EXHIBIT 10.1
WORKING CAPITAL ASSURANCE AGREEMENT
THIS WORKING CAPITAL ASSURANCE AGREEMENT (this "Agreement") is entered
into as of June 7, 2002 by and between nSTOR TECHNOLOGIES, INC., a Delaware
corporation ("nStor"), and HILCOAST DEVELOPMENT CORP., a Delaware corporation
("Hilcoast").
BACKGROUND
A. On the date hereof, nStor, Pacific USA Holdings Corp., a Texas
corporation ("Pacific USA"), Pacific Technology Group, Inc., a Texas corporation
("PTG"), and Stonehouse Technologies, Inc., a Texas corporation ("Stonehouse")
entered into a Stock Purchase Agreement whereby, among other things, nStor
acquired all of the outstanding shares of common stock of Stonehouse.
B. In order to induce Pacific USA, PTG and Stonehouse to enter into the
Stock Purchase Agreement and to consummate the transaction described above,
nStor and Hilcoast, a stockholder of nStor, have agreed to enter into this
Agreement on the terms and subject to the conditions set forth below.
NOW, THEREFORE, for good and valuable consideration paid by each of the
parties hereto to the other, the receipt and sufficiency of which is hereby
acknowledged and in consideration of the covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
AGREEMENT
1. Working Capital Loans. For a period of one hundred eighty (180) days
from the date hereof (the "Term"), Hilcoast unconditionally agrees to loan, upon
demand by nStor in the event of a working capital deficit, an aggregate amount
not in excess of $1,250,000, including the amounts previously loaned to nStor by
Hilcoast and outstanding on the date hereof of $940,000, (collectively, the
"Working Capital Loans"), to meet any working capital deficit of nStor during
the Term as any such deficit may arise. Notwithstanding the foregoing, no
Working Capital Loans will be required to be advanced hereunder to meet the
working capital needs of Stonehouse or any of its subsidiaries.
2. Advances; Promissory Notes. Working Capital Loans will be made by
Hilcoast from time to time during the Term upon the request of nStor. Any
Working Capital Loans advanced by Hilcoast to nStor under this Agreement shall
be evidenced by the two (2) promissory notes previously issued by nStor to
Hilcoast and attached hereto as Exhibit A. nStor will provide written notice to
Pacific USA and PTG of any request for a Working Capital Loan hereunder within
two days of the date such request is made to Hilcoast, which notice shall
specify the amount requested by nStor to be advanced and the remaining amount
required to be advanced by Hilcoast hereunder and shall be signed by a
designated officer of nStor. Hilcoast agrees to advance any Working Capital Loan
hereunder within one (1) business day of receipt of the request for a Working
Capital Loan from nStor.
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3. Inducement and Reliance. Hilcoast acknowledges that (a) the covenants
and agreements made hereunder by Hilcoast are being made in part to induce
Pacific USA, PTG and Stonehouse to enter into the Stock Purchase Agreement and
consummate the transactions contemplated thereby, (b) it is expressly intended
that the covenants and agreements made hereunder by Hilcoast may be relied upon
and enforced by Pacific USA and PTG, and (c) each of Pacific USA and PTG is a
third-party beneficiary of this Agreement.
4. Representations and Warranties of Hilcoast. Hilcoast represents and
warrants that (a) this Agreement constitutes a legal, valid, and binding
obligation of Hilcoast, was duly authorized, executed, and delivered by
Hilcoast, and is fully enforceable against Hilcoast in accordance with its
terms; (b) Hilcoast is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and is duly authorized
and qualified to perform all of its obligations under this Agreement; and (c)
neither this Agreement nor any agreement, document, or instrument executed or to
be executed in connection herewith violates or conflicts with the terms of any
other agreement to which Hilcoast is a party.
5. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to its subject matter and
supersedes any prior understandings or agreements between the parties with
respect to such subject matter.
(b) Independence of Agreement. This Agreement shall not be
construed as a guaranty or surety agreement for any of nStor's obligations or
debts, but shall constitute the separate and independent primary obligation of
Hilcoast to nStor.
(c) Notices. Any notice, request, demand, statement or consent
made hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provisions for
a receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed as follows:
If to nStor: nStor Technologies, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxx
With copy to: Akerman, Senterfitt & Xxxxxx, P.A.
Las Olas Centre II, Suite 1600
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
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If to Hilcoast: Hilcoast Development Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: H. Xxxxx Xxxx
If to Pacific USA or Pacific USA Holdings Corp.
PTG: 0000 X. Xxxxxx Xxxxxxx
Xxxxx, Xxxxx 00000
Attn: Xxxxxxx XxXxxx, President
Xxxx X. Xxxxxxx, General Counsel -
Business Development
With copy to: Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 X. Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
or at such other place as any of the parties hereto may from time to time
hereafter designate to the others in writing.
(d) Choice of Law; Jurisdiction. This Agreement shall be
construed, and the rights and obligations of nStor and Hilcoast shall be
determined, in accordance with the laws of the State of Florida, exclusive of
its conflicts of laws rules. Exclusive jurisdiction and venue shall be in the
federal or state courts located in Miami-Dade County, Florida.
(e) Amendments. This Agreement may be modified or amended only by
a written instrument executed by nStor and Hilcoast and consented to in writing
by Pacific USA.
(f) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single instrument.
(h) Future Cooperation. Each party covenants and agrees to
take such further action and execute such further documents as may be necessary
or appropriate to carry out the intention of this Agreement.
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(i) Counsel Fees. If any person brings any action to interpret or
enforce this Agreement, or for damages for any alleged breach thereof, the
prevailing party in any such action shall be entitled to reasonable attorney's
fees and costs as awarded by the court in addition to all other recovery,
damages and costs.
(j) Headings. All titles and headings in this Agreement are
intended solely for convenience of reference and shall in no way limit or
otherwise affect the interpretation, construction or enforcement of any of the
provisions hereof.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxx
___________________________
Xxxx Xxxxxx, Vice President
HILCOAST DEVELOPMENT CORP.
By: /s/ H. Xxxxx Xxxx
___________________________
H. Xxxxx Xxxx, Chief
Executive Officer
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EXHIBIT A
PROMISSORY NOTES
6
PROMISSORY NOTE
April 30, 2002
U.S. $750,000.00 San Diego, California
FOR VALUE RECEIVED, the undersigned nSTOR TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at 00000 Xxxx Xxx Xxxx, Xxx
Xxxxx, Xxxxxxxxxx, 00000 (hereinafter called "Maker"), hereby promises to pay to
the order of Hilcoast Development Corp., a Delaware corporation, with a business
address at 000 Xxxxxxx Xxxxxxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx 00000 (hereinafter
called "Payee"), at the address of Payee's principal place of business stated
above, or at such other place as the Payee may designate in writing, the sum of
SEVEN HUNDRED AND FIFTY THOUSAND AND 00/100ths U.S. Dollars (U.S. $750,000.00)
(the "Principal Amount"), plus interest on the outstanding balance of the
Principal Amount at the rate of eight percent (8%) per annum, payable quarterly,
from the date hereof until the date when said sum is paid in full in accordance
with the terms hereof. The entire Principal Amount plus all accrued interest
thereon shall be due and payable in full on April 30, 2003.
It is expressly agreed that this Promissory Note evidences a SEVEN HUNDRED AND
FIFTY THOUSAND AND 00/100ths U.S. Dollars (U.S. $750,000.00) revolving line of
credit. The Principal Amount which may be outstanding at any time under such
line of credit shall not exceed SEVEN HUNDRED AND FIFTY THOUSAND AND 00/100ths
U.S. Dollars (U.S. $750,000.00). However, this limitation shall not be deemed to
prohibit Payee from advancing any sum, which may, in Payee's sole and exclusive
discretion, be necessary or desirable in order to protect and preserve the
effect and enforceability of this Promissory Note. Within the limits and subject
to the terms and conditions hereof, the Maker may borrow, repay and re-borrow
under the revolving line of credit evidenced by this Promissory Note and all
shall be subject to the terms and conditions of this Promissory Note.
Upon the failure by Maker to pay interest in full on or before the date when due
hereunder, the entire unpaid amount of this Note shall thereupon be immediately
due and payable, and the Payee shall have all rights and remedies provided under
this Note.
Maker shall have the right, in Maker's discretion at any time, without payment
of premium or penalty, to repay in whole or in part the unpaid balance of this
Note.
This Note shall be governed by and construed under the laws of the State of
Florida. The exclusive venue for any litigation in connection with or arising
out of this Note shall be Palm Beach County, Florida, and the Maker hereby
consents and submits to the jurisdiction of the state and federal courts sitting
in Palm Beach County, Florida.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
Title Acting President, Chief Operating and Financial Officer
7
PROMISSORY NOTE
May 18, 2002
U.S. $500,000.00 San Diego, California
FOR VALUE RECEIVED, the undersigned nSTOR TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at 00000 Xxxx Xxx Xxxx, Xxx
Xxxxx, Xxxxxxxxxx, 00000 (hereinafter called "Maker"), hereby promises to pay to
the order of Hilcoast Development Corp., a Delaware corporation, with a business
address at 000 Xxxxxxx Xxxxxxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx 00000 (hereinafter
called "Payee"), at the address of Payee's principal place of business stated
above, or at such other place as the Payee may designate in writing, the sum of
FIVE HUNDRED THOUSAND AND 00/100ths U.S. Dollars (U.S. $500,000.00) (the
"Principal Amount"), plus interest on the outstanding balance of the Principal
Amount at the rate of eight percent (8%) per annum, from the date hereof until
the date when said sum is paid in full in accordance with the terms hereof. The
entire Principal Amount plus all accrued interest thereon shall be due and
payable in full on December 31, 2002.
It is expressly agreed that this Promissory Note evidences a FIVE HUNDRED
THOUSAND AND 00/100ths U.S. Dollars (U.S. $500,000.00) revolving line of credit.
The Principal Amount which may be outstanding at any time under such line of
credit shall not exceed FIVE HUNDRED THOUSAND AND 00/100ths U.S. Dollars (U.S.
$500,000.00). However, this limitation shall not be deemed to prohibit Payee
from advancing any sum, which may, in Payee's sole and exclusive discretion, be
necessary or desirable in order to protect and preserve the effect and
enforceability of this Promissory Note. Within the limits and subject to the
terms and conditions hereof, the Maker may borrow, repay and re-borrow under the
revolving line of credit evidenced by this Promissory Note and all shall be
subject to the terms and conditions of this Promissory Note.
Upon the failure by Maker to pay interest in full on or before the date when due
hereunder, the entire unpaid amount of this Note shall thereupon be immediately
due and payable, and the Payee shall have all rights and remedies provided under
this Note.
Maker shall have the right, in Maker's discretion at any time, without payment
of premium or penalty, to repay in whole or in part the unpaid balance of this
Note.
This Note shall be governed by and construed under the laws of the State of
Florida. The exclusive venue for any litigation in connection with or arising
out of this Note shall be Palm Beach County, Florida, and the Maker hereby
consents and submits to the jurisdiction of the state and federal courts sitting
in Palm Beach County, Florida.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
nSTOR TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
Title Acting President, Chief Operating and Financial Officer
