instruments, and certificates will have
been duly authorized by all necessary action on the part of Buyer.
Buyer shall obtain all such written consents and approvals, if
any, as may be necessary or required to permit Buyer to perform
Buyer's obligations under this Agreement The individual or
individuals executing this Agreement and any and all documents
contemplated in it an behalf of Buyer has or have the legal power,
right and actual authority to bind Buyer to the terms and
conditions in the Agreement and in those documents.
(iii) Execution. This Agreement, and all related documents,
instruments, and certificates have been duly executed and
delivered by Buyer and constitute the legal, valid and binding
agreements of Buyer, enforceable against Buyer in accordance with
their respective terms.
(iv) No Violation. Neither the execution, delivery or
performance by Buyer of this Agreement, and all related documents,
instruments and certificates, nor the consummation, by Buyer of
the transactions contemplated hereby or thereby, nor compliance by
Buyer with the provisions hereof or thereof
(A) conflicts with, or results in the breach of any provision
of, or is inconsistent with Buyer's articles of organization; or
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(B) contravenes or violates any law, rule, regulation, order,
writ judgment, injunction, decree, determination or awarded
presently in effect and applicable to Buyer, or
(C) results in a breach of, or constitutes a default (with or
without the giving of notice or the lapse of time or both) under
any indenture, mortgage or agreement for borrowed money to which
Buyer is a. party or any other agreement or instrument to which
Buyer is a party or by which Buyer or Buyer's property is bound or
affected, or
(D) that requires any consent or approval of any
governmental authority or third party with respect to Buyer.
(v) Inspection Buyer has received all information it
considers necessary or appropriate for deciding whether to acquire
the Loan from Seller. Buyer has been provided full and complete
access to all Loan Documents and other document, instruments and
agreements pertaining to the Loan, has inspected and reviewed all
of the Loan Documents, together with such other documents,
instruments, reports, certificates, and other materials as Buyer
has deemed necessary or appropriate in connection with this
transaction, including without limitation, all agreements and
documents referenced herein whether or not Seller is a party
thereto.
(vi) Knowledgeable Investor. Buyer is acquiring the Loan for
its own account only and not for any other person. Buyer considers
itself a sophisticated investor, having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Loan.
7. Inducements to Seller and Buyer, Release. As additional
consideration and inducement to Seller and Buyer to enter into
this Agreement and with knowledge that Seller and Buyer would. not
enter into this Agreement but for the provisions of this Paragraph
7; Borrower represents and warrants to Seller and Buyer that: (i)
the entire amount of indebtedness and all obligations under the
Loan Documents as modified by this Agreement are and continue to
be the valid, binding and enforceable obligations of Borrower and
are secured by the Loan Documents; (ii) all collateral and
interests encumbered under the Security Agreement constitute and
shall continue to be, first priority liens and collateral security
for all of the obligations of Borrower under the Loan Documents;
(iii) to the best of Borrower's knowledge, the value of such
collateral is and has at all times been, in the aggregate, greater
than the amount of the outstanding obligations under the Loan
Documents; and (iv) Borrower has no defense, setoff, claim or
counterclaim against Seller, (A) in regard to the obligations of
Borrower under this Agreement, the Loan Documents, or any
indebtedness or other obligation to Seller whatsoever, or (B) with
respect to any document, instrument, transaction, act or omission
arising out of or related to, or entered into pursuant to, this
Agreement, the Loan Documents,; or any other indebtedness or
obligation of Borrower to Seller.
8. Acknowledgments of Borrower and Guarantor. Each of
Borrower and Guarantor hereby acknowledge and agree that by
entering into this Agreement Seller does not waive any default
under the Loan Agreement or any other Loan Document or become
obligated to waive any condition or obligation in any agreement
between or among the parties to this Agreement and exercise of its
rights under the Promissory Note and the Buyer Security Agreement.
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8. Remedies of Seller. If Buyer fails or refuses to
consummate the purchase of the Loan pursuant to this Agreement at
the Closing, or fails to perform any of Buyer's other obligations
under this Agreement either prior to or at the Closing for any
reason and provided that Seller is not in default, then Seller
shall be entitled to exercise any and all remedies provided at law
or in equity, including, without limitation, termination of this
Agreement by written notice of termination to Buyer.
9. Remedies of Buyer. If Seller defaults on its obligations
under this Agreement either prior to or at the Closing for any
reason and provided that Buyer is not in default, then Buyer shall
be entitled to exercise any and all remedies provided at law or in
equity, including, without limitation, the right to have specific
performance of this Agreement or to terminate this Agreement by
written notice of termination to Seller.
10. Limitation. The execution and delivery of this Agreement
and the existence and exercise of any of the foregoing remedies
shall in no way be deemed or act as a waiver, nor impair, diminish
or in any way affect Seller's rights and remedies under the Loan
Documents with respect to the Loan and the Note prior to
assignment of the Loan Documents pursuant hereto.
11. Knowledge. As used in this Agreement, "knowledge" means
only the current actual knowledge of the corporate officers of
Seller or Buyer, as the case may be, but does not include
constructive knowledge or inquiry knowledge.
12. Miscellaneous.
(a) Notices. Notices will be in writing and will be given by
personal delivery, by deposit in the United States mail certified
mail, return receipt requested, postage prepaid, by facsimile
transmission, or by express delivery service, freight prepaid.
Notices will be delivered or addressed to the parties at the
addresses or facsimile numbers set forth below or at such other
address or number as a party may designate in writing. The date
notice is deemed to have been given, received and become effective
will be (i) the date on which the notice is delivered, if notice
is given by personal delivery, (ii) the date of actual receipt, if
the notice is sent through the United States mail or by express
delivery service, or (iii) if notice is sent by facsimile
transmission, on the date of transmission, if the transmission is
commenced prior to 4:00 o'clock p.m. (local time at the place of
receipt) and continuously transmitted thereafter until complete,
otherwise on the day following the date of transmission. The
addresses for notice are as follows:
If to Seller: Imperial Bank
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Legal Dept.
Telephone No.: 000 000 0000
Facsimile No.: 000 000 0000
with a copy to: Xxxxx & Xxxxxx LLP
Gateway Tower West
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00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 801-257-1800
If to Buyer: Abacas Ventures, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxxxx
Telephone No.:
Facsimile No.:
If to Borrower: Circuit Technology, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to Durham Xxxxx & Xxxxxxx
00 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone No.: 801538-2424
Facsimile No.: 000-000-0000
(b) Time is of the Essence: Time is of the essence in this
Agreement
(c) Counterparts. This Agreement may be executed in any
number of counterparts and
by different parties hereto separate counterparts, each of
which, when so executed and delivered
shall be an original, but also such counterparts shall together
constitute one and the same instrument. Signature pages may be
detached from the counterparts and attached to a single copy of
this Agreement to physically form one document. Telecopied
signature pages will be acceptable, provided originally signed
signature pages are provided to each of the other parties by
overnight courier.
(d) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California,
without giving effect to its conflict of laws provisions.
(e) Assignment. Binding Effect. Buyer shall not have the
right to assign any of its rights under this Agreement without the
prior written consent of Seller, which consent Seller may withhold
in Seller's sole and absolute discretion. Except as limited by the
preceding sentence, the provisions of this Agreement are binding
upon and will inure to the benefit of the parties and their
respective heirs, personal representatives, successors and
assigns.
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(1) Waivers. No waiver of any of the provisions of this
Agreement will constitute a waiver of any other provision,
whether or not similar, nor will any waiver be a continuing
waiver. No waiver will be binding unless executed in writing by
the party making the waiver. A party may waive any provision of
this Agreement intended for its benefit; provided, however, such
waiver will in no way excuse the other parties from the
performance of any of its other obligations under this Agreement
(g) Further Documentation. Each party agrees in good faith to
execute such further or additional documents as may be necessary
or appropriate to fully carry out the intent and purpose of this
Agreement
(h) Headings. The headings of this Agreement are for purposes
of reference only and
will not limit or define the meaning of any provision of this
Agreement.
(i) Entire Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter
contained in this Agreement. All prior and contemporaneous
agreements, representations and understandings of the parties,
oral or written, re superseded by and merged in this Agreement No
supplement modification or amendment of this Agreement wil1 be
binding unless in writing and executed by the parties.
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(j) Further Assurances. Each of the Seller and the Buyer
agree to take or cause to be taken
such actions as may be necessary or appropriate to effectuate the
transactions contemplated hereunder. Each of the Seller and the
Buyer request and warrant that they, respectively, have the right,
power, means, and authority to enter into and perform this
Agreement and the Commitment Letter.
IN WITNESS WHEREOF, Seller and Buyer have caused this
Agreement to be duly executed and delivered as of the date first
above written.
SELLER:
IMPERIAL BANK
A California banking corporation
By: /s/ Xxxxx XxXxxxxx
Name: Xxxxx XxXxxxxx
Title: S.V.P.
BUYER
ABACAS VENTURES, INC
A Delaware corporation
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: President
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ACKNOWLEDGMENT, CONSENT AND AGREEMENT OF BORROWER
The undersigned, referred to above as the "Borrower", hereby:
(i) acknowledges that Borrower has received a copy of the Loan
Documents, and is familiar with the terms and conditions thereof;
(ii) acknowledges and consents to the execution and delivery of
the foregoing Purchase Agreement and agrees to be bound by the
terms thereof; (iii) consents tot the sale and assignment of the
Loan and Loan Documents to the Buyer described above, (iv) agrees
that the obligations of Borrower pursuant to the Loan Documents
remain in full force and effect; (v) agrees that Borrower has no
claims, defenses, offsets or counterclaims with respect to the
Loan or the Loan Documents futherance thereof, an in consideration
for Seller's agreement to sell and assign the Loan and Loan
Documents to Buyer at a significantly discounted purchase price,
agrees to execute and deliver to Seller that certain General
Release Agreement of even date herewith; and (iv) makes each of
the representations, warranties and agreements of Sections 7 and 8
of the foregoing Agreement.
Dated as of May 1, 2000
BORROWER:
CIRCUIT TECHNOLOGY, INC.
A Utah Corporation
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: President
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