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EXHIBIT 10.3.1
AGREEMENT FOR DISCOUNTED PAYMENT AND
ADEQUATE ASSURANCE OF PERFORMANCE
This agreement (the "Agreement") is entered into between Voice Powered
Technology International, Inc., a California corporation ("VPTI") and GSS/Array
Technology, Inc., a Delaware corporation ("GSS") and is executed as of this
20th day of May 1997.
I.
RECITALS
1.1 VPTI is a developer and marketer of consumer electronic products
including various models of a product known as the Voice Organizer. GSS is a
contract manufacturer for VPTI, pursuant to the Manufacturing Agreement between
VPTI and GSS dated February 7, 1996 ("Manufacturing Agreement"). VPTI issues
purchase orders (the "Purchase Orders") to GSS. GSS then orders the necessary
components and manufactures finished goods for VPTI. GSS has manufactured
finished goods for VPTI, and VPTI has not paid the amounts due under the
Purchase Orders. Some of the outstanding Purchase Orders issued by VPTI relate
to finished goods manufactured by GSS which have been invoiced and shipped to
VPTI customers (the "Invoiced Finished Goods"). Some of the outstanding Purchase
Orders issued by VPTI relate to finished goods manufactured or work in process
for models of Voice Organizers, other than Model 5150 and Model 5160, which have
not yet been invoiced by GSS and are held by GSS (the "Work in Process
Inventory" as shown on Exhibit A). The remaining Purchase Orders issued by VPTI
are for units of Model 5150 and Model 5160 which have not yet been shipped and
invoiced by GSS (the "Sold Products") as shown on Exhibit B. In addition, GSS is
in possession of components ordered by GSS pursuant to a certain canceled
Purchase Order issued by VPTI for 7,500 units of the Model 9601 Voice
Organizer/Pager (the "Canceled Parts"). As of the date hereof, VPTI owes to GSS
$1,638,322.00 for Invoiced Finished Goods and the Manufacturing Equipment (as
hereinafter defined) and $139,000 for Canceled Parts, for a total of $1,777,322
(the "Total Indebtedness").
1.2 VPTI is presently attempting to sell certain of its assets and
distribute the proceeds to its creditors. In particular, VPTI is attempting to
conclude a sale of all of VPTI's assets used in the manufacturing and sale of
its Sold Products (the "Transaction") to an unrelated third party (the
"Purchaser"), including, without limitation, all components owned by VPTI used
in the manufacture of the Sold Products (the "Components"), and all equipment,
software, tooling and other materials purchased and owned by VPTI related to the
manufacture of the Sold Products and currently located at GSS's manufacturing
facilities (the "Manufacturing Equipment").
1.3 VPTI and GSS acknowledge that in the event that VPTI is unable to
sell its assets for a satisfactory price or otherwise restructure its financial
affairs, VPTI may file a voluntary petition for relief under Title 11 United
States Code. In order to facilitate the sale of certain of VPTI's
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assets, GSS shall accept discounted payment of the Purchase Orders as set forth
herein. In the event that the transaction with the Purchaser is not concluded
as contemplated herein or the transaction is completed with GSS obtaining
payment and is subsequently undone GSS retains all of its rights against VPTI
based on the Total Indebtedness.
II.
AGREEMENT
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2.1 VPTI agrees to the following:
2.2.2 With respect to the Purchase Orders relating to the
Invoiced Finished Goods, the Manufacturing Equipment and the Canceled Parts.
VPTI shall pay within two (2) days from the date of closing with the Purchaser
the sum of 803,000.
2.2.2 (a) On or before June 15, 1997, VPTI shall issue to GSS
500,000 shares of $1.00 par value, non-voting, non cumulative, 6% Convertible
Preferred Stock ("Stock") of VPTI. Dividends shall be mandatory and payable
annually thirty (30) days after the anniversary date of its issue in cash or
common stock of VPTI at Market Value (as hereinafter defined). Market Value
shall be determined by the average closing bid price for the five (5) trading
days prior to the anniversary date of its issue. Each share of the Stock shall
be convertible, at the election of GSS, into four (4) shares of Common Stock of
VPTI at a price equal to $0.25 per share of common stock.
(b) At the option of GSS, VPTI will agree to appoint a
representative of GSS to the Board of Directors of VPTI for a one year term. In
any event VPTI hereby agrees, for a period of one year, to provide notice to
GSS of its Board of Director meetings, and GSS shall have the right, at GSS's
option, to attend such meetings as a non-voting observer. In addition, VPTI
shall provide to GSS not less than quarterly copies of its financial
statements, as well as copies of all documents filed with the SEC.
2.1.3 In the event VPTI fails to comply with the provision of
2.1.1 and 2.1.2 (a), then this Agreement shall become null and void, and VPTI
shall be obligated for the Total Indebtedness owed by VPTI to GSS prior to the
Agreement less any payments made under 2.1.1 and 2.1.2(a). In addition, should
any amounts paid to GSS pursuant to 2.1.1 and/or 2.1.2(a) be required, by order
of any court or pursuant to any negotiated compromise, to be returned to VPTI,
this Agreement shall be null and void, and VPTI shall be obligated for the
Total Indebtedness less any amounts retained by GSS.
2.1.4 As of the date hereof, VPTI represents that it has no
claim, offset or counterclaim against GSS including, without limitation, claims
with respect to quality or
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workmanship related to the manufacture of VPTI's products by GSS. Further, VPTI
hereby releases GSS, as of the date herein, from any and all claims and
liabilities of any nature whatsoever.
2.2 GSS agrees to the following:
2.2.1 Subject to Section 2.1.3 herein, payment of the
consideration discussed in Paragraph 2.1.1 and 2.1.2(a) shall relinquish VPTI
from any and all obligations with respect to Purchase Orders relating to the
Invoiced Finished Goods, the Manufacturing Equipment and the Canceled Parts.
2.2.2 With respect to the Purchase Orders relating to the
Work in Process Inventory GSS shall accept as payment 110% of the price per
unit as stated in such Purchase Order, in recognition of the additional labor
and administrative cost associated therewith, as full and final satisfaction of
the unpaid amounts owed by VPTI for the Work in Process Inventory, such payment
to be made by VPTI to GSS upon notification from GSS that such goods are ready
for shipment in accordance with a mutually agreeable production and shipping
schedule. VPTI further agrees that future Purchase Orders shall be issued at
per unit prices equal to the formula previously applied to VPTI products
pursuant to the Manufacturing Agreement plus ten percent (10%).
2.2.3 With respect to the Purchase Orders relating to the
Sold Products, GSS acknowledges and agrees that, upon written notification from
VPTI that VPTI has concluded the Transaction with the Purchaser and written
agreement from the Purchaser assuming all obligations under the Purchase Orders
for Sold Products, GSS will consent to the assignment of such Purchase Orders
for Sold Products in the full amount to the Purchaser as full and final
satisfaction of VPTI's obligation under such Purchase Orders.
2.2.4 GSS hereby acknowledges that, upon written notification
from VPTI that VPTI has concluded the Transaction with Purchaser, that all
Manufacturing Equipment as shown on Exhibit C attached hereto will thereafter
by owned by Purchaser free and clear of any claims by GSS.
2.2.5 GSS hereby acknowledges that, upon written notification
from VPTI that VPTI has concluded the Transaction with Purchaser, that all
Components as shown on Exhibit D attached hereto will thereafter be owned by
Purchaser free and clear of any claims by GSS.
2.2.6 GSS agrees to continue to manufacture pursuant to the
terms of the Manufacturing Agreement up to 2,000 units per week of Voice
Organizers for VPTI for a period not less than six (6) months from the date
hereof. VPTI agrees to provide GSS with a Standby Letter of Credit in the
amount of $172,000 to secure VPTI's payments, as provided in Section 2.2.2,
under Purchaser Orders for the Work in Process Inventory as well as future
Purchase Orders to be issued by VPTI, and VPTI agrees to pay GSS for all
shipments pursuant to such Purchase Orders, as provided in Section 2.2.2, upon
notification from GSS that the goods are ready for shipment.
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III.
ASSIGNMENT OF CLAIMS
3.1 No party hereto has assigned, transferred, or granted, or
purported to assign, transfer or grant, any of the claims and causes of action
disposed of by this Agreement.
IV.
NO ADMISSION
4.1 This Agreement represents a compromise of claims and shall not be
construed as an admission by any party of any liability or of any contention or
allegation made by any other party except that VPTI acknowledges the Total
Indebtedness as a valid debt due and owing from VPTI to GSS.
V.
GOVERNING LAW
5.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
VI.
ENTIRE AGREEMENT
6.1 This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions. This Agreement may
be amended only by an agreement in writing.
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VII.
CONSENT
7.1 The parties hereto acknowledge that they were represented by
attorneys of their own choosing in the negotiations for and preparation of this
Agreement, that they have read this Agreement, that they are fully aware of its
contents and of its legal effect by virtue of discussions with their attorneys,
and that they have freely and voluntarily entered into the settlement set forth
in this Agreement.
VIII.
CAPTIONS
8.1 Any captions to the paragraphs of this Agreement are solely for
the convenience of the parties, are not a part of this Agreement, and shall not
be used for the interpretation or determination of the validity of this
Agreement or any portion thereof.
IX.
AUTHORITY TO EXECUTE AGREEMENT
9.1 Each party or responsible officer or partner thereof executing
this Agreement is duly authorized to enter into and execute this Agreement in
such capacity.
X.
JURISDICTION
10.1 The parties hereto agree that in the event that VPTI files a
voluntary petition under Xxxxx 00, Xxxxxx Xxxxxx Code, or a petition is filed
against it under Title 00, Xxxxxx Xxxxxx Xxxx, xxx Xxxxxx Xxxxxx Bankruptcy
Court for the Central District of California shall have sole and exclusive
jurisdiction, sitting without a jury, to hear and determine any disputes that
arise under or on account of this Agreement.
10.2 In all other events, all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only in the state
and federal courts located in the County of Los Angeles, State of California.
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XI.
WAIVER OF JURY TRIAL
11.1 VPTI and GSS hereby waive any right to trial by jury of any claim,
cause of action, or proceeding arising under and in any way related to this
Agreement. Either party may file an original counterpart or a copy of this
Section of this Agreement with any court as written evidence of the consent of
the other party hereto to the waiver of its right to trail by jury.
XII.
ATTORNEYS FEES TO PREVAILING PARTY
12.1 To the extent any party needs to commence an action to enforce the
provisions of this Agreement, then the prevailing party in that action shall be
entitled to collect all reasonable attorneys fees and costs in connection
therewith.
XIII.
IMPLEMENTATION
13.1 VPTI and GSS shall execute such other and further documents and do
such further acts as may reasonably be required to effectuate the intent of the
parties to carry out the terms of this Agreement.
XIV.
MANUFACTURING AGREEMENT
14.1 The parties hereby agree that, unless otherwise modified by the
terms herein, that the Manufacturing Agreement shall remain in full force and
effect unless otherwise terminated pursuant to its terms.
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XV.
MISCELLANEOUS
14.1 This Agreement shall inure to the benefit of and be binding on the
successors and assignees of the parties and each of them.
14.2 If any provision of this Agreement or portion thereof shall be
declared invalid for any reason, then the invalid provision or portion thereof
shall be deemed omitted and the remaining terms shall nevertheless be carried
into effect.
14.3 This Agreement may be executed in any number of counterparts, each
of which shall constitute one and the same instrument. Facsimile signatures
shall be treated as originals.
DATED: May 20, 1997 VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC.
By: /s/ XXXXXXXX X. XXXXX
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Its: President/CEO
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DATED: May __, 1997 GSS/ARRAY TECHNOLOGY, INC.
By: /s/ [ILLEGIBLE]
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Its: Vice President Finance
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Exhibit A
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PURCHASE ORDERS FOR
WORK IN PROCESS INVENTORY
Purchase Order Quantity P.O. New
Number Model Remaining Price Price
-------------- ----- --------- ----- -----
3544 5210 965 $31.01 $34.11
3570 5250 264 $71.53 $78.68
3581 5210 5,000 $30.49 $33.54
3582-01 6308 4,750 $35.70 $39.27
3588 2010 1,000 $ 7.13 ea $ 7.84 ea
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Exhibit B
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PURCHASE ORDERS FOR
SOLD PRODUCTS
Purchase Order Model Quantity Unit Total
Number Number Remaining Price Value
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3545 5150A 5,000 units $21.90 $109,500.00
3616 5160 3,750 units $22.16 $ 83,100.00
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EXHIBIT C
MANUFACTURING EQUIPMENT
Stock No. DWG No. Description Tool Cost Vendor Art Number PO No.
| 171-0005-B 1710092-B Insulator, PCB NIL Decal
| 180-0137-A 1801372-A Label, Back, 0000 XXX Xxxxx 000-0000-X
| 180-0137-B 1801372-A LABEL, BACK, 0000X XXX Xxxxx 000-0000-X
| 180-0141-B 1801412-B POP Body Label NIL Decal 587-0009-B
See | 180-0159-A 1801392-A Label, LCD POP, 5160 NIL Decal 587-0055-A
Note < | 180-0163-A 1801372-B Label, Back, 0000 XXX Xxxxx 000-0000-X
"A" | 183-0208-B Quick Guide, 5150/5150A NIL Many 587-0002-B
Below | 183-0209-A WARRANTY CARD NIL Many 587-0013-A
| 183-0220-A Quick Guide, 6160 NIL Many 587-0084-A
| 185-0128-B Manual, 5150 NIL Many 587-0001-B
| 185-0128-C Manual, 5150A NIL Many 587-0001-C
| 185-0133-A Manual, 5160 NIL Many 587-0061-A
| 190-0116-B Giftbox, 5160 NIL Thai Packaging 587-0056-B
| 185-0110-A 1991102-A FIVE COLOR CLAMSHELL CD NIL Thai Packaging 587-0006-A
| Circuit Bd Cutting Tools $1,053.00 GSS 3600
| SMT Stencils $1,000.00 GSS 3600
| SMT Stencils, revised Board $1,000.00 GSS 3600
| Presses for Gluing Case $ 435.00 GSS 3600
| Crystal Soldering Fixture $ 220.00 GSS 3600
See Note | FCT#3 Test Fixtures $ 200.00 GSS 3500
"B" < | LCD Assembly Test Fixture $ 155.00 GSS 3600
| Clamshell Heat Seal Fixture $ 383.00 GSS 3503
| COB Tester Base $1,328.00 GSS 3599
| COB Double Sided Fixture $1,070.00 GSS 3599
| COB Electronics Tester, 5150 (2) NIL GSS
| COB Electronics Tester, 5150A (1) NIL GSS
| Fluke DMM #45 (3) $3,141.00 GSS 3589
| Xxxxxxxx, PM-668G Counlor (2) $1,000.00 GSS
NOTE A: GSS believes that all these items are in the possession of vendors,
and there shall be no warranty expressed or implied, to the condition
of these items, by GSS.
NOTE B: All these items are transferred to Purchaser, pursuant to Clause
2.2.5. of the agreement, on a ""AS IS" basis.
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Exhibit D
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PARTS FOR 5150/5160 OWNED BY VPTI
AT GSS/ARRAY
Item Part Number Quantity Cost Total
---- ----------- -------- ---- -----
1. Microprocessor Die (5150) PN 000-0000-00 3,300 $3.75 $12,375.00
3. Inductor .56uH PN 400-0001 18,980 $0.245 $ 4,650.10**
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Total $17,025.10
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**Subject to confirmation by GSS-Singapore that GSS holds these parts.
