EXHIBIT 10.02
WORKOUT AGREEMENT
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of
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SILICON VALLEY RESEARCH, INC.
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This Workout Agreement ("Agreement") is made between Silicon Valley
Research, Inc. ("Debtor") and each of the creditors of the Debtor which executes
a Consent in the form attached hereto as Exhibit A (individually, a Creditor
and, collectively, the "Creditors").
RECITALS
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A. As of November 1, 1998 ("Workout Date"), the Debtor is indebted to the
holders of unsecured claims totaling approximately $340,000.
B. The Debtor convened a meeting on November 19, 1998, to which all of
its unsecured creditors were invited. At that meeting, the management of Debtor
discussed the Debtor's financial condition and its future prospects. Subsequent
to that meeting, the creditors formed a committee of creditors ("Committee")
which is currently composed of the following Creditors:
Creditor Name Representative
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Flying Beyond, Inc. ▇▇▇▇ ▇▇▇▇▇
Advanta Business Services Corp. ▇▇▇▇ ▇▇▇▇▇▇
C. Thereafter, the Debtor met with the Committee and a plan for
restructuring of the obligations of the Debtor was agreed upon between the
Debtor and the Committee. This Agreement embodies such agreement. The Committee
supports this Agreement and recommends that the creditors participate in the
debt restructuring proposed by this Agreement.
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Article I
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DESCRIPTION AND DETERMINATION OF CLAIMS
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1.1 Claims Treated Under This Agreement. Except as otherwise provided
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herein, claims subject to this Agreement ("Unsecured Claims") shall include all
unsecured claims against the Debtor which existed on the Workout Date. Unsecured
Claims shall include (a) all unsecured claims arising under leases or executory
contracts entered into prior to the Workout Date except to the extent of the
reasonable value of the use of goods, services or space actually used or
occupied by the Debtor after the Workout Date and (b) interest, late charges and
other amounts accruing on or before the Workout Date. Unsecured Claims shall not
include those claims described in Exhibit B hereto ("Schedule of Excluded
Claims") or an amendment to such Schedule B which is delivered to the Committee
by the Debtor on or before the Effective Date.
1.2 Designation of Claim Amount by Creditor. Upon execution of a Consent,
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each Creditor shall state thereon the amount of its Unsecured Claim. Such
Unsecured Claim shall not include any interest, late charges or similar amounts
accruing after the Workout Date, all of which accruals shall be deemed waived by
the execution of the Consent, except for those Creditors with previous
stipulations and/or workout agreements which provide for treatment similar to
Distribution Alternative 1 as set forth in Article 2.2(a) hereof. Further, with
respect to such Creditors, the terms of any such previous stipulations and/or
workout agreements shall remain in full force and effect not withstanding
anything to the contrary set forth herein.
1.3 Delivery of Consent. The Creditor shall deliver such Consent to CMA
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at the address or facsimile number shown thereon. CMA shall note on each Consent
the date it is received and shall immediately transmit a copy of such Consent to
the Debtor.
1.4 Notice of Dispute. Not later than the later of (a) the Effective Date
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or (b) thirty days after receipt of the copy of each Consent from CMA, if the
Debtor
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disputes all or any portion of the Unsecured Claim asserted by a Creditor in its
Consent, the Debtor shall transmit written notice to the Creditor stating the
amount thereof that is disputed. Provided, however, the amount acknowledged and
agreed to be due and owing from the Debtor to any Creditor under the terms of
any previous stipulations and/or workout agreement shall be binding upon the
Debtor and may not be disputed under this Agreement.
1.5 Determination of Allowed Claim. If the Debtor gives timely notice of
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dispute of an Unsecured Claim, the portion of such claim which the Debtor
disputes shall be deemed a "Disputed Claim." Any Unsecured Claim, or portion
thereof, which the Debtor does not timely dispute shall be deemed an Allowed
Claim.
1.6 Treatment of Disputed Claims.
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(a) Resolution Through Arbitration. The allowability of each Disputed
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Claim shall be determined by either (i) agreement between the Debtor and the
Creditor or (ii) binding arbitration pursuant to the Commercial Arbitration
Rules of the American Arbitration Association upon demand submitted to the
Association by either party. The award of the arbitrator in such proceeding
shall be a declaration only of the amount of the Creditor's Allowed Claim under
this Agreement and shall specify that it may be satisfied only in accordance
with this Agreement. The allocation of the cost of such arbitration (including
the fees, if any, of the arbitrator) shall be determined by the arbitrator in
the award.
(b) Reserve for Disputed Claims. At the time when any distribution is
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to be made to the holders of Allowed Claims, the Disbursing Agent shall withhold
an amount equal to the distribution that would have been made on all Disputed
Claims if they had been Allowed Claims at the time of the distribution. The
Disbursing Agent shall hold such amount in an interest bearing, federally
insured deposit account ("Claims Reserve") pending resolution of the Disputed
Claim as provided herein.
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(c) Distributions on Disputed Claims. Not later than thirty days
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after the Disbursing Agent receives written notice that the allowability of a
Disputed Claim is resolved, the Disbursing Agent shall pay to the Creditor
holding such claim, from the Claims Reserve, (a) the portion of the
distributions that were withheld on account of the Disputed Claim to which the
holder thereof is entitled as a result of resolution of the Disputed Claim and
(b) the interest accrued in the Claims Reserve on account of such portion. The
portion of such distributions to which the holder is not entitled shall be
returned to the Debtor.
Article II
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TREATMENT OF CLAIMS
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2.1 Acceptance of Agreement; Consideration. By execution of their
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Consents, the Creditors accept this Agreement and the treatments set forth
herein. The treatment provided to Unsecured Claims in this Agreement shall
supercede and replace all such Unsecured Claims, except those Creditors with
previous stipulations and/or workout agreements which provide for treatment
similar to Distribution Alternative 1 as set forth in Article 2.2(a) hereof.
Further, with respect to such Creditors, the terms of any such previous
stipulations and/or workout agreements shall remain in full force and effect not
withstanding anything to the contrary set forth herein. The Creditors accept
this Agreement for valuable consideration, receipt of which is hereby
acknowledged; such consideration includes the promises of the Debtor herein and
the powers granted to the Committee.
2.2 Distribution Alternatives.
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(a) All Creditors holding Allowed Claims shall be entitled to elect
("Alternative 1") to receive on account of such claims cash
payments totaling 15% of such claims in the manner set forth in
Article 3.1 hereof
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in exchange for a one-year stay on the remaining balance. The 15%
payment will decrease the indebtedness and interest will accrue
at the rate of 10% on the remaining balance. The Creditor will
agree to suspend any and all collection activities for one year.
(b) All Creditors holding Allowed Claims shall be entitled to elect
("Alternative 2") to receive on account of such claims cash
payments totaling 30% of such claims in the manner set forth in
Article 3.1 hereof and the Creditor will forgive the remaining
balance. The Debtor will receive a complete release from the
Creditor.
Article III
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DISTRIBUTIONS
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3.1 Distributions to Creditors. Upon receipt of all consents and
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verification by the Debtor and the Committee, the Disbursing Agent shall make
distributions to the Creditors based upon the distribution election chosen on
the consent.
3.2 Return of Excess Funds. After all claims are satisfied in full, the
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Disbursing Agent shall return to the Debtor all funds remaining in the Claims
Reserve.
Article IV
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EFFECTIVE DATE
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4.1 Acceptance of Creditors. This Agreement shall become effective only
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if it is accepted by the holders of 95% or more in dollar amount of Unsecured
Claims or by such lower percentage to which the Debtor agrees. In determining
such percentage, Unsecured Claims held by creditors who do not submit Consents
shall be deemed to be in the amounts shown in the Debtor's books and records.
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4.2 Definition of Effective Date. The "Effective Date" of this Agreement
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shall be the day on which the Disbursing Agent certifies that the required
percentage of acceptances has been received in accordance with Article 4.1
hereof.
Article V
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COVENANTS
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5.1 Affirmative Covenants. Until the obligations of the Debtor under the
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claims are satisfied in full, unless the Committee agrees otherwise, the Debtor
shall:
(a) Continuation of Relationships. Continue to conduct business with
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Creditors to the extent that the prices, service, product availability, and
quality of performance by such Creditors are comparable to those available to
the Debtor generally and to the extent this covenant is not prohibited by
antitrust or other applicable law, governmental regulations, or requirements of
customers of the Debtor.
(b) Maintenance of Books and Records. Maintain its books and records
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according to generally accepted accounting principles applied on a consistent
basis.
(c) Payment of Taxes. Promptly pay all taxes, fees, levies and
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charges due and payable to any public authority as they accrue, except to the
extent such nonpayment is due to a bona fide dispute as to liability therefor.
5.2 Negative Covenants. Until the obligations of the Debtor under the
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claims are satisfied in full, unless the Committee agrees otherwise, the Debtor
shall not:
(a) Payments Outside Agreement. Make any payment on any Unsecured
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Claim other than according to the treatments set forth in this Agreement.
(b) Distributions To Shareholders. Declare or pay any dividend or
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make any distribution in cash or in kind with respect to any of its capital
stock or take any action to authorize any such dividend or distribution.
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(c) Redemption of Stock. Purchase, redeem, retire or otherwise
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acquire for value any of its capital stock.
(d) Loans to Others. Make any loan in any amount to any person or
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entity other than travel, expense and/or similar advances made in the ordinary
course of business to existing or prospective employees.
(e) Guaranties. Become obligated as a surety or guarantor on behalf
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of any other person or entity except in the ordinary course of business.
5.3 Confidentiality of Information. The Committee acknowledges that
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substantial portions of the information provided to it may be confidential
information of the Debtor, and the Committee shall safeguard the confidentiality
of all information designated by the Debtor as confidential and shall not,
without the prior written consent of the Debtor, disclose any information so
designated to any third party other than its attorneys.
Article VI
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DEFAULT AND REMEDIES
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6.1 Events of Default. It shall be an "Event of Default" hereunder if (a)
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the Debtor fails to make any payment required hereby within ten days after the
due date thereof; (b) the Debtor fails to perform any other of its obligations
hereunder; or (c) the Debtor fails to make any payment and/or fails to perform
any other obligation under the terms of any previous stipulation and/or workout
agreement with any Creditor.
6.2 Remedies on Default. Upon the occurrence of an Event of Default and
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so long as such Event of Default is continuing, the Committee may, at its
election, give notice of such default to the Debtor. The notice shall specify
the Event(s) of Default on which such notice is based. If such Event of Default
is a failure to make any payment required hereby, the Debtor shall have not more
than ten (10) days after giving of such notice to cure such Event of Default. If
such Event of Default is due to a failure to
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perform any other of its obligations hereunder, the Debtor shall have not more
than thirty (30) days to cure such Event of Default. If the Debtor fails to cure
such Event of Default within the foregoing periods, the Committee may declare
the entire balance of claims immediately due and payable and exercise all
remedies available to it and the Creditors hereunder and applicable law. In such
event, (a) Creditors may individually pursue their rights and remedies pursuant
to applicable law, and (b) no further notices need be given to the Debtor other
than such notices as are required by applicable law. Provided, further, upon the
occurance of an Event of Default under any previous stipulation and/or workout
agreement, the Creditor may immediately pursue any and all remedies available
under such previous stipulation, workout agreement and/or under applicable law.
Article VII
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COMMITTEE AND DISBURSING AGENT
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7.1 Authority of the Committee. The Committee shall continue to
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represent all Creditors. The Creditors authorize the Committee to act for them,
directly and agents, in all matters related to this Agreement, including the
modification of any terms, conditions, or covenants hereof or thereof. Creditors
shall be bound by all decisions made and actions taken or directed by the
Committee, and neither the Committee nor any of its members shall be liable to
any Creditor for any action taken or not taken by it or them in good faith.
7.2 Resignation and Replacement of Committee Members. In the event that
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one or more members of the Committee shall resign or otherwise become unable to
serve, the remaining members may select replacements from those Creditors
willing to serve. In addition, the Committee may authorize the addition of
Creditors to the Committee and elect the representative of any Creditor serving
on the Committee to
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serve as the Chair of the Committee. The Debtor shall be given prompt notice of
any changes in the composition of the Committee.
7.3 Expenses of the Committee. The Debtor shall pay all reasonable
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expenses incurred by the Committee and the Disbursing Agent in the performance
of their duties under this Agreement, including reasonable attorney fees, upon
presentation of appropriate evidence thereof. The Debtor shall not, however, be
required to pay any fee to a member of the Committee for service on the
Committee.
7.4 Procedure for Committee Action. Any decision of the Committee to take
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any action or give any consent shall be made by majority vote of the members of
the Committee. Such action or consent shall be effectively communicated to the
Debtor or any third party if communicated in a writing signed by the members of
the Committee, and the Debtor shall be entitled to rely on any communication
from the members of the Committee.
7.5 Appointment of Disbursing Agent. CMA shall be the disbursing agent
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("Disbursing Agent") under this Agreement and shall continue to serve in such
capacity until completion of its duties under this Agreement or until CMA
resigns or is removed. If CMA ceases to serve as Disbursing Agent, the Committee
shall have the authority to appoint a replacement Disbursing Agent.
7.6 Duties of Disbursing Agent. The Disbursing Agent shall make the
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distributions required under this Agreement and shall perform all duties
incident thereto that the Disbursing Agent is instructed to perform by the
Committee including, but not limited to, maintenance of the Claims Reserve and
records identifying claims and the names and addresses of Creditors. The
Disbursing Agent shall keep the Claims Reserve as a segregated account. As to
all matters relating to the performance of its duties hereunder, the Disbursing
Agent shall be acting as agent for the Creditors. The Disbursing Agent shall be
entitled to rely on instructions received from the Committee, except that
determination of the amounts of Allowed Claims shall be made in
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accordance with Article 1.5 hereof. The duties of the Disbursing Agent shall be
ministerial only, and neither the Disbursing Agent nor any of its officers,
directors or agents shall be liable to any Creditor for any action taken or not
taken by it or them in good faith.
7.7 Fees and Expenses of the Disbursing Agent. As compensation for its
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services, the Disbursing Agent shall receive a fee of 5% of the first $100,000
distributed and 3% of distributions of the next $100,000 to $1 million, or a
minimum fee of $5,000, whichever is greater. The fee is due and payable at the
time the funds are distributed to unsecured creditors. In addition, the Debtor
shall reimburse the Disbursing Agent, when requested by the Disbursing Agent,
for its reasonable expenses of performing its services, including but not
limited to reimbursement for postage, photocopy, telephone, facsimile, and
travel expenses.
Article VIII
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GENERAL PROVISIONS
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8.1 Governing Law. This Agreement and all controversies relating to the
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subject matter hereof shall be governed by and determined in accordance with the
laws of the State of California without application of any conflict of laws
rules or principles that would refer such controversy to the law of any other
jurisdiction.
8.2 All notices, requests, or other communications required or permitted
under this Agreement shall be effective only if in writing and delivered
personally, by overnight courier, or by facsimile transmission, addressed as
follows:
If to the Debtor, to:
Silicon Valley Research, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President and Chief
Executive Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Lincoln Brooks, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Committee, to:
Advanta Business Services Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Flying Beyond, Inc.
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to CMA, to:
Credit Managers Association
of California
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to particular Creditors shall be addressed and delivered to the
addresses or facsimile numbers shown on their Consents. Each party may change
its address or facsimile notice by giving notice of such change in the manner
specified in this section. Notice shall be deemed effectively given at the time
it is received if given by personal delivery or overnight courier or at the time
shown on the transmittal confirmation of the sender's facsimile machine if given
by facsimile transmission.
8.3 Counterparts. This Agreement, when executed by the Debtor and the
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Committee, and the Consents, when executed by Creditors, shall constitute a
single agreement.
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8.4 Captions. The captions used in this Agreement are for the convenience
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of the parties, and shall not be utilized to construe or interpret the
provisions of this Agreement.
8.5 Entire Agreement. Except as otherwise provided herein, this Agreement
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and the Consents shall constitute the entire agreement of the Debtor, the
Creditors and the Committee, and supersede and replace all prior and
contemporaneous agreements, documents, or understandings, whether written or
oral. All such prior and contemporaneous oral agreements and understandings
shall have no legal effect. Notwithstanding anything herein to the contrary, all
of the terms, conditions and covenants set forth in any previous stipulation
and/or workout agreement by and between the Debtor and any Creditor shall remain
in full force and effect. Any such previous stipulation and/or workout agreement
shall be fully enforceable in accordance with its terms and, in the event of any
conflict between the terms of this Agreement and the terms of any such previous
stipulation and/or workout agreement, the terms of such previous stipulation
and/or workout agreement shall prevail.
IN WITNESS WHEREOF, the Debtor and the Committee have executed this
Agreement as of the date written below and each Creditor shall be deemed to have
executed this Agreement by execution of a Consent.
Dated: ________________ SILICON VALLEY RESEARCH, INC.
By: ___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO
Committee of Creditors of
SILICON VALLEY RESEARCH, INC.
By: _______________________________
▇▇▇▇ ▇▇▇▇▇▇, Advanta Business
Services
By: _______________________________
▇▇▇▇ ▇▇▇▇▇, Flying Beyond, Inc.
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Exhibit A
SILICON VALLEY RESEARCH, INC.
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WORKOUT AGREEMENT
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CONSENT
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The undersigned Creditor ("Creditor") hereby accepts all of the terms and
conditions of the Workout Agreement of Silicon Valley Research, Inc. ("Debtor"),
dated ________, 1999 ("Workout Agreement"). I certify that I have read the
Workout Agreement and understand all of its terms, including the provisions that
(a) the cash and other benefits I receive will be in full satisfaction of my
Unsecured Claim (as defined in the Workout Agreement) and (b) the Committee is
authorized to act on my behalf in connection with all matters related to my
Unsecured Claim, including the modification of the terms of the Workout
Agreement.
I further certify that, as of November 1, 1998, the amount of my Unsecured
Claim is $__________. [I certify that this amount does not include any interest,
late charges, attorney fees, or the like which was incurred after November 1,
1998, except for those Creditors with previous workout agreements electing
Distribution Alternative 1.]
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Legal Name of Creditor..................... _______________________________
Signature of Creditor or Authorized
Representative............................. _______________________________
Printed or Typed Name of Person Signing.... _______________________________
Title of Person Signing.................... _______________________________
Address of Creditor........................ _______________________________
_______________________________
Telephone Number........................... _______________________________
Facsimile Number........................... _______________________________
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Alternative 1:
I hereby make the distribution election under Article 2.2(a) to receive on
account of my Allowed Claim cash payments totaling 15% of such claim in the
manner set forth in Article 3.1 hereof in exchange for a one-year stay on the
remaining balance. The 15% payment will decrease the indebtedness and interest
will accrue at the rate of 10% on the remaining balance. The Creditor will
suspend any and all collection activities for one year.
Initials [____]
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Alternative 2:
I hereby make the distribution election under Article 2.2(b) to receive on
account of my Allowed Claims cash payments totaling 30% of such claims in the
manner set forth in Article 3.1 hereof and the Creditor will forgive the
remaining balance. The Debtor will receive a complete release from the Creditor.
Initials [____]
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PLEASE SIGN AND RETURN TO: CREDIT MANAGERS ASSOCIATION OF CALIFORNIA
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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Exhibit B
SILICON VALLEY RESEARCH, INC..
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WORKOUT AGREEMENT
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Schedule of Excluded Claims
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The claims of the following persons and entities shall not be included in
the Unsecured Claims subject to this workout agreement, notwithstanding their
existence on the Workout Date:
1. Accrued salaries, wages, vacation pay, and similar benefits payable to
employees employed by the Debtor on the date of the Workout Agreement, and
all employment taxes relating thereto.
2. Insurance premiums and other amounts payable with respect to the Debtor's
life and health insurance policies which are in force on the Effective
Date.
3. Accrued utility charges for gas, electricity, telephone, waste disposal,
and other similar services.
4. Reimbursement of out-of-pocket expenses incurred by employees and
directors.
5. Personal property tax claims
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