Execution Copy
ADVANCE FORMULA AGREEMENT
THIS AGREEMENT is made this day of July, 1997, by Enercorp, Inc.
("Debtor") to COMERICA BANK ("Bank"), a Michigan banking corporation of ▇▇▇
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For and in consideration of the loans and other credit which Debtor may
now or hereafter obtain or request from Bank which are secured pursuant to a
Security Agreement dated July , 1997 ("Security Agreement"), and for other good
and valuable consideration, Debtor agrees as follows:
1. FORMULA LOANS. The credit which Bank may now or hereafter extend to
Debtor subject to the limitations of this Agreement and to the
conditions and limitations of any other agreement between Debtor and
Bank is identified as follows:
$2,250,000 secured, demand line of credit
and any extensions, renewals or substitutions, whether in a greater or
lesser amount, including any letters of credit issued thereunder ("Formula
Loans").
2. ADVANCE FORMULA. Debtor warrants and agrees that Debtor's indebtedness
to Bank for the Formula Loans shall never exceed the sum of:
(a) fifty percent (50%) of the market value (as determined by the Bank
from time to time) of Eligible Securities consisting of shares of
the common stock of ▇▇▇▇▇▇▇▇ Controls; and
(b) the lesser of (i) fifty percent (50%) of the market value (as
determined by the Bank from time to time) of Eligible Securities
consisting of shares of the common stock of Ajay Sports, Inc. and
(ii) Four Hundred Thousand Dollars ($400,000).
"Eligible Securities" shall mean securities owned by the Debtor in which
the Bank has a first priority security interest and which are not subject to
other liens or encumbrances.
3. FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are
exceeded at any time, Debtor shall, within five days of demand by Bank,
at Debtor's option, either (a) pay Bank sums sufficient to reduce the
Formula Loans by the amount of such excess, or, (b) provide to Bank
additional Eligible Securities consisting of common stock of ▇▇▇▇▇▇▇▇
Controls and Ajay Sports, Inc. so that the provisions of paragraph 2
will be complied with. In addition, if Bank in its sole discretion
shall so agree, Debtor may provide Bank additional collateral in the
form of cash or other property with a value, as determined by Bank,
that when added to the elements set forth in paragraph 2 will
constitute compliance with said limitations.
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4. INSPECTIONS; COMPLIANCE. Debtor shall permit Bank and its designees
from time to time to make such inspections and audits, and to obtain
such confirmations or other information, with respect to any of the
Collateral as Bank is entitled to make or obtain under the Security
Agreement, and shall reimburse Bank on demand for all costs and
expenses incurred by Bank in connection with such inspections and
audits. Debtor shall further comply with all of the other terms and
conditions of the Security Agreement.
5. DEFAULT. Any failure by Debtor to comply with this Agreement shall
constitute a default under the Formula Loans and under the Security
Agreement and the Indebtedness, as defined therein.
6. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or
terminated only in writing duly executed by Debtor and Bank. No delay
by Bank in requiring Debtor's compliance herewith shall constitute a
waiver of such right. The rights granted to Bank hereunder are
cumulative, and in addition to any other rights Bank may have by
agreement or under applicable law. This Agreement shall supersede and
replace in their entirety any prior advance formula agreements in
effect between Bank and Debtor.
7. DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary
set forth in this Agreement, in the event that the Formula Loans are at
any time on a demand basis, Debtor hereby acknowledge and agree that
the formula set forth in paragraph 2 hereof is merely for advisory and
guidance purposes and Bank shall not be obligated to make any loans or
advances under the Formula Loans, and, notwithstanding the terms of
paragraph 3 above, Bank may at any time, at its option, demand payment
of any or all of the Formula Loans, whereupon the same shall become due
and payable.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
Chief Executive Office Address: DEBTOR:
ENERCORP, INC.
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By:
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Its:
Accepted and Approved:
COMERICA BANK
By:
Its: