EXHIBIT 10.5
OPTION TO PURCHASE
WHEREAS SunTrust Bank ("SUNTRUST") is a banking institution chartered
in the State of Georgia and registered and authorized to do business in the
State of Florida.
WHEREAS Hy-Tech Computer Systems, Inc. f/k/a Datasys USA, Incorporated
("HY-TECH") is a corporation organized and existing under the laws of the State
of Florida. Until on or about September 1999, Hy-Tech was known as Datasys USA,
Incorporated.
WHEREAS on or about October 2, 1998, Hy-Tech and The Huntington
National Bank entered into a business loan agreement. Attendant to and
contemplated by this business loan agreement were (1) a $1,000,000.00 promissory
note, (2) a commercial security agreement, and (3) guaranties executed by Xxxxx
X. Xxxxxxx ("XXXXXXX"), Xxxxxx X. Xxxxxxxx, Xx. ("XXXXXXXX"), and Xxxx X. XxXxxx
("XXXXXX").
WHEREAS on or about August 6, 1999, Hy-Tech and The Huntington National
Bank entered into another business loan agreement. Attendant to and contemplated
by this business loan agreement were (1) a $4,000,000.00 promissory note, (2) a
commercial security agreement, and (3) guaranties executed by Xxxxxxx, Xxxxxxxx,
and XxXxxx.
WHEREAS on or about August 20, 1999, Hy-Tech executed and delivered to
The Huntington National Bank, a $171,000.00 promissory note and a commercial
security agreement. Additionally, on or about August 20, 1999, Xxxxxxx, Xxxxxxxx
and XxXxxx executed their guaranties.
WHEREAS on or about February 2002, SunTrust acquired the Florida
operations of The Huntington National Bank, and, among other things, was
assigned and received the aforementioned business loan agreement, promissory
notes, commercial security agreements and guaranties. Accordingly, SunTrust is
the owner and holder of the promissory notes and is entitled to enforce the
business loan agreements, commercial security agreements and guaranties
referenced above.
WHEREAS on or about May 2, 2002, SunTrust and Hy-Tech, Conklin,
Frosceno, and XxXxxx, entered into a forbearance agreement that provided, among
other things, that SunTrust would forbear from enforcing its rights and remedies
under the August 6, 1999, business loan agreement, promissory note, commercial
security agreement, and guaranties until August 30, 2002, subject to Hy-Tech's
strict compliance with the terms and provisions of the forbearance agreement.
WHEREAS on or about August 30, 2002, SunTrust and Hy-Tech, Conklin,
Frosceno, and XxXxxx, entered into a second forbearance agreement that provided,
among other things, that SunTrust would forbear from enforcing its rights and
remedies under the August 6, 1999, business loan agreement, promissory note,
commercial security agreement, and guaranties until December 31, 2002, subject
to Hy-Tech's strict compliance with the terms and provisions of the second
forbearance agreement.
WHEREAS Hy-Tech failed to abide by the terms of the Second Forbearance
Agreement, by, among other things, failing to make scheduled payments on loans
due in August, September, and October and failing to meet certain borrowing base
requirements. By letters dated October 25, 2002, and October 28, 2002, Hy-Tech
requested and Plaintiff agreed to an interim forbearance of certain scheduled
payments due in November and from meeting borrowing base requirements until
December 2, 2002.
WHEREAS Hy-Tech failed to make the its loan payments on the promissory
notes and failed to meet its borrowing base requirements by December 2, 2002, an
event of default occurred under the forbearance agreement, the second
forbearance agreement, business loan agreements, commercial security agreements,
and guaranties. SunTrust sent formal notice thereof to Hy-Tech, Conklin,
Frosceno, and XxXxxx.
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WHEREAS Hy-Tech, Conklin, Frosceno, and XxXxxx, have failed to cure the
aforementioned defaults.
WHEREAS on or about December 20, 2002, SunTrust filed suit against
Hy-Tech, Xxxxxxx, Xxxxxxxx and XxXxxx in the Circuit Court of the Twentieth
Judicial Circuit In and For Xxx County, Florida, bearing case number
02-13848-ca-WCM.
WHEREAS on or about April 14, 2002, XxxXxxxx obtained a judgment in the
amount of $3,965,968.10 against Hy-Tech, Xxxxxxx and XxXxxx, a copy of which is
attached hereto as EXHIBIT A.
WHEREAS on or about April 14, 2002, SunTrust instituted the following
activities to collect its judgment:
Motion for Writ of Garnishment; ASTI Corp. as garnishee;
Motion for Writ of Garnishment; Chips Computers, as garnishee;
Motion for Writ of Garnishment; CIT Group, Inc. as garnishee;
Motion for Writ of Garnishment; Accutech Computer, Inc. as garnishee;
Motion for Writ of Garnishment; Go Ahead Enterprises, LLC as garnishee;
Motion for Writ of Garnishment; Colonial Bank as garnishee;
Motion for Writ of Garnishment; Bank of America as garnishee; and
Motion for Writ of Garnishment; Xxxx Xxxxxx Chevrolet as garnishee;
(collectively, the "GARNISHMENTS"). In addition, SunTrust has served depositions
in aid of execution on its judgment against shareholders (or spouses or
beneficiaries or shareholders) of stock of Hy-Test or HYTT (the "INSIDER
DEPOSITIONS").
WHEREAS on or about April 14, 2003, SunTrust Bank filed suit against
Hy-Tech Technology Group, INC.("HYTT"), Hy-Tech's corporate parent, in the
Circuit Court of the Twentieth Judicial Circuit In and For Xxx County, Florida,
bearing case number 03-1737-ca-XXX (the "HYTT LAWSUIT). (Collectively, the HYTT
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Lawsuit, the Garnishments and Insider Depositions shall be referred to herein as
the "POST-JUDGMENT ACTIONS").
WHEREAS HYTT would like to acquire the Judgment and SunTrust's right,
title and interest in the promissory notes, business loan agreements, commercial
security agreements and guarantees (collectively, the "HY-TECH ASSETS") on the
terms and conditions set forth herein.
WHEREAS SunTrust is willing to sell the Hy-Tech Assets to HYTT on the
terms and conditions set forth herein.
WHEREAS in connection with the purchase of the Hy-Tech Assets, HYTT
wants SunTrust to forbear from pursuing the Post-Judgment Actions, and SunTrust
is willing to do so under the terms and conditions set forth herein.
NOW THEREFORE
1. SunTrust is willing to sell, and HYTT is willing to buy, the Hy-Tech
Assets for One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
"PURCHASE PRICE") as set forth herein:
X. XXXX shall deliver to SunTrust by wire transfer, no later than 4:00
p.m. E.D.T. on Friday, April 25, 2003, the sum of One Million Dollars
($1,000,000.00), and payments of $65,000.00 on June 02, 2003, $65,000.00 on July
01, 2003, and $65,000.00 on August 01, 2003. These payments shall constitute a
non-refundable purchase of an option to purchase the Hy-Tech Assets. These
payments shall be considered part of the Purchase Price provided HYTT deliver
the balance of the Purchase Price to SunTrust by the earlier of (1) within three
business days of the date a registration statement is declared effective by the
Securities and Exchange Commission for HYTT or (2) August 29, 2003 (the "OUTSIDE
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CLOSING DATE"). Should HYTT have failed to deliver the balance of the Purchase
Price by the Outside Closing Date, this option will have lapsed.
B. At any time before the Outside Closing Date, HYTT shall elect to pay
the balance of the Purchase Price and close the Hy-Tech Asset assignment. To do
so, HYTT shall give SunTrust not less than three business days' written notice
of its election to close. The notice shall be given to Xxxxxxx X. Xxxxxxx Vice
President, Special Assets Department SunTrust Bank, Tampa Bay Mail Code FL -
Tampa 4104 000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx Xxxx Xxxxxx Xxx 0000 Xxxxx, Xxxxxxx
00000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx Xxxxxxx LLP
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
xxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
C. Upon receipt of the balance of the Purchase Price, SunTrust shall
deliver to HYTT an assignment of the Hy-Tech Assets with no representation and
warranties other than ownership, authority to transfer and lack of encumbrances.
D. The Hy-Tech Asset assignment closing shall occur at SunTrust's
counsel's office in Tampa, Florida or at such other location as is mutually
agreed.
2. XXXX agrees to ensure that : (a) HY-Tech Eligible Inventory and
HY-Tech Eligible Accounts Receivable (both as defined in the May 2, 2002,
Forbearance Agreement) aggregate at least Two Million Dollars ($2,00,000.00),
and (b) Sun-Trust continues to receive written certification (no later than 4:00
p.m. E.D.T. beginning on April 25, 2003 and continuing each Friday thereafter
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for the remaining term of this agreement) of Hy-Tech's Eligible Inventory and
Accounts Receivable. Should Sun-Trust not receive written certification, or
should Hy-Tech's Eligible Inventory and Accounts Receivable be less then $2.0
million, SunTrust shall be entitled to give notice by fax or e-mail to HYTT of
the defect and, if SunTrust does not (i) receive written confirmation by the
close of the third business day after notice is sent that Eligible Inventory and
Accounts Receivable are at least $2.0 million, OR (ii) receive the balance of
the Purchase Price by the close of the third business day after notice is sent,
then this Option Agreement and HYTT's right to purchase the Hy-Tech Assets
hereunder are immediately and irrevocably terminated without further notice.
3. Notwithstanding anything else in this document to the contrary, if
Hy-Tech or HYTT files for protection under federal bankruptcy law, or an order
for relief is entered in any involuntary bankruptcy filed against Hy-Tech or
HYTT, or Hy-Tech or HYTT executes an assignment for the benefit of creditors,
then this Option Agreement and HYTT's right to purchase the Hy-Tech Assets
hereunder are immediately and irrevocably terminated without further notice
UNLESS HYTT closes on the sale of the Hy-Tech Assets not more than three (3)
business days from the date Hy-Tech files bankruptcy, has an order for relief
entered against it, or executes an assignment for the benefit of creditors.
4. Upon receipt of, and in return for, the one million dollar
($1,000,000.00) payment referenced in paragraph 1(A) above, SunTrust agrees that
it shall dismiss WITHOUT PREJUDICE the HYTT Lawsuit, shall release the
Garnishments that have been served and shall not serve any Garnishments not
already served, and shall continue the Insider Depositions for so long as this
Option Agreement and HYTT's rights to purchase the Hy-Tech Assets hereunder has
not been terminated
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5. Time is of the essence in performing all of the obligations set
forth herein.
HY-TECH TECHNOLOGY GROUP, INC. SUNTRUST BANK
By: By:
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Print Name: Xxxxxxx X. Xxxxxxx
---------------------
Its: Vice President, Special Assets
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Dated: April ___, 2003 Dated: April ___, 2003
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