<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY , 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STERILE RECOVERIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
FLORIDA 7213 59-3252632
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
28100 U.S. HIGHWAY 19 NORTH, SUITE 201
CLEARWATER, FLORIDA 34621
(813) 726-4421
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JAMES T. BOOSALES
EXECUTIVE VICE PRESIDENT
STERILE RECOVERIES, INC.
28100 U.S. HIGHWAY 19 NORTH, SUITE 201
CLEARWATER, FLORIDA 34621
(813) 726-4421
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
DAVID S. FELMAN ROBERT J. GRAMMIG
GLENN RASMUSSEN & FOGARTY, P.A. HOLLAND & KNIGHT
100 SOUTH ASHLEY DRIVE, SUITE 1300 400 NORTH ASHLEY DRIVE, SUITE 2300
TAMPA, FLORIDA 33602 TAMPA, FLORIDA 33602
(813) 229-3333 (813) 227-8500
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(d) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value..... 2,300,000 $12.00 $27,600,000 $9,518
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</TABLE>
(1) Includes 300,000 shares of Common Stock that might be purchased by the
underwriters to cover overallotments, if any.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Section 6(b) of the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
STERILE RECOVERIES, INC.
CROSS-REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED IN FORM S-1
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION OR CAPTION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Cover Page of the Registration Statement;
Cross-Reference Sheet; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors, and
Ratio of Earnings to Fixed Charges....... Prospectus Summary; The Company; Risk
Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Outside Front Cover Page of Prospectus;
Underwriting; Risk Factors
6. Dilution................................... Dilution
7. Selling Security Holders................... Principal Shareholders
8. Plan of Distribution....................... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to be
Registered............................... Outside Front Cover Page of Prospectus;
Description of Capital Stock
10. Interests of Named Experts and Counsel..... Legal Matters
11. Information with Respect to the
Registrant............................... Cover Page of the Registration Statement;
Prospectus Summary; Risk Factors; The
Company; Use of Proceeds; Dividend
Policy; Dilution; Capitalization;
Selected Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Principal
Shareholders; Certain Transactions;
Description of Capital Stock; Shares
Eligible for Future Sale; Underwriting;
Legal Matters; Experts; Financial
Statements; Available Information
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
</TABLE>
i
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
ANY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS
2,000,000 SHARES
STERILE RECOVERIES, INC.
COMMON STOCK
------------------------
All of the 2,000,000 shares of Common Stock are being offered by Sterile
Recoveries, Inc. Prior to the offering, there has been no public market for the
Common Stock. It is currently estimated that the initial public offering price
will be between $10.00 and $12.00 per share. See "Underwriting" for information
relating to the determination of the initial public offering price.
The Company has applied for inclusion of the Common Stock on the Nasdaq
National Market under the symbol "STRC".
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED
UNDER THE CAPTION "RISK FACTORS" AT PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE PROCEEDS
TO TO
PUBLIC UNDERWRITING COMPANY(2)
DISCOUNTS AND
COMMISSIONS(1)
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<S> <C> <C> <C>
Per Share............................................ $ $ $
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Total(3)............................................. $ $ $
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</TABLE>
(1) The Company and certain shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting offering expenses estimated at $850,000, all of which are
payable by the Company.
(3) The Company and certain shareholders have granted the Underwriters a 30-day
option to purchase up to 300,000 additional shares of Common Stock on the
same terms and conditions set forth above to cover over-allotments, if any.
If the Underwriters exercise this over-allotment option in full, the total
Price to Public will be $ , the total Underwriting Discounts and
Commissions will be $ , the total Proceeds to Company will be
$ , and the total proceeds to these shareholders will be
$ . See "Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as, and if delivered to and accepted by the Underwriters
and subject to their right to reject orders in whole or in part. It is expected
that delivery of the certificates representing the shares of Common Stock will
be made on or about , 1996, through the Depository Trust Company or
at the offices of Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin.
ROBERT W. BAIRD & CO. RAYMOND JAMES & ASSOCIATES, INC.
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 4
[DIAGRAM SHOWING IN A CIRCLE THE FOUR
PRINCIPAL ELEMENTS OF THE COMPANY'S REPROCESSING OPERATION]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Financial Statements (including the Notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise stated, the information in this
Prospectus does not give effect to the exercise of the Underwriters'
over-allotment option. Except if the context otherwise requires, the terms "SRI"
and the "Company" as used in this Prospectus refer to Sterile Recoveries, Inc.,
a Florida corporation.
THE COMPANY
SRI provides hospitals and surgery centers with a comprehensive surgical
procedure-based delivery and retrieval service for reusable gowns, towels,
drapes, and basins and provides other disposable products necessary for surgery.
At seven regional facilities, SRI collects, sorts, cleans, inspects, packages,
sterilizes, and delivers its reusable products on a just-in-time basis. SRI
offers an integrated "closed-loop" reprocessing service that uses two of the
most technologically advanced reusable textiles: (i) a GORE(R) Surgical Barrier
Fabric for gowns and drapes that is breathable yet liquidproof and provides a
viral/bacterial barrier and (ii) an advanced microfiber polyester surgical
fabric for gowns and drapes that is liquid and bacterial resistant. The Company
believes that its reusable surgical products made from these fabrics provide
protection and comfort that are superior to the disposable alternatives.
The Company currently serves a growing customer base of approximately 200
hospitals and surgery centers located in 17 states, including Duke University
Medical Center (Durham), Henry Ford Hospital (Detroit), Johns Hopkins Bayview
Medical Center (Baltimore), St. Luke's Episcopal Hospital (Houston), Jackson
Memorial Hospital (Miami), LDS Hospital (Salt Lake City), and Hospital of the
Good Samaritan (Los Angeles). The Company's comprehensive delivery and retrieval
service enables its customers to outsource a costly and burdensome function to
SRI.
The Company believes that its reusable surgical product delivery and
retrieval service is a superior and competitively priced alternative to
disposable surgical products or to operating an in-house reusable program for
surgical products. The Company's delivery service offers savings to hospitals by
reducing the costs associated with: (i) the disposal of biohazardous wastes,
(ii) carrying an inventory of disposable surgical products, and (iii) in-house
processing of reusable surgical products. In addition to these cost savings, the
Company's liquidproof or liquid resistant gowns offer surgeons and surgical
staff enhanced protection against transmission of blood-borne pathogens,
including the HIV and hepatitis viruses. The Company believes that a service
that provides daily delivery of substantially better quality surgical products
without any capital investment, thereby reducing employee and space needs,
should become an attractive managed care option for hospitals.
Several developments have created a market opportunity for the kind of cost
competitive reusable surgical product delivery and retrieval services SRI
offers. These factors include: increasing pressure on hospitals to contain costs
and increase productivity; heightened concern regarding the transmission of
infectious diseases; concern regarding the handling and disposal of biohazardous
waste; and increased outsourcing of hospital functions that do not involve
patient care.
The Company's objective is to continue its growth and become a leading
provider of reusable surgical products and related delivery and retrieval
services to hospitals and surgery centers. The Company's principal strategies
for achieving this objective are as follows: (i) employ superior operational
knowledge; (ii) leverage infrastructure with increased penetration in existing
markets; (iii) decentralize operations to facilities; (iv) add facilities in
selected markets; (v) expand national and regional agreements; and (vi) become a
preferred vendor through competitive pricing and expanded service solutions.
SRI purchased the assets of its business from a subsidiary of AMSCO
International, Inc. ("AMSCO") on July 31, 1994 (the "Acquisition"). Between 1991
and 1993, AMSCO made significant capital investments to construct and refine the
"closed-loop" delivery and retrieval process currently used by SRI. SRI believes
that AMSCO invested approximately $100 million in the business prior to the
sale. The Company believes that its predecessor's expenditures of time, money,
and effort to develop the reprocessing system represent a significant barrier to
future competition and provide the foundation for the Company's further growth.
Since the Acquisition, SRI has reduced its variable cost by more
efficiently servicing increased sales levels with reduced labor hours. From
December 31, 1995 to March 31, 1996, the Company has retained in excess of 85%
of its customers and increased its average daily revenues by approximately 32%.
3
<PAGE> 6
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIVE MONTHS THREE MONTHS
ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
------------ ------------- ------------------------------
1994(1) 1995(1) 1995 1996
------------ ------------- ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Reusable surgical products service.... $ 9,285 $24,753 $ 5,796 $ 6,896
Disposable surgical products.......... -- 567 21 434
------------ ------------- ------------ ---------------
Total revenues...................... 9,285 25,320 5,817 7,330
Cost of revenues...................... 6,550 17,659 4,181 5,024
------------ ------------- ------------ ---------------
Gross profit........................ 2,735 7,661 1,636 2,306
Distribution expenses................. 1,032 2,801 694 722
Selling and administrative expenses... 2,162 3,975 1,014 1,067
------------ ------------- ------------ ---------------
Income (loss) from operations....... (459) 885 (72) 517
Interest expense...................... 735 1,489 379 347
------------ ------------- ------------ ---------------
Net income (loss)................... $ (1,194) $ (604) $ (451) $ 170
============ ============ ============ ==============
Pro forma net income (loss)(2)........ $ (1,194) $ (604) $ (451) $ 170
============ ============ ============ ==============
Pro forma net income (loss) per common
share(2)(3)......................... $ (0.34) $ (0.17) $ (0.13) $ 0.05
============ ============ ============ ==============
Weighted average common shares
outstanding......................... 3,513 3,513 3,513 3,513
OPERATING DATA:
EBITDA................................ $ 85 $ 2,069 $ 204 $ 885
Average daily revenue(4).............. 87 100 91 115
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------
ACTUAL AS ADJUSTED(5)
------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Reusable surgical products............ $ 5,413 $ 5,413
Total assets.......................... 15,635 24,587
Total indebtedness.................... 11,790 1,134
Shareholders' equity.................. 1,211 20,821
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995 1995 1995 1995 1996
--------- ------------ ------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
QUARTERLY STATEMENT OF OPERATIONS DATA:
Reusable surgical products service.... $ 5,796 $6,025 $ 6,307 $6,625 $6,896
Disposable surgical products.......... 21 38 220 288 434
--------- ------------ ------------- ------------ -------
Total revenues...................... 5,817 6,063 6,527 6,913 7,330
Costs of revenues..................... 4,181 4,222 4,464 4,792 5,024
--------- ------------ ------------- ------------ -------
Gross profit........................ 1,636 1,841 2,063 2,121 2,306
Distribution expenses................. 694 691 690 726 722
Selling and administrative expenses... 1,014 1,011 962 988 1,067
--------- ------------ ------------- ------------ -------
Income (loss) from operations....... (72) 139 411 407 517
Interest expense...................... 379 374 371 365 347
--------- ------------ ------------- ------------ -------
Net income (loss)................... $ (451) $ (235) $ 40 $ 42 $ 170
--------- ------------ ------------- ------------ -------
Pro forma net income(loss)(2)......... $ (451) $ (235) $ 40 $ 42 $ 170
========= ============ ============ ============ ==============
Pro forma net income (loss) per common
share(2)(3)......................... $ (0.13) $(0.07) $ 0.01 $ 0.01 $ 0.05
========= ============ ============ ============ ==============
Weighted average common shares
outstanding......................... 3,513 3,513 3,513 3,513 3,513
OPERATING DATA:
EBITDA................................ $ 204 $ 423 $ 713 $ 729 $ 885
Average daily revenue(4).............. 91 95 104 110 115
</TABLE>
4
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,000,000 shares
Common Stock to be outstanding after
the Offering............................... 5,367,089 shares(6)
Use of Proceeds.............................. For repayment of debt, capital expenditures,
working capital, and general corporate
purposes.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol....... STRC
</TABLE>
- ---------------
(1) The Company operates on a 52-53 week fiscal year ending the Sunday nearest
December 31.
(2) As an S Corporation for federal income tax purposes, the Company has not
been subject to corporate income tax. On a pro forma basis, assuming the
Company had been subject to corporate income tax for all periods presented,
the Company would not have recognized any corporate income tax in the
relevant periods. See Notes B and K of Notes to Financial Statements.
(3) Supplemental pro forma net income per common share for the year ended
December 31, 1995 and the three months ended March 31, 1996, giving effect
to the payment of debt from a portion of the offering's proceeds and the
increased number of shares, is $0.18 and $0.11 per common share (assuming
4,508 and 4,412 weighted average common shares outstanding). See "Use of
Proceeds."
(4) Average daily revenue is calculated by dividing revenues for the period by
the number of days the facilities were in operation during the period,
which is generally 254 days per year and 63 or 64 days for a quarter.
(5) Adjusted to reflect the sale of 2,000,000 shares of Common Stock being
offered by the Company hereby (assuming an initial public offering price of
$11.00) and the application of the net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
(6) Excludes 180,000 shares of Common Stock issuable upon exercise of
outstanding stock options, 219,500 shares of Common Stock issuable on
exercise of options to be granted immediately on the completion of the
offering, and 128,205 shares of Common Stock issuable on partial conversion
of a Convertible Demand Promissory Note dated March 1, 1996, of the Company
(which is not redeemable).
GORE(R) is a registered trademark of W.L. Gore & Associates, Inc.
5
<PAGE> 8
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, as well as the other information set forth in this Prospectus.
SALES PROCESS AND MARKET ACCEPTANCE OF PRODUCTS AND SERVICES
The Company's future performance depends on its ability to sell its
products and services to new and existing customers. The Company's sales process
for new customers is typically between six and twelve months in duration from
initial contact to purchase commitment. The extended sales process is typically
due to the complicated approval process within hospitals for purchases from new
suppliers, the long duration of existing supply contracts, and implementation
delays pending termination of a hospital's previous supply relationships. The
long sales process inhibits the ability of the Company to quickly increase sales
to new and existing customers or enter new markets.
SRI's future performance will also depend on market acceptance of its
combination of reusable surgical products and direct delivery and retrieval
service. SRI's market is now dominated by disposable products, and the Company's
strategic emphasis on reusable surgical products and reprocessing services
requires its customers to change their customary purchasing patterns. There is
no assurance that a significant portion of the market will shift from disposable
products to the Company's reusable surgical products and reprocessing services.
The Company's inability to gain wider market acceptance of its reusable products
and reprocessing services would have a material adverse effect on the Company's
operating and expansion plans. See "Business -- The Market."
COMPETITION
The Company's business is highly competitive. The Company's competitors
include a large number of distributors and manufacturers, as well as the
in-house reprocessing operations of hospitals. Certain of the Company's existing
and potential competitors possess substantially greater resources than the
Company, and the Company's market is dominated by their disposable products.
Some of the Company's competitors, including Baxter International Inc., serve as
the sole supplier of a wide assortment of products to a significant number of
hospitals. The Company does not provide an array of products as complete as
those provided by some of its competitors, which in some instances is a
competitive disadvantage. There is no assurance that the Company will be able to
compete effectively with existing or potential competitors. See "Business --
Competition."
LIMITED OPERATING HISTORY AND HISTORICAL LOSSES
The Company's predecessor, AMSCO Sterile Recoveries, Inc. ("Amsco
Sterile"), began operations in 1991 and was acquired by SRI on July 31, 1994.
Accordingly, the Company's business has only a short operating history. SRI's
predecessor incurred an accumulated deficit of approximately $50 million in
starting and initially operating the business. Additionally, for the five months
ended December 31, 1994, and the fiscal year ended December 31, 1995, the
Company had net losses of approximately $1.2 million and $600,000, respectively.
There is no assurance that the Company will operate profitably in the future.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
DEPENDENCE ON A SIGNIFICANT CUSTOMER AND MARKET CONSOLIDATION
During 1995 and the first quarter of 1996, Columbia/HCA Healthcare
Corporation ("Columbia") hospitals with which the Company currently does
business accounted for approximately 12% and 15% of SRI's sales, respectively.
Although each Columbia hospital currently makes its purchasing decisions on an
individual basis, and no single hospital accounted for more than 3% of the
Company's sales, the Company believes that the executive management of Columbia
has the ability to influence the selection of particular vendors. The loss of a
substantial portion of the Columbia hospitals' business would have a material
adverse effect on the Company. Additionally, hospitals are increasingly buying
products and services in groups to improve efficiency
6
<PAGE> 9
and lower costs. Although SRI is increasingly targeting these groups for its
sales efforts, a change of its customers' purchasing patterns to group
purchasing could have a material adverse effect on the Company. See
"Business -- Customers."
DEPENDENCE ON KEY EXECUTIVES
The Company is largely dependent upon the management expertise and
experience of Richard T. Isel, James T. Boosales, Bertram T. Martin, Jr., and
Wayne R. Peterson, its principal officers. Mr. Isel underwent heart bypass
surgery in March 1996, and although he has returned to work on a part-time
basis, there is no assurance that his condition will permit him to provide the
same level of service to the Company that he provided before his surgery. The
loss of the services of one or more of these key employees could have a material
adverse effect on the Company. The Company has purchased $1.0 million key man
life insurance policies on the lives of each of Messrs. Isel, Boosales, and
Peterson, and a policy will be purchased on the life of Mr. Martin before the
offering. There is no assurance that this insurance will be maintained or
available in the future or that the amount of insurance would adequately
compensate the Company for the loss of services of any of these executives. See
"Management."
INCREASING REPLACEMENT AND AMORTIZATION COSTS
SRI acquired its equipment and surgical products at a cost that is
substantially below both their original cost and current replacement cost, which
has resulted in lower depreciation, amortization, and shrinkage expense for
those assets since the Acquisition, as compared to the expenses incurred by
Amsco Sterile. Since the Acquisition, SRI has purchased equipment and surgical
products at current replacement cost, resulting in increased depreciation,
amortization, and shrinkage expense. SRI amortizes its reusable surgical
products on a per use basis. If the products' actual number of uses proves to be
shorter than SRI's current estimates, SRI's annual product amortization expense
would increase, which would adversely affect its profitability. The amount of
shrinkage (loss and scrap of reusable surgical products) experienced by the
Company is influenced by a variety of factors including the customers' surgical
product rotation and operating room control procedures, the Company's internal
tracking of reusable surgical products through bar coding and the Company's
increased use of standardized surgical packs. Since the Acquisition, because the
replacement cost of reusable surgical products is substantially higher than the
cost of the surgical products acquired from Amsco Sterile, the amount of
shrinkage may increase, which could adversely affect the profitability of the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" and Note B of Notes to Financial Statements.
NEED FOR CAPITAL
The Company's business is capital intensive and will require substantial
capital expenditures for additional surgical products and equipment during the
next several years to achieve its operating and expansion plans. The Company's
inability to obtain adequate capital could have a material adverse effect on the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
DEPENDENCE ON A KEY SUPPLIER
A significant percentage of the Company's business is dependent upon its
ability to obtain the GORE Surgical Barrier Fabric from W.L. Gore & Associates,
Inc. This material is a key component of SRI's liquidproof surgical gowns, which
accounted for approximately 17% of its revenues in fiscal year 1995. The Company
does not have a long-term commitment from W.L. Gore & Associates, Inc. for the
supply of this fabric and is currently unaware of any equivalent substitute for
the GORE product. Sustained loss of this supply relationship would have a
material adverse effect on the Company. See "Business -- Products."
7
<PAGE> 10
GOVERNMENT REGULATION
Substantially all of the Company's products and services are subject to
extensive government regulation in the United States by federal, state and local
governmental agencies, including the Food and Drug Administration (the "FDA"),
the Department of Transportation ("DOT"), and the Occupational Safety and Health
Administration ("OSHA"). The process of obtaining and maintaining required
regulatory approvals is lengthy, expensive, and uncertain, and regulatory
agencies can delay or prevent product introductions or license renewals. Failure
to comply with applicable regulatory requirements can result in fines, civil and
criminal penalties, stop sale orders, loss or denial of approvals and recalls or
seizures of products. Changes in existing regulations, changes in
interpretations of existing regulations, or the adoption of new regulations
could have a material adverse effect on the Company. See
"Business -- Regulation."
HEALTH CARE REFORM
Numerous proposals have been debated in Congress and in several state
legislatures regarding health care legislation intended to control the cost and
availability of health care services. It is not possible to determine what
health care reform legislation will be adopted by Congress or any state
legislature, or if and when any such legislation will be adopted and implemented
by regulations. In that event, there can be no assurance that the Company will
be able to adjust effectively to any regulatory changes made by future health
care reform legislation and remain profitable. The Company is unable to predict
accurately the nature and effect, if any, that the adoption of health care
legislation or regulations or changing interpretations at the federal or state
level would have upon the Company. See "Business -- Regulation."
PRODUCT LIABILITY AND INSURANCE COVERAGE
The use of the Company's products entails a risk of liability from injuries
suffered by patients, hospital staff, and the Company's employees. The Company's
products are used in connection with surgery, which exposes all of the above
persons to risks of transmission of blood-borne pathogens, including the HIV and
hepatitis viruses. Although no claims have been asserted to date, product
liability or other claims might be asserted against the Company by persons who
allege that the use of the Company's products resulted in injury or other
adverse effects, and the claims might involve large amounts of alleged damages
and significant defense costs. Although the Company currently maintains product
liability and workers compensation insurance, the liability limits or the scope
of the Company's insurance policies might be inadequate to protect against
potential claims. In addition, the Company's insurance policies must be renewed
annually. The Company has been able to obtain product liability insurance in the
past; however this insurance varies in cost, might be difficult to obtain, and
might not be available on commercially reasonable terms in the future. A
successful claim against the Company in excess of its available insurance
coverage could have a material adverse effect on the Company. In addition, the
Company's business reputation could be adversely affected by product liability
claims, regardless of their merit or eventual outcome.
VOTING CONTROL BY MANAGEMENT AND ANTI-TAKEOVER PROVISIONS
Upon the conclusion of the offering, directors and executive officers of
the Company, as a group, will beneficially own approximately 60.1% of the
Company's outstanding Common Stock (approximately 55.8% if the Underwriters'
over-allotment option is exercised in full). As a result, these shareholders
will have sufficient voting power to control the outcome of shareholder votes,
including votes concerning the election of directors, the adoption or amendment
of provisions in the Company's Articles of Incorporation or Bylaws, and the
approval of any sale or merger of the Company and other significant corporate
transactions. This could have the effect of delaying, deferring or preventing a
change of control of the Company, including transactions in which holders of the
Common Stock might otherwise receive a premium for their shares over
then-current market prices.
Purchasers in the offering will become minority shareholders of the Company
and will be unable to control the management or business policies of the
Company. Moreover, subject to general fiduciary
8
<PAGE> 11
obligations, the Company is not prohibited from engaging in transactions with
management and principal shareholders, or with entities in which such persons
are interested.
Florida law and the Company's Bylaws and Articles of Incorporation contain
provisions that might have the effect of inhibiting a non-negotiated merger or
other business combination. These provisions are intended to encourage a person
interested in acquiring the Company to negotiate with, and obtain the approval
of, the Board of Directors in connection with the transaction. However, certain
of these provisions might discourage a future acquisition of the Company,
including an acquisition in which shareholders otherwise might receive a premium
for their shares. Further, certain provisions of the Company's employment
agreements and employee benefit plans might also render any such business
combination more costly and therefore less probable. In addition, the Board of
Directors has the authority to issue shares of Preferred Stock and fix its
rights and preferences, which could have the effect of delaying or preventing a
change of control. See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, the Company will have outstanding
5,367,089 shares of Common Stock (5,517,089 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, 2,000,000 shares
sold in the offering (2,300,000 shares if the Underwriters' over-allotment
option is exercised in full) will be freely tradeable by persons other than
affiliates of the Company, without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"). The remaining
3,367,089 shares of Common Stock (3,217,089 shares if the Underwriters'
over-allotment option is exercised in full) will be "restricted" securities
within the meaning of Rule 144 under the Securities Act, and cannot be sold
unless an exemption from registration is available, including the exemption
contained in Rule 144. Beginning 90 days after the date of this Prospectus,
approximately 3,100,000 shares will be eligible for public sale subject to the
volume and other limitations of Rule 144. However, the holders of all of those
shares have agreed not to sell or otherwise dispose of their shares for a period
ending 180 days after the date of this Prospectus without the prior written
consent of the Representatives of the Underwriters. The sale of a substantial
number of shares of Common Stock could adversely affect the market price of the
Common Stock. See "Shares Eligible for Future Sale."
NO PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF SHARE PRICE
Prior to the offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market will
develop or continue after the offering, or that the market price of the Common
Stock will not decline below the initial public offering price. The initial
public offering price was determined by negotiation between the Company and the
Underwriters based on several factors and might not be indicative of the market
price for the Common Stock after the offering. See "Underwriting."
The Company believes that various factors, such as general economic
conditions and changes or volatility in financial markets, changing conditions
in the health care industry or health care reform, and quarterly or annual
variations in the Company's financial results, some of which are unrelated to
the Company's performance, could cause the market price of the Company's Common
Stock to fluctuate substantially.
DILUTION
Purchasers in the offering will incur immediate dilution in the tangible
book value of the Common Stock of $7.22 per share. Additional dilution is likely
to occur on the exercise of options and conversion of the Convertible Note. See
"Dilution" and "Certain Transactions."
9
<PAGE> 12
THE COMPANY
SRI provides hospitals and surgery centers with a comprehensive surgical
procedure-based delivery and retrieval service for reusable gowns, towels,
drapes, and basins and provides other disposable products necessary for surgery.
At seven regional facilities, SRI collects, sorts, cleans, inspects, packages,
sterilizes, and delivers its reusable products on a just-in-time basis. SRI
offers an integrated "closed-loop" reprocessing service that uses two of the
most technologically advanced reusable textiles: (i) a GORE Surgical Barrier
Fabric for gowns and drapes that is breathable yet liquidproof and provides a
viral/bacterial barrier and (ii) an advanced microfiber polyester surgical
fabric for gowns and drapes that is liquid and bacterial resistant. The Company
believes that its reusable surgical products made from these fabrics provide
protection and comfort that are superior to disposable alternatives.
The Company currently serves a growing customer base of approximately 200
hospitals and surgery centers located in 17 states, including Duke University
Medical Center (Durham), Henry Ford Hospital (Detroit), Johns Hopkins Bayview
Medical Center (Baltimore), St. Luke's Episcopal Hospital (Houston), Jackson
Memorial Hospital (Miami), LDS Hospital (Salt Lake City), and Hospital of the
Good Samaritan (Los Angeles). The Company's comprehensive delivery and retrieval
service enables its customers to outsource a costly and burdensome function to
SRI and receive superior surgical products and service at a competitive cost.
ORIGIN OF THE BUSINESS -- AMSCO'S INVESTMENT
In 1991, Richard T. Isel, SRI's co-founder and Chief Executive Officer,
became aware of new surgical fabrics that led to the formation of Sterile
Recoveries, Inc. Mr. Isel, who previously founded Sterile Design, Inc. in 1979
to develop and market sterile disposable custom procedure trays, believed that
SRI could improve on custom procedure trays by responding to the needs of
hospitals and surgery centers to reduce costs, curtail biohazardous waste, and
improve the protection and comfort of surgeons and surgical staff during
surgery. To fund the significant capital requirements for fabric, equipment, and
infrastructure required for the new concept, Mr. Isel and Wayne R. Peterson
formed an alliance with AMSCO. In September 1991, the new company became a
subsidiary of AMSCO named AMSCO Sterile Recoveries, Inc.
Amsco Sterile designed and built nine state-of-the-art processing
facilities in 1992 and 1993. During these two years, Amsco Sterile developed and
subsequently refined the washing and sterilizing system that serves as the
foundation for the Company's current closed-loop system. Amsco Sterile spent
considerable resources to create a reprocessing system that would meet the
significant logistical challenges of efficiently collecting, sorting, cleaning,
inspecting, packaging, sterilizing, and delivering an assortment of surgical
products to a dispersed customer base on a just-in-time basis. The primary
challenge was to effectively clean and sterilize soiled gowns and other sewn
goods while preserving the products' liquid resistance and breathability over
their maximum potential useful lives. SRI believes that Amsco Sterile invested
approximately $100 million in the business before its sale, including
approximately $70 million in capital expenditures to construct, purchase and
install equipment and stock the nine facilities from 1991 through 1994, and
approximately $30 million to fund operating losses. SRI believes that its
predecessor's expenditures of time, money, and effort to develop the
reprocessing system have allowed SRI's current management to gain valuable
experience and represent significant barriers for potential competitors.
Amsco Sterile incurred substantial losses that resulted in the sale of its
assets to SRI on July 31, 1994. SRI believes that AMSCO made several operational
and strategic decisions that impaired the growth of Amsco Sterile and
contributed to the magnitude of these losses. The new facilities were built
without a sufficient customer base and Amsco Sterile experienced a delay in
obtaining FDA pre-market approval of the products after significant expenditures
had already been made. Additionally, AMSCO sought to integrate the business into
its own centralized operations rather than build the reprocessing service as a
separate self-sustaining business. Amsco Sterile also relied on AMSCO's existing
sales force, which was dedicated principally to selling AMSCO's institutional
sterilization equipment and emphasized volume over profitability. Finally, AMSCO
limited the product offering to reusable products only, which prevented Amsco
Sterile from offering customers a full solution to their surgical products
needs.
10
<PAGE> 13
Due to differences in management philosophy, AMSCO removed Mr. Isel as
President of Amsco Sterile in November 1993, and reassigned Mr. Peterson to a
planning role. Continued losses caused Amsco Sterile to close three facilities
in early 1994. In May 1994 AMSCO approached Mr. Isel about buying the business.
THE ACQUISITION
Mr. Isel and Mr. Peterson formed SRI and purchased substantially all the
assets of Amsco Sterile for $15.3 million, including $1.5 million of assets that
were sold to a third party. Concurrently, James T. Boosales invested in the
Company and joined the management team as an Executive Vice President and the
principal financial officer. The assets retained by SRI included eight of the
nine facilities developed by Amsco Sterile (one owned, seven leased) and all of
its surgical products inventory and operating equipment relating to the retained
facilities. SRI's processing facilities are currently underutilized and provide
the capacity to support significant growth for SRI's new and existing customers.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operation" and Note C of Notes to Financial Statements.
Since acquiring the business from Amsco Sterile, SRI has changed its
business strategy and operations to overcome the operating problems experienced
by Amsco Sterile. Using the substantial management expertise developed before
the Acquisition, SRI management has designed and implemented standard operating
procedures at each facility, decentralized its management by promoting or
recruiting facility general managers who are accountable for both sales and
profitability, and imposed increased financial discipline. As a result, the
Company has improved its operating efficiency, reduced service costs, and
standardized its delivery and reprocessing service. Since the Acquisition, SRI
has reduced its variable cost by more efficiently servicing greater sales levels
with reduced labor hours. From December 31, 1995 to March 31, 1996, the Company
has retained approximately 90% of its customers and increased its average daily
revenues by approximately 32%.
RECENT DEVELOPMENTS
On February 26, 1996, the Company acquired Surgipro, Inc., an Orlando-based
provider of disposable surgical products. This acquisition has enhanced SRI's
ability to offer flexible, tailored solutions to its customers' surgical supply
needs by supplementing its reusable surgical product delivery and retrieval
service with disposable accessory packs, which contain disposable items, such as
needles, sutures, syringes, and tubing for surgical procedures.
To further strengthen the management team, Bertram T. Martin, Jr., a
director and a shareholder of the Company, will become Executive Vice President
and Chief Operating Officer on the consummation of the offering. Prior to
joining SRI, Mr. Martin assisted in formulating the initial business plan in
1991 and has served as a financial consultant to the Company.
The Company's executive offices are located at 28100 U.S. Highway 19 North,
Suite 201, Clearwater, Florida 34621, and its telephone number is (813)
726-4421.
11
<PAGE> 14
USE OF PROCEEDS
The net proceeds from the sale of 2,000,000 shares of Common Stock offered
by the Company (assuming an offering price of $11.00 per share), after deducting
the estimated underwriting discounts and commissions and offering expenses
payable by the Company, are estimated to be $19.6 million ($21.1 million if the
Underwriters' overallotment option is exercised in full).
The Company intends to use approximately $11.1 million of the net proceeds
to repay indebtedness, including approximately $8.4 million of debt owed to
Amsco Sterile and $2.7 million of debt owed to a lender. The Amsco Sterile debt
was incurred to finance the Acquisition, matures in August 1997, and accrues
interest at a variable rate equal to the prime rate plus 1.5%. The debt owed to
a lender matures in January 1997 and accrues interest at a base lending rate
plus 2.0%. The balance of the net proceeds will be used for working capital and
general corporate purposes, including the purchase of more reusable surgical
products and equipment to expand SRI's existing operations. Although it does not
have any current plans, the Company might use part of the proceeds to acquire
businesses, technologies, or products complementary to the Company's business or
to develop additional facilities in new locations. Pending application, the
proceeds will be invested in short-term, investment grade securities or money
market instruments. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock.
The Company currently expects that all of its earnings will be retained for
development and expansion of its business and does not anticipate paying
dividends on its Common Stock in the foreseeable future. Any payment of
dividends in the future will be at the sole discretion of the Company's Board of
Directors and will depend on, among other things, future earnings, contractual
restrictions, capital requirements, the general financial condition of the
Company, and general business conditions. Additionally, financial covenants in
the Company's credit facility prohibit the payment of cash dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
12
<PAGE> 15
DILUTION
The net tangible book value of the Company as of March 31, 1996, was
$674,459, or $.20 per share of Common Stock. Net tangible book value per share
represents the amount of the Company's tangible net worth (total tangible assets
less total liabilities), divided by the number of shares of Common Stock
outstanding. After giving effect to the sale of 2,000,000 shares of Common Stock
by the Company in the offering (assuming an initial public offering price of $11
per share) and the application of the net proceeds therefrom (after deduction of
estimated offering expenses to be paid by the Company), the pro forma net
tangible book value of the Company as of March 31, 1996, would have been
approximately $20.3 million or $3.78 per share of Common Stock. This represents
an immediate increase in pro forma net tangible book value of $3.58 per share to
current shareholders and an immediate dilution of $7.22 per share to purchasers
of shares in the offering. The following table illustrates the per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $11.00
Net tangible book value per share before offering......................... $0.20
Increase per share attributable to new investors.......................... 3.58
-----
Pro forma net tangible book value per share after the offering.............. 3.78
------
Dilution to new investors................................................... $ 7.22
======
</TABLE>
The following table sets forth the number of shares purchased from the
Company, the total consideration paid, and the average price per share paid by
the Company's existing shareholders and to be paid by new investors in the
offering (assuming an initial public offering price of $11.00 per share) and
before deduction of estimated underwriting discounts and commissions:
<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders................. 3,367,089 62.7% $ 2,838,500 11.4% $ 0.84
New investors......................... 2,000,000 37.3 22,000,000 88.6 11.00
--------- ------- ----------- -------
Total....................... 5,367,089 100.0% $24,838,500 100.0%
======== ===== ========== =====
</TABLE>
- ---------------
(1) Excludes 180,000 shares of Common Stock issuable on the exercise of
outstanding stock options, an aggregate of 219,500 shares of Common Stock
issuable on the exercise of stock options to be granted upon the completion
of the offering, and 128,205 shares of Common Stock issuable on partial
conversion of the Convertible Note. See "Management -- Stock Option Plans;"
and "Certain Transactions." Exercise of outstanding stock options and
conversion of the Convertible Note will result in further dilution to
investors in the offering.
13
<PAGE> 16
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
March 31, 1996, and (ii) as adjusted to reflect the application of the net
proceeds from the issuance and sale by the Company of 2,000,000 shares of Common
Stock in the offering. See "Use of Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Notes payable -- working capital loan facility....................... $ 1,975 $ --
Notes payable -- related parties..................................... 1,134 1,134
Acquisition debt..................................................... 8,681 --
Shareholders' equity
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; no
shares issued and outstanding................................... -- --
Common Stock, $0.001 par value, 30,000,000 shares authorized;
3,367,089 shares issued and outstanding; 5,367,089 shares as
adjusted(1)..................................................... 3 5
Additional paid-in capital......................................... 2,835 22,443
Accumulated deficit................................................ (1,627) (1,627)
------- -----------
Total shareholders' equity...................................... 1,211 20,821
------- -----------
Total capitalization.......................................... $13,001 $21,955
======= =========
</TABLE>
- ---------------
(1) Excludes 180,000 shares of Common Stock issuable upon the exercise of
outstanding stock options, an aggregate of 219,500 shares of Common Stock
issuable upon the exercise of stock options to be granted upon the
completion of the offering, and 128,205 shares of Common Stock issuable on
partial conversion of the Convertible Note.
14
<PAGE> 17
SELECTED FINANCIAL DATA
The following table contains certain selected financial data and is
qualified by the more detailed Financial Statements and Notes thereto included
elsewhere in this Prospectus. The selected financial data for the five months
ended December 31, 1994, and the fiscal year ended December 31, 1995, have been
derived from the Company's audited financial statements. The selected financial
data (statement of income data only) set forth below for the fiscal year ended
December 31, 1993, and the seven months ended July 31, 1994, have been derived
from audited financial statements of Amsco Sterile (the predecessor company).
The selected financial data set forth below for the three months ended March 31,
1995 and 1996 have been derived from the unaudited financial statements of the
Company, which include all adjustments that the Company considers necessary for
a fair presentation of the results of operation for the periods presented.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the full year ended December
31, 1996. The selected financial data for the years ended December 31, 1991 and
1992 and Balance Sheet Data as of December 31, 1993 and July 31, 1994 have been
derived from the unaudited statements of operations and balance sheets of Amsco
Sterile exclusive of notes thereto, which include all adjustments that Amsco
Sterile considers necessary for a fair presentation of its results of operation
and financial position for the periods presented. The following information
should be read in conjunction with the Financial Statements and Notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
STERILE RECOVERIES, INC.(1)
-------------------------------------------------
PREDECESSOR COMPANY(1)
------------------------------------------ FIVE MONTHS
SEVEN MONTHS ENDED THREE MONTHS
ENDED DECEMBER YEAR ENDED ENDED
YEARS ENDED DECEMBER 31, JULY 31, 31, DECEMBER 31, MARCH 31,
--------------------------- ------------ ----------- ------------ -------------------
1991 1992 1993 1994 1994 1995 1995 1996
------ ------- -------- ------------ ----------- ------------ ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Reusable surgical products
service...................... $ -- $ 1,132 $ 7,988 $ 12,069 $ 9,285 $ 24,752 $ 5,796 $ 6,896
Disposable surgical products... -- -- -- -- -- 568 21 434
------ ------- -------- ------------ ----------- ------------ ------- -------
Total revenues............... -- 1,132 7,988 12,069 9,285 25,320 5,817 7,330
Cost of revenues............... -- 684 15,090 14,091 6,550 17,659 4,181 5,024
------ ------- -------- ------------ ----------- ------------ ------- -------
Gross profit (loss).......... -- 448 (7,102) (2,022) 2,735 7,661 1,636 2,306
Distribution expenses.......... -- -- 981 1,309 1,032 2,801 694 722
Selling and administrative
expenses..................... 578 7,638 12,132 7,375 2,162 3,975 1,014 1,067
Restructuring expenses......... -- -- 1,550 -- -- -- -- --
Income (loss) from
operations................. -- (7,190) (21,765) (10,706) (459) 885 (72) 517
Interest expense............... -- 1,536 5,727 4,791 735 1,489 379 347
------ ------- -------- ------------ ----------- ------------ ------- -------
(578) (8,726) (27,492) (15,497) (1,194) (604) (451) 170
Income tax expense............. -- -- -- -- -- -- -- --
------ ------- -------- ------------ ----------- ------------ ------- -------
Net income (loss)............ $ (578) $(8,726) $(27,492) $(15,497) $(1,194) $ (604) $ (451) $ 170
====== ======= ======== =========== ========== ========== ======= =======
Pro forma net income
(loss)(2).................... $(1,194) $ (604) $ (451) $ 170
========== ========== ======= =======
Pro forma net income (loss)
per common share(2)(3)....... $ (0.34) $ (0.17) $ (0.13) $ (0.05)
========== ========== ======= =======
Weighted average common shares
outstanding.................. 3,513 3,513 3,513 3,513
BALANCE SHEET DATA:
Reusable surgical products..... $ -- $18,344 $ 31,226 $ 32,836 $ 4,867 $ 4,824 $ 4,722 $ 5,413
Total assets................... 1,997 43,999 63,871 67,651 13,388 13,493 12,913 15,635
Total indebtedness............. 2,021 49,156 96,088 115,841 11,942 10,891 11,925 11,790
Shareholders' equity
(deficit).................... 1,422 (7,304) (34,796) (50,293) (182) 214 (634) 1,211
</TABLE>
- ---------------
(1) The table covers periods before and after the Company acquired its business
from Amsco Sterile on July 31, 1994. A comparison of the Company's operating
results for the periods after the Acquisition to the operating results
before the Acquisition is not meaningful. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview."
(2) As an S Corporation for federal income tax purposes, the Company has not
been subject to income tax. On a pro forma basis, assuming the Company had
been subject to income tax for all periods presented, the Company would not
have recognized any corporate income tax in the relevant periods. See Notes
B and K of Notes to Financial Statements.
(3) Supplemental pro forma net income per common share for the year ended
December 31, 1995 and the three months ended March 31, 1996, giving effect
to the payment of debt from a portion of the offering's proceeds and the
increased number of shares, is $0.18 and $0.11 per common share (assuming
4,508 and 4,412 weighted average common shares outstanding). See "Use of
Proceeds."
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Financial Statements and the Notes thereto included elsewhere in
this Prospectus.
OVERVIEW
This discussion and analysis covers periods before and after the Company
acquired its business from Amsco Sterile on July 31, 1994. A comparison of the
Company's operating results for the periods after the Acquisition to the
operating results for the periods before the Acquisition is not meaningful for
several reasons. Amsco Sterile incurred a significant amount of debt and costs
to start up and develop the business. SRI believes that Amsco Sterile expended
approximately $100 million in the business before the Acquisition, comprising
approximately $70 million to construct, equip, and stock nine facilities and
approximately $30 million to fund operating losses (excluding depreciation,
amortization and interest). SRI purchased eight of the nine facilities and all
of Amsco Sterile's depreciated equipment and surgical products inventory for
approximately 17% of their net book value. Consequently, SRI has one fewer
facility, less debt, and considerably lower depreciation and amortization
expense than Amsco Sterile. In addition, the Company has significantly changed
the business operations since the Acquisition. See "The Company" and Note C of
Notes to Financial Statements.
The Company's revenues are derived from providing hospitals and surgery
centers with reusable gowns, towels, drapes, and basins for use in surgical
procedures through a "closed-loop" delivery and retrieval service and also from
the sale of disposable surgical products that supplement its reusable surgical
product service. The Company's revenue growth is primarily affected by the
number of customers, the number and type of surgical procedures that it services
for each customer, and the pricing by type of surgical pack.
A useful comparison of annual revenues requires combining the revenues of
Amsco Sterile for the seven months ended July 31, 1994, with the revenues of the
Company for the five months ended December 31, 1994. The Company's revenues
increased $3.9 million, or 18.6%, to $25.3 million in 1995 from $21.4 million in
1994. On a combined basis, 1994 revenues increased $13.4 million, or 167.3%, to
$21.4 million from $8.0 million in 1993. In late 1994 and early 1995, SRI's
revenue growth slowed because of marketplace concerns regarding SRI's financial
condition after the Acquisition and management's focus on retaining existing
customers and implementing operating efficiencies to generate operating profits
in 1995.
The Company believes that its facilities currently operate at approximately
50% of their estimated aggregate annual revenue capacity of approximately $60
million. SRI believes that the aggregate revenue capacity can be further
increased to approximately $80 million with additional equipment expenditures of
approximately $300,000 in each of its five largest facilities. A primary
strategy of the Company is to increase its operating leverage by expanding
revenues within existing markets. See "Business -- Strategy."
During 1996, the Company has substantially increased its expenditures for
reusable surgical products, primarily to support anticipated increases in
business. To adequately service a new customer, SRI estimates that it makes an
investment in new reusable surgical products and carts equal to approximately
50% of the projected first year revenue from the customer. Until the beginning
of 1996, SRI used reserve stocks of reusable surgical fabrics and products that
it purchased in the Acquisition at a relatively low cost. With reserve stocks
almost fully utilized, SRI's capital expenditures for new carts and reusable
surgical products were $800,000 in the first quarter of 1996, compared to
$800,000 for all of fiscal year 1995. SRI estimates that its capital
expenditures for new carts and reusable surgical products will be approximately
$275,000 per month for the next 12 months, although the amount will fluctuate
depending on the growth rate of SRI's business. See "-- Liquidity and Capital
Resources."
The Company amortizes its reusable surgical products on a per use basis,
based on estimates of the products' useful lives. SRI's purchase of used
reusable surgical products in the Acquisition at approximately 17% of Amsco
Sterile's net book value has resulted in lower amortization expense since the
Acquisition. Purchases of new reusable surgical products at current cost (which
is significantly less than Amsco Sterile's
16
<PAGE> 19
original cost) will increase future amortization expense. See "Risk
Factors -- Increasing Replacement and Amortization Costs" and Note B of Notes to
Financial Statements.
The Company has been an S Corporation for state and federal income tax
purposes since its inception and accordingly, has not been subject to corporate
income taxes. On completion of the offering, the Company's S Corporation status
will terminate and the Company will become subject to corporate income taxes.
See Notes B and K of Notes to Financial Statements.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual future results will depend on a variety of
factors and circumstances, including those discussed in "Risk Factors" at the
beginning of this Prospectus.
QUARTERLY RESULTS
The following table presents unaudited quarterly operating results for the
Company for 1995 and the first quarter of 1996. The data have been derived by
the Company from the Financial Statements included elsewhere in this Prospectus,
and include all adjustments, consisting of normal recurring accruals, that the
Company considers necessary for a fair presentation thereof. These operating
results are not necessarily indicative of the Company's future performance.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995 1995 1995 1995 1996
--------- -------- ------------- ------------ ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Reusable surgical products
service.......................... $ 5,796 $6,025 $ 6,307 $6,625 $ 6,896
Disposable surgical products....... 21 38 220 288 434
--------- -------- ------------- ------------ ---------
Total revenues................... 5,817 6,063 6,527 6,913 7,330
Costs of revenues.................. 4,181 4,222 4,464 4,792 5,024
--------- -------- ------------- ------------ ---------
Gross profit..................... 1,636 1,841 2,063 2,121 2,306
Distribution expenses.............. 694 691 690 726 722
Selling and administrative
expenses......................... 1,014 1,011 962 988 1,067
--------- -------- ------------- ------------ ---------
Income (loss) from
operations.................. (72) 139 411 407 517
Interest expense................... 379 374 371 365 347
--------- -------- ------------- ------------ ---------
Pro forma and historical net income
(loss)........................... $ (451) $ (235) $ 40 $ 42 $ 170
======= ====== ========== ========== =======
Pro forma net income (loss) per
share............................ $ (0.13) $(0.07) $ 0.01 $ 0.01 $ 0.05
======= ====== ========== ========== =======
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
revenues represented by certain items reflected in the statements of operations
of the Company and Amsco Sterile.
<TABLE>
<CAPTION>
STERILE RECOVERIES, INC.
PREDECESSOR COMPANY --------------------------------------------
--------------------------- THREE MONTHS
SEVEN MONTHS FIVE MONTHS ENDED
YEAR ENDED ENDED ENDED YEAR ENDED MARCH 31,
DECEMBER 31, JULY 31, DECEMBER 31, DECEMBER 31, --------------
1993 1994 1994 1995 1995 1996
------------ ------------ ------------ ------------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Reusable surgical products
service........................ 100.0% 100.0% 100.0% 97.8% 99.6% 94.1%
Disposable surgical products..... -- -- -- 2.2 0.4 5.9
------------ ------------ ------------ ------------ ------ -----
Total revenues.............. 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues................. 188.9 116.7 70.5 69.7 71.9 68.5
Gross profit................ (88.9) (16.7) 29.5 30.3 28.1 31.5
Distribution expenses............ 12.3 10.9 11.1 11.1 11.9 9.9
Selling and administrative
expenses....................... 151.9 61.1 23.3 15.7 17.4 14.6
Restructuring expense............ 19.4 -- -- -- -- --
Income (loss) from
operations................ (272.5) (88.7) (4.9) 3.5 (1.2) 7.0
Interest expense................. 71.7 39.7 7.9 5.9 6.5 4.7
Pro forma and historical net
income (loss).................. (344.2) (128.4) (12.8) (2.4) (7.7) 2.3
</TABLE>
17
<PAGE> 20
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Revenues. The Company's revenues increased $1.5 million, or 26.0%, to $7.3
million in the first quarter of 1996 from $5.8 million in the first quarter of
1995, primarily as a result of additional customers, an increase in sales to
existing customers, the reopening of the Raleigh facility in June 1995, and the
addition of disposable surgical products to supplement the Company's reusable
surgical products service in March 1995. The Company measures average daily
revenues to track its growth. Average daily revenues increased to $115,000 per
day in the first quarter of 1996 from $91,000 per day in the first quarter of
1995. Disposable surgical products contributed $413,000 of additional revenues
during the first quarter of 1996, as the Company's reusable surgical products
delivery and retrieval service provided 94.1% of revenues in the first quarter
of 1996 and 99.6% of revenues in the first quarter of 1995. Substantially all
the revenue from the sale of disposable products in both periods was
attributable to disposable products purchased from a third party vendor and
distributed to SRI customers under a joint marketing agreement.
Gross Profit. Gross profit increased $671,000, or 41.0%, to $2.3 million
in the first quarter of 1996 from $1.6 million in the first quarter of 1995.
Gross margin increased to 31.5% in the first quarter of 1996 from 28.1% in the
first quarter of 1995. The improvement in gross margin is largely attributable
to labor efficiencies in the pack room and the economies of scale associated
with spreading fixed costs over more revenues. These favorable developments were
partially offset by increased costs for amortization of reusable surgical
products and the Company's relatively lower gross margin on its distribution of
the third party vendor's disposable products. The Company expects the gross
margin on disposable surgical products to increase if Surgipro revenues
increase. However, the sale of disposable products will reduce the Company's
overall gross margin when combined with the higher gross margin on reusable
surgical product services.
Distribution Expenses. Distribution expenses increased $29,000, or 4.1%,
to $722,000 in the first quarter of 1996 from $694,000 in the first quarter of
1995. As a percentage of revenues, distribution expenses decreased to 9.9% in
the first quarter of 1996 from 11.9% in the first quarter of 1995. The Company
incurs distribution expenses both in transporting its reusable surgical products
locally and between the facility and outlying metropolitan areas. The
improvement in distribution expenses as a percentage of revenues resulted
primarily from efficiencies derived from delivering more volume over existing
routes and the reopening of the Raleigh facility.
Selling and Administrative Expenses. Selling and administrative expenses
increased $53,000, or 5.2%, to $1.1 million in the first quarter of 1996 from
$1.0 million in the first quarter of 1995. As a percentage of revenues, selling
and administrative expenses decreased to 14.6% in the first quarter of 1996 from
17.4% in the first quarter of 1995 due to the leveraging of fixed administrative
expenses over additional revenue. Administrative expenses will increase after
the offering with the addition of another executive officer and the expense
associated with being a public company.
Interest Expense. Interest expense decreased by $32,000, or 8.5%, to
$347,000 for the first quarter of 1996 from $379,000 in the first quarter of
1995, primarily as the result of a lower variable interest rate on its working
capital loan, conversion of a $1.0 million convertible note into Common Stock in
September 1995, and a $1.2 million reduction in the principal balance of the
Amsco Sterile note. As a percentage of revenues, interest expense decreased to
4.7% in the first quarter of 1996 from 6.5% in the first quarter of 1995.
Net Income. As a result of the foregoing, SRI's net income increased to
$170,000 for the first quarter of 1996, from a net loss of $451,000 in the first
quarter of 1995. As a percentage of revenues, net income in the first quarter of
1996 was 2.3% of revenues compared to a net loss of 7.7% of revenues in the
first quarter of 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO FIVE MONTHS ENDED DECEMBER 31, 1994
Revenues. Average daily revenues increased to $111,000 per day in December
1995 from $82,000 per day in August 1994. Average daily revenues increased to
$100,000 per day in fiscal year 1995 from $87,000 per day in the last five
months of 1994, primarily as a result of additional customers, an increase in
sales to existing
18
<PAGE> 21
customers, the addition of disposable surgical products to supplement the
Company's reusable surgical products service, and the Company reopening its
Raleigh facility in June 1995.
Gross Profit. As a percentage of revenues, gross profit increased to 30.3%
in 1995 from 29.5% in the last five months of 1994. The increase was due
primarily to leveraging of the facility infrastructure as average daily revenues
increased by 14.9% during this time period.
Distribution Expenses. As a percentage of revenues, distribution expenses
remained constant at 11.1% in 1995 and in the last five months of 1994.
Selling and Administrative Expenses. As a percentage of revenues, selling
and administrative expenses decreased to 15.7% in fiscal year 1995 from 23.3% in
the last five months of 1994 due to the leveraging of fixed administrative
expenses over additional revenues, a reduction in computer expenses incurred in
the transition following the Acquisition, and a reduction in corporate staff.
Interest Expense. As a percentage of revenues, interest expense decreased
to 5.9% in 1995 from 7.9% in the last five months of 1994. The decrease resulted
from a $400,000 reduction in the average outstanding balance of the Company's
working capital loan from the last five months of 1994 to fiscal year 1995, the
conversions of a $1.0 million convertible note into Common Stock in September
1995, and the increase in revenues. See Notes E and F of Notes to Financial
Statements.
Net Loss. As a result of the foregoing, the Company's net loss decreased
to 2.4% of revenues in fiscal year 1995 from 12.8% in the last five months of
1994.
SEVEN MONTHS ENDED JULY 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
The following discussion and analysis pertains to operations before the
Acquisition on July 31, 1994 and the inception of the Company's operations. See
"-- Overview" and "The Company."
Revenues. Average daily revenues increased to $82,000 per day in the seven
months ended July 31, 1994, from $31,000 per day in 1993, primarily as a result
of continuing marketing efforts of Amsco Sterile.
Gross Profit (Deficit). As a percentage of revenues, Amsco Sterile's gross
profit (deficit) decreased to a deficit of 16.7% in the seven months ended July
31, 1994, from a deficit of 88.9% in fiscal year 1993. Gross profit (deficit) in
fiscal year 1993 was adversely affected by facility start-ups and process
refinement, both of which contributed to extraordinarily high variable costs due
to inefficiencies, training costs, and inexperienced personnel. In early 1994,
Amsco Sterile consolidated the facility operations of Chicago into Detroit,
Raleigh into Baltimore, and Dallas into Houston to increase production volume in
Detroit, Houston, and Baltimore and reduced facility overhead by converting the
Chicago, Raleigh and Dallas facilities to depot operations.
Distribution Expenses. As a percentage of revenues, Amsco Sterile's
distribution expenses decreased to 10.9% in the seven months ended July 31,
1994, from 12.3% in fiscal year 1993. Increases in distribution expenses
($82,000 per month in 1993 compared to $187,000 per month in the seven months
ended July 31, 1994) associated with the conversion of three operating
facilities to depots were offset by economies of scale derived from a
substantial increase in revenues.
Selling and Administrative Expenses. As a percentage of revenues, Amsco
Sterile's selling and administrative expenses decreased to 61.1% of revenues for
the seven months ended July 31, 1994, from 151.9% for fiscal year 1993. Selling
and administrative expenses for both periods were just over $1.0 million per
month and as a percentage of revenues, decreased in the seven months ended July
31, 1994 from fiscal year 1993 because of increases in revenues.
Interest Expense. As a percentage of revenues, Amsco Sterile's interest
expense decreased to 39.7% in the seven months ended July 31, 1994 from 71.7% in
fiscal year 1993. Average interest expense increased to $684,000 per month for
the seven months ended July 31, 1994, from $477,000 per month in fiscal year
1993, as AMSCO's continuing investments in Amsco Sterile were reflected in
intercompany debt. However, revenues increased during the first seven months of
1994 at a higher rate than interest expense, causing interest expense to
decrease as a percentage of revenues.
19
<PAGE> 22
Restructuring Expense. Amsco Sterile incurred a $1.6 million restructuring
expense in fiscal year 1993 in connection with its decision to close three of
the reprocessing facilities. See Note D of Notes to Amsco Sterile's Financial
Statements.
Net Loss. As a result of the foregoing, Amsco Sterile's net loss decreased
to 128.4% of revenues in the seven months ended July 31, 1994, from 344.2% of
revenues in fiscal year 1993.
LIQUIDITY AND CAPITAL RESOURCES
Since the Acquisition, the Company's primary sources of capital have been
cash flows from operations, private sales of debt and equity securities,
operating leases for facilities and distribution vehicles, and available
borrowings under its working capital loan facility. In March 1996, the Company
raised $1.3 million through the sale of Common Stock and the Convertible Note.
See "Certain Transactions."
The Company had positive cash flow from operating activities of $38,000 for
the first quarter of 1996, compared to $22,000 for the same period in 1995. The
Company's positive cash flow from operating activities was $1.1 million for
1995, as compared to $774,000 in the last five months of 1994. The Company
benefited in 1994 and the first quarter of 1995 from collection of Amsco
Sterile's trade accounts receivable of $551,000 for 1994 and $367,000 for the
first quarter of 1995. This one-time impact of trade accounts receivable
collection favorably impacted the net cash provided from operations by $367,000
for the first quarter of 1995, thereby understating the improvement of cash flow
from the first quarter of 1995 to the first quarter of 1996. As an investing
activity, the Company expended $805,000 for purchases of reusable surgical
products in the first quarter of 1996 as compared to $28,000 in the first
quarter of 1995.
Inventories at March 31, 1996, were $679,000, compared to $305,000 and
$217,000 at the end of 1995 and 1994, respectively. The increases in inventories
reflects the introduction of disposable surgical products to supplement the
Company's delivery and retrieval service for reusable products. As a result of
the acquisition of Surgipro on February 26, 1996, inventories are expected to
continue to increase with revenues as the Company fully implements the offering
of disposable products.
At March 31, 1996, the Company had $11.8 million of notes payable and
acquisition debt outstanding. Approximately $11.1 million of the net proceeds of
the offering will be used to repay most of this outstanding indebtedness. Before
and after the Acquisition, the business of the Company has been financed
primarily with interest-bearing borrowings that have negatively impacted its
earnings. The Company's interest expense in 1995 was $1.5 million. The use of a
portion of the offering proceeds to retire most of the Company's outstanding
borrowings will on an annualized basis eliminate interest expense of
approximately $1.4 million and principal payments to Amsco Sterile of
approximately $1.2 million. See "Use of Proceeds."
The Company has a commitment for a $15.0 million unsecured revolving credit
facility that will be effective upon completion of the offering and expire in
July 1999. Beginning January 1, 1997, total outstanding borrowings under the
facility are limited to three times the Company's earnings before interest,
taxes, depreciation, and amortization (EBITDA) for the previous fiscal year
(declining to two and one-half times by the third year). Pursuant to the terms
of the credit facility, SRI may elect to convert up to $5.0 million of the
available facility into term loans for capital expenditures that are ratably
payable over five years. All borrowings accrue interest at the London Interbank
Offered Rate (LIBOR) plus 200 basis points (7.5% as of May 1, 1996). The
Company's revolving credit agreement with the bank restricts the declaration of
dividends and prohibits the Company from encumbering its assets.
The Company's available bank borrowings will be determined based upon a
multiple of EBITDA. EBITDA increased to $885,000 in the first quarter of 1996
from $204,000 in the first quarter of 1995. EBITDA was $2.1 million for 1995.
After the offering, the Company's primary capital requirements will be for
additional stocks of reusable surgical products, primarily to support
anticipated growth in revenues, the Company anticipates that such expenditures
will be approximately $275,000 per month for the next 12 months, subject to
fluctuations in the growth of SRI's business. The Company will also require
additional working capital to support its inventory of disposable surgical
products following the Surgipro acquisition. Management believes that the
proceeds of the
20
<PAGE> 23
offering, combined with its cash flow from operating activities and funds
available under its credit facility, will be sufficient to fund its growth and
anticipated capital requirements for at least the next 12 months.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock Based Compensation." With respect to stock options
granted to employees, SFAS No. 123 permits companies to continue using the
accounting method promulgated by the Accounting Principles Board Opinion No. 25
("APB No. 25"), "Accounting for Stock Issued to Employees," to measure
compensation or to adopt the fair value based method prescribed by SFAS No. 123.
If APB No. 25's method is continued, pro forma disclosures are required as if
SFAS No. 123 accounting provisions were followed. Management has determined not
to adopt SFAS No. 123's accounting recognition provisions related to stock
options granted to employees and accordingly, will continue following APB No.
25's accounting provisions. See Note B of Notes to Financial Statements.
21
<PAGE> 24
BUSINESS
SRI provides hospitals and surgery centers with a comprehensive surgical
procedure-based delivery and retrieval service for reusable gowns, towels,
drapes, and basins and provides other disposable products necessary for surgery.
At seven regional facilities, SRI collects, sorts, cleans, inspects, packages,
sterilizes, and delivers its reusable products on a just-in-time basis. SRI
offers an integrated "closed-loop" reprocessing service that uses two of the
most technologically advanced reusable textiles: (i) a GORE Surgical Barrier
Fabric for gowns and drapes that is breathable yet liquidproof and provides a
viral/bacterial barrier and (ii) an advanced microfiber polyester surgical
fabric for gowns and drapes that is liquid and bacterial resistant. The Company
believes that its reusable surgical products made from these fabrics provide
protection and comfort that are superior to disposable alternatives.
The Company currently serves a growing customer base of approximately 200
hospitals and surgery centers located in 17 states, including Duke University
Medical Center (Durham), Henry Ford Hospital (Detroit), Johns Hopkins Bayview
Medical Center (Baltimore), St. Luke's Episcopal Hospital (Houston), Jackson
Memorial Hospital (Miami), LDS Hospital (Salt Lake City), and Hospital of the
Good Samaritan (Los Angeles). The Company's comprehensive delivery and retrieval
service enables its customers to outsource a costly and burdensome function to
SRI.
The Company believes that its reusable surgical product delivery and
retrieval service is a superior and competitively priced alternative to
disposable surgical products or to operating an in-house reusable program for
surgical products. The Company's delivery service offers savings to hospitals by
reducing the costs associated with: (i) the disposal of biohazardous wastes,
(ii) carrying an inventory of disposable surgical products, and (iii) in-house
processing of reusable surgical products. In addition to these cost savings, the
Company's liquidproof and liquid-resistant gowns offer surgeons and surgical
staff enhanced protection against transmission of blood-borne pathogens,
including the HIV and hepatitis viruses. Also, the Company's reusable gowns are
made with a breathable surgical fabric that is designed for superior comfort
during long procedures.
Through the Company's acquisition of Surgipro on February 26, 1996, SRI
offers its customers disposable accessory packs containing smaller surgical
items that are not reusable, such as needles, sutures, syringes, and tubing. The
Company's Surgipro acquisition enables SRI to complement its reusable surgical
product delivery and retrieval service with disposable surgical products that
are not available in reusable form. The Company believes that the flexibility it
offers its customers by combining reusable surgical gowns, towels, drapes, and
basins with disposable products will improve the Company's competitive position
in the marketplace.
THE MARKET
The United States health care system includes approximately 6,500 acute
care hospitals, over 2,300 freestanding surgery centers, and a variety of other
health care facilities. According to industry sources, approximately 31 million
procedures will be performed at hospitals and surgery centers in 1996. The
Company believes that between $40-$50 of reusable surgical products service
revenues can be realized from a typical surgical procedure.
In the 1980's, hospitals began using custom procedure trays because of
their convenience, a trend that continued to grow until recently. A custom
procedure tray typically contains in disposable form most of the sterile
products used in a particular surgical or other medical procedure. According to
industry sources, total sales of custom procedure trays in the United States
were an estimated $1.5 billion in 1995.
With the growth of managed care, many hospitals and surgery centers are
seeking alternatives to custom procedure trays. The Company believes that custom
procedure trays have several shortcomings relative to reusable products,
including costs associated with excessive product content, storage, handling,
and waste disposal, and the working capital requirements required to carry
product inventory. Most hospitals which converted to custom procedure trays
eliminated the in-house personnel and equipment necessary to process reusable
surgical products. Furthermore, hospitals possessing in-house facilities are
increasingly unwilling to support those personnel and capital requirements. The
Company believes that a service that provides daily
22
<PAGE> 25
delivery of substantially better quality surgical products without any capital
investment, thereby reducing employee and space needs, should become an
attractive managed care option for hospitals.
Several developments have created a market opportunity for the kind of
cost-competitive, reusable surgical product delivery and retrieval service SRI
offers, including:
Increasing Pressure on Hospitals to Contain Cost and Increase
Productivity. With the growth of managed care, economic constraints continue to
require hospitals to become more efficient by limiting capital investments,
reducing staff, and reducing costs. Hospitals are increasingly seeking to
decrease their cost of supplies and the associated cost of waste disposal. SRI
offers a cost-competitive service that eliminates the need for in-house
inventory or processing facilities or the costs associated with stocking and
discarding disposable products.
Heightened Concern Regarding the Transmission of Infectious Diseases. The
health care industry has experienced a substantial increase in the transmission
of infectious disease through cross-infections. These concerns have increased
the desirability of surgical barrier fabrics that protect surgeons and surgical
staff from patient liquids. SRI's liquidproof gown prevents liquid and viral
strike-through in critical areas during surgical procedures involving higher
risk. The Company's standard gown is specially designed to resist liquid and
bacterial strike-through in most other surgical procedures.
Concern Regarding the Handling and Disposal of Biohazardous Waste. The
disposal of large volumes of infectious and hazardous solid and liquid waste
generated by the health care industry has attracted increased public awareness.
The increased burdens on hospitals generating biohazardous waste due to
restrictions on incineration and access to dump sites give a competitive
advantage to reprocessing systems, such as SRI's, that replace disposable
surgical products with reusable surgical products. The SRI reprocessing cycle
substantially reduces biohazardous waste and its impact on the environment.
Increased Outsourcing of Hospital Functions that do not Involve Patient
Care. Hospitals with significant staff, capital and space dedicated to in-house
processing of reusable surgical products are increasingly outsourcing this
function to more efficient outside providers. This trend is consistent with the
overall industry focus on efficiency and improved patient care. SRI's service
allows hospitals to outsource to SRI the ownership and reprocessing of surgical
products.
STRATEGY
The Company's objective is to continue its growth and become a leading
provider of reusable surgical products and related delivery and retrieval
services to hospitals and surgery centers. The Company's principal strategies
for achieving this objective are as follows:
Employ Superior Operational Knowledge. The Company's management gained
substantial knowledge in operating Amsco Sterile's facilities. Amsco Sterile
invested approximately $100 million during the period from 1991 to 1994,
allowing management to implement innovative techniques and processes. As a
result, when the Company acquired these facilities, management had developed a
high degree of expertise in operations and was ready to capitalize upon Amsco
Sterile's development efforts. The Company intends to utilize this expertise to
provide superior products and services at a competitive cost.
Leverage Infrastructure with Increased Penetration in Existing
Markets. The Company believes that its existing facilities currently operate at
approximately 50% of their aggregate annual revenue capacity, allowing it to add
a substantial amount of sales without the need for significant additional
capital expenditures for equipment or new facilities. To obtain increased
operating leverage and expand profit margins, the Company intends to grow its
customer base within its existing markets and focus on expanding its
relationships with existing customers by servicing additional surgical
procedures.
Decentralize Operations to Facilities. The Company operates each of its
facilities on a stand alone basis, with the general manager of each facility
accountable to senior management for sales, operations, and profitability within
the facility's market area. The Company believes that individual general
managers with operational experience in local markets are best suited to respond
to local business opportunities with overall
23
<PAGE> 26
direction and support from the Company's corporate staff. The Company
implemented an incentive compensation plan in 1995 that provides compensation
awards for the general managers and certain key production and sales employees
based on individual and facility performance, as well as overall Company
performance. Each general manager participates in the Company's stock option
plan.
Add Facilities in Selected Markets. SRI currently services customers in 17
states through seven regional facilities. SRI serves several large metropolitan
areas through highway transport and satellite distribution facilities (depots)
that are supported from a regional facility. To expand geographically, the
Company expects to build additional facilities when needed in markets previously
served by highway transport. For example, the Company reopened its Raleigh,
North Carolina facility during the second quarter of 1995 to serve customers in
North Carolina and South Carolina that were previously serviced from the
Company's facility in Baltimore, Maryland. From each new facility, SRI will be
able to serve new metropolitan areas that were previously too far from an
existing regional facility. The Company believes that this strategy of
incremental geographic expansion will allow the Company to operate these new
facilities profitably by beginning operations with an existing customer base.
Expand National and Regional Agreements. To date, the Company's service
agreements are primarily with individual hospitals. Management believes that
there is a trend toward group purchasing among hospitals. To address this
consolidation, management intends to offer its reusable products delivery
service through agreements with national and regional hospital groups.
Become a Preferred Vendor Through Competitive Pricing and Expanded Service
Solutions. As hospitals seek to contain costs and outsource functions that do
not involve patient care or revenue producing activities, the Company believes
that hospitals will seek relationships with vendors that offer a broad range of
products or services at competitive prices. The Company intends to establish
preferred vendor relationships with its customers by providing high-quality
reusable surgical products, related delivery and retrieval services, and
disposable accessory packs containing disposable surgical items. Through its
disposable products division, SRI has expanded its range of surgical products to
include those products typically offered by its competitors through disposable
custom procedure trays, while giving its customers the added flexibility of
using the Company's reusable surgical products.
DELIVERY, RETRIEVAL, AND REPROCESSING SYSTEM
SRI's closed-loop reprocessing service picks up soiled reusable surgical
products from its customers and sorts, cleans, inspects, packages, sterilizes,
and redelivers the products. In one trip, SRI's trucks deliver clean carts of
sterilized surgical products to the hospital or surgical center and return carts
containing soiled products to its facility for reprocessing, always dividing
clean carts from "soiled" carts. The specially designed aluminum carts hold
sterile products, lock to maintain security and sterilization, conveniently roll
for delivery within the hospital and convert into hampers to hold soiled
products after the procedure. The customer avoids the need to maintain secondary
stock locations and the costs of either reprocessing reusable products or
stocking and discarding disposable products.
Upon return to SRI's facility, the contents of the soiled carts are sorted
in a decontamination area. Soiled products are routed through an automated
washing and drying process that delivers clean, dry, and decontaminated products
to a pack room where they are carefully inspected for damage, repaired if
necessary, folded and assembled into packs, and then wrapped in a barrier wrap.
The wrapped pack is steam sterilized before being packaged, sorted, and
redelivered to the customer. SRI separately cleans, dries, and decontaminates
its carts, stainless steel basins, and other hard reusable products through
special automatic tunnel washers before redelivery.
Because the Company's ability to price competitively with disposable
products depends on maintaining its sewn goods' useful lives, SRI closely
monitors their reprocessing to ensure longevity. SRI uses a bar coding system to
track its reusable surgical products' status, history, and number of uses. SRI
continually refines the washing and sterilization processes, building on Amsco
Sterile's substantial investments of time and money to initially develop those
operations.
24
<PAGE> 27
PRODUCTS
SRI's principal reusable surgical products are its liquidproof and liquid
resistant surgical gowns, towels, drapes, and stainless steel basin sets. SRI
offers these products in a variety of packs that are configured to the
hospital's specific needs. Its typical pack includes a gown, absorbent towels, a
liquidproof backtable cover, mayo stand covers, and possibly some stainless
components. SRI also offers disposable accessory packs with disposable products
such as needles, syringes, sutures, tubing, and other products that are not
available in reusable form.
SRI's liquidproof gown has GORE Surgical Barrier Fabric in critical areas
to provide protection for procedures that present a higher risk of liquid
strike-through. The GORE fabric is breathable yet liquidproof and prevents both
viral and liquid strike-through. This protection is critical to SRI's customers
given current concerns of doctors, staff, and regulatory authorities regarding
transmission of blood-borne pathogens, including the HIV and hepatitis viruses.
The Company's liquid resistant gown is made of an advanced microfiber polyester
fabric designed to resist liquid and bacterial strike-through in most surgical
procedures. All of SRI's gowns and drapes offer the wearer both comfort and
breathability, combined with a high level of protection from liquid penetration
that SRI believes is superior to that offered by disposable products.
SRI contracts with third party vendors for the weaving of microfiber fabric
and the cutting and sewing of garments, wraps, and drapes. The Company's
business is substantially dependent on its ability to obtain from GORE the
Surgical Barrier Fabric, a key component of its liquidproof surgical products.
The Company does not have a long-term commitment from GORE for the supply of
that product, but enjoys a good relationship with that company. The other
components of the Company's products are currently available at reasonable costs
from a variety of suppliers. See "Risk Factors -- Dependence on a Key Supplier."
FACILITIES AND SERVICE AREAS
SRI operates seven processing facilities of approximately 23,000 to 32,000
square feet each in Tampa, Detroit, Baltimore, Houston, Raleigh-Durham, Salt
Lake City, and Los Angeles. Each facility contains a uniform set of computerized
and fully automated heavy washers, dryers, and sterilizers to achieve consistent
cleaning and sterilization cycles for reusable surgical products. The Company
uses standard operating procedures at each facility, regularly implementing at
all facilities efficiencies that are developed and tested at one location.
The Company believes that its existing facilities currently operate at
approximately 50% of their aggregate annual revenue capacity. The Company
believes that it can significantly increase its revenues without significant
additional capital expenditures for equipment or new facilities. SRI intends to
eventually add another washer and sterilizer to each facility, which will
further increase its capacity in its existing facilities. Furthermore, the
Dallas facility is fully equipped to operate as a processing facility but is
currently only used as a depot. Should the North Texas and Oklahoma market
warrant a processing facility, SRI could begin full processing operations with
minimal capital expenditures. SRI believes it has an opportunity to
significantly improve its operating results by servicing added sales through
increased use of its existing facilities. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
25
<PAGE> 28
The Company's properties and the major markets that they serve are
summarized below. All the properties are leased, except for the Houston
processing facility. SRI believes that its existing facilities are adequate to
meet its current requirements.
<TABLE>
<CAPTION>
SQUARE FEET
FACILITY AND LOCATION (APPROX.) LEASE EXPIRATION(1) SELECTED MARKETS SERVED
- ---------------------------------- ----------- ------------------- -------------------------
<S> <C> <C> <C>
Processing facilities:
Baltimore, Maryland............. 32,000 February 1, 2003 Baltimore, Philadelphia,
Pittsburgh, Washington,
D.C.
Detroit, Michigan............... 23,000 September 30, 2002 Chicago, Detroit,
Louisville
Houston, Texas(2)............... 30,000 Owned Dallas, Houston, San
Antonio, Oklahoma City
Los Angeles, California......... 30,000 December 31, 2002 San Diego, Sacramento,
Los Angeles, San
Francisco
Raleigh, North Carolina......... 26,000 April 30, 2002 Richmond, Atlanta, South
Carolina, North Carolina
Salt Lake City, Utah............ 24,000 November 31, 2003 Utah
Tampa, Florida.................. 29,000 January 24, 2002 Tampa, Miami, Orlando,
Jacksonville
Depots:
Chicago, Illinois............... 3,000 September 30, 1996 --
Dallas, Texas................... 20,000 March 31, 2002 --
Louisville, Kentucky............ 3,000 December 31, 1996 --
Miami, Florida.................. 4,000 January 31, 1997 --
San Francisco, California....... 6,000 May 31, 1997 --
Warehouse:
Houston, Texas.................. 5,000 September 30, 1996 --
Disposable products facility:
Orlando, Florida................ 18,500 February 28, 1999 --
Corporate office:
Clearwater, Florida............. 9,000 October 31, 1996 --
</TABLE>
- ---------------
(1) Excludes renewal options in the leases that range from one to 10 years.
(2) The Houston property is owned by the Company subject to a first mortgage
securing a Convertible Note in the principal amount of $1.0 million. See
"Certain Transactions."
EMPLOYEES
As of March 31, 1996, SRI employed approximately 650 people, consisting of
approximately 30 persons in management, administration, and finance at its
corporate office and approximately 620 people in various positions at the
Company's facilities. The Company's employees are not covered by a collective
bargaining agreement, and the Company considers its employee relations to be
good.
26
<PAGE> 29
CUSTOMERS
The Company currently services approximately 200 hospitals and surgery
centers in 17 states throughout the United States. The following is a partial
list of these customers and their locations:
<TABLE>
<S> <C>
Allegheny General Hospital............... Pittsburgh, Pennsylvania
Audubon Regional Hospital................ Louisville, Kentucky
Duke University Medical Center........... Durham, North Carolina
Henry Ford Hospital...................... Detroit, Michigan
Hermann Hospital......................... Houston, Texas
Hospital of the Good Samaritan........... Los Angeles, California
Jackson Memorial Hospital................ Miami, Florida
Johns Hopkins Bayview Medical Center..... Baltimore, Maryland
LDS Hospital............................. Salt Lake City, Utah
Medical City Dallas...................... Dallas, Texas
St. Luke's Episcopal Hospital............ Houston, Texas
Southwest Texas Methodist Hospital....... San Antonio, Texas
</TABLE>
From December 31, 1994 through March 31, 1996, the Company has retained in
excess of 85% of its customers. SRI believes that this low attrition rate among
its customers reflects its products' appeal, its service quality, and general
customer resistance to change when the SRI system is in place. SRI also believes
that its direct relationship with hospital staff has been important in retaining
and attracting customers. Many of SRI's competitors use a distributor system
that SRI believes adds cost and introduces an intermediary between the
competition and their customers.
The Company's sales process for new customers is typically six to twelve
months in duration from initial contact to a purchase commitment. The extended
sales process is typically due to the complicated approval process within
hospitals for purchases from new suppliers, the long duration of existing supply
contracts, and implementation delays pending termination of a hospital's
previous supply relationships. The Company believes that there is a tendency to
maintain the status quo in many hospitals and that this favors its retention of
existing customers. See "Risk Factors -- Sales Process and Market Acceptance of
Products and Services."
SRI bills its customers weekly for the previous week's deliveries on a per
use basis under service contracts or purchase orders. Consistent with industry
custom, these contracts generally are cancellable by either party with 90 days'
notice, and customers may unilaterally reduce their use of the Company's
services under such contracts without penalty. The Company does not have any
order backlog because its products are generally delivered daily in response to
customer orders.
COMPETITION
SRI competes principally with sellers of both reusable and disposable
gowns, drapes, utensils, and other products for surgical procedures. The market
is dominated by disposables, especially custom procedure trays. SRI believes
that it is the leading provider of high quality reusable surgical gowns and
drapes. With the acquisition of Surgipro, SRI can compete directly with
suppliers of disposable custom procedure trays.
Unlike SRI, many of SRI's competitors can offer full national coverage and
have much greater resources than the Company. The Company's principal competitor
is the Convertors division of Baxter International Inc., which has a substantial
market share. See "Risk Factors -- Competition."
The Company competes primarily based on price, service, quality, and its
ability to save its customers waste disposal costs. The changing healthcare
environment in recent years has led to increasingly intense competition among
health care suppliers based on price, service, and product performance.
Hospitals are seeking cost reductions in response to pressure from governments,
insurance companies, and health maintenance organizations. The Company believes
that its high degree of expertise in operations significantly assists it in
offering a superior product at a competitive cost. In addition, hospitals are
increasingly seeking
27
<PAGE> 30
buying leverage by purchasing in integrated networks. SRI believes that
competitive pressure in these areas will continue.
REGULATION
The Company's products are subject to regulation by the FDA as medical
devices. The regulated devices include the Company's gowns, towels, drapes,
basins, boots, surgical wraps, surgical packs, and delivery blankets. The FDA
regulates the development, production, distribution, and promotion of medical
devices in the United States. Various states in which the Company's products are
being sold or may be sold in the future might impose additional regulatory
requirements. Pursuant to the Federal Food Drug and Cosmetics Act (the "FDA
Act"), a medical device is subject to general controls regarding FDA inspections
of facilities, "Good Manufacturing Practices," labeling, maintenance of records,
and filings with the FDA. FDA pre-market approval of these devices is obtained
under Section 510(k) of regulations issued under the FDA Act, which provides for
FDA approval on an expedited basis for products that can be shown to be
substantially equivalent to devices legally marketed before May 1976 (the month
and year of enactment of the FDA Act). Products must be produced in registered
establishments and be manufactured in accordance with "Good Manufacturing
Practices," as defined under the FDA Act. In addition, all medical devices must
be periodically listed with the FDA. Labeling and promotional activities are
subject to scrutiny by the FDA and, in certain instances, by the Federal Trade
Commission. If the Company fails to comply with the applicable provisions of the
FDA Act, the FDA can institute proceedings to detain or seize products, enjoin
future violations, impose product labeling restrictions or enforce product
recalls or withdrawals from the market. The Medical Device Reporting ("MDR")
regulation obligates the Company to provide information to the FDA on injuries
alleged to have been associated with the use of a product or in connection with
certain product failures which could cause serious injury or death. SRI and its
hospital customers also must comply with regulations of OSHA, including the
blood-borne pathogen rule requiring that "universal precautions" be observed to
minimize exposure to blood and other bodily fluids. To comply with these
requirements, SRI's employees wear protective gear in handling soiled linens in
the facility's decontamination area. Properly used, SRI's products allow its
hospital customers to protect their employees in compliance with these
regulations. The Company must comply with local regulations governing the
discharge of water used in its operations. SRI uses local licensed contractors
to dispose of any biohazardous waste generated by the hospital and received by
SRI and therefore does not need to obtain permits for biohazardous waste
disposal. The Company must comply with DOT and OSHA regulations governing the
transportation of hazardous materials. These regulations concern, among other
things, labelling, marketing, placarding, using proper containers, and reporting
discharges. The Company complies with these regulations by putting soiled
products in marked liquidproof bags and locked, marked transfer carts and by
separating sterile and soiled products on its trucks. Sterilization of the
Company's disposable accessory packs is provided under contract by a third
party. The use of ethylene oxide by that third party in the sterilization of the
Company's disposable accessory packs is subject to regulation under OSHA and by
the Environmental Protection Agency. In addition to the foregoing, numerous
other federal, state and local regulatory authorities, including those enforcing
laws that relate to the environment, fire hazard control, and working
conditions, have jurisdiction to take actions that could have a material adverse
effect on the Company. SRI makes expenditures from time to time to comply with
environmental regulations, but does not expect any material capital expenditures
for environmental compliance in the current or next fiscal year.
LEGAL PROCEEDINGS
Neither the Company nor any of its property is subject to any litigation or
other legal proceeding that is expected to have a material effect on the Company
or its business.
28
<PAGE> 31
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Board of Directors is divided into three classes, with the
members of each class serving three-year terms expiring at the third annual
meeting of shareholders after their election. The following table sets forth
information, as of the date of this Prospectus, regarding the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
- --------------------------------------- --- --------------------------------------- --------
<S> <C> <C> <C>
Richard T. Isel........................ 52 President, Chief Executive Officer, and 1999
Director
Wayne R. Peterson...................... 44 Executive Vice President - Operations 1998
and Director
James T. Boosales...................... 53 Executive Vice President, Chief 1997
Financial Officer, and Director
Bertram T. Martin, Jr.(1).............. 46 Executive Vice President, Chief 1998
Operating Officer, and Director
Lee R. Kemberling(2)................... 70 Director 1997
James M. Emanuel....................... 47 Director 1999
</TABLE>
- ---------------
(1) Mr. Martin will become an executive officer of the Company at the completion
of the offering.
(2) Lee R. Kemberling was elected a director of the Company pursuant to a
Shareholder Agreement dated July 28, 1994, among the Company, Richard T.
Isel, Wayne R. Peterson, James T. Boosales, and Mr. Kemberling. The
Shareholder Agreement will terminate upon consummation of the offering.
Richard T. Isel has been the Company's President and a director since the
Company's inception in 1994. Mr. Isel co-founded Amsco Sterile in 1991 and
served as its President and a director until November 1993. Before starting
Amsco Sterile, Mr. Isel was a founder and the chief executive officer of Sterile
Design, Inc., a manufacturer of sterile custom procedure trays. Sterile Design,
Inc. was acquired by Johnson & Johnson in 1986 and operated as a wholly owned
subsidiary until it was sold to Maxxim Medical, Inc. in 1993. Following his sale
of Sterile Design, Inc., Mr. Isel was subject to a five-year non-compete
agreement and engaged in consulting and private investment activities. Before
founding Sterile Design, Inc., Mr. Isel served as an area vice president with
American Hospital Supply Corporation.
Wayne R. Peterson has been the Company's Executive Vice President
responsible for operations and a director since the Company's inception. Mr.
Peterson co-founded Amsco Sterile and served as its Executive Vice President
until the Acquisition. Before joining Amsco Sterile, Mr. Peterson was President
of Agora Development, Inc., a real estate development company that from 1987 to
1991 developed projects totaling 2,000,000 square feet in four Western States
(California, Nevada, Arizona, and Illinois) for a total combined value of $278
million. Mr. Peterson is Mr. Isel's brother-in-law.
James T. Boosales has been the Company's Executive Vice President and
principal financial officer and a director since the Company's inception. He
served as President, International, of Fisher-Price, Inc., a $200 million
division of this toy and juvenile products company, from 1990 through 1993.
Before joining Fisher-Price, Inc., Mr. Boosales served in several senior
executive capacities with General Mills, Inc., including President,
International, for Kenner Parker Toys, Inc./Tonka Corp. from 1985 to 1989,
during and after its spinoff as a public company, and President of Foot-Joy,
Inc. from 1982 to 1985.
Bertram T. Martin, Jr. was elected a director of the Company on May 2,
1996, and will become Executive Vice President and Chief Operating Officer of
the Company on the consummation of the offering. Since July 1995, Mr. Martin has
provided consulting services to the Company and other businesses through
Corporate Strategic Directions, Inc. From 1993 until 1995, he was President and
Chief Operating Officer of
29
<PAGE> 32
Pharmacy Management Services, Inc., a nationwide provider of medical cost
containment and managed care services and a Nasdaq-listed company, until its
acquisition by Beverly Enterprises, Inc. in June 1995. He served as a director
during the five years Pharmacy Management was a public company. Before joining
Pharmacy Management, Mr. Martin was a Vice President, director, and shareholder
of Tunstall Consulting, Inc., a corporate financial consulting business, from
1985 to 1993.
Lee R. Kemberling, an initial investor in the Company, has been a director
of the Company since its inception. Mr. Kemberling is the founder, and since
1969 has been sole shareholder and President of, Kemco Systems, Inc., a
developer and manufacturer of commercial and industrial waste water heat
recovery systems, including systems used in SRI's operations.
James M. Emanuel has been a director of the Company since May 2, 1996.
Since January 1984, he has served as the Chief Financial Officer of Lincare
Inc., a national provider of respiratory therapy services for patients with
pulmonary disorders, and has been the Chief Financial Officer of Lincare
Holdings since November 1990. Mr. Emanuel has also served as a director of
Lincare Inc. and Lincare Holdings since November 1990. Mr. Emanuel served in
numerous financial capacities at Union Carbide Corporation between 1973 and
1984, and acted as Business Controller of Union Carbide's Cryogenic Equipment
Business immediately prior to joining Lincare.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's other most highly compensated executive officers for the
year ended December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITIONS SALARY COMPENSATION
- ---------------------------------------------------------------------- -------- ------------
<S> <C> <C>
Richard T. Isel, President and Chief Executive Officer................ $220,000 --
Wayne R. Peterson, Executive Vice President - Operations.............. $200,000 --
James T. Boosales, Executive Vice President and Chief Financial
Officer............................................................. $200,000 --
</TABLE>
None of the foregoing officers received any bonus compensation in 1995 or has
ever received any stock option grants.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with all of the executive officers
listed in the Summary Compensation Table and with Bertram T. Martin, Jr. that
provide for annual salary as follows for fiscal year 1996:
<TABLE>
<CAPTION>
NAME SALARY
-------------------------------------------------------------------------- --------
<S> <C>
Richard T. Isel........................................................... $220,000
Wayne R. Peterson......................................................... $200,000
James T. Boosales......................................................... $200,000
Bertram T. Martin, Jr..................................................... $200,000*
</TABLE>
- ---------------
* Mr. Martin will become an executive officer of the Company at the completion
of the offering.
The agreements can be terminated by either party without cause at any time,
subject to certain notice requirements. Each agreement provides a severance
compensation benefit equal to three times the executive officer's total
compensation (payable in a lump sum) for an involuntary or constructive
termination of employment following a "change of control." Each officer is
prohibited from competing with the Company during the three year period
following termination of the officer's employment.
30
<PAGE> 33
STOCK OPTION PLANS
The Company maintains two stock option plans (collectively, the "Stock
Option Plans") to attract, motivate, and retain key employees and members of the
Board of Directors who are not employees of the Company. The Company's 1995
Stock Option Plan (the "Employee Plan") and the 1996 Non-Employee Director Stock
Option Plan (the "Non-Employee Plan") have been adopted by the Board of
Directors and were approved by the shareholders of the Company on December 21,
1995 and May 2, 1996, respectively. An amendment to the Employee Plan was
approved by the Board of Directors and shareholders of the Company on May 2,
1996.
1995 Stock Option Plan. The Employee Plan provides for the grant to
employees of incentive or nonqualified options to purchase up to 500,000 shares
of Common Stock. On December 21, 1995, the Company granted non-qualified stock
options covering a total of 94,000 shares of Common Stock to various employees
at an exercise price of $5.85 per share. None of the options vest until
completion of the offering, and then vest ratably over the four-year period
following the completion of the offering. All of the options vest on a change in
control of the Company. Options granted under the Employee Plan expire not later
than ten years after the date granted or sooner in the event of death,
disability, retirement, or termination of employment. Upon the completion of the
offering, Bertram T. Martin, Jr. will be granted options to purchase a total of
70,000 shares of Common Stock at the initial offering price per share. All
participants in the option plan as a group (including Mr. Martin) will be
granted options to purchase a total of 219,500 shares of Common Stock at the
initial offering price per share. Each of these options vests ratably over the
five-year period following the completion of the offering.
1996 Non-Employee Director Stock Option Plan. The Non-Employee Plan
provides for the grant of nonqualified stock options to purchase up to 100,000
shares of Common Stock to members of the Board of Directors who are not
employees of the Company. As of the date of this Prospectus, such members held
no options under the Non-Employee Plan. Upon the completion of the offering,
each outside director will be granted options to purchase 4,000 shares of Common
Stock for each full remaining year of the director's term. Thereafter, on the
date on which a new outside director is first elected or appointed, he will
automatically be granted options to purchase 4,000 shares of Common Stock for
each year of his initial term. Each outside director will be granted options to
purchase 4,000 shares of Common Stock for each year of any subsequent term to
which he is elected. All options become exercisable ratably over the director's
term and have an exercise price equal to the fair market value of the Common
Stock on the date of grant.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
as such for service as members of either the Board of Directors or committees
thereof. Directors who are not employees of the Company receive $1,000 per Board
and committee meeting attended. The outside directors are also eligible to
receive options to purchase Common Stock under the Non-Employee Plan. See
"Management -- Stock Option Plans -- 1996 Non-Employee Director Stock Option
Plan." In addition, upon becoming a director of the Company, James M. Emanuel
was granted options to purchase 7,500 shares of Common Stock at an exercise
price equal to $8.00 per share, which vest one-third on the closing of the
offering, one-third at the 1997 annual meeting of shareholders, and one-third at
the 1998 annual meeting of shareholders.
COMMITTEES OF THE BOARD
The Board of Directors has established committees whose responsibilities
are summarized as follows:
Audit Committee. The Audit Committee is comprised of Messrs. Kemberling
and Emanuel and is responsible for reviewing the independence, qualifications,
and activities of the Company's independent certified accountants and the
Company's financial policies, control procedures, and accounting staff. The
Audit Committee recommends to the Board the appointment of the independent
certified public accountants and reviews and approves the Company's financial
statements. The Audit Committee also is responsible for the review of
transactions between the Company and any Company officer, director, or entity in
which a Company officer or director, has a material interest.
31
<PAGE> 34
Compensation Committee. The Compensation Committee is comprised of Messrs.
Kemberling and Emanuel and is responsible for establishing the compensation of
the Company's directors, officers, and other managerial personnel, including
salaries, bonuses, termination arrangements, and other executive officer
benefits. In addition, the Committee is responsible for the administration of
the Company's Employee Plan, including the recipient, amount, and terms of stock
option grants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established a Compensation Committee on May 2, 1996.
Members of the Compensation Committee are Messrs. Kemberling and Emanuel.
Certain members of the Company's Board of Directors are parties to transactions
with the Company. See "Certain Transactions."
CERTAIN TRANSACTIONS
In September 1995, Lee R. Kemberling, a director of the Company, converted
a Convertible Demand Promissory Note in the original principal amount of
$1,000,000 into 225,807 shares of the Common Stock at an effective conversion
price of $4.43 per share. The indebtedness to Mr. Kemberling was incurred to
partially finance the Acquisition. In March 1996, the Company borrowed another
$1,000,000 from Mr. Kemberling for working capital pursuant to a secured
Convertible Demand Promissory Note (the "Convertible Note") that is not
redeemable before March 1, 1997. The Convertible Note bears interest at an
annual rate of 8.5%, and the entire principal amount of the Convertible Note is
payable on demand on or after March 1, 1997. At any time before that date, up to
$750,000 of the principal amount of the Convertible Note is convertible into
Common Stock at $5.85 per share. The Convertible Note is secured by a first lien
on the Company's Houston facility and the equipment located there.
Mr. Kemberling is also the director, president, and sole stockholder of
Kemco, Inc., a developer and manufacturer of commercial and industrial waste
water heat recovery systems that originally furnished Amsco Sterile with the
water and heat reclamation equipment installed at each of its facilities. The
Company expects to pay Kemco in 1996 between $75,000 and $100,000 to design and
supply the components for water reclamation systems for five of the Company's
facilities. The Company believes that the terms of its transactions with Kemco
approximate those that would be available from an independent third party.
Since October 1995, Bertram T. Martin, Jr. and his company, Corporate
Strategic Directions, Inc., have performed consulting services for the Company,
including advising the Company in connection with the offering, its interim
financing, and its strategic plan, for which he received options to purchase
66,000 shares of Common Stock at $4.43 per share and will receive consulting
fees of $254,320 on the completion of the offering. The options were awarded in
October 1995.
32
<PAGE> 35
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the date of this Prospectus, and as adjusted to
reflect the sale of Common Stock offered hereby, with respect to: (i) each of
the Company's directors and the executive officers named in the Summary
Compensation Table; (ii) all directors and officers of the Company as a group;
and (iii) each person known by the Company to own beneficially more than 5% of
the Common Stock. Each of the shareholders listed below has sole voting and
investment power over the shares beneficially owned.
<TABLE>
<CAPTION>
PERCENTAGE BENEFICIALLY OWNED
------------------------------
SHARES BEFORE AFTER
BENEFICIAL OWNER(1) BENEFICIALLY OWNED THE OFFERING THE OFFERING(2)
- ------------------------------------------------------ ------------------ ------------ ---------------
<S> <C> <C> <C>
Richard T. Isel....................................... 1,042,329 31.0% 19.4%
James T. Boosales..................................... 900,000 26.7 16.8
Wayne R. Peterson(3).................................. 960,000 28.5 17.9
Lee R. Kemberling(4).................................. 225,807 6.7 4.2
All directors and officers as a group (6
persons)(5)......................................... 3,227,262 95.8% 60.1%
</TABLE>
- ---------------
(1) Except as discussed below, information regarding beneficial ownership was
furnished by the persons named in the table and is as of May 6, 1996. A
total of 54,000, 46,500, and 49,500 of the shares of Common Stock owned by
Messrs. Isel, Boosales, and Peterson, respectively, are subject to the
Underwriters' overallotment option. The business address for Richard T.
Isel, James T. Boosales, Wayne R. Peterson, and Bertram T. Martin, Jr. is
28100 U.S. Highway 19 North, Suite 201, Clearwater, Florida 34621. The
business address for Lee R. Kemberling is 11500 47th Street North,
Clearwater, Florida 34622.
(2) Assumes the Underwriters' overallotment option is not exercised.
(3) The amounts shown as beneficially owned by Mr. Peterson are held by a trust
in which Mr. Peterson is the trustee.
(4) Excludes 128,205 shares of Common Stock issuable on conversion of the
Convertible Note.
(5) Excludes 66,000 shares of Common Stock issuable upon the exercise of
outstanding stock options held by Bertram T. Martin, Jr., 70,000 shares of
Common Stock issuable on the exercise of stock options to be granted to Mr.
Martin on completion of the offering, and 7,500 shares of Common Stock
issuable upon the exercise of outstanding stock options held by James M.
Emanuel.
33
<PAGE> 36
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, $.001 par value per share, and 5,000,000 shares of preferred
stock, $.001 par value per share (the "Preferred Stock"). The following
description of the capital stock of the Company is qualified in its entirety by
reference to the Company's Articles of Incorporation and Bylaws.
COMMON STOCK
As of May 6, 1996, the Company had outstanding 3,367,089 shares of Common
Stock and had eight holders of record of the Common Stock. This total excludes
shares issuable on the exercise of outstanding options and conversion of the
Convertible Note. Each shareholder of record is entitled to one vote per share
on all matters to be voted upon by the shareholders. The Company's Articles of
Incorporation do not provide for cumulative voting.
Subject to preferences that might be applicable to any then outstanding
Preferred Stock, the holders of the Common Stock are entitled to receive
dividends when, as, and if declared from time to time by the Board of Directors
out of funds legally available therefor. See "Dividend Policy." In the event of
liquidation, dissolution, or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities subject to prior distribution rights of any Preferred Stock then
outstanding. The Common Stock has no preemptive or conversion rights and is not
subject to call or assessment by the Company. There are no redemption or sinking
fund provisions applicable to the Common Stock. All outstanding shares of Common
Stock in the offering are, and the shares offered hereby on issuance and sale
will be, duly authorized, validly issued, fully paid, and non-assessable.
PREFERRED STOCK
The Board of Directors has the authority, without any further vote or
action by the Company's shareholders, to issue Preferred Stock in one or more
series and to fix the number of shares, designations, relative rights (including
voting rights), preferences, and limitations of those series to the full extent
now or hereafter permitted by Florida law. The Company believes that this power
to issue Preferred Stock will provide flexibility in connection with possible
corporate transactions. The issuance of Preferred Stock, however, could
adversely affect the voting power of holders of Common Stock and restrict their
rights to receive payments upon liquidation. The Company has no present
intention to issue shares of Preferred Stock, although it may determine to do so
in the future.
Depending on the rights of the Preferred Stock, the issuance of Preferred
Stock could have an adverse effect on holders of Common Stock by delaying or
preventing a change in control of the Company, making removal of the present
management of the Company more difficult, or resulting in restrictions in the
payment of dividends and other distributions to the holders of Common Stock.
REGISTRATION RIGHTS
The holders of 444,933 shares of Common Stock (collectively, the "Holders")
each have certain registration rights with respect to the registration of those
shares under the Securities Act. Each of such shareholders has "piggyback"
registration rights to request that the Company register any of such shares to
the extent that the Company proposes to register any of its Common Stock under
the Securities Act (other than in exchange for assets or securities of another
corporation, Common Stock to be issued pursuant to a transaction registered on
Form S-4 or a comparable registration statement, or a stock option plan or other
employee plan or securities issued or issuable pursuant to such a plan).
However, if such piggyback rights are exercised in connection with an
underwritten public offering of the Company's Common Stock, the managing
underwriter of such an offering has the right to reduce the number of such
shares to be included in the offering.
34
<PAGE> 37
CERTAIN STATUTORY AND OTHER PROVISIONS
Statutory Provisions. The Company is subject to several anti-takeover
provisions under Florida law that apply to a public corporation organized under
Florida law unless the corporation has elected to opt out of those provisions in
its articles of incorporation or (depending on the provision in question)
bylaws. The Company has not elected to opt out of those provisions. The Florida
Business Corporation Act (the "Florida Act") prohibits the voting of shares in a
publicly-held Florida corporation that are acquired in a "control share
acquisition" unless the Board of Directors approves the control share
acquisition or the holders of a majority of the corporation's voting shares
(exclusive of shares held by officers of the corporation, inside directors, or
the acquiring party) approve the granting of voting rights as to the shares
acquired in the control share acquisition. A "control share acquisition" is
defined as an acquisition that immediately thereafter entitles the acquiring
party to vote in the election of directions within each of the following ranges
of voting power: (i) one-fifth or more but less than one-third of such voting
power, (ii) one-third or more but less than a majority of such voting power, and
(iii) a majority or more of such voting power. This statutory voting restriction
is not applicable in certain circumstances set forth in the Florida Act.
The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An interested shareholder is
defined as a person who together with affiliates and associates, beneficially
owns (as defined in Section 607.0901(1)(e) of the Florida Act) more than 10% of
the corporation's outstanding voting shares.
Classified Board of Directors. The Company's Articles of Incorporation and
Bylaws provide that the Board of Directors of the Company will be divided into
three classes, with staggered terms of three years for each class. The term of
one class expires every year. The Company's Articles of Incorporation provide
that any vacancies on the Board of Directors shall be filled only by the
affirmative vote of a majority of the directors then in office, even if less
than a quorum. The Articles of Incorporation of the Company also provide that
any director may be removed from office, but only for cause and only upon the
affirmative vote of the holders of at least two-thirds of the Common Stock.
Special Voting Requirements. The Company's Articles of Incorporation
provide that all actions taken by the shareholders must be taken at an annual or
special meeting of the shareholders or by unanimous written consent. The
Articles of Incorporation provide that special meetings of the shareholders may
be called only by the President, the Chairman of the Board, a majority of the
members of the board of directors, or the holders of not less than 35% of the
Company's outstanding voting shares. Under the Company's Bylaws, shareholders
will be required to comply with advance notice provisions with respect to any
proposal submitted for shareholder vote, including nominations for elections to
the Board of Directors. The Articles of Incorporation and Bylaws of the Company
contain provisions requiring the affirmative vote of the holders of at least
two-thirds of the Common Stock to amend certain provisions thereof.
Indemnification and Limitation of Liability. The Florida Act authorizes
Florida corporations to indemnify any person who was or is a party to any
proceeding (other than an action by, or in the right of, the corporation), by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation or other
entity, against liability incurred in connection with such proceeding, including
any appeal thereof, if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or on behalf of a corporation, indemnification may not be made if the
person seeking indemnification is adjudged liable, unless the court in which
such action was brought determines such person is fairly and reasonably entitled
to indemnification. The indemnification provisions of the Florida Act require
indemnification if a director or
35
<PAGE> 38
officer has been successful on the merits or otherwise in defense of any action,
suit, or proceeding to which he or she was a party by reason of the fact that he
or she is or was a director or officer of the corporation. The indemnification
authorized under Florida law is not exclusive and is in addition to any other
rights granted to officers and directors under the Articles of Incorporation or
Bylaws of the corporation or any agreement between officers and directors and
the corporation. A corporation may purchase and maintain insurance or furnish
similar protection on behalf of any officer or director against any liability
asserted against the officer or director and incurred by the officer or director
in such capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him or her
against such liability under the Florida Act.
The Company's Articles of Incorporation provide for the indemnification of
directors and executive officers of the Company to the maximum extent permitted
by Florida law and for the advancement of expenses incurred in connection with
the defense of any action, suit, or proceeding that the director or executive
officer was a party to by reason of the fact that he or she is or was a director
or executive officer of the Company upon the receipt of an undertaking to repay
such amount, unless it is ultimately determined that such person is not entitled
to indemnification.
Under the Florida Act, a director is not personally liable for monetary
damages to the Company or any other person for acts or omissions in his or her
capacity as a director except in certain limited circumstances such as certain
violations of criminal law and transactions in which the director derived an
improper person benefit. As a result, shareholders may be unable to recover
monetary damages against directors for actions taken by them which constitute
negligence or gross negligence or which are in violation of their fiduciary
duties, although injunctive or other equitable relief may be available.
The Company also has entered into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The Company is not required to indemnify a director or officer
if the indemnified loss results from any of the following: (a) a violation of
Section 16(a) of the Securities and Exchange Act of 1934, as amended; (b) a
violation of criminal law; (c) a transaction from which the officer or director
received an improper personal benefit; (d) willful misconduct or a conscious
disregard for the Company's best interests; or (e) a transaction for which the
director is liable pursuant to Section 607.0834 of the Florida Act for certain
distributions from the corporation to its shareholders.
The foregoing provisions of the Florida Act and the Company's Articles of
Incorporation and Bylaws could have the effect of preventing or delaying a
person from acquiring or seeking to acquire a substantial equity interest in, or
control of, the Company.
REGISTRAR AND TRANSFER AGENT
The transfer agent and registrar for the Common Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.
36
<PAGE> 39
SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of the offering, the Company will have 5,367,089 shares
of Common Stock outstanding (5,517,089 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, the 2,000,000
shares of Common Stock sold in the offering (2,300,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable by persons other than affiliates of the Company, without restriction
under the Securities Act of 1933, as amended (the "Securities Act"). The
remaining 3,367,089 shares of Common Stock (3,217,089 shares if the
Underwriters' over-allotment option is exercised in full) will be "restricted"
securities within the meaning of Rule 144 under the Securities Act and may not
be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including the exemptions contained in
Rule 144. Of this amount, approximately 3.1 million shares will be beneficially
owned by persons who are affiliates of the Company and, commencing 90 days after
the date of this Prospectus, would be eligible for public sale pursuant to Rule
144, subject to the volume restrictions discussed below. However, the directors,
executive officers, and principal shareholders of the Company have agreed not to
sell, contract to sell, or otherwise dispose of any shares of Common Stock for a
period of 180 days after the date of this Prospectus without the prior written
consent of the Representatives.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the company, who has
beneficially owned his or her shares for at least two years (including the prior
holding period of any prior owner other than an affiliate) is entitled to sell
within any three-month period that number of shares which does not exceed the
greater of 1% of the outstanding shares of the Common Stock, or the average
weekly trading volume during the four calendar weeks preceding each such sale.
Sales under Rule 144 also are subject to certain manner of sale provisions,
notice requirements, and the availability of current public information about
the Company. A person (or persons whose shares are aggregated) who is not or has
not been deemed an "affiliate" of the Company for at least three months, and who
has beneficially owned shares for at least three years (including the holding
period of any prior owner other than an affiliate) would be entitled to sell
such shares under Rule 144 without regard to the limitations discussed above.
A public market for the Common Stock has not existed before the offering.
Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices.
37
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters listed
below, and the Underwriters, for whom Robert W. Baird & Co. Incorporated and
Raymond James & Associates, Inc. are acting as representatives (the
"Representatives"), have severally agreed to purchase, the respective number of
shares of Common Stock set forth opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Robert W. Baird & Co. Incorporated........................................
Raymond James & Associates, Inc...........................................
---------
Total...........................................................
========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The Underwriters are obligated to
purchase all the shares of Common Stock offered hereby, excluding shares covered
by the over-allotment option granted to the Underwriters, if any are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price, less a concession not in excess of $ per share, and that
the Underwriters and such dealers may reallow a concession not in excess of
$ per share to other dealers. The public offering price and concessions
and reallowances to dealers may be changed by the Representatives after the
initial public offering.
The Company and certain Selling Shareholders have granted to the
Underwriters an option, exercisable within 30 days after the date of the initial
public offering, to purchase up to an additional 300,000 shares of Common Stock
to cover over-allotments, at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any such additional shares pursuant to this option, each of the Underwriters
will be committed to purchase such additional shares in approximately the same
proportion as set forth in the above table. The Underwriters may purchase such
shares only to cover over-allotments, if any, in connection with the offering.
The Company and the Underwriters have agreed to indemnify, or to contribute
to payments made by, each other against certain civil liabilities, including
certain civil liabilities under the Securities Act.
Before the offering, there has been no public market for the Common Stock.
The initial public offering price was determined by negotiation among the
Company, the Selling Shareholders and the Representatives. The factors
considered in determining the initial public offering price include the history
of and prospects for the business in which the Company operates, past and
present operations, revenues, and earnings of the Company and the trend of such
earnings, the prospects for such earnings, the general condition of the
securities markets at the time of the offering, and the demand for similar
securities of reasonably comparable companies.
The Representatives have informed the Company and the Selling Shareholders
that the Underwriters do not intend to make sales to any accounts over which
they exercise discretionary authority.
The Company and its directors and executive officers, and the Selling
Shareholders have agreed not to sell, contract to sell, or otherwise dispose of
any shares of Common Stock for a period of 180 days after the
38
<PAGE> 41
date of the Prospectus without the prior written consent of the Representatives.
See "Shares Eligible for Future Sale."
LEGAL MATTERS
The validity of the issuance of the Common Stock offered pursuant to this
Prospectus will be passed upon for the Company by Glenn Rasmussen & Fogarty,
P.A., Tampa, Florida. Certain legal matters in connection with the sale of the
Common Stock offered hereby will be passed upon for the Underwriters by Holland
& Knight, Tampa, Florida. A shareholder of Glenn Rasmussen & Fogarty, P.A.
beneficially owns 19,827 shares of Common Stock of the Company.
EXPERTS
The financial statements and financial statement schedule for SRI as of
December 31, 1995 and December 31, 1994, and for the five months ended December
31, 1994, and the year ended December 31, 1995, and the financial statements and
financial statement schedule for AMSCO Sterile Recoveries, Inc. for the year
ended December 31, 1993, and the seven months ended July 31, 1994, included in
this Prospectus and in the Registration Statement, have been audited by Grant
Thornton LLP, independent certified public accountants, as stated in their
reports included herein, and in the Registration Statement, and are included
herein in reliance upon the reports given upon the authority of that firm as
experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and its exhibits and schedules, certain portions of which are omitted
as permitted by the rules and regulations of the Commission. Statements made in
this Prospectus regarding the contents of any plan, contract, document, or
agreement are not necessarily complete, and, in each instance, reference is made
to the copy of the plan, contract, document, or agreement filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference and the exhibits and schedules thereto. For further
information concerning the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits and
schedules filed with that statement, which may be obtained from the Commission
at the public reference facilities maintained by the Commission at 450 Fifth
Street N.W., Washington, D.C. 20549, at prescribed rates.
The Company intends to furnish its shareholders annual reports containing
financial statements certified by an independent public accounting firm and will
make available copies of quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
39
<PAGE> 42
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS OF STERILE RECOVERIES, INC.
Report of Independent Certified Public Accountants.................................. F-2
Balance Sheets as of December 31, 1994 and 1995, and March 31, 1996 (unaudited)..... F-3
Statements of Operations for the five months and year ended December 31, 1994 and
1995, and the three months ended March 31, 1995 and 1996 (unaudited)............. F-4
Statement of Shareholders' Equity (Deficit) for the five months and year ended
December 31, 1994 and 1995, and the three months ended March 31, 1996
(unaudited)...................................................................... F-5
Statements of Cash Flows for the five months and year ended December 31, 1994 and
1995, and the three months ended March 31, 1995 and 1996 (unaudited)............. F-6
Notes to Financial Statements....................................................... F-7
FINANCIAL STATEMENTS OF AMSCO STERILE RECOVERIES, INC.
Report of Independent Certified Public Accountants.................................. F-19
Statements of Operations for the year ended December 31, 1993 and the seven months
ended July 31, 1994.............................................................. F-20
Statements of Cash Flows for the year ended December 31, 1993 and the seven months
ended July 31, 1994.............................................................. F-21
Notes to Financial Statements....................................................... F-22
</TABLE>
F-1
<PAGE> 43
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Sterile Recoveries, Inc.
We have audited the accompanying balance sheets of Sterile Recoveries, Inc.
as of December 31, 1994 and 1995, and the related statements of operations,
shareholders' equity (deficit) and cash flows for the five months ended December
31, 1994 and year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sterile Recoveries, Inc., as
of December 31, 1994 and 1995, and the results of operations and cash flows for
the five months ended December 31, 1994 and year ended December 31, 1995, in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Tampa, Florida
May 10, 1996
F-2
<PAGE> 44
STERILE RECOVERIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash................................................ $ 287,881 $ 251,444 $ 365,260
Accounts receivable, net............................ 3,295,518 3,389,243 3,842,895
Inventories......................................... 217,335 305,450 678,722
Prepaid expenses and other assets................... 258,009 303,309 390,098
Reusable surgical products, net of accumulated
amortization of $374,130, $1,137,603, and
$1,392,277, respectively.......................... 4,867,447 4,924,271 5,412,737
Property, plant and equipment, net.................. 4,462,305 4,318,840 4,409,110
Goodwill, net....................................... -- -- 536,229
-------- -------- --------
Total assets.............................. $13,388,495 $13,492,557 $15,635,051
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable -- working capital loan facility...... $ 1,061,341 $ 1,810,119 $ 1,975,386
Notes payable -- related parties.................... 1,000,000 -- 1,133,977
Accounts payable.................................... 679,814 1,166,657 1,527,382
Employee related accrued expenses................... 439,712 652,990 634,185
Other accrued expenses.............................. 509,197 568,084 472,601
Acquisition debt.................................... 9,880,832 9,080,832 8,680,832
-------- -------- --------
Total liabilities......................... 13,570,896 13,278,682 14,424,363
Commitments......................................... -- -- --
Shareholders' equity (deficit)
Preferred stock -- authorized 5,000,000 shares of
$.001 par value; no shares issued and
outstanding.................................... -- -- --
Common stock -- authorized 30,000,000 shares of
$.001 par value; issued and outstanding
3,000,000, 3,225,807 and 3,367,089 shares,
respectively................................... 3,000 3,226 3,367
Additional paid-in capital........................ 1,009,000 2,008,774 2,835,133
Accumulated deficit............................... (1,194,401) (1,798,125) (1,627,812)
-------- -------- --------
Total shareholders' equity (deficit)........... (182,401) 213,875 1,210,688
-------- -------- --------
Total liabilities and shareholders'
equity.................................. $13,388,495 $13,492,557 $15,635,051
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 45
STERILE RECOVERIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
------------ ------------ -------------------------
1994 1995 1995 1996
------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Reusable surgical products service.... $ 9,284,792 $ 24,752,403 $5,795,882 $6,896,334
Disposable surgical products.......... -- 567,421 20,648 433,843
----------- ----------- ---------- ----------
Total revenues..................... 9,284,792 25,319,824 5,816,530 7,330,177
Cost of revenues........................ 6,549,809 17,658,762 4,180,857 5,023,536
----------- ----------- ---------- ----------
Gross profit....................... 2,734,983 7,661,062 1,635,673 2,306,641
Distribution expenses................... 1,031,954 2,801,419 693,678 722,213
Selling and administrative expenses..... 2,162,012 3,974,849 1,014,001 1,067,109
----------- ----------- ---------- ----------
Income (loss) from operations...... (458,983) 884,794 (72,006) 517,319
Interest expense........................ 735,418 1,488,518 379,153 347,006
----------- ----------- ---------- ----------
Net income (loss).................. $ (1,194,401) $ (603,724) $ (451,159) $ 170,313
=========== =========== ========== ==========
Unaudited pro forma information
Historical net income (loss).......... $ (1,194,401) $ (603,724) $ (451,159) $ 170,313
Income tax expense.................... -- -- -- --
----------- ----------- ---------- ----------
Pro forma net income (loss)........... $ (1,194,401) $ (603,724) $ (451,159) $ 170,313
=========== =========== ========== ==========
Pro forma net income (loss) per common
share.............................. $ (0.34) $ (0.17) $ (0.13) $ 0.05
=========== =========== ========== ==========
Weighted average common shares
outstanding........................ 3,512,815 3,512,815 3,512,815 3,512,815
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 46
STERILE RECOVERIES, INC.
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Initial cash capitalization
of the Company............ 3,000,000 $3,000 $1,009,000 $ -- $ 1,012,000
Net loss..................... -- -- -- (1,194,401) (1,194,401)
--------- ------ ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1994... 3,000,000 3,000 1,009,000 (1,194,401) (182,401)
Conversion of note payable... 225,807 226 999,774 -- 1,000,000
Net loss..................... -- -- -- (603,724) (603,724)
--------- ------ ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1995... 3,225,807 3,226 2,008,774 (1,798,125) 213,875
Issuance of Common Stock for
cash (unaudited).......... 51,282 51 299,949 -- 300,000
Acquisition of Surgipro
(unaudited)............... 90,000 90 526,410 -- 526,500
Net income (unaudited)....... -- -- -- 170,313 170,313
--------- ------ ---------- ----------- -----------
BALANCE AT MARCH 31, 1996
(UNAUDITED).................. 3,367,089 $3,367 $2,835,133 $(1,627,812) $ 1,210,688
========= ====== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE> 47
STERILE RECOVERIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FIVE MONTHS THREE MONTHS ENDED
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, ---------------------
1994 1995 1995 1996
------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities
Net income (loss)................................................ $(1,194,401 ) $ (603,724 ) $(451,159) $ 170,313
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization.................................. 169,778 421,243 102,687 112,741
Amortization of reusable surgical products, including
shrinkage provision.......................................... 374,130 763,473 173,261 316,132
Change in assets and liabilities:
Accounts receivable.......................................... 551,175 (93,725 ) 366,845 (389,850)
Inventories.................................................. (90,119 ) (88,115 ) (128,001) (167,028)
Prepaid expenses and other assets............................ (258,009 ) (45,300 ) (47,795) 46,698
Accounts payable............................................. 401,025 486,843 (112,912) 239,226
Accrued expenses............................................. 820,364 272,164 119,475 (289,754)
----------- ----------- --------- ---------
Net cash provided by operating activities................. 773,943 1,112,859 22,401 38,478
----------- ----------- --------- ---------
Cash flows from investing activities
Proceeds from sale of assets from acquired company............... 1,529,540 -- -- --
Purchases of property, plant, and equipment...................... (62,112 ) (277,778 ) (37,722) (190,973)
Purchases of reusable surgical products.......................... (14,831 ) (820,297 ) (27,932) (804,598)
Payment for acquisition of business, net of cash acquired........ (5,012,000 ) -- -- 5,634
----------- ----------- --------- ---------
Net cash used in investing activities.......................... (3,559,403 ) (1,098,075 ) (65,654) (989,937)
----------- ----------- --------- ---------
Cash flows from financing activities
Proceeds from initial capitalization of the Company.............. 1,012,000 -- -- --
Proceeds from convertible demand notes........................... 1,000,000 -- -- 1,000,000
Payments on acquisition debt..................................... -- (800,000 ) -- (400,000)
Net proceeds from working capital loan facility.................. 1,061,341 748,779 (16,856) 165,275
Proceeds from issuance of common stock........................... -- -- -- 300,000
----------- ----------- --------- ---------
Net cash provided by (used in) financing activities............ 3,073,341 (51,221 ) (16,856) 1,065,275
----------- ----------- --------- ---------
Increase (decrease) in cash........................................ 287,881 (36,437 ) (60,109) 113,816
Cash at beginning of period........................................ -- 287,881 287,881 251,444
----------- ----------- --------- ---------
Cash at end of period.............................................. $ 287,881 $ 251,444 $ 227,772 $ 365,260
=========== =========== ========= =========
Supplemental cash flow information
Cash paid for interest........................................... $ 686,085 $ 1,418,623 $ 263,760 $ 418,857
=========== =========== ========= =========
Supplemental schedule of non-cash investing and financing
activities:
Purchase of Amsco Sterile (1994) and Surgipro (1996)
Fair value of assets acquired.................................. $15,300,000 $ -- $ -- $ 952,000
Cash (paid) received........................................... (5,012,000 ) -- -- 6,000
Common stock issued............................................ -- -- -- (526,000)
----------- ----------- --------- ---------
Liabilities incurred or assumed................................ $10,288,000 $ -- $ -- $ 432,000
=========== =========== ========= =========
Conversion of convertible demand note into 225,807 shares of
common stock................................................... $ -- $ 1,000,000 $ -- $ --
=========== =========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 48
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A -- DESCRIPTION OF ORGANIZATION AND BUSINESS
Sterile Recoveries, Inc. ("SRI" or the "Company") was incorporated on June
13, 1994 in Florida to acquire substantially all of the assets of its
predecessor, AMSCO Sterile Recoveries, Inc. ("Amsco Sterile") on July 31, 1994
(see Note C) (the "Acquisition"). The Company's corporate office is located in
Clearwater, Florida.
SRI provides hospitals and surgery centers with a comprehensive surgical
procedure-based delivery and retrieval service for reusable gowns, towels,
drapes and basins and provides other disposable products necessary for surgery.
At seven regional facilities located in various states, SRI collects, sorts,
cleans, inspects, packages, sterilizes, and delivers its reusable products on a
just-in-time basis. While its emphasis is providing a reusable surgical product
delivery and retrieval service, the Company also earns revenues from the sale of
disposable surgical products. On February 26, 1996, the Company acquired
Surgipro, Inc. ("Surgipro") which became its disposable products division in
order to expand its revenues from disposable accessory packs containing small
surgical items such as needles and sutures.
SRI's customers, hospitals and surgery centers are currently located in
seventeen states. During 1995 and the first quarter of 1996, Columbia/HCA
Healthcare Corporation ("Columbia") hospitals, with which the Company currently
does business, accounted for approximately 12% and 15% of SRI's sales,
respectively. Although each Columbia hospital currently makes its purchasing
decisions on an individual basis, and none of the individual hospitals accounted
for more than 3% of the Company's sales, the Company believes that the executive
management of Columbia has the ability to influence the hospitals' use of
particular vendors. The loss of a substantial portion of the Columbia hospitals'
business would have a material adverse effect on the Company. Additionally,
hospitals are increasingly buying products and services in groups to improve
efficiency and negotiating leverage. Although SRI is increasingly targeting
these groups for its sales efforts, a change of its customers' purchasing
patterns to group purchasing might have a material adverse effect on the Company
because the Company has historically sold its products to hospitals on an
individual basis.
SRI contracts with third party vendors for the weaving of microfiber fabric
and the cutting and sewing of gowns, wraps, and drapes. A significant percentage
of the Company's business is dependent on its ability to obtain a key component
of its liquid-proof surgical products from one principal vendor.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statement presentation
The Company had no assets or operations from June 13, 1994 until the
Acquisition, except for the Company's initial cash capitalization of $1,012,000
by its three shareholders on July 21, 1994. The statements of operations, cash
flows and shareholders' equity present the Company's initial period as the five
month period August 1, 1994 through December 31, 1994.
The Company operates on a 52-53 week fiscal year ending the Sunday nearest
December 31. The financial statements reflect the Company's year-end as December
31 for presentation purposes.
Use of estimates in financial statements
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
F-7
<PAGE> 49
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Company has no cash
equivalents for any of the periods presented.
Inventories
Inventories consist principally of consumables, supplies, and disposable
surgical products since the acquisition of Surgipro (see Note C) and are stated
at the lower of cost or market; cost being determined on the first-in, first-out
method.
Reusable surgical products
Reusable surgical products are stated at historical cost, net of
amortization. The products are amortized on a basis similar to the units of
production method. Estimated useful lives are based on the estimated total
number of available uses for each product. The expected total available usage
generally ranges from 75 to 125 uses, which correlates to a three to seven year
time period and is based on several factors including studies performed by
management. The estimates, however, are subject to revision if actual experience
differs from the estimated available uses.
The Company has experienced minor amounts of shrinkage since August 1,
1994, with actual shrinkage currently ranging 1% - 1.5% of revenues. The Company
will continue to evaluate at least quarterly the actual shrinkage experience and
trends, and will review the shrinkage provision if deemed necessary.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets, or the term of the related
leases for leasehold improvements, if less than the useful lives.
Goodwill
Goodwill, which resulted from the acquisition of Surgipro, is stated at
cost less accumulated amortization which is provided using the straight-line
method over 20 years.
On a quarterly basis, the Company will evaluate the projected undiscounted
cash flows of each business unit (reusable and disposable) to determine whether
or not there is permanent impairment of its long-lived assets, including
goodwill, and will expense the amount, if any, determined to be permanently
impaired.
Revenues
Revenues are recognized as the agreed upon services, as described in Note A
of Notes to Financial Statements, are delivered, which is generally daily. The
Company's revenues are principally generated from service agreements with
varying terms of one to three years, which are cancelable by either party with
generally a 90-day notice. All reusable surgical products provided to a customer
under these agreements are used by the customer, but remain the Company's
property.
Income taxes
The Company is taxed as an S Corporation under the provisions of the
Internal Revenue Code. As such, the Company's taxable income is includable in
the individual income tax returns of its shareholders for federal and state
income tax purposes. Accordingly, no provisions for federal and state income
taxes have been recorded in the accompanying historical financial statements.
F-8
<PAGE> 50
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
On completion of the offering, the Company will terminate its S Corporation
status, become subject to corporate income taxes, and record deferred income
taxes to account for the temporary differences between the tax and reported
bases of the Company's assets and liabilities, which will be included in the
Company's statement of operations (see Note K).
Collectibility of accounts receivable
The Company grants credit to customers who meet pre-established credit
requirements. The Company does not require collateral when trade credit is
granted to customers. Credit losses have been less than $25,000 for each period
presented herein. The allowance for doubtful accounts at December 31, 1994 and
1995 and March 31, 1996 is $6,000, $21,000 and $27,000, respectively.
Fair value of financial instruments
The carrying amounts of cash, receivables, accounts payables, accrued
expenses and notes payable approximate fair value because of the short-term
nature of the items. The carrying value of the acquisition debt approximates its
fair value based on current interest rates, coupled with the expected near term
payoff of the debt with the proceeds from the offering.
New accounting pronouncement
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock Based Compensation." With respect to stock options
granted to employees, SFAS No. 123 permits companies to continue using the
accounting method promulgated by the Accounting Principles Board Opinion No. 25
("APB No. 25"), "Accounting for Stock Issued to Employees," to measure
compensation or to adopt the fair value based method prescribed by SFAS No. 123.
If APB No. 25's method is continued, pro forma disclosures are required as if
SFAS No. 123's accounting provisions were followed. Management has determined
not to adopt SFAS No. 123's accounting recognition provisions related to stock
options granted to employees and accordingly, will continue following APB No.
25's accounting provisions. All other requirements of SFAS No. 123 will be
implemented on January 1, 1996 and are not expected to have a material effect on
the Company's financial statements.
Unaudited financial statements
The unaudited financial statements and the related notes thereto for March
31, 1995 and 1996 include all normal and recurring adjustments which in the
opinion of management are necessary for a fair presentation and are prepared on
the same basis as audited annual statements. The interim results are not
necessarily indicative of the results that may be expected for the full year.
NOTE C -- BUSINESS COMBINATIONS
Amsco Sterile Recoveries, Inc.
Effective July 31, 1994, the Company acquired from Amsco Sterile in the
Acquisition substantially all of its assets, principally reusable surgical
products, property, plant and equipment, and accounts receivable. Amsco
Sterile's parent is American Sterilizer Company, a subsidiary of AMSCO
International, Inc.
F-9
<PAGE> 51
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
("AMSCO"). Two of the Company's officers and major shareholders were formerly
executive officers of Amsco Sterile. The total consideration of approximately
$15,300,000 consisted of:
<TABLE>
<S> <C>
Cash.................................................................... $ 5,012,000
Acquisition debt to Amsco Sterile....................................... 9,871,000
Liabilities assumed..................................................... 265,000
Direct acquisition costs................................................ 152,000
--------
$15,300,000
========
</TABLE>
The cash was provided from: (i) $1,012,000 contributed by the Company's
three shareholders; (ii) $1,000,000 from a convertible note agreement with an
individual who became a director of the Company (see Note F); (iii) $1,470,000
from the concurrent factoring of certain of the acquired accounts receivable
(see Note E); and (iv) $1,530,000 from the concurrent sale of one of the
facilities acquired from Amsco Sterile, including reusable surgical products, to
an unrelated third party.
The acquisition was accounted for as a purchase transaction. The purchase
cost was allocated based on the fair value of the net assets acquired or
estimated amounts expected to be received upon disposal, as follows:
<TABLE>
<S> <C>
Accounts receivable..................................................... $ 3,847,000
Inventories............................................................. 127,000
Reusable surgical products.............................................. 5,226,000
Property, plant and equipment........................................... 4,570,000
--------
13,770,000
Assets sold concurrently................................................ 1,530,000
--------
$15,300,000
========
</TABLE>
The Company's active operations commenced upon the acquisition of Amsco
Sterile's business on July 31, 1994; therefore, the statement of operations
includes the acquired business' operating results from August 1, 1994.
Surgipro
In February 1996, the Company purchased the operations of Surgipro. The
Company paid consideration of approximately $600,000, consisting of 90,000
shares of the Company's Common Stock valued at $526,500 and a note payable of
approximately $76,000 due in 1998 (or on the earlier completion of the
offering), for approximately $500,000 of assets and the assumption of
approximately $400,000 of liabilities. The note payable amount is subject to
further adjustment upon final determination. Any adjustment is not expected to
exceed $35,000 and will result in an increase to recorded goodwill. This
acquisition was accounted for as a purchase transaction and, accordingly, the
purchase price was allocated to the assets and liabilities based upon their
estimated fair values at the time of the acquisition, with the excess of
approximately $540,000 being allocated to goodwill. The results of operations
are included in the accompanying Statement of Operations from the acquisition
date.
F-10
<PAGE> 52
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following unaudited pro forma financial information assumes that the
purchase had occurred at the beginning of the respective periods after giving
effect to certain pro forma adjustments including, among others, adjustments to
reflect amortization of goodwill. The pro forma information is presented for
informational purposes only and may not be indicative of actual results had the
purchase occurred at the beginning of the respective periods.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
Revenues.................................................... $6,062,430 $7,444,371
Net income (loss)........................................... $ (451,341) $ 122,330
Net income (loss) per common share.......................... $ (.13) $ .04
</TABLE>
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL -------------------------
LIVES IN YEARS 1994 1995
-------------- ---------- ---------- MARCH 31,
1996
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Land and building................ 38 $ 314,369 $ 314,369 $ 320,568
Leasehold improvements........... 2-18 1,298,697 1,300,698 1,310,549
Machinery and equipment.......... 3-12 2,677,164 2,928,415 3,105,059
Office furniture and equipment... 5-10 341,853 366,390 424,657
------- ------- -------
4,632,083 4,909,872 5,160,833
Less: Accumulated depreciation
and amortization............... 169,778 591,032 751,723
------- ------- -------
$4,462,305 $4,318,840 $4,409,110
======= ======= =======
</TABLE>
NOTE E -- NOTES PAYABLE -- WORKING CAPITAL LOAN FACILITY
In July 1994, the Company established a factoring arrangement with a
finance company whereby the Company factors substantially all of its trade
receivables on a recourse basis. The arrangement had an initial term of 180 days
and automatically renews after each successive 365-day term. The finance company
may terminate the arrangement at the end of any of the successive 365-day terms
upon written notice of at least 60 days prior to the end of any such term or at
any time upon an event of default (including nonpayment of indebtedness when
declared due or a bankruptcy filing) or if the finance company reasonably deems
itself insecure as to the intent or ability of the Company to pay any of its
indebtedness under the arrangement. Generally, the Company may borrow up to 90%
of the unpaid face amount of such receivables less a reserve amount equal to
previously issued unpaid advances and an amount established by the lender to
cover for disputed and/or underpaid billings not repurchased by the Company. The
agreement requires the Company to repurchase the receivables which are unpaid
after 90 days and allows the Company to repurchase the receivables and terminate
the arrangement at any time upon payment to the factor of all advances made and
all interest and fees owed. Interest on the cash drawings are at a base lending
rate (8.75% and 8.25% at December 31, 1995 and March 31, 1996, respectively)
plus 4% (adjusted to 2% at March 1, 1996). The factor also receives a commission
on the face amount of the receivables financed. Interest and fees totaled
$307,327 in 1994, $422,234 in 1995 and $114,477 in 1996. Advances owed under
this arrangement total $1,061,341, $1,810,119, and $1,975,386 at December 31,
1994, December 31, 1995, and March 31, 1996, respectively. Available borrowings
under this arrangement at December 31, 1995 and March 31, 1996 approximate
$373,000 and $493,000, respectively.
F-11
<PAGE> 53
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- NOTES PAYABLE -- RELATED PARTIES
Notes payable -- related parties consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1995
---------- ---------- MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
Convertible demand promissory note............. $1,000,000 $ -- $ 1,000,000
Note payable other............................. -- -- 133,977
---------- ---------- ----------
$1,000,000 $ -- $ 1,133,977
========== ========== ==========
</TABLE>
Convertible Demand Promissory Note
In conjunction with the Acquisition, the Company borrowed $1,000,000 from a
director of the Company pursuant to a secured Convertible Demand Promissory Note
that accrues interest at 12% per annum. In September 1995, the note was
converted into 225,807 shares of Common Stock at an effective conversion price
of $4.43 per share.
In March 1996, the Company borrowed another $1,000,000 from the director
pursuant to another Convertible Demand Promissory Note. Beginning on March 1,
1997, the Convertible Note becomes payable on demand and may be redeemed by the
Company for face value. At any time before that date, $750,000 of the
Convertible Note is convertible to Common Stock at $5.85 per share. The $250,000
balance is not convertible and is payable on maturity. The Convertible Note has
a stated interest rate of 8.5% and is secured by a first lien on the Company's
Houston, Texas facility and the equipment located at the facility.
The Company incurred interest expense related to the two demand notes of
$50,000, $70,000, $30,000 and $7,000 for the five months ended December 31,
1994, the year ended December 31, 1995, and the three months ended March 31,
1995 and 1996.
Note Payable Other
In connection with the Surgipro acquisition (Note C), the Company will
issue a note payable in the estimated amount of $76,000 due in four equal
quarterly installments of $18,988 beginning April 1997. The full amount of the
note is payable ten days after the Company closes the offering. Issuance of the
note has been deferred pending post-closing adjustments which are not expected
to exceed $35,000. Interest on the note accrues after July 1996 at a stated rate
equal to the prime rate announced from time to time by the Company's principal
bank and is payable in quarterly installments beginning October 1996 and
continuing until the note is paid in full.
Also, in connection with the same acquisition, the Company assumed a
non-interest bearing note payable of $58,025 due in three equal monthly
installments of $19,342 beginning April 1996.
The weighted average interest rates of all the Company's notes payable at
December 31, 1994 and 1995 and March 31, 1996 were 12.26%, 12.75%, and 10.73%
respectively.
F-12
<PAGE> 54
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- ACQUISITION DEBT
Acquisition debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1995
---------- ---------- MARCH 31,
1996
----------
(UNAUDITED)
<S> <C> <C> <C>
Purchase money note -- Amsco Sterile; monthly principal
payments of $100,000 through July 1997 with a balloon
payment due August 1997; interest at a bank's prime
rate (8.75% at December 31, 1995 and March 31, 1996)
plus 1.5%; collateralized by all Company assets,
excluding accounts receivable and real and personal
property at the Houston, Texas facility.............. $9,880,832 $9,080,832 $8,680,832
========== ========== ==========
</TABLE>
At December 31, 1995, aggregate maturities of acquisition debt are
summarized below:
<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
----------------------------------------------------------------- ----------
<S> <C>
1996........................................................... $1,200,000
1997........................................................... 7,880,832
----------
$9,080,832
==========
</TABLE>
The Purchase Money Security Agreement with Amsco Sterile contains various
financial related covenants, including, among other things, limiting in 1996 the
Company's total allowed capital expenditures and general indebtedness to
approximately $4,400,000 and $18,600,000, respectively. In addition, certain
limitations exist as to the permitted amount of Common Stock dividends and
distributions. If the Company completes the offering of common stock described
in Note K, the entire debt would be paid off from the proceeds of the offering.
Interest expense for the five months ended December 31, 1994, the year
ended December 31, 1995, and the three months ended March 31, 1995 and 1996
totaled $378,758, $977,711, $247,021, and $221,021, respectively.
NOTE H -- COMMITMENTS
Operating Leases
The Company leases offices, facilities and distribution vehicles under
noncancelable operating leases with terms ranging from one year to nine years.
At present the Company intends to exercise certain of these renewal options when
the initial term expires. The office and processing facility leases contain
various renewal options and escalating payments. The vehicle leases contain
contingent rentals based on mileage.
Future minimum lease payments at December 31, 1995 under leases in excess
of one year are as follows:
<TABLE>
<S> <C>
Year ending
1996................................................................ $1,635,345
1997................................................................ 1,211,563
1998................................................................ 1,011,777
1999................................................................ 788,511
2000................................................................ 720,800
Thereafter.......................................................... 1,166,413
----------
$6,534,409
==========
</TABLE>
F-13
<PAGE> 55
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Rental expense for the five-month period ended December 31, 1994, the year
ended December 31, 1995, and the three months ended March 31, 1995 and 1996
totaled $815,235, $1,866,246, $432,491 and $477,042 (including contingent
rentals of approximately $100,000, $230,000, $55,000 and $45,000), respectively.
Management Incentive Plan
The Company has established a Management Incentive Plan in which forty (40)
employees participated in 1995. The incentives are based on various performance
factors and can be adjusted to reflect the Company's overall performance as
determined by the Board of Directors. Payment of the cash incentives is made at
the end of the second month after the end of the incentive year and the
participant must still be an employee of the Company at that time.
Approximately $195,000 and $30,000 of estimated incentives were recognized
during the year ended December 31, 1995 and the three months ended March 31,
1996.
Financial Consultant Agreement
In accordance with a financial consulting agreement dated October 18, 1995
with a director, upon the successful completion of the offering, approximately
$255,000 cash remuneration will be payable to the consultant. Because payment
for the consultant services is contingent upon successful completion of the
offering, which is uncertain, no amounts have been accrued.
Management Employment Agreements
On May 2, 1996, the Board approved employment agreements with four
executives in which each executive would receive severance pay equal to three
years of base salary in the event that the executive is terminated following a
change in control of the Company.
Shareholder Agreement
The Company and its shareholders have entered into a shareholder agreement
(amended as of February 20, 1996) whereby the Company has the first option and
the shareholders the second option to purchase any (but not less than all)
shares that a shareholder intends to transfer to any person other than the
Company, generally at the same price contemplated by the intended transfer. This
agreement will automatically terminate upon completion of the offering.
NOTE I -- SHAREHOLDERS' EQUITY
Common Stock
The Company, on December 21, 1995, increased the number of authorized
Common Stock shares from 10,000,000 to 30,000,000 at $.001 par value per share.
Subject to preferences that might be applicable to any then outstanding
Preferred Stock, the holders of the Common Stock are entitled to receive
dividends when, as, and if declared from time to time by the Board of Directors
out of funds legally available therefor. In the event of liquidation,
dissolution, or winding up of the Company, holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
subject to prior distribution rights of any Preferred Stock then outstanding.
The Common Stock has no preemptive or conversion rights and is not subject to
call or assessment by the Company. There are no redemption or sinking fund
provisions applicable to the Common Stock.
The Company, on December 21, 1995, declared a 3-for-1 stock split which was
effectuated as a 200% stock dividend. All share and per share data in the
Company's financial statements and notes thereto have been retroactively
restated to give effect to the split.
F-14
<PAGE> 56
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Preferred Stock
The Company is authorized to issue 5,000,000 shares of Preferred Stock,
$.001 par value per share. The Board of Directors has the authority, without any
further vote or action by the Company's shareholders, to issue Preferred Stock
in one or more series and to fix the number of shares, designations, relative
rights (including voting rights), preferences, and limitations of those series
to the full extent now or hereafter permitted by Florida law. The Company
believes that this power to issue Preferred Stock will provide flexibility in
connection with possible corporate transactions. The issuance of Preferred
Stock, however, could adversely affect the voting power of holders of Common
Stock and restrict their rights to receive payments upon liquidation and could
have the effect of delaying, deferring, or preventing a change in control of the
Company. The Company has no present intention to issue shares of Preferred
Stock, although it may determine to do so in the future.
NOTE J -- STOCK OPTIONS
The Company maintains two stock option plans which were adopted by the
Board of Directors and were approved by the shareholders of the Company on
December 21, 1995, the Company's 1995 Stock Option Plan (the "Employee Plan")
and on May 2, 1996, the Company's 1996 Non-Employee Director Plan (the "Non-
Employee Plan").
The Employee Plan
The Employee Plan provides for the grant to employees of incentive or
non-qualified options to purchase up to 500,000 shares of Common Stock. On
December 21, 1995, the Company granted non-qualified stock options covering a
total of 94,000 shares of Common Stock to various employees at an exercise price
of $5.85 per share. The exercise price represents the estimated fair value of
the Company's Common Stock at the time of the grant, as approved by the Board of
Directors based upon various factors including an independent third party firm's
valuation. None of the options vest until completion of the offering, and then
vest ratably over the four-year period following the completion of the offering.
All outstanding options vest upon the change in control of the Company. Options
granted under the Employee Plan expire not later than ten years after the date
granted or sooner in the event of death, disability, retirement or termination
of employment. Upon completion of the offering, all employees as a group that
participate in the Employee Plan will also be granted options to purchase a
total of 219,500 shares of Common Stock at the initial offering price per share.
Included in these options are 70,000 options to an employee who is also a
director of the Company. Each of these options vests ratably over the five-year
period following the completion of the offering.
The Non-Employee Plan
The Non-Employee Plan provides for the grant of nonqualified stock options
to purchase up to 100,000 shares of Common Stock to members of the Board of
Directors who are not employees of the Company. As of the date of these
financial statements, such members held no options under the Non-Employee Plan.
Upon the completion of the offering, each non-employee director will be granted
options to purchase 4,000 shares of Common Stock for each full remaining year of
the director's term at the offering price. Thereafter, on the date on which a
new non-employee director is first elected or appointed, he will automatically
be granted options to purchase 4,000 shares of Common Stock for each year of his
initial term. Each non-employee director will be granted options to purchase
4,000 shares of Common Stock for each year of any subsequent term to which he is
elected. All options become exercisable ratably over the director's term and
have an exercise price equal to the fair market value of the Common Stock on the
date of grant.
F-15
<PAGE> 57
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Other Stock Options
In March 1995, in conjunction with an employment termination and an
agreement that the former employee would be a future independent sales
representative for the Company, 12,500 options at $1.00 a share exercise price
were granted to the individual. The option term is for 10 years and includes a
put option whereby the Company could be required to buy back the option at the
net book value per share of the Company's Common Stock at the preceding year end
value, less $1.00 a share. At March 31, 1996, the put option has no value (i.e.
net book value per share is less than $1.00 a share).
In October 1995, in conjunction with a financial consulting arrangement
with an individual who has become a director of the Company, the Company granted
the individual a non-qualified stock option for 66,000 shares of its Common
Stock at an exercise price of $4.43 a share, exercisable as follows: (1) 22,000
shares upon the completion of an interim financing (completed in March 1996);
and (2) 44,000 upon completing an initial public offering before September 1,
1996. The exercise price was determined by the Board of Directors to approximate
the estimated fair value of the Company's Common Stock at the date of grant
based on various factors, including the Company's history of operating losses.
On May 2, 1996, the Company issued to a recently appointed director, an
option to purchase 7,500 shares of the Company's Common Stock for $8.00 per
share, which vests one third on completion of the offering, one third at the
1997 annual meeting of shareholders, and one third at the 1998 annual meeting of
shareholders.
The following table summarizes the activity in Common Stock subject to
options since the Company's inception:
<TABLE>
<CAPTION>
PRICE
SHARES PER SHARE
-------- -------------
<S> <C> <C>
Outstanding at July 31, 1994 and December 31, 1994.......... -- --
Granted
March, 1995............................................ 12,500 $ 1.00
October, 1995.......................................... 66,000 $ 4.43
December, 1995......................................... 94,000 $ 5.85
Exercised................................................. --
Cancelled................................................. --
------- -------------
Outstanding at December 31, 1995 and March 31, 1996......... 172,500 $1.00 - $5.85
======= =============
</TABLE>
At December 31, 1995 and March 31, 1996, stock options for 12,500 shares
($1.00 a share) and 34,500 shares ($1.00 -- $4.43 a share) were exercisable,
respectively.
NOTE K -- PRO FORMA INFORMATION (UNAUDITED)
Pro forma income taxes
In conjunction with the completion of the offering, the Company will
terminate its S Corporation election and become subject to corporate income
taxes from that date forward.
The statements of operations for all periods presented reflect the pro
forma effect on income taxes (benefits) as if the Company's earnings (losses)
had been subjected to federal and state income taxes as a C Corporation.
In the determination whether to recognize any tax benefits from the
Company's operating losses on a pro forma basis, management considered the
Company's history of net operating losses. While management acknowledges that
the Company's recent fiscal quarters demonstrate the Company's ability to be
profitable, management believes using the more likely than not criteria
established by SFAS No. 109, "Accounting for
F-16
<PAGE> 58
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes," that no tax benefits should be recognized for any reported
period, except for the three months ended March 31, 1996. As the table below
reflects, the estimated income tax expense before utilization of the Company's
net operating loss carryforwards was approximately $65,000 on the earnings for
the first quarter of 1996.
Reconciliation of the income tax expense (benefit) calculated using the
federal statutory income tax rate of 34% to the income tax expense (benefit)
recorded is as follows:
<TABLE>
<CAPTION>
FIVE MONTHS THREE MONTHS ENDED
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, --------------------
1994 1995 1995 1996
------------ ------------ --------- --------
<S> <C> <C> <C> <C>
Federal income taxes (benefit) at
statutory rates................................ $ (406,000) $ (205,000) $(153,000) $ 58,000
State income taxes, net of federal benefit....... (44,000) (22,000) (16,000) 6,000
Net operating losses not currently utilizable.... 444,000 224,000 167,000 --
Utilization of net operating carryforwards....... -- -- -- (65,000)
Other, net....................................... 6,000 3,000 2,000 1,000
------------ ----------- - ---------- ---------
Income tax expense (benefit)..................... $ -- $ -- $ -- $ --
============ ============ ========== =========
</TABLE>
Since the Company's cumulative net operating losses have passed directly to
its S Corporation shareholders, the losses will not be available to the Company
upon conversion to C Corporation status.
At December 31, 1994 and 1995 and March 31, 1996, there were differences
between the bases for the Company's assets and liabilities as reported for
income tax return purposes and as reported for financial statement purposes. The
aggregate bases difference at these dates has been approximately $500,000
representing principally reported liabilities, such as accrued vacation expense,
which have no bases for income tax purposes.
Pro forma net income (loss) per common share
Pro forma net income (loss) per common share is computed by dividing pro
forma net income (loss) by the weighted average number of shares of common stock
outstanding. Pro forma net income (loss) includes a pro forma provision for
income taxes assuming the Company had been subject to income taxes during the
period it was an S Corporation for income tax purposes. All Common Stock and
options issued within one year prior to the Company's offering are deemed
outstanding for all periods. In addition, the Company assumed that the
Convertible Demand Promissory Note issued March 1996 (see Notes F and L) would
be converted prior to or concurrently with the offering and accordingly, the
resulting shares of Common Stock are included in the net income (loss) per
common share calculation. The Company used the treasury stock method to
calculate the Common Stock equivalents that the stock options would represent.
The additional shares assumed outstanding in the calculation of income (loss)
per common share, relate primarily to the Common Stock issued as described in
the Statement of Shareholders' Equity and Notes C, F and L of the financial
statements and the previously described convertible notes.
<TABLE>
<CAPTION>
FIVE MONTHS THREE MONTHS ENDED
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, -----------------------
1994 1995 1995 1996
------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
Actual weighted average shares
outstanding.............................. 3,000,000 3,094,086 3,000,000 3,255,807
Additional shares.......................... 512,815 418,729 512,815 257,003
--------- --------- --------- ---------
Weighted average shares used in income per
share calculation........................ 3,512,815 3,512,815 3,512,815 3,512,815
========= ========= ========= =========
</TABLE>
F-17
<PAGE> 59
STERILE RECOVERIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company is contemplating the offering in the amount of $22,000,000,
from which proceeds will be used to retire approximately $10,700,000 of debt.
The supplementary pro forma income per common share for 1995 and the three
months ended March 31, 1996 as if this debt has been retired at the beginning of
the respective periods, would be $.18 and $.11 per share (assuming 4,507,558 and
4,411,992 weighted average common shares outstanding, respectively).
NOTE L -- RELATED PARTY TRANSACTIONS
During fiscal years 1994 and 1995 and the three months ended March 31,
1996, SRI purchased repair parts and services for the Company's water and heat
reclamation equipment from a company which is owned by a director and
shareholder of the Company, incurring total expense of $4,000, $8,000 and
$14,000, respectively, which is included in cost of revenues.
In March 1996, the Company's financial consultant who subsequently became a
director (see Note H) and a member of the law firm representing the Company as
general counsel, contributed $250,000 and $50,000 in cash for 42,735 and 8,547
shares of the Company's Common Stock, respectively. The shares of Common Stock
were valued at $5.85 a share, representing its estimated fair value as
determined by the Company's Board of Directors upon considering various factors,
including an independent third-party firm's valuation, the Company's inability
to obtain other financing, and a contemporaneous transaction at the same
purchase price per share.
In both July 1994 and March 1996, the Company received $1,000,000 in cash
from a director and significant shareholder. In each case, the cash was received
for a Convertible Demand Promissory Note (see Note F).
F-18
<PAGE> 60
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Sterile Recoveries, Inc.
We have audited the accompanying statement of operations of Amsco Sterile
Recoveries, Inc. (a wholly-owned subsidiary of American Sterilizer Company and
predecessor to Sterile Recoveries, Inc.) and the related statements of cash
flows for the year ended December 31, 1993 and the seven months ended July 31,
1994. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations of Amsco Sterile Recoveries,
Inc. and cash flows for the year ended December 31, 1993 and the seven months
ended July 31, 1994, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Tampa, Florida
May 10, 1996
F-19
<PAGE> 61
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, JULY 31,
1993 1994
------------ ------------
<S> <C> <C>
Revenues
Reusable surgical products service............................ $ 7,988,117 $ 12,069,411
Cost of revenues................................................ 15,089,952 14,091,339
--------- ---------
Gross profit (deficit)..................................... (7,101,835) (2,021,928)
Distribution expenses........................................... 980,937 1,309,603
Selling and administrative expenses............................. 12,132,167 7,374,720
Restructuring expense........................................... 1,550,000 --
--------- ---------
Loss from operations.......................................... (21,764,939) (10,706,251)
Interest expense................................................ 5,727,107 4,790,888
--------- ---------
Loss before income taxes...................................... (27,492,046) (15,497,139)
Income taxes.................................................... -- --
--------- ---------
Net loss...................................................... $(27,492,046) $(15,497,139)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 62
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, JULY 31,
1993 1994
------------ ------------
<S> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities
Net loss...................................................... $(27,492,046) $(15,497,139)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.............................. 1,904,070 1,388,032
Amortization of reusable surgical products, including
shrinkage provision...................................... 2,553,234 3,515,659
Change in assets and liabilities:
Accounts receivable...................................... (1,602,749) (1,609,963)
Prepaid expenses and other assets........................ (641,466) (450,646)
Accounts payable......................................... (2,703,893) 49,955
Accrued expenses......................................... 1,197,470 23,804
Accrued restructuring.................................... 1,550,000 (549,014)
------------ ------------
Net cash used in operating activities................. (25,235,380) (13,129,312)
------------ ------------
Cash flows from investing activities
Purchases of property, plant and equipment.................... (7,156,044) (1,390,265)
Purchases of reusable surgical products....................... (15,301,269) (5,125,698)
------------ ------------
Net cash used in investing activities................. (22,457,313) (6,515,963)
------------ ------------
Cash flows from financing activities
Advances and loans (net) from parent.......................... 46,932,851 19,752,400
------------ ------------
Net cash provided by financing activities............. 46,932,851 19,752,400
------------ ------------
Increase (decrease) in cash..................................... (759,842) 107,125
Cash at beginning of period..................................... 800,031 40,189
------------ ------------
Cash at end of period........................................... $ 40,189 $ 147,314
============ ============
Supplemental cash flow information
Cash paid for interest(1)..................................... $ 5,727,107 $ 4,790,888
============ ============
</TABLE>
- ---------------
(1) Accrued through intercompany charges.
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 63
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE A -- DESCRIPTION OF ORGANIZATION AND BUSINESS
AMSCO Sterile Recoveries, Inc. ("Amsco Sterile") was a wholly-owned
subsidiary of American Sterilizer Company, a Pennsylvania corporation whose
parent, AMSCO International, Inc. ("AMSCO"), is a Delaware corporation. The
Amsco Sterile corporate headquarters were located in Clearwater, Florida.
Amsco Sterile commenced business in September 1991 when it acquired Amsco
Sterile's predecessor, a Delaware corporation, which at that time had no assets
or liabilities, except for exclusive rights under a distribution agreement with
a manufacturer of certain fabric material used in Amsco Sterile's products.
Amsco Sterile provided hospitals and surgery centers with a comprehensive
surgical procedure-based delivery and retrieval service for reusable gowns,
towels, drapes and basins, necessary for surgery. At regional facilities located
in various states, Amsco Sterile collected, sorted, cleaned, inspected,
packaged, sterilized, and delivered its reusable products on a just-in-time
basis.
In 1993, one customer accounted for approximately 12% of revenues. In 1994,
no customer accounted for more than 10% of revenues.
Amsco Sterile contracted with third party vendors for the weaving of
microfiber fabric and the cutting and sewing of gowns, wraps, and drapes. Amsco
Sterile's business was substantially dependent on its ability to obtain a key
component of its surgical products from two principal vendors.
Effective July 31, 1994, Amsco Sterile consummated a sale of substantially
all its assets to Sterile Recoveries, Inc. (see Note B).
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statement presentation
Amsco Sterile maintained separate books and records as its operations were
generally on the stand alone basis as it related to its affiliated group, except
that Amsco Sterile was solely dependent on its parent to finance its operations
through intercompany loans and advances and Amsco Sterile and its parent had
many common customers. The accompanying financial statements therefore may not
necessarily be indicative of the results of operations that would be obtained if
Amsco Sterile had operated exclusively as an independent entity.
The statement of operations reflect the interest charged by AMSCO on the
intercompany debt. The other services provided by AMSCO that are material have
been included in the financial statements (see below). While Amsco Sterile was
part of AMSCO's consolidated income tax return, Amsco Sterile's income tax
provision herein is determined on the separate return basis (see note E).
AMSCO's Board of Directors, on June 23, 1994, approved a plan to divest or
wind down Amsco Sterile's business and engaged a nationally recognized
investment banking firm to solicit bids to purchase Amsco Sterile. AMSCO's
decision was based on the difficulties encountered in achieving Amsco Sterile's
growth objectives in the healthcare environment existing at that time. In
connection with this divestment plan, Amsco Sterile consummated the sale of
substantially all of its assets on July 31, 1994 to a newly formed company,
Sterile Recoveries, Inc. (the "Successor"), a Florida corporation, owned by two
former executive officers of Amsco Sterile and another individual. These two
former executive officers were also two of the founders and stockholders of
Amsco Sterile's predecessor in September 1991 (see Note A). The purchase price
totaled approximately $14,883,000 (exclusive of assumed liabilities of
$265,000), consisting of cash of $5,012,000 and a purchase money note of
$9,871,000. The purchase price was substantially less than the recorded cost of
the assets disposed.
F-22
<PAGE> 64
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The accompanying financial statements do not contain any adjustments such
as writedown of assets or establishment of reserves resulting from AMSCO's
decision to discontinue Amsco Sterile's operations and/or to sell most of the
assets effective July 31, 1994.
The Company operates on a 52-53 week fiscal year ending the Sunday nearest
December 31. The financial statements reflect the Company's year-end as December
31.
Use of estimates in financial statements
In preparing financial statements in conformity with generally accepted
accounting principles, management made estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could have differed from those estimates.
Revenues
Revenues are recognized as the agreed upon services, as described in Note A
to the financial statements, are delivered, which is generally daily. Amsco
Sterile's revenues were principally generated from service agreements with
varying terms of one to three years, which are cancelable by either party with
generally a 90-day notice. All reusable surgical products provided to the
customers under these agreements, are used by the customer, but remain Amsco
Sterile's property.
Depreciation of property, plant and equipment
Depreciation and amortization is provided using the straight-line method
over the estimated useful lives of the assets: 40 years for buildings; 5-20
years for leasehold improvements; 3-12 years for machinery and equipment; and
5-10 years for office furniture and equipment. Leasehold improvements are
amortized using the lesser of the asset's useful lives or the lease term.
Amortization of reusable surgical products
The products are amortized on a basis similar to the unit of production
method. Estimated useful lives are based on the estimated total number of
available uses for each product. The expected total available uses generally
ranges from 75 to 125 uses, which correlates to a 3 to 7 year time period and is
based on several factors, including studies performed by Amsco Sterile's
management. The estimates, however, are subject to revision if actual experience
differs from the estimated available uses.
In addition to the amortization of the reusable surgical products, Amsco
Sterile provided for shrinkage of the product. The provision was generally 8% of
revenues and was based on management estimates.
Goodwill amortization
Goodwill amortization is provided using the straight-line method over 40
years. The goodwill is related to the purchase of Amsco Sterile's predecessor
and is accounted for at the subsidiary level using push down accounting by
AMSCO.
NOTE C -- RELATED PARTY TRANSACTIONS
Administrative costs
AMSCO charged fees to Amsco Sterile to develop certain computer software
for Amsco Sterile's use. Such fees allocated by AMSCO, based on estimates of
actual time incurred, which management believed to be a reasonable allocation
method, aggregated approximately $41,000 and $400,000 for the year ended
F-23
<PAGE> 65
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1993 and seven months ended July 31, 1994, respectively. AMSCO also
processed payroll, collected Amsco Sterile's accounts receivable and performed
computer processing for Amsco Sterile at no charge to Amsco Sterile. No estimate
of these costs has been reflected in these financial statements as management
believed that the amounts were not material to the financial statements.
Interest expense
AMSCO charged Amsco Sterile interest monthly on borrowings made by Amsco
Sterile based upon the average balance owed to AMSCO at a rate comparable to
that which is paid by AMSCO on its borrowings (approximately 9% at July 31,
1994). Amsco Sterile's management believed that the interest allocation method
was reasonable.
Purchase of property, plant and equipment
Amsco Sterile purchased various equipment from AMSCO, which AMSCO also
marketed and sold to its other customers, totaling $700,000 and $-0- in 1993 and
1994.
NOTE D -- RESTRUCTURING
Amsco Sterile decided by December 31, 1993 to close three of its facilities
and reduce some of its workforce in 1994, consequently Amsco Sterile recorded a
$1,550,000 restructuring provision in 1993 consisting of (1) $900,000 for lease
termination charges; (2) $300,000 for severance and relocation costs; and (3)
$350,000 for various other matters. Through July 31, 1994, approximately
$550,000 of these items were paid.
NOTE E -- INCOME TAXES
Amsco Sterile's tax provision was determined on a separate return basis.
Amsco Sterile incurred substantial losses since inception. In addition,
substantially all of Amsco Sterile's assets were sold at July 31, 1994 for an
amount which was less than the assets' carrying values. The statements of
operations do not reflect any income tax benefits for Amsco Sterile's losses as,
under the circumstances described above and in Note B to the financial
statements, none have been or are likely to be realized.
NOTE F -- COMMITMENTS
The terms of the acquisition agreement with Amsco Sterile's predecessor
also included additional consideration under the terms of an earn-out provision
based on net profits of the Company through December 31, 1996. Because of the
substantial losses incurred since the September 1991 acquisition through July
31, 1994, there have been no adjustments to the original purchase price.
NOTE G -- OPERATING LEASES
Amsco Sterile leased offices, facilities and distribution vehicles under
noncancelable operating leases with terms ranging from 1 year to 10 years. The
office and processing facility leases contained various renewal options and
escalating payments. The vehicle leases contained contingent rentals based on
mileage.
Total rental expense for the year ended December 31, 1993, and the seven
months ended July 31, 1994 aggregated approximately $1,125,000 and $670,000
(including contingent rentals of approximately $178,000 and $155,000),
respectively.
F-24
<PAGE> 66
AMSCO STERILE RECOVERIES, INC.
(PREDECESSOR TO STERILE RECOVERIES, INC.)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE H -- EMPLOYEE BENEFIT PLANS
Employees of Amsco Sterile were entitled to participate in the benefit
plans of AMSCO. AMSCO's plans consisted of the following:
AMSCO Employees' Retirement Account
AMSCO administered the AMSCO Employees' Retirement Account (the "Plan"),
which is a qualified employee stock ownership plan.
The Plan enabled eligible employees, including Amsco Sterile's management,
to receive an equity participation in AMSCO. Contributions declared by the
Board of Directors, up to a maximum of 25% of eligible employee
compensation, were made to the Plan. The Plan in turn used the funds to
purchase shares of the AMSCO's stock or made investments in certain other
securities.
AMSCO Pension Plan
AMSCO had a defined benefit pension plan which covered substantially all
domestic union employees and provided pension benefits of stated amounts
for each year of service of the employee. The following table sets forth
the pension plan's funded status at December 31, 1993:
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligations
Vested............................................................... $(29,421,000)
Nonvested............................................................ (982,000)
------
Projected benefit obligation (equal to the accumulated benefit
obligation).......................................................... (30,403,000)
Plan assets at fair value.............................................. 26,462,000
------
Plan assets less than projected benefit obligation................... $ (3,941,000)
======
</TABLE>
Amsco Sterile's expenses relating to these benefit plans were approximately
$0 and $243,000 in 1993 and 1994, respectively.
F-25
<PAGE> 67
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL SCHEDULE
Board of Directors
Sterile Recoveries, Inc.
In connection with our audit of the financial statements of Sterile
Recoveries, Inc., referred to in our report dated May 10, 1996, which is
included in the Prospectus constituting Part I of this Registration Statement,
we have also audited Schedule II for the five months ended December 31, 1994 and
the year ended December 31, 1995. In our opinion, this schedule presents fairly,
in all material respects, the information required to be set forth therein.
GRANT THORNTON LLP
Tampa, Florida
May 10, 1996
S-1
<PAGE> 68
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
STERILE RECOVERIES, INC.
<TABLE>
<CAPTION>
COLUMN C
------------------------------
COLUMN B ADDITIONS
---------- ------------------------------ COLUMN D COLUMN E
COLUMN A BALANCE AT CHARGED TO CHARGED TO ------------ --------------
- --------------------------------- BEGINNING COSTS AND OTHER ACCOUNTS -- DEDUCTIONS -- BALANCE AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD
- --------------------------------- ---------- ---------- ----------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Five months ended December 31,
1994:
Allowance for doubtful
accounts.................... $ -- $ 6,000 -- $ -- $ 6,000
Year ended December 31, 1995:
Allowance for doubtful
accounts.................... 6,000 25,000 -- (10,000)(1) 21,000
</TABLE>
- ---------------
(1) Write-offs of uncollectible accounts.
S-2
<PAGE> 69
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL SCHEDULE
Board of Directors
Sterile Recoveries, Inc.
In connection with our audit of the financial statements of AMSCO Sterile
Recoveries, Inc. referred to in our report dated May 10, 1996, which is included
in the Prospectus constituting Part I of this Registration Statement, we have
also audited Schedule II for the year ended December 31, 1993 and the seven
months ended July 31, 1994. In our opinion, this schedule presents fairly, in
all material respects, the information required to be set forth therein.
GRANT THORNTON LLP
Tampa, Florida
May 10, 1996
S-3
<PAGE> 70
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
AMSCO STERILE RECOVERIES, INC.
<TABLE>
<CAPTION>
COLUMN C
------------------------------
COLUMN B ADDITIONS
---------- ------------------------------ COLUMN D COLUMN E
COLUMN A BALANCE AT CHARGED TO CHARGED TO ------------ --------------
- --------------------------------- BEGINNING COSTS AND OTHER ACCOUNTS -- DEDUCTIONS -- BALANCE AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD
- --------------------------------- ---------- ---------- ----------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Allowance for doubtful
accounts.................... $ -- $ 27,182 -- $ (2,182)(1) $ 25,000
Seven Months ended July 31, 1994:
Allowance for doubtful
accounts.................... 25,000 125,000 150,000
</TABLE>
- ---------------
(1) Write-offs of uncollectible accounts.
S-4
<PAGE> 71
[MAP SHOWING LOCATION OF FACILITIES
AND DEPOTS THROUGHOUT THE UNITED STATES]
<PAGE> 72
- -------------------------------------------------------
- -------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES
IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
The Company............................ 10
Use of Proceeds........................ 12
Dividend Policy........................ 12
Dilution............................... 13
Capitalization......................... 14
Selected Financial Data................ 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 16
Business............................... 22
Management............................. 29
Certain Transactions................... 32
Principal Shareholders................. 33
Description of Capital Stock........... 34
Shares Eligible for Future Sale........ 37
Underwriting........................... 38
Legal Matters.......................... 39
Experts................................ 39
Available Information.................. 39
Index to Financial Statements.......... F-1
</TABLE>
---------------------
UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
2,000,000 SHARES
STERILE RECOVERIES, INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
ROBERT W. BAIRD & CO.
INCORPORATED
RAYMOND JAMES &
ASSOCIATES, INC.
, 1996
- -------------------------------------------------------
- -------------------------------------------------------
<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering (excluding underwriting discounts
and commissions) are as follows:
<TABLE>
<CAPTION>
ITEM AMOUNT
---------------------------------------------------------------- -------
<S> <C>
SEC Registration Fee............................................ $ 9,518
NASD Filing Fee................................................. 3,260
Listing Fees.................................................... 30,918
Transfer Agent and Registrar Fees............................... *
Printing and Engraving Expenses................................. *
Legal Fees and Expenses......................................... *
Accounting Fees and Expenses.................................... *
Blue Sky Qualification Fees and Expenses (including legal
fees)......................................................... *
Director and Officer Liability Insurance Premium................ *
Consulting Fees and Expenses.................................... *
Miscellaneous................................................... *
-------
Total................................................. *
=======
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 6, Section 6.1, of the Company's Articles of Incorporation provides
for the indemnification of the Company's directors and executive officers to the
fullest effect permitted by law. Reference is made to the Company's Articles of
Incorporation filed as Exhibit 3.1 to the Registration Statement. Pursuant to
the Florida Business Corporation Act, the Company may, and in some cases, shall,
indemnify its directors and executive officers against certain liabilities. In
addition, the Company has entered into an indemnity agreement with each of its
current directors and executive officers pursuant to which it is obligated to
indemnify those persons to the fullest extent authorized by law and to advance
payments to cover defense costs against an unsecured obligation to repay such
advances if it is ultimately determined that the recipient of the advance is not
entitled to indemnification. Reference is made to the form of Indemnification
Agreement filed as Exhibit 10.3 to the Registration Statement.
Additionally, the Company maintains a director and officer liability
insurance policy in the face amount of $3,000,000, that insures its officers and
directors against certain liabilities incurred in their capacities as officers
and directors of the Company. Further, pursuant to the Underwriting Agreement
filed as a Exhibit 1.1 to this Registration Statement, the Underwriters have
agreed to indemnify the Company and its officers, directors, and controlling
persons against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the last three years preceding the filing of this Registration
Statement, the Company has sold the following securities that were not
registered under the Securities Act:
On its formation in June 1994, the Company issued an aggregate of 3,000,000
shares to Messrs. Isel, Peterson, and Boosales for $1,011,000 in aggregate
consideration and transfer of certain contractual rights to initially capitalize
the Company.
II-1
<PAGE> 74
In July 1994, the Company issued a Convertible Demand Promissory Note to
Lee R. Kemberling for $1,000,000. Mr. Kemberling converted the Convertible Note
into 225,807 shares of the Company's Common Stock in September 1995 at an
effective price of $4.43 per share. In March 1996, the Company issued another
Convertible Demand Promissory Note to Mr. Kemberling in exchange for another
investment of $1,000,000, of which $750,000 is convertible for one year from its
issuance into 128,205 shares of the Common Stock at a conversion price of $5.85
per share.
In March 1995, the Company issued stock options for 12,500 shares of Common
Stock to Robert Normyle, a former employee, exercisable at a price of $1.00 per
share. In October 1995, the Company issued stock options for 66,000 shares of
Common Stock to Bertram T. Martin, Jr., exercisable at a price of $4.43 per
share. In December 1995, the Company issued to its employees options to purchase
94,000 shares of Common Stock, exercisable at an exercise price of $5.85 per
share. On May 2, 1996, the Company issued to James M. Emanuel options to
purchase 7,500 shares of Common Stock, exercisable at an exercise price of $8.00
per share.
In February 1996, the Company issued 90,000 shares of the Common Stock and
a promissory note to Clayton W. Page in connection with its acquisition of
Surgipro, Inc. The amount of the promissory note will be approximately $110,000,
subject to adjustment.
In March 1996, the Company issued 42,735 shares of Common Stock to Bertram
T. Martin, Jr. in connection with his investment of $250,000 in the Company, and
the Company issued 8,547 shares of Common Stock to David S. Felman in connection
with his investment of $50,000 in the Company.
No person acted as an underwriter with respect to the transactions
described above. In each of the foregoing instances, the Company relied on
Section 4(2) of the Securities Act or Rule 701 promulgated under the Securities
Act for the exemption from the registration requirements of the Securities Act,
since no public offerings were involved.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
1.1 Proposed form of Underwriting Agreement.*
2.1 Asset Purchase Agreement dated July 31, 1994, between the Company and Amsco Sterile
Recoveries, Inc.
2.2 Agreement and Plan of Merger dated as of February 26, 1996, between Surgipro, Inc.
and the Company.
2.3 Articles of Merger dated as of February 26, 1996, between Surgipro, Inc. and the
Company.
3.1 Restated Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4.1 See Exhibits 3.1 and 3.2.
4.2 Specimen certificate for Common Stock.*
4.3 Form of Lock-up Agreement.*
5.1 Opinion of Glenn Rasmussen & Fogarty, P.A., regarding the validity of issuance of
the securities being registered.*
10.1 1995 Stock Option Plan, as amended.
10.2 Form of Stock Option Agreement between the Company and participants under the 1995
Stock Option Plan.
10.3 Form of Indemnity Agreement between the Company and each of its executive officers.
</TABLE>
II-2
<PAGE> 75
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.4 Consulting Agreement dated October 18, 1995, between the Company and Corporate
Strategic Directions, Inc.
10.5 Stock Option Agreement dated March 20, 1995, between the Company and Robert Normyle.
10.6 Shareholder Agreement dated July 28, 1994, among all shareholders of the Company.
10.7 Factoring Agreement and Security Agreement dated July 14, 1994, as amended, between
the Company and Metro Factors, Inc.
10.8 Purchase Money Note dated as of July 31, 1994, as amended, executed by the Company
in favor of Amsco Sterile Recoveries, Inc.
10.9 Purchase Money Security Agreement dated as of July 31, 1994, as amended, between
Amsco Sterile Recoveries, Inc. and the Company.
10.10 Form of Registration Rights Agreement executed in connection with the private
placement of Common Stock.
10.11 Convertible Demand Promissory Note dated March 1, 1996, executed by the Company in
favor of Lee R. Kemberling.
10.12 Convertible Note Agreement dated March 1, 1996, between Lee R. Kemberling and the
Company.
10.13 Promissory Note to be executed by the Company in favor of Clayton W. Page.*
10.14 Form of Employment Agreement between the Company and each of Messrs. Isel, Peterson,
and Boosales.*
10.15 Employment Agreement dated as of February 26, 1996, between Clayton W. Page and the
Company.
10.16 Lease Agreement dated August 16, 1991, between Coastal 2920 Corporation and Amsco
Sterile Recoveries, Inc., as amended and assigned to the Company.
10.17 Lease dated August 28, 1992, among Winchester Homes Inc. and Weyerhaeuser Real
Estate Company and Amsco Sterile Recoveries, Inc., as assigned to the Company.
10.18 Texas Industrial Net Lease dated March 19, 1992, between the Trustees of the Estate
of James Campbell, Deceased and Amsco Sterile Recoveries, Inc., as assigned to the
Company.
10.19 Lease dated March 30, 1992, between Walter D'Aloisio and Amsco Sterile Recoveries,
Inc., as assigned to the Company.
10.20 Standard Industrial Lease -- Multi-Tenant (American Industrial Real Estate
Association) dated February 24, 1992, between Borstein Enterprises and Amsco Sterile
Recoveries, Inc., as assigned to the Company.
10.21 Carolina Central Industrial Center Lease dated April 22, 1992, between Industrial
Development Associates and Amsco Sterile Recoveries, Inc., as assigned to the
Company.
10.22 Lease Agreement dated September 2, 1993, between Price Pioneer Company, Ltd. and
Amsco Sterile Recoveries, Inc., as assigned to the Company.
10.23 Service Center Lease dated December 4, 1991, between QP One Corporation and Amsco
Sterile Recoveries, Inc., as amended and assigned to the Company.
10.24 Lease Agreement dated January 31, 1996, between Florida Conference Association of
Seventh-Day Adventists and Surgipro, Inc., as assigned to the Company.
10.25 License Agreement dated July 31, 1994, between the Company and Amsco Sterile
Recoveries, Inc.
10.26 Marketing and Distribution Agreement dated November 15, 1994, between Sterile
Concepts, Inc. and the Company.
</TABLE>
II-3
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.27 Stock Option Agreement dated as of October 18, 1996, between Bertram T. Martin, Jr.
and the Company.
10.28 Stock Option Agreement dated as of May 2, 1996, between James M. Emanuel and the
Company.*
10.29 1996 Non-Employee Director Stock Option Plan.
23.1 (a) Consent of Grant Thornton LLP (relating to Amsco Sterile Recoveries, Inc.)
(b) Consent of Grant Thornton LLP (relating to the Company)
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney relating to subsequent amendments (included on the signature page
of this Registration Statement).
27.1 Financial Data Schedules.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The Registrant hereby undertakes that:
(1) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
II-4
<PAGE> 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Clearwater, State of
Florida, on May 13, 1996.
STERILE RECOVERIES, INC.
By: /s/ RICHARD T. ISEL
--------------------------------------
Richard T. Isel
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to section 6(a) of the Securities Act of 1933, each of the
undersigned hereby appoints and constitutes Richard T. Isel and James T.
Boosales, and each of them (with full power to act alone), his true and lawful
agents and attorneys-in-fact, with full power of substitution and
resubstitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute, and file with the Securities and
Exchange Commission and any state securities regulatory board or commission any
documents relating to the proposed issuance and registration of the securities
offered pursuant to this Registration Statement on Form S-1 under the Securities
Act of 1933, as amended, including any and all pre-effective and post-effective
amendments relating thereto, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority, and
including any registration statement for the same offering covered by this
registration statement that is to be effective upon filing pursuant to Rule
462(b) of the Securities Act, granting unto said attorney, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as he might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- -------------------------------------- -------------
<C> <S> <C>
/s/ RICHARD T. ISEL President, Chief Executive Officer, May 13, 1996
- --------------------------------------- and Director (Principal Executive
Richard T. Isel Officer)
/s/ WAYNE R. PETERSON Executive Vice President -- Operations May 13, 1996
- --------------------------------------- and Director
Wayne R. Peterson
/s/ JAMES T. BOOSALES Executive Vice President, Chief May 13, 1996
- --------------------------------------- Financial Officer, and Director
James T. Boosales (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-5
<PAGE> 78
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- -------------------------------------- -------------
<C> <S> <C>
/s/ BERTRAM T. MARTIN, JR. Director May 13, 1996
- ---------------------------------------
Bertram T. Martin, Jr.
/s/ LEE R. KEMBERLING Director May 13, 1996
- ---------------------------------------
Lee R. Kemberling
/s/ JAMES M. EMANUEL Director May 13, 1996
- ---------------------------------------
James M. Emanuel
</TABLE>
II-6
<PAGE> 79
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED PAGE
- ------ --------------------------------------------------------------------- -------------
<C> <S> <C>
1.1 Proposed form of Underwriting Agreement.*............................
2.1 Asset Purchase Agreement dated July 31, 1994, between the Company and
Amsco Sterile Recoveries, Inc........................................
2.2 Agreement and Plan of Merger dated as of February 26, 1996, between
Surgipro, Inc. and the Company.......................................
2.3 Articles of Merger dated as of February 26, 1996, between Surgipro,
Inc. and the Company.................................................
3.1 Restated Articles of Incorporation of the Company....................
3.2 Bylaws of the Company................................................
4.1 See Exhibits 3.1 and 3.2.............................................
4.2 Specimen certificate for Common Stock.*..............................
4.3 Form of Lock-up Agreement.*..........................................
5.1 Opinion of Glenn Rasmussen & Fogarty, P.A., regarding the validity of
issuance of the securities being registered.*........................
10.1 1995 Stock Option Plan, as amended...................................
10.2 Form of Stock Option Agreement between the Company and participants
under the 1995 Stock Option Plan.....................................
10.3 Form of Indemnity Agreement between the Company and each of its
executive officers...................................................
10.4 Consulting Agreement dated October 18, 1995, between the Company and
Corporate Strategic Directions, Inc..................................
10.5 Stock Option Agreement dated March 20, 1995, between the Company and
Robert Normyle.......................................................
10.6 Shareholder Agreement dated July 28, 1994, among all shareholders of
the Company..........................................................
10.7 Factoring Agreement and Security Agreement dated July 14, 1994, as
amended, between the Company and Metro Factors, Inc..................
10.8 Purchase Money Note dated as of July 31, 1994, as amended, executed
by the Company in favor of Amsco Sterile Recoveries, Inc.............
10.9 Purchase Money Security Agreement dated as of July 31, 1994, as
amended, between Amsco Sterile Recoveries, Inc. and the Company......
10.10 Form of Registration Rights Agreement executed in connection with the
private placement of Common Stock....................................
10.11 Convertible Demand Promissory Note dated March 1, 1996, executed by
the Company in favor of Lee R. Kemberling............................
10.12 Convertible Note Agreement dated March 1, 1996, between Lee R.
Kemberling and the Company...........................................
10.13 Promissory Note to be executed by the Company in favor of Clayton W.
Page.*...............................................................
10.14 Form of Employment Agreement between the Company and each of Messrs.
Isel, Peterson, and Boosales.*.......................................
10.15 Employment Agreement dated as of February 26, 1996, between Clayton
W. Page and the Company..............................................
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED PAGE
- ------ --------------------------------------------------------------------- -------------
<C> <S> <C>
10.16 Lease Agreement dated August 16, 1991, between Coastal 2920
Corporation and Amsco Sterile Recoveries, Inc., as amended and
assigned to the Company..............................................
10.17 Lease dated August 28, 1992, among Winchester Homes Inc. and
Weyerhaeuser Real Estate Company and Amsco Sterile Recoveries, Inc.,
as assigned to the Company...........................................
10.18 Texas Industrial Net Lease dated March 19, 1992, between the Trustees
of the Estate of James Campbell, Deceased and Amsco Sterile
Recoveries, Inc., as assigned to the Company.........................
10.19 Lease dated March 30, 1992, between Walter D'Aloisio and Amsco
Sterile Recoveries, Inc., as assigned to the Company.................
10.20 Standard Industrial Lease -- Multi-Tenant (American Industrial Real
Estate Association) dated February 24, 1992, between Borstein
Enterprises and Amsco Sterile Recoveries, Inc., as assigned to the
Company..............................................................
10.21 Carolina Central Industrial Center Lease dated April 22, 1992,
between Industrial Development Associates and Amsco Sterile
Recoveries, Inc., as assigned to the Company.........................
10.22 Lease Agreement dated September 2, 1993, between Price Pioneer
Company, Ltd. and Amsco Sterile Recoveries, Inc., as assigned to the
Company..............................................................
10.23 Service Center Lease dated December 4, 1991, between QP One
Corporation and Amsco Sterile Recoveries, Inc., as amended and
assigned to the Company..............................................
10.24 Lease Agreement dated January 31, 1996, between Florida Conference
Association of Seventh-Day Adventists and Surgipro, Inc., as assigned
to the Company.......................................................
10.25 License Agreement dated July 31, 1994, between the Company and Amsco
Sterile Recoveries, Inc..............................................
10.26 Marketing and Distribution Agreement dated November 15, 1994, between
Sterile Concepts, Inc. and the Company...............................
10.27 Stock Option Agreement dated as of October 18, 1996, between Bertram
T. Martin, Jr. and the Company.......................................
10.28 Stock Option Agreement dated as of May 2, 1996, between James M.
Emanuel and the Company.*............................................
10.29 1996 Non-Employee Director Stock Option Plan.........................
23.1 (a) Consent of Grant Thornton LLP (relating to Amsco Sterile
Recoveries, Inc.)....................................................
(b) Consent of Grant Thornton LLP (relating to the Company)..........
23.2 Consent of Counsel (included in Exhibit 5.1).........................
24.1 Power of Attorney relating to subsequent amendments (included on the
signature page of this Registration Statement).......................
27.1 Financial Data Schedules.............................................
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of July 31,
1994 by and between AMSCO STERILE RECOVERIES, INC., a Delaware corporation
("Seller") and STERILE RECOVERIES, INC., a Florida corporation ("Buyer"),
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of designing, contracting
for the manufacture of, supplying and sterilizing reusable gowns and drapes
used in surgical procedures in hospitals and other medical facilities (the
"Business"); and
WHEREAS, Seller desires to sell and transfer to Buyer, and Buyer
desires to purchase and acquire from Seller, substantially all of Seller's
rights, properties and assets pertaining to the Business;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth and other good and valuable consideration, had and received, and
intending to be legally bound, the parties hereto, upon the terms and subject
to the conditions contained herein, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. Purchase and Sale of Assets. Upon the terms and
subject to the conditions contained herein, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase and acquire
from Seller, all of Seller's right, title and interest in and to the following
described properties, rights and assets, wherever situated, of Seller used in
the conduct of the Business:
(a) Assets to be Purchased. Seller shall sell, assign, transfer,
convey and deliver to Buyer all of its right, title and interest in its assets
used in the conduct of the Business, wherever located, tangible and intangible,
real, personal and mixed as the same exist on the date hereof, other than the
Excluded Assets (as defined below). The assets to be sold and assigned to
Buyer are described as follows (all of such assets and properties are
collectively referred to hereinafter as the "Assets"):
(i) certain real property of Seller located in Sugar
Land, Texas and described in Schedule 1.1(a)(i) of the Disclosure
Memorandum (as hereinafter defined), together with all buildings,
structures, fixtures and improvements of Seller, with respect to or
located on such real property and all appurtenances thereto and all
appurtenant rights, privileges and easements belonging or appertaining
thereto (the "Sugar Land Property");
(ii) the leasehold estate of Seller in and to each of the
real property leases described in Schedule 1.1(a)(ii) of the
Disclosure Memorandum (the "Real Property Leases"), together with all
right, title and interest of Seller as lessee with respect to all
buildings, fixtures, improvements, rights of way, appurtenances
therein or thereto and easements and other rights relating thereto;
(iii) all machinery, equipment, replacement parts,
furniture, fixtures, vehicles (together with all transferable
warranties with respect to such property) and other tangible assets or
property, wherever located, used in the operation of the Business and
owned by Seller;
(iv) all inventories, raw materials, supplies and work in
process, wherever located, used in the operation of or held for lease
in the Business and owned by Seller;
<PAGE> 2
(v) all of the right, title and interest of Seller in, to
and under any contracts, agreements, commitments, plans (other than
employee benefit plans), arrangements and personal property leases of
the Business that are described on Schedule 1.1(a)(v) of the
Disclosure Memorandum;
(vi) all of Seller's assignable registrations, licenses,
permits, approvals, grants, franchises and consents for operation of
the Business, whether issued or granted by any federal, state or local
government entity or municipality or subdivision thereof or any
authority, department, commission, board, agency, court or
instrumentality, including without limitation Seller's 510(k)
registrations of its products with the Food and Drug Administration;
(vii) all right, title and interest of Seller in and to the
name "Sterile Recoveries";
(viii) all right, title and interest of Seller in and to any
and all patents, patent applications, copyrights and copyright
registrations described on Schedule 1.1(a)(viii) of the Disclosure
Memorandum;
(ix) all right, title and interest of Seller in and to any
and all know-how, inventions, processes, formulae, product manuals,
phone numbers and proprietary technical information used in the
Business;
(x) all right, title and interest of Seller in and to all
deposits described on Schedule 1.1(a)(x) of the Disclosure Memorandum;
(xi) the electronic data and business records of Seller
relating to the Business;
(xii) all accounts receivable (other than those accounts
receivable specifically identified in Sections 1.1(b)(iv), 1.1(b)(vi)
and 1.1(b)(vii) hereof);
(xiii) certain rights associated with certain software, as
described in Section 3.1(g) hereof;
(xiv) all rights of Seller to indemnity by or contribution
from lessors and others (other than insurers) in respect of any
liabilities assumed by Buyer as described in Section 1.2(a) hereof;
and
(xv) all other property and assets of Seller used
exclusively in the conduct of the Business, real or personal, tangible
or intangible, wherever situated, other than the Excluded Assets.
(b) Excluded Assets. Notwithstanding any other provision of this
Agreement, Seller shall retain all of its rights and interests in and to (i)
any cash or bank accounts of, Seller; (ii) Seller's rights in and to the name
"AMSCO" or any similar name or derivation thereof used by Seller; (iii)
Seller's corporate logos, service marks, trademarks and trade names (except
that Buyer shall acquire Seller's rights in and to the name "Sterile
Recoveries," in accordance with Section 1.1(a)(vii) hereof); (iv) any right of
Seller to receive a tax refund from any Taxing Authority (as hereinafter
defined) and any tax assets or tax benefits of Seller reflected on the balance
sheet of Seller as of July 3, 1994; (v) Seller's minute books, stock record
books and corporate seal; (vi) any notes or loans receivable of Seller from any
employee or affiliate of Seller, including without limitation those loans
receivable reflected on Schedule 1.1(b)(vi) of the Disclosure Memorandum; (vii)
prepaid items reflected on Schedule 1.1(b)(vii) of the Disclosure Memorandum;
(viii) the proprietary information described on Schedule 1.1(b)(viii) of the
Disclosure Memorandum (the "Sterilization Technology"); and (ix) assets
transferred by bill of sale directly to Medline Industries, Inc. at Buyer's
instruction.
- 2 -
<PAGE> 3
(c) Effectuation of Purchase and Sale. The transfer of the Assets
as herein provided shall be effected by bills of sale, deeds, assignments and
other instruments of transfer and conveyance delivered to Buyer on the Closing
Date in forms sufficient to transfer the Assets as contemplated by this
Agreement, including a warranty deed with respect to the Sugar Land Property.
(d) Consents. Except as otherwise described on Schedule 1.1(d) of
the Disclosure Memorandum, Seller agrees to use reasonable efforts to obtain
the consent of any parties to any contracts, licenses, leases or other
agreements being assigned by Seller to Buyer hereunder; provided, however, that
this provision shall not require Seller to furnish an additional guaranty of
any obligation of Buyer under any assumed lease. Schedule 1.1(d) of the
Disclosure Memorandum contains a listing of all of Seller's contracts,
licenses, leases and agreements that require the consent of a third party for
the assignment thereof to Buyer. Seller shall pay any waiver, amendment or
consent fees required by the terms of any contract, license, lease or agreement
incidental to the procurement of any waiver, amendment or consent. If any such
required consent is not obtained, Seller shall cooperate with Buyer in any
reasonable arrangement to provide for Buyer the benefits under any such
contract, license, lease or other agreement, and Buyer shall perform the
obligations of Seller under any such contract, license, lease or other
agreement to the extent it receives such benefits (provided, however, that
Seller shall not be required to incur any additional costs or expenses in order
to provide such benefits to Buyer). Except as otherwise reflected on Schedule
1.1(d) hereof, Buyer shall indemnify and hold Seller harmless against the
claims of any such other party under any such contract, lease, license or other
agreement with respect to which Buyer and Seller have entered into an
arrangement as described in the preceding sentence to provide such contractual
benefits to Buyer.
Section 1.2 Assumed and Excluded Liabilities.
(a) Assumed Liabilities. As of the Closing and subject to the
terms and conditions of this Agreement, Buyer fully assumes and agrees to pay,
perform and discharge when due (with no recourse whatsoever to Seller) the
following liabilities, responsibilities and obligations (collectively, the
"Assumed Liabilities"):
(i) Real Pronerty Leases. All liabilities and
obligations of Seller under each of the real property leases set forth
on Schedule 1.1(a)(ii) of the Disclosure Memorandum (collectively the
"Assumed Leases") (but subject to the proration provisions of Section
1.7 hereof);
(ii) Other Contracts. Subject to the proration provisions
of Section 1.7 hereof, all liabilities and obligations of Seller
related to the Business under each of Seller's contracts, agreements,
personal property leases, understandings and undertakings, whether
written or oral, that are set forth on Schedule 1.1(a)(v) of the
Disclosure Memorandum;
(iii) Environmental Liabilities. All liabilities,
responsibilities and obligations arising from (1) any violation of
Environmental Law (as hereinafter defined) with respect to Seller's
operations and the real property owned or leased by Seller and (2) any
remedial environmental obligations imposed by any federal, state or
local authority with respect to such real property, including without
limitation any obligations imposed under the comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (and any implementing regulations) or any similar state or
local legal requirement, whether such liabilities, responsibilities or
obligations accrued prior to or after the Closing;
(iv) Accounts Payable. All accounts payable of Seller
other than those described in Section 1.2(b)(v) hereof;
(v) Kemco Litigation. All liabilities and obligations of
Seller arising from or relating to Kemco Systems, Inc. v. AMSCO
Sterile Recoveries, Inc., Case Numbers 94-003910-CI-008 and
94-003910-CI-013 (the "Kemco Litigation");
- 3 -
<PAGE> 4
(vi) Vendor and Supplier Purchase Orders. All liabilities
and obligations of Seller under those open vendor and supplier
purchase orders described on Schedule 1.2(a)(vi) of the Disclosure
Memorandum (for goods not shipped or services not rendered prior to
the Closing), as well as all other open vendor purchase orders for
supplies or product useable or saleable in the ordinary course of
Buyer's business (which other purchase orders do not exceed $25,000 in
the aggregate);
(vii) Customer Purchase Orders. All liabilities and
obligations of Seller under open customer purchase orders and any
rebate, refund or discount arrangements entered into or accepted in
connection with the Business; and
(viii) Other Liabilities. To the extent not included in
subparagraphs (i) through (vii) above or Section 1.2(b) below, all
debts, contracts, liabilities, responsibilities and obligations of
Seller of any kind, character or description, whether accrued,
absolute, contingent or otherwise, whether known or unknown, that are
based upon events, acts or occurrences which existed or occurred on or
before December 1, 1993, or thereafter arising as a result of the
operation of the Business by Seller on or before such date (whether or
not asserted during such period).
The Assumed Liabilities will not include, and Buyer does not assume, the
Excluded Liabilities, as defined below. Buyer and Seller agree that they will
use their best efforts to effectuate Buyer's assumption of the Assumed
Liabilities. Except for the Assumed Liabilities, Buyer will not assume any
liability, obligation or commitment of Seller.
(b) Excluded Liabilities. Anything contained in this Agreement to
the contrary notwithstanding, the following liabilities, responsibilities and
obligations of Seller ("Excluded Liabilities") shall be retained by Seller and
shall be paid, performed and discharged by Seller when due (with no recourse
whatsoever to Buyer) as of and after the Closing:
(i) Tax Matters. All liabilities, responsibilities, and
obligations of Seller with respect to any federal, state and local
taxes (including any interest or penalties) attributable to the use
and ownership of the Assets by Seller prior to the Closing or the
conduct of the Business by Seller prior to the Closing;
(ii) Litigation. All liabilities, responsibilities and
obligations arising from or relating to any litigation pending against
Seller (except the Kemco Litigation);
(iii) Excluded Assets. All liabilities, responsibilities
and obligations arising out of or related to the Excluded Assets;
(iv) Employee Matters. All liabilities, responsibilities,
and obligations arising from or relating to Seller's employees'
service and relationship with Seller before the Closing or, except to
the extent of Buyer's obligation under Section 3.2(c) hereof, the
failure of Buyer to continue their employment after the Closing
(including contractual obligations, severance obligations under plans
or programs, if any, of Seller) and associated with Buyer not
retaining employees (including claims, if any, under WARN or any state
counterpart also governing plant closing laws), worker's compensation
and claims for failure of Seller to comply with any applicable laws or
regulations governing Seller's relationship with Seller's employees
before or after the Closing;
(v) Accounts Payable. All accounts payable of Seller (1)
reflected on the books of Seller prior to the Closing Date; (2) for
goods delivered to or services rendered for the Seller prior to the
Closing Date (including obligations to Rotecno A.G. pursuant to
Invoice No. 13298 dated April 19, 1994 and Tennessee Apparel Company
arising out of services rendered prior to Closing); or (3) in respect
of which invoices have been received prior to the Closing Date;
- 4 -
<PAGE> 5
(vi) Product Liabilitv. Those product liability claims
arising out of the sale or lease of product by Seller prior to
closing; and
(vii) Other Liabilities. To the extent not included in
subparagraphs (i) through (vi) above or Section 1.2(a) above, all
debts, contracts, liabilities, responsibilities and obligations of
Seller of any kind, character or description, whether accrued,
absolute, contingent or otherwise, whether known or unknown, that are
based upon events, acts or occurrences which occurred on or after
December 2, 1993 to the Closing Date, or thereafter arising as a
result of the operation of the Business by Seller during such period
(whether or not asserted during that period).
Section 1.3. Purchase Price and Payment Terms. The purchase price
(the "Purchase Price") for the Assets is $14,883,250, and is payable to Seller
as follows:
(a) Cash Payment. Buyer shall pay to Seller, in immediately
available funds, the cash sum of $5,012,000;
(b) Deferred Payment. Buyer shall deliver to Seller a
non-negotiable Purchase Money Note, in substantially the form of Exhibit A,
which note shall be secured by the Purchase Money Security Agreement in
substantially the form attached hereto as Exhibit B;
(c) Assumption of Liabilities. Buyer shall assume, and agree to
pay, perform, and satisfy when due, the Assumed Liabilities; and
(d) Release of Employment Agreement, Stock Purchase Agreement and
Stock Option Agreement. Buyer shall cause Richard T. Isel to release AMSCO
International, Inc. ("AMSCO"), American Sterilizer Company ("ASC") and Seller
from all liability under the Employment Agreement among ASRI, ASC and Mr. Isel
dated as of September 3, 1991 (the "Employment Agreement"), the Stock Option
Agreement dated September 3, 1991 between AMSCO and Mr. Isel (the "Stock Option
Agreement") and the Stock Purchase Agreement dated as of September 3, 1991
among K-Bro Linen Systems, Inc., ASC, AMSCO, Mr. Isel and Wayne Peterson (the
"Stock Purchase Agreement").
Section 1.4. Time and Place of Closing. The "Closing" means 11:59
p.m. Pittsburgh time on July 31, 1994 (the "Closing Date"). The Closing has
taken place at Pittsburgh, Pennsylvania.
Section 1.5. Seller's Closing Deliveries. Seller has delivered
(or caused to be delivered) to Buyer the following:
(a) control of the Assets, as well as all documents effectuating
the transfer of the Assets, including but not limited to a special warranty
deed in the form attached as Exhibit C hereto conveying the Sugar Land
Property;
(b) a copy of the certificate of incorporation of Seller,
certified by the Secretary of State of the State of Delaware and a copy of
Seller's by-laws;
(c) a recent good standing certificate for Seller, issued by the
Secretary of State of the State of Delaware;
(d) copies of resolutions of Seller's board of directors and
stockholder approving all actions taken or to be taken by Seller and its
officers in connection with the consummation of the transactions contemplated
by this Agreement;
(e) a receipt executed by Seller acknowledging receipt from Buyer
of the cash portion of the Purchase Price;
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(f) a Support Services Agreement in the form of Exhibit D hereto;
(g) the officer's certificate in the form attached hereto as
Exhibit E and a secretary's certificate regarding Seller's by-laws, the
resolutions described in (d) above and the incumbency of officers;
(h) a listing of Seller's accounts receivable as of 11:59 p.m. on
the Closing Date;
(i) authorization letter permitting Buyer to obtain the deposits
described in Section 1.1(a)(x) hereof;
(j) releases by AMSCO International, Inc. of Messrs. Isel and
Peterson in the forms of Exhibits F-1 and F-2 hereto;
(k) opinion of William J. Rieflin, Esq., general counsel of AMSCO
International, Inc., in the form of Exhibit G hereto; and
(l) side letter of AMSCO International, Inc. in the form attached
hereto as Exhibit H.
Section 1.6 Buyer's Closing Deliveries. Buyer has delivered (or
caused to be delivered) to Seller:
(a) payment of the cash portion of the Purchase Price in same-day
funds by wire transfer to an account or accounts designated in writing by
Seller, together with the Purchase Money Note in the form of Exhibit A and the
Security Agreement in the form of Exhibit B;
(b) a copy of the certificate of incorporation of Buyer, certified
by the Secretary of State of Florida, and a copy of Buyer's by-laws;
(c) copies of resolutions of the board of directors of Buyer
authorizing the execution of this Agreement and the consummation of the
transactions contemplated hereby;
(d) a recent good standing certificate for Buyer, issued by the
Secretary of State of Florida;
(e) the instrument of assumption in the form attached hereto as
Exhibit I;
(f) leasehold assignment and assumption agreements for each of the
Real Property Leases in substantially the form of Exhibit J hereto;
(g) the officer's certificate in the form attached hereto as
Exhibit K and a secretary's certificate regarding Buyer's by-laws, the
resolutions described in (c) above and the incumbency of officers, both dated
the Closing Date;
(h) releases by K-Bro Linen Systems, Inc. and Messrs. Isel and
Peterson of AMSCO International, Inc., American Sterilizer Company and Seller
in the forms of Exhibits L-1, L-2 and L-3 hereto; and
(i) opinion of Glenn, Rasmussen & Fogarty, counsel to Buyer, in
the form of Exhibit M hereto.
Section 1.7. Prorations. Any operating expenses, including any
real or personal tax or assessment, permit or license fee, or similar tax,
assessment, fee or charge, or any rent or utility payments based on the
ownership, lease or use of the Assets during any period which includes the
Closing Date shall be apportioned between Buyer and Seller on a prorated basis.
Seller shall pay that portion of the expense equal to the product of the total
expense for such period times a fraction, the
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numerator of which is equal to the number of days during the period the Assets
were owned, leased or used by Seller and the denominator of which is equal to
the total number of days in the period. Buyer shall pay the remaining portion
of the expense. For purposes of the foregoing allocation provision, Seller
shall be considered the owner, lessee or user of the Assets on the Closing
Date. All prorations of taxes under this Section 1.7 shall be calculated for
purposes of the Closing on the basis of the most recent rates, assignments and
valuations available to the parties at the time such prorations are determined.
In the event that the actual tax assessments for any such prorated item shall
differ from those utilized in the initial proration calculation for the
Closing, Seller and Buyer shall reprorate such taxes on the basis of the final
assessments as promptly as practicable following the determination of the final
tax liability for the Assets subject to such reproration.
Section 1.8. Allocation of Consideration. The consideration given
by Buyer for the Assets will be allocated among the components of the Assets in
accordance with the attached Exhibit N. The amount of consideration allocated
to the Assets will be decreased pro rata to the extent that the purchase price
for the Assets is reduced pursuant to Section 1.7 hereof. Buyer and Seller
accept and shall abide by the foregoing allocation of the purchase price for
the Assets and shall not include in any tax return filed by either of them any
item of gain, income, or deduction that reflects a different allocation of any
portion of the purchase price. On the Closing Date, Buyer and Seller shall
execute an IRS Form 8594 containing the allocation prescribed by this section.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer that, except as set forth in a
disclosure memorandum delivered herewith by Seller to Buyer (the "Disclosure
Memorandum") (which Disclosure Memorandum shall be deemed to qualify each
representation and warranty in its entirety notwithstanding the omission of a
specific reference to the Disclosure Memorandum in such representation and
warranty):
(a) Corporate Existence and Authority. Seller is a corporation
validly existing and in good standing under the laws of the state of Delaware,
and is duly qualified to do business and in good standing in Alabama,
California, the District of Columbia, Florida, Georgia, Idaho, Illinois,
Indiana, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas, Utah,
Virginia, Wisconsin and Wyoming.
(b) Subsidiaries. Seller has no subsidiary corporations.
(c) Stock Ownership. All of the outstanding stock of Seller is
owned by American Sterilizer Company, a Pennsylvania corporation.
(d) Execution and Delivery of Agreement. Seller has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by, and constitutes the valid and binding
obligation of, Seller, enforceable against Seller in accordance with its terms,
except as enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought.
(e) Authorization; Stockholder Approval. The execution and
delivery of this Agreement by Seller and the consummation of the transactions
contemplated hereby have been duly approved by the board of directors of
Seller. Seller has obtained all stockholder approvals required under
applicable law for the consummation of the transactions contemplated by this
Agreement. No other corporate
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proceedings on the part of Seller are necessary to authorize this Agreement or
to consummate the transactions so contemplated.
(f) Absence of Defaults. Except as set forth in Schedule 2.1(f)
of the Disclosure Memorandum, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by Seller with any of the provisions hereof shall (a) conflict with
or result in a breach of any provision of the certificate of incorporation or
by-laws of Seller, (b) violate, conflict with, constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, result in a material breach or termination of, accelerate the
performance required by, or result in the creation of a lien, security
interest, charge or other encumbrance upon any of the properties or assets of,
Seller under, or require the consent of any party under, any material provision
of any contract or lease to which Seller is a party, or (c) violate any
judgment, ruling, order, writ, injunction, statute, rule or regulation
applicable to Seller.
(g) Title to Properties. Schedule 1.1(a)(ii) of the Disclosure
Memorandum sets forth as of the date hereof a complete and correct list of all
of Seller's leases of real estate, including any and all buildings, fixtures
and other tenant improvements thereon, together with an identification of all
of Seller's subleases of all or any portion of such leased real property. Each
Real Property Lease is the valid and binding obligation of Seller. Seller has
not received written notice of any default (or any event or condition which
constitutes, or after notice or passage of time or both would constitute a
default) in the performance of its obligations under any Real Property Lease
which has not been cured or waived, and has no knowledge of any default by any
landlord under any Real Property Lease which would, in either case, have a
material adverse effect on Seller. Each Real Property Lease is in full force
and effect and all rents, expenses and charges payable by or to Seller for all
periods prior to the date hereof have been paid or accrued pursuant to the
terms thereof (except for any payments payable by Seller as to which the
obligation to make such payment is being contested in good faith and except for
payments which in the aggregate will not have a material adverse effect on
Seller). Except as otherwise disclosed on Schedule 2.1(g) of the Disclosure
Memorandum, the fixtures, equipment, inventory, automobiles and other tangible
personal property (whether owned or leased) reflected on the balance sheet of
Seller at July 3, 1994 or acquired thereafter (except for assets sold or
otherwise disposed of in the ordinary course of business since July 3, 1994)
are free and clear of any material liens and encumbrances. Other than to Buyer
hereunder, Seller has not granted to any person any right or option to acquire
any interest in the Assets or any part of them. Except for its purchase money
security interest in the Assets, Seller and its affiliates do not and will not
have any claim to the equipment listed on Schedule 2.1(g) of the Disclosure
Memorandum or any other Assets or any right or option to acquire any interest
in the Assets or any part of them.
(h) Tax Matters. For purposes of this Agreement, "Taxes" or "Tax"
means all net income, capital gains, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profit
taxes, customs duties, or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax, or
additional amounts imposed by any taxing authority ("Taxing Authority") upon
Seller.
(i) Schedule 2.1(h)(i) of the Disclosure Memorandum sets
forth all jurisdictions in which Seller has filed or will file income
or franchise tax returns relating to the Business for each taxable
period, or portion thereof, ending on or before the Closing Date.
(ii) Seller has withheld or will withhold amounts from the
compensation and other payments due and payable to its employees and
has filed or will file all federal, foreign, state, and local returns
and reports with respect to employee income tax withholding and social
security and employment taxes for all periods (or portions thereof)
ending on or before the Closing Date, in compliance with the
provisions of applicable federal, state and local laws.
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(iii) Seller has paid, or provided a sufficient reserve for
the payment of, all federal, state and local Taxes with respect to all
periods, or portions thereof, ending on or before the Closing Date.
(iv) There are no material claims or, to the best
knowledge of Seller, any investigations by any Taxing Authority
pending or, to the best knowledge of Seller, threatened, against
Seller for any past due Taxes; and there has been no waiver of any
applicable statute of limitations or extension of the time for the
assessment of any Tax against Seller.
(i) Litigation. Except as set forth in Schedule 2.1(i) of the
Disclosure Memorandum, there is no action, suit, proceeding, arbitration or
investigation by any governmental agency pending against or affecting Seller,
or against any asset or business of Seller which could have a material adverse
effect on Seller, nor any judgment, injunction, decree, consent, order or rule
imposed on Seller that is having, or insofar as reasonably can be foreseen,
will have, a material adverse effect on Seller.
(j) Compliance with Laws. Except as set forth on Schedule 2.1(j)
of the Disclosure Memorandum, Seller holds all permits, licenses, certificates
of authority, orders and approvals of, and has made all filings, applications
and registrations with, all governmental or regulatory bodies that are required
in order to permit it to carry on the Business as it is presently conducted,
except where failure to hold permits, licenses, certificates of authority,
orders and approvals, or to make such filings, applications and registrations,
would not have a material adverse effect on Seller. Seller and the Business
are in substantial compliance with all applicable statutes, regulations, rules,
orders, permits or licenses.
(k) Employee Benefit Plans. Schedule 2.1(k) of the Disclosure
Memorandum includes a complete list of all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that now allow for participation by employees of Seller
("Employee Plans"). To the best knowledge of Seller, no prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") has occurred with respect to any
Employee Plan. Except as identified on Schedule 2.1(k) of the Disclosure
Memorandum, at no time has Seller or, since September 3, 1991, any member of
Seller's controlled group (within the meaning of Sections 414(b), (c), (m) or
(o) of the Code), maintained any Employee Plan that is a defined benefit plan
or that is subject to the minimum funding standards of Section 412 of the Code.
No Employee Plan is a multi-employer plan within the meaning of Section 3(37)
of ERISA and neither Seller, nor, since September 3, 1991, any member of
Seller's controlled group, has ever contributed to or been required to
contribute to any multi-employer plan. With respect to each of Seller's
Employee Plans that is subject to continuation coverage requirements, each such
Employee Plan has been operated in material compliance with the provisions of
Section 4980B of the Code and Part 6 of Title I of ERISA.
(l) No Broker. Other than Alex. Brown & Co., no broker or finder,
or other party or agent performing similar functions, has been retained by
Seller or is entitled to be paid based upon any agreements, arrangements or
understandings made by Seller in connection with the transactions contemplated
by this Agreement, and Seller has not agreed to pay any brokerage fee or other
commission on account of the transactions contemplated by this Agreement.
(m) Environmental Matters. To Seller's knowledge: (i) except as
set forth on Schedule 2.1(m) of the Disclosure Memorandum, as of this date
Seller is presently in substantial compliance with all Environmental Laws
applicable to its operations. For purposes of this Agreement, "Environmental
Laws" shall mean all laws, regulations, rules, ordinances, by-laws, orders or
determinations of governmental or judicial authorities at the federal, state or
local level relating to the environment or the release of any materials into
the environment; and (ii) except as set forth on Schedule 2.1(m) of the
Disclosure Memorandum, Seller has not as of this date entered into or been
subject to any consent decree, compliance order, or administrative order with
respect to any Environmental Law applicable to the real property owned and
leased by Seller; received notice under the citizen suit provisions of any
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Environmental Law in connection with the real property owned and leased by
Seller; or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim under any
Environmental Law.
(n) Location and Use of Purchased Property. To the best of the
Seller's knowledge, all of the Assets (except inventory leased to customers in
the ordinary course of business and certain marketing materials) are located on
the Sugar Land Property and the Leased Premises.
Section 2.2. Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller as follows:
(a) Existence and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and is duly qualified to do business and is in good standing in each
jurisdiction where its ownership or lease of property or the nature of the
business conducted by it requires it to be so qualified, except for such
jurisdictions in which the failure to so qualify would not have a material
adverse effect on Buyer. Buyer has the requisite power and authority to own,
lease and operate its properties and assets and to carry on its business as it
is now being conducted. Buyer has heretofore delivered to Seller true and
complete copies of its charter and its by-laws as currently in effect.
(b) Execution and Delivery of Agreement. Buyer has the requisite
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by, and constitutes the valid and binding obligation of,
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought.
(c) Authorization. The execution and delivery of this Agreement
by Buyer, and the consummation of the transactions contemplated hereby and
thereby, have been duly approved by the board of directors of Buyer and no
other corporate proceedings on the part of Buyer are necessary to authorize
this Agreement or to consummate the transactions so contemplated.
(d) Absence of Defaults. Neither the execution nor delivery of
this Agreement, the consummation of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof shall (a) conflict with
or result in a breach of any provision of the articles of incorporation or
by-laws of Buyer; (b) violate, conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
result in a breach or termination of, accelerate the performance required by,
or result in the creation of a lien, security interest, charge, or other
encumbrance upon any of the properties or assets of Buyer under, or require the
consent of any other party to, any note, bond, mortgage, lease, agreement, or
other instrument to which Buyer is a party or by which Buyer may be bound
(prior to the Closing) which would have a material adverse effect on Buyer, or
(c) upon obtaining all requisite governmental regulatory approvals, violate any
judgment, ruling, order, writ, injunction, statute, rule, or regulation
applicable to Buyer or the properties or assets of Buyer.
(e) Absence of Certain Changes. There has not been any change in
the financial condition, results of operations or business of Buyer since its
inception, which either individually or in the aggregate would have a material
adverse effect on Buyer or could reasonably be expected to prevent or impair
the ability of Buyer to consummate the transactions contemplated hereby.
(f) No Litigation. There is no action, suit, proceeding,
arbitration or investigation by any governmental agency pending or, to the
knowledge of Buyer, threatened against or affecting, nor any judgment,
injunction, decree, consent, order or rule imposed on Buyer, which is having
or, insofar as
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reasonably can be foreseen, will have a material adverse effect on Buyer or
which, if adversely determined, would preclude Buyer from consummating the
transactions contemplated hereby.
(g) Compliance with Laws. Buyer holds all permits, licenses,
certificates of authority, orders, and approvals of, and has made all filings,
applications, and registrations with, all governmental or regulatory bodies
that are required in order to permit it to carry on its business in all
respects as it is presently conducted except where failure to hold permits,
licenses, certificates of authority, orders, and approvals, or to make such
filings, applications, and registrations would not have a material adverse
effect on the Buyer. Buyer is in substantial compliance with all applicable
statutes, regulations, rules, orders, permits, or licenses.
(h) No Broker. Other than Charles Herold, as broker for Metro
Factors, Inc., no broker or finder, or other party or agent performing similar
functions, has been retained by Buyer or is entitled to be paid based upon any
agreements, arrangements or understandings made by Buyer in connection with the
transactions contemplated by this Agreement, and Buyer has not agreed to pay
any brokerage fee or other commission on account of the transactions
contemplated by this Agreement.
ARTICLE III
COVENANTS
Section 3.1. Covenants of Seller. Seller hereby covenants and
agrees, for so long as no Event of Default has occurred and is continuing under
the Purchase Money Note attached hereto as Exhibit A, as follows:
(a) Press Releases. Seller shall consult with Buyer as to the
form and content of any press release or other public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby, and
shall not issue any such press release, written communication or public
disclosure prior to such consultation, except in exigent circumstances as may
be required by law. Seller shall promptly announce this transaction to its
employees and customers.
(b) Additional Instruments. Seller shall execute and deliver to
Buyer following Closing such instruments and take such further actions
consistent with the terms of this Agreement as Buyer may reasonably require in
order to carry out the intent of this Agreement.
(c) Competition and Trade Secrets. Seller shall not at any time
after the Closing Date:
(i) influence or attempt to influence any customer who
has a business relationship with Seller as of the date of this
Agreement to lease or buy reusable surgical gowns and drapes from any
entity affiliated with Seller following the acquisition of the Assets
by Buyer; and
(ii) divulge, disclose, or communicate, for any reason or
in any manner to any person, any information (written or otherwise)
concerning Trade Secrets. For purposes of this Section 3.1(c)(ii),
"Trade Secrets" shall mean: (w) all confidential information in
tangible form that is clearly identified as confidential and used
exclusively in the Business, (x) proprietary product formulas or
ingredients used exclusively in the Business, (y) all proprietary
methods, processes (including the Sterilization Technology and other
wash/sterilization cycles) and operating procedures (including
inventory control systems and facilities designs) used exclusively in
the Business or (z) proprietary information related to the design of
gowns and drapes (provided, however, that this covenant shall not
apply to information already in the public domain as of the date
hereof; to information that was by reasonable proof already in the
hands of a third party; to information that was independently
developed by any third party; or to information that is disclosed by a
source other than Seller or its affiliates).
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(d) Change in Corporate Name. Within 60 days after the Closing
Date, Seller's parent shall cause Seller to change its corporate name so that
it is not deceptively similar to "Sterile Recoveries, Inc." Immediately after
the Closing Date, Buyer shall discontinue use of the name "AMSCO," including in
its letterhead, invoices, purchase orders, business cards and promotional
materials; provided, however, that Buyer may continue to use inventory and
equipment marked with the name "AMSCO" for a period of 60 days after the
Closing Date if Buyer exercises its best efforts to mark through the name
"AMSCO" on such inventory and equipment as soon as practicable. Seller
consents to the foregoing limited use by Buyer during this transition period.
(e) Post-Closing Cooperation on Accounts. Seller shall promptly
remit to Metro Factors, Inc. any checks or other payments for accounts assigned
pursuant to this Agreement. Seller shall cooperate with Buyer and Metro
Factors, Inc. in collection of accounts, including providing any supporting
documentation or information with respect to the accounts.
(f) Bulk Sales Compliance. Buyer hereby waives compliance by
Seller with the provisions of any bulk sale or similar law of any state or
commonwealth, and Seller warrants and agrees to pay and discharge when due all
claims of creditors which could be asserted against Buyer by reason of such
noncompliance to the extent that such liabilities are not specifically assumed
by Buyer under this Agreement.
(g) Software. Seller agrees to transfer to Buyer rights in the
software on Schedule 3.1(g) of the Disclosure Memorandum to the extent Seller
is able to transfer such rights. Such transfer shall be on the following
terms:
(i) As to software owned by Seller and identified in
Category I on Schedule 3.1(g) of the Disclosure Memorandum, Seller
hereby grants Buyer a perpetual license to use this software and will
transfer a copy of this software (including the source code) to Buyer;
(ii) As to the software identified in Category II on
Schedule 3.1(g) of the Disclosure Memorandum, Seller hereby grants
Buyer a license to use this software for transition purposes in
accordance with the terms of the Support Services Agreement; and
(iii) As to software licensed from third-parties by Seller
and identified in Category III on Schedule 3.1(g) of the Disclosure
Memorandum, Seller will attempt to obtain for Buyer the right to use
such software to the extent permitted under the relevant license
agreement; provided, however, that Seller shall retain such rights in
the software as Seller may require. To the extent assignment or
transfer is not permitted under the relevant third party license
agreement, Buyer will obtain new licenses in its own right.
The licenses granted under subsections (i) and (ii) are for Buyer's
internal use only. Buyer may not assign or sublicense this software, nor may
Buyer use this software to process data for others. The licenses granted under
subsections (i) and (ii) shall be royalty-free, nonexclusive and
nontransferable; provided, however, that the license granted under subsection
(i) may be transferred in connection with any sale of the Business in which the
Purchase Money Note is paid in full).
With respect to software under subsection (iii), Seller agrees to
contact the third-party licensors to seek the necessary consents on behalf of
Buyer. However, Buyer shall ultimately bear the responsibility for obtaining
any necessary consents and for associated charges.
Until licenses are transferred to Buyer or Buyer obtains new licenses,
Seller will take reasonable steps pursuant to the Support Services Agreement to
provide Buyer with the continuing benefit of the software currently being used
to operate the Business. However, Seller will not be required to violate any
terms or conditions set forth in any license agreement to which Seller is a
party.
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SELLER MAKES NO EXPRESS OR IMPLIED WARRANTY WHATSOEVER AS TO THE
SOFTWARE OR THE RIGHTS TRANSFERRED HEREIN, ALL OF WHICH ARE PROVIDED "AS-IS
WHERE IS." SELLER HEREBY DISCLAIMS ALL SUCH WARRANTIES, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
(h) Sterilization Technology. In accordance with Section 1.1(b)
hereof, Seller will retain rights to use the sterilization cycle technology
(the "Sterilization Technology") developed by Seller for use in the Business,
subject to the terms set forth in this section. Seller shall not use (or
license others to use) the Sterilization Technology in connection with the
lease or sale of reusable surgical gowns or drapes and Buyer shall use the
Sterilization Technology only in connection with the lease or sale of reusable
surgical gowns or drapes and for no other purpose. Seller hereby licenses the
Sterilization Technology to Buyer for use in the Business. The foregoing
license shall be perpetual, royalty-free and non-transferable except in
connection with a sale of the Business or substantially all of Buyer's assets
as a consequence of which all amounts due under the Purchase Money Note
described in Section 1.3(b) hereof are paid. Buyer may contract with other
manufacturers for the production and supply of equipment that uses the
Sterilization Technology, but only if SRI obtains assurances from such
manufacturers that they will keep the Sterilization Technology confidential.
Section 3.2. Covenants of Buyer. Buyer hereby covenants and
agrees, for so long as the Purchase Money Note attached hereto as Exhibit A
remains outstanding, as follows:
(a) Press Releases. Buyer shall consult with Seller as to the
form and content of any press release or other public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby, and
shall not issue any such press release, written communication or public
disclosure prior to such consultation, except in exigent circumstances as may
be required by law.
(b) Additional Instruments. Buyer shall execute and deliver to
Seller such further instruments and take such other actions as Seller may
reasonably require in order to carry out the intent of this Agreement.
(c) Employees. Buyer shall extend offers of employment to all
employees of Seller as of the Closing Date, other than those identified on
Exhibit O hereto.
(d) Post-Closing Access. Following the Closing, Buyer shall
afford to the officers, employees and authorized representatives of Seller all
reasonable access, during normal business hours and upon reasonable prior
notice (so as not to interfere with the operations of Buyer), to the offices,
properties and business records of Buyer in order that Seller may have full
opportunity to obtain such information as Seller's tax advisers and auditors
shall require in order to prepare its tax returns and financial statements. At
Seller's request, from and after the Closing Date, Buyer shall deliver to
Seller copies of any business records of Buyer that are required by Seller's
tax advisers or auditors.
(e) Keep-Well Seller's Customers. Buyer acknowledges that some
customers of the Business are, and will continue to be from and after this
date, customers of Seller's affiliates. Accordingly, Buyer agrees that it will
exercise its best efforts (subject to reasonable commercial limitations) to
service its customers in a professional and workmanlike manner consistent with
the standards of quality provided to Buyer's other customers and at prices not
higher than Buyer's prices at the relevant time for similar accounts with
similar product mixes (provided, however, that nothing contained in this
Section 3.2(e) will limit or otherwise affect Buyer's right to set its prices
and/or services in any manner it deems appropriate).
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ARTICLE IV
INSURANCE
4.1. Insurance Coverage (Seller). At Buyer's cost and expense,
Seller agrees to accommodate a request from Buyer to have Buyer named as an
additional insured on the primary insurance policies of Seller listed in
Schedule 4.1 of the Disclosure Memorandum. Buyer acknowledges that Seller has
provided Buyer with copies of the policies listed in Schedule 4.1 of the
Disclosure Memorandum, and that Buyer has reviewed such policies and
understands the limitations, exceptions and exclusions of coverage contained in
such policies. Seller's obligation to continue to maintain Buyer as an
additional insured under such policies shall continue until the second
anniversary of the Closing Date. Through the second anniversary of the
Closing, Seller shall maintain its occurrences insurance coverage in full force
and effect and prevent any material reduction of coverage, provided that such
maintenance obligation will not require Seller to agree to payments which
constitute increases over current levels. Seller shall provide to Buyer notice
of any termination, revocation, or reduction of any such policy.
4.2. Insurance Coverage (Buyer). Buyer shall, from and after
Closing, obtain and maintain in force general liability, products liability,
worker's compensation and employers liability insurance policies providing
coverage comparable to that maintained by Seller prior to Closing, provided
that such maintenance obligation will not require Buyer to agree to payments or
terms that are commercially unreasonable. This obligation shall continue until
the second anniversary of the Closing Date. Buyer shall provide to Seller
notice of any termination, revocation, or reduction of any such policy.
ARTICLE V
TITLE COMMITMENTS FOR REAL PROPERTY
Section 5.1. Title Evidence. Buyer acknowledges its receipt of a
commitment for the issuance of an owner's fee policy of title insurance, issued
by Lawyers Title Insurance Corporation (the "Title Company") on July 21, 1994,
as its commitment No. 94260073, with respect to the Sugar Land Property (the
"Commitment"). Buyer further acknowledges its approval of all matters shown as
exceptions in Schedules B and C to the Commitment, other than that certain
mechanic's lien claim and affidavit appearing as item C-5 of the Commitment.
At Seller's sole cost and expense, Seller will cause the Title Company to issue
to Buyer as soon as practicable after the Closing, an owner's title insurance
policy (ALTA Form B) having an effective date as of the Closing insuring title
in Buyer in the manner and for the amounts set forth in the Commitment, but (x)
making no exception to coverage in respect of the aforementioned mechanic's
lien; and (y) making no exception to coverage for matters which may be deleted
by Seller's execution and delivery of a standard ALTA form owner's affidavit.
ARTICLE VI
AMENDMENT
The parties may amend, modify or supplement this Agreement only
pursuant to an instrument in writing, executed and delivered by the parties
hereto.
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<PAGE> 15
ARTICLE VII
EXPENSES
Section 7.1. Except as otherwise specified in Section 7.2 hereof, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement,
including without limitation all fees and expenses of agents, representatives
and counsel employed by the parties hereto, shall be borne solely by the party
which shall have incurred the same.
Section 7.2. All costs and expenses associated with the transfer to
Seller of the Assets pursuant to this Agreement, including recording costs and
filing fees, stamp taxes, personal property taxes, sales taxes and related
costs, fees and expenses, shall be allocated in accordance with the parties'
written agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Seller Indemnification of Buyer. Seller shall
indemnify and hold harmless Buyer (and, at Buyer's request, defend) from and
against all losses, damages, claims, demands, choses of actions and liabilities
and all reasonable costs and expenses (including, without limitation,
reasonable costs and expenses of litigation and, to the extent permitted by
law, reasonable attorneys' fees) incurred by Buyer occasioned or caused by,
resulting from or arising out of, directly or indirectly, (a) the
untruthfulness or inaccuracy of any of the representations or warranties, or
the breach of the covenants or other agreements of Seller contained in this
Agreement; provided, however, that Seller shall have no obligation to indemnify
Buyer in connection with any untruthful or inaccurate representation or
warranty to the extent that Richard T. Isel or Wayne R. Peterson have knowledge
on the date of this Agreement of its untruthfulness or inaccuracy; (b) the
assertion against Buyer of any liability or obligation relating to any of the
Excluded Assets or Excluded Liabilities; or (c) any liability arising out of
the operation of the Business prior to the Closing which does not constitute an
Assumed Liability. For purposes of this Section 8.1, "knowledge" shall be
deemed to include information of which any of Messrs. Isel or Peterson have
actual knowledge.
Section 8.2. Buyer Indemnification of Seller. Buyer shall
indemnify and hold harmless Seller (and, at Seller's request, defend) from and
against all losses, damages, claims, demands, choses of actions and liabilities
and all reasonable costs and expenses (including, without limitation,
reasonable costs and expenses of litigation and, to the extent permitted by
law, reasonable attorneys' fees) incurred by Seller occasioned or caused by,
resulting from or arising out of, directly or indirectly, (a) the
untruthfulness or inaccuracy of any of the representations or warranties, or
the breach of the covenants or other agreements of Buyer contained in this
Agreement, (b) the assertion against Seller of any claim arising out of or
related to the Assets (except to the extent such claim relates only to an
Excluded Liability) or the Assumed Liabilities, (c) any liability arising under
the Stock Purchase Agreement, the Employment Agreement or the Stock Option
Agreement; or (d) any liability arising out of the operation of the Business
from and after the Closing which does not constitute an Excluded Liability.
Section 8.3. Claims for Indemnity.
(a) Time for Making of Claims for Indemnity. A claim for
indemnity under this Agreement may be made:
(i) for indemnification of Buyer by Seller pursuant to
Section 8.1, at any time prior to one year after the Closing Date;
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<PAGE> 16
(ii) for indemnification of Seller by Buyer pursuant to
Section 8.2, at any time prior to the expiration of the applicable
limitations period governing the relevant claim or cause of action.
Notwithstanding the foregoing, the limitations set forth in this
Section 8.3(a)(i) shall not apply in respect of any claim for indemnifiable
losses if and to the extent such losses are covered by Seller's insurance
policies listed in Schedule 4.1 of the Disclosure Memorandum.
(b) In the event that any claim is made within the prescribed
period, the indemnity relating to such claim shall survive until such claim is
resolved. Claims not made within the applicable period shall not be
indemnified hereunder. Each written notice of a claim for indemnity shall set
forth in reasonable detail the basis upon which such claim for indemnity is
made.
(c) Conduct of Lawsuits. In the event that any person or entity
not a party to this Agreement shall make any demand or claim or file or
threaten to file any lawsuit, which demand, claim or lawsuit may result in any
loss, cost or expense subject to indemnification under this Agreement, then the
indemnified party shall provide written notice of such demand, claim or lawsuit
to the indemnifying party (and, if applicable, its insurance carrier) as soon
as is reasonably practicable but in any event within fifteen days after
discovery or receipt of such demand, claim or lawsuit, and the indemnifying
party (and, if applicable, its insurance carrier) shall have the option, at
their cost and expense, to defend the indemnified party or to retain counsel
for the indemnified party (and its insurance carrier) to defend any such
demand, claim or lawsuit. In the event that the indemnifying party shall fail
to respond to the indemnified party within fifteen (15) days after receipt of
such written notice of any such demand, claim or lawsuit, then the indemnified
party may retain counsel and conduct the defense of such demand, claim or
lawsuit as it may in its reasonable discretion deem proper, at the reasonable
cost and expense of the indemnifying party, subject however, to the
indemnifying party's right to intervene in such defense at any time upon the
giving of reasonable notice. In effecting the settlement of any such demand,
claim or lawsuit, an indemnified party shall act in good faith, shall consult
with the indemnifying party (and its insurance carrier), and shall enter into
only such settlement as the indemnifying party shall approve, which approval
will not be unreasonably withheld.
Section 8.4. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained in this
Section 8, Seller shall not be required to provide indemnification to Buyer
unless and until the aggregate of all amounts (including costs and expenses)
that are indemnifiable by Seller pursuant to Section 8.1 and for which Buyer
lacks insurance coverage exceeds $200,000, in which event Seller will be liable
only for the amount of such claims in excess of such threshold; provided,
however, that the threshold specified in this Section 8.4(a) shall not apply in
respect of indemnity claims of Buyer concerning (i) Seller's failure to pay the
accounts payable described in Section 1.2(b)(v) hereof, (ii) Seller's failure
to pay the taxes described in Section 1.2(b)(i) hereof, or (iii) Seller's
failure to pay the employee matters described in Section 1.2(b)(iv) hereof.
(b) In addition to the limitation set forth in clause (a) above,
Seller and Buyer agree that all of Buyer's uninsured indemnifiable amounts in
excess of $200,000 shall be divided equally between Buyer and Seller until
Buyer shall have incurred an aggregate of $1,000,000 in otherwise indemnifiable
amounts under Section 8.1 (it being understood that Seller's out-of-pocket
payments for indemnification under this Article VIII will under no
circumstances exceed $400,000). Seller shall have no obligation to indemnify
Buyer for indemnifiable losses incurred by Buyer in excess of $1,000,000.
(c) During the pendency of any dispute between the indemnifying
party and its insurer over the coverage actually provided under any such
insurance policy, neither party shall be required to pay out of pocket any
indemnifiable losses in respect of any loss such insurance policy purports to
cover. Direct indemnification by the insured will be due only upon a judgment,
settlement or other resolution
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<PAGE> 17
of or in such coverage dispute, under the terms of which it is determined that
the indemnifiable losses are not, in fact, covered by the insurance policy. If
said judgment, settlement or other resolution results in a determination that
only part of the indemnifiable loss is covered, then the insured indemnifying
party shall, following such determination, personally pay the non-covered part
of the loss, to the extent this Agreement would otherwise require any such
payment.
ARTICLE IX
MISCELIANEOUS
Section 9.1. Survival of Covenants, Representations and
Warranties. The representations, warranties and covenants in this Agreement
(other than covenants contained herein which by their express terms extend
beyond the Closing) will terminate at the Closing.
Section 9.2. Limitation and Disclaimer of Representations and
Warranties.
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY TO THIS
AGREEMENT MAKES ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER PARTY HERETO.
WITHOUT LIMITING THE FOREGOING, EACH PARTY HERETO SPECIFICALLY DISCLAIMS ANY
AND ALL REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY STATED IN THIS AGREEMENT
OR IN ANY CERTIFICATE, EXHIBIT OR OTHER INSTRUMENT DELIVERED OR TO BE DELIVERED
PURSUANT TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR
WARRANTY IMPLIED BY LAW. IN ADDITION, SELLER HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY AS TO THE QUALITY OR CONDITION OF THE ASSETS, ALL OF
WHICH SHALL BE TAKEN "AS IS, WHERE IS."
Section 9.3. Parties in Interest; Assignment. This Agreement is
binding upon the parties hereto and their respective successors, legal
representatives and assigns, and is for the benefit of the parties hereto, and
their respective successors, legal representatives and assigns. No other
person shall have any rights or benefits under this Agreement, either as a
third party beneficiary or otherwise. This Agreement cannot be assigned except
by a written agreement executed by the parties hereto or their respective
successors and assigns.
Section 9.4. Entire Agreement. This Agreement reflects the entire
agreement among the parties and supersedes all prior agreements and
undertakings, oral or written, among the parties with respect to the subject
matter of this Agreement, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein. The Disclosure Memorandum and the exhibits to
this Agreement are incorporated into this Agreement by reference and made a
part hereof.
Section 9.5. Notice. All notices and other communications
provided for under this Agreement shall be effective only if such notices are
in writing and personally delivered (with receipt thereof acknowledged), mailed
(by registered or certified mail, return receipt requested), telegraphed,
telexed or telecopied to the applicable party at the respective addresses
indicated below:
If to Seller:
AMSCO Sterile Recoveries, Inc.
c/o Mr. Daniel P. Barry
AMSCO International, Inc.
One Mellon Bank Center
500 Grant Street, Suite 5000
Pittsburgh, Pennsylvania 15219
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<PAGE> 18
with a copy to:
William J. Rieflin, Esq.
General Counsel and Secretary
AMSCO International, Inc.
One Mellon Bank Center
500 Grant Street, Suite 5000
Pittsburgh, Pennsylvania 15219
Telecopy: (412) 338-6501
If to Buyer:
Sterile Recoveries, Inc.
28100 U.S. Hwy. N.
Suite 201
Clearwater, FL 34621
Telecopy: (813) 726-8959
with a copy to:
David S. Felman, Esq.
Glenn Rasmussen & Fogarty
100 South Ashley Drive, Suite 1300
P.O. Box 3333
Tampa, Florida 33601-3333
Telecopy: (813) 229-5916
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying, as to delivery, with
the terms of this section.
Section 9.6. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but such
counterparts taken together shall constitute one and the same instrument.
Section 9.7. Headings. The headings used in this Agreement are
inserted for convenience and reference only and are not intended to be part of
or to affect the meaning of this Agreement.
Section 9.8. Governing Law; Submission to Jurisdiction. This
Agreement shall be construed and enforced in accordance with the internal laws
of the Commonwealth of Pennsylvania, without regard to its conflicts of laws
principles. Buyer and Seller hereby consent to the jurisdiction of any state
or federal court located within the city of Pittsburgh, Pennsylvania and waive
personal service of any and all process, and consent that all such service of
process be made by registered mail directed to such party at the address
designated by such party pursuant to Section 9.5 hereof, and service so made
shall be deemed to be completed upon actual receipt thereof. Buyer and Seller
agree that if either at any time commences any action or proceeding with
respect to this Agreement, it will commence such action or proceeding only in a
state or federal court located within the city of Pittsburgh, Pennsylvania.
Buyer and Seller waive any objection to venue of any action instituted
hereunder and consent to the granting of such legal or equitable relief as is
deemed appropriate by the court.
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<PAGE> 19
Section 9.9. Severabilitv. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 9.10. Materiality. The term "material adverse effect" as
used herein shall mean a material adverse change in the financial condition,
results of operations or business of Seller or Buyer, as the case may be.
"Material" shall mean, with respect to any matter, item or event, any matter,
item or event which is material to the financial condition, results of
operations or business of Seller or Buyer, as the case may be.
Section 9.11. Affiliates. For purposes of this Agreement, the term
"affiliate" means any person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
any such person.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
<TABLE>
<S> <C>
AMSCO STERILE RECOVERIES, INC.,
ATTEST: A Delaware Corporation
/s/ Susan E. Minahan By: /s/ William J. Rieflin
- -------------------------------- --------------------------------
Name: Wm. J. Rieflin
--------------------------------
Title: Secretary
--------------------------------
STERILE RECOVERIES, INC.,
ATTEST: A Florida Corporation
/s/ [Illegible] By: /s/ James T. Boosales
- -------------------------------- --------------------------------
Name: J. T. Boosales
--------------------------------
Title: Exec. V. P.
--------------------------------
</TABLE>
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<PAGE> 20
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
A Purchase Money Note
B Purchase Money Security Agreement
C Special Warranty Deed
B Support Services Agreement
E Officer's Certificate - Seller
F-1 Release of Isel by AMSCO
F-2 Release of Peterson by AMSCO
G Opinion of William J. Rieflin, Esq.
H Side letter of AMSCO International, Inc.
I Instrument of Assumption
J Assignment and Assumption Agreement for Leases
K Officer's Certificate - Buyer
L-1 Release of AMSCO, American Sterilizer and Seller by K-Bro Linen Systems, Inc.
L-2 Release of AMSCO, American Sterilizer and Seller by Isel
L-3 Release of AMSCO, American Sterilizer and Seller by Peterson
M Opinion of Buyer's Counsel
N Allocation of Consideration
O Employees Not to be Rehired by Buyer
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES IN DISCLOSURE MEMORANDUM
- ----------------------------------
<S> <C>
1.1(a)(i) Description of Sugar Land Property
1.1(a)(ii) Real Property Leases
1.1(a)(v) Contracts
1.1(a)(viii) Intellectual Property
1.1(a)(x) Deposits
1.1(b)(vi) Loans Receivable
1.1(b)(vii) Prepaid Items
</TABLE>
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<PAGE> 21
1.1(b)(viii) Retained Proprietary Information
1.1(d) Third Party Consents
1.2(a)(ii) Other Contracts
1.2(a)(vi) Open Purchase Orders
2.1(f) Defaults
2.1(g) Equipment
2.1(h)(i) Jurisdictions in which Seller Files Tax Returns
2.1(i) Litigation
2.1(j) Compliance with Laws
2.1(k) Employee Benefit Plans
2.1(m) Environmental Law Compliance
3.1(g) Software
4.1 Insurance Policies
THE ABOVE SCHEDULES HAVE BEEN OMITTED. THE COMPANY AGREES TO FURNISH
A COPY OF ANY OMITTED SCHEDULE TO THE COMMISSION UPON REQUEST.
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<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is executed as of
February 26, 1996, by SURGIPRO, INC. (the "Company"), a Florida
corporation, STERILE RECOVERIES, INC. ("Purchaser"), a Florida corporation,
and CLAYTON W. PAGE ("Page"), a Florida resident and the Company's sole
shareholder, to record their agreement regarding the acquisition of the
Company by Purchaser.
RECITALS
A. The Boards of Directors of Purchaser and the Company have agreed to
effect the merger provided for in this Agreement on the terms and subject
to the conditions set forth in this Agreement.
B. For federal income tax purposes, the parties intend that the merger
provided for in this Agreement will qualify as a reorganization within the
meaning of section 368 of the Internal Revenue Code of 1986, as amended.
C. Page, Purchaser, and the Company desire to make certain
representations, warranties, and agreements contained in this Agreement in
connection with the merger.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants, and agreements contained in this Agreement,
Page, Purchaser, and the Company agree as follows:
1. FORM AND INTERPRETATION.
1.1 Definitions. As used in this Agreement and the exhibits to
it, the following capitalized terms have the definitions attributed to
them:
"Agreement" means this Agreement and Plan of Merger, as
originally executed by the parties and as subsequently amended or
modified by them in accordance with its terms.
"Articles of Merger" means the Articles of Merger in the form
attached as Exhibit "A," to be executed by Purchaser and the Company on
the Closing Date and filed with the Department of State of Florida
to effectuate the Merger.
"Board of Directors" means the Board of Directors of the Company.
<PAGE> 2
"Closing Date" means February 26, 1996, which is the date as of
which this Agreement will become effective.
"Code" means the United States Internal Revenue Code of 1986, as
amended, or any law or regulations enacted to replace that Code.
"Company" means Surgipro, Inc., a Florida corporation and a party to
this Agreement.
"Company Disclosure Schedule" means the disclosure schedule dated
February 29, 1996, that is contemplated by this Agreement and has been
separately furnished to Purchaser by the Company.
"Company Shares" means shares of the Company's common stock, $.01
par value.
"Effective Time" means the date and time when the Articles of
Merger are filed by the Department of State of Florida.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and includes all rules and regulations promulgated under
that act.
"Financial Contingency" means a direct or indirect liability,
obligation, or indebtedness of a person that arises upon the occurrence
of an event, condition, circumstance, or act or omission of another
person, and includes (a) asserted claims, legal proceedings,
administrative proceedings, and other "loss contingencies," as determined
pursuant to Statement of Financial Accounting Standards No. 5, (b) a
liability, obligation, or indebtedness of another person that a
person has assumed, indorsed, guaranteed, or become a surety,
accommodation party, or responsible in any other way for, except for
guarantees and indorsements made in connection with the deposit of
items for collection in the ordinary course of business, (c) agreements
to purchase, repurchase, or otherwise acquire any liability,
obligation, or indebtedness or any collateral therefor, (d) agreements
to fund any deficiency, to protect any obligee against loss, to
provide funds for the repayment of any liability, obligation, or
indebtedness of another person, to keep well or maintain the
solvency of any business organization, or to maintain the level of any
particular asset, liability, or item of income of any business organi-
zation, and (e) an agreement for the purchase of materials, supplies,
or other property that requires
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<PAGE> 3
payment regardless of whether the materials, supplies, or other
property are delivered or tendered to the purchaser.
"Florida Corporation Law" means the Florida Business
Corporation Act, Chapter 607, Florida Statutes (1995), as in effect on
the Closing Date.
"Forest Lake Lease" means the Lease dated January 31, 1996,
between the Company and Forest Lake Academy.
"Hazardous Material" means urea, solid waste, polychlorinated
biphenyls (PCBs), paint containing lead, formaldehyde foam insulation,
discharges of sewage or effluent, and all toxic, hazardous, and
radioactive waste, material, pollutants, substances, and contaminants
that are regulated by any local, state, or federal environmental law,
whether or not classified as hazardous under those laws.
"Lien" means a restriction on the use or transferability of
property and a claim or charge on any interest in property securing an
obligation owed to, or claimed by, a person other than the owner of the
property, whether the claim or charge exists by reason of statute,
contract, or common law, and includes a lien or security interest
arising from a pledge, mortgage, indenture, encumbrance,
hypothecation, trust receipt, deed of trust, conditional sale, security
agreement, or collateral assignment and a lease, bailment, or consignment
for security purposes.
"Material Adverse Effect" refers to the magnitude of the
consequence of a particular fact, event, condition, or circumstance to
the Company and means that the fact, event, condition, or circumstance had,
has, or will likely have an adverse effect on the then-existing
assets, business, prospects, financial condition, or results of
operations of the Company that is material to the Company, and any
adverse effect that involves or would involve the loss, disposition,
or impairment of an asset or the accrual or payment of a cost, expense, or
liability (including damages) will be "material" to the Company, only if
it exceeds $25,000.
"Merger" means the merger of the Company with and into Purchaser
that is contemplated by this Agreement.
"Merger Consideration" means the Purchaser Note and the 90,000
Purchaser Shares into which the Company Shares are converted as a result
of the Merger.
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<PAGE> 4
"Page" means Clayton W. Page, a party to this Agreement and the
sole shareholder of the Company.
"Plan" means every employee benefit, welfare, or compensation plan,
trust, program, practice, agreement, or arrangement that provides
benefits or compensation to any current or former officer, director, or
employee of the Company or his or her survivors, including any bonus,
thrift, pension, savings, incentive, insurance, retirement, stock
bonus, stock option, stock purchase, profit sharing, loan guarantee,
early retirement, deferred compensation, medical reimbursement,
supplemental retirement, relocation assistance, stock appreciation
right, severance or termination compensation, employee loan or credit
extension, and dental, vision, medical, or other health care plan.
"Plan of Merger" means the plan of merger of the Company with and
into Purchaser that is set forth in Article I of the Articles of Merger.
"Purchase Property" means all of the Company's assets, properties,
operations, and business, wherever located.
"Purchaser Disclosure Documents" means the disclosure documents
dated as of February 26, 1996, that is contemplated by this Agreement and
has been separately furnished to Page and the Company by Purchaser.
"Purchaser Note" means the promissory note of the Purchaser in
the form of Exhibit "B," to be delivered to Page as part of the
Merger Consideration.
"Purchaser Shares" means shares of Purchaser's common stock, $.001
par value.
"Shareholder Agreement" means the Shareholder Agreement dated
July 28, 1994, among Purchaser, Richard T. Isel, Wayne R.
Peterson, and James T. Boosales, as "Original Shareholders," as
subsequently joined by other "Shareholders."
"Site" means each parcel of real estate now or previously owned or
leased by the Company or on which operations are or were conducted by the
Company.
"Surviving Corporation" means Purchaser, following the Merger.
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<PAGE> 5
1.2 Other Recurring Words. As used in this Agreement and the exhibits to
it, (a) the words "consent" and "approval" are synonymous, (b) the word
"including" is always without limitation, (c) neuter words should be
construed to include correlative feminine and masculine words, (d) words in
the singular number include words in the plural number and vice versa, and (e)
the following uncapitalized words and terms have the meanings ascribed to
them:
"business day" means a week day on which commercial banks are open
for business in Tampa, Florida.
"costs" includes the fees, costs, and expenses of experts,
attorneys, mediators, witnesses, arbitrators, collection agents, and
supersedeas bonds, whether incurred before or after demand or commence-
ment of legal proceedings, and whether incurred pursuant to trial,
appellate, mediation, bankruptcy, arbitration, administrative, or
judgment-execution proceedings.
"days" means calendar days, including Sundays, Saturdays, and
holidays.
"governmental authority" includes a government, a public body or
authority, and any governmental body, agency, authority, department, or
subdivision, whether domestic or foreign or local, state, regional, or
national.
"law" includes a state or national code, rule, statute, ordinance,
or regulation and the common law arising from final, nonappealable
decisions of governmental authorities and state or federal courts in the
United States.
"order" includes an order, decree, ruling, judgment, or injunction.
"person" includes, in addition to a natural person, a group,
trust, syndicate, corporation, cooperative, association, partnership,
business trust, joint venture, limited liability company, unin-
corporated organization, and governmental authority.
"subsidiary," when used in reference to any particular party,
means a corporation with respect to which the party either (i) is required
to consolidate the reporting of its financial information in accordance
with generally accepted accounting principles, or (ii) is a beneficial
owner of either at least 20% of any class of the corporation's
securities or securities of the corporation representing at least 20% of
the voting power of all the corporation's
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<PAGE> 6
outstanding securities that are entitled to vote in the election of its
directors.
Accounting terms used, but not otherwise defined, in this Agreement are
to be construed and interpreted in accordance with "generally accepted
accounting principles" in effect on the Execution Date, as described in
Accounting Standards Board SAS No. 69 and established by various
pronouncements of the Accounting Principles Board, the Financial Accounting
Standards Board, and the American Institute of Certified Public
Accountants.
1.3 Headings; Exhibits; References. The headings preceding the
text of the sections of this Agreement are solely for convenient reference and
neither constitute a part of this Agreement nor affect its meaning,
interpretation, or effect. All exhibits and schedules referred to in this
Agreement are an integral part of it and are incorporated by reference in
it. Unless otherwise expressly stated, a reference in this Agreement to a
section, exhibit, or schedule is to a section, exhibit, or schedule of this
Agreement. If this Agreement is assigned by a party in accordance with its
terms, all references in this Agreement to that party will pertain to
the assignee, and the parties shall revise the exhibits as necessary or
appropriate to substitute the assignee for the assignor under this Agreement.
1.4 Governing Law. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the
laws of those jurisdictions pertaining to the resolution of conflicts with
laws of other jurisdictions. The parties waive any rule of law that would
require any ambiguity in this Agreement to be construed against the party
who drafted it.
1.5 Severability. The parties have executed this Agreement with the
intention that every provision of it is valid, lawful, and enforceable.
Accordingly, each provision of this Agreement should be applied and
interpreted so it is valid, lawful, and enforceable. If a provision of this
Agreement (or the application of it) is held by a court to be invalid, un-
lawful, or unenforceable under applicable law, however, that provision will
be considered separable from the remaining provisions of this Agreement,
will be reformed and enforced to the extent that it is valid and lawful, and
will not affect the validity, lawfulness, or enforceability of any other pro-
vision of this Agreement or the application of that provision to a person or
circumstance in which it is valid, lawful, and enforceable, unless the
invalidity affects the lawfulness of Purchaser's acquisition of the Company,
in which case either Purchaser or the Company may terminate this Agreement.
1.6 Direct or Indirect Action. When any provision of this Agreement
requires or prohibits any particular action to
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<PAGE> 7
be taken by a person, the provision applies regardless of whether the
action is taken directly or indirectly by the person.
1.7 Execution and Effectiveness. The parties may execute this Agreement
in counterparts. Each executed counterpart of this Agreement will constitute
an original document, and all executed counterparts, together, will
constitute the same agreement. This Agreement will become effective when
each party has executed and delivered to every other party a counterpart of
it.
1.8 Entire Agreement. This Agreement records the entire understanding
of the parties regarding the subjects addressed in it and supersedes any
prior or contemporaneous agreement, understanding, or representation, oral or
written, by them.
2. THE MERGER.
2.1 Plan of Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the Florida Corporation Law, the Company
shall be merged with and into Purchaser pursuant to the Plan of Merger.
Purchaser will be the surviving corporation in the Merger, and the separate
corporate existence of the Company will cease as a result of the Merger.
The Merger will have the effects provided in the Florida Corporation Law.
2.2 Merger Consideration. Pursuant to the Plan of Merger, all
the issued Company Shares will be converted into (i) 90,000 Purchaser Shares
and (ii) following determination of the amount, the Purchaser Note in the
amount determined in accordance with section 2.3 below. Page will
surrender to Purchaser the certificates evidencing all of the outstanding
shares of Company stock.
The certificates representing the Purchaser Shares will bear the
following legend:
The securities evidenced by this certificate have not been registered
under either the Securities Act of 1933, as amended, or the securities
laws of any state. These securities cannot be offered for sale, sold,
assigned, pledged, hypothecated, or otherwise transferred or encumbered at
any time, as a whole or in part, absent registration of the
transaction under the Securities Act of 1933, as amended, and every
applicable state securities law or delivery to the Company of a
satisfactory opinion of counsel to the effect that registration of
the transaction under those laws is not required.
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<PAGE> 8
The transfer of the shares evidenced by this certificate is restricted
by a Shareholder Agreement among the holder of this certificate and other
shareholders of the Company. The Company will furnish to any
shareholder, on request and without charge, a full statement of those
restrictions.
The Purchaser Note will not be assignable.
2.3 Purchaser Note Amount Determination.
(a) Within 110 days following the Closing Date, Page and
Purchaser will jointly prepare (i) a balance sheet dated as of the Closing
Date (the "Closing Date Balance Sheet"). Page shall also submit to
Purchaser a favorable comfort letter compiled by Raymond Bersch, CPA, in
accordance with the procedures and standards described in the attached
Exhibit "C." The Closing Date Balance Sheet will be prepared on a basis
consistent with the basis on which the Company's December 31, 1995, balance
sheet was prepared and the comfort letter of Raymond Bersch, CPA, that
accompanies the Closing Date Balance Sheet shall contain a statement to that
effect. The Closing Date Balance Sheet will be prepared without regard to any
effects on the Company of the transactions contemplated by this Agreement,
including tax consequences, and will assume that the Company is continuing its
business on a going concern basis. The Closing Date Balance Sheet shall
contain an accrual for all legal fees, accounting fees, and other trans-
actional costs and expenses that have not been paid by the Company prior
to the date of the Closing Date Balance Sheet and that the Company has
incurred to that date and reasonably expects to incur through the Closing
Date. Page and the Company will provide Purchaser and its independent
accountants with full and contemporaneous access to Raymond Bersch, CPA, and
the workpapers of the Company and Raymond Bersch, CPA, as Page and Purchaser
prepare the Closing Date Balance Sheet.
(b) The aggregate amount of the Purchaser Note to be delivered
by the Purchaser as part of the Merger shall be equal to $20,000 plus the "net
tangible value" of the Company as reflected on the Closing Date Balance
Sheet and executed and delivered promptly after such determination is made.
For purposes of this section, "net tangible value" means the excess of
the aggregate recorded amount of tangible assets of the Company over
liabilities of the Company, except that inventory will be determined
using the cost of the material components of the inventory rather than
recorded cost. "Tangible assets" excludes (a) any writeup of assets
subsequent to December 31, 1995, (b) deferred assets, (c) amounts due from
insiders, including Page, (d) patents, copyrights, trademarks, trade names,
noncompete agreements, franchises, experimental expenses, and other intangible
assets, (e) goodwill and other amounts representing the excess of the
purchase price of assets or stock over the value assigned to them on the
books
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<PAGE> 9
of the Company, and (f) any other amounts categorized as intangible
assets under generally accepted accounting principles. For purposes of
calculating "net tangible value," all accounts receivable of the Company as of
the Closing Date will be valued at face value, without making provisions for
uncollectible amounts, but the amount of any such accounts receivable
that are not actually collected within 90 days following the Closing Date
will be deducted from the dollar value of assets used to calculate net
tangible value. The following items will be prorated for purposes of
compiling the Closing Date Balance Sheet:
(i) Use, sales, and payroll taxes, and ad valorem taxes and
assessments;
(ii) Fuel, electricity, telephone, and other utility service
charges, deposits, and expenses;
(iii) Employee payroll, life and disability insurance premiums,
and other fringe benefits; and
(iv) Rent, interest, other insurance premiums, and installment
payments.
(c) Purchaser shall assign to Page all accounts receivable not
collected within 90 days following the Closing Date.
2.4 Articles of Merger. On the Closing Date, Purchaser and the Company
shall execute the Articles of Merger in accordance with the requirements
of Florida Corporation Law and deliver the executed Articles of Merger to the
Department of State of Florida for filing. Purchaser shall pay to the
Department of State of Florida all fees required for the filing of the
Articles of Merger and to effectuate the Merger.
2.5 Effects of Merger. The Merger will have the legal effects
prescribed by section 607.1106 of the Florida Business Corporation Act. For
federal income tax purposes, the Merger is intended to qualify as a tax-free
reorganization pursuant to section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended.
2.6 Bylaws and Articles of Incorporation. The Bylaws and Articles of
Incorporation of the Company in effect at the Effective Time will be the
Bylaws and Articles of Incorporation of the Surviving Corporation, until
they are amended in accordance with their terms and the Florida Business
Corporation Act.
2.7 Directors and Officers. The directors and officers of the Company
in office at the Effective Time will continue to be the directors and officers
of the Surviving Corporation following the Merger, until their respective
successors are
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<PAGE> 10
duly elected and qualified in accordance with the Florida Corporation Law
and the Company's Bylaws and Articles of Incorporation or until their
earlier death, resignation, or removal from office.
2.8 Further Assurances. At any time and from time to time after the
Effective Time, at the request of the Company or any assignee or successor of
it, the officers and directors of Surgipro last in office shall execute and
deliver to the Company any new, additional, or confirmatory deed, agreement,
instrument, or other document, and take or cause to be taken all further
action, as is necessary or appropriate to vest, record, confirm, perfect, or
otherwise establish the Company's right, title, and interest in and to
all rights, powers, property, franchises, immunities, and privileges of
Surgipro or to otherwise carry into effect the intent and purposes of this
Plan of Merger.
3. FURTHER AGREEMENTS.
3.1 Transaction Expenses. Whether or not the Merger is consummated,
each party shall pay all its own costs and expenses (including fees and
disbursements of accountants, legal counsel, financial advisors, and other
consultants) that it incurs in connection with the Merger and this Agreement.
3.2 Public Announcements. The parties promptly shall advise, consult,
and cooperate with each other before issuing, or permitting any of their
respective agents, officers, directors, or employees to issue, any press
release, or public announcement to any third party concerning this Agreement
or the transactions contemplated by it.
3.3 Consent of Page. By executing this Agreement, Page (as the sole
director and shareholder of the Company) approves the Merger and consents to
the execution, delivery, and performance of this Agreement by the Company,
and this consent will be treated for all purposes as an affirmative vote duly
adopted at a meeting of the sole director and shareholder of the Company held
for that purpose. Page shall take all further action that is advisable
or necessary to authorize the Company's execution, delivery, and performance
of this Agreement.
3.4 Shareholder Agreement. On the Closing Date, Page shall execute a
counterpart of the Shareholder Agreement.
3.5 Employment Agreement; Back Compensation. On the Closing Date,
Page and Purchaser shall enter into the Employment Agreement in the form of
Exhibit "D" to this Agreement.
3.6 Registration Rights Agreement. On the Closing Date, Page shall
execute and deliver the investment representation letter in the form of Exhibit
"E" to this Agreement.
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<PAGE> 11
3.7 Indemnification.
(a) Page indemnifies and shall hold harmless Purchaser, and
each agent, employee, director, shareholder, successor, and assignee of
Purchaser (collectively, the "Indemnified Persons") from and against all
cost, loss, claim, damage, expense, penalty, and liability (whether or not
liquidated or paid by the Indemnified Person; including fines, interest,
legal fees and expenses, and amounts paid in settlement) (an "Indemnified
Loss") that are asserted against the Indemnified Persons and arise in
connection with any of the following: (i) a breach of any representation,
warranty, or covenant made or to be performed by Page or the Company pursuant
to this Agreement; (ii) any asserted claim or liability based on a product
sold, obligation incurred, or other transaction effected (other than a
liability recorded in the Closing Date Balance Sheet) by or through the
Company before the Closing Date, including the nonpayment by the Company of
all applicable use and sales taxes payable for transactions effected before
the Closing Date (whether or not Page knew of the basis for the claim or
liability); or (iii) any suit, action, demand, proceeding, or other act
incident to enforcing this indemnity provision. Page shall reimburse the
Indemnified Persons for any legal and other expenses reasonably
incurred in defending or preparing to defend against any such Indemnified
Loss. Page indemnifies and shall hold harmless the Indemnified Persons
from every Indemnified Loss notwithstanding any other provision of this
Agreement, any disclosure previously made by Page or the Company in or
pursuant to this Agreement, any right of audit or investigation granted to
Purchaser pursuant to this Agreement, or any information obtained or
available to Purchaser as a result of exercising that right, whether
before or after the Closing Date. Purchaser acknowledges that in the absence
of actual knowledge of a false representation, Page will not be subject to a
claim for fraud or intentional misrepresentation. However, Page will be
responsible for the foregoing contractual indemnities irrespective of whether
he had knowledge of a particular matter that constitutes a breach of
representation or other basis for an Indemnified Loss.
(b) Page shall pay any Indemnified Loss as follows:
(i) If the Indemnified Loss arises from an item used to
determine "tangible net worth," the Purchaser Note will be reduced
by the amount of the Indemnified Loss;
(ii) If the Indemnified Loss arises from any other matter
or if the Purchaser Note has been fully paid, the loss will be paid by
Page returning to Purchaser within ten days of his receipt of notice of
the Indemnified Loss a number of Purchaser Shares
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<PAGE> 12
with a value at the time the Indemnified Loss is incurred equal to the
amount of the Indemnified Loss; and
(iii) If the balance of the Purchaser Note has been reduced to
zero and Page no longer holds any Purchaser Shares, Page shall pay the
amount of the Indemnified Loss in cash within ten days following his
receipt of notice of the Indemnified Loss.
Page will have no obligation to indemnify Indemnified Persons for Indemnified
Losses incurred by Purchaser after the second anniversary of this Agreement.
The aggregate amount of Indemnified Losses payable pursuant to part (iii)
above will not exceed the sum of the amount Page realizes from payments on
the Purchaser Note plus the amounts Page realizes on disposition of the
Purchaser Shares (unless Page disposes of the Purchaser Shares in a gift
transaction, in which case the relevant amount will be the fair value of the
Purchaser Shares on the disposition date).
(c) Purchaser indemnifies and shall hold harmless Page from and
against all cost, loss, claim, damage, expense, penalty, and liability
(whether or not liquidated or paid by Page, including fines, interest, legal
fees, and expenses, and amounts paid in settlement (a "Purchaser Indemnified
Loss") that are asserted against Page and arise in connection with any of
the foregoing: (i) a breach of any representation, warranty, or covenant
made or to be performed by the Company pursuant to this Agreement, (ii) any
liability recorded in the Closing Date Balance Sheet, and (iii) any
suit, action, demand, proceeding, or other act incident to enforcing this
indemnity provision. Purchaser shall pay any Purchaser Indemnified Losses
within 30 days after its receipt of notice of the claim. Purchaser will
have no obligation to indemnify Page for Purchaser Indemnified Losses
incurred by Page after the second anniversary of this Agreement.
3.8 Tax Treatment of Merger. Purchaser and the Company shall (a) treat
the Merger as a tax-free "reorganization" under section 368(a)(1)(A) of the
Code, (b) report the Merger and all related transactions for federal income
tax purposes in a manner consistent with that treatment, (c) take all
reasonable action required to cause the Merger to be treated as a
"reorganization" under section 368(a)(1)(A) of the Code, and (d) not take any
action that could disqualify the Merger from "reorganization" status under
section 368(a)(1)(A) of the Code.
3.9 Registration Rights. On the Closing Date, Purchaser shall execute
and deliver to Page a Registration Rights Agreement in the form of Exhibit
"F" to this Agreement that provides to Page piggyback registration rights
with respect to all Purchaser Shares acquired by Page pursuant to the Merger.
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<PAGE> 13
4. THE CLOSING.
4.1 Closing Obligations. On the Closing Date, (a) the Company has
executed the Articles of Merger and (ii) delivered to Purchaser the
certificate specified in section 4.4(c) and all other documents or
certificates that are required to be delivered by it to Purchaser on or before
the Closing Date and have not been previously delivered, and (b) Purchaser has
(i) executed the Articles of Merger, (ii) filed the Articles of Merger with
the Florida Department of State, (iii) paid all fees required for those
filings and to effectuate the Merger, and (iv) delivered to the Company the
certificate specified in section 4.5(c), and all other documents or
certificates that are required to be delivered by Purchaser to the Company on
or before the Closing Date and have not been previously delivered.
4.2 Closing Conditions of Each Party. The respective obligations of
each party to this Agreement to effect the Merger and consummate the other
transactions contemplated by this Agreement are subject to the following
conditions precedent, each of which has been satisfied on or before the
Closing Date:
(a) The shareholder and director of the Company has approved the
Merger, the Plan of Merger, and this Agreement by the requisite vote in
accordance with Florida Corporation Law and the Company's Bylaws and Articles
of Incorporation;
(b) Page and the Company have terminated their contractual
agreements with Dr. Bob G. Mitchell and Kelly Mitchell and their
affiliates;
(c) Purchaser has received from Sterile Concepts, Inc. any
necessary consent to the Merger and Purchaser proceeding with its
contemplated custom procedure kit business following the Merger;
(d) Purchaser has obtained from AMSCO International, Inc. any
necessary consent to the Merger under the Purchase Money Security Agreement
dated as of July 31, 1994; and
(e) All orders, permits, consents, licenses, approvals,
franchises, certificates, registrations, and other authorizations from
governmental authorities that are necessary to consummate the Merger have
been obtained.
4.3 Closing Conditions of Purchaser. The obligations of Purchaser to
effect the Merger and to consummate the other transactions contemplated by
this Agreement are further subject to the following conditions precedent,
each of which has been satisfied on or before the Closing:
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<PAGE> 14
(a) The representations and warranties of the Company
contained in this Agreement are true and correct in all material respects as
of Closing Date;
(b) The Company has performed in all material respects all
agreements and obligations under this Agreement that are required to be
performed by it on or before the Closing Date;
(c) Purchaser has received a certificate signed by the Company's
President stating that (i) all representations and warranties of the Company
contained in this Agreement were true and correct in all material respects
as of the Closing Date, and (ii) all agreements and obligations in this
Agreement to be performed by the Company on or before the Closing Date
have been performed by the Company in all material respects;
(d) Purchaser has received UCC-11 searches and other lien
searches showing no existing security interests in, or liens on property of the
Company; and
(e) All consents and approvals from third parties that are
necessary for the Company to consummate the Merger have been obtained.
4.4 Closing Conditions of the Company. The Company's obligations to
effect the Merger and to consummate the other transactions contemplated by
this Agreement are further subject to the following conditions precedent,
each of which have been satisfied on or before the Closing Date:
(a) The representations and warranties of Purchaser contained in
this Agreement are true and correct in all material respects as of the
Closing Date;
(b) Purchaser has performed in all material respects all of
its respective agreements and obligations under this Agreement that are
required to be performed by them on or before the Closing Date;
(c) The Company has received a certificate signed by Purchaser's
President or Executive Vice President stating that (i) all representations and
warranties of Purchaser contained in this Agreement were true and correct in
all material respects as of the Closing Date, and (ii) all agreements and
obligations in this Agreement to be performed by Purchaser on or before the
Closing Date have been performed by it in all material respects; and
(d) All consents and approvals from third parties that are
necessary for Purchaser to consummate the Merger have been obtained.
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<PAGE> 15
5. REPRESENTATIONS AND WARRANTIES OF PAGE AND THE COMPANY.
Page and the Company jointly and severally represent and warrant to
Purchaser the following:
5.1 Corporate Power and Organization. The Company is a corporation
duly incorporated and validly existing in active status under the laws of the
State of Florida, has the requisite corporate power and authority to carry on
its business as currently conducted, and possesses all orders, permits, con-
sents, licenses, approvals, franchises, certificates, registrations, and
other authorizations from governmental authorities that are necessary to
conduct its current business. The Company is duly qualified to do business as
a foreign corporation and in good standing in every jurisdiction where it
owns or leases any material property or its business activities require it
to so qualify. The Company previously furnished or made available to
Purchaser copies of its Bylaws and Articles of Incorporation, which are
accurate and complete as of the Closing Date.
5.2 Authorization and Validity of Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement, to
perform its obligations under this Agreement, and, subject to approval of
this Agreement by its shareholders as required by applicable law, to
consummate the Merger. The execution, delivery, and performance of this
Agreement by the Company:
(a) will not conflict with the Company's Bylaws or Articles of
Incorporation;
(b) have been duly authorized by all requisite corporate action
of the Company and no other corporate proceedings on the part of the Company
or its shareholder are necessary to authorize this Agreement or consummate
the transactions contemplated by it;
(c) will not breach, violate, suspend, or terminate (or create any
right of suspension or termination), cause the imposition of a penalty,
permit acceleration of the maturity of any liability or obligation of the
Company, constitute a default or any event that (with notice or lapse of
time or both) would constitute a default, under or pursuant to any material
bond, lease, order, mortgage, agreement, indenture, instrument, deed of
trust, promissory note, security agreement, or other commitment to which
the Company is a party or any of its property is subject, except to the extent
that any of the foregoing would not have, in the aggregate, a Material Adverse
Effect on the Company;
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<PAGE> 16
(d) will not result in the creation or attachment of a Lien on any
property of the Company, except to the extent that any Lien would not have a
Material Adverse Effect on the Company;
(e) will not violate any law or order applicable to the businesses
of the Company, except for any violation that would not have a Material Adverse
Effect on the Company; and
(f) does not require any notice to, filing or registration with,
or consent, license, approval, or authorization of, any governmental
authority.
This Agreement has been duly executed and delivered by the Company to
Purchaser, and, assuming it constitutes a valid and binding obligation of
Purchaser, this Agreement is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability is limited by application of general
principles of equity and by bankruptcy, insolvency, moratorium, debtor
relief, and similar laws of general application affecting the enforcement of
creditor rights and debtor obligations.
5.3 Authorized Capitalization. The authorized capital stock of the
Company consists exclusively of 100,000 shares of common stock, $.01 par
value. As of the Closing Date, (a) 1,000 shares of common stock are validly
issued and outstanding, all of which are owned by Page and those shares are
fully paid, non-assessable, and free of any preemptive rights, and (b) no
shares of the Company's common stock are held in the treasury of the
Company. Except as described above, (i) the Company does not have
authorized or outstanding any other class of debt or equity securities or
any rights, options, warrants, agreements, or commitments of any kind
obligating it to issue any shares of its capital stock, any securities con-
vertible into or exchangeable for shares of its capital stock, or any rights,
options, or warrants to acquire any shares of its capital stock, and (ii)
there are no proxies, voting trusts, shareholder agreements, or other
agreements or understandings to which the Company is a party or is bound
with respect to the voting of any Company Shares.
5.4 Subsidiaries. The Company does not have any direct or indirect
subsidiaries and does not own or control, directly or indirectly, any equity
or other ownership interest in any other corporation, partnership, joint
venture, or business organization, and (b) the Company is not a partner or
participant in, and does not conduct any part of its business
through, any partnership, joint venture, or similar arrangement.
5.5 Financial Statements. The annual financial statements of the
Company dated as of December 31, 1995 (the
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<PAGE> 17
"Financial Statement Date") and the interim financial statements of the
Company dated as of January 31, 1996, that have been furnished to Purchaser
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as
otherwise indicated in the notes to them) and fairly present the financial
position, results of operations, and cash flows from operating, investing,
and financing activities of the Company as of the dates and for the periods
indicated, except that the unaudited interim financial statements are subject
to normal year-end adjustments and omit or condense certain footnotes and
other information normally included in financial statements prepared in
accordance with generally accepted accounting principles. Except as and to
the extent set forth in the foregoing financial statements, the Company does
not have any liabilities or obligations of any nature (whether accrued,
absolute, contingent, or otherwise, and whether due or to become due),
which are material to the business, assets, properties, results of
operations, financial condition, or prospects of the Company.
5.6 Subsequent Events. None of the following has occurred since
the Financial Statement Date: (a) any event that had, or is reasonably
likely to have, a Material Adverse Effect on the Company; (b) any damage or
destruction, whether or not covered by insurance, that adversely affected
the property or business of the Company; (c) any borrowing, issuance of
any debt security, or debt assumption, endorsement, or guarantee; (d)
any change by the Company in its accounting methods, practices, or
principles, except as required to comply with applicable law or a change in
generally accepted accounting principles; (e) any commitment or transaction
by the Company that had, or is reasonably likely to have, a Material Adverse
Effect on the Company and was not in the usual and ordinary course of
business; (f) any declaration, payment, or setting aside for payment of
any dividends or other distributions (whether in cash, stock, or property) in
respect of the Company Shares; or (g) any event, action, or condition that
constitutes an agreement by the Company to do anything described in clauses
(a)-(f) above.
5.7 Legal Compliance. The Company is not in violation of any law or
order of any court or governmental authority that is applicable to it, its
businesses, or its properties. There are no actions pending or (to the best
knowledge of the Page) threatened that question the validity of this Agreement,
any documents to be delivered to Purchaser by the Company in connection with
this Agreement, or any action taken or to be taken by the Company in
connection with the transactions contemplated by this Agreement. There is
not any pending or (to the best knowledge of Page) threatened action by a
governmental authority that names the Company as a party. The Company
will deliver to Purchaser, upon request, a true and complete copy of any
material permit, license, or other gov-
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<PAGE> 18
ernmental authorization relating to the business operations of the Company.
5.8 Brokerage. The Company has not used or engaged a broker, finder,
or investment banking firm that is entitled to any fee, commission, or other
remuneration in connection with the Merger.
5.9 Absence of Undisclosed Liabilities. The Company does not have
any liabilities, obligations, Financial Contingencies, leases under which
they are lessees and that have a term from inception (including renewal
options) exceeding one year, or unusual commitments of any kind, except for
those accrued, reserved, or disclosed in the balance sheet of the Company
as at December 31, 1995, and the accompanying notes thereto.
5.10 Environmental Matters.
(a) None of the Company or its officers have received any
formal or informal notification from any governmental authority or other
person that it allegedly was a contributor to, or a potentially responsible
party in connection with, any place at which Hazardous Material was stored,
treated, released, or disposed;
(b) None of the Company or its officers have received, or
are aware of, any notice, warning letter, or consent order relating to a
violation of any safety or environmental law with respect to any Site or
the operation and maintenance of their businesses;
(c) None of the Company or its officers are or have been a party
to any civil or criminal litigation or to any administrative proceeding by a
governmental authority involving allegations of (i) a violation of any
safety or environmental law, (ii) the release of any Hazardous Material
or petroleum substance into the environment (whether in or outside the
workplace), or (iii) any personal injury or property damage resulting from
the use, storage, disposal, treatment, generation, manufacture, or other
handling of any Hazardous Material or petroleum substance on any Site or other
property; and
(d) The Company has (i) operated its business in compliance with
all health, safety, occupational, and environmental protection laws and
orders, including the Federal Water Pollution Control Act (33 U.S.C. Section
1251 et seq.), the Resource Conservation & Recovery Act (42 U.S.C. Section
6901 et seq.), the Safe Drinking Water Act (21 U.S.C. Section 7401 et seq.),
and the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), all as amended; (ii) has
not disposed or arranged (by contract, agreement, or otherwise), within the
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<PAGE> 19
meaning of section 107(a)(3) of CERCLA, for the disposal of any Hazardous
Material that was used, generated, or handled by any of them at any off-site
location that at the time of the disposal was listed or proposed for inclusion
on the National Priority List promulgated pursuant to CERCLA or any list pro-
mulgated by any governmental authority for the purpose of identifying
sites that pose an imminent danger to health and safety; and (iii) has been
issued, and will maintain until the Closing Date, all permits, licenses,
certificates, and approvals required from any governmental authority that
are required for its operations with respect to (A) air emissions, (B) noise
emissions, (C) discharges of surface water or groundwater, (D) solid or
liquid waste disposal of toxic or hazardous substances or wastes, and (E)
compliance with any other health, safety, or environmental law or order, and
an accurate and complete list of any such material permits, licenses,
certificates, or approvals is set forth in the Company Disclosure
Schedule.
The Company has furnished or made available to Purchaser (1) all notices
of violation from governmental authorities relating to safety and
environmental laws and orders and all environmental studies performed by or on
behalf of the Company or any governmental authority, or any other party, that
pertain to the Company, and (2) all material, reports, or other documents
relating to any safety or environmental matter referred to in this section
or disclosed in the Company Disclosure Schedule.
5.11 Tax Matters. For purpose of this Agreement, "Taxes" or "Tax" means
all net income, capital gains, gross income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment,
excise, intangibles, severance, stamp, occupation, premium, property or
windfall profit taxes, customs duties, or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax, or additional amounts imposed by any taxing authority
("Taxing Authority") upon the Company. The Company:
(a) has withheld or will withhold amounts from the compensation and
other payments due and payable to its employees and has filed or will file
all federal, foreign, state, and local returns and reports with respect to
employee income tax withholding and social security and employment taxes for
all periods (or portions thereof) ending on or before the Closing Date,
in compliance with the provisions of applicable federal, state and local laws;
(b) has paid, or provided a sufficient reserve for the payment
of, all federal, state and local Taxes with respect to all periods, or
portions thereof, ending on or before the Closing Date;
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<PAGE> 20
(c) has filed (including extensions) all federal, state, local,
and other tax returns required to be filed by it under applicable law,
including estimated tax returns and reports; and
(d) has not been subject to any material claims or, to the
knowledge of the Company, any investigations by any Taxing Authority pending
against the Company for any past due Taxes; and there has been no waiver of
any applicable statute of limitations or extension of the time for the
assessment of any Tax against the Company.
5.12 Location and Use of Purchase Property. All the Purchase Property
is located on the Company's premises at Forest Lake Academy. The Purchase
Property constitutes all of the property historically used by the Company in
its business at any location.
5.13 Title to Purchase Property. The Company has, and will convey to
the Company good and marketable title to, all of the Purchase Property.
On the Closing Date, following completion of the Merger, Buyer will have good
and marketable title to the Purchase Property subject to no Lien and the
Purchase Property will not be subject to any claim of interest or ownership by
any person.
5.14 Real Property; Leased Properties. The Company does not own any
real property. The Company Disclosure Schedule lists every lease of real or
personal property that is used in the operation of the businesses of the
Company and that requires annual rental payments of $5,000 or more, including
in each case the names of the lessor and lessee and the location of the
property subject to the lease. Except as disclosed in the Company
Disclosure Schedule, (a) the Company has a valid leasehold interest in the
property subject to each of the leases listed on the Company Disclosure
Schedule, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies
generally; (b) the Company is not in default of any of those leases to
which it is a party; (c) no current party to any of those leases has made
or notified the Company of a claim with respect to any breach or default by
them under any of those leases; and (d) none of the leases listed on the
Company Disclosure Schedule are subject to any sublease, license, or
other agreement granting to any other person any right to the use, occupancy,
or enjoyment of all or any part of the property that is subject to the lease.
The Company has delivered to Purchaser, at any time upon request, a true and
complete copy of each lease listed on the Company Disclosure Schedule.
5.15 Option, Service, and Executory Contracts. The Company has
not granted to any person any right or option to acquire any interest in the
Purchase Property or any part of
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<PAGE> 21
it. Neither Page nor Purchaser has granted to any person any right or
option to acquire any interest in the stock of the Company or any part of it.
5.16 Workers' Compensation. The Company is in compliance with all laws
regulating workers' compensation and has a workers' compensation insurance
policy that now is in full force and effect, and (a) all workers'
compensation insurance premiums have been fully paid; (b) no indebtedness
is outstanding in respect of any workers' compensation insurance
premiums; (c) there is no deficiency for any workers' compensation premium
payable, assessed, proposed, threatened, or in prospect nor is there any
basis for a deficiency; and (d) there is no basis for denial of coverage as to
all or any part of the Company's workers' compensation insurance. Purchaser
will not be liable for any workers' compensation claim of the Company's
employees arising on or before the Closing Date.
5.17 Consents and Authorizations. All authorizations, consents,
approvals, and licenses required under any law for the ownership or
operation of the property owned or operated by the Company or for the conduct
of any business in which it is engaged have been duly issued and are in
full force and effect, and the Company is not in default, nor has any event
occurred which with the passage of time or the giving of notice, or
both, would constitute a default, under any of the terms or provisions of any
part thereof, or under any law or order. No approval, consent, or
authorization of, or filing a registration with, any governmental authority is
required with respect to the execution and delivery of this Agreement and
the consummation of the Merger.
5.18 Intellectual Property. The Company Disclosure Schedule
contains a list of all patents, trademarks, trade names, service marks,
trademark and service mark registrations, applications for patent,
trademark and service mark registrations, and brand names and copyrights
which the Company owns, possesses the right to use, or in which it has any
proprietary interest and all license agreements with respect to any of
the foregoing as to which the Company is licensor or licensee (collectively,
the "Intellectual Property"). The Intellectual Property constitutes all
trademarks, trade names, service marks, trademark and service mark regis-
trations, applications for trademark and service mark registrations, and
brand names and copyrights necessary for the conduct of the business of
the Company. The Intellectual Property is legal, valid, and in full force and
effect. There are no pending or threatened claims against the Company by any
person claiming title to or asserting an interest in any of the
Intellectual Property, or contending that their use constitutes an
infringement on the rights of any person, and no valid grounds for any such
claim exists.
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<PAGE> 22
5.19 Employment Matters. The Company is not a party to any union
agreement covering any of its employees nor does it have any employment
agreement with any of its employees, or any Plans or agreements covering any
of its employees. The Company is not liable for any arrearages of wages, any
accrued or vested vacation pay, or any tax or penalty for failure to comply
with any applicable local, state, or federal law relating to the
employment of labor, and there is not a controversy pending, threatened,
or in prospect between the Company and its employees nor to the best
knowledge of Page and Company is there any basis for a controversy.
Purchaser will not be liable for any claim with respect to any of the
foregoing matters arising on or before the Closing Date or as a consequence of
the Merger.
5.20 Material Contracts. The Company Disclosure Schedule lists all the
following contracts that are in effect as of the date of this Agreement and
to which Page or the Company is a party:
(a) any contract or agreement containing covenants limiting the
freedom of Page or the Company to engage in any line of business or to compete
with any person;
(b) any written employment agreement;
(c) any written agreement with any director, officer, or
shareholder of the Company that is not terminable without penalty or
liability arising from the termination;
(d) any joint venture agreement or shareholder agreement; or
(e) any contract or other agreement to guaranty any debt, liability,
or obligation of any person.
5.21 Receivables. All accounts receivable of the Company that are
recorded in the Company's balance sheets at the Closing Date represent
valid claims against debtors for sales or other charges arising on or before
the respective balance sheet date, are not subject to discount except for
normal cash discounts, and have been appropriately reduced to their
estimated net realizable value.
5.22 Insurance. The Company Disclosure Schedule lists all material
policies of insurance (including the names and addresses of all insurers)
that are in force on the Closing Date and insure the Company, or any of its
assets or employees, including policies of fire, life, theft,
disability, employee fidelity, workers' compensation, and other casualty and
liability insurance. The Company will deliver to Purchaser, upon request,
true and complete copies of any material insurance policy listed on the
Company Disclosure Schedule,
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<PAGE> 23
including all amendments, supplements, modifications, or side letters relating
thereto.
5.23 Accuracy of Representations and Warranties. None of the
representations and warranties by the Company in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Page the following:
6.1 Corporate Power and Organization. Purchaser is a corporation
duly incorporated and validly existing in good standing under the laws of
the State of Florida. Purchaser has the requisite corporate power and
authority to carry on its business as currently conducted, possesses all
orders, permits, consents, licenses, approvals, franchises, certificates,
registrations, and other authorizations from governmental authorities that
are necessary to conduct its current business, except for those the
absence of which would not have, in the aggregate, a Material Adverse Effect
on Purchaser.
6.2 Authorization and Validity of Agreement. Purchaser has the
requisite corporate power and authority to enter into this Agreement, to
perform its obligations under this Agreement, and to consummate the Merger.
The execution, delivery, and performance of this Agreement by Purchaser:
(a) has been duly authorized by all requisite corporate action of
Purchaser and the shareholders of Purchaser;
(b) will not conflict with its Bylaws and Articles of
Incorporation;
(c) will not breach, violate, suspend, or terminate (or create any
right of suspension, or termination), cause the imposition of a penalty,
permit acceleration of the maturity of any liability or obligation of
Purchaser, constitute a default or any event that (with notice or lapse of
time or both) would constitute a default, under or pursuant to any material
bond, lease, order, mortgage, agreement, indenture, instrument, deed of
trust, promissory note, security agreement, or other commitment to which
Purchaser is a party or any of its property is subject, except to the extent
that any of the foregoing would not have, in the aggregate, a Material
Adverse Effect on Purchaser;
(d) will not result in the creation or attachment of a Lien on any
property of Purchaser, except to the extent that
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<PAGE> 24
the Lien would not have a Material Adverse Effect on Purchaser;
(e) subject to compliance with the laws specified in the next
clause, will not violate any law or order applicable to Purchaser or any of
its property, except for any violation that would not have a Material
Adverse Effect on Purchaser; and
(f) does not require any notice to, filing or registration with,
or consent, license, approval, or authorization of, any governmental authority.
Purchaser's board of directors has approved and authorized the Merger, the
Plan of Merger, this Agreement, and the other transactions contemplated by
this Agreement. This Agreement has been duly executed and delivered to the
Company by Purchaser and, assuming it constitutes a valid and binding obli-
gation of the Company, this Agreement is a valid and binding obligation of
each of Purchaser, enforceable against it in accordance with its terms,
except to the extent that its enforceability is limited by application of
general principles of equity and by bankruptcy, insolvency, moratorium,
debtor relief, and similar laws of general application affecting the
enforcement of creditor rights and debtor obligations.
6.3 Accuracy of Representations and Warranties. None of the
representations and warranties by Purchaser in this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading.
7. MISCELLANEOUS.
7.1 Time of Essence. Time is of the essence in the performance and
satisfaction by each party of every duty, condition, agreement, and
obligation to be performed or satisfied by the party under this Agreement.
7.2 Assignment. This Agreement is not assignable by operation of
law or otherwise by any party to this Agreement without the advance written
approval of every other party to this Agreement, which it may withhold in its
sole discretion. Any attempted assignment of this Agreement by a party
without the advance written approval of all the other parties will be invalid
and unenforceable against the other parties.
7.3 Legal Proceedings. In any mediation, arbitration, or legal
proceeding arising out of this Agreement, the losing party shall reimburse
the prevailing party, on demand, for all costs incurred by the prevailing
party in enforcing, defending, or prosecuting any claim arising out of this
Agreement.
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<PAGE> 25
An agent, officer, director, employee, or shareholder of a party to this
Agreement (other than Page) is not personally liable for any breach of a
covenant, warranty, agreement, or representation of any party to this
Agreement, except for any breach resulting from a fraud perpetrated by that
person.
7.4 Notices. Unless this agreement expressly permits it to be given
orally, every notice, consent, demand, and approval required or permitted by
this Agreement will be valid only if it is (a) in writing (whether or not the
applicable provision of this Agreement states that it must be in writing),
(b) delivered personally or by telecopy, commercial courier, or first
class, postage prepaid, United States mail (whether or not certified or
registered and regardless of whether a return receipt is requested or
received by the sender), and (c) addressed by the sender to the intended
recipient as follows:
(a) If to Page or the Company:
Surgipro, Inc.
3909 East Semoran Boulevard
Apopka, Florida 32703
Telecopy: (407) 869-5530
Attention: Clayton W. Page
(b) If to Purchaser:
Sterile Recoveries, Inc.
28100 U.S. Highway 19 North
Suite 201
Clearwater, Florida 34621
Telecopy: (813) 725-8037
Attention: James T. Boosales
with a copy to:
Glenn Rasmussen & Fogarty, P.A.
100 South Ashley Drive, Suite 1300
Tampa, Florida 33602
Telecopy: (813) 229-5946
Attention: David S. Felman
or to such other address as the intended recipient may designate by notice
given to every other party to this Agreement in the manner provided in this
section. A validly given notice, consent, demand, or approval will be
effective on the earlier of its receipt, if delivered personally or by
telecopy or commercial courier, or the fifth business day after it is
postmarked by the United States Postal Service, if delivered by first
class, postage prepaid, United States mail. Each
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<PAGE> 26
party to this Agreement shall promptly notify every other party of any
change in its mailing address.
7.5 Third Party Rights. This Agreement is binding on, and inures to
the benefit of, every approved assignee and successor in interest of a
party to it. Nothing in this Agreement, whether express or implied, is
intended or should be construed to confer or grant to any person (other than
the parties to this Agreement and their respective approved assignees
and successors in interest) any claim, right, remedy, or privilege under
or because of this Agreement or any provision of it.
7.6 Survival of Provisions. The representations and warranties of
each party in this Agreement will survive the consummation of the Merger.
EXECUTED: March 1, 1996, in Tampa and Orlando, Florida.
STERILE RECOVERIES, INC.
By:/s/ Richard T. Isel
----------------------(SEAL)
Richard T. Isel
President
SURGIPRO, INC.
By:/s/ Clayton W. Page
----------------------(SEAL)
Clayton W. Page
President
/s/ Clayton W. Page
-------------------------------
CLAYTON W. PAGE
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<PAGE> 27
EXHIBITS
Exhibit "A" Articles of Merger
Exhibit "B" Purchaser Note
Exhibit "C" Comfort Letter Standards
Exhibit "D" Employment Agreement
Exhibit "E" Investment Representation Letter
Exhibit "F" Registration Rights Agreement
<PAGE> 28
COMPANY DISCLOSURE SCHEDULE
SURGIPRO LEASES/CONTACTS
1. Building Lease with Forest Lake Academy.
2. Lease with Clark Credit Corporation for fork lift.
3. Waste Management Agreement with Orlando Waste Paper (one year).
4. Lease for Computer Network with Business Credit Leasing.
5. Judgment against All-Med/Jeffrey Hawkins and associated contingency fee
arrangement with counsel.
<PAGE> 1
EXHIBIT 2.3
ARTICLES OF MERGER
TO
MERGE SURGIPRO, INC.
INTO STERILE RECOVERIES, INC.
SURGIPRO, INC. ("Surgipro"), a Florida corporation, and STERILE
RECOVERIES, INC. (the "Company"), a Florida corporation, execute the
following Articles of Merger pursuant to section 607.1105 of the Florida
Business Corporation Act, Chapter 607, Florida Statutes (the "Florida Business
Corporation Act") to effectuate a merger of Surgipro with and into the
Company (the "Merger"):
ARTICLE I
PLAN OF MERGER
The plan of merger of Surgipro into the Company (the "Plan of
Merger") is as follows:
1.1 Parties to Merger. The parties to the Merger are Surgipro and
the Company (together the "Companies"). Clayton W. Page ("Page") owns all of
the issued and outstanding stock of Surgipro.
1.2 The Merger. Subject to the terms and conditions of the Agreement
and Plan of Merger dated as of February 26, 1996, and in accordance with
the Florida Business Corporation Act, Surgipro will be merged with and into
the Company as of the effective time of the merger specified in Article II
below (the "Effective Time"). As a result of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation"), and the
corporate existence of Surgipro will cease at the Effective Time. Promptly
after these Articles of Merger are fully executed, the Company shall
deliver these Articles of Merger to the Department of State of Florida (the
"Department") for filing and pay to the Department all fees required for
their filing and to effectuate the Merger.
1.3 Conversion of Shares. At the Effective Time, all the shares of
common stock of Surgipro ("Surgipro Stock") that are issued and outstanding
immediately before the Effective Time will be converted into a right to
receive 90,000 shares of the common stock of the Company (the "Company Stock")
and a Promissory Note (the "Purchaser Note") in the amount specified in the
Merger Agreement, without any further action by the holder of Surgipro
Stock, except for surrender to the Company of the certificate or
certificates evidencing those shares. As a result of the Merger, the record
holder of Surgipro Stock at the Effective Time (Page) will become the owner
of 90,000 shares of the Company Stock.
<PAGE> 2
1.4 Effects of Merger. The Merger will have the legal effects
prescribed by section 607.1106 of the Florida Business Corporation Act. For
federal income tax purposes, the Merger is intended to qualify as a tax-free
reorganization pursuant to section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended.
1.5 Bylaws and Articles of Incorporation. The Bylaws and Articles of
Incorporation of the Company in effect at the Effective Time will be the
Bylaws and Articles of Incorporation of the Surviving Corporation, until
they are amended in accordance with their terms and the Florida Business
Corporation Act.
1.6 Directors and Officers. The directors and officers of the Company
in office at the Effective Time will continue to be the directors and officers
of the Surviving Corporation following the Merger, until their respective
successors are duly elected and qualified in accordance with the Florida
Business Corporation Act and the Company's Bylaws and Articles of Incorporation
or until their earlier death, resignation, or removal from office.
1.7 Further Assurances. At any time and from time to time after the
Effective Time, at the request of the Company or any assignee or successor of
it, the officers and directors of Surgipro last in office shall execute and
deliver to the Company any new, additional, or confirmatory deed, agreement,
instrument, or other document, and take or cause to be taken all further
action, as is necessary or appropriate to vest, record, confirm, perfect, or
otherwise establish the Company's right, title, and interest in and to all
rights, powers, property, franchises, immunities, and privileges of Surgipro
or to otherwise carry into effect the intent and purposes of this Plan of
Merger.
ARTICLE II
EFFECTIVE DATE OF MERGER
The Merger will become effective (the "Effective Time") as of the
date and time when these Articles of Merger are filed by the Department of
State of Florida.
ARTICLE III
SHAREHOLDER APPROVAL OF MERGER AND PLAN OF MERGER
The Merger and Plan of Merger was adopted by Page, as sole shareholder
and director of Surgipro, as of February 26, 1996, and by the directors and
"Original Shareholders" of the
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<PAGE> 3
Company, at a meeting of its Board of Directors on February 23, 1996.
Executed: March 1, 1996, in Tampa and Orlando, Florida.
SURGIPRO, INC.
By: /s/ Clayton W. Page
----------------------------
Clayton W. Page
President
STERILE RECOVERIES, INC.
By: /s/ Richard T. Isel
----------------------------
Richard T. Isel
President
STATE OF FLORIDA
COUNTY OF SEMINOLE
The foregoing Articles of Merger were acknowledged before me on March
1, 1996, by Clayton W. Page, as President of Surgipro, Inc., on behalf of
the corporation.
My commission expires: /s/ Lori M. Greaves
--------------------------------
4-18-97, Notary Public
(Notarial Seal)
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing Articles of Merger were acknowledged before me on
February 29, 1996, by Richard T. Isel, as President of Sterile Recoveries,
Inc., on behalf of the corporation.
My commission expires: /s/ Betty C. Atkins
------------------------------
Betty C. Atkins, Notary Public
(Notarial Seal)
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<PAGE> 1
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
STERILE RECOVERIES, INC.
Pursuant to Sections 607.1006 and 607.1007 of the Florida Business
Corporation Act (the "FBCA"), Sterile Recoveries, Inc. adopts these Restated
Articles of Incorporation:
FIRST: The name of the Corporation is STERILE RECOVERIES, INC.
SECOND: The Corporation's Articles of Incorporation are restated in
their entirety to read as follows:
ARTICLE 1
Name
The name of the Corporation is: STERILE RECOVERIES, INC.
ARTICLE 2
Business and Activities
The Corporation may, and is authorized to, engage in any activity or
business now or hereafter permitted under the laws of the United States and of
the State of Florida.
ARTICLE 3
Capital Stock
3.1 Authorized Shares. The total number of shares of all classes of
capital stock that the Corporation shall have the authority to issue shall
be 35,000,000 shares, of which 30,000,000 shares shall be Common Stock
having a par value of $0.001 per share ("Common Stock") and 5,000,000 shares
shall be Preferred Stock, having a par value of $0.001 per share
("Preferred Stock"). The Board of Directors is expressly authorized,
pursuant to Section 607.0602 of the FBCA, to provide for the
classification and reclassification of any unissued shares of Common Stock
or Preferred Stock and the issuance thereof in one or more classes or series
without the approval of the shareholders of the Corporation, all within the
limitations set forth in Section 607.0601 of the FBCA.
3.2 Common Stock.
(A) Relative Rights. The Common Stock shall be subject to all
of the rights, privileges, preferences, and priorities of the Preferred Stock
as set forth in the Articles of Amendment to these Articles of
Incorporation that may hereafter be filed pursuant to Section 607.0602 of the
FBCA to establish the respective class or series of the Preferred Stock.
Except as otherwise provided in these Articles of Incorporation, each share
of Common Stock shall have the same
<PAGE> 2
rights as and be identical in all respects to all the other shares of Common
Stock.
(B) Voting Rights. Except as otherwise provided by the FBCA or
these Articles of Incorporation and except as may be determined by the Board
of Directors with respect to the Preferred Stock, only the holders of
Common Stock shall be entitled to vote for the election of directors of
the Corporation and for all other corporate purposes. Upon any such vote,
each holder of Common Stock shall, except as otherwise provided by the
FBCA, be entitled to one vote for each share of Common Stock held by such
holder.
(C) Dividends. Whenever there shall have been paid, or declared
and set aside for payment, to the holders of the shares of any class of stock
having preference over the Common Stock as to the payment of dividends, the
full amount of dividends and of sinking fund or retirement payments, if
any, to which such holders are respectively entitled in preference to the
Common Stock, then the holders of record of the Common Stock, and the
holders of any class or series of stock entitled to participate
therewith as to dividends, shall be entitled to receive dividends, when, as,
and if declared by the Board of Directors, out of any assets legally
available for the payment of dividends thereon.
(D) Dissolution, Liquidation, Winding Up. In the event of any
dissolution, liquidation, or winding up of the Corporation, whether voluntary
or involuntary, the holders of record of the Common Stock then outstanding,
and all holders of any class or series of stock entitled to participate there-
with in whole or in part as to the distribution of assets, shall become
entitled to participate in the distribution of assets of the Corporation
remaining after the Corporation shall have paid, or set aside for payment,
to the holders of any class of stock having preference over the Common Stock
in the event of dissolution, liquidation, or winding up, the full preferential
amounts (if any) to which they are entitled and shall have paid or
provided for payment of all debts and liabilities of the Corporation.
3.3 Preferred Stock.
(A) Issuance, Designations, Powers, Etc. The Board of Directors
is expressly authorized, subject to the limita- tions prescribed by the
FBCA and these Articles of Incorporation, to provide, by resolution
and by filing Articles of Amendment to these Articles of Incorporation,
which shall be effective without shareholder action pursuant to Section
607.0602(4) of the FBCA, for the issuance from time to time of the shares of
the Preferred Stock in one or more classes or series, to establish from time
to time the number of shares to be included in each such class or series, and
to fix the designations, powers, preferences, and other rights of
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<PAGE> 3
the shares of each such class or series and to fix the qualifications,
limitations, and restrictions thereon, including, but without limiting
the generality of the foregoing, the following:
(1) the number of shares constituting that class or
series and the distinctive designation of that class or series;
(2) the dividend rate on the shares of that class or
series, whether dividends shall be cumulative, noncumulative, or
partially cumulative and, if so, from which date or dates, and the
relative rights of priority, if any, of payments of dividends on shares
of that class or series;
(3) whether that class or series shall have voting rights,
in addition to the voting rights provided by the FBCA, and, if so, the
terms of such voting rights;
(4) whether that class or series shall have conversion
privileges, and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(5) whether or not the shares of that class or series shall
be redeemable, and, if so, the terms and conditions of such
redemption, including the dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different redemption
dates as the Board of Directors shall determine;
(6) whether that class or series shall have a sinking fund
for the redemption or purchase of shares of that class or series, and, if
so, the terms and amount of such sinking fund;
(7) the rights of the shares of that class or series in the
event of voluntary or involuntary liquidation, dissolution, or winding
up of the Corporation, and the relative rights of priority, if any, of
payment of shares of that class or series; and
(8) any other relative powers, preferences, and rights of
that class or series, and qualifications, limitations, or restrictions on
that class or series.
(B) Dissolution, Liquidation, Winding Up. In the event of any
liquidation, dissolution, or winding up of the Corporation, whether voluntary
or involuntary, the holders of Preferred Stock of each class or series shall
be entitled to receive only such amount or amounts as shall have been fixed
-3-
<PAGE> 4
by the Articles of Amendment to these Articles of Incorporation or by
the resolution or resolutions of the Board of Directors providing for the
issuance of such class or series.
3.4 No Preemptive Rights. Except as the Board of Directors may
otherwise determine, no shareholder of the Corporation shall have any
preferential or preemptive right to subscribe for or purchase from the
Corporation any new or additional shares of capital stock, or securities
convertible into shares of capital stock, of the Corporation, whether now or
hereafter authorized.
ARTICLE 4
Board of Directors
4.1 Classification. Except as otherwise provided pursuant to the
provisions of these Articles of Incorporation or Articles of Amendment filed
pursuant to Section 3.3 hereof relating to the rights of the holders of any
class or series of Preferred Stock, voting separately by class or series, to
elect additional directors under specified circumstances, the number of
directors of the Corporation shall be as fixed from time to time by or pursuant
to these Articles of Incorporation or by bylaws of the Corporation (the
"Bylaws"). The directors, other than those who may be elected by the holders
of any class or series of Preferred Stock voting separately by class or
series, shall be classified, with respect to the time for which they
severally hold office, into three classes, Class I, Class II and Class III,
each of which shall be as nearly equal in number as possible, and shall be
adjusted from time to time in the manner specified in the Bylaws to maintain
such proportionality. Each initial director in Class I shall hold office for
a term expiring at the 1999 annual meeting of the shareholders; each initial
director in Class II shall hold office for a term expiring at the 1998 annual
meeting of the shareholders; and each initial director in Class III shall
hold office for a term expiring at the 1997 annual meeting of the
shareholders. Notwithstanding the foregoing provisions of this Section 4.1,
each director shall serve until such director's successor is duly
elected and qualified or until such director's earlier death, resignation,
or removal. At each annual meeting of the shareholders, the successors to the
class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of the shareholders
held in the third year following the year of their election and until their
successors shall have been duly elected and qualified or until such director's
earlier death, resignation, or removal.
4.2 Removal.
(A) Removal For Cause. Except as otherwise provided pursuant to
the provisions of these Articles of Incorporation or Articles of Amendment
filed pursuant to Section 3.3
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<PAGE> 5
hereof relating to the rights of the holders of any class or series of
Preferred Stock, voting separately by class or series, to elect directors
under specified circumstances, any director or directors may be removed from
office at any time, but only for cause (as defined in Section 4.2(B) hereof)
and only by the affirmative vote, at a special meeting of the shareholders
called for such a purpose, of not less than sixty-six and two-thirds
percent (66 2/3%) of the total number of votes of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, but only if
notice of such proposed removal was contained in the notice of such meeting.
At least thirty (30) days prior to such special meeting of shareholders,
written notice shall be sent to the director or directors whose removal will be
considered at such meeting. Any vacancy on the Board of Directors resulting
from such removal or otherwise shall be filled only by vote of a majority of
the directors then in office, although less than a quorum, and any director so
chosen shall hold office until the next election of the class for which such
director shall have been chosen and until his or her successor shall have
been elected and qualified or until any such director's earlier death,
resignation, or removal.
(B) "Cause" Defined. For the purposes of this Section 4.2,
"cause" shall mean (i) misconduct as a director of the Corporation or any
subsidiary of the Corporation which involves dishonesty with respect to a
substantial or material corporate activity or corporate assets, or (ii)
conviction of an offense punishable by one (1) or more years of imprisonment
(other than minor regulatory infractions and traffic violations which do
not materially and adversely affect the Corporation).
4.3 Change of Number of Directors. In the event of any increase or
decrease in the authorized number of directors, the newly created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors so
as to maintain such classes as nearly equal as possible. No decrease in the
number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
4.4 Directors Elected by Holders of Preferred Stock. Notwithstanding
the foregoing, whenever the holders of any one or more classes or series of
Preferred Stock issued by the Corporation shall have the right, voting
separately by class or series, to elect one or more directors at an annual
or special meeting of shareholders, the election, term of office, filling of
vacancies, and other features of such directorships shall be governed by the
terms of these Articles of Incorporation, as amended by Articles of
Amendment applicable to such classes or series of Preferred Stock, and such
directors so elected shall not be divided into classes pursuant to this
-5-
<PAGE> 6
Article 4 unless expressly provided by the Articles of Amendment
applicable to such classes or series of Preferred Stock.
4.5 Exercise of Business Judgment. In discharging his or her duties as
a director of the Corporation, a director may consider such factors as the
director considers relevant, including the long-term prospects and interests
of the Corporation and its shareholders, the social, economic, legal, or
other effects of any corporate action or inaction upon the employees,
suppliers, customers of the Corporation or its subsidiaries, the
communities and society in which the Corporation or its subsidiaries
operate, and the economy of the State of Florida and the United States.
4.6 Number of Directors. The number of directors
constituting the Board of Directors of the Corporation is six (6). The number
of directors may be increased or decreased from time to time as provided in the
Bylaws, but in no event shall the number of directors be less than three (3).
ARTICLE 5
Action By Shareholders
5.1 Call For Special Meeting. Special meetings of the shareholders of
the Corporation may be called at any time, but only by (a) the President
or Chairman of the Board of the Corporation, (b) a majority of the
directors in office, although less than a quorum, and (c) the holders of not
less than thirty-five percent (35%) of the total number of votes of the then
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, voting together as a single
class.
5.2 Shareholder Action By Unanimous Written Consent. Any action
required or permitted to be taken by the shareholders of the Corporation
must be effected at a duly called annual or special meeting of the
shareholders, and may not be effected by any consent in writing by such
shareholders, unless such written consent is unanimous.
ARTICLE 6
Indemnification
6.1 Provision of Indemnification. The Corporation shall, to the
fullest extent permitted or required by the FBCA, including any amendments
thereto (but in the case of any such amendment, only to the extent such
amendment permits or requires the Corporation to provide broader
indemnification rights than prior to such amendment), indemnify its Directors
and Executive Officers against any and all Liabilities, and advance any
and all reasonable Expenses, incurred thereby in any Proceeding to which any
such Director or Executive Officer
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<PAGE> 7
is a Party or in which such Director or Executive Officer is deposed or
called to testify as a witness because he or she is or was a Director or
Executive Officer of the Corporation. The rights to indemnification granted
hereunder shall not be deemed exclusive of any other rights to
indemnification against Liabilities or the advancement of Expenses which a
Director or Executive Officer may be entitled under any written
agreement, Board of Directors' resolution, vote of shareholders, the FBCA,
or otherwise. The Corporation may, but shall not be required to, supplement
the foregoing rights to indemnification against Liabilities and
advancement of Expenses by the purchase of insurance on behalf of any one or
more of its Directors or Executive Officers whether or not the Corporation
would be obligated to indemnify or advance Expenses to such Director
or Executive Officer under this Article. For purposes of this Article, the
term "Directors" includes former directors of the Corporation and any director
who is or was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, including, without limitation, any
employee benefit plan (other than in the capacity as an agent separately
retained and compensated for the provision of goods or services to the
enterprise, including, without limitation, attorneys-at-law, accountants, and
financial consultants). For purposes of this Article, the term
"Executive Officers" includes those individuals who are or were at any
time "executive officers" of the Corporation as defined in Securities and
Exchange Commission Rule 3b-7 promulgated under the Securities Exchange
Act of 1934, as amended. All other capitalized terms used in this Article 6
and not otherwise defined herein have the meaning set forth in Section
607.0850 of the FBCA. The provisions of this Article 6 are intended solely
for the benefit of the indemnified parties described herein and their heirs
and personal representatives and shall not create any rights in favor of
third parties. No amendment to or repeal of this Article 6 shall
diminish the rights of indemnification provided for herein prior to such
amendment or repeal.
ARTICLE 7
Amendments
7.1 Articles of Incorporation. Notwithstanding any other provision
of these Articles of Incorporation or the Bylaws of the Corporation (and
notwithstanding that a lesser percentage may be specified by law) the
affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the total
number of votes of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required (unless separate voting by
classes is required by the FBCA, in which event the affirmative vote of
sixty-six and two-thirds percent (66 2/3%) of the number of shares of each
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<PAGE> 8
class or series entitled to vote as a class shall be required), to
amend or repeal, or to adopt any provision incon- sistent with the purpose
or intent of, Articles 4, 5, 6, or this Article 7 of these Articles of
Incorporation. Notice of any such proposed amendment, repeal, or adoption
shall be contained in the notice of the meeting at which it is to be
considered. Subject to the provisions set forth herein, the Corporation
reserves the right to amend, alter, repeal, or rescind any provision
contained in these Articles of Incorporation in the manner now or hereafter
prescribed by law.
7.2 Bylaws. The shareholders of the Corporation may adopt or amend
a bylaw which fixes a greater quorum or voting requirement for shareholders
(or voting groups of shareholders) than is required by the FBCA. The
adoption or amendment of a bylaw that adds, changes, or deletes a greater
quorum or voting requirement for shareholders must meet the same quorum or
voting requirement and be adopted by the same vote and voting groups
required to take action under the quorum or voting requirement then in
effect or proposed to be adopted, whichever is greater.
ARTICLE 8
Registered Office and Agent
The address of the Registered Office of the Corporation is 28100 U.S.
Highway 19 North, Suite 201, Clearwater, Florida 34621, and the Registered
Agent at such address is James T. Boosales.
ARTICLE 9
Principal Office and Mailing Address
The address of the Principal Office of the Corporation and its mailing
address is 28100 U.S. Highway 19 North, Suite 201, Clearwater, Florida 34621.
The location of the Principal Office and the mailing address shall be subject
to change as may be provided in the Bylaws.
THIRD: The foregoing restatement of the Corporation's Articles of
Incorporation amends the Corporation's Articles of Incorporation and was
adopted and approved by a majority of the shareholders of the Corporation
at a meeting of the shareholders held on May 2, 1996, and the number of votes
cast by the shareholders was sufficient for approval.
Fourth: The foregoing restatement of the Corporation's Articles of
Incorporation will become effective upon the
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<PAGE> 9
filing of these Restated Articles of Incorporation with the Florida
Department of State.
IN WITNESS WHEREOF, these Restated Articles of Incorporation
have been signed on behalf of the Corporation this 2nd day of May, 1996.
/s/ Richard T. Isel
--------------------------
Richard T. Isel, President
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
STERILE RECOVERIES, INC.
(a Florida corporation)
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
-----------
<TABLE>
<S> <C> <C>
Section 1.1 Definitions 1
-----------
ARTICLE 2
Offices
-------
Section 2.1 Principal and Business Offices 1
------------------------------
Section 2.2 Registered Office 1
-----------------
ARTICLE 3
Shareholders
------------
Section 3.1 Annual Meeting 1
--------------
Section 3.2 Special Meetings 3
----------------
Section 3.3 Place of Meeting 3
----------------
Section 3.4 Notice of Meeting 3
-----------------
Section 3.5 Waiver of Notice 4
----------------
Section 3.6 Fixing of Record Date 4
---------------------
Section 3.7 Shareholders' List for Meetings 5
-------------------------------
Section 3.8 Quorum 6
------
Section 3.9 Voting of Shares 6
----------------
Section 3.10 Vote Required 6
-------------
Section 3.11 Conduct of Meeting 7
------------------
Section 3.12 Inspectors of Election 7
----------------------
Section 3.13 Proxies 8
-------
Section 3.14 Action by Shareholders Without Meeting 8
--------------------------------------
Section 3.15 Acceptance of Instruments Showing Shareholder Action
---------------------------------------------------- 9
ARTICLE 4
Board of Directors
------------------
Section 4.1 General Powers and Number 10
-------------------------
Section 4.2 Qualifications 10
--------------
Section 4.3 Term of Office 10
--------------
Section 4.4 Nominations of Directors 10
------------------------
Section 4.5 Removal 11
-------
Section 4.6 Resignation 12
-----------
Section 4.7 Vacancies 12
---------
Section 4.8 Compensation 13
------------
Section 4.9 Regular Meetings 13
----------------
Section 4.10 Special Meetings 13
----------------
Section 4.11 Notice 13
------
Section 4.12 Waiver of Notice 13
----------------
Section 4.13 Quorum and Voting 14
-----------------
Section 4.14 Conduct of Meetings 14
-------------------
</TABLE>
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<PAGE> 3
<TABLE>
Page
----
<S> <C>
Section 4.15 Committees 15
----------
Section 4.16 Action Without Meeting 15
----------------------
ARTICLE 5
Officers
--------
Section 5.1 Number 16
------
Section 5.2 Election and Term of Office 16
---------------------------
Section 5.3 Removal 16
-------
Section 5.4 Resignation 16
-----------
Section 5.5 Vacancies 16
---------
Section 5.6 Chairman of the Board 17
---------------------
Section 5.7 President 17
---------
Section 5.8 Vice Presidents 18
---------------
Section 5.9 Secretary 18
---------
Section 5.10 Treasurer 18
---------
Section 5.11 Assistant Secretaries and Assistant Treasurers 19
----------------------------------------------
Section 5.12 Other Assistants and Acting Officers 19
------------------------------------
Section 5.13 Salaries 19
--------
ARTICLE 6
Contracts, Checks and Deposits; Special Corporate Acts
------------------------------------------------------
Section 6.1 Contracts 19
---------
Section 6.2 Checks, Drafts, etc 20
-------------------
Section 6.3 Deposits 20
--------
Section 6.4 Voting of Securities Owned by Corporation 20
-----------------------------------------
ARTICLE 7
Certificates for Shares; Transfer of Shares
-------------------------------------------
Section 7.1 Consideration for Shares 20
------------------------
Section 7.2 Certificates for Shares 21
-----------------------
Section 7.3 Transfer of Shares 21
------------------
Section 7.4 Restrictions on Transfer 22
------------------------
Section 7.5 Lost, Destroyed, or Stolen Certificates 22
---------------------------------------
Section 7.6 Stock Regulations 22
-----------------
ARTICLE 8
Seal
----
Section 8.1 Seal 22
----
ARTICLE 9
Books and Records
-----------------
Section 9.1 Books and Records 22
-----------------
Section 9.2 Shareholders' Inspection Rights 23
-------------------------------
Section 9.3 Distribution of Financial Information 23
-------------------------------------
Section 9.4 Other Reports 23
-------------
</TABLE>
ii
<PAGE> 4
ARTICLE 10
Indemnification
---------------
Page
----
Section 10.1 Provision of Indemnification 23
----------------------------
ARTICLE 11
Amendments
----------
Section 11.1 Power to Amend 24
--------------
iii
<PAGE> 5
ARTICLE 1
Definitions
Section 1.1 Definitions. The following terms shall have the following
meanings for purposes of these bylaws:
"Act" means the Florida Business Corporation Act, as it may be amended from
time to time, or any successor legislation thereto.
"Corporation" means Sterile Recoveries, Inc., a Florida corporation.
"Deliver" or "delivery" includes delivery by hand; United States
mail; facsimile, telegraph, teletype or other form of electronic
transmission, with written confirmation or other acknowledgment of
receipt; and private mail carriers handling nationwide mail services.
"Principal office" means the office (within or without the State of
Florida) where the Corporation's principal executive offices are
located, as designated in the Articles of Incorporation until an
annual report has been filed with the Florida Department of State, and
thereafter as designated in the annual report.
ARTICLE 2
Offices
Section 2.1 Principal and Business Offices. The Corporation may have
such principal and other business offices, either within or without the
State of Florida, as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
Section 2.2 Registered Office. The registered office of the Corporation
required by the Act to be maintained in the State of Florida may but need not
be identical with the principal office if located in the State of Florida, and
the address of the registered office may be changed from time to time by the
Board of Directors or by the registered agent. The business office of the
registered agent of the Corporation shall be identical to such registered
office.
ARTICLE 3
Shareholders
Section 3.1 Annual Meeting.
(a) Call by Directors. The annual meeting of shareholders
shall be held within four months after the close of each fiscal year of the
Corporation on a date and at a time and place designated by the Board of
Directors, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the election of
directors
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<PAGE> 6
shall not be held on the day fixed as herein provided for any annual
meeting of shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of
shareholders as soon thereafter as is practicable. The failure to
hold the annual meeting of the shareholders within the time stated in
these bylaws shall not affect the terms of office of the officers or
directors of the Corporation or the validity of any corporate action.
(b) Business At Annual Meeting. At an annual meeting of the
shareholders of the Corporation, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (1) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (2) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (3) otherwise properly
brought before the meeting by a shareholder. For business to be
properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be received at the
principal business office of the Corporation no later than the date
designated for receipt of shareholders' proposals in a prior public
disclosure made by the Corporation. If there has been no such prior public
disclosure, then to be timely, a shareholder's notice must be delivered
to or mailed and received at the principal business office of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the annual meeting of shareholders; provided, however, that in the event
that less than seventy (70) days' notice of the date of the meeting is given
to shareholders by notice or prior public disclosure, notice by the
shareholders, to be timely, must be received by the Corporation not later
than the close of business on the tenth day following the day on which the
Corporation gave notice or made a public disclosure of the date of the
annual meeting of the shareholders. A shareholder's notice to the Secretary
shall set forth as to each matter the shareholder proposes to bring before
the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear on the
Corporation's stock books, of the shareholders proposing such business,
(c) the class and number of shares of the Corporation which are beneficially
owned by the shareholder, (d) any material interest of the shareholder in
such business, and (e) the same information required by clauses (b), (c)
and (d) above with respect to any other shareholder that, to the knowledge
of the shareholder proposing such business, supports such proposal.
Notwithstanding anything in these bylaws to the contrary, no business
shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section. The Chairman of an annual meeting
shall, if the facts warrant, determine and declare to the annual
meeting that a matter of business was not properly brought before the meeting
in accordance
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with the provisions of this Section, and if the Chairman shall so determine,
the Chairman shall so declare at the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 3.2 Special Meetings.
(a) Call by President or Directors. Special meetings of
shareholders of the Corporation, for any purpose or purposes, may be called by
the President, Chairman of the Board (if any), or a majority of the
directors in office, although less than a quorum.
(b) Call by Shareholders. The Corporation shall call a special
meeting of shareholders in the event that the holders of at least thirty-five
percent (35%) of all of the votes entitled to vote generally in the election
of directors, voting together as a single class, sign, date, and deliver to the
Secretary one or more written demands for the meeting describing one or more
purposes for which it is to be held. The Corporation shall give notice of
such a special meeting within sixty days after the date that the demand is
delivered to the Corporation.
Section 3.3 Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Florida, as the place
of meeting for any annual or special meeting of shareholders. If no
designation is made, the place of meeting shall be the principal office of the
Corporation.
Section 3.4 Notice of Meeting.
(a) Content and Delivery. Written notice stating the date, time,
and place of any meeting of shareholders and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days nor more than sixty days before the date of
the meeting by or at the direction of the President or the Secretary, or
the officer or persons duly calling the meeting, to each shareholder of
record entitled to vote at such meeting and to such other persons as
required by the Act. Unless the Act requires otherwise, notice of an annual
meeting need not include a description of the purpose or purposes for which
the meeting is called. If mailed, notice of a meeting of shareholders shall
be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the stock
record books of the Corporation, with postage thereon prepaid.
(b) Notice of Adjourned Meetings. If an annual or special
meeting of shareholders is adjourned to a different date, time, or place,
the Corporation shall not be required to give notice of the new date, time,
or place if the new date, time, or place is announced at the meeting before
adjournment; provided, however, that if a new record date for an adjourned
meeting is or must be fixed, the Corporation shall give notice of the
adjourned
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<PAGE> 8
meeting to persons who are shareholders as of the new record date who are
entitled to notice of the meeting.
(c) No Notice Under Certain Circumstances.
Notwithstanding the other provisions of this Section, no notice of a meeting
of shareholders need be given to a shareholder if: (1) an annual report
and proxy statement for two consecutive annual meetings of shareholders,
or (2) all, and at least two, checks in payment of dividends or interest on
securities during a twelve-month period have been sent by first-class, United
States mail, addressed to the shareholder at his or her address as it
appears on the share transfer books of the Corporation, and returned
undeliverable. The obligation of the Corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
Corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 3.5 Waiver of Notice.
(a) Written Waiver. A shareholder may waive any notice
required by the Act or these bylaws before or after the date and time
stated for the meeting in the notice. The waiver shall be in writing and
signed by the shareholder entitled to the notice, and be delivered to the
Corporation for inclusion in the minutes or filing with the corporate
records. Neither the business to be transacted at nor the purpose of any
regular or special meeting of shareholders need be specified in any written
waiver of notice.
(b) Waiver by Attendance. A shareholder's attendance at a
meeting, in person or by proxy, waives objection to all of the following:
(1) lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting; and (2) consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
Section 3.6 Fixing of Record Date.
(a) General. The Board of Directors may fix in advance a
date as the record date for the purpose of determining shareholders entitled
to notice of a shareholders' meeting, entitled to vote, or take any
other action. In no event may a record date fixed by the Board of Directors
be a date preceding the date upon which the resolution fixing the record
date is adopted or a date more than seventy days before the date of
meeting or action requiring a determination of shareholders.
(b) Special Meeting. The record date for determining shareholders
entitled to demand a special meeting shall be the close of business on the
date the first shareholder delivers his or her demand to the Corporation.
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<PAGE> 9
(c) Shareholder Action by Unanimous Written Consent. If no
prior action is required by the Board of Directors pursuant to the Act, the
record date for determining shareholders entitled to take action without a
meeting shall be the close of business on the date the first signed
written consent with respect to the action in question is delivered to the
Corporation, but if prior action is required by the Board of Directors
pursuant to the Act, such record date shall be the close of business on the
date on which the Board of Directors adopts the resolution taking such
prior action unless the Board of Directors otherwise fixes a record
date. Any action of the shareholders of the Corporation taken without a
meeting shall be effected only upon the unanimous written consent of all
shareholders entitled to take such action.
(d) Absence of Board Determination for Shareholders' Meeting.
If the Board of Directors does not determine the record date for determining
shareholders entitled to notice of and to vote at an annual or special
shareholders' meeting, such record date shall be the close of business on
the day before the first notice with respect thereto is delivered to
shareholders.
(e) Adjourned Meeting. A record date for determining shareholders
entitled to notice of or to vote at a shareholders' meeting is effective for
any adjournment of the meeting unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
Section 3.7 Shareholders' List for Meetings.
(a) Preparation and Availability. After a record date for a
meeting of shareholders has been fixed, the Corporation shall prepare an
alphabetical list of the names of all of the shareholders entitled to notice
of the meeting. The list shall be arranged by class or series of shares,
if any, and show the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any shareholder
for a period of ten days prior to the meeting or such shorter time as exists
between the record date and the meeting date, and continuing through
the meeting, at the Corporation's principal office, at a place identified
in the meeting notice in the city where the meeting will be held, or at
the office of the Corporation's transfer agent or registrar, if any. A
shareholder or his or her agent may, on written demand, inspect the list,
subject to the requirements of the Act, during regular business hours and
at his or her expense, during the period that it is available for
inspection pursuant to this Section. A shareholder's written demand
to inspect the list shall describe with reasonable particularity the purpose
for inspection of the list, and the Corporation may deny the demand to inspect
the list if the Secretary determines that the demand was not made in good
faith and for a proper purpose or if the list is not directly connected
with the purpose stated in the shareholder's demand, all
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<PAGE> 10
subject to the requirements of Section 607.1602(3) of the Act.
Notwithstanding anything herein to the contrary, the Corporation shall make
the shareholders' list available at any annual meeting or special meeting of
shareholders and any shareholder or his or her agent or attorney may inspect
the list at any time during the meeting or any adjournment thereof.
(b) Prima Facie Evidence. The shareholders' list is prima facie
evidence of the identity of shareholders entitled to examine the
shareholders' list or to vote at a meeting of shareholders.
(c) Failure to Comply. If the requirements of this Section
have not been substantially complied with, or if the Corporation refuses
to allow a shareholder or his or her agent or attorney to inspect the
shareholders' list before or at the meeting, on the demand of any
shareholder, in person or by proxy, who failed to get such access, the
meeting shall be adjourned until such requirements are complied with.
(d) Validity of Action Not Affected. Refusal or failure to
prepare or make available the shareholders' list shall not affect the
validity of any action taken at a meeting of shareholders.
Section 3.8 Quorum.
(a) What Constitutes a Quorum. Shares entitled to vote as a
separate voting group may take action on a matter at a meeting only if a
quorum of those shares exists with respect to that matter. If the
Corporation has only one class of stock outstanding, such class shall
constitute a separate voting group for purposes of this Section. Except as
otherwise provided in the Act, a majority of the votes entitled to be cast
on the matter shall constitute a quorum of the voting group for action on
that matter.
(b) Presence of Shares. Once a share is represented for any
purpose at a meeting, other than for the purpose of objecting to holding
the meeting or transacting business at the meeting, it is considered
present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting unless a
new record date is or must be set for the adjourned meeting.
(c) Adjournment in Absence of Quorum. Where a quorum is not
present, the holders of a majority of the shares represented and who
would be entitled to vote at the meeting if a quorum were present may adjourn
such meeting from time to time.
Section 3.9 Voting of Shares. Except as provided in the Articles of
Incorporation or the Act, each outstanding share, regardless of class, is
entitled to one vote on each matter voted on at a meeting of shareholders.
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Section 3.10 Vote Required.
(a) Matters Other Than Election of Directors. If a quorum
exists, except in the case of the election of directors, action on a
matter shall be approved by a majority of the votes cast at such meeting,
unless the Act or the Articles of Incorporation require a greater number
of affirmative votes.
(b) Election of Directors. Each director shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election of
directors at a meeting at which a quorum is present. Each shareholder who
is entitled to vote at an election of directors has the right to vote the
number of shares owned by him or her for as many persons as there are
directors to be elected. Shareholders do not have a right to cumulate their
votes for directors.
Section 3.11 Conduct of Meeting. The Chairman of the Board of Directors,
and if there be none, or in his or her absence, the President, and in his
or her absence, a Vice President in the order provided under the Section
of these bylaws titled "Vice Presidents," and in their absence, any
person chosen by the shareholders present shall call a shareholders' meeting
to order and shall act as presiding officer of the meeting, and the
Secretary of the Corporation shall act as secretary of all meetings
of the shareholders, but, in the absence of the Secretary, the
presiding officer may appoint any other person to act as secretary of the
meeting. The presiding officer of the meeting shall have broad discretion
in determining the order of business at a shareholders' meeting. The
presiding officer's authority to conduct the meeting shall include, but in no
way be limited to, recognizing shareholders entitled to speak, calling for
the necessary reports, stating questions and putting them to a vote, calling
for nominations, and announcing the results of voting. The presiding
officer also shall take such actions as are necessary and appropriate to
preserve order at the meeting. The rules of parliamentary procedure need
not be observed in the conduct of shareholders' meetings.
Section 3.12 Inspectors of Election. Inspectors of election may be
appointed by the Board of Directors to act at any meeting of shareholders at
which any vote is taken. If inspectors of election are not so appointed,
the presiding officer of the meeting may, and on the request of any
shareholder shall, make such appointment. Each inspector, before
entering upon the discharge of his or her duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his or her ability.
The inspectors of election shall determine the number of shares outstanding,
the voting rights with respect to each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity, and effect
of proxies; receive votes, ballots, consents, and waivers; hear and determine
all challenges
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and questions arising in connection with the vote; count and tabulate
all votes, consents, and waivers; determine and announce the result; and do
such acts as are proper to conduct the election or vote with fairness to all
shareholders. No inspector, whether appointed by the Board of Directors or
by the person acting as presiding officer of the meeting, need be a
shareholder. The inspectors may appoint and retain other persons or
entities to assist the inspectors in the performance of the duties of the
inspectors. On request of the person presiding at the meeting, the
inspectors shall make a report in writing of any challenge, question or
matter determined by them and execute a certificate of any fact found by them.
Section 3.13 Proxies.
(a) Appointment. At all meetings of shareholders, a shareholder
may vote his or her shares in person or by proxy. A shareholder may appoint
a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his or her attorney-in-fact. If an
appointment form expressly provides, any proxy holder may appoint, in
writing, a substitute to act in his or her place. A telegraph, telex, or a
cablegram, a facsimile transmission of a signed appointment form, or a
photographic, photostatic, or equivalent reproduction of a signed appointment
form is a sufficient appointment form.
(b) When Effective. An appointment of a proxy is effective
when received by the Secretary or other officer or agent of the Corporation
authorized to tabulate votes. An appointment is valid for up to eleven (11)
months unless a longer period is expressly provided in the appointment form.
An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
Section 3.14 Action by Shareholders Without Meeting.
(a) Requirements for Unanimous Written Consent. Any action
required or permitted by the Act to be taken at any annual or special meeting
of shareholders may be taken without a meeting, without prior notice, and
without a vote if one or more written consents describing the action taken
shall be signed and dated by the holders of all (and not less than all) of
the outstanding capital stock of the Corporation entitled to vote thereon.
Such consents must be delivered to the principal office of the
Corporation in Florida, the Corporation's principal place of business,
the Secretary, or another officer or agent of the Corporation having
custody of the books in which proceedings of meetings of shareholders are
recorded. No written consent shall be effective to take the corporate
action referred to therein unless, within sixty days of the date of the
earliest dated consent delivered in the manner required herein, written
consents signed by the number of holders required to take action are
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delivered to the Corporation by delivery as set forth in this Section.
(b) Revocation of Written Consents. Any written consent may
be revoked prior to the date that the Corporation receives the required
number of consents to authorize the proposed action. No revocation is
effective unless in writing and until received by the Corporation at its
principal office in Florida or its principal place of business, or received
by the Secretary or other officer or agent having custody of the books
in which proceedings of meetings of shareholders are recorded.
(c) Same Effect as Vote at Meeting. A consent signed under this
Section has the effect of a meeting vote and may be described as such in
any document. Whenever action is taken by written consent pursuant to this
Section, the written consent of the shareholders consenting thereto or the
written reports of inspectors appointed to tabulate such consents shall be
filed with the minutes of proceedings of shareholders.
Section 3.15 Acceptance of Instruments Showing Shareholder Action.
If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the Corporation, if acting
in good faith, may accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of a shareholder. If the name
signed on a vote, consent, waiver, or proxy appointment does not correspond to
the name of a shareholder, the Corporation, if acting in good faith, may
accept the vote, consent, waiver, or proxy appointment and give it effect as
the act of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports to
be that of an officer or agent of the entity;
(b) The name signed purports to be that of a
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the Corporation requests, evidence of
fiduciary status acceptable to the Corporation is presented with
respect to the vote, consent, waiver, or proxy appointment;
(c) The name signed purports to be that of a receiver or trustee
in bankruptcy, or assignee for the benefit of creditors of the shareholder
and, if the Corporation requests, evidence of this status acceptable to the
Corporation is presented with respect to the vote, consent, waiver, or proxy
appointment;
(d) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the Corporation
requests, evidence acceptable to the Corporation of the signatory's
authority to sign for the shareholder is presented with respect to the
vote, consent, waiver, or proxy appointment; or
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(e) Two or more persons are the shareholder as cotenants
or fiduciaries and the name signed purports to be the name of at least
one of the co-owners and the person signing appears to be acting on behalf of
all co-owners.
The Corporation may reject a vote, consent, waiver, or proxy appointment
if the Secretary or other officer or agent of the Corporation who is
authorized to tabulate votes, acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
ARTICLE 4
Board of Directors
Section 4.1 General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation managed under the direction of, the Board of Directors. The
Corporation shall have six (6) directors initially. The number of directors
may be increased or decreased from time to time by vote of a majority of the
Board of Directors, but shall never be less than three (3) nor more than
fifteen (15).
Section 4.2 Qualifications. Directors must be natural persons who
are eighteen years of age or older but need not be residents of the State
of Florida or shareholders of the Corporation.
Section 4.3 Term of Office. The directors shall be classified,
with respect to the time for which they severally hold office, into three (3)
classes, Class I, Class II and Class III, each of which shall be as nearly
equal in number as possible. Class I shall be established for a term
expiring at the annual meeting of shareholders to be held in 1999 and
shall consist initially of two (2) directors. Class II shall be established
for a term expiring at the annual meeting of shareholders to be held in 1998
and shall consist initially of two (2) directors. Class III shall be
established for a term expiring at the annual meeting of shareholders to be
held in 1997 and shall consist initially of two (2) directors. Each director
shall hold office until his or her successors are elected and qualified, or
until such director's earlier death, resignation or removal as hereinafter
provided. At each annual meeting of the shareholders of the Corporation,
the successors of the class of directors whose terms expire at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their election.
Unless otherwise provided in the Articles of Incorporation, when the number
of directors of the Corporation is changed, the Board of Directors shall
determine the class or classes to which the increased or decreased number
of directors shall be apportioned; provided, however, that no decrease
in the number of directors shall affect the term of any director then in
office.
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Section 4.4 Nominations of Directors. Except as otherwise provided
pursuant to the provisions of the Articles of Incorporation or
Articles of Amendment relating to the rights of the holders of any class
or series of Preferred Stock, voting separately by class or series, to elect
directors under specified circumstances, nominations of persons for election to
the Board of Directors may be made by the Chairman of the Board on behalf of
the Board of Directors or by any shareholder of the Corporation entitled to
vote for the election of directors at the annual meeting of the
shareholders who complies with the notice provisions set forth in
this Section. To be timely, a shareholder's notice shall be received
at the principal business office of the Corporation no later than the date
designated for receipt of shareholders' proposals in a prior public
disclosure made by the Corporation. If there has been no such prior public
disclosure, then to be timely, a shareholder's nomination must be delivered
to or mailed and received at the principal business office of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the annual meeting of shareholders; provided, however, that in the event
that less than seventy (70) days' notice of the date of the meeting is
given to the shareholders or prior public disclosure of the date of the
meeting is made, notice by the shareholder to be timely must be so
received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed
or such public disclosure was made. A shareholder's notice to the
Secretary shall set forth (a) as to each person the shareholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of such proposed nominee, (ii) the principal
occupation or employment of such person, (iii) the class and number of
shares of capital stock of the Corporation which are beneficially owned by
such person, and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b)
as to the shareholder giving notice (i) the name and address, as they
appear on the Corporation's books, of the shareholder proposing such
nomination, and (ii) the class and number of shares of stock of the
Corporation which are beneficially owned by the shareholder. No
person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this
Section. The Chairman of the meeting shall, if the facts warrant, determine
and declare to the annual meeting that a nomination was not made in accordance
with the provisions of this Section, and if the Chairman shall so determine,
the Chairman shall so declare at the meeting and the defective nomination shall
be disregarded.
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Section 4.5 Removal.
(a) Generally. Except as otherwise provided pursuant to the
provisions of the Articles of Incorporation or Articles of Amendment relating
to the rights of the holders of any class or series of Preferred Stock,
voting separately by class or series, to elect directors under specified
circumstances, any director or directors may be removed from office at any
time, but only for cause (as defined in Section 4.5(b) hereof) and only
by the affirmative vote, at a special meeting of the shareholders called for
such a purpose, of not less than sixty-six and two-thirds percent (66
2/3%) of the total number of votes of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, but only if notice of such
proposed removal was contained in the notice of such meeting. At least
thirty (30) days prior to such special meeting of shareholders, written notice
shall be sent to the director or directors whose removal will be considered
at such meeting. Any vacancy on the Board of Directors resulting from such
removal or otherwise shall be filled only by vote of a majority of the
directors then in office, although less than a quorum, and any director so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until his or her successor shall have been
elected and qualified or until any such director's earlier death,
resignation or removal.
(b) "Cause" Defined. For the purposes of this Section,
"cause" shall mean (i) misconduct as a director of the Corporation or any
subsidiary of the Corporation which involves dishonesty with respect to a
substantial or material corporate activity or corporate assets, or (ii)
conviction of an offense punishable by one (1) or more years of imprisonment
(other than minor regulatory infractions and traffic violations which do not
materially and adversely affect the Corporation).
Section 4.6 Resignation. A director may resign at any time by
delivering written notice to the Board of Directors or its Chairman (if
any) or to the Corporation. A director's resignation is effective when the
notice is delivered unless the notice specifies a later effective date.
Section 4.7 Vacancies.
(a) Who May Fill Vacancies. Except as provided below,
whenever any vacancy occurs on the Board of Directors, including a
vacancy resulting from an increase in the number of directors, it may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office until his or her
successor is duly elected and qualified, and such successor shall complete such
director's remaining term.
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(b) Directors Electing by Voting Groups. Whenever the holders
of shares of any voting group are entitled to elect a class of one or more
directors by the provisions of the Articles of Incorporation, vacancies in such
class may be filled by holders of shares of that voting group or by a
majority of the directors then in office elected by such voting group or by a
sole remaining director so elected. If no director elected by such voting
group remains in office, unless the Articles of Incorporation provide
otherwise, directors not elected by such voting group may fill vacancies.
(c) Prospective Vacancies. A vacancy that will occur at a
specific later date, because of a resignation effective at a later date or
otherwise, may be filled before the vacancy occurs, but the new director may
not take office until the vacancy occurs.
Section 4.8 Compensation. The Board of Directors, irrespective
of any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the Corporation as directors,
officers, or otherwise, or may delegate such authority to an appropriate
committee. The Board of Directors also shall have authority to provide for
or delegate authority to an appropriate committee to provide for reasonable
pensions, disability or death benefits, and other benefits or payments,
to directors, officers, and employees and to their families, dependents,
estates, or beneficiaries on account of prior services rendered to the
Corporation by such directors, officers, and employees.
Section 4.9 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
after the annual meeting of shareholders and each adjourned session
thereof. The place of such regular meeting shall be the same as the
place of the meeting of shareholders which precedes it, or such other
suitable place as may be announced at such meeting of shareholders. The
Board of Directors may provide, by resolution, the date, time, and place,
either within or without the State of Florida, for the holding of
additional regular meetings of the Board of Directors without notice other
than such resolution.
Section 4.10 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), the President
or not less than one-third (1/3) of the members of the Board of Directors. The
person or persons calling the meeting may fix any place, either within or
without the State of Florida, as the place for holding any special
meeting of the Board of Directors, and if no other place is fixed, the
place of the meeting shall be the principal office of the Corporation in the
State of Florida.
Section 4.11 Notice. Special meetings of the Board of Directors
must be preceded by at least two days' notice of the
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date, time, and place of the meeting. The notice need not describe the
purpose of the special meeting.
Section 4.12 Waiver of Notice. Notice of a meeting of the Board of
Directors need not be given to any director who signs a waiver of notice
either before or after the meeting. Attendance of a director at a meeting
shall constitute a waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Section 4.13 Quorum and Voting. A quorum of the Board of Directors
consists of a majority of the number of directors prescribed by these
bylaws (or if no number is prescribed, the number of directors in office
immediately before the meeting begins). If a quorum is present when a
vote is taken, the affirmative vote of a majority of directors present is the
act of the Board of Directors. A director who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken is deemed to have assented to the action taken unless: (a)
he or she objects at the beginning of the meeting (or promptly upon his or her
arrival) to holding it or transacting specified business at the meeting; or
(b) he or she votes against or abstains from the action taken.
Section 4.14 Conduct of Meetings.
(a) Presiding Officer. The Board of Directors may elect from
among its members a Chairman of the Board of Directors, who shall preside at
meetings of the Board of Directors. The Chairman, and if there be none,
or in his or her absence, the President, and in his or her absence, a Vice
President in the order provided under the Section of these bylaws titled
"Vice Presidents," and in his or her absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order and
shall act as presiding officer of the meeting.
(b) Minutes. The Secretary of the Corporation shall act as
secretary of all meetings of the Board of Directors but in the absence of
the Secretary, the presiding officer may appoint any other person present
to act as secretary of the meeting. Minutes of any regular or special
meeting of the Board of Directors shall be prepared and distributed to each
director.
(c) Adjournments. A majority of the directors present,
whether or not a quorum exists, may adjourn any meeting of the Board of
Directors to another time and place. Notice of any such adjourned meeting
shall be given to the directors who are not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors.
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(d) Participation by Conference Call or Similar Means. The
Board of Directors may permit any or all directors to participate in a
regular or a special meeting by, or conduct the meeting through the use of,
any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in
a meeting by this means is deemed to be present in person at the meeting.
Section 4.15 Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from
among its members an Executive Committee and one or more other committees,
which may include, by way of example and not as a limitation, a Compensation
Committee (for the purpose of establishing and implementing an executive
compensation policy) and an Audit Committee (for the purpose of
examining and considering matters relating to the financial affairs of
the Corporation). Each committee shall have two or more members, who serve at
the pleasure of the Board of Directors, provided that the Compensation
Committee and the Audit Committee shall consist of at least two Independent
Directors. For purposes of this Section, "Independent Director" shall mean a
person other than an officer or employee of the Corporation or any
subsidiary of the Corporation or any other individual having a relationship
which, in the opinion of the Board of Directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities
of a director. To the extent provided in the resolution of the Board of
Directors establishing and constituting such committees, such committees
shall have and may exercise all the authority of the Board of
Directors, except that no such committee shall have the authority to:
(a) approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders;
(b) fill vacancies on the Board of Directors or any committee
thereof;
(c) adopt, amend, or repeal these bylaws;
(d) authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors;
or
(e) authorize or approve the issuance or sale or contract
for the sale of shares, or determine the designation and relative rights,
preferences, and limitations of a voting group except that the Board of
Directors may authorize a committee (or a senior executive officer of the
Corporation) to do so within limits specifically prescribed by the Board of
Directors.
The Board of Directors, by resolution adopted in accordance with
this Section, may designate one or more directors as alternate
members of any such committee, who may act in the place and stead
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of any absent member or members at any meeting of such committee. The
provisions of these bylaws which govern meetings, notice and waiver of
notice, and quorum and voting requirements of the Board of Directors apply to
committees and their members as well.
Section 4.16 Action Without Meeting. Any action required or permitted
by the Act to be taken at a meeting of the Board of Directors or a
committee thereof may be taken without a meeting if the action is taken by
all members of the Board or of the committee. The action shall be
evidenced by one or more written consents describing the action taken, signed
by each director or committee member and retained by the Corporation. Such
action shall be effective when the last director or committee member signs
the consent, unless the consent specifies a different effective date.
A consent signed under this Section has the effect of a vote at a meeting
and may be described as such in any document.
ARTICLE 5
Officers
Section 5.1 Number. The principal officers of the Corporation
shall be a Chairman, a President, the number of Vice Presidents, if any, as
authorized from time to time by the Board of Directors, a Secretary, and a
Treasurer, each of whom shall be elected by the Board of Directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. The Board of Directors may
also authorize any duly appointed officer to appoint one or more officers
or assistant officers. The same individual may simultaneously hold
more than one office.
Section 5.2 Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as is practicable. Each officer shall hold office until his or
her successor shall have been duly elected or until his or her prior death,
resignation, or removal.
Section 5.3 Removal. The Board of Directors may remove any officer
and, unless restricted by the Board of Directors, an officer may remove
any officer or assistant officer appointed by that officer, at any
time, with or without cause and notwithstanding the contract rights,
if any, of the officer removed. The appointment of an officer does not of
itself create contract rights.
Section 5.4 Resignation. An officer may resign at any time by
delivering notice to the Corporation. The resignation shall be effective
when the notice is delivered, unless the notice specifies a later
effective date and the Corporation accepts the
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later effective date. If a resignation is made effective at a later date
and the Corporation accepts the future effective date, the pending vacancy
may be filled before the effective date but the successor may not take office
until the effective date.
Section 5.5 Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification, or otherwise, shall be
filled as soon thereafter as practicable by the Board of Directors for the
unexpired portion of the term.
Section 5.6 Chairman of the Board. The Chairman of the Board (the
"Chairman") shall be a member of the Board of Directors of the Corporation
and shall preside over all meetings of the Board of Directors and
shareholders of the Corporation. The Chairman shall have authority, subject
to such rules as may be prescribed by the Board of Directors, to appoint such
agents and employees of the Corporation as he or she shall deem necessary,
to prescribe their powers, duties and compensation, and to delegate authority
to them. Such agents and employees shall hold office at the direction
of the Chairman. The Chairman shall have authority to sign certificates for
shares of the Corporation the issuance of which shall have been authorized
by resolution of the Board of Directors, and to execute and acknowledge,
on behalf of the Corporation, all deeds, mortgages, bonds, contracts,
leases, reports, and all other documents or instruments necessary or
proper to be executed in the course of the Corporation's regular business,
or which shall be authorized by resolution of the Board of Directors; and,
except as otherwise provided by law or the Board of Directors, the
Chairman may authorize the President or any Vice President or other officer or
agent of the Corporation to execute and acknowledge such documents or
instruments in his or her place and stead. In general, he or she shall
perform all duties as may be prescribed by the Board of Directors from time to
time.
Section 5.7 President. The President shall be the chief executive
officer of the Corporation and, subject to the direction of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. If the Chairman of the Board is not present,
the President shall preside at all meetings of the Board of Directors and
shareholders. The President shall have authority, subject to such rules as
may be prescribed by the Board of Directors, to appoint such agents and
employees of the Corporation as he or she shall deem necessary, to prescribe
their powers, duties and compensation, and to delegate authority to them.
Such agents and employees shall hold office at the discretion of the
President. The President shall have authority to sign certificates for
shares of the Corporation the issuance of which shall have been authorized by
resolution of the Board of Directors, and to execute and acknowledge, on
behalf of the Corporation, all deeds, mortgages, bonds, contracts, leases,
reports, and all other documents or instruments necessary or proper to
be executed in the course of the Corporation's regular business, or which
shall be authorized by resolution of the Board
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of Directors; and, except as otherwise provided by law or the Board of
Directors, the President may authorize any Vice President or other officer
or agent of the Corporation to execute and acknowledge such documents or
instruments in his or her place and stead. In general he or she shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 5.8 Vice Presidents. In the absence of the President or in the
event of the President's death, inability or refusal to act, or in the event
for any reason it shall be impracticable for the President to act personally,
the Vice President, if any (or in the event there be more than one Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of
their election), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President. Any Vice President may sign certificates for shares
of the Corporation the issuance of which shall have been authorized by
resolution of the Board of Directors; and shall perform such other
duties and have such authority as from time to time may be delegated or
assigned to him or her by the President or by the Board of Directors.
The execution of any instrument of the Corporation by any Vice
President shall be conclusive evidence, as to third parties, of his or her
authority to act in the stead of the President. The Corporation may have one
or more Executive Vice Presidents and one or more Senior Vice Presidents, who
shall be Vice Presidents for purposes hereof.
Section 5.9 Secretary. The Secretary shall: (a) keep, or cause to be
kept, minutes of the meetings of the shareholders and of the Board of
Directors (and of committees thereof) in one or more books provided for that
purpose (including records of actions taken by the shareholders or the Board of
Directors (or committees thereof) without a meeting); (b) be custodian of
the corporate records and of the seal of the Corporation, if any, and if
the Corporation has a seal, see that it is affixed to all documents the
execution of which on behalf of the Corporation under its seal is duly
authorized; (c) authenticate the records of the Corporation; (d)
maintain a record of the shareholders of the Corporation, in a form that
permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and class
or series of shares held by each shareholder; (e) have general charge of the
stock transfer books of the Corporation; and (f) in general perform all
duties incident to the office of Secretary and have such other duties and
exercise such authority as from time to time may be delegated or assigned by
the President or by the Board of Directors.
Section 5.10 Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
maintain appropriate accounting records; (c) receive and give receipts
for moneys due and payable to the
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Corporation from any source whatsoever, and deposit all such moneys in
the name of the Corporation in such banks, trust companies, or other
depositaries as shall be selected in accordance with the provisions of
these bylaws; and (d) in general perform all of the duties incident to the
office of Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned by the President
or by the Board of Directors. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the Board of Directors shall
determine.
Section 5.11 Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize. The Assistant
Treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with
such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties
and have such authority as shall from time to time be delegated or assigned to
them by the Secretary or the Treasurer, respectively, or by the President or
the Board of Directors.
Section 5.12 Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly appointed
officer of the Corporation to appoint, any person to act as assistant to
any officer, or as agent for the Corporation in his or her stead, or to
perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or acting
officer or other agent so appointed by the Board of Directors or an
authorized officer shall have the power to perform all the duties of the
office to which he or she is so appointed to be an assistant, or as to
which he or she is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors or the appointing officer.
Section 5.13 Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
Corporation.
ARTICLE 6
Contracts, Checks and Deposits; Special Corporate Acts
Section 6.1 Contracts. The Board of Directors may authorize any officer
or officers, or any agent or agents to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the Corporation,
and such authorization may be general or confined to specific instances.
In the absence of other designation, all deeds, mortgages, and instruments of
assignment or pledge made by the Corporation shall be executed in
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<PAGE> 24
the name of the Corporation by the President or one of the Vice Presidents;
the Secretary or an Assistant Secretary, when necessary or required,
shall attest and affix the corporate seal, if any, thereto; and when so
executed no other party to such instrument or any third party shall be
required to make any inquiry into the authority of the signing officer or
officers.
Section 6.2 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in
the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as
shall from time to time be determined by or under the authority of a
resolution of the Board of Directors.
Section 6.3 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies, or other depositaries as may be
selected by or under the authority of a resolution of the Board of Directors.
Section 6.4 Voting of Securities Owned by Corporation. Subject
always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by the Corporation may be voted at any meeting of security holders
of such other corporation by the President of the Corporation if he or she be
present, or in his or her absence by any Vice President of the Corporation
who may be present, and (b) whenever, in the judgment of the
President, or in his or her absence, of any Vice President, it is desirable
for the Corporation to execute a proxy or written consent in respect
of any such shares or other securities, such proxy or consent shall be
executed in the name of the Corporation by the President or one of the Vice
Presidents of the Corporation, without necessity of any authorization by the
Board of Directors, affixation of corporate seal, if any, or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of the
Corporation shall have full right, power, and authority to vote the shares
or other securities issued by such other corporation and owned or controlled
by the Corporation the same as such shares or other securities might be voted
by the Corporation.
ARTICLE 7
Certificates for Shares; Transfer of Shares
Section 7.1 Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, promises to perform services evidenced by a
written contract, or other securities of the Corporation. Before the
Corporation issues shares, the Board of Directors shall determine
that the consideration received or to be received for the shares to be
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<PAGE> 25
issued is adequate. The determination of the Board of Directors is
conclusive insofar as the adequacy of consideration for the issuance of
shares relates to whether the shares are validly issued, fully paid, and
nonassessable. The Corporation may place in escrow shares issued for
future services or benefits or a promissory note, or make other
arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until
the services are performed, the note is paid, or the benefits are received. If
the services are not performed, the note is not paid, or the benefits are not
received, the Corporation may cancel, in whole or in part, the shares escrowed
or restricted and the distributions credited.
Section 7.2 Certificates for Shares. Every holder of shares in the
Corporation shall be entitled to have a certificate representing all
shares to which he or she is entitled unless the Board of Directors
authorizes the issuance of some or all shares without certificates. Any
such authorization shall not affect shares already represented by certificates
until the certificates are surrendered to the Corporation. If the Board of
Directors authorizes the issuance of any shares without certificates, within a
reasonable time after the issue or transfer of any such shares, the
Corporation shall send the shareholder a written statement of the information
required by the Act or the Articles of Incorporation to be set
forth on certificates, including any restrictions on transfer. Certificates
representing shares of the Corporation shall be in such form, consistent
with the Act, as shall be determined by the Board of Directors. Such
certificates shall be signed (either manually or in facsimile) by the President
or any Vice President or any other persons designated by the Board of Directors
and may be sealed with the seal of the Corporation or a facsimile thereof.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation.
Unless the Board of Directors authorizes shares without certificates, all
certificates surrendered to the Corporation for transfer shall be canceled
and no new certificate shall be issued until the former certificate for a
like number of shares shall have been surrendered and canceled, except
as provided in these bylaws with respect to lost, destroyed, or stolen
certificates. The validity of a share certificate is not affected if a person
who signed the certificate (either manually or in facsimile) no longer
holds office when the certificate is issued.
Section 7.3 Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer, the Corporation
may treat the registered owner of such shares as the person exclusively
entitled to vote, to receive notifications, and otherwise to have and
exercise all the rights and power of an owner. Where a certificate for
shares is presented to the Corporation with a request to register a transfer,
the Corporation shall not be liable to the owner or any other person
suffering
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<PAGE> 26
loss as a result of such registration of transfer if (a) there were on or
with the certificate the necessary endorsements, and (b) the Corporation had
no duty to inquire into adverse claims or has discharged any such duty.
The Corporation may require reasonable assurance that such endorsements
are genuine and effective and compliance with such other regulations as
may be prescribed by or under the authority of the Board of Directors.
Section 7.4 Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation
as required by the Act or the Articles of Incorporation of the restrictions
imposed by the Corporation upon the transfer of such shares.
Section 7.5 Lost, Destroyed, or Stolen Certificates. Unless the Board
of Directors authorizes shares without certificates, where the owner
claims that certificates for shares have been lost, destroyed, or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the Corporation has notice that such shares
have been acquired by a bona fide purchaser, (b) files with the Corporation a
sufficient indemnity bond if required by the Board of Directors or any
principal officer, and (c) satisfies such other reasonable requirements
as may be prescribed by or under the authority of the Board of Directors.
Section 7.6 Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with law as they may deem expedient concerning the issue,
transfer, and registration of shares of the Corporation.
ARTICLE 8
Seal
Section 8.1 Seal. The Board of Directors may provide for a corporate
seal for the Corporation.
ARTICLE 9
Books and Records
Section 9.1 Books and Records.
(a) The Corporation shall keep as permanent records minutes of
all meetings of the shareholders and Board of Directors, a record of
all actions taken by the shareholders or Board of Directors without a meeting,
and a record of all actions taken by a committee of the Board of Directors
in place of the Board of Directors on behalf of the Corporation.
(b) The Corporation shall maintain accurate accounting records.
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<PAGE> 27
(c) The Corporation or its agent shall maintain a record of
the shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class
of shares showing the number and series of shares held by each.
(d) The Corporation shall keep a copy of all written
communications within the preceding three years to all shareholders
generally or to all shareholders of a class or series, including the
financial statements required to be furnished by the Act, and a copy of
its most recent annual report delivered to the Department of State.
Section 9.2 Shareholders' Inspection Rights. Shareholders are
entitled to inspect and copy records of the Corporation as permitted by the
Act.
Section 9.3 Distribution of Financial Information. The Corporation
shall prepare and disseminate financial statements to shareholders as required
by the Act.
Section 9.4 Other Reports. The Corporation shall disseminate such other
reports to shareholders as are required by the Act, including reports
regarding indemnification in certain circumstances and reports regarding
the issuance or authorization for issuance of shares in exchange for promises
to render services in the future.
ARTICLE 10
Indemnification
Section 10.1 Provision of Indemnification. The Corporation shall, to
the fullest extent permitted or required by the Act, including any
amendments thereto (but in the case of any such amendment, only to the
extent such amendment permits or requires the Corporation to provide
broader indemnification rights than prior to such amendment), indemnify its
Directors and Executive Officers against any and all Liabilities, and advance
any and all reasonable Expenses, incurred thereby in any Proceeding to which
any such Director or Executive Officer is a Party or in which such Director or
Executive Officer is deposed or called to testify as a witness because he or
she is or was a Director or Executive Officer of the Corporation. The
rights to indemnification granted hereunder shall not be deemed exclusive
of any other rights to indemnification against Liabilities or the advancement
of Expenses which a Director or Executive Officer may be entitled under any
written agreement, Board of Directors' resolution, vote of
shareholders, the Act, or otherwise. The Corporation may, but shall not
be required to, supplement the foregoing rights to indemnification against
Liabilities and advancement of Expenses by the purchase of insurance on
behalf of any one or more of its Directors or Executive Officers whether or
not the Corporation would be obligated to indemnify or advance Expenses
to such Director or Executive Officer under this Article. For purposes of
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<PAGE> 28
this Article, the term "Directors" includes former directors of the
Corporation and any director who is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
including, without limitation, any employee benefit plan (other than in the
capacity as an agent separately retained and compensated for the provision of
goods or services to the enterprise, including, without limitation,
attorneys-at-law, accountants, and financial consultants). For purposes of
this Article, the term "Executive Officers" includes those individuals who
are or were at any time "executive officers" of the Corporation as
defined in Securities and Exchange Commission Rule 3b-7 promulgated under
the Securities Exchange Act of 1934, as amended. All other capitalized
terms used in this Article and not otherwise defined herein have the meaning
set forth in Section 607.0850 of the Act. The provisions of this Article are
intended solely for the benefit of the indemnified parties described herein and
their heirs and personal representatives and shall not create any rights in
favor of third parties. No amendment to or repeal of this Article shall
diminish the rights of indemnification provided for herein prior to such
amendment or repeal.
ARTICLE 11
Amendments
Section 11.1 Power to Amend. These bylaws may be amended or repealed by
either the Board of Directors or the shareholders, unless the Act reserves
the power to amend these bylaws generally or any particular bylaw provision, as
the case may be, exclusively to the shareholders or unless the
shareholders, in amending or repealing these bylaws generally or any
particular bylaw provision, provide expressly that the Board of Directors
may not amend or repeal these bylaws or such bylaw provision, as the case may
be. The shareholders of the Corporation may adopt or amend a bylaw provision
which fixes a greater quorum or voting requirement for shareholders (or
voting groups of shareholders) than is required by the Act. The
adoption or amendment of a bylaw provision that adds, changes or deletes a
greater quorum or voting requirement for shareholders must meet the same
quorum or voting requirement and be adopted by the same vote and voting
groups required to take action under the quorum or voting requirement then
in effect or proposed to be adopted, whichever is greater.
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<PAGE> 1
EXHIBIT 10.1
STERILE RECOVERIES, INC.
1995 STOCK OPTION PLAN
Sterile Recoveries, Inc. establishes the following 1995 Stock Option
Plan for the exclusive benefit of its eligible employees and other key
persons:
ARTICLE I
PURPOSE AND INTERPRETATION
1.1 Purpose. The purpose of this Plan is to further the interests of
the Company, its Subsidiaries (if any), and its shareholders by providing
incentives in the form of Stock Options to key employees and other key
persons who contribute materially to the success and profitability of the
Company. The Plan will enable the Company to attract and retain key
employees, to reward outstanding individual contributions, and to give
selected key employees and other key persons an interest in the Company
parallel to that of its shareholders, thus enhancing their proprietary
interest in the Company's continued success and progress.
1.2 Definitions. As used in this Plan, the following defined,
capitalized terms have the respective meanings ascribed to them:
"Administrative Committee" means the Board of Directors before
the Common Stock is Publicly Held and the committee appointed by the Board
of Directors pursuant to section 2.1 to administer the Plan after the
Company is Publicly Held.
"Affiliate" means a Subsidiary of the Company, a corporation that
directly or indirectly owns 80% or more of the voting securities of the
Company, or a corporation of which 80% or more of the voting
securities is owned directly or indirectly by the same corporation that
directly or indirectly owns 80% or more of the voting securities of the
Company.
"Board of Directors" means the Board of Directors of the
Company.
"Change in Control" means any of the following: (a) the
shareholders of the Company approve a liquidation of all or
substantially all the consolidated assets of the Company and
its Subsidiaries, other than a liquidation of a Subsidiary into
the Company or another Subsidiary (unless the transaction is
subsequently abandoned or
<PAGE> 2
otherwise fails to occur); (b) the shareholders of the Company approve a
sale, lease, exchange, or other transfer to any person other than the
Company or a Subsidiary (in a single transaction or related series of
transactions) of all or substantially all of consolidated assets
of the Company and its Subsidiaries, excluding the creation (but
not the foreclosure) of a lien, mortgage, or security interest
(unless the transaction is subsequently abandoned or otherwise fails
to occur); (c) the shareholders of the Company approve a merger,
consolidation, reorganization, tender offer, exchange offer, or share
exchange in which the Company will not be the surviving corporation or
will become a majority-owned subsidiary of a person other than a
Subsidiary (unless the transaction is subsequently abandoned or
otherwise fails to occur); or (d) the occurrence of any event,
transaction, or arrangement that results in any person or group
becoming a beneficial owner of (i) a majority of the outstanding Common
Stock of the Company or any Subsidiary that contributed more than
50% of the Company's consolidated revenues for its last fiscal year,
(ii) securities of the Company representing a majority of the combined
voting power of all the outstanding securities of the Company that are
entitled to vote generally in the election of its directors, or (iii) with
respect to any Subsidiary that contributed more than 50% of the Company's
consolidated revenues for its last fiscal year, securities of that
Subsidiary representing a majority of the combined voting power of all
the outstanding securities of that Subsidiary that are entitled to vote
generally in the election of its directors, unless in each case the
beneficial owner is the Company, a Subsidiary, an employee benefit
plan sponsored by the Company, a person or group who is a record or
beneficial owner of 25% or more of the outstanding Shares on the Date of
Grant, or a person who becomes a beneficial owner of 25% or more of the
outstanding Shares solely by becoming a trustee of an inter vivos trust
created by a person who is the record or beneficial owner of 25% or more
of the outstanding Shares on the Date of Grant.
"Common Stock" means the common stock, $.001 par value, of the
Company.
"Company" means Sterile Recoveries, Inc., a Florida corporation
and the sponsor of this Plan.
"Date of Grant" means, with respect to a Stock Option, the date
as of when it is granted to a Participant.
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<PAGE> 3
"Employee" means a person who is an officer of the Company or is
employed by the Company or a Subsidiary on a full-time, salaried
basis for at least 30 hours each week.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, and includes all rules and regulations of
the SEC promulgated under that act.
"Incentive Option" means a Stock Option granted under this Plan
that is intended to qualify as an "incentive stock option," as defined
in section 422 of the Internal Revenue Code, as in effect on the Date
of Grant of the Stock Option.
"Internal Revenue Code" means the United States Internal Revenue
Code of 1986, as amended from time to time, or any United States
income tax law subsequently enacted in substitution for that code.
"Market Value" means, as of any particular date, the mean average of
the high bid and low asked prices of the Shares that were quoted on
the National Association of Securities Dealers Automated Quotation System
on that date, or the weighted mean average of the high and low sales
prices of the Shares on the American Stock Exchange or the New York
Stock Exchange, if the Shares become listed for trading on either of
those securities exchanges or, if the Common Stock is not Publicly
Held, the market value of the Company as determined in the sole
discretion of the Administrative Committee.
"Nonqualified Option" means a Stock Option granted under this
Plan that is not designated as an Incentive Option.
"Option Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions, performance
requirements, and limitations applicable to a Stock Option.
"Participant" means an Employee who is selected by the
Administrative Committee to receive a Stock Option pursuant to this
Plan, in the person's capacity as a participant under the Plan.
"Plan" means this 1995 Stock Option Plan of Sterile Recoveries,
Inc., as originally adopted and as subsequently amended, modified, or
supplemented in accordance with its terms.
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<PAGE> 4
"Publicly Held" means the status of the Shares at any time
subsequent to (i) the sale of Shares of the Company in a registered
offering under the Securities Act of 1933, as amended, or (ii) if
earlier, the registration of the Shares under the Exchange Act.
"Shares" means shares of the Common Stock or any securities issued
in exchange or substitution for those shares pursuant to a transaction
described in section 5.1.
"Stock Option" means an option to purchase Shares from the
Company that is granted to a Participant pursuant to this Plan,
whether as an Incentive Option or a Nonqualified Option.
"Subsidiary" means a corporation of which 80% of its voting
securities are owned directly or indirectly by the Company.
1.3 Other Words. As used in this Plan, the word "or" is not exclusive;
the words "consent" and "approval" are synonymous; the word "including" is
always without limitation; the phrase "beneficial owner" has the meaning
attributed to it under Rule 13d-3 of the Exchange Act; the word "group" has the
meaning attributed to that term in Rule 13d-5(b)(1) under the Exchange Act;
and the phrase "business day" means any day that is not a Saturday, Sunday, or
holiday observed by the New York Stock Exchange. This Plan is written in the
masculine gender solely for convenience, and masculine words should be
construed to include correlative neuter and feminine words. In addition,
words in the singular number include words of the plural number and vice versa.
1.4 Headings and References. The titles and headings preceding the
text of the articles and sections of this Plan are solely for convenient
reference and neither constitute a part of this Plan nor affect its meaning,
interpretation, or effect. Unless otherwise expressly stated, a reference
in this Plan to a section refers to a section of this Plan.
1.5 Limitation of Grant. Nothing in this Plan, whether express or
implied, is intended or should be construed to confer upon, or to grant to,
any person (other than the Participants and their respective heirs and
personal representatives) any claim, right, or remedy under or because of this
Plan. An Employee does not have any claim or right to participate in this
Plan and will not acquire any right to continue as an officer or employee
of the Company or a Subsidiary because of his selection as a Participant under
this Plan. An Employee's selection as a Participant does not restrict in
any way the right of the Company or a Subsidiary to terminate his employment
at any time.
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<PAGE> 5
1.6 Governing Law. The validity, construction, enforcement, and
interpretation of this Plan are governed by the laws of the United States of
America and the State of Florida, excluding the laws of those jurisdictions
relating to resolution of conflicts with laws of other jurisdictions.
ARTICLE II
PLAN ADMINISTRATION
2.1 Administrative Committee. This Plan will be administered by
an Administrative Committee. Before the Shares become Publicly Held, the
Administrative Committee will consist of the Board of Directors. After the
Shares become Publicly Held, the Administrative Committee will consist of at
least two members of the Board of Directors to serve for unspecified
terms at the discretion of the Board of Directors. The Board of
Directors may remove a member of the Administrative Committee (as such)
at any time, with or without cause, and has the exclusive power to appoint a
successor to fill any vacancy on the Administrative Committee. After the
Shares become Publicly Held, the Administrative Committee will not include any
person who, for at least one year before his appointment, received Shares or
Stock Options under this Plan or any other benefit plan entitling a
Participant to acquire any stock, stock options, or other "equity securities"
of the Company or its Affiliates (as that term is defined for purposes of
section 16 of the Exchange Act). A member of the Administrative Committee is
ineligible to receive a grant of an option under this Plan or any other plan
of the Company or any of its Affiliates while serving as a member of
the Administrative Committee.
2.2 Power and Authority. The Administrative Committee has the
exclusive power and authority, and the sole and absolute discretion, to do
the following: (a) construe and interpret this Plan; (b) select the
Employees and other persons who will be Participants in this Plan; (c) amend,
prescribe, and rescind rules and regulations relating to this Plan; (d) grant
options under the Plan, either conditionally or unconditionally,
and designate whether they constitute incentive or nonstatutory options;
(e) determine when options will be granted under the Plan; (f) determine the
number of Shares subject to each option; (g) determine the terms and
conditions of each option, including the exercise price of each option
(which must comply with section 3.4 of this Plan), the time or times when the
option will become exercisable and the duration of the exercise period which
must not exceed the limitations specified in section 3.4 of this Plan),
the conditions under which the option will vest and become exercisable,
the methods of exercising options, and the methods for payment of the
exercise price; (h) to approve and recommend amendments to the Plan for
adoption by the Board of
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<PAGE> 6
Directors and (if necessary or desirable) the shareholders of the Company;
(i) to prescribe the form or forms of agreement or instruments evidencing
options granted under the Plan; (j) to engage the services of any agent,
expert, or professional advisor in furtherance of the Plan's purposes; and (k)
to take all other actions, and make all other determinations, that are
advisable or necessary for the Plan's administration. In the absence of
fraud or mistake, any action or determination by the Administrative Committee
will be final and binding on all persons.
2.3 Approval Procedures. All actions and determinations of the
Administrative Committee must be unanimous. Every action or determination
of the Administrative Committee that is expressly required or permitted
under this Plan will be valid only if undertaken pursuant to a vote,
consent, or approval that is evidenced by either (a) a resolution adopted by
the affirmative vote of all the members of the Administrative Committee at
a meeting, or (b) a written consent signed by all the members of the
Administrative Committee. The members of the Administrative Committee may
execute a written consent in counterparts. Each executed counterpart will
constitute an original document, and all of them, together, will constitute
the same document. A properly executed written consent will be effective
as of the date specified in it or, if an effective date is not so specified,
on the date when it is signed by the last person necessary to validate it,
and will be valid if it is executed before, after, or concurrently with the
action or determination to which it applies.
2.4 Indemnification. A member of the Administrative Committee is
not liable for, and the Company releases each member of the Administrative
Committee from all liability for, any punitive, incidental, consequential, or
other damages or obligation to the Company or any Employee, Participant, or
other person for any act or omission by the member of the Administrative
Committee (including his own negligence), or by any agent, employee,
professional advisor, or other expert used or engaged by the Administrative
Committee, if the act or omission does not constitute gross negligence or
willful misconduct and is done or omitted in good faith, on behalf of the
Company, and in a manner reasonably believed by him to be both in the best
interests of the Company and within the scope of the authority granted to the
Administrative Committee by this Plan. The Company shall indemnify each member
of the Administrative Committee, and shall reimburse him from the Company's
assets, for any cost, loss, damage, expense, or liability (including
fines, amounts paid in settlement, and legal fees and expenses) incurred by
him by reason of any act or omission for which he is released from
liability pursuant to this section.
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<PAGE> 7
ARTICLE III
STOCK OPTIONS AND PARTICIPANTS
3.1 Stock Options. Benefits under this Plan will consist of
Stock Options. The Administrative Committee may designate any Stock Option
as an Incentive Option, in which case the Stock Option must comply with the
requirements of section 3.5. If no designation is made, a Stock Option will
constitute a Nonqualified Option. The Administrative Committee may
grant a Participant both Incentive Options and Nonqualified Options, at the
same time or at different times.
3.2 Participants. Every Employee is eligible to be selected by
the Administrative Committee to participate in this Plan. The
Administrative Committee's designation of an Employee as a Participant at
any particular time does not require the Administrative Committee to
designate that Employee to receive any Stock Options at any other time or to
receive the same Stock Options as any other Participant at any time. The
Administrative Committee may consider such factors as it deems pertinent in
selecting Participants and in determining the amount, nature, and
composition of Stock Options awarded to them, including the following:
(i) the financial condition of the Company and its Subsidiaries; (ii) the
expected net income of the Company for the current or future years; (iii)
the contributions of an Employee to the success and profitability of the
Company or an Affiliate; and (iv) the adequacy of the Employee's other
compensation. The Administrative Committee may award Stock Options to
an Employee even if Stock Options previously were granted to the Employee
under this or another plan of the Company or an Affiliate, and whether or
not the previously granted benefits have been fully exercised. An Employee
who participates in another benefit plan of the Company or an Affiliate also
may participate in this Plan.
3.3 Benefit Limitations. The total number of Shares that are
authorized to be issued pursuant to the exercise of Stock Options granted
under this Plan is limited to 380,000 Shares (after the three-for-one stock
split in the form of a stock dividend authorized on December 21, 1995). This
amount automatically will be adjusted in accordance with section 5.1. If a
Stock Option is forfeited or terminated as a whole or in part for any reason
other than its exercise, the unexercised Shares constituting that Stock
Option (or the part of it so terminated) will be available for future
awards of Stock Options under this Plan. No Participant may receive, under
the Plan, Stock Options the aggregate of which is more than 76,000 Shares or
20% of the Shares authorized under this Plan.
3.4 Exercise Price and Dates; Other Terms and Conditions.
The purchase price for each Share purchased pursuant to the exercise of
a Stock Option must not be less than the Market Value of a Share on the Date
of Grant of the
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<PAGE> 8
Stock Option. Stock Options are not exercisable until they have been
accepted by the Participant. An award of a Stock Option to a Participant
will be cancelled automatically if he does not accept the award within 30
calendar days following the date when he is given written notice of the award.
Every Stock Option must expire not later than ten years after its Date of
Grant, and, except as otherwise provided in section 4.2 or in the Option
Agreement, it will expire on the 90th day following the date when the
Participant (other than non-Employee Participants) to whom it was granted
ceases to be an Employee. If the optionee is an Employee, the optionee
shall not dispose of the option (other than upon its exercise) or any stock
acquired pursuant to exercise of the option for six months following the
Date of Grant. Subject to the foregoing limitations, the Administrative
Committee may impose on an award of Stock Options any terms and conditions
that it deems appropriate, including vesting schedules and forfeiture
provisions.
3.5 Incentive Options. Notwithstanding anything in this Plan to the
contrary, an Incentive Option must satisfy the following additional
requirements:
(a) The Incentive Option must be designated as such by the
Administrative Committee when it is granted;
(b) The Participant must be an Employee;
(c) This Plan must be approved by the shareholders of the
Company within 12 months before or after the effective date of the Plan;
and
(d) The Incentive Option must satisfy all conditions and
requirements imposed by the Internal Revenue Code for qualified
incentive stock options and any policies instituted by the
Administrative Committee with respect to incentive stock options.
ARTICLE IV
EXERCISE OF STOCK OPTIONS
4.1 Exercise Method. Subject to limitations imposed by the this Plan
and the Stock Option Agreement, a Participant may exercise a Stock Option
as a whole, in part, or in increments at any time or from time to time
before it expires. A partial exercise of a Stock Option will not
affect a Participant's subsequent right to exercise the Stock Option as to the
remaining Shares subject to the Stock Option. To exercise a Stock Option,
a Participant must do the following: (a) deliver to the Company a written
notice of exercise in such form as prescribed by the Administrative
Committee; (b) tender to the Company full payment for the Shares to be
purchased pursuant to the exercise of the Stock Option; and
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<PAGE> 9
(c) comply with such other reasonable requirements as the Administrative
Committee may establish. The exercise date of a Stock Option will be the date
when the Company has received the notice of exercise and full payment of the
exercise price and all other requirements established by the Administrative
Committee have been satisfied. A Participant may pay all or any part of
the exercise price under a Stock Option for the option shares to be purchased
pursuant to the Stock Option by any combination of the following methods:
(a) By bank draft, money order, or personal check payable to the
order of the Company; or
(b) By transferring to the Company outstanding Shares that are owned
by the Participant; or
(c) By delivering to the Company the Participant's
written election for the Company to withhold a portion of the Shares
otherwise issuable to the Participant pursuant to the exercise of the
Stock Option; or
(d) To the extent approved in advance by the Administrative
Committee, by delivering to a financial institution or a
securities broker-dealer irrevocable instructions to pay promptly to
the Company all or a portion of the proceeds from either a sale of the
Shares to be purchased pursuant to the Participant's exercise of the Stock
Option or a loan to be secured by a pledge of all or a portion of any of
those Option Shares.
Any applicable local, state, or federal tax withholding obligation
associated with a Participant's exercise of a Stock Option shall be
satisfied by the Company's withholding a portion of the Shares otherwise
issuable to the Participant pursuant to the exercise of the Stock Option.
Shares that are transferred to, or withheld by, the Company in payment of the
exercise price and any tax withholding will be valued for purposes of
payment at their Market Value on the exercise date of the Stock Option.
This provision does not preclude the exercise of a Stock Option by any other
proper legal method specifically approved by the Administrative Committee.
The Administrative Committee shall determine the acceptable methods for
tendering or withholding Shares as payment for the exercise price of a Stock
Option and may impose limitations and prohibitions on the use of Shares to
pay the exercise price of a Stock Option as it considers appropriate for tax,
legal, business, or accounting reasons. No one has the rights of a
shareholder with respect to Shares subject to a Stock Option until a
certificate evidencing those Shares has been delivered to the person exercising
the Stock Option.
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<PAGE> 10
4.2 Exercise Conditions.
(a) Employees. A Participant who is an Employee may exercise a
Stock Option only if he has been in the continuous employment of the Company
or a Subsidiary during the period beginning on the Date of Grant of the Stock
Option and ending on the 90th day before the exercise date. The
Administrative Committee may decide to what extent bona fide leaves of
absence for illness, temporary disability, government or military
service, or other reasons will constitute an interruption of
continuous employment. Each Stock Option is exercisable during the life of the
Participant only by him.
A Stock Option expires and ceases to be exercisable on the 90th day after
the Participant to whom it was granted ceases to be an Employee, except as
otherwise provided in this Plan and in the Option Agreement. If a
Participant's employment with the Company or a Subsidiary is terminated
(voluntarily or involuntarily), he may exercise his Stock Options within 90
calendar days following his date of termination. If a Participant
dies or ceases to be an Employee because of disability within the
meaning of section 22(e)(3) of the Internal Revenue Code at a time
when he is entitled to exercise a Stock Option, the Stock Option will
continue to be exercisable for 180 days after his death or disability by the
Participant (in the case of disability) or by the Participant's
heir or estate (in the case of death). Notwithstanding the
foregoing, a Stock Option is never exercisable later than the stated
expiration date of the Stock Option. After the death, disability, or
termination of employment of a Participant, his Stock Options will be exer-
cisable only with respect to the number of Shares (if any) that could
have been exercised as of the date when he ceased to be an Employee
(subject to any adjustment required by section 5.1). A Stock Option will
terminate, as a whole or in part, to the extent that, in accordance with this
section, it ceases to be exercisable for any of the Shares subject to it.
(b) Other Persons. Stock Options held by Participants
who are not Employees will be exercisable on the terms and conditions set
forth in the Stock Option Agreement between the Company and the Participant.
4.3 Cancellation and Rescission of Stock Options. Unless the Stock
Option Agreement specifies otherwise, the Administrative Committee may
cancel any Stock Options at any time if the Participant is not in
compliance with all applicable provisions of the Plan, the Stock Option
Agreement, and with the following conditions:
(a) A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of the
chief executive officer of the Company or other senior officer
designated by the
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<PAGE> 11
Administrative Committee, is or becomes competitive with the Company, or
which organization or business, or the rendering of services to such
organization or business is or becomes otherwise prejudicial to or in conflict
with the interests of the Company. For a Participant whose employment
has terminated, the judgment of the chief executive officer shall be based
on the Participant's position and responsibilities while employed by
the Company, the Participant's post-employment responsibilities and
position with the other organization or business, the extent of past,
current, and potential competition or conflict between the Company and the
other organization or business, the effect on the Company's customers,
suppliers, and competitors of the Participant's assuming the post-employment
position, guidelines for business conduct established by the Company,
and such other considerations as are deemed relevant given the applicable
facts and circumstances. A Participant who has retired shall be free,
however, to purchase as an investment or otherwise, stock or other securities
of such organization or business so long as they are listed upon a recognized
securities exchange or traded over-the-counter, and such investment does
not represent a substantial investment to the Participant or a greater than
10 percent equity interest in the organization or business.
(b) A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company, or use in other
than the Company's business, any confidential information or material relating
to the business of the Company, acquired by the Participant either during or
after employment with the Company.
(c) A Participant shall disclose promptly and assign to the Company
all right, title, and interest in any invention or idea, patentable or
not, made or conceived by the Participant during employment by the
Company, relating in any manner to the actual or anticipated business,
research or development work of the Company and shall do anything
reasonably necessary to enable the Company to secure a patent where
appropriate in the United States and in other countries.
(d) Upon exercise pursuant to a Stock Option, the Participant
shall certify in the notice of exercise that he or she is in compliance
with the terms and conditions of the Plan. Failure to comply with the
provisions of paragraph (a), (b), or (c) of this section 4.3 prior to, or
during the six months after, any exercise pursuant to a Stock Option shall
cause such exercise to be rescinded. The Company shall notify the Participant
in writing of any such rescission within two years after such exercise.
Within ten days after receiving such a notice from the Company, the
Participant shall pay to the Company the amount of any gain realized as a
result of the rescinded exercise, pursuant to a Stock Option. Such payment
shall be made either in cash or by returning to the Company
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<PAGE> 12
the number of Shares that the Participant received in connection with
the rescinded exercise.
4.4 Reservation, Listing, and Delivery of Shares. The Company shall
reserve from its authorized but unissued shares of Common Stock and keep
available until the termination of this Plan, solely for issuance upon the
exercise of Stock Options, the number of Shares issuable at any time pursuant
to the exercise of Stock Options granted or available for grant under this
Plan. In addition, the Company shall take all requisite action to assure
that it validly and legally may issue fully-paid, nonassessable Shares upon
the exercise of each Stock Option. Also, after the Shares become Publicly
Held, the Company, at its sole expense, shall reserve for listing on the
National Association of Securities Dealers Automated Quotation System or any
national securities exchange on which the Shares are listed for trading,
upon official notice of issuance pursuant to the exercise of Stock Options,
the number of Shares issuable at any time upon the exercise of Stock Options
granted or available for grant under this Plan, and the Company shall
maintain that listing until this Plan terminates. Promptly after a Stock
Option is validly exercised, the Company shall issue and deliver to the order
of the person who exercised the Stock Option a stock certificate
evidencing that number of fully-paid and nonassessable Shares that were
purchased pursuant to the exercise of the Stock Option, plus, instead of
any fractional Share to which that person otherwise would be entitled, a
cash sum equal to the product of (a) that fraction, multiplied by (b) the
Market Value of one full Share as of the exercise date of the Stock Option.
The Company shall pay all costs and excise taxes associated with the
original issuance of stock certificates evidencing Shares purchased pursuant
to the exercise of Stock Options.
4.5 Legal Compliance. Stock Options are exercisable, and Shares are
issuable under this Plan, only in compliance with all applicable state and
federal laws and regulations (including securities laws) and the rules of
all stock exchanges on which the Shares are listed for trading. Any
certificate evidencing Shares issued under the Plan will bear such legends and
statements as the Administrative Committee deems advisable to assure
compliance with those laws, rules, and regulations. A Stock Option is not
exercisable, and the Company shall not issue any Shares under this Plan,
until the Company has obtained any consent or approval required from any
state or federal regulatory body having jurisdiction. Upon the
exercise of a Stock Option by an heir, guardian, or personal representative
of a Participant, the Administrative Committee may require reasonable
evidence of the person's legal ownership of the Stock Option and such
consents and releases of governmental authorities as it deems advisable.
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<PAGE> 13
ARTICLE V
ADDITIONAL PROVISIONS
5.1 Antidilution. If the Company does any of the following (a
"Dilutive Event") at any time before the exercise or expiration of a Stock
Option: (a) splits or subdivides its then-outstanding Shares into a greater
or different number of Shares; (b) reduces the then-outstanding number of
Shares by a reverse stock-split or by otherwise combining those Shares into
a smaller number of Shares; (c) effects any other capital adjustment,
recapitalization, reorganization, or reclassification that has the effect
of increasing or decreasing proportionately the number of outstanding
Shares then held by each shareholder; (d) distributes any of its assets to
its shareholders pro rata as a partial liquidation or return of
capital; or (e) declares, issues, or distributes to the holders of its
Common Stock, without separate payment therefor, (i) a noncash dividend
payable in any property or securities of the Company, including additional
Shares, or (ii) any cash, property, or securities in connection with a
spin-off, split-up, reclassification, recapitalization, combination of
shares, or similar rearrangement of the Company's capital stock; then,
upon the subsequent exercise of a Stock Option after the record date for, or
the occurrence of, each Dilutive Event, the Participant will be entitled
to receive, in exchange for the exercise price specified in the Stock Option,
and in addition to (or in substitution for in the case of a reduced number
of Shares), the Shares otherwise issuable upon exercise of the Stock
Option, the additional (or reduced) amount of Shares and other securities and
property (including cash) resulting from the Dilutive Event that he would
have been entitled to receive if (A) he had exercised the Stock Option on
the Date of Grant (even if the Stock Option was not exercisable then) and had
been the record owner of the number of Shares resulting from the exercise
during the period beginning on that date and ending on the actual exercise
date of the Stock Option, and (B) he had retained all Shares and other
securities and property (including cash) receivable by him during that
period, after giving effect to all the Dilutive Events that occurred
during that period.
5.2 Change in Control.
(a) Generally. If a Change in Control occurs, all outstanding
Stock Options will become fully vested and exercisable as of the
earlier of the effective date of the shareholder approval or the effective
date of any of the Change in Control transaction (the "Effective Date") and,
at the election of the Board of Directors, the Company may terminate
the Plan, in which case the holder of each outstanding Stock Option
will be entitled to payment of the amount by which the Market Value of all
Shares subject to the Stock Option on the Effective Date exceeds the Market
Value of all those Shares as of the Date of Grant of the Stock Option,
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<PAGE> 14
in full settlement of all the holder's rights and interests in the Stock
Option.
(b) Special Rules Governing Mergers and Stock Exchanges. In
the case of a merger, share exchange, or other transaction in which the
shareholders of the Company receive securities of the acquirer, at the
election of the Board of Directors, the Company may (but is not obligated to)
elect to continue this Plan and each Stock Option granted under the Plan
will be converted into an option to purchase securities of the acquirer
being issued in the transaction. In such case, the exercise price and
number of Shares subject to the Stock Option will be adjusted based on
the exchange or conversion ratio (the "Ratio") used to convert Shares into
securities of the acquirer. The adjusted exercise price will be the
exercise price per Share, divided by the Ratio. The adjusted number of
Shares subject to the Stock Option will be the product of the Ratio
multiplied by the number of Shares subject to the Stock Option before the
transaction.
(c) Special Rules in Case of Cash Acquisition. In the case of a
Change in Control transaction in which the Shareholders will receive
consideration for their Shares (such as cash or debt) other than common stock
of the acquirer and the Company has elected pursuant to (a) above to terminate
the Plan and pay the spread of the Market Value on the Effective Date over
the Market Value on the Date of Grant, each holder of a stock option may
elect to defer the payment and settlement following termination of the
Plan by up to six months and one day after the Effective Date.
5.3 Assignment, Amendment, and Termination. Every Stock Option is not
transferable, except pursuant to the death of a Participant, and any
attempted transfer or assignment by a Participant will be invalid and
ineffective as to the Company. The Board of Directors of the Company may
alter, amend, or terminate this Plan without approval of the Company's share-
holders. However, subject to changes in law or other legal requirements
that would permit otherwise, without the approval of the Company's
shareholders, an amendment will not be valid and effective if it:
(a) materially increases the benefits accruing to Participants under
the Plan;
(b) materially modifies the eligibility requirements for
participation in the Plan;
(c) reduces the minimum exercise price per Share of Stock
Options granted or available for grant under this Plan;
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<PAGE> 15
(d) materially increases the aggregate number of Shares that is
issuable upon the exercise of Stock Options; or
(e) amends the requirements of paragraphs (a)-(d) of this
section.
An amendment or termination of this Plan, whether with or without the
approval of the Company's shareholders, will not alter or impair any right
or obligation of an outstanding Stock Option without the consent of the
person then entitled to exercise it, except for adjustments expressly provided
for in this Plan.
5.4 Expenses and Proceeds. The Company shall pay all expenses of
the Plan. The Company may use the cash proceeds received from Participants
upon the exercise of Stock Options for general corporate purposes.
5.5 Market Value Determinations. If, after the Shares are Publicly
Held, trading in the Shares, or a price quotation for the Shares, does not
occur on a date when the Market Value is required to be determined under either
this Plan or a stock option agreement, the next preceding date when Shares
were traded or a price was quoted will control the determination of the Market
Value.
5.6 Duration and Effective Date. This Plan will become effective as of
December 21, 1995, subject to approval by the Company's shareholders within
12 months after that date, and will terminate on the tenth anniversary of its
effective date. The Company is not authorized to award any Stock Options after
the termination date of this Plan.
5.7 Rule 16b-3. With respect to persons subject to section 16 of
the Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of SEC Rule 16b-3 or any rule promulgated by
the SEC under the Exchange Act in substitution for that rule. To the extent
any provision of the Plan or action by the Administrative
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<PAGE> 16
Committee fails to so comply, it shall be null and void, to the extent
permitted by law and deemed advisable by the Administrative Committee.
Adopted by Board of Directors Adopted by Shareholders on
on December 21, 1995 December 21, 1995
STERILE RECOVERIES, INC.
By: /s/ Richard T. Isel
--------------------------
Richard T. Isel
President
ATTEST: [CORPORATE SEAL]
/s/ James T. Boosales
- -------------------------
James T. Boosales
Secretary
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<PAGE> 17
STERILE RECOVERIES, INC.
FIRST AMENDMENT TO 1995 STOCK OPTION PLAN
This First Amendment to 1995 Stock Option Plan (this "Amendment")
amends the 1995 Stock Option Plan of Sterile Recoveries, Inc. adopted on
December 21, 1995 (the "Plan"). Unless otherwise defined in this Amendment,
all capitalized terms used in this Amendment have the meanings ascribed to them
in the Plan, and the definitions of those terms contained in the Plan are
incorporated by reference in this Amendment.
1. Amendment to the Plan. The first sentence of Section 3.3 of
the Plan is amended in its entirety to state as follows:
The total number of Shares that are authorized to be issued pursuant
to the exercise of Stock Options granted under this Plan is limited to
500,000 Shares (after the three-for-one stock split in the form of a
stock dividend authorized on December 21, 1995).
2. Counterparts. This Amendment may be executed in counterparts.
Each executed counterpart of this Amendment will constitute an original
document, and all executed counterparts, together, will constitute the same
Amendment.
Adopted by Board of Directors Adopted by Shareholders
on May 2, 1996 on May 2, 1996
STERILE RECOVERIES, INC.
By: /s/ Wayne R. Peterson
-------------------------------------
Wayne R. Peterson
Executive Vice President
ATTEST: [CORPORATE SEAL]
/s/ James T. Boosales
- -------------------------------
James T. Boosales
Secretary
<PAGE> 1
EXHIBIT 10.2
STERILE RECOVERIES, INC.
1995 STOCK OPTION PLAN
-----------------------------------
[FORM OF] STOCK OPTION AGREEMENT
[ ] Shares(*)
-----------------------------------
Date of Grant: December 21, 1995
Expiration Date: December 21, 2005
Exercise Price: $5.85 Per Share(*)
-----------------------------------
TO:
To enhance your interest in the sustained success and profitability of
Sterile Recoveries, Inc., you have been granted as of the Date of Grant stated
above a non-qualified stock option to purchase up to [ ](*) shares of its
common stock, $.001 par value, at an exercise price of $5.85(*) per share,
subject to all the following terms and conditions:
1. Definitions. As used in this Agreement, the capitalized terms
defined below have the respective meanings ascribed to them:
"Administrative Committee" means the committee appointed by
the Company's Board of Directors to administer the Plan.
"Agreement" means this Stock Option Agreement, as originally
executed by you and the Company, and as subsequently amended or
modified in accordance with its terms.
"Internal Revenue Code" means the United States Internal
Revenue Code of 1986, as amended from time to time, or any United
States income tax law subsequently enacted in substitution for that
code.
----------------------
(*) The number of Shares and exercise price reflect and are after
the three-for-one stock split effected by the Company in the form of a 200%
stock dividend as of December 21, 1995.
<PAGE> 2
"Company" means Sterile Recoveries, Inc., a Florida
corporation.
"Date of Grant" means the date when the Administrative
Committee authorized the grant of the Stock Option to you, as stated in
the heading of this Agreement.
"Option Year" means each period of 12 consecutive months
beginning on the date that the Company first becomes Publicly Held, or
on each anniversary of the date that the Company first becomes Publicly
Held.
"Plan" means the Sterile Recoveries, Inc. 1995 Stock Option
Plan that was adopted as of October 18, 1995, a copy of which is
attached as Appendix "D" to this Agreement.
"Publicly Held" means the status of the Shares at any time
subsequent to (i) the sale of Shares of the Company in a registered
offering under the Securities Act of 1933, as amended, or (ii) if
earlier, the registration of the Shares under the Exchange Act.
"Shares" means shares of the Company's common stock, $.001 par
value.
"Stock Option" means the non-qualified stock option to
purchase Shares from the Company according to the terms and conditions
of the Plan that is granted to you pursuant to this Agreement.
2. Incorporation of Plan. The grant and exercise of the Stock Option
are subject to your acceptance of this Agreement and all the terms and
conditions of the Plan, which are incorporated by reference in this Agreement.
3. Revocation and Expiration. The award of the Stock Option to you
will be revoked automatically without further action or notice if you do not
accept this Agreement within 30 days following the date when you are given
written notice of the award of the Stock Option. In any event, unless extended
by the Administrative Committee, the Stock Option expires at 5:00 P.M., New York
time, on the earlier of (a) the date that is ten years after the Date of Grant,
which is the Expiration Date stated in the heading of this Agreement, (b) the
90th day after the day that you cease to be an employee of the Company or any
of its subsidiaries (other than as a result of your death or disability), or
(c) the 180th day after you die or cease to be an employee of the Company or
any of its subsidiaries because of a total and permanent disability, as defined
in section 22(e)(3) of the Internal Revenue Code. In
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<PAGE> 3
no event is the Stock Option exercisable after the Expiration Date stated in
the heading of this Agreement.
4. Exercise of Option. The Stock Option is not exercisable until you
accept this Agreement. Thereafter, the Stock Option is exercisable to the
extent and in the manner described in the Plan and this Agreement. To the
extent that it is exercisable, you may exercise the Stock Option as a whole, in
part, or in increments at any time and from time to time. You may exercise the
Stock Option as to all or any portion of the full number of Shares for which it
is exercisable at any time, but you must exercise the Stock Option before it
expires, and every exercise must be for at least 500 whole Shares. No
fractional Shares will be issued pursuant to the Stock Option. NOTWITHSTANDING
ANYTHING IN THE PLAN OR THIS AGREEMENT, THE STOCK OPTION WILL NOT BE EXERCIS-
ABLE UNTIL AND UNLESS THERE OCCURS A "CHANGE OF CONTROL" EVENT SPECIFIED IN
SUBSECTION 5.2(a) OF THE PLAN OR THE COMPANY CLOSES A REGISTERED AND
UNDERWRITTEN PUBLIC OFFERING OF ITS SHARES AND BECOMES PUBLICLY HELD. YOU
ACKNOWLEDGE THAT THE COMPANY NEED NOT AND MIGHT NOT UNDERTAKE ANY SUCH OFFERING
BEFORE THE STOCK OPTION EXPIRES. UNLESS THE COMPANY CLOSES AN OFFERING OR IS
ACQUIRED AT A PREMIUM OVER THE EXERCISE PRICE, THE STOCK OPTION WILL NOT HAVE
ANY VALUE.
If the Company becomes Publicly Held, the Stock Option will become
immediately exercisable for 20% of the Shares subject to the Stock Option. The
Stock Option will then be exercisable for each Option Year that elapses (or has
elapsed) since the date that the Company becomes Publicly Held, in serial
increments equal to 20% of the Shares subject to the Stock Option, as follows:
<TABLE>
<CAPTION>
Percent Exercisable
-------------------
After Option Year Per Year Cumulatively
----------------- -------- ------------
<S> <C> <C>
1 20% 40%
2 20% 60%
3 20% 80%
4 20% 100%
</TABLE>
In addition, whether or not the Company is Publicly Held, the Stock Option will
become fully and immediately exercisable upon the occurrence of a "Change of
Control" event described in subsection 5.2(a) of the Plan. In no event is the
Stock Option exercisable after the Expiration Date or if the exercise of the
Stock Option or the Company's issuance and delivery of Shares pursuant to the
exercise would violate any law.
5. Method of Exercise. To exercise the Stock Option, you must do the
following before the Stock Option expires: (a) deliver to the Company a written
notice of exercise in the form of Appendix "A" to this Agreement (or such other
form as
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<PAGE> 4
the Administrative Committee may subsequently prescribe), specifying the number
of Shares to be purchased; (b) tender to the Company full payment for the
Shares to be purchased pursuant to the exercise of the Stock Option; (c) pay to
the Company, or make an arrangement satisfactory to the Administrative
Committee for the payment of, any tax withholding required in connection with
your exercise of the Stock Option (including FICA, Medicare, and local, state,
or federal income taxes); and (d) comply with any other reasonable requirements
of exercise that the administrative Committee has established. You may pay the
exercise price and any tax withholding for the Shares that you purchase
pursuant to the Stock Option by any combination of cash, money order, personal
check, or certified or official bank check or with Shares valued at fair market
value on the exercise date. The exercise date for each exercise of the Stock
Option will be the date when (i) the Company has received notice of exercise
and full payment of the exercise price, (ii) you have paid to the Company or
made a satisfactory arrangement for the payment of any requisite tax
withholding, and (iii) you have satisfied any other requirements of exercise
established by the Administrative Committee.
6. Employment Condition. Except as otherwise provided below, you may
exercise the Stock Option only if you have continuously been an employee of the
Company or a subsidiary of the Company during the period beginning on the Date
of Grant and ending on the 90th day after the exercise date of the Stock
Option. If your employment with the Company or any subsidiary of the Company is
terminated (voluntarily or involuntarily) at a time when the Stock Option is
exercisable, you may exercise the Stock Option within 90 days following the
effective date of termination. If you die or cease to be an employee because of
a total and permanent disability (within the meaning of section 22(e)(3) of the
Internal Revenue Code) at a time when the Stock Option is exercisable, the
Stock Option will continue to be exercisable by your heir or estate for 180
days following your death or by you or your guardian for 180 days following the
termination of your employment because of disability. Notwithstanding the
foregoing, the Stock Option is never exercisable after the Expiration Date
stated in the heading of this Agreement. The Stock Option will be exercisable
after your death, disability, or termination of employment only to the extent
that it was exercisable on the date when you ceased to be an employee of the
Company or any of its subsidiaries. The Administrative Committee shall decide
to what extent bona fide leaves of absence for illness, temporary disability,
military or governmental service, or other reasons will constitute an
interruption of continuous employment that results in your ceasing to be an
employee of the Company or any of its subsidiaries. The award of the Stock
Option to you does not create or extend any right for you to continue to serve
as an officer or employee of the Company or any of its subsidiaries,
-4-
<PAGE> 5
to participate in any other stock option or employee benefit plan of the
Company, or to receive the same benefits as any other employee; nor does it
restrict in any way the right of the Company or any of its subsidiaries to
terminate at any time your employment with it either at will or as provided in
any written employment agreement between you and the Company.
7. Nontransferability of Option. You are prohibited from transferring
the Stock Option, any interest in it, or any right under this Agreement by any
means other than by will or the law of descent and distribution. The Stock
Option is exercisable during your lifetime only by you or your guardian. Any
prohibited transfer (whether by gift, sale, pledge, assignment, hypothecation,
or otherwise) will be invalid and ineffective as to the Company. In addition,
the Stock Option and your rights under this Agreement are not subject to any
lien, levy, attachment, execution, or similar process by creditors. The
Company may cancel the Stock Option by notice to you, if you attempt to make a
prohibited transfer, or if the Stock Option, any interest in it, or any right
under this Agreement becomes subject to a lien, levy, attachment, execution,
or similar process.
8. Stock Certificates. Promptly after the Stock Option has been
validly exercised in accordance with the terms of the Plan, the Company shall
issue and deliver to the person who exercised it, against a written receipt in
substantially the form attached as Appendix "B" to this Agreement, a stock
certificate evidencing that person's ownership of the Shares that were
purchased pursuant to the Stock Option plus, instead of any fractional Share to
which that person otherwise would be entitled, a cash sum equal to the product
of (a) that fraction, multiplied by (b) the fair market value of a Share on the
exercise date of the Stock Option, as determined pursuant to the Plan. No one
will have any rights as a shareholder with respect to any Shares issuable upon
exercise of the Stock Option until the Stock Option has been validly exercised,
the Company has issued and delivered to the person exercising the Stock Option
a certificate evidencing those Shares, and the name of the person exercising
the Stock Option has been entered as a shareholder of record in the Company's
stock records.
9. Representations and Warranties. By accepting this Agreement, you
represent and warrant to the Company the following:
(a) You are accepting the Stock Option, and will purchase the
Shares subject to your Stock Option, solely for your own account, as
principal, without a view to, and not for resale in connection with,
any distribution or underwriting of the Stock Option or any Shares,
and you are not participating, directly or indirectly, in any
distribution or
-5-
<PAGE> 6
underwriting of the Stock Option or any Shares. You are not acquiring
the Stock Option, and will not purchase any Shares pursuant to it, as
an agent, nominee, or representative for the account or benefit of
another person or entity, and you have not agreed or arranged to sell,
assign, transfer, subdivide, or otherwise dispose of all or any part
of the Stock Option or the Shares subject to it to another person or
entity.
(b) You understand that (i) no state or federal agency has
passed upon the Stock Option or the Shares or made any finding or
determination as to the fairness of the Stock Option or the Shares as
an investment, (ii) the Stock Option and the Shares subject to it have
not been, and will not be, registered under either the Securities Act
of 1933, as amended, or any state securities law, (iii) those Shares
can be offered for sale, sold, assigned, foreclosed or otherwise
transferred only if the transaction is registered under those laws or
qualifies for an available exemption from registration under those
laws, and (iv) the Company has not agreed, and is not obligated to
register any resale or other transfer of any Shares acquired pursuant
to the Stock Option under the Securities Act of 1933, as amended, or
any state securities law, or to take any action to enable you to
qualify for an exemption from registration under any of those laws
with respect to a resale or other transfer of those Shares.
(c) You understand that, in furtherance of the transfer
restrictions stated above, (i) the Company will issue stop transfer
instructions to its transfer agent to restrict an impermissible resale
or other transfer of the Shares purchased pursuant to your Stock
Option, (ii) each certificate evidencing those Shares will bear a
restrictive legend in substantially the following form:
A transfer of the securities evidenced by this
certificate is restricted by state and federal
securities laws. These securities cannot be
offered for sale, sold, assigned, foreclosed, or
otherwise transferred at any time absent either
registration of the transaction under the
Securities Act of 1933, as amended, and every
applicable state securities law or delivery to
the issuer of these securities of a written
opinion of legal counsel satisfactory to it that
registration of the transaction under those laws
is not required.
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<PAGE> 7
, and (iii) a legend substantially identical to the one set forth
above will be placed on every new stock certificate that is issued
upon a transfer or exchange of those Shares.
(d) You will not offer for sale, sell, assign, pledge,
hypothecate, or otherwise transfer the Shares purchased pursuant to
your Stock Option at any time without either (i) registering the
transaction under the Securities Act of 1933, as amended, and every
applicable state securities law or (ii) delivering to the Company a
satisfactory written opinion of legal counsel to the effect that
registration of the transaction is not required under any of those
laws.
(e) You understand that an established trading market does not
exist for the Shares, and none is likely to develop in the absence of
a registered public offering of the Shares.
(f) You understand that (i) in the absence of any acquisition
of the Company or registered public offering of the Shares, the Option
does not have any value and (ii) the Company does not have any
obligation whatsoever to undertake a public offering or otherwise act
to cause the Option have value.
(g) You have received from the Company and carefully read a
Plan Summary (including the supplement) pertaining to the Plan and all
the other documents described on Appendix "C" to this Agreement.
10. Holdback Agreement. If the Company initiates a public offering of
the Shares, you agree not to effect any public sale or distribution, including
any sale pursuant to Rule 144 or any successor provision of the Securities Act
of 1933, as amended, of any Shares during the 120 day period (or, in the case
of an initial public offering, the 180 day period) beginning on the closing
date of the offering.
11. Notices. Every notice, demand, consent, approval, and other
communication required or permitted under this Agreement will be valid only if
it is in writing and delivered personally or by telex, telecopy, telegram,
commercial courier, or first class, postage prepaid, United States mail
(whether or not certified or registered and regardless of whether a return
receipt is received or requested by the sender) and addressed, if to you, at
your address set forth below and, if to the Company, at 28100 U.S. Highway 19
North, Suite 201, Clearwater, Florida 34621, Attention: President, or at any
other address that either party has previously designated by notice given to
the other party in accordance
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<PAGE> 8
with this provision. A validly given notice, demand, consent, approval, or
other communication will be effective on the earlier of its receipt, if
delivered personally or by telex, telecopy, telegram, or commercial courier, or
the third day after it is postmarked by the United States Postal Service, if it
is delivered by first class, postage prepaid, United States mail. You shall
notify the Company of any change in your mailing address that is listed in this
Agreement.
12. Legal Proceedings. If any dispute arises between you and the
Company with respect to this Agreement or the Stock Option, either party may
elect (but is not obligated) to submit the dispute to arbitration before a
panel of arbitrators in accordance with the Florida Arbitration Code by giving
the other party a notice of arbitration in accordance with section 9 of this
Agreement. If a party elects to arbitrate a dispute before a lawsuit is filed
with respect to the subject matter of the dispute, arbitration will be the sole
and exclusive method of resolving the dispute, the other party must arbitrate
the dispute, and each party will be barred from filing a lawsuit concerning the
subject matter of the arbitration, except to obtain an equitable remedy. A
party's right to submit a dispute to arbitration does not restrict its right to
institute litigation to obtain any legal or equitable remedy. The filing of a
lawsuit by either party before the other party has elected that a dispute be
submitted to arbitration will bar and preclude both you and the Company from
submitting the subject matter of the lawsuit to arbitration while the lawsuit
is pending.
The arbitration panel will consist of three arbitrators, with one
arbitrator selected by the Company, the second selected by you, and the third,
neutral arbitrator selected by agreement of the first two arbitrators. Each
party shall select an arbitrator and notify the other party of the selection
within 15 days after the effective date of the notice of arbitration and the
two arbitrators selected by the parties shall select the third arbitrator
within 30 days after the effective date of the notice of arbitration. A party
who fails to select an arbitrator within the prescribed 15-day period waives
the right to select an arbitrator or to have an additional, neutral arbitrator
selected by the arbitrator selected by the other party, and the arbitrator
chosen by the other party will constitute the "arbitration panel" for purposes
of this Agreement.
Every arbitrator must be independent (not a relative of yours or an
officer, director, employee, or shareholder of the Company or any Subsidiary)
without any economic or financial interest of any kind in the outcome of the
arbitration. Each arbitrator's conduct will be governed by the Code of Ethics
for Arbitrators in Commercial Disputes (1986) that has been approved and
recommended by the American Bar Association and the American Arbitration
Association.
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<PAGE> 9
Within 120 days after the effective date of the notice of arbitration,
the arbitration panel shall convene a hearing for the dispute to be held on
such date and at such time and place in Tampa, Florida, as the arbitration
panel designates upon 60 days' advance notice to you and the Company. The
arbitration panel shall render its decision within 30 days after the conclusion
of the hearing. The decision of the arbitration panel will be binding and
conclusive as to you and the Company and, upon the pleading of either party,
any court having jurisdiction may enter a judgment of any award rendered in the
arbitration, which may include an award of damages. The arbitration panel shall
hear and decide the dispute based on the evidence produced, notwithstanding the
failure or refusal to appear by a party who has been duly notified of the date,
time, and place of the hearing.
You and the Company (a) consent to the personal jurisdiction of the
state and federal courts having jurisdiction over Hillsborough County, Florida,
(b) stipulate that the proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement or the Stock Option is Hillsborough
County, Florida, and (c) waive any defense, whether asserted by a motion or
pleading, that Hillsborough County, Florida, is an improper or inconvenient
venue. YOU KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE YOUR RIGHT TO A JURY
TRIAL IN ANY LAWSUIT BETWEEN YOU AND THE COMPANY WITH RESPECT TO THIS AGREEMENT
OR THE STOCK OPTION.
In any mediation, arbitration, or legal proceeding arising out of this
Agreement, the losing party shall reimburse the prevailing party, on demand,
for all costs incurred by the prevailing party in enforcing, defending, or
prosecuting any claim arising out of this Agreement, including all fees, costs,
and expenses of agents, experts, attorneys, witnesses, arbitrators, and
supersedeas bonds, whether incurred before or after demand or commencement of
legal or arbitration proceedings, and whether incurred pursuant to trial,
appellate, mediation, arbitration, bankruptcy, administrative, or judgment
execution proceedings. The Company shall pay to you, on demand, interest on
any amount owed to you under this Agreement that is not paid to you when due,
from the date when due until paid in full, at the annual rate then provided by
Florida law for the payment of interest on judgments generally (the current
annual rate of interest on judgments prescribed by section 55.03, Florida
Statutes, is 12%).
13. Miscellaneous. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the
laws of those jurisdictions pertaining to resolution of conflicts with the laws
of other jurisdictions. A waiver, amendment, modification, or cancellation of
this Agreement will be valid and
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<PAGE> 10
effective only if it is in writing and executed by you and the Company. By
signing this Agreement, you accept the grant of the Stock Option, acknowledge
receipt of copies of the Plan and the disclosure documents described on
Appendix "C," and warrant that you are free to enter into this Agreement and do
not have any legal obligations that are inconsistent with this Agreement. The
Plan and this Agreement record the final, complete, and exclusive understanding
between you and the Company with respect to the Stock Option and supersede any
prior or contemporaneous agreement, representation, or understanding, oral
or written, by you or the Company. This Agreement is binding on your heirs,
guardian, and personal representative and is binding on, inures to the benefit
of, the Company's assignees and successors. Time is of the essence with respect
to your exercise of the Stock Option.
STERILE RECOVERIES, INC.
WITNESSES: By: (SEAL)
-------------------
Richard T. Isel
- ---------------------- President
- ----------------------
(As to Mr. Isel)
ACCEPTANCE OF STOCK OPTION
I have carefully read the foregoing Stock Option Agreement, all the
disclosure documents described on Appendix "C" to the Agreement, and the
accompanying copy of the Sterile Recoveries, Inc. 1995 Stock Option Plan.
Before exercising the Stock Option, I will review the additional disclosure
documents furnished to me by the Company. I accept the Stock Option granted to
me pursuant to the Agreement and agree to be bound by all the terms and
conditions of the Plan and the Agreement.
/s/
EXECUTED: ----------------------------
---------- Signature of Participant
/s/
----------------------------
Name of Participant
-----------------------------
Street Address
-----------------------------
City State Zip Code
-----------------------------
Social Security Number
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<PAGE> 1
EXHIBIT 10.3
[FORM OF] INDEMNITY AGREEMENT
This Indemnity Agreement is executed by [Add name] ("Executive"), who
resides at [Add address], and STERILE RECOVERIES, INC. (the "Company"), a
Florida corporation with its principal executive office at 28100 U.S. Highway
19 North, Clearwater, Florida 34621, to record their agreement regarding the
indemnification by the Company of Executive in certain circumstances. Executive
and the Company have executed this Indemnity Agreement in connection with
Executive's service as the [Add title] and a director of the Company. The
parties agree as follows:
1. Interpretation. As used in this Agreement, the capitalized terms
defined below have the respective meanings ascribed to them:
"Agreement" means this Indemnity Agreement, as originally executed by
Executive and the Company and as subsequently amended or modified by them
in accordance with its terms.
"Board" means the Board of Directors of the Company.
"Bylaws" means the Bylaws of the Company in effect on the execution
date of this Agreement.
"Change of Control" means a change of control of the Company that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended, whether or not the Company is then subject to such reporting
requirement.
"Company" means Sterile Recoveries, Inc., a Florida corporation and a
party to this Agreement, and includes its assignees and successors (by
operation of law or otherwise).
"Executive" means [Add name], a Florida resident and a party to this
Agreement, and includes his heirs, guardian, and personal representative.
"Indemnified Loss" means all actual cost, loss, damage, expense, and
liability that Executive incurs or suffers pursuant to, or in connection
with defending, settling, prosecuting, investigating, or participating in
(as a witness or otherwise) any Proceeding that arises out of, or is
connected in any way with, the following: (a) Executive's enforcement of
his rights under the Liability Insurance; (b) Executive's enforcement of
the Company's obligations to him under
<PAGE> 2
this Agreement; or (c) Executive's past, present, or future service as an
agent, officer, director, or employee of the Company, as a trustee or
fiduciary of any employee benefit plan or trust sponsored by the Company,
or (at the Company's request) as an agent, officer, director, trustee,
employee, or fiduciary of another corporation, partnership, joint venture,
business trust, limited liability company, or other enterprise; and
includes all fines, taxes, interest, monetary penalties, premiums for
supersedeas bonds, and fees, costs, and expenses of experts, lawyers,
mediators, arbitrators, witnesses, accountants, consultants, and
investigators, whether incurred before or after demand or commencement of a
Proceeding.
"Independent Legal Counsel" means a duly licensed member of The
Florida Bar (who is authorized to render legal services in the State of
Florida) who practices corporate law and who is not a relative of Executive
or an officer, director, employee, or shareholder of the Company, does not
have any economic or financial interest of any kind in the outcome of the
determination, and previously has not represented in any matter either
Executive, the Company, or any other party to the Proceeding resulting in
the claim for an Indemnified Loss.
"Liability Insurance" means any director and officer liability
insurance issued to the Company and includes any similar additional
policies or substitute policies issued to replace that policy.
"Proceeding" means any claim, action, demand, inquiry, lawsuit,
proceeding, or investigation, whether formal or informal, pending,
threatened, or completed, or civil, criminal, administrative, or
investigative, and includes mediation, arbitration, appellate, bankruptcy,
and judgment-execution proceedings.
In addition, as used in this Agreement, (a) the word "including" is always
without limitation, (b) the word "days" refers to calendar days, including
Saturdays, Sundays, and holidays, (c) words in the singular number include
words of the plural number and vice versa, (d) the word "order" includes an
order, decree, ruling, judgment, or injunction, (e) the word "law" includes a
code, rule, statute, ordinance, or regulation and the common law arising from
final, nonappealable decisions of governmental authorities and state or federal
courts in the United States, and (f) the word "person" includes, in addition to
a natural person, a group, trust, syndicate, corporation, cooperative,
association, partnership, business trust, joint venture, limited liability
company, unincorporated organization, and a government, governmental authority,
a public
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<PAGE> 3
body or authority, and any governmental body, agency, authority, department, or
subdivision, whether domestic or foreign or local, state, regional, or
national. The headings preceding the text of the sections of this Agreement
have been inserted solely for convenient reference and neither constitute a
part of this Agreement nor affect its meaning, interpretation, or effect.
2. Purpose. Executive is a director and officer of the Company. Both
Executive and the Company recognize and acknowledge that Executive's service in
those capacities exposes Executive to significant risks of personal liability
arising from proceedings pertaining to Executive's participation in the
management of the Company. To mitigate those risks, the Company has purchased
the Liability Insurance, which provides limited coverage on a "claims made
basis." However, the Liability Insurance is insufficient (in amount and
coverage) to fully reimburse Executive for the potential amount of personal
liability and attendant expenses that Executive might incur in a Proceeding
arising out of Executive's service as an officer and director of the Company.
In addition to the Liability Insurance provided by the Company, the Bylaws
obligate the Company to indemnify Executive, to the fullest extent required or
permitted by law, for all fees, losses, damages, expenses, and liability that
Executive incurs because of Executive's service as an officer and director of
the Company. The indemnification of Executive pursuant to the Bylaws is
uncertain because the Board or the shareholders of the Company may amend the
Bylaws at any time to limit or diminish that indemnification. The possibility
of an amendment or modification of the Bylaws to diminish the indemnification
currently afforded to Executive would increase following a "change in control"
of the Company, when Executive might need the benefit of that protection the
most.
The Company recognizes that the indemnification provided to Executive
pursuant to the Bylaws and the Liability Insurance is insufficient to attract
and retain capable and responsible business persons as officers and directors.
The Company also recognizes that increased protection against personal
liability will enhance Executive's ability to serve the best interests of the
corporation, its shareholders, and its other corporate constituencies by
permitting Executive to make difficult decisions without the fear of personal
economic risk. The Bylaws and the Florida Business Corporation Act permit the
Company to enhance the indemnification already afforded to Executive pursuant
to the Bylaws and the Liability Insurance. In consideration of Executive's
willingness to serve as an officer and director of the Company, and in
recognition of Executive's need for substantial protection against personal
liability arising from Executive's service as an officer and director of the
Company, the Company is entering into this
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<PAGE> 4
Agreement to supplement the indemnification available to Executive.
3. Indemnification. The Company shall indemnify and hold harmless
Executive from every Indemnified Loss. The obligation of the Company under
this Agreement is absolute and unconditional, is not conditioned in any way on
any attempt by Executive to collect from an insurer any amount under a
liability insurance policy, and is not subject to any setoff, defense,
deduction, or counterclaim that the Company might have against Executive.
However, the Company will not have any liability or obligation to Executive
under this Agreement for any Indemnified Loss that is excluded pursuant to
section 7 or that Executive voluntarily pays, settles, compromises, confesses
judgment for, or admits liability with respect to, without the approval of the
Company or before Executive requests the Company to pay or perform the
Indemnified Loss. If Executive is entitled to indemnification under this
Agreement for only a portion of an Indemnified Loss, the Company shall
indemnify Executive for that portion of the Indemnified Loss. If Executive
pays an Indemnified Loss with the Company's approval, or if Executive becomes
legally obligated to pay an Indemnified Loss, the Company shall reimburse
Executive for the Indemnified Loss, or pay it on behalf of Executive, in
accordance with this Agreement within 20 days after a determination has been
made that Executive is entitled to indemnification under this Agreement
pursuant to section 8 of this Agreement or such determination is deemed to
have been made pursuant to section 9 of this Agreement. Each notice from
Executive requesting payment or reimbursement of an Indemnified Loss must be
accompanied by evidence of the Indemnified Loss.
4. Liability Insurance. The Company shall pay all premiums and otherwise
maintain in full force and effect while Executive is employed by the Company
and for five years following the effective date of the termination of
Executive's employment with the Company a policy of directors' and officers'
liability insurance that insures Executive and provides coverage of up to
[$3,000,000] for claims made against Executive in all capacities for which he
serves or served the Company. The Company promptly shall notify Executive of
any lapse, amendment, termination, or cancellation of this insurance coverage.
5. Advancement of Expenses. The Company shall promptly pay and reimburse
Executive for all costs incurred or to be incurred by Executive in connection
with a Proceeding that constitutes or might give rise to an Indemnified Loss,
in advance of a final disposition or adjudication of the Proceeding. Executive
shall repay to the Company any amount so advanced, if and to the extent that
Executive ultimately is not entitled to indemnification under this Agreement.
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<PAGE> 5
6. Notice of Claims. Within seven days after Executive receives notice
of a Proceeding that will or might give rise to an Indemnified Loss, Executive
shall notify the Company of the Proceeding. Executive's failure to so notify
the Company, however, will not relieve the Company from any liability to
Executive for indemnification pursuant to this Agreement or otherwise, unless
the failure materially prejudices the rights or obligations of the Company.
Without limiting what might be materially prejudicial to the Company, the
failure of Executive to notify the Company of a lawsuit within seven days
after the date when Executive is served with a copy of the complaint,
petition, or other pleading that asserts a claim that is or might give rise to
an Indemnified Loss will be presumed to be materially prejudicial to the
Company, unless it also was served with a copy of the same complaint, petition,
or other pleading. The Company may participate at its own expense in the
Proceeding, or, with the consent of Executive, it may elect within a
reasonable time to assume the defense of the Proceeding at its sole cost. If
the Company assumes the defense of the Proceeding with Executive's consent,
Executive may employ separate legal counsel and participate in the defense of
the Proceeding at his sole cost, and the Company will not have any obligation
to pay or advance costs incurred or to be incurred by Executive's further
participation in the defense of the Proceeding. If the Company does not
assume the defense of the Proceeding, Executive must obtain the Company's
advance approval of the legal counsel to be engaged by Executive to defend the
Proceeding. The Company shall not unreasonably withhold its approval of any
legal counsel selected by Executive.
Executive shall not settle, compromise, or admit civil liability with
respect to a Proceeding that constitutes or might give rise to an Indemnified
Loss without the advance approval of the Company. The Company shall notify
Executive whether or not it will approve a proposed settlement within 20 days
after the date when Executive gives it notice of the proposed settlement that
summarizes all the settlement terms and conditions. The Company's failure to
notify Executive within the 20-day period as to whether it will approve the
proposed settlement will constitute its approval of the proposed settlement.
Except as provided in this paragraph, Executive is not entitled to any
indemnification for amounts paid or payable by Executive pursuant to a
settlement that is made by Executive without the Company's approval.
7. Indemnity Exclusions. Nothing in this Agreement requires or permits
the Company to indemnify Executive for an Indemnified Loss, if any final,
nonappealable order of a court establishes that Executive's actions or
omissions constitute a violation of section 16(b) of the Securities Exchange
Act of 1934, as amended, or were material to the cause of action adjudicated
and constitute:
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<PAGE> 6
(a) A violation of criminal law, unless Executive had reasonable cause
to believe that the conduct was lawful or had no reasonable cause to
believe that the conduct was unlawful;
(b) A transaction from which Executive received an improper personal
benefit;
(c) If Executive is a director, a circumstance under which Executive
is liable under section 607.0834 of the Florida Business Corporation Act;
or
(d) Willful misconduct or a conscious disregard for the best interests
of the Company, which is established in a Proceeding by or in the right of
the Company to procure a judgment in its favor or in a Proceeding by or in
the right of a shareholder.
The termination of any criminal proceeding or investigation by entry of a
consent decree or a plea of nolo contendere or its equivalent will not
constitute a final, nonappealable order of a court that establishes that
Executive's actions or omissions were a violation of criminal law and will not
establish any presumption that Executive lacked reasonable cause to believe
that his conduct was lawful.
8. Determination of Entitlement to Indemnification. The determination of
whether the Company is obligated to indemnify Executive under this Agreement
for an Indemnified Loss shall be made as follows: (i) If a Change of Control of
the Company has occurred, by Independent Legal Counsel selected by Executive,
unless Executive notifies the Company that the determination shall be made by
the Company's Board of Directors pursuant to subsection (ii) of this section;
(ii) If a Change of Control of the Company has not occurred, (a) by the
Company's Board of Directors by a majority vote of a quorum consisting of
directors who were not a party to the Proceeding resulting in the claim for an
Indemnified Loss, or (b) if such a quorum of the Company's Board of Directors
is not obtainable, by Independent Legal Counsel selected by the Company's Board
of Directors.
If the determination of whether the Company is obligated to indemnify
Executive under this Agreement is to be made by Independent Legal Counsel
pursuant to this section, Executive or the Company, as the case may be, shall
notify the other party of the identity of the Independent Legal Counsel
selected. Within five days after receiving such notice, Executive or the
Company, as the case may be, may object to the Independent Legal Counsel
selected on the grounds that the person selected does not satisfy the
requirements of "Independent Legal Counsel" contained in this Agreement. The
failure to object within the five-day period will constitute approval of the
Independent Legal Counsel selected. If
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<PAGE> 7
Independent Legal Counsel has not been selected without objection within 20
days after the date Executive notifies the Company of his request for payment
or reimbursement of an Indemnified Loss, either Executive or the Company may
petition a court of competent jurisdiction for the resolution of any objection
to the Independent Legal Counsel selected or for the appointment of Independent
Legal Counsel selected by the court. The Company shall pay all fees and
expenses incident to the selection of the Independent Legal Counsel and all
fees and expenses incurred by the Independent Legal Counsel in determining
whether the Company is obligated to indemnify Executive under this Agreement.
9. Presumptions. If a Change of Control of the Company has occurred, in
determining whether the Company is obligated to indemnify Executive for an
Indemnified Loss under this Agreement, the person or persons making such
determination shall presume that the Company is obligated to indemnify
Executive and the Company shall have the burden of proof to overcome that
presumption. If the determination of whether the Company is obligated to
indemnify Executive for an Indemnified Loss under this Agreement has not been
made within 60 days after the date Executive notifies the Company of his
request for payment or reimbursement of an Indemnified Loss, Executive's
entitlement to indemnification under this Agreement shall be presumed, absent
fraud or mistake of fact and absent a prohibition of such indemnification under
applicable law.
10. Shareholder Notification. The Company shall deliver to each record
shareholder of the Company who is entitled to vote for the election of the
Board a written statement of every payment to or on behalf of Executive
pursuant to this Agreement. The Company shall mail that statement to its
shareholders on or before the date when it mails to its shareholders notice of
the next annual meeting of shareholders of the Company that succeeds the date
of payment (unless that meeting is held within three months after the date of
the payment), but in any event within 15 months after the date of the payment.
The statement must specify the name of Executive, the amount paid by the
Company, and the nature and the status at the time of the payment of any
pending or threatened litigation relating to the payment.
11. Subrogation and Duplication of Payments. To the extent of any payment
by the Company to or on behalf of Executive for an Indemnified Loss, the
Company will be subrogated to all rights of Executive to recover or obtain
reimbursement for the payment from any third party. At the request of the
Company at any time and from time to time, Executive shall execute and deliver
to the Company any document (and do all such other acts) as are reasonably
necessary to enable the Company to obtain or realize the benefit of that
subrogation, including the prosecution by Executive or the
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<PAGE> 8
Company of a legal proceeding to enforce those rights of Executive. However, if
the Company requests Executive to institute a legal proceeding to recover or
obtain reimbursement from a third party of any amount paid by the Company to or
on behalf of Executive for an Indemnified Loss, that Proceeding will be covered
by the indemnification and expense advancement provisions of this Agreement,
and the Company shall pay, reimburse, indemnify, and hold harmless Executive
from all cost, expense, damage, and liability arising out of, or in any way
connected with, that Proceeding to the same extent that it is obligated to do
for any Indemnified Loss. The Company is not liable for, and Executive is not
entitled to any payment with respect to, an Indemnified Loss to the extent
Executive has received payment for the Indemnified Loss from any person other
than the Company, such as the insurer under the Liability Insurance.
12. Legal Matters. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the United States of America, excluding the laws of those
jurisdictions pertaining to the resolution of conflicts with laws of other
jurisdictions. If any dispute arises between Executive and the Company with
respect to this Agreement, either party may elect (but is not obligated) to
submit the dispute to arbitration before a panel of arbitrators in accordance
with the Florida Arbitration Code by giving the other party a notice of
arbitration in accordance with section 11 of this Agreement. If a party elects
to arbitrate a dispute before a lawsuit is filed with respect to the subject
matter of the dispute, arbitration will be the sole and exclusive method of
resolving the dispute, the other party must arbitrate the dispute, and each
party will be barred from filing a lawsuit concerning the subject matter of the
arbitration, except to obtain an equitable remedy. A party's right to submit a
dispute to arbitration does not restrict its right to institute litigation to
obtain any legal or equitable remedy. The filing of a lawsuit by either party
before the other party has elected that a dispute be submitted to arbitration
will bar and preclude both Executive and the Company from submitting the
subject matter of the lawsuit to arbitration while the lawsuit is pending.
The arbitration panel will consist of three arbitrators, with one
arbitrator selected by the Company, the second selected by Executive, and the
third, neutral arbitrator selected by agreement of the first two arbitrators.
Each party shall select an arbitrator and notify the other party of the
selection within 15 days after the effective date of the notice of arbitration
and the two arbitrators selected by the parties shall select the third
arbitrator within 30 days after the effective date of the notice of
arbitration. A party who fails to select an arbitrator within the prescribed
15-day period waives the right to select an arbitrator or to have an
additional, neutral arbitrator selected by the arbitrator selected by the other
party, and the arbitrator chosen by the other party will constitute the
"arbitration panel" for purposes of this Agreement.
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<PAGE> 9
Every arbitrator must be independent (not a relative of Executive or an
officer, director, employee, or shareholder of the Company) without any
economic or financial interest of any kind in the outcome of the arbitration.
Each arbitrator's conduct will be governed by the Code of Ethics for
Arbitrators in Commercial Disputes (1986) that has been approved and
recommended by the American Bar Association and the American Arbitration
Association.
Within 120 days after the effective date of the notice of arbitration, the
arbitration panel shall convene a hearing for the dispute to be held on such
date and at such time and place in Tampa, Florida, as the arbitration panel
designates upon 60 days' advance notice to Executive and the Company. The
arbitration panel shall render its decision within 30 days after the conclusion
of the hearing. The decision of the arbitration panel will be binding and
conclusive as to Executive and the Company and, upon the pleading of either
party, any court having jurisdiction may enter a judgment of any award rendered
in the arbitration, which may include an award of damages. The arbitration
panel shall hear and decide the dispute based on the evidence produced,
notwithstanding the failure or refusal to appear by a party who has been duly
notified of the date, time, and place of the hearing.
Executive and the Company (a) consent to the personal jurisdiction of the
state and federal courts having jurisdiction over Hillsborough County, Florida,
(b) stipulate that the proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement is Hillsborough County, Florida, for
state court proceedings, and the Middle District of Florida, Tampa Division,
for federal district court proceedings, and (c) waive any defense, whether
asserted by a motion or pleading, that Hillsborough County, Florida, or the
Middle District of Florida, Tampa Division, is an improper or inconvenient
venue. EXECUTIVE KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES HIS RIGHT TO
A JURY TRIAL IN ANY LAWSUIT BETWEEN HIM AND THE COMPANY THAT PERTAINS TO THIS
AGREEMENT OR ANY CLAIM BY EXECUTIVE FOR INDEMNIFICATION FROM THE COMPANY
(WHETHER OR NOT PURSUANT TO THIS AGREEMENT).
In any mediation, arbitration, or legal proceeding arising out of this
Agreement, the losing party shall reimburse the prevailing party, on demand,
for all costs incurred by the prevailing party in enforcing, defending, or
prosecuting any claim arising out of this Agreement, including all fees, costs,
and expenses of agents, experts, lawyers, mediators, witnesses, accountants,
consultants, arbitrators, investigators, and supersedeas bonds, whether
incurred before or after demand or commencement of legal proceedings, and
whether
-9-
<PAGE> 10
incurred pursuant to trial, appellate, mediation, arbitration, bankruptcy,
administrative, or judgment-execution proceedings.
If Independent Legal Counsel or the Company's Board of Directors determines
that the Company is not obligated to indemnify Executive pursuant to this
Agreement, Executive shall not be prejudiced because of that determination in
any Proceeding commenced by him under this Agreement and any such Proceeding
shall be conducted on a de novo basis. If Independent Legal Counsel or the
Company's Board of Directors determines that the Company is obligated to
indemnify Executive pursuant to this Agreement, the Company shall be bound by
that determination in any Proceeding commenced by it under this Agreement,
absent fraud or mistake of fact and absent a prohibition of such
indemnification under applicable law. In addition, the Company waives any claim
that the procedures and presumptions in this Agreement regarding the
indemnification of Executive are not valid and enforceable against the Company.
13. Notices. Every notice, demand, request, or approval required or
permitted under this Agreement will be valid only if it is in writing and
delivered personally or by telecopy, commercial courier, or first-class,
postage prepaid United States mail (whether or not certified or registered and
regardless of whether a return receipt is requested or received by the sender)
and addressed by the sender to the intended recipient at the party's address
set forth in this Agreement or to such other address as the intended recipient
has previously designated to the sender by notice given in accordance with this
section. A validly given notice, demand, request, or approval will be effective
on the earlier of its receipt, if delivered personally or by telecopy or
commercial courier, or the third day after it is postmarked by the United
States Postal Service, if it is delivered by first class, postage prepaid,
United States mail. Each party to this Agreement promptly shall notify the
other of any change in its mailing address.
14. Severability and Nonexclusivity. Whenever possible, each provision of
this Agreement should be construed and interpreted so that it is valid and
enforceable under applicable law on the date of its execution. However, if a
provision of this Agreement, or the application of it, is held by a court of
competent jurisdiction to be invalid or unenforceable, that provision will be
deemed severable from the remaining provisions of this Agreement and will not
affect the validity, interpretation, or effect of the other provisions of this
Agreement or the application of that provision to other circumstances in which
it is valid and enforceable. The rights, duties, and obligations of Executive
and the Company under this Agreement do not limit, diminish, or supersede the
rights, duties, and obligations of Executive and the Company with respect to
the indemnification afforded to Executive
-10-
<PAGE> 11
under the Liability Insurance, the Florida Business Corporation Act, or the
Bylaws and Articles of Incorporation of the Company. In addition, Executive's
rights under this Agreement will not be limited or diminished in any respect by
any amendment to the Bylaws or the Articles of Incorporation of the Company or
by any other corporate action of the Company.
15. Waiver and Modification. A waiver, discharge, amendment, termination,
cancellation, or modification of this Agreement will be valid and effective
only if evidenced by a writing signed by or on behalf of both parties to this
Agreement. No course of dealing or delay by any party to this Agreement in
exercising any right, power, remedy, or benefit under this Agreement will
operate as a waiver of any right, power, remedy, or benefit of that party,
except to the extent expressly manifested in writing by that party. The failure
at any time of either party to require performance by the other party of any
provision of this Agreement will in no way affect the party's right to later
enforce that provision or this Agreement. In addition, the waiver by either
party of a breach of any provision of this Agreement will not constitute a
waiver of any succeeding breach of the provision or a waiver of the provision
itself.
16. Rights of Third Parties. Nothing in this Agreement, whether express
or implied, is intended or should be construed to confer upon, or to grant to,
any person, except Executive, the Company, and their respective authorized
assignees and successors, any claim, right, remedy, or benefit under or because
of this Agreement or any provision of it. This Agreement is binding on every
assignee or successor of the Company, including any successor corporation
resulting from a merger, consolidation, recapitalization, reorganization, sale
of all or substantially all the assets of the Company, or any other transaction
resulting in the successor corporation assuming the liabilities of the Company
under this Agreement (by operation of law or otherwise). The Company shall
require any assignee or successor of the Company, by written agreement in form
and substance acceptable to Executive and the Company, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if an assignment or succession had
not occurred. This Agreement is not assignable by Executive, and any attempted
assignment by Executive will be invalid and ineffective against the Company.
17. Complete Agreement; Execution; Effective Date. This Agreement records
the final, complete, and exclusive understanding between the parties with
respect to the obligations created under it and supersedes any prior or
contemporaneous agreement, understanding, or representation, oral or written,
by either of them. Executive and the Company may execute this Agreement in
counterparts. Each executed counterpart will constitute an original document,
and all executed counter-
-11-
<PAGE> 12
parts, together, will constitute the same agreement. This Agreement will become
effective, as of its stated execution date, when each party has executed and
delivered to the other party a counterpart of it.
EXECUTED: May __, 1996, in Clearwater, Florida
WITNESSES: STERILE RECOVERIES, INC.
By:
- ------------------------- --------------------------
Name:
---------------------
Title:
--------------------
- ------------------------
(As to Mr. ________)
WITNESSES: "EXECUTIVE"
- ------------------------- ----------------------------
[Add officer's name]
- -------------------------
(As to Mr. _________)
-12-
<PAGE> 1
EXHIBIT 10.4
Bert T. Martin, Jr.
President
CORPORATE STRATEGIC DIRECTIONS, INC.
2805 Parkland Blvd.
Tampa, Florida 33609
Office: 813-348-3883 Home: 813-877-2572
-----------------------------------------
October 18, 1995
Mr. Richard T. Isel
President
Sterile Recoveries, Inc.
28100 U.S. Hwy. 19N, Suite 201
Clearwater, FL 34621
Dear Dick:
We want to thank you for the opportunity to assist Sterile Recoveries, Inc.
("SRI") in developing its business plan which will include a capital formation
plan, and in obtaining the capital to support the plan. Wayne, Jim and you
have established the foundation for an excellent growth opportunity in the
health care industry.
In this regard, Corporate Strategic Directions, Inc. ("CSD") proposes to
provide the following consulting services to SRI.
Phase One
Analysis of all historical operating and financial information currently
available on the business by location and on a consolidated basis. In
addition, visits to all company sites, interview with corporate
officers and key employees as appropriate to obtain a comprehensive
understanding of the operation of the business, its marketplace, the
competition and the people involved in the business. The professionals
associated with your company including Dave Felman, outside accounting
firms and members of the Board of Directors will be interviewed and all
industry information readily available will be reviewed.
Phase Two
The information compiled and analyzed in Phase One will be utilized to
assist SRI in developing a written business plan. This business plan
will include historical financial analysis, a three to five year
financial projection, as well as descriptions of the industry,
marketplace, management and strategic opportunities. The plan will also
detail the amount of capital required to support the busi-
<PAGE> 2
Mr. Richard T. Isel
October 18, 1995
Page 2
ness plan. During the preparation of the plan, we will review
additional growth alternatives including prospective acquisitions
which may affect the capital requirements.
Phase Three
CSD will assist SRI in obtaining working capital financing to replace
the current factor financing by presenting the company's business plan
to the appropriate capital sources. A list of prospective sources will
be reviewed with SRI management prior to contact. It is anticipated
that the financing outlined in the plan will support the company's
requirements through a successful public offering during calendar 1996.
This phase will be completed upon the funding of the new working capital
financing for SRI. This phase must be completed before January 31,
1996.
Phase Four
SRI desires to access the public market for sufficient capital to
expand the business and to enhance shareholder value. CSD will assist
SRI in interviewing several investment bankers. A list of prospective
investment bankers will be reviewed and approved by SRI management prior
to contact. Each investment banker will receive a copy of the company's
business plan and will be asked to provide written and oral presentations
to include a valuation of SRI, a detailed approach to the public offering
process and prospective timing for the offering. CSD will assist the SRI
management and Board of Directors in analyzing each proposal. This phase
will be completed when SRI has engaged an investment banker for the
offering.
Phase Five
Once an investment banker or bankers are engaged by SRI, CSD will
assist in coordinating the process including preparation of all
documentation by lawyers, accountants, investment bankers and the
management of SRI. This phase will be complete upon the receipt of
funding from the initial public offering or any other transaction
involving a substantial sale of the common stock of SRI or its
<PAGE> 3
Mr. Richard T. Isel
October 18, 1995
Page 3
shareholders. These events might include a merger, consolidation or
sale of substantially all the assets by SRI. This phase must be
completed by September 1, 1996.
Phase Six
SRI may request consulting services in addition to those outlined above
which CSD may agree to provide for such needs as reviewing and
negotiating acquisitions or other projects.
The above outlined services will be performed on an hourly basis at the rate
of $300 per hour exclusive of out of pocket expenses for travel, copying, etc.
with the following fees per phase:
<TABLE>
<S> <C>
Phase One $10,000 - $15,000
Phase Two $25,000 - $35,000
Phase Three $25,000 - $50,000
Phase Four $75,000 - $150,000
Phase Five $125,000 - $250,000
Phase Six Based upon the hours incurred.
</TABLE>
Billings for services and expenses will be presented monthly. The ranges of
fees outlined above,exclusive of expenses, represent minimums and maximums
for each phase. Billings for expenses will be due within 15 days after the
invoice date. Billings for services in phases one through three will be due
upon the successful completion of Phase Three. Billing for services in
Phases Four and Five will be due upon the successful completion of Phase
Five. Any other billing under Phase Six services will be due upon receipt of
invoice.
As further consideration for the services provided above and for previously
uncompensated consulting services over the previous four years, SRI will
provide CSD or its President non-qualified stock options in the amount of
22,000 shares (prior to any stock split), which will vest one-third with the
successful completion of Phase Three and two-thirds with the successful
completion of Phase Five outlined above. The exercise price will be $13.33
per share and the option period will extend for ten years from the date of
grant. These options will be issued under separate agreement to be completed
by November 15, 1995.
CSD shall use its best efforts in the foregoing solicitation of financing
commitments. SRI reserves the right, in its sole
<PAGE> 4
Mr. Richard T. Isel
October 18, 1995
Page 4
discretion, to suspend solicitation of financing for a period of time or
permanently. SRI shall have the sole right to accept offers of financing and
may reject any and every such offer in whole or in part for any reason or for
no reason at all. CSD agrees not to divulge the contents of any information
regarding SRI furnished to it by SRI, except to the extent that the information
is contained in the business plan (and CSD is authorized to distribute the
business plan) or release of the information is otherwise authorized by SRI.
Termination after the phase deadline. Unless extended by the parties'
agreement, the engagement will be terminated automatically without obligation
of either party of any kind if Phase Three or Phase Five is not successfully
completed by the specified deadline date for procuring debt or equity
financing, except for the obligation in the last sentence of this paragraph.
Termination before the phase deadline. At any time before the specified
deadline, this engagement may be terminated by CSD or SRI upon written notice
to the other party. If terminated by CSD, no additional consulting fees will be
due other than those earned. If terminated by SRI before the specified
deadline, CSD will be due all minimum consulting fees for any phase that CSD
has completed. In addition, if SRI terminates the engagement (whether before
or after the specified deadline) or if the engagement terminates automatically
and SRI declines to extend it, CSD consulting fees will be earned and options
vested for the applicable phase, if any financing provided by a source from
which CSD secured a written proposal is consummated within one year of the date
of the signing of this engagement letter and CSD makes itself available to
coordinate closing of the financing.
SRI shall indemnify, hold harmless, and (at its election) defend CSD and its
agents, officers, directors, and employees to the full extent lawful from any
and all costs, claims, losses, damages (whether punitive, incidental, or
consequential), and liabilities (including fines, penalties, and amounts paid
in settlement), joint or several, that relate to, or arise in any manner out
of, the performance of the consulting services contemplated by this Agreement,
any event, proposal, occurrence, or transaction contemplated by this Agreement,
or their role in connection with any of the foregoing, and SRI also shall
advance or promptly reimburse them for all expenses (including reasonable fees
of legal counsel) as they are incurred by them in connection with
investigating, preparing to defend, settling, or defending any pending or
threatened indemnified claim, action, or proceed-
<PAGE> 5
Mr. Richard T. Isel
October 18, 1995
Page 5
ing, whether or not the indemnified party is a party or potential party to it.
Notwithstanding the foregoing, SRI is not obligated to indemnify or provide
any expense reimbursement to CSD or any of its agents, officers, directors, or
employees for any cost, claim, loss, damage, or liability that results
primarily from an act or omission by any of them that constitutes fraud, gross
negligence, or willful misconduct. The foregoing provisions for
indemnification and expense reimbursement are in addition to any rights that
CSD and its agents, officers, directors, and employees individually or
collectively might have at common law, including without limitation any right
of contribution.
CSD shall indemnify, hold harmless, and (at its election) defend SRI and its
agents, officers, directors, and employees to the full extent lawful from any
and all costs, claims, losses, damages (whether punitive, incidental, or
consequential), or liabilities (including fines, penalties, and amounts paid
in settlement), joint or several, that result primarily from an act or
omission by CSD in connection with the performance of the services contemplated
by this Agreement that constitutes fraud, gross negligence, or willful
misconduct, and CSD also shall advance or promptly reimburse them for all
expenses (including reasonable fees of legal counsel) as they are incurred by
them in connection with investigating, preparing to defend, settling, or
defending any pending or threatened indemnified claim, action, or proceeding,
whether or not the indemnified party is a party or potential party to it.
Notwithstanding the foregoing, CSD is not obligated to indemnify or provide any
expense reimbursement to SRI or any of its agents, officers, directors, or
employees for any cost, claim, loss, damage, or liability that arises out of,
or is based on, any untrue statement or alleged untrue statement of a material
fact contained in any information furnished orally or in writing by SRI (or any
of its agents, officers, directors, or employees) to CSD (or any of its agents,
officers, directors, or employees) in connection with the performance of the
services contemplated by this Agreement or any event, matter, proposal, or
transaction contemplated by this Agreement, or the omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The foregoing provisions for indemnification and expense
reimbursement are in addition to any rights that SRI and its agents, officers,
directors, and employees individually or collectively might have at common law,
including without limitation any right of contribution.
<PAGE> 6
Mr. Richard T. Isel
October 18, 1995
Page 6
If the indemnification or expense reimbursement provided in this Agreement is
either unavailable to any indemnified party for any reason or insufficient to
hold an indemnified party harmless to the extent contemplated by this
Agreement, then each party otherwise obligated to provide the indemnification
shall contribute to the amount paid or payable by the indemnified party for
which indemnification is unavailable or insufficient, in such proportion as is
appropriate to reflect the relative economic benefits received or to be
received by CSD and SRI from the event, matter, proposal, or transaction for
which indemnification or expense reimbursement is unavailable or insufficient.
If the foregoing allocation of contribution obligations is not permitted by
applicable law, CSD and SRI shall contribute to the amount paid or payable by
the indemnified party for which indemnification is unavailable or insufficient
in such proportion as is appropriate to reflect, not only the relative
economic benefits received or to be received by them, but also their relative
fault, in the event, matter, proposal, or transaction for which indemnification
or expense reimbursement is unavailable or insufficient.
An indemnifying party is entitled to participate in the defense of any claim,
action, or proceeding for which an indemnified party has requested, or intends
to request, contribution, indemnification, or expense reimbursement, or to
assume the defense of the action, claim, or proceeding, with legal counsel
selected by it but reasonably satisfactory to the indemnified party. If the
indemnifying party assumes the defense of any claim, action, or proceeding for
which an indemnified party has requested, or intends to request, contribution,
indemnification, or expense reimbursement under this Agreement, the
indemnified party may elect to participate in the defense of the claim, action,
or proceeding at its own cost and expense (including attorney fees) with legal
counsel selected by it but reasonably satisfactory to the indemnifying party.
However, the indemnified party shall cooperate, and shall cause its legal
counsel to cooperate, with the indemnifying party and its legal counsel in
the defense of the claim, action, or proceeding assumed by the indemnifying
party.
An indemnified party shall obtain the advance written approval of every
indemnifying party before settling, compromising, or consenting to the entry
of a judgement with respect to any pending or threatened claim, action, or
proceeding for which it has requested, or intends to request, contribution,
indemnification, or expense reimbursement from an indemnifying party pursuant
to this Agreement. In addition, SRI shall not,
<PAGE> 7
Mr. Richard T. Isel
October 18, 1995
Page 7
and it shall not permit any of its agents, officers, directors, or employees
to, settle, compromise, or consent to the entry of a judgement in any pending
or threatened claim, action, or proceeding for which contribution,
indemnification, or expense reimbursement might be sought under this Agreement
by CSD or any of its agents, officers, directors, or employees (whether or not
any of them is a party or potential party to the claim, action, or proceeding),
unless either it obtains the advance written consent of CSD (which consent CSD
shall not unreasonably withhold) or the settlement, compromise, or consent to
judgement includes the unconditional release of CSD and its agents, officers,
directors, and employees from all liability arising out of the claim, action,
or proceeding. Furthermore, an indemnifying party will not have any liability
for contribution, indemnification, or expense reimbursement with respect to
any pending or threatened claim, action, or proceeding that is settled,
compromised, or resolved by entry of a consent judgement without its advance
written approval. In no event is CSD obligated to make any payment to SRI or
any of its agents, officers, directors, or employees for contribution,
indemnification, or expense reimbursement pursuant to this Agreement for an
aggregate, cumulative amount exceeding the total amount of fees paid or
payable to it by SRI pursuant to this Agreement.
If the above outlined engagement is acceptable to you, please acknowledge
your acceptance by signing the enclosed copy and returning it to me.
I look forward to assisting you in this exciting project.
Very truly yours,
CORPORATE STRATEGIC DIRECTIONS, INC.
/s/ Bertram T. Martin, Jr.
- ----------------------------
Bertram T. Martin, Jr.
President
STERILE RECOVERIES, INC.
/s/ Richard T. Isel October 18, 1995
- ---------------------------- -------------------------
Richard T. Isel, Dated
President
<PAGE> 1
EXHIBIT 10.5
STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of this 20th day of March 1995, by and
between STERILE RECOVERIES, INC., a Florida corporation, with principal offices
and place of business at Suite 201, 28100 U.S. Highway 19 North, Clearwater,
Florida 34621 (hereinafter referred to as the "Corporation"), and ROBERT
NORMYLE, an individual residing at 2968 Windridge Oak Drive, Palm Harbor, FL
34684, in the State of Florida (hereinafter referred to as the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has been a valuable executive, employed by the
Corporation; and
WHEREAS, the Optionee, with the mutual agreement of the Corporation,
has severed his employment with the Corporation and has established as an
independent manufacturer's representative, with the right to represent the
Corporation for joint Corporation/Sterile Concepts, Inc. business in Teas
during 1995; and
WHEREAS, the Corporation recognizes the valuable services performed
for it by the Optionee and wishes to maintain a positive, on-going relationship
with Optionee; and
WHEREAS, the parties hereto wish to provide the terms upon which the
Corporation shall provide a stock option to the Optionee; and
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the parties hereto agree as follows:
1. RECITALS. The recitals are incorporated herein.
2. DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
a. "Book Value" of the Corporation common stock means the Book
Value of the common stock calculated as of the last day of a calendar year, on
a consolidated basis, using generally accepted accounting principles
consistently applied, while giving due regard for the accounting conventions
and elections of the Corporation.
b. "Business relationship" means the relationship of the Optionee
with the Corporation as employee, contractor, distributor, sales
representative, agent, or consultant, directly, and also indirectly, through
any corporation, company, or other affiliate owned in whole or in part by the
Optionee or any member of the Optionee's immediate family.
c. "Cause" means that the Optionee's business relationship with
the Corporation was terminated by the Corporation because the Optionee:
i. committed or participated in an injurious act of
fraud or dishonesty against Corporation or others doing
business with the Corporation; or
ii. committed or participated in an injurious act or
omission wantonly, willfully, recklessly or in a manner which
was grossly negligent against Corporation or others doing
business with the Corporation; or
iii. was convicted of engaging in a criminal enterprise
involving moral turpitude.
<PAGE> 2
d. "Competition" means that the Optionee has during the period
the Option may be exercised, engaged in competition with the business of the
Corporation, or sold, marketed or otherwise distributed any product that is
competitive with any product sold, marketed or otherwise distributed by the
Corporation, whether such activity was done directly, or indirectly, in any
capacity, whether as employee, contractor, distributor, sales representative,
agent, consultant, partner, proprietor, stockholder, or otherwise, within the
United States, or any state or political subdivision thereof.
e. "Sale of Business" means a transaction in which: (i) the
Corporation sells all, or substantially all, of its assets in a single
transaction, or a series of related transactions, or (ii) the Shareholders sell
all, or substantially all, of the then issued and outstanding shares of Common
Stock of the Corporation to one or more persons (other than the Corporation),
who is not a person included within the definition of Shareholders of the
Corporation, or (iii) the Corporation has publicly offered twenty percent
(20%), or more, of its then outstanding shares of common stock. "Substantially
all" means eighty percent (80%) or more in value, and also, in the case of
shares, voting rights.
f. "Shareholders" means Richard T. Isel, Wayne R. Peterson, and
James T. Boosales, the present shareholders of the Corporation, and any member
of the immediate families of any of them (spouse, child, grandchild, or spouse
of a child or grandchild), or trusts for any such person, who at the time is a
shareholder of the Corporation.
3. OPTION. The Corporation hereby irrevocably grants to the Optionee, as
a matter of separate agreement and not in lieu of other compensation for
services, the right and option, hereafter called the Option, to purchase all or
any part of an aggregate of Twelve Thousand Five Hundred (12,500) shares of
common stock of the Corporation, hereinafter called the Shares, on the terms
and conditions herein set forth.
4. OPTION PRICE. The purchase price of each of the Shares shall be $1.00
per Share.
5. DURATION OF OPTION. The Option shall continue for a period of ten
(10) years from the date hereof and, unless sooner terminated under the
provisions of hereof, shall expire at the end of such period.
6. TERMINATION OF OPTION. This Option shall terminate as to any
unexercised Shares prior to the end of the ten (10) year period on the earlier
of:
a. the date the Option is "put" to the Corporation by the
Optionee in accordance with this Agreement; or
b. six (6) months after the date of the Optionee's death; or
c. the date the Optionee's "business relationship" with the
Corporation was terminated by the Corporation "for cause," or
d. the date the Optionee engages in "competition" with
Corporation.
7. TRANSFER. The Option may not be transferred except by last will and
testament, or the laws of descent and distribution, and may be exercised only
by the Optionee during his lifetime. More particularly, but without limiting
the generality of the foregoing, the Option may not be assigned, transferred
(except as noted herein), pledged or hypothecated in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment, or similar
2
<PAGE> 3
process. Any attempted assignment, transfer, pledge, hypothecation, or other
disposition of the Option contrary to the provisions hereof, and the levy of
any attachment or similar process on the Option, shall be null and void and
without effect.
8. DEATH OF OPTIONEE. Subject to the terms of this Agreement, in the
event of the Optionee's death the Option may be exercised by the legal
representatives of the estate of the Optionee or by the person or persons to
whom the Optionee's rights under the Option shall pass by will or the laws of
descent and distribution.
9. TOTAL OR PARTIAL EXERCISE. The Option may be exercised either at one
time as to the total number of Shares or from time to time as to any portion
thereof in units of 1,000 Shares or multiples thereof.
10. PURCHASE FOR INVESTMENT ONLY. The Optionee represents and agrees, and
each other person who, pursuant to this Agreement, shall exercise the Option in
whole or in part shall be required to represent and agree at the time of
exercise, that any and all Shares of common stock purchased by him pursuant to
the Option will be purchased for investment and not with a view to the
distribution or resale thereof.
11. NO ADJUSTMENT ON RECAPITALIZATION. There shall be no adjustment in
the number of shares subject to this Option in the event of any
recapitalization, merger, reorganization, reclassification of stock,
consolidation, split-up, stock dividend, or other change in the corporate
structure of Capitalization affecting the Corporation's common stock as
presently constituted.
12. REGISTRATION OF SHARES. All such Shares issued upon exercise of the
option shall be unregistered shares within the meaning of applicable federal
and state securities laws, and the Corporation shall have no obligation to
register such Shares or integrate them in any public offering of securities
made by the Corporation. If, however, at the time the Option is exercised, the
Corporation is in the process of registering other shares of stock or
securities for public distribution, the Corporation may, in its discretion,
defer the issuance of Shares to the Optionee until the securities being
registered have been distributed in accordance with the Corporation's plan of
distribution, or, in its discretion, include the Shares in the registration.
Issued Shares shall be endorsed evidencing the non-transferability of the
Shares except in compliance with applicable securities laws and exemptions from
registration thereunder.
13. S CORPORATION STATUS. The Corporation presently reports its net
income as an S Corporation for federal income taxes. Upon the first exercise
of the Option, the Optionee shall deliver a written agreement to the
Corporation, which shall be binding as to all exercises of the Option, agreeing
that so long as the shareholders of the Corporation have not voluntarily
revoked the election of S corporation status under federal income tax laws, as
provided in the Internal Revenue Code of 1986, as amended, no transfer of the
Shares shall be made by the Optionee to any third party except to a person who
is eligible to become a qualified shareholder under any federal or state tax
statute the Corporation has adopted, including without limitation, Subchapter S
status, and agrees in writing to file any necessary consents to continue such
status and further agrees in writing not to terminate the qualification without
the approval of the remaining Shareholders.
14. SHAREHOLDERS' AGREEMENTS AND BYLAWS. The Shares when issued shall be
subject to the bylaws of the Corporation and to any agreement between
Corporation stockholders restricting or governing the transfer of shares of
stock.
3
<PAGE> 4
15. NOTICE OF EXERCISE; ISSUANCE OF CERTIFICATES. Subject to the terms
and conditions of this Agreement, the Option may be exercised by written notice
to the Corporation. Such notice shall state the election to exercise the
Option and the number of Shares in respect of which it is being exercised,
shall contain a representation and agreement by the person or persons so
exercising the Option that such Shares are being purchased for investment and
not with a view to the distribution or resale thereof, and shall be signed by
the person or persons so exercising the Option. Such notice shall be
accompanied by a certified or bank cashier's check payable to the order of the
Corporation for the full purchase price of the Shares in respect of which the
Option is being exercised. The certificate or certificates representing the
Shares shall be issued and delivered by the Corporation as soon as practicable
after receipt of the notice and payment. Such certificate or certificates
shall be registered in the name of the Optionee (or the Optionee's successor in
interest, if the Optionee is deceased), or, if the Optionee shall so request in
the notice exercising the Option, shall be registered in the name of the
Optionee and another person jointly, with right of survivorship (or as tenants
by the entireties, if the person is the Optionee's spouse), and shall be
delivered to or on the written order of the person or persons exercising the
Option. In the event the Option is being exercised by the successor in
interest of the Optionee, the notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise the Option.
16. OPTIONEE'S RIGHT TO PUT OPTION TO CORPORATION. At any time prior to
the date the Option is fully exercised, terminates, or expires by its own
terms, the Optionee, but not any successor in interest to the Optionee, may
elect to "put" all, and not less than all, of his Option to the remaining,
unexercised Shares to the Corporation.
a. The Optionee shall exercise his right to put the Option to the
Corporation by delivering written notice to the Corporation of his election.
b. Upon exercise of the put, the Option as to all unexercised
Shares shall immediately terminate.
c. Within sixty (60) days after the notice is delivered to the
Corporation, a closing shall take place at the office of the Corporation and
the Corporation shall pay the Optionee, by a certified or bank cashier's check
payable to the Order of the Optionee, a price equal to: (i) the "Book Value" of
the unexercised Shares, determined in accordance with this Agreement as of the
then immediately preceding December 31st, reduced (ii) by One Dollar ($1.00)
for each such Share, which is the price the Optionee would pay for the
unexercised Shares had the Option for all of such Shares been exercised by the
Optionee at the time.
17. CORPORATION'S RIGHT TO PURCHASE STOCK. The Corporation shall have the
right at any time, and from time to time, to purchase Shares issued to the
Optionee from the Optionee, or the Optionee's beneficiaries or other successor
in interest, in accordance with this paragraph.
a. The Corporation shall exercise its right to purchase all, and
not less than all, of the Shares issued to Optionee and then outstanding, by
delivering written notice to the Optionee of the Corporation's election.
b. Within sixty (60) days after the notice is delivered by the
Corporation, a closing shall take place at the office of the Corporation and
the Corporation shall pay the Optionee, by a certified or bank cashier's check
payable to the Order of the Optionee, a price equal to the "Book Value" of the
Shares, determined in accordance with this Agreement as of the then immediately
preceding December 31st.
4
<PAGE> 5
c. PROVIDED, HOWEVER, if prior to the Corporation exercising its
option: (i) a Sale of Business transaction has occurred, (ii) a binding
agreement for a Sale of Business transaction has been entered into, closing
thereunder is pending, and the agreement has not expired or terminated by its
terms or agreement of the parties, or (iii) a written letter of intent to enter
into a Sale of Business transaction is in effect, the proposed transaction has
not closed, and the letter has not expired or terminated, then the Share price
shall be at the price that would be applicable under the Sale of Business
transaction.
d. PROVIDED FURTHER, HOWEVER, if the Corporation exercises its
right to purchase the Shares and within six (6) months thereafter a Sale of
Business transaction occurs at a price whereunder the Optionee would have
received a higher price for his Shares, the Corporation shall, upon the closing
of the Sale of Business transaction, pay the Optionee a supplemental purchase
price equal to the price differential between the price paid the Optionee for
the Shares and the price that would have resulted from the Sale of Business
transaction, after considering all appropriate adjustments, including, but not
limited to tax affects and the costs of the transaction.
e. The Shares issued shall bear a restrictive endorsement
subjecting them to the provisions of this Agreement.
18. DISPUTE AS TO VALUE OF SHARES. In the event there is any dispute
between the parties as to value or price of the Shares under paragraph 16 or
paragraph 17, the value or price shall be determined by the independent
certified public accountant of the Corporation, whose decision shall, unless
fraudulent or patently erroneous, be final and binding upon the parties.
19. NO TRUST CREATED. Nothing contained herein, and no action taken
pursuant to the provisions hereof by either party hereto, shall create, nor be
construed to create, a trust of any kind or a fiduciary relationship between
the Optionee, or any other person, and the Corporation.
20. NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be
construed to be a contract of employment, or any other business relationship,
in any capacity, or for any term of years, nor as conferring upon the Optionee
the right to continue a business relationship with the Corporation, in any
capacity.
21. NO SHAREHOLDER RIGHTS. This Agreement does not entitle the Optionee
to any dividend, distribution, or any voting right, or other rights of
Corporation shareholders with respect to the Shares prior to the date the
Option is exercised and the Shares are purchased.
22. AMENDMENT. This Agreement may not be amended, altered or modified,
except by a written instrument signed by the parties hereto or their respective
successors, and may not be otherwise terminated except as provided herein.
23. INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns, and the Optionee,
his successors, heirs, executors, administrators and beneficiaries.
24. NOTICES. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States certified
mail, postage prepaid, addressed to such party's last known address as shown on
the records of the Corporation. The date of such mailing shall be deemed the
date of notice, consent or demand. Notice sent to the Corporation shall be
sent to the President, and a copy thereof shall be sent to the Treasurer.
5
<PAGE> 6
25. GOVERNING LAW. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of
the State of Florida.
26. ARBITRATION. In the event of any dispute related to this Agreement
between the parties, or in the event of any breach by either party arising out
of or related to this Agreement, the dispute or breach shall be resolved by
arbitration in accordance with the Florida Arbitration Code then pertaining.
The prevailing party shall be reimbursed costs of arbitration including
reasonable attorney fees through all proceedings. The arbitration proceedings
shall be held in Pinellas County, Florida unless otherwise agreed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement at
Clearwater, Florida, the day and year first above written.
STERILE RECOVERIES, INC.
By: /s/ James T. Boosales
-------------------------------------
James T. Boosales
OPTIONEE:
By: /s/ Robert Normyle
-------------------------------------
Robert Normyle
6
<PAGE> 1
EXHIBIT 10.6
SHAREHOLDER AGREEMENT
(Sterile Recoveries, Inc.)
This is a Shareholder Agreement among STERILE RECOVERIES, INC. (the
"Company") and RICHARD T. ISEL ("Isel"), WAYNE R. PETERSON ("Peterson"), and
JAMES T. BOOSALES ("Boosales"), and every other shareholder of the Company who
subsequently signs this Agreement or a counterpart of it, to record their
agreement regarding the transfer of shares of the Company's capital stock. The
parties to this Agreement (other than the Company) collectively control all the
outstanding common stock of the Company. They desire to restrict control of the
Company to stabilize the Company, to protect their respective economic
interests in the Company, to preserve the Company's business, and to promote
the harmonious management of the Company"s affairs. Accordingly, the parties
agree as follows:
1. FORM AND INTERPRETATION
1.1 Defined Terms. As used in this Agreement, the following defined,
capitalized terms have the respective meanings ascribed to them:
"Agreement" means this Shareholder Agreement, as originally
executed and as later amended, modified, or supplemented in accordance
with its terms.
"Buyer" means the Company or a Shareholder that elects or is
required to purchase the Stock of a Shareholder pursuant to this
Agreement.
"Company" means Sterile Recoveries, Inc., a Florida
corporation and a party to this Agreement, and includes its assignees
and successors (by operation of law or otherwise).
"Fair Value" means a value equal to three times the average
annual earnings (before taxes) of the Company for the two immediately
preceding 12-month periods, as determined by the Company's independent
accounting firm.
"Option Insurance" means the life insurance policies permitted
by section 2.1.
"Original Shareholders" means each of Tames T. Boosales,
Richar T. Isel, and Wayne R. Peterson.
"Prohibited Transferee" means any person who is not the Company
including anyone who succeeds to the ownership of any Stock owned by a
Shareholder, by operation of law or otherwise, and includes a spouse,
trustee, guardian, receiver, successor by operation
<PAGE> 2
of law, and anyone to whom stock is transferred in contravention of any
option granted by this Agreement.
"Related Party" means an Original Shareholder, a spouse or
relative of an Original Shareholder, any person who, directly or
indirectly controls, is controlled by, or under common control with, the
Company, a spouse, relative, officer, director, or employee of any of
the foregoing persons, and any entity of which any of the foregoing
persons is a member, officer, director, employee, partner, trustee, or a
direct or indirect beneficial owner of any equity or beneficial interest
of 5% or more.
"Remaining Shareholder" means a living Shareholder who still owns
Stock.
"Seller" means a Shareholder or a Prohibited Transferee who
elects or is required by this Agreement to sell Stock.
"Shareholder" means the original Shareholders and every other
holder of Stock who subsequently signs this Agreement or a counterpart
of it.
"Stock" means the Company's common stock, $.001 par value, issued
and outstanding at any time, and includes any beneficial interest in
that common stock and any securities issued in exchange or substitution
for that common stock that confers on the holders of those securities,
as a class, the rights to vote for the election of a majority of the
directors of the Company and to receive all or a portion of the current
dividends and liquidating distributions of the Company, without
limitation as to amount, but after the payment of dividends and
distributions on any shares of capital stock entitled to preference.
"Successor" means, with respect to any deceased Shareholder, the
heir, estate, beneficiary, surviving joint tenant or tenant by the
entirety, or other person who succeeds to his or her ownership of any
Stock upon his or her death.
"Transfer" means every transfer of Stock, any interest in Stock,
any power to vote or to direct the voting of any Stock, and any power to
dispose of or to direct the disposition of Stock, whether voluntary,
involuntary, or by operation of law, and whether by gift, sale, proxy,
pledge, exchange, agreement, conveyance, assignment, attachment,
foreclosure, encumbrance, voting trust, hypothecation,
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<PAGE> 3
levy of execution, seizure by a receiver or trustee, testamentary or
Intestate succession, or otherwise.
Transfer Notice" means a written notice of a Shareholder's
intention to make a Transfer that states the name and address of each
proposed transferee the terms and conditions of the proposed transfer,
and the maximum number of shares that the other Shareholders may include
in the sale pursuant to sections 3.1-3.3, and Is accompanied by a copy
of a bona fide written offer of purchase that states the purchase price,
the method and terms of payment, and the contemplated closing date for
the transaction.
1.2 Headings and References. The headings preceding the text of the
sections of this Agreement are solely for convenient reference and neither
constitute a part of this Agreement nor affect its meaning, interpretation, or
effect. All appendices referred to in this Agreement are an integral part of
it and are incorporated by reference in it. Unless otherwise expressly stated,
all references in this Agreement to a section or an appendix are to a section
or an appendix of this Agreement.
1.3 Complete Agreement. This Agreement records the final, complete,
and exclusive understanding among the parties regarding the subjects addressed
in it and supersedes any prior or contemporaneous agreement, understanding, or
representation, oral or written, by any of them.
1.4 Severability. Whenever possible, this Agreement and each
provision of it should be construed and interpreted so that it is valid and
enforceable under applicable law on the date of its execution. If a provision
of this Agreement, or the application of it, is held by a court to be invalid
or unenforceable, however, that provision will be deemed separable from the
other provisions of this Agreement and will not affect the validity,
interpretation, or effect of the other provisions of this Agreement or the
application of that provision to other circumstances in which it is valid and
enforceable.
1.5 Rights or Third Parties. Nothing in this Agreement, whether
express or implied, is intended or should be construed to confer upon, or to
grant to, any person except the Company, the Shareholders, and their respective
heirs, assignees, successors, and personal representatives, any claim, right,
remedy, or privilege under or because of this Agreement or any provision of it.
1.6 Inclusive Words. As used in this Agreement, (a) the word
"including" is always without limitation, (b) masculine and feminine words
should be construed to Include correlative neuter words, (c) the word "days"
refers to calendar days,
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<PAGE> 4
including Saturdays, Sundays, and holidays, (d) words in the singular number
include words in the plural number and vice versa, (e) the word "person"
includes a group, trust, syndicate, corporation, cooperative, association,
partnership, business trust, joint venture, limited liability company,
unincorporated organization, and governmental authority, as well as a natural
person, and (f) every reference to Stock "owned" by a Shareholder includes all
Stock that the Shareholder owns Individually or Jointly with another person.
Accounting terms used, but not other-wise defined, in this Agreement are to be
construed and interpreted in accordance with generally accepted accounting
principles in effect on the effective date of this Agreement.
2. OPTION INSURANCE
2.1 Option Insurance. The Company may, but is not obligated to,
purchase a policy or policies of life insurance (either term, whole life, or
universal) on the life of any Shareholder, up to the maximum, aggregate amount
of insurance as its board of directors deems reasonably necessary to fund all
or part of the purchase price payable for the shares of Stock owned by the
Shareholder upon the Shareholder's death. If it purchases a policy on the life
of any Shareholder, the Company must purchase and maintain policies on the
lives of the other Shareholders in pro rata amounts based on their respective
stock ownership. The Company may substitute policies for existing policies,
and may modify, convert, or increase the amount of coverage under any existing
policy, as its board of directors considers necessary or appropriate to
accomplish the intent and purposes of this Agreement. Every substitute or
additional insurance policy will be subject to the provisions of this
Agreement.
2.2 Ownership of Option Insurance. Until this Agreement is
terminated, and except for policies assigned in accordance with this Agreement,
the Company will be the sole owner and beneficiary of all Option Insurance.
The Company may apply to the payment of premiums any earnings, dividends, or
accumulated not cash surrender value under any Option Insurance. The Company
may borrow funds secured by the cash value of Option Insurance, if its board of
directors reasonably believes that, upon maturity of the policy, the net
proceeds of the policy (after repayment of all policy loans) will equal or
exceed the policy's full face value. If it determines to borrow against the
cash value of any Option Insurance, the Company must borrow against all option
Insurance it owns, pro rata based on the Shareholders' percentage ownership of
the Company.
2.3 Company's Fiduciary Duties. Subject to the provisions of
section 2.2, the Company shall act in a fiduciary capacity with respect to the
preservation of all Option Insurance and its cash value and shall designate in
its financial records and reports that the benefits and obligations of all
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<PAGE> 5
Option Insurance are subject to the provisions of this Agreement. The Company
promptly shall (a) collect all Option Insurance proceeds payable upon the death
of an Insured Shareholder or the termination of an Option Insurance policy, (b)
deposit the proceeds at the bank in Tampa, Florida, where the Company maintains
its general operating account, in a separate trust account designated as the
"Stock Purchase Account," to be used solely for the purposes of this Agreement,
and (c) keep the proceeds on deposit there until they are disbursed In
accordance with this Agreement. The Company's interests in the cash values
and proceeds of Option Insurance are not subject to any claim of a creditor of
the Company, except for a Seller, but then only to the extent that the Seller
is entitled under this Agreement to have the proceeds of Option Insurance
applied to pay the purchase price for his or her Stock. Instead, the rights of
a creditor of the Company will attach only to the Stock acquired by the Company
pursuant to this Agreement. Any excess Option Insurance proceeds that remain
after paying the cash portion of the purchase price on the closing date for
the Stock will be the property of the Company.
2.4 Transfer and Termination of Option Insurance Policies. Upon the
termination of this Agreement in accordance with section 7.3, each Shareholder,
and the spouse, children, and parents of each Shareholder (in that order), will
have the right, for 30 days after the effective date of the termination, to
purchase from the Company the Option Insurance that insures the life of that
Shareholder. Similarly, if a Shareholder ceases to own any Stock, the
Shareholder, and the spouse, children, and parents of Shareholder (in that
order), will have the right, for 30 days after the date when the Shareholder
ceased to own any Stock, to purchase from the Company all Option Insurance that
it owns on the life of the Shareholder. To the extent a Shareholder, or his
or her spouse, children, or parents, do not exercise their foregoing rights to
purchase Option Insurance on the life of the Shareholder, the Company shall
promptly cancel that Option Insurance, unless the insured Shareholder expressly
consents in writing to the continuation of the Option Insurance. Unless the
Company as owner of the Option Insurance agrees otherwise, the purchase price
for each policy of Option Insurance purchased by a Shareholder or his or her
spouse, children, or parents pursuant to the rights provided In this section
must be paid in cash and will be equal to the lesser of the net cash surrender
value or the interpolated terminal reserve value of the Option Insurance as of
the date of purchase. The Buyer and Seller of Stock pursuant to the exercise
of an option granted under this Agreement may agree that the Buyer may credit
against the purchase price of the Stock the purchase price for any Option
Insurance on the life of the Seller that is to be purchased from the Buyer.
The owner of an Option Insurance policy shall execute and deliver to the
purchaser of that policy any documents or instruments that are
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<PAGE> 6
necessary or appropriate to transfer full and complete title to that policy to
the purchaser.
3. CO-SALE RIGHTS
3.1 In General. Each Shareholder grants to the other Shareholders
the right and privilege (but not the obligation) to participate in any sale of
Stock owned by him, on the same terms and conditions and pro rata according to
the ratio of (a) the total number of shares of Stock owned by the Shareholder
who is entitled to participate in the sale (a "Participating Shareholder") , to
(b) the total amount of the Stock owned collectively before the sale by the
Shareholders. if that ratio produces a number that is not a whole number, the
Participating Shareholder will be entitled to participate in the sale only to
the extent of the number of shares of Stock rounded down to the next lowest
whole number. For example, if the ratio results in 2,000.5 shares of Stock,
the Participating Shareholder will be entitled to sell only 2,000 shares of
Stock. A Shareholder who intends to sell any Stock (a "selling Shareholder")
has the option of (i) offering to the other Shareholder the opportunity to
participate directly in the sale of Stock (the "Direct Participation Option"),
or (ii) completing his sale of Stock to the third party purchaser and then
offering to purchase from the Participating Shareholder the amount of Stock
required by this section (the "Indirect Participation Option"). The rights
granted in this section (1) apply only to sales made in accordance with the
provisions of section 4 and (2) do not apply to a sale by a Shareholder to the
Company or to any of the other Shareholders of any Option Shares upon the
exercise of any option to purchase under section 4.
3.2 Direct Participation Option. A selling Shareholder who selects
the Direct Participation Option shall notify the other Shareholder of his
proposed sale of Stock at least 15 days before the closing date of the sale,
summarizing the general terms and conditions of sale and specifying the name of
the purchaser, the total amount of Stock to be sold, and the maximum number of
shares of Stock that the Participating Shareholder may include in the sale
pursuant to the requirements of this section. A Shareholder receiving that
notice shall notify the selling Shareholder, within ten days after receipt of
that notice, whether he desires to participate in the sale. A Shareholder's
failure to notify the selling Shareholder within that ten-day period of whether
he desires to participate in the sale will constitute an election not to
participate in the sale. The selling Shareholder shall arrange for a
Participating Shareholder who validly exercises his Direct Participation Option
(a "DPO Electing Shareholder") to be included as a party to the sale on the
same terms and conditions as are applicable to the selling Shareholder. A DPO
Electing Shareholder will be entitled to sell to the third
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<PAGE> 7
party that number of shares of Stock derived from the following formula:
<TABLE>
<S> <C>
Total number of shares owned
before sale by DPO Electing Shareholder
Total number of shares to be X ---------------------------------------------
purchased by third party Total of amount of Stock owned before sale by
all Shareholders on a fully diluted basis
</TABLE>
A DPO Electing Shareholder may participate in a sale and sell to the third
party less than the maximum amount of shares of Stock that he Is entitled to
sell pursuant to the above formula, in which case the selling Shareholder will
have the right to sell the balance of the DPO Electing Shareholder's allotment.
3.3 Indirect Participation Option. A selling Shareholder who
selects the Indirect Participation Option shall notify the other Shareholder of
his sale of Stock within seven days after the closing of his sale. The notice
must specify the name of the purchaser, the sale terms and price per share of
the Stock, the total number of shares of Stock that were sold by the selling
Shareholder, and the maximum number of shares of Stock that the selling
Shareholder is required to purchase from the other Shareholder. A Shareholder
receiving that notice shall notify the selling Shareholder, within ten days
after receipt of that notice, whether he intends to participate in the sale by
the selling Shareholder. A Shareholder's failure to notify the selling
Shareholder within that ten-day period of whether he desires to participate in
the sale will constitute an election not to participate in the sale. A
Shareholder who validly exercises his option to participate in the selling
Shareholder's sale of Stock (an "IPO Electing Shareholder") will be entitled to
sell to the selling Shareholder, and the selling Shareholder shall purchase
from the IPO Electing Shareholder on the same terms and conditions as the
selling Shareholder sold his Stock to the third party, that number of shares of
Stock derived from the following formula:
<TABLE>
<S> <C>
Number of shares owned before
before sale by IPO Electing Shareholder
---------------------------------------------
Number of shares sold X Total number of shares owned before sale
to third party by selling Shareholder by all Shareholders on a fully diluted basis
</TABLE>
An IPO Electing Shareholder may elect to sell to the selling Shareholder less
than the maximum number of shares of Stock that he is entitled to sell pursuant
to the above formula.
4. TRANSFER RESTRICTIONS
4.1 In General. A Shareholder shall not Transfer any of his or
her Stock to anyone without first delivering a Transfer Notice to the Company
and every other Shareholder at least 65
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<PAGE> 8
days in advance of the Transfer. In addition, a Shareholder shall not Transfer
any Stock to a Prohibited Transferee, except pursuant to a bona fide sale made
in accordance with sections 4.1 through 4.7. These Transfer restrictions apply
to a Transfer to a spouse, joint tenant, tenant in common, or tenant by the
entirety, by operation of law or otherwise. Any Transfer of Stock in
contravention of this Agreement will be invalid and ineffective. A Shareholder
may Transfer his or her Stock to an inter vivos trust created by him or her for
his or her benefit or the benefit of his or her spouse or lineal descendants
if: (a) every trustee of the trust executed a counterpart of this Agreement and
agrees to be bound by It as a Shareholder; (b) the trustees of the trust are
Shareholders; and (c) the trust expressly provides that all rights and powers
attendant to any Stock held by the trust (including voting rights) can be
exercised only by the trustees in their sole, unfettered discretion.
Notwithstanding any provision in this Agreement to the contrary, any transfer
to a person whom is ineligible by law as a Subchapter S shareholder or any
transfer that would cause the total number of shareholders of the Company to
exceed the maximum number allowed for Subchapter S qualification purposes is
strictly prohibited.
4.2 Option to Purchase. Upon receipt of a Transfer Notice from a
Shareholder of his, her, or its intention to make a Transfer to a Prohibited
Transferee, or upon the occurrence of a Transfer to a Prohibited Transferee
(whether voluntary, involuntary, or by operation of law, excluding death), the
Company will have an option exercisable for 30 days following the date when it
receives the Transfer Notice or (in the case of a Transfer that occurs without
a Transfer Notice) the date when it receives written notice of the occurrence
of the Transfer, to purchase all (but not less than all) the Stock that is the
subject of the Transfer to the Prohibited Transferee (the "Option Shares"). If
a Shareholder institutes voluntary proceedings under any bankruptcy or debtor
relief law, however, the first option of the Company will arise when the
bankruptcy court enters a final order authorizing or directing a sale of Stock
owned by the Shareholder and must be exercised within 30 days thereafter. Any
Transfer upon the death of a Shareholder is governed by section 4.6.
If the Company does not exercise its first option, every Shareholder
will have a second option, exercisable for 15 days following the effective date
of the waiver or expiration of that first option, to purchase all (but not less
than all) the Option Shares. If more than one Shareholder exercises this
option, they shall purchase the Option Shares pro rata according to the
respective number of shares of Stock owned of record by them on the effective
date of the waiver or expiration of the first option. The Shareholder
optionees must purchase all the Option Shares, and none of the options
exercised by the Shareholders will be valid and effective unless they
collectively elect to purchase all the Option Shares.
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<PAGE> 9
The foregoing options &rise automatically (without receipt of any
Transfer Notice from a Shareholder) upon (a) the appointment of a guardian for
the person or property of a Shareholder, (b) an involuntary Transfer to a
Prohibited Transferee, including sale pursuant to attachment, foreclosure, levy
of execution, seizure by a trustee in bankruptcy, or other legal procedure, or
(c) any Transfer to a Prohibited Transferee by operation of law (excluding
death). The Company and every Shareholder promptly shall notify each other of
any of the foregoing events that come to their attention. The foregoing option
periods will be tolled if a Shareholder who intends to make a Transfer to a
Prohibited Transferee fails to deliver a Transfer Notice on a timely basis to
the Company and all the other Shareholders or if a purported notice of Transfer
does not satisfy the requirements of a Transfer Notice. If the foregoing
options are validly exercised, the selling Shareholder shall sell the Option
Shares to the Buyer in accordance with the terms and conditions of this
Agreement.
Upon the expiration of the options referred to above or the failure
of the optionees to exercise their respective options to purchase all the
Option Shares, the selling Shareholder may transfer the Option Shares to the
Prohibited Transferee, upon the exact terms and at the exact price disclosed
in the Transfer Notice delivered to the Company and the other Shareholders
pursuant to this section if the transferee exercises a counterpart of this
Agreement as a condition precedent to its purchase of the Stock. The selling
Shareholder's right to transfer the Option Shares free of the restrictions
imposed by this section will terminate on the 90th day following the waiver or
expiration of the Company's option. If the sale or transfer of the Option
Shares in not concluded within that 90-day period or if the price and terms of
the Transfer are modified from those disclosed in the Transfer Notice delivered
to the Company and the other Shareholders pursuant to this section, the selling
Shareholder must comply again with the notice provisions of section 4.1 and the
transfer restrictions of this section before making the Transfer. A Transfer
to a transferee who does not execute a counterpart of this Agreement will be
void, invalid, and ineffective.
4.3 Purchase Price. The purchase price of any Stock to be
purchased by the Company or the other Shareholders pursuant to section 4.2 will
be the same as set forth in the bona fide written offer received by the selling
Shareholder, except that, if the purchase arises from an involuntary Transfer,
the purchase price will be the Fair Value of the Stock.
4.4 Nonassignability and Lapsing of Option Rights. The options
granted under section 4.2 cannot be assigned and will lapse immediately upon
the occurrence of any of the following events: (a) the death of the optionee;
(b) an assignment by
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<PAGE> 10
the optionee of all his or her Stock for the benefit of creditors; or (c) the
levy under a writ of execution of all the optionee's Stock that is subject to
sale under any legal procedure.
4.5 Notice of Exercise of Option. Any party exercising an option
granted under section 4.2 must give notice of exercise of the option to the
President of the Company and to the Shareholder owning the Stock (or to the
Prohibited Transferee to whom a Transfer of Stock has been made), stating the
optionee's election to purchase all the Option Shares, and (in the case of a
proposed voluntary Transfer to a Prohibited Transferee pursuant to a bona fide
written offer) must tender to the Company's legal counsel to hold in escrow for
the purchase 10% of the purchase price for the Option Shares. The Company
shall request that its legal counsel serve as escrow agent for the purchase
pursuant to the terms of an escrow agreement that is satisfactory to the legal
counsel and requires the escrow agent to disburse the funds (a) to the Seller
if the sale and purchase of Option Shares is consummated or (b) to the Buyer if
the sale and purchase of Option Shares is not consummated. The Secretary of
the Company immediately shall notify all nonselling Shareholders (in the manner
specified in section 8.1) of the waiver, exercise, or expiration of the
Company's 15-day option and, if the Company does not exercise its option, the
total number of shares of Stock that were outstanding on the effective date of
the waiver or expiration of the Company's option. Every Shareholder shall
notify every party to this Agreement of every exercise of an option granted by
section 4.2. Absent notice that a prior option has been waived or exercised, a
junior optionee may assume that the prior option expired without exercise on
the expiration date specified in section 4.2.
4.6 Upon Death of a Shareholder. If a Shareholder dies before this
Agreement terminates, the deceased Shareholder's Successor has an option (but
not an obligation) to elect within 60 days after the deceased Shareholder's
death to sell some or all of the deceased Shareholder's Stock to the Company
for a purchase price equal to the greater of (a) the Fair Value or (b) the
total proceeds received by the Company from Option Insurance on the life of the
deceased Shareholder. If a deceased Shareholder's Successor elects to sell
some or all of the deceased Shareholder's Stock pursuant to this section, the
Company shall purchase the Stock. Each Shareholder agrees that any shares of
the deceased Shareholder's Stock that the Successor does not sell to the
Company pursuant to this section shall not have any voting rights. The closing
of any sale and purchase of Stock under this section will take place within 75
days after the deceased Shareholder's death at the principal office of the
Company at the time and on the date specified by the Successor in its election
notice to the Company. If necessary to effectuate the provisions of this
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<PAGE> 11
section, the Shareholders and the Company agree that they shall amend the
Company's Articles of Incorporation, effective as of the execution date of this
Agreement or as soon thereafter as practicable, to include the foregoing
restriction regarding the voting rights attributable to transferred shares of
Stock.
4.7 Conflict with Bylaws or Articles of Incoporation. If the
Company's bylaws or articles of Incorporation grants the Company or any
shareholder of the Company an option or right of first refusal to redeem or
purchase Stock that is sought to be transferred or otherwise restricts the
transfer of Stock, both this Agreement and the provisions of the bylaws and
articles of incorporation will apply to any transfer of Stock subject to their
provisions, to the extent that this Agreement does not conflict with those
provisions. If a conflict exists between this Agreement and those provisions,
this Agreement controls the conflict, and those provisions will be ineffective
to the extent that they are inconsistent with this Agreement.
5. CLOSING AND PAYMENT OF STOCK PURCHASES
5.1 Closing. Except as provided in section 4.6 and, unless
otherwise agreed by both the Buyer and Seller, the closing of any sale and
purchase of Stock under this Agreement will take place at the principal office
of the Company at such time and on such date as the Buyer specifies in its
notice of exercise of the option, except that the closing date cannot be more
than 30 days after the exercise date of the option.
5.2 Payment of Purchase Price. The purchase price of Stock
purchased by the Company or any Shareholder pursuant to section 4.2 or 4.3 will
be payable on the closing date of the purchase as follows: (a) if the Seller
has received a bona fide written offer for the Stock, the terms of payment will
be the same as those set forth in the written offer; (b) if the purchase is
pursuant to the death of a Shareholder, the entire purchase price will be
payable in cash on the closing date, to the extent of the proceeds of any
Option Insurance owned by the Company on the life of the deceased Shareholder,
and the balance of the purchase price (if any) will be payable pursuant to a
promissory note in substantially the form of Appendix "A"; and (c) in all other
cases, and unless the Buyer and the Seller agree differently, 10% of the
purchase price will be payable in cash and the balance of the purchase price
will be payable pursuant to a promissory note in substantially the form of
Appendix "A." The Buyer shall execute and deliver to the Seller on the closing
date any promissory note required by this Agreement to be delivered in payment
of any portion of the purchase price. The purchase price payable for any Stock
under this Agreement includes the Stock's proportionate share of any goodwill
value of the Company. in addition, the purchase price payable for any Stock of
a deceased Shareholder is
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<PAGE> 12
not to be adjusted to reflect any change in the Company's to net income or fair
market value resulting from its receipt of Option Insurance proceeds pursuant
to a death of a Shareholder that precipitates a sale and purchase of any Stock.
5.3 Delivery of Stock. Upon a Buyer's full payment to the Seller
by the Buyer of the purchase price (in cash or by promissory note or both), the
Seller shall endorse in blank and deliver to the Buyer the certificates
evidencing the Stock purchased, free and clear of all liens, charges,
encumbrances, security interests, and adverse claims of every kind whatsoever,
except for the transfer restrictions of this Agreement and any transfer
restrictions imposed by state and federal securities law.
5.4 Pledge of Stock. Until the principal and interest under any
promissory note issued by a Buyer pursuant to section 5.2 are fully paid in
cash, the Buyer shall secure the payment of all principal and interest under
the promissory note by granting the Seller a first-priority security interest
in those shares of their purchased Stock that were not fully paid in cash on
the closing date of the purchase. The Buyer shall create and perfect that
security interest by executing and delivering to the Seller on the closing date
of the purchase (a) a Stock Pledge Agreement in substantially the form of
Appendix "B," and (b) a certificate representing the shares of Stock to be
pledged to the Seller, accompanied by a stock transfer power duly executed in
blank by the Buyer. However, the Buyer of any Stock so pledged to a Seller
will be entitled to vote the pledged shares and receive any dividends on those
shares for as long as the promissory note secured by the Stock Pledge Agreement
is not in default.
5.5 Documentary Stamps. Whenever any Stock is sold pursuant to
this Agreement, the Buyer shall pay all necessary documentary excise taxes and
shall affix to the appropriate documents (and cancel) all requisite documentary
tax stamps.
6. MANAGEMENT MATTERS
6.1 Voting Agreement. For the term of this Agreement, the
Shareholders shall exercise in every election of directors their voting and
consensual rights and powers, an shareholders of the Company, to assure the
election of the Original Shareholders who own at least 2% of the outstanding
voting stock of the Company as directors of the Company and shall not vote to
remove them from those positions. Additionally, as long as the Convertible
Demand Promissory Note dated July , 1994, in the principal amount of
$1,000,000 (the "Note") payable by the Company to Lee R. Kemberling
("Kemberling") has not been paid in full or, if Kemberling converts the Note to
Stock pursuant to the terms of the Note, and as long as Kemberling owns at
least 2% of the outstanding voting Stock of the Company, the Shareholders shall
exercise their voting and consensual
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<PAGE> 13
rights and powers, as shareholders of the Company, to assure the election of
Kemberling to the Company's board of directors and shall not vote to remove him
from that position.
6.2 Major Corporate Transactions. Notwithstanding anything in
this Agreement to the contrary, the following actions by the Company require
the consent or affirmative vote of each of the Original Shareholders, in
addition to any other vote, consent, or approval required by law or otherwise:
(a) issue or reissue any stock or other equity
securities, or any debt securities convertible into equity securities,
or any rights, options, or warrants to acquire any equity securities;
(b) make or declare a dividend or other distribution in
cash, securities, or other property on any of the Company's stock or
other securities;
(c) amend the Company's bylaws or articles of
incorporation;
(d) relocate the Company's place of business;
(e) engage in any business other than the business now
conducted by the Company or in any activity or transaction not in the
usual and ordinary course of business;
(f) make any change in the salary of any salaried
employee, grant any incentive compensation to any salaried employee,
or pay any incentive compensation to any salaried employee;
(g) hire, terminate, or layoff any salaried employee of
the Company;
(h) establish any new employee benefit or welfare plans
or materially modify any existing employee benefit or welfare plan;
(i) enter into any transaction (including loans) with any
Related Party, except for transactions in the usual and ordinary
course of business on terms that are not less favorable than those
that could be obtained in a comparable arm's length transaction with a
person who is not a Related Party;
(j) acquire the capital stock of any corporation
(including the Company) or an equity interest in any other person
including, without limitation, a partnership, joint venture, limited
liability
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<PAGE> 14
company, or other operating business, the creation, acquisition, or
establishment by any means of a subsidiary, and the redemption,
repurchase, or other acquisition any of the Company's outstanding
capital stock, except (1) as permitted or required by this Shareholder
Agreement, (2) stock or other securities received in settlement of a
debt that was created in the usual and ordinary course of business,
and (3) certificates of deposit and readily marketable securities
issued or guaranteed by the United States of America;
(k) a merger, dissolution, liquidation, consolidation,
recapitalization, reorganization, or share exchange of or by the
Company, or a sale of all or any significant part of the Company's
assets (except in the usual and ordinary course of business and
whether or not constituting substantially all the Company's assets);
(1) approve or revise the Company's annual capital
budget;
(m) any capital expenditure not in the Company's approved
annual budget (including capitalized leases and interest costs) or any
capital expenditure in excess of $20,000 that is included in the
Company's approved annual budget;
(n) create, assume, issue, or incur any indebtedness in
excess of $20,000 per obligation, except for accounts payable incurred
in the usual and ordinary course of business;
(o) extend, endorse, or guarantee, or become a surety,
accommodation party, or responsible for, any indebtedness or other
obligation of any other person, except for guarantees and
endorsements made in connection with the deposit of items for
collection or trade credit extended to customers in the usual and
ordinary course of business;
(p) prepay, redeem, retire, or otherwise acquire for
value any indebtedness in amounts greater or at times earlier than
required by agreements and instruments existing on the date of this
Agreement: other than accounts payable in the usual and ordinary
course of business;
(q) Incur, create, enter into, or assume a commitment to
enter into or make any payment under any lease, contract, arrangement,
or other commit-
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<PAGE> 15
ment (oral or written), if immediately thereafter, the aggregate of
all such payments to be made in any consecutive 12-month period would
exceed $5,000, unless the lease, contract, arrangement, or other
commitment is terminable at will by the Company upon not more than 30
days' advance notice;
(r) make a gift, loan, advance, political contribution,
or charitable contribution to or in any person, except loans and
advances to employees of up to $2,000 for ordinary and necessary
business expenses; and
(s) enter into any new hospital or customer contract,
agreement, or arrangement.
The Company agrees that, if necessary to enforce the terms of this section, it
shall amend its Articles of Incorporation, effective as of the execution date
of this Agreement, to include the foregoing restrictions.
7. GENERAL PROVISIONS
7.1 Corporate Law Restriction. Notwithstanding anything in this
Agreement to the contrary, the Company shall make payments on promissory notes
issued pursuant to this Agreement only to the extent allowed by applicable
Florida law. If any payments required under any promissory note issued by the
Company pursuant to this Agreement exceed any limitation imposed by applicable
Florida corporate law, the Company shall, and the Shareholders shall cause the
Company to: (a) pay as much on the promissory note as applicable Florida
corporate law allows; (b) refrain from paying any bonus compensation, declaring
any dividends (in cash, stock, or other property), or making any other
distributions in respect of the Stock, until the promissory note has been fully
paid in cash; and (c) remain obligated to pay the remaining indebtedness on the
promissory note as and when the Company's financial condition permits it to
lawfully do so.
7.2 Restrictive Legend. The Company and the Shareholders shall
place on each Company stock certificate evidencing shares of the Stock subject
to this Agreement a legend substantially as follows: "Transfer of the shares
represented by this certificate is restricted by the provisions of a
Shareholder Agreement dated July 28, 1994, among the Company and certain of
its shareholders. The shares evidenced by this certificate cannot be
transferred except as provided In that Shareholder Agreement. The Company will
furnish to any Shareholder, upon request and without charge, a full statement
of these restrictions."
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<PAGE> 16
7.3 Termination of Agreement.. This Agreement will terminate
automatically upon the occurrence of any of the following events:
(a) dissolution of the Company (unless the Company is
reinstated within 90 days after an involuntary dissolution);
(b) the merger of the Company into another corporation, a
share exchange in which the Company becomes a subsidiary of another
corporation, or a sale of all or substantially all the assets or
outstanding voting stock of the Company to one or more Prohibited
Transferees;
(c) the execution by all the parties bound by this
Agreement of an agreement of termination; or
(d) the ownership by a single Shareholder of all the
outstanding Stock subject to this Agreement.
Termination pursuant to clause (a) above will be effective on the effective
date of dissolution. Termination pursuant to clause (b) above will be
effective on the closing date of the applicable transaction. Termination
pursuant to clause (c) above will be effective, as of the date specified in the
agreement of termination. Termination pursuant to clause (d) above will be
effective on the date of the death of the last Shareholder or sale of Stock
that results in only one remaining Shareholder. Notwithstanding the foregoing
provisions of this section 7.3, this Agreement will survive any termination
until: (i) every promissory note issued pursuant to this Agreement has been
fully paid in cash; and (II) every other obligation of the Company to purchase
a Shareholder's Stock that arose before the termination of this Agreement has
been fully discharged.
7.4 Prohibited Action. Except as otherwise provided in this
Agreement, a Shareholder shall not (a) pledge or otherwise encumber any of his,
her, or its Stock as security for any loan or other indebtedness, (b) create a
voting trust with respect to his, her, or its Stock, (c) grant a proxy or
irrevocable proxy with respect to his, her, or its Stock, or (d) otherwise
subject his, her, or its Stock to any other voting agreement or shareholder
agreement, unless the pledge or encumbrance in approved in writing in advance
by all the other Shareholders or the proxy, trust, or agreement confers all
rights and powers with respect to the Stock (including voting rights) on a
party to this Agreement and permits that party to exercise all rights and
powers attendant to the subject Stock in his, her, or its sole, unfettered
discretion.
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<PAGE> 17
7.5 Company Distribution of Net Income. To the extent such
distributions are allowed by applicable Florida law, before April 1 of each
year during the term of this Agreement, the Company shall distribute to its
shareholders that percentage of its annual net income for the preceding
calendar year equal to five percent above the highest marginal income tax rate
for ordinary income imposed on individuals by the Internal Revenue Code of
1986, as amended, unless the distribution of a greater percentage of income is
unanimously approved by the Original Shareholders, as well as approved by other
requisite shareholder action.
8. MISCELLANEOUS
8.1 Notices. Every notice, request, demand, consent, approval, or
agreement required or permitted by this Agreement will be validly given only if
it is in writing and delivered personally or by telecopy, commercial courier,
or first class, postage prepaid, United States mail (whether or not certified
or registered and regardless of whether a return receipt is requested or
received by the sender), and addressed by the sender to every requisite
recipient at his address set forth below, or at such other address as a party
subsequently designates by notice to the other parties that is given and
effective in accordance with the provisions of this section. Except for
Transfer Notices and other notices of transfer that this Agreement expressly
provides are effective only on receipt, a validly given notice, request,
demand, consent, approval, or agreement will be effective on the earlier of its
receipt, if delivered personally or by telecopy or commercial courier, or the
third day after it is postmarked by the United States Postal Service, if
delivered by first class, postage prepaid United States mail. Each party
promptly shall notify the others of any change in its mailing address set forth
below.
8.2 Binding Effect. This Agreement inures to the benefit
of, and is binding on, the parties' respective heirs, successors, and
assignees. If a Shareholder's spouse owns Stock during the term of this
Agreement, the rights and obligations created by this Agreement apply to the
spouse and his or her Stock during the term of this Agreement to the same
extent as they apply to the Shareholder and his or her Stock.
8.3 Modification and Assignment. A waiver, amendment, extension,
cancellation, or modification of this Agreement or any provision of it will be
valid and effective only if it is in writing and signed by each party to this
Agreement. This Agreement is not assignable by any party without the prior
written consent of the other parties, and any attempted assignment by a party
without the prior written consent of the other parties will be invalid and
unenforceable against the other parties. If a party validly assigns this
Agreement, all
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<PAGE> 18
references to the party in this Agreement will include his or her assignee.
8.4 Arbitration of Disputes. If any dispute arises with respect to
this Agreement between two or more of the parties to it, each party to the
dispute shall use its best efforts to resolve the dispute. If, after 30 days
the dispute has not been resolved, any of the parties may elect to submit the
dispute to mediation by an independent certified circuit civil mediator
selected jointly by the parties by giving notice to the other parties of its
election to mediate (the "Mediation Notice"). If a party elects to mediate a
dispute, the other parties must mediate the dispute, although the result of the
mediation will not be binding on either party. If the parties fail to jointly
select a mediator within 20 days after the effective date of the Mediation
Notice, each party shall submit to the other party a proposed list of not less
than eight certified circuit civil mediators to mediate the dispute within 35
days after the effective date of the Mediation Notice. A party who fails to
submit a proposed list of mediators within the prescribed 35-day period waives
the right to select a mediator and the other party may select the mediator. If
both parties timely submit their proposed lists of mediators, each party shall
select two mediators from the other party's list and the Company's regular
legal counsel shall blindly select the mediator from a box containing the names
of each mediator so selected on a "3 x 5" card. The mediator shall convene a
meeting of the parties to the dispute within 60 days after his or her
appointment.
Any party to a dispute that arises with respect to this Agreement may
elect to submit the dispute to binding arbitration before a panel of
arbitrators in accordance with the Florida Arbitration Code and the Florida
Evidence Code after the conclusion of the mediation of the dispute by giving
the other parties a notice of arbitration in accordance with section 8.1 (the
"Arbitration Notice"). If the parties do not resolve the dispute through
mediation, arbitration will be the sole and exclusive method of resolving the
dispute. All parties must arbitrate the dispute, and each party will be
barred from filing a lawsuit concerning the subject matter of the dispute,
except to obtain an equitable remedy.
The parties shall make every effort to select a mutually acceptable
Florida corporate lawyer who is rated "AV" by Martindale-Hubbell law directory
to arbitrate the dispute. If within 10 days after the effective date of the
Arbitration Notice the parties are unable to select such an arbitrator, an
arbitration panel will be selected. The arbitration panel will consist of
three arbitrators selected by agreement of the parties to the dispute. At
least one of the arbitrators must be a Florida corporate lawyer who is rated
"AV" by Martindale-Hubbell law directory. Each party shall select an
arbitrator within 20 days after the effective date of the Arbitration
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<PAGE> 19
Notice. A party who fails to select an arbitrator within the prescribed 20-day
period waives the right to select an arbitrator, and the arbitrators chosen by
the other parties will constitute the "arbitration panel" for purposes of this
Agreement. If each party selects an arbitrator, the two arbitrators so
selected shall select the third arbitrator.
Every mediator or arbitrator must be independent (not a lawyer or
relative of a party to this Agreement or an officer, director, employee, or
shareholder of the Company) without any economic or financial interest of any
kind in the outcome of the mediation or arbitration. Each arbitrator's conduct
will be governed by the Code of Ethics for Arbitrators in Commercial Disputes
(1986) that has been approved and recommended by the American Bar Association
and the American Arbitration Association.
Within 60 days after the effective date of their election or
appointment, the arbitration panel shall convene a hearing for the dispute to
be held on such date and at such time and place in Tampa, Clearwater, or St.
Petersburg, Florida, as the arbitration panel designates upon 45 days' advance
notice to the parties to the dispute. The arbitration panel shall render its
decision within 30 days after the conclusion of the hearing. The decision of
the arbitration panel will be binding and conclusive as to all the parties to
the dispute and, upon the pleading of any party to the dispute, any court
having jurisdiction may enter a judgment of any award rendered in the
arbitration, which may include an award of any damages. The arbitration panel
shall hear and decide the dispute based on the evidence produced,
notwithstanding the failure or refusal to appear by a party who has been duly
notified of the date, time, and place of the hearing.
8.5 Legal Proceedings; Governing Law. Each party to this
Agreement (a) consents to the personal jurisdiction of the state and federal
courts having jurisdiction in Pinellas County, Florida, (b) stipulates that the
proper, exclusive, and convenient venue for any legal proceeding arising out of
this Agreement is Pinellas County, Florida, for state court proceedings, and
the Middle District of Florida, for federal district court proceedings, and (c)
waives any defense, whether asserted by a motion or pleading, that Pinellas
County, Florida, or the Middle District of Florida, is an improper or
inconvenient venue. EACH PARTY TO THIS AGREEMENT KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES THE RIGHT TO A JURY TRIAL IN ANY LAWSUIT BETWEEN THE PARTY
AND ANY OTHER PARTY WITH RESPECT TO THIS AGREEMENT.
In any mediation, arbitration, or litigation (including appellate
proceedings) arising out of this Agreement;, the losing party shall reimburse
the prevailing party, on demand, for all costs and expenses (including legal
fees, costs, and expenses) that are incurred by the prevailing party as a
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<PAGE> 20
result of the mediation, arbitration, or litigation. The validity,
construction, enforcement, and interpretation of this Agreement are governed by
the laws of the State of Florida and the federal laws of the United States
of America, excluding the laws of those jurisdictions pertaining to resolution
of conflicts with laws of other jurisdictions.
8.6 Execution and Effective Date. The parties may execute this
Agreement in counterparts. Each executed counterpart will be considered an
original document, and all executed counterparts, together, will constitute the
same agreement. This Agreement will become effective with respect to the
original parties to it as of its stated execution date, when each of those
parties has executed and delivered to the others a counterpart of this
Agreement. This Agreement will become effective as to every ensuing
shareholder when he, she, or it executes a counterpart of this Agreement and
agrees to be bound by it as a Shareholder.
8.7 Time of Essence. Time is of the essence with respect to the
exercise and performance of the parties' respective rights and duties under
sections 2.3, 2.4, 3.1-3.3, 4.1-4.3, 4.6, 5.1-5.5, and 6.1-6.6.
EXECUTED: July 28, 1994, In Tampa, Florida.
[signatures continued on next page]
STERILE RECOVERIES, INC.
28100 U.S. Highway 19 North
Suite 201
Clearwater, FL 34621
ATTEST: BY: /s/ Richard T. Isel (SEAL)
-----------------------
Richard T. Isel
President
/s/ James T. Boosales
- -----------------------------
Secretary
WITNESSES: SHAREHOLDERS
/s/ JAMES T. BOOSALES
- ----------------------------- ----------------------
JAMES T. BOOSALES
- ----------------------------- 13561 Verde Drive
(As to Mr. Boosales) Palm Beach Gardens,
Florida 33410
- -----------------------------
/s/ RICHARD T. ISEL
- ----------------------------- -----------------------------
(As to Mr. Isel) RICHARD T. ISEL
3505 Turtlebrooke
Clearwater, Florida 34621
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<PAGE> 21
/s/ WAYNE R. PETERSON
- ------------------------------- -----------------------------
WAYNE R. PETERSON
- ------------------------------- 2779 Camden Road
(As to Mr. Peterson) Clearwater, Florida 34619
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<PAGE> 22
APPENDIX "A"
[NOTE: FLORIDA DOCUMENTARY STAMP TAXES
ARE PAYABLE UPON EXECUTION OF THIS PROMISSORY NOTE]
PROMISSORY NOTE
$[Principal Amount] [Closing Date], 199[ ]
Clearwater, Florida
The undersigned ("Payor"), for value received, promises to pay to the
order of [ Name of Seller ] ("Payee") or to any subsequent holder of this Note,
at [Seller's Address], or at such other place as the holder of this Note
designates by notice to Payor, in legal tender of the United States of America,
the principal amount of [ ] AND /100 ($[ ]), together with simple
interest on the unpaid principal amount, from the date of this Note until it
becomes due and payable, at a fixed annual rate of 1.5% above the "Base Rate"
(as defined below) on the date of this Note. Payor shall pay the principal
amount of this Note in three, equal, consecutive, annual installments on each
anniversary of the date of this Note, beginning on [ ], 199[ ], and
ending on [ ], 199[ ], when a final payment of all accrued interest and
outstanding principal under this Note will be due and payable. Payor shall pay
the accrued interest on this Note concurrently with each installment of
principal.
For purposes of this Note, the "Base Rate" means the general level of the
base rate charged on corporate loans at large United States money center
commercial banks that is published in The Wall Street Journal as the "prime
rate" or, if The Wall Street Journal ceases to publish that rate, the rate of
Interest set and announced by Nations Bank of Florida, N.A. as its "base rate"
or "prime rate."
Interest is payable on demand on each overdue Installment of interest or
principal from the date when due until paid at an annual rate equal to the
greater of 18% or the highest annual rate of interest then allowed by
applicable Florida law. If any interest or principal is or becomes due and
payable on a day that is a Saturday, Sunday, or holiday observed by financial
institutions in Tampa, Florida, the due date of the payment will be extended
automatically to the next succeeding day that Is not a Saturday, Sunday, or
holiday observed by financial Institutions in Tampa, Florida, and, during the
extension, Payor shall pay interest on the outstanding principal amount at the
rate specified for the payment of interest before maturity. Each payment on
this Note will be applied first to accrued interest then to principal.
<PAGE> 23
This Note is issued in connection with the purchase by Payor from Payee of
shares of common stock of Sterile Recoveries, Inc. (the "Company"), a Florida
corporation, pursuant to a Shareholder Agreement dated July , 1994, among the
Company and certain shareholders of the Company. Payor shall prepay this Note
to the extent of all proceeds received by Payor upon Payee's death from any
insurance owned by Payor on the life of Payee. Until this Note has been paid
in full, Payor shall remit to Payee promptly (and in any event within 48 hours
after receipt) all proceeds of any insurance owned by Payor on the life of
Payee, in the form received (except for any endorsement or assignment required
to transfer it to Payee), for application to the amounts due under this Note.
Payor otherwise may prepay this Note in full at any time or in part from time
to time, without penalty, premium, or prior notice to the holder of this Note,
in integral multiples of $100.
The occurrence of one or more of the following events will constitute a
"Default" under this Note:
(a) The nonpayment of any interest or principal under this Note within
five days after it is due;
(b) The death of the Payor, if the Payor Is a natural person;
(c) The dissolution, liquidation, or termination of Payor, if
Payor is not a natural person (except for an involuntary dissolution of a
corporation by the Department of State of Florida that is subsequently
reinstated within 90 days);
(d) The insolvency, appointment of a trustee or receiver for Payor, or
filing by Payor (or by a creditor against Payor) of a petition seeking
relief under any bankruptcy or debtor relief law; or
(e) If the Payor is the Company, a merger of the Company into another
corporation, a share exchange pursuant to which the Company becomes a
subsidiary of another corporation, or a sale of substantially all the
assets or voting stock of the Company to a third party.
If a Default occurs, the holder of this Note, without advance notice to Payor,
may accelerate the maturity of this Note and declare the entire unpaid
principal amount of this Note and all accrued interest on it to be immediately
due and payable, and the holder of this Note may otherwise proceed to protect
its rights in the manner provided by applicable law.
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<PAGE> 24
[NOTE: Include the following paragraph only if the Payor is the Company.]
Notwithstanding anything in this Note to the contrary, Payor shall pay
installments of principal and interest due under this Note only If and to the
extent that payment of a distribution to its shareholders could then be made
under applicable Florida law. If any payments required under this Note exceed
any limitation imposed by applicable Florida law, Payor shall: (a) pay as much
of each payment as applicable Florida law allows; (b) refrain from declaring
any dividends (in cash, stock, or other property) or making any other
distributions in respect of its common stock, until the payment has been fully
paid in cash; and (c) remain obligated to pay the remaining indebtedness of
this Note as and when Payor's financial condition permits it to lawfully do so.
Payor and every other person liable at any time for payment of this Note
(i) waive presentment, protest, notice of protest, and notice of dishonor, (ii)
consent to all extensions and renewals of this Note (as a whole or in part) and
all delays in time of payment or other performance under this Note that the
holder of this Note grants at any time and from time to time, without
limitation and without notice to or further consent of Payor, (ii) consent to
the personal jurisdiction of the state and federal courts having jurisdiction
over Pinellas County, Florida, (iv) stipulate that the proper, exclusive, and
convenient venue for any legal proceeding relating to the enforcement of this
Note is Pinellas County, Florida, for a state court proceeding, and the Middle
District of Florida, for a federal district court proceeding, and (v) waive any
defense, whether asserted by motion or pleading, that those venues are improper
or inconvenient. Payor shall pay all costs incurred by the holder of this Note
in enforcing or collecting this Note, including all attorneys' fees, costs, and
expenses incurred in connection with all matters of interpretation,
enforcement, and collection, whether or not pursuant to litigation or before or
after demand for payment, and regardless of whether incurred before, during,
or after trial, appellate, mediation, arbitration, bankruptcy, or
judgment-execution proceedings.
Every demand or notice required or permitted by this Note will be valid
only if it is in writing and delivered personally or by telex, telecopy,
telegram, commercial courier, or first class, postage prepaid, United States
mail (whether or not certified or registered and whether or not a return
receipt is requested or received by the sender), and addressed, If to Payor, at
Payor's address listed below, and if to Payee, at the address specified in the
first paragraph of this Note, or at such other address as Payor or the holder
of this Note may have designated to the other by notice given in accordance
with this paragraph. A validly given demand or notice will be effective on the
earlier of its receipt, if delivered personally or by telex, telecopy,
telegram, or com-
-3-
<PAGE> 25
mercial courier, or the third day after it is postmarked by the United States
Postal Service, if delivered by first class, postage prepaid, United States
mail. Each party promptly shall notify the other of any change in its mailing
address listed in this Note.
DUE: [ ], 199[ ]
[SIGNATURE BLOCK FOR INDIVIDUAL PURCHASER]
WITNESSES: -----------------------------------------
Name:
------------------------------------
Address:
---------------------------------
- ------------------------------ ------------------------------------------
- ------------------------------
STATE OF FLORIDA
COUNTY OF PINELLAS
The foregoing document was acknowledged before me on _______, 199_ ,
by ___________, who is personally known to me or has produced ______________ as
identification.
---------------------------
Notary Public
--------------------------------
[SIGNATURE BLOCK FOR COMPANY, IF IT IS PAYOR]
STERILE RECOVERIES, INC.
28100 U.S. Highway 19 North
Suite 201
Clearwater, Florida 34621
WITNESSES: By:
---------------------------------
Name:
-----------------------------
Title:
- ----------------------- ------------------------------
- -----------------------
-4-
<PAGE> 26
STATE OF FLORIDA
COUNTY OF PINELLAS
The foregoing document was acknowledged before me on _______ , 199_,
by _____________, as _____________ of Sterile Recoveries, Inc., a Florida
corporation, on behalf of the corporation. He/She is personally known to me or
has produced _______________ as identification.
-------------------------------
Notary Public
-5-
<PAGE> 27
APPENDIX "B"
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement") Is executed by [Name of
Buyer] ("Debtor") and [Name of Seller] ("Secured Party").
BACKGROUND
Pursuant to a Shareholder Agreement dated July , 1994, Secured Party sold
to Debtor [ No. of Shares] shares of the common stock of Sterile Recoveries,
Inc. (the "Company"), a Florida corporation. Debtor has executed and delivered
to Secured Party a promissory note dated on or about the date of this Agreement
payable by Debtor to the order of Secured Party in the principal amount of
$[ ] (the "Note") as partial payment of the purchase price or that common
stock. The Shareholder Agreement requires Debtor to grant to Secured Party a
security interest In certain shares of the Company common stock purchased by
Debtor to secure the prompt payment of the Note.
OPERATIVE TERMS
Debtor and Secured Party agree as follows:
1. Grant of Security Interest. To secure the prompt and punctual payment
of (a) the Note, (b) all costs of collection, and (c) all costs incurred in
connection with realizing the value of the security provided by this Agreement
if the Note is in Default (including without limitation appraisal fees,
broker-dealer fees, and attorneys' fees) (collectively, the "Liabilities"),
Debtor grants to Secured Party a first security interest in (i) [No. of Shares]
shares of the Company's common stock, $.001 par value, that are registered in
Debtor's name on the stock transfer records of the Company and are listed on
Schedule I to this Agreement (the "Shares"), (ii) all additional shares or
other property or securities that are receivable or otherwise distributable at
any time and from time to time in respect of, or in exchange or substitution
for, the Shares, and (iii) all proceeds of the foregoing. As used in this
Agreement, the term "Collateral" refers to all the property described in this
section 1, as well as any part of it or any interest in it.
2. Delivery of Shares. To perfect the security interest granted above,
Debtor shall deliver to Secured Party immediately following its execution and
delivery of this Agreement, and thereafter promptly upon its receipt of any
Collateral, the certificates or other muniments of title evidencing Debtor's
ownership of the Collateral. Upon delivery to Secured Party, each stock
certificate must be either duly indorsed in blank by Debtor or accompanied by a
stock transfer power duly executed in blank by Debtor. Each delivery of
Collateral re-
<PAGE> 28
quired by this section must be accompanied by a schedule specifying the number
of shares or other property or securities.
3. Assurances. Debtor covenants to Secured Party that, except for the
security interests granted to Secured Party by this Agreement: (a) Debtor is
and will be the sole legal and equitable owner of the Collateral given to
Secured Party; (b) the Collateral is and will be free and clear of all liens,
assessments, encumbrances, adverse claims, and security interests of every kind
and nature; (c) Debtor has authority to deliver, assign, convoy, pledge, and
transfer the Collateral to Secured Party under this Agreement; and (d) Debtor
has not and will not sell, assign, convey, pledge, transfer, hypothecate, or in
any other way encumber or dispose of the Collateral.
4. Voting and Other Rights. As long as Debtor is not in Default and
subject to the valid exercise of Secured Party's rights and remedies under the
Uniform Commercial Code in effect for the State of Florida in the event of
Default, Secured Party shall not transfer any Collateral into its name or any
other person's name, and Secured Party will not be entitled to exercise the
voting and consensual rights and powers attendant to the Shares. However,
Secured Party is entitled to receive for application to the amounts due under
the Liabilities every dividend or other distribution that is paid or made in
respect of the Shares during the term of this Agreement. Until the Liabilities
have been fully paid, Debtor shall hold all cash or other property that it
receives as a dividend or other distribution in respect of the Shares under an
express trust for the sole benefit of Secured Party and immediately deliver
that cash or property to Secured Party within 48 hours after Debtor receives it
in the form received (except for any indorsement or assignment required to
transfer it to Secured Party) for application to the amounts due under the
Liabilities. After and during the continuance of a Default by Debtor, (a)
Secured Party, upon notice to Debtor and the Company, will have the sole and
absolute right to exercise all the voting and consensual rights and powers of
the Shares, even if the Shares are not registered in its name, (b) upon request
and delivery to the Company of the certificates evidencing the Shares, Secured
Party may register all or any portion of the Shares in its or its nominee's
name, and the Company promptly shall register the transfer of those Shares so
requested, and (c) when those Shares have been registered in the name of
Secured Party, Secured Party will be (i) vested with, and will have the
exclusive and irrevocable right and authority to exercise, all voting and
consensual rights and powers attendant to those Shares and (ii) entitled to
receive and retain all dividends and other distributions made by the Company on
account of those Shares.
5. Default Remedies. The occurrence of any of the following events will
constitute a "Default" under this Agreement
-2-
<PAGE> 29
and the Liabilities (notwithstanding any provision to the contrary in any
agreement, instrument, or other document evidencing any of the Liabilities):
(a) any event occurs that constitutes a "Default" under the Note; (b) Debtor
fails to perform any of its obligations under this Agreement; or (c) any
representation or warranty made by Debtor to Secured Party in this Agreement is
or becomes false or misleading in any material respect. At any time after a
Default, Secured Party, at its option, without notice to Debtor, may (i)
accelerate the maturities of all or any of the Liabilities (notwithstanding the
provisions of them) and declare them to be immediately due and payable, and
(ii) exercise from time to time all rights and remedies of a secured creditor
under applicable law, including the Uniform Commercial Code in effect for the
State of Florida. Secured Party may exercise any of its rights or remedies
serially, wholly, partially, or collectively, and the exercise of any one right
does not preclude the exercise of any other right. Any notice of sale,
disposition, or other intended action by Secured Party that is given to Debtor
at its address specified in this Agreement at least ton calendar days before
the action is taken will constitute reasonable notice of disposition to Debtor.
Expenses of holding, preparing for sale, and the like include Secured Party's
attorneys' fees, costs, and expenses. Secured Party may apply any proceeds
from a disposition of any Collateral toward payment of any of the Liabilities,
In such order of application as Secured Party elects in its sole discretion,
and Debtor is liable to Secured Party for any deficiency between the proceeds
realized upon any disposition of the Collateral and the amount of the
Liabilities remaining unpaid. Secured Party may exercise its right to collect
the Liabilities, and to enforce any other security for them, before or after
taking any action under this Agreement. Debtor promptly shall pay to Secured
Party all costs incurred by Secured Party in collection of the Liabilities and
enforcement of its rights under this Agreement.
Because of Debtor's position in relation to the Shares, or because of the
nature of the transaction by which Debtor acquired the Shares, or because of
other present or future circumstances, a disposition of the Shares permitted
under this Agreement might be restricted by the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the Securities and
Exchange Commission under that Act (collectively, the "Federal Securities
Laws"). Debtor acknowledges that compliance with the Federal Securities Laws
could very strictly limit the extent or manner of disposition of the Shares by
Secured Party or any subsequent transferee. Similarly, other legal
restrictions or limitations on disposition of the Shares might be imposed by
applicable Blue Sky or other state securities laws. Debtor releases Secured
Party from all liability as a result of a sale of the Shares at any private
sale. Debtor waives any claim against Secured Party arising because the price
at which the Shares might be sold at a private sale
-3-
<PAGE> 30
is less than the price that might have been obtained at a public sale or is
less than the aggregate amount of the Liabilities, even if Secured Party
accepts the first offer received and does not offer the Shares to more than
one prospective purchaser. However, Secured Party shall use reasonable effort
for 20 calendar days to dispose of the Shares at the highest obtainable price.
Without limiting the generality of the foregoing and merely as an example, the
foregoing provisions would apply if Secured Party was to place the Shares for
private placement by an Investment banking firm, or if the investment banking
firm purchased the Shares for its own account, or if Secured Party sold the
Shares privately to one or more purchasers.
6. Termination. This Agreement and the security interest of Secured
Party under it will terminate when the Liabilities are paid and performed in
full, but only if Debtor does not file (and no creditor of Debtor files against
Debtor), within 91 calendar days after the first date when all the Liabilities
are paid and performed in full, a petition seeking relief under any bankruptcy
or debtor relief law and a claim for recovery or repayment of any amount paid
on the Liabilities or for avoidance of any security interest in the Collateral.
An affidavit or written statement of Secured Party, or any duly appointed
agent or attorney-in-fact for Secured Party, that shows or asserts that any
principal or interest under the Note or Liabilities remains unpaid will
constitute presumptive evidence of the continuing effectiveness of this
Agreement, and any interested person is authorized to rely on it. Upon
termination of this Agreement, Secured Party shall reassign and deliver to
Debtor the Collateral that is then held by Secured Party under this Agreement
and has not been sold or otherwise applied pursuant to the terms of this
Agreement.
7. Legal Proceedings. The validity, construction, enforcement, and
Interpretation of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the
laws of those jurisdictions pertaining to resolution of conflict with laws of
other jurisdictions. Debtor consents to the personal jurisdiction of the state
and federal courts having jurisdiction in Pinellas County, Florida, stipulates
that the proper, convenient, and exclusive venue for any legal proceeding
pertaining to this Agreement is Pinellas County, Florida, for state court
proceedings, and the Middle District of Florida, for a federal district court
proceeding, and waives any defense, whether asserted by notion or pleading,
that those venues are improper or inconvenient. In any legal proceeding
between Debtor and Secured Party that pertains to the validity or enforcement
of this Agreement or Secured Party's security interest. In the Collateral
granted under it, the losing party shall pay the prevailing party, on demand,
for all costs that
-4-
<PAGE> 31
are incurred by the prevailing party as a result of the legal proceeding.
8. Notices. Each notice required or permitted under this Agreement will
be valid only if it is in writing and delivered personally or by telex,
telecopy, telegram, commercial courier, or first class, postage prepaid United
States mail (whether or not certified or registered and regardless of whether a
return receipt is received or requested by the sender) and addressed by the
sender to the party who is the intended recipient at the address listed for
that party in this Agreement, or to such other address as the party may have
designated by notice given to the other party in accordance with the provisions
of this section. A validly given notice will be effective on the earlier of
its receipt, if delivered personally or by telex, telecopy, telegram, or
commercial courier, or the third day after it is postmarked by the United
States Postal Service, if delivered by United States mail. Each party promptly
shall notify the other of any change in its mailing address listed In this
Agreement.
9. Miscellaneous. Time is of the essence of this Agreement. This
Agreement will become effective as of its stated date of execution, when it has
been executed by Debtor and Secured Party. Any waiver, amendment,
modification, or termination of this Agreement will be valid and effective only
if it is in writing and signed by Debtor and Secured Party. In addition, a
written waiver of a Default under this Agreement will not operate as a waiver
of any other Default or of a succeeding Default under the same provision or as
a waiver of the provision itself. A delay, omission, or course of dealing on
the part of Secured Party in exercising any right, power, or remedy will not
operate as a waiver of it, except when this Agreement expressly requires the
right, power, or remedy to be exercised within a specified time, and a single
or partial exercise by Secured Party of any right, power, or remedy does not
preclude any further exercise of it or to the exercise of any other right, power
or remedy. The exercise or nonexercise by Secured Party of any right, power,
or remedy does not constitute a waiver of a Default by Debtor under this
Agreement. As used in this Agreement, (a) the word "including" in always
without limitation, (b) words in the singular number include words of the
plural number and vice versa, (c) neuter words should be construed to include
correlative feminine and masculine words, and (d) the word "costs" includes all
the fees, costs, and expenses of experts, witnesses, collection agents, and
supersedeas bonds, and all attorneys' fees, costs, and expenses, whether
incurred before, during, or after demand or commencement of legal proceedings,
and whether incurred pursuant to trial, appellate, mediation, bankruptcy,
arbitration, or judgment-execution proceedings. This Agreement inures to the
benefit of Secured Party and its assigns and
-5-
<PAGE> 32
successors and is binding on Debtor and its assigns and successors.
EXECUTED: ________________, 199_, in Tampa, Florida.
[SIGNATURE BLOCK FOR NATURAL PERSON]
WITNESSES: ------------------------------
Name:
Address: -------------------------
------------------------
- -------------------------------- ------------------------------
- --------------------------------
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing document was acknowledged before me on ________________,
199_, by ____________________, who is personally known to me or has produced
___________________ as identification.
-------------------------------
Notary Public
-------------------------------
[SIGNATURE BLOCK FOR CORPORATION]
[NAME OF CORPORATION]
WITNESSES: By:
----------------------------
Name:
- ----------------------------- -----------------------
Title:
-----------------------
Address:
------------------------
- ------------------------------ ----------------------------
-6-
<PAGE> 33
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing document was acknowledged before me on _____________, 199_,
by ____________________, as _______________ of______________________,
Inc. __________, a [________] corporation, on behalf of the corporation.
He/She is personally known to me or has produced ___________________ as
identification.
--------------------------------
Notary Public
-7-
<PAGE> 34
SCHEDULE I
PLEDGED SHARES
------------------------
Description of No. of Stock
Name of Debtor Securities Shares Cert. No.
-------------- --------------- ---------- -----------
Common stock,
$.001 par value,
of Sterile
Recoveries, Inc.
<PAGE> 35
AMENDMENT TO SHAREHOLDER AGREEMENT
This Amendment to Shareholder Agreement (this "Amendment") amends the
Shareholder Agreement (the "Shareholder Agreement") dated July 28, 1994,
among Sterile Recoveries, Inc. (the "Company"), Richard T. Isel, Wayne R.
Peterson, and James T. Boosales as "Original Shareholders" and other
shareholders who subsequently have signed counterparts to the Shareholder
Agreement. The undersigned shareholders of the Company agree as follows:
1. Section 7.3. The following is added as the last sentence of
Section 7.3:
This Agreement will also terminate automatically on the completion of a
registered offering of the Stock under the Securities Act of 1933.
2. Section 8.3. The first sentence of Section 8.3 is modified to
state as follows:
A waiver, amendment, extension, cancellation, or modification of this
Agreement or any provision of it will be valid and effective only if it is
in writing and signed by Lee R. Kemberling and each party to this
Agreement who is an Original Shareholder.
3. Full Force and Effect. Except as modified by this Amendment, the
Shareholder Agreement remains in full force and effect in accordance with its
terms.
4. Counterparts. The parties may execute this Amendment in counterparts.
Each executed counterpart will be considered an original document, and all
executed counterparts, together, will constitute the same agreement.
EXECUTED: as of February 20, 1996
/s/ Richard T. Isel /s/ Bert T. Martin, Jr.
- ----------------------------- ----------------------------
RICHARD T. ISEL BERT T. MARTIN, JR.
/s/ Wayne R. Peterson /s/ Jeffrey Isel
- ----------------------------- ----------------------------
WAYNE R. PETERSON JEFFREY ISEL
/s/ James T. Boosales /s/ David S. Felman
- ----------------------------- ----------------------------
JAMES T. BOOSALES DAVID S. FELMAN
/s/ Lee R. Kemberling
- -----------------------------
LEE R. KEMBERLING
<PAGE> 36
STERILE RECOVERIES, INC.
JOINDER IN SHAREHOLDER AGREEMENT
(to be appended to Shareholder Agreement)
The undersigned joins in the foregoing Shareholder Agreement of
Sterile Recoveries, Inc., a Florida corporation, dated July 28, 1994, among
James T. Boosales, Richard T. Isel, and Wayne R. Peterson, and agrees to be
bound by its terms.
EXECUTED: September 13, 1995
/s/ LEE R. KEMBERLING
---------------------------------
LEE R. KEMBERLING
<PAGE> 37
STERILE RECOVERIES, INC.
JOINDER IN SHAREHOLDER AGREEMENT
(to be appended to Shareholder Agreement)
The undersigned joins in the foregoing Shareholder Agreement of Sterile
Recoveries, Inc., a Florida corporation, dated July 28, 1994, as amended, among
James T. Boosales, Richard T. Isel, and Wayne R. Peterson, and agrees to
be bound by its terms.
EXECUTED: as of February 26, 1996 /s/ CLAYTON W. PAGE
---------------------------------
CLAYTON W. PAGE
<PAGE> 38
STERILE RECOVERIES, INC.
JOINDER IN SHAREHOLDER AGREEMENT
(to be appended to Shareholder Agreement)
The undersigned joins in the foregoing Shareholder Agreement of Sterile
Recoveries, Inc. (the "Company"), a Florida corporation, dated July 28, 1994,
among the Company, James T. Boosales, Richard T. Isel, Wayne R. Peterson, and
Lee R. Kemberling, and agrees to be bound by its terms as a shareholder of the
Company.
EXECUTED: December 15, 1995
/s/ DAVID S. FELMAN
---------------------------------
DAVID S. FELMAN
/s/ J. JEFFERY ISEL
---------------------------------
J. JEFFERY ISEL
/s/ BERTRAM T. MARTIN, JR.
---------------------------------
BERTRAM T. MARTIN, JR.
<PAGE> 1
EXHIBIT 10.7
FACTORING AGREEMENT AND SECURITY AGREEMENT
STERILE RECOVERIES, INC.
METRO FACTORS, INC.
Walnut Glen Tower / Suite 1099, Box 57 / 8144 Walnut Hill Lane / Dallas, Texas
75231 / P.O. Box 38604 / Dallas, Texas 75238 (214) 363-4557 / Texas
1-800 288-0600 / National 1-800-327-2274 / FAX (214) 369-1944
<PAGE> 2
Rev. 12/01/92
FACTORING AGREEMENT AND SECURITY AGREEMENT
(GENERAL - FLEX FEE)
This Agreement is made as of the last date signed below between the
CLIENT identified on the last page of this Agreement (herein called CLIENT) and
METRO FACTORS, INC., a Texas corporation with its principal place of business
located in Dallas, Texas (herein called METRO). For good and valuable
consideration, the receipt of which is hereby acknowledged, CLIENT agrees to
sell to METRO and METRO agrees to purchase from CLIENT accounts receivable for
the sale of inventory or goods or the rendering of services or labor (herein
called BILLS) upon the following terms and conditions:
1. DEFINITIONS:
1.1 CUSTOMER. That person or business entity legally obligated to
pay a BILL sold and/or assigned by CLIENT to METRO.
1.2 BILL. Any right to payment (account receivable, note, contract,
etc.) for the sale of inventory or goods or the rendering of
services or labor by CLIENT.
1.3 NON-RECOURSE BASIS. The purchase of BILLS from CLIENT by METRO
wherein METRO assumes the CREDIT RISK of a CUSTOMER.
1.4 CREDIT RISK. Non-payment by a CUSTOMER of a BILL within one
hundred twenty (120) days after the date of such BILL when such
non-payment is due solely to the insolvency and financial
inability of a CUSTOMER to pay as evidenced by the filing of a
petition under any Chapter of the Federal Bankruptcy Act by or
against such CUSTOMER within the one hundred twenty (120) day
period immediately following the date of such BILL. At the end
of such one hundred twenty (120) day period, whether or not
METRO has been paid by the CUSTOMER, if such non-payment is due
solely to the CREDIT RISK of the CUSTOMER, CLIENT'S account with
METRO shall be credited as fully as if METRO had received
payment from the CUSTOMER.
1.5 RECOURSE BASIS. The purchase of BILLS from CLIENT by METRO
wherein CLIENT retains the risk of non-payment of a BILL by a
CUSTOMER for any reason whatsoever.
1.6 DISPUTE. Any defense, dispute, offset, or claim asserted by a
CUSTOMER with respect to a BILL whether valid or invalid.
1.7 NET CASH EMPLOYED. The total outstanding and unpaid
face amount of BILLS purchased by METRO from CLIENT minus
CLIENT'S RESERVE FUND on the day such figure must be determined.
1.8 MAXIMUM NET CASH EMPLOYED. The MAXIMUM NET CASH
EMPLOYED shall not exceed $4,000,000.
2. SALE OF ACCOUNTS. In CLIENT'S sole discretion, CLIENT shall
determine the CUSTOMERS whose BILLS are to be offered for sale
to METRO; however, if any BILLS of a particular CUSTOMER are offered
for sale to METRO, all BILLS due from that particular CUSTOMER shall
be offered for sale to METRO. All such BILLS offered for sale to METRO
shall be identified by separate and subsequent written assignments in
a form approved by METRO. CLIENT will immediately upon sale of BILLS
to METRO make proper entries on its books and records disclosing the
absolute sale of all such BILLS to METRO.
3. CREDIT APPROVAL. METRO reserves the right to approve the credit of
any CUSTOMER prior to the purchase of any BILL due from such CUSTOMER
and if credit is approved, whether such credit is approved on a
NON-RECOURSE BASIS or on a RECOURSE BASIS. METRO may, but shall not
be obligated to, establish maximum credit limits upon any CUSTOMER.
METRO may withdraw any credit approval at any time before delivery or
performance by CLIENT. All BILLS are purchased by METRO on a RECOURSE
BASIS unless METRO has issued a written approval
of the purchase of BILLS on a NON-RECOURSE BASIS on METRO's form
entitled "Credit Approval Request" and then only the BILLS issued
during the time stated on such form unless such approval has been
withdrawn with notice to CLIENT.
4. ADVANCES (NET CASH EMPLOYED). During the first 60 day period
of this Agreement CLIENT shall have the right at any time to
be advanced funds from METRO in an amount up to 95.0% of the
total face amount of outstanding and unpaid BILLS purchased
from CLIENT by METRO, subject to the adequacy of the RESERVE
FUND as provided herein. During the next 30 day period of
this Agreement CLIENT shall have the right at any time to be
advanced funds from METRO in an amount up to 90.0% of the
total face amount of outstanding and unpaid BILLS purchased
from CLIENT by METRO after that date, subject to the adequacy
of the RESERVE
1
<PAGE> 3
FUND as provided herein. During the next 30 day period of
this Agreement CLIENT shall have the right at any time to be
advanced funds from METRO in an amount up to 85.0% of the
total face amount of outstanding and unpaid BILLS purchased
from CLIENT by METRO after that date, subject to the adequacy
of the RESERVE FUND as provided herein. Thereafter, CLIENT
shall have the right at any time to be advanced funds from
METRO in an amount up to 80.0% of the total face amount of
outstanding and unpaid BILLS purchased from CLIENT by METRO
after that date, subject to the adequacy of the RESERVE FUND
as provided herein. Notwithstanding anything to the contrary
herein, METRO shall be entitled to deduct from any advances to
CLIENT the amount of any underpayments, DISPUTES, unpaid BILLS
over 90 days old, and any fees or expenses due to METRO.
5. INTEREST, FEES, AND EXPENSES.
5.1 INTEREST ON NET CASH EMPLOYED. CLIENT agrees to pay
interest to METRO upon the NET CASH EMPLOYED at an
annual rate equal to the lessor of the BASE LENDING
RATE plus 4.0% or the maximum rate allowed by
applicable State or federal law. Such interest shall
be calculated on a daily basis upon a year consisting
of 360 days and shall be due and payable daily. BASE
LENDING RATE as used herein shall be the BASE LENDING
RATE from time to time announced by Society National
Bank, Cleveland, Ohio on the date such BASE LENDING
RATE must be determined. Each change in the BASE
LENDING RATE shall be effective without notice to
CLIENT on the date on which a change in the BASE
LENDING RATE shall have been made by the bank. The
bank charges its customers interest at rates at,
above, or below its BASE LENDING RATE. The BASE
LENDING RATE of Society National Bank is currently
7.25%. For purposes of calculating interest,
CLIENT'S account shall be credited with payments
received from CUSTOMERS after allowance of three
banking days (Collection Days) to allow sufficient
time for check clearance through the Federal Reserve
system. In no event shall the rate charged by METRO
exceed the maximum rate of interest permitted by
applicable State or Federal law. All sums of money
which shall not be paid to METRO by CLIENT when due
shall bear interest at the highest rate allowed by
the laws of the State of Texas which rate is
currently 18.0% from such due date until paid in
full.
5.2 FACTOR'S COMMISSION. CLIENT agrees to pay METRO a
commission equal to 1.25% of the face amount of BILLS
purchased by METRO from CLIENT as consideration for
METRO'S services in, among other things, making
credit investigations, supervising the ledgering and
collection of BILLS purchased hereunder, generation
of management accounting reports, and assuming the
CREDIT RISK when applicable. Such commission shall
be due and payable at the time such BILLS are
purchased and shall be deducted from any sums
otherwise due CLIENT. If the total face amount of
BILLS purchased hereunder during the initial Term or
any subsequent Renewal Term shall not equal or exceed
the minimum sum of $12,000,000, the commission for
such term shall be computed on such minimum sum.
5.3 PROCESSING FEES. CLIENT agrees to pay METRO
processing fees as follows:
A. $1.10 per BILL purchased by METRO hereunder.
B. Expedited delivery fees (Federal Express,
Express Mail, wire transfers @ $15.00 each,
etc.) incurred by METRO on behalf of CLIENT.
5.4 INITIAL SETUP FEE. CLIENT agrees to pay to METRO an
origination fee of 1.0% of the MAXIMUM NET CASH
EMPLOYED and to reimburse METRO for out of pocket
fees and expenses incurred by METRO in the
preparation of this Agreement such as public records
search fees, filing fees, and assignment stamp.
(Note: This fee can be charged to CLIENT'S RESERVE
FUND).
6. RESERVE FUND. During the first 60 day period of this
Agreement METRO may reserve and withhold from any payment or
credits otherwise to be made to CLIENT an amount in a RESERVE
FUND equal to 5.0% of the total outstanding and unpaid face
amount of BILLS purchased by METRO from CLIENT which shall
represent the unadvanced remaining portion of any such BILLS.
During the next 30 day period of this Agreement METRO may
reserve and withhold from any payment or credits otherwise to
be made to CLIENT an amount in a RESERVE FUND equal to 10.0%
of the total outstanding and unpaid face amount of BILLS
purchased by METRO from CLIENT which shall represent the
unadvanced remaining portion of any such BILLS. During the
next 30 day period of this Agreement METRO may reserve and
withhold from any payment or credits otherwise to be made to
CLIENT an amount in a RESERVE FUND equal to 15.0% of the total
outstanding and unpaid face amount of BILLS purchased by METRO
from CLIENT which shall represent the unadvanced remaining
portion of any such BILLS. Thereafter METRO may reserve and
withhold from any payment or credits otherwise to be made to
CLIENT an amount in a RESERVE FUND equal to 20.0% of the total
outstanding and unpaid face amount of BILLS purchased by METRO
from CLIENT which shall represent the unadvanced remaining
portion of any such BILLS. Any under payments on BILLS due to
a DISPUTE shall be debited to the RESERVE FUND and any over
payments on BILLS to which CLIENT is legally entitled shall be
credited to the RESERVE FUND. METRO may charge to such
RESERVE FUND any indebtedness of CLIENT to METRO. CLIENT
shall be obligated to pay METRO deficiencies, if any, in such
RESERVE FUND. METRO may withhold such additional amounts in
the RESERVE FUND as it may reasonably deem necessary to cover
and provide for any DISPUTES, unpaid BILLS purchased on a
RECOURSE BASIS which are more than ninety (90) days old, and
any other present or potential indebtedness of CLIENT to
METRO. RESERVE FUNDS in excess of those necessary to satisfy
the above requirements shall be available to be advanced to
CLIENT as CLIENT so instructs METRO. Notwithstanding the
foregoing, METRO may reserve
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and withhold from any payment or credits otherwise to be made
to CLIENT an amount equal to 5.0% of those BILLS existing at
the time of closing of the sale of AMSCO Sterile Recoveries,
Inc. to CLIENT by AMSCO International, Inc.
7. HOLD IN TRUST. If any payment of any BILLS purchased by METRO
shall be received by CLIENT from a CUSTOMER, such payment
shall be held by CLIENT in trust for METRO, separate and apart
from CLIENT'S own funds, and shall be immediately delivered to
METRO in the identical form in which it was received. Failure
to so deliver said payment shall give METRO, at its option,
the right to terminate this Agreement and/or resort to the
collection of said sums due from the RESERVE FUND and/or other
balances or credits otherwise due to or held for CLIENT by
METRO without demand or notice or to demand immediate payment
from CLIENT by cash or cashier's check. Should CLIENT come
into possession of a payment comprised of amounts owing to
both METRO and CLIENT, CLIENT shall remit such payment in the
identical form in which it was received to METRO and METRO
shall refund CLIENT'S portion directly to CLIENT or credit
CLIENT'S RESERVE FUND with CLIENT'S portion thereof when such
check has cleared the bank upon which it was drawn. Without
waiving any other right of METRO hereunder, METRO may charge
CLIENT a service fee of up to 5% of the amount of any payments
due to METRO not remitted by CLIENT as herein provided.
8. SETTLEMENT OF DISPUTE. CLIENT shall at its own expense settle
all DISPUTES, subject to METRO'S approval; but, METRO shall
have the right to settle or litigate any DISPUTE directly with
the CUSTOMER or other claimant and METRO may charge to
CLIENT'S RESERVE FUND any deficiencies, costs and expenses
including reasonable attorney's fees incurred in connection
with such DISPUTE. In the event of a DISPUTE or other breach
of warranty hereunder as to any BILL, METRO may in its
discretion immediately or at such time as METRO may elect,
charge the unpaid balance of the related BILL (or any disputed
portion thereof) to CLIENT'S RESERVE FUND; however, such
charge to CLIENT'S RESERVE FUND shall not be deemed to be a
reassignment of such BILL to CLIENT. Notwithstanding any of
the above provisions, METRO shall not proceed to settle any
DISPUTE without first having given CLIENT at least fifteen
(15) days prior written notice of its intent to settle a
DISPUTE during which time CLIENT shall have the opportunity to
repurchase any DISPUTED BILL and thereby become solely
responsible for resolving any DISPUTE related to such BILL or
BILLS. In no event shall METRO settle a DISPUTE without
CLIENT'S prior written consent so long as CLIENT is not in
default of any terms of this Agreement.
9. REPURCHASE OF UNPAID BILLS PURCHASED ON A RECOURSE BASIS. If
any BILL purchased by METRO on a RECOURSE BASIS remains unpaid
for any reason ninety (90) days after date of such BILL or
sooner if in METRO'S sole discretion such BILL is determined
to be uncollectible, CLIENT agrees to repurchase such BILLS
from METRO at the full face amount of such BILL. In any
event, if more than 25% of a CUSTOMER'S account purchased on a
RECOURSE BASIS is unpaid after ninety (90) days from dates of
the respective BILLS, CLIENT agrees to repurchase the entirety
of such account.
10. ACCOUNT STATED. All transactions between METRO and CLIENT
shall be recorded by METRO and statements of such transactions
shall be regularly supplied to CLIENT. Such statement shall
be deemed an ACCOUNT STATED unless METRO receives written
notice from CLIENT of any specific exception thereto within
thirty (30) days after date of receipt by CLIENT of such
statement.
11. WARRANTIES, REPRESENTATIONS, AND COVENANTS OF CLIENT. As an
inducement for METRO to enter into this Agreement, and with
full knowledge that the truth and accuracy of the WARRANTIES,
REPRESENTATIONS, AND COVENANTS in this Agreement are being
relied upon by METRO, CLIENT warrants, represents and/or
covenants that (a) CLIENT is property licensed and authorized
to operate its business under all applicable State and Federal
laws in the name and/or trade name designated for CLIENT at
the end of this Agreement; (b) CLIENT'S business is solvent;
(c) Each of CLIENT'S CUSTOMER'S business is solvent to the
best of CLIENT'S knowledge and belief; (d) CLIENT has good and
clear title to the BILLS sold and/or assigned to METRO and to
all property in which a security interest is granted to METRO
herein; (e) Assignment to METRO of each BILL purchased by
METRO hereunder will thereby vest absolute ownership of such
BILL in METRO free from any liens, claims, security interests,
or equities of third parties; (f) Each BILL shall, on the date
of assignment, be based upon a bona fide rendering of services
or sale of goods or products by CLIENT or AMSCO Sterile
Recoveries, Inc. and shall be a valid and enforceable
obligation of the CUSTOMER who is designated to be billed upon
the face of the BILL; (g) Such BILL shall be accepted and
retained by the CUSTOMER without assertion of any dispute; (h)
Neither CLIENT nor any employee, officer, director, agent,
shareholder, or owner of CLIENT, owns, controls, or in any way
whatsoever exercises dominion over the business of any
CUSTOMER, the BILLS of which are sold hereunder to METRO; (i)
All financial records, statements, books, or other documents
relating to the business of CLIENT which are supplied to METRO
by CLIENT or any of its authorized representatives, either
before or after the signing of this Agreement, are true and
accurate; (j) CLIENT will not transfer, pledge, or give a
security interest in any of its BILLS to any other party
during the life of this Agreement; (k) CLIENT will not change
or modify the terms of the original BILL unless METRO first
consents in writing to such change; (l) CLIENT will not permit
a lien or encumbrance to be created upon any of the BILLS sold
and/or COLLATERAL pledged herein to METRO; (m) CLIENT will
maintain such insurance covering CLIENT'S business and/or the
property of CLIENT'S CUSTOMERS as is customary or required by
law for businesses similar to the business of CLIENT and if
reasonably deemed necessary for the protection of METRO'S
interest in any BILLS or other COLLATERAL CLIENT shall name
METRO as a loss payee of any such insurance; (n) CLIENT will
promptly notify METRO in writing of any proposed or actual
change in control of the Company, location of its principal
offices, location of the office in which books and records
concerning BILLS and COLLATERAL are kept, change of CLIENT'S
name, death of any co-owner, any sale or purchase of
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<PAGE> 5
assets of CLIENT out of the regular course of CLIENT'S
business, and any other material change in the business or
financial affairs of CLIENT; (o) CLIENT will promptly pay all
sums due METRO when due or declared due; (p) Each BILL sold
and/or assigned to METRO is genuine and in all respects what
it purports to be and is not a duplicate of another BILL
covering the same charges nor has it been billed directly by
CLIENT to the CUSTOMER unless a special written agreement is
entered into by CLIENT with METRO concerning the terms of
purchase of such BILLS; (q) CLIENT will fully cooperate with
METRO in any litigation between METRO and a CUSTOMER relating
to any BILLS purchased and/or assigned to METRO hereunder,
including but not limited to furnishing at CLIENT'S expense
any witnesses (other than METRO'S employees) and documentation
which is or should be under CLIENT'S control (NOTE: If the
related BILLS were purchased on a NON-RECOURSE BASIS, failure
of CLIENT to so cooperate shall cancel the CREDIT RISK assumed
by METRO on such BILLS and CLIENT shall be liable to METRO for
all expenses incurred by METRO in such litigation if an
adverse decision is rendered against METRO therein,); (r)
CLIENT will promptly pay when due all Federal, State and local
taxes and will immediately notify METRO in writing if any such
taxes are not paid when due; (s) CLIENT will immediately
notify METRO of the filing of any Federal Tax Lien or Levy or
if any agreement is made with any taxing authority to pay out
any due and unpaid taxes; (t) CLIENT will immediately notify
METRO of the filing of any petition of bankruptcy by or
against CLIENT, the composition of CLIENT'S creditors, or the
appointment of a trustee or receiver for CLIENT'S business.
As to any BILL for which is a warranty proves incorrect, METRO
shall have the right to charge the amount of such BILL to the
RESERVE FUND immediately.
12. CHANGE IN OWNERSHIP. METRO shall have the right to
immediately terminate this Agreement if CLIENT'S ownership
changes subsequent to the execution of this Agreement that
results in a change of control.
13. BILLING REQUIREMENTS. CLIENT further warrants, represents,
and/or covenants that all BILLS submitted for sale to METRO
shall be presented to METRO within thirty (30) days after the
sale of inventory or goods or the rendering of services or
labor related to such BILL and shall conform to the following
requirements.
13.1 Be the original BILL (unless special written
arrangements are made for METRO to purchase BILLS,
the originals of which have already been delivered to
the CUSTOMER.
13.2 Be accompanied by as many additional copies as are
required by CUSTOMER plus one (1) file copy to be
retained by METRO.
13.3 Be legible.
13.4 Clearly state the full legal name and address of the
CUSTOMER and the party to whom such BILL is to be
mailed.
13.5 If requested by METRO, be accompanied by the original
purchase order and/or contract and any amendments or
modifications thereof, signed bills of lading (if
any), or proof of delivery or acceptance signed by
CUSTOMER.
13.6 Be attached to any supporting information or
documentation required by the CUSTOMER as a
precondition to payment. (Note: Copies of any and
all such documentation shall also be attached to
METRO'S file copy of the related BILL).
13.7 Be stamped or imprinted with a notice of sale of such
BILL to METRO with instructions to remit payment
directly to METRO in language approved by METRO.
13.8 Except as METRO may otherwise consent, the terms of
CUSTOMER'S payment of BILLS shall be "Net 30 days" or
less.
14. EVENT OF DEFAULT. CLIENT shall be in default of this
Agreement upon the happening of any of the following events
(herein called EVENT OF DEFAULT):
14.1 The breach of any warranty, covenant, or
representation made herein or in connection herewith,
whether written or oral, the filing of an involuntary
petition of bankruptcy against CLIENT, or the filing
of a voluntary petition in bankruptcy by CLIENT.
CLIENT will give METRO at least forty-eight (48)
hours advance notice of the filing of any voluntary
petition of bankruptcy by CLIENT. Except in the
event of fraud by CLIENT or under circumstances which
reasonably lead METRO to conclude that CLIENT is
engaging in fraudulent conduct, METRO shall give
CLIENT at least ten (10) days written notice of any
breach during which time CLIENT shall have an
opportunity to cure same.
14.2 If METRO reasonably deems itself insecure as to the
intent or ability of CLIENT to pay any indebtedness
of CLIENT to METRO when due or declared due or to
perform any obligation of CLIENT herein or attendant
hereto.
15. REMEDIES. Upon the occurrence of an EVENT OF DEFAULT, and at
any time thereafter, METRO may elect, CLIENT hereby expressly
waiving notice, demand, and presentment, to declare any and
all indebtedness hereby secured immediately due and payable.
METRO shall be entitled to all rights and remedies of a
Secured Party under the Uniform Commercial Code of
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Texas as presently existing or hereafter amended, including
the right to enter upon the premises where any COLLATERAL is
located and take immediate possession of such COLLATERAL and
remove same from such premises. To the extent deemed
reasonably necessary by METRO to aid in the collection of its
collateral, METRO shall have the right to the use of any
computer hardware or software used by CLIENT pertaining to its
accounts receivable. METRO shall be entitled to avail itself
of all such other rights and remedies as may now or hereafter
exist at law or in equity for collection of said indebtedness
and the enforcement of the covenants, warranties, and
representations herein and the resort to any one or
combination of such remedies provided hereunder shall not
prevent the concurrent or subsequent employment of any other
appropriate remedy. CLIENT shall be liable to METRO for any
deficiencies after foreclosure of METRO'S security interest
herein. The waiver by METRO of the breach of any term of this
Agreement or the compliance therewith shall not be construed
as a waiver of any subsequent breach or compliance. CLIENT
agrees to reimburse METRO for any out-of-pocket expenses
incurred by METRO as a result of an EVENT OF DEFAULT or in
connection therewith.
16. ATTORNEY'S FEES AND EXPENSES. The prevailing party in any
litigation between CLIENT and METRO shall be paid by the
non-prevailing party all costs and expenses of litigation
including but not limited to reasonable attorney's fees.
17. SECURITY INTEREST. METRO, in addition to the outright
ownership of those BILLS purchased from CLIENT hereunder, is
hereby granted a continuing security interest in all of
CLIENT'S presently owned and existing and hereafter acquired
and arising accounts receivable, all other forms of
obligations owing to CLIENT, all contract rights, chattel
paper, general intangibles including but not limited to the
RESERVE FUND held by METRO and all instruments, documents,
books, and records pertaining to any of the foregoing together
with all guarantees, securities, and liens for payment of any
BILLS and all products and proceeds of any of the foregoing.
All of the foregoing is sometimes collectively called herein
COLLATERAL. Such security interest in such COLLATERAL is to
be security for any and all obligations or indebtedness of any
kind, direct or indirect, absolute or contingent, owing by
CLIENT to METRO however incurred or evidenced and however and
whenever same shall arise or have arisen, and whether such
COLLATERAL is now or hereafter existing. METRO shall release
this security interest and reassign all BILLS purchased from
CLIENT upon repayment of all advances and other obligations of
CLIENT to METRO.
18. FINANCIAL STATEMENTS, BOOKS AND RECORDS, RIGHT OF INSPECTION.
As often as such are prepared, but not less than within thirty
(30) days after the close of each quarter, CLIENT shall
furnish METRO with a copy of CLIENT'S most recent profit and
loss statement and balance sheet. Within sixty (60) days
after the close of each fiscal year, CLIENT shall furnish
METRO with a profit and loss statement and balance sheet as of
the close of such fiscal year, prepared and signed by an
independent certified public accountant. CLIENT agrees to
timely furnish METRO such additional financial information as
METRO shall request. CLIENT agrees to provide METRO by the
10th day of each month a detailed accounts receivable ageing
reflecting all open and unpaid invoices for all non-factored
CUSTOMERS as of the last day of the immediately preceding
month. METRO and METRO'S agents shall have the right at all
times between the hours of 8:00 a.m. and 6:00 p.m. Monday
through Friday to examine and make extracts from all books and
records of CLIENT. Failure to comply with this paragraph may
at METRO'S discretion be deemed an EVENT OF DEFAULT.
19. INDEMNITY. All taxes and governmental charges imposed upon
CLIENT with respect to the sale of inventory or goods or the
rendering of services or labor by CLIENT shall be the sole
responsibility of CLIENT and CLIENT shall indemnify and hold
METRO harmless from and against all liabilities for any acts
or omissions of CLIENT.
20. NON-ASSIGNABILITY BY CLIENT. CLIENT may not assign any of its
rights or obligations hereunder without METRO'S prior written
consent; however, METRO may assign any of its rights and
remedies with respect to CLIENT.
21. AGREEMENT BINDING. This Agreement shall be binding upon
CLIENT and METRO, their heirs, successors, and assigns.
22. SEVERABILITY. The provisions of this Agreement are severable
and if any of these provisions shall be held by any court of
competent jurisdiction to be unenforceable such holdings shall
not affect or impair any other provisions hereof.
23. ENTIRE AGREEMENT. It is expressly acknowledged and agreed by
CLIENT that (a) No representations have been made, whether
oral or written, except as expressly set forth in this
Agreement or in a writing signed by a corporate officer of
METRO, or (b) If any such representations have been made and
are not expressly set forth herein, that any such
representations have no binding effect whatsoever. CLIENT has
not relied on any inducement to enter into this Agreement
except as wholly set forth herein or as communicated in
writing by a duly constituted and authorized corporate officer
of METRO. This Agreement may only be changed, modified,
supplemented or amended by a written document signed by all
parties hereto.
24. NOTICES. Notices from either party to the other shall be
given in writing and mailed postage prepaid, registered or
certified mail, or placed in the hands of a national overnight
delivery service addressed to the addresses set forth at the
end of this Agreement, or at such other address as either
party may advise the other in writing. If mailed, notice
shall be deemed to have been received three (3) days after the
date of postmark. Otherwise, notice shall be deemed to be
received upon actual receipt thereof.
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25. JURISDICTION, VENUE, WAIVER OF JURY TRIAL, AGENT FOR SERVICE
OF PROCESS. CLIENT agrees that this Agreement is accepted and
made in the State of Texas and is subject to the laws of the
State of Texas and that all sums due hereunder are payable in
the State of Texas. CLIENT subjects itself to the
jurisdiction of the courts of the State of Texas and agrees
that venue shall be in Dallas County, Texas for the purpose of
enforcement of this Agreement. Recognizing the inherent
delays at jury trials and desiring a speedy resolution of any
litigation between CLIENT and METRO, CLIENT WAIVERS IT'S RIGHT
TO TRAIL BY JURY and agrees to submit all disputed issues to
the judge of the court in which any such litigation is
pending.
26. ACCEPTANCE; TERMINATION. This Agreement will become effective
when accepted by METRO as evidenced by signature of its
President, Richard G. Worthy, or its Executive Vice President,
Joe Ring, and shall continue for a period of one hundred
eighty (180) days (the "Initial Term") and shall be
automatically renewed and extended for successive terms of one
hundred eighty (180) days (the "Renewal Terms") unless
terminated as provided hereinbelow. CLIENT and METRO shall
have the right to terminate this Agreement at the end of the
Initial Term or at the end of any Renewal Term by giving
written notice to the other at least sixty (60) days prior to
the end of such Term. Notwithstanding the foregoing, CLIENT
shall have the right to terminate this Agreement at any time
upon payment to METRO of all advances made to CLIENT by METRO
and interest earned thereon, plus any unpaid minimum factor's
commissions due. If METRO elects to terminate this Agreement
during the first one hundred eighty (180) days for any reason
other than a default by CLIENT, METRO shall refund a prorated
portion of the $40,000 origination fee determined by dividing
$40,000 by one hundred eighty (180) times the number of days
remaining in the Initial Term. Notwithstanding such notice,
CLIENT shall have no right to terminate this Agreement until
all obligations (direct or contingent) owing by CLIENT to
METRO hereunder or otherwise shall have been paid in full,
whether or not such obligations are due or are to become due
in the future. Upon the occurrence of any EVENT OF DEFAULT, or
if any guaranty of the obligations of CLIENT hereunder shall
be terminated by the guarantor, or if METRO should otherwise
reasonably deem itself insecure, METRO may at METRO'S election
consider such occurrence an anticipatory repudiation of this
Agreement and/or immediately terminate this Agreement as to
future transactions without notice. No termination of this
Agreement shall in any way affect or impair any right of METRO
arising prior thereto or by reason thereof, nor shall any such
termination relieve CLIENT or any of its guarantors of any
obligation to METRO under this Agreement or otherwise until
all of said obligations are fully paid and performed, nor
shall any such termination affect any right or remedy of METRO
arising from any such obligation, and all agreements,
warranties, representations, and covenants of CLIENT or its
guarantors shall survive termination. In the event that
CLIENT shall have breached any provision of this Agreement or
if notice of termination is given by either party, the RESERVE
FUND and any other balances or credits otherwise due by METRO
to CLIENT may be retained and applied by METRO from time to
time upon any indebtedness then or thereafter due from CLIENT
and the RESERVE FUND may at METRO'S discretion upon such
breach or notice of termination, be increased to an amount
equal to the then total unpaid face amount of all BILLS
purchased by METRO hereunder and other present or potential
indebtedness of CLIENT to METRO, whether matured or unmatured.
In such event, as the RESERVE FUND exceeds all present and
potential indebtedness of CLIENT to METRO, METRO shall remit
such excess to CLIENT.
27. POWER OF ATTORNEY. In order to carry out this Agreement,
CLIENT irrevocably appoints METRO, or any authorized designee
of METRO, as CLIENT'S special attorney-in-fact with power:
27.1 To delete CLIENT'S address on all BILLS sold and/or
assigned to METRO by CLIENT and insert METRO'S
address in its place.
27.2 To receive, accept, open and dispose of all mail
addressed to CLIENT which may come into METRO'S
possession.
27.3 To endorse the name of CLIENT on any checks or other
instruments or evidence of payment that may come into
the possession of METRO on BILLS purchased by METRO
from CLIENT or in which CLIENT has granted METRO a
security interest.
27.4 In CLIENT'S name, or otherwise, to demand, sue for,
collect and obtain releases for any and all monies
due or to become due on BILLS purchased by METRO from
CLIENT or in which CLIENT has granted METRO a
security interest.
27.5 Subject to the notification provisions in paragraph
8, to compromise, prosecute, defend, defend any
action, claim or proceeding as to BILLS purchased by
METRO from CLIENT or in which CLIENT has granted
METRO a security interest.
27.6 To notify, direct or instruct CLIENT'S CUSTOMER in
CLIENT'S name of the proper remittance address and of
procedures for making payment on any BILLS that are
sold to METRO by CLIENT or in which CLIENT has
granted METRO a security interest.
28. This Agreement includes all assumed names, tradestyles, and
divisions of CLIENT unless specifically agreed to in writing
by METRO.
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29. This Agreement is subject to receipt of the personal guaranty
of Richard Isel and Wayne Peterson in the form signed on the
same date of this Agreement on such terms and conditions
acceptable to METRO.
30. It is understood that AMSCO Sterile Recoveries, Inc. is
selling to CLIENT all of its accounts receivable existing as
of the date of closing of such sale pursuant to the terms and
conditions of Exhibit "A" which is attached hereto and
incorporated herein for all purposes (herein call 'AMSCO
Purchased Accounts"). The AMSCO Purchased Accounts are to be
subsequently assigned to METRO and provide the basis for the
initial funding under this Agreement. All representations,
covenants, and warranties of this Agreement shall apply as
fully to the AMSCO Purchased Accounts as if such accounts had
been initially generated by CLIENT.
31. CLIENT WARRANTS AND REPRESENTS TO METRO THAT CLIENT HAS READ
THIS AGREEMENT IN ITS ENTIRETY PRIOR TO SIGNING AND THAT PRIOR
TO SIGNING THIS AGREEMENT, ALL BLANKS WERE FILLED IN (EXCEPT
FOR DATES AND SIGNATURES) AND ALL ALTERNATIONS OF THIS
AGREEMENT WERE INITIALLED BY CLIENT.
32. TERMINATION. CLIENT may terminate this Agreement without any
liability or obligation at any time before METRO purchases
BILLS pursuant to it's terms.
33. This Agreement is executed by CLIENT and METRO subject to
Exhibit "A", a copy of which is to be provided to METRO
immediately upon execution thereof, the terms and conditions
of which are to be approved by METRO.
CLIENT: STERILE RECOVERIES, INC.
By: /s/ Richard T. Isel
--------------------------
Richard T. Isel, President
Date Signed: July 14 , 1994
------------------
Physical Address: 28100 U.S. Hwy. 19 North, Suite 201, Clearwater, Pinellas
County, Florida 34621
Mailing Address: Same
Attested By: /s/ James T. Boosales
--------------------------------------
James T. Boosales, Corporate Secretary
METRO FACTORS, INC.
By: /s/ Joe Ring
----------------------------------
Joe Ring, Executive Vice President
Date Signed: July 18 , 1994
--------------------------
Physical Address: 8144 Walnut Hill Lane, Suite 1099, Dallas, Dallas County,
Texas 75231-4316
Mailing Address: P. O. Box 38604, Dallas, Dallas County, Texas 75238
Attested By: /s/ Laura Kelley
---------------------------------
Laura Kelley, Assistant Secretary
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AMENDMENT TO FACTORING AGREEMENT AND SECURITY AGREEMENT
DATED JULY 18, 1994
BY AND BETWEEN
STERILE RECOVERIES, INC. AND METRO FACTORS, INC.
Notwithstanding anything to the contrary in the Factoring Agreement
and Security Agreement it is agreed by the parties as follows effective January
30, 1995:
Paragraph 5.2 of the Agreement is amended, modified and restated to
read as follows:
"FACTOR'S COMMISSION. CLIENT agrees to pay METRO a commission
equal to .8% of the face amount of BILLS purchased by METRO
from CLIENT as consideration for METRO'S services in, among
other things, making credit investigations, supervising the
ledgering and collection of BILLS purchased hereunder,
generation of management accounting reports, and assuming the
CREDIT RISK when applicable. Such commission shall be due and
payable at the time such BILLS are purchased and shall be
deducted from any sums otherwise due CLIENT. If the total
face amount of BILLS purchased hereunder during the Renewal
Term shall not equal or exceed the minimum sum of $18,000,000,
the commission for such term shall be computed on such minimum
sum."
Paragraph 26 of the Agreement is amended, modified and restated to
read as follows:
"ACCEPTANCE; TERMINATION. This Agreement will continue for a
term of one (1) year from the effective date of this Amendment
and shall be automatically renewed thereafter for successive
periods of (1) year (the "Renewal Term") unless terminated as
provided herein. METRO and CLIENT shall have the right to
terminate this Agreement at the end of any Renewal Term by
giving written notice to the other at least sixty (60) days
prior to the end of any such Term. Notwithstanding the
foregoing, CLIENT shall have the right to terminate this
Agreement at any time upon payment to METRO of all advances
made to CLIENT by METRO and interest earned thereon, plus any
unpaid minimum factor's commissions due. Notwithstanding such
notice, CLIENT shall have no right to terminate this Agreement
until all obligations (direct or contingent) owing by CLIENT
to METRO hereunder or otherwise shall have been paid in full,
whether or not such obligations are due or are to become due
in the future. Upon the occurrence of an EVENT OF DEFAULT, or
if any guaranty of the obligations of CLIENT hereunder shall
be terminated by the guarantor, or if METRO should otherwise
reasonably deem itself insecure, METRO may at METRO'S election
consider such occurrence an anticipatory repudiation of this
Agreement and/or immediately terminate this Agreement as to
future transactions without notice. No termination of this
Agreement shall in any way affect or impair any right of METRO
arising prior thereto or by reason thereof, nor shall any such
termination relieve CLIENT or any of its guarantors of any
obligation to METRO under this Agreement or otherwise until
all of said obligations are fully paid and performed, nor
shall any such termination affect any right or remedy of METRO
arising from any such obligation, and all agreements,
warranties, representations, and covenants of CLIENT or its
guarantors shall survive termination. In the event that
CLIENT shall have breached any provision of this Agreement or
if notice of termination
<PAGE> 10
is given by either party, the RESERVE FUND and any other
balances or credits otherwise due by METRO to CLIENT may be
retained and applied by METRO from time to time upon any
indebtedness then or thereafter due from CLIENT and the
RESERVE FUND may at METRO'S discretion upon such breach or
notice of termination, be increased to an amount equal to the
then total unpaid face amount of all BILLS purchased by METRO
hereunder and other present or potential indebtedness of
CLIENT to METRO, whether matured or unmatured. In such event,
as the RESERVE FUND exceeds all present and potential
indebtedness of CLIENT to METRO, METRO shall remit such excess
to CLIENT."
STERILE RECOVERIES, INC. METRO FACTORS, INC.
BY: /s/ RICHARD T. ISEL BY: /s/ RICHARD G. WORTHY
-------------------- ----------------------------
RICHARD T. ISEL, PRESIDENT RICHARD G. WORTHY, PRESIDENT
Date: February 16 , 1995 Date: February 18 , 1995
------------------- ---------------------
Attested By: /s/ James T. Boosales Attested By: /s/ Laura Kelley
--------------------- -----------------------
James Boosales, Sec. Laura Kelley, Asst. Sec.
<PAGE> 11
AMENDMENT TO FACTORING AGREEMENT AND SECURITY AGREEMENT
DATED JULY 18, 1994
BY AND BETWEEN
STERILE RECOVERIES, INC. AND METRO FACTORS, INC.
It is hereby agreed by the parties that the Initial Term of the
above referenced Factoring Agreement and Security Agreement (the "Agreement")
shall end January 29, 1995 and the Renewal Term shall begin January 30, 1995.
All other terms and conditions of the Agreement shall remain in full
force and effect.
CLIENT: STERILE RECOVERIES, INC.
By: /s/ Richard T. Isel
--------------------------
Richard T. Isel, President
Date signed: January 17 , 1995
-----------------------
Attested By: /s/ James T. Boosales
-----------------------------------
James Boosales, Corporate Secretary
METRO FACTORS, INC.
By: /s/ Richard G. Worthy
----------------------------
Richard G. Worthy, President
Date signed: January 17 , 1995
---------------------
Attested By: /s/ Laura Kelley
---------------------------------
Laura Kelley, Assistant Secretary
<PAGE> 12
SECOND AMENDMENT TO FACTORING AGREEMENT AND SECURITY AGREEMENT DATED
JULY 18, 1994
BY AND BETWEEN
STERILE RECOVERIES, INC. AND METRO FACTORS, INC.
Notwithstanding anything to the contrary in the Factoring
Agreement and Security Agreement it is agreed by the parties as follows
effective March 1, 1996:
Paragraph 4 of the Agreement is amended, modified and restated to read as
follows:
"ADVANCES (NET CASH EMPLOYED). CLIENT shall have the right at any time
to be advanced funds from METRO in an amount up to 90.0% of the total
face amount of outstanding and unpaid BILLS purchased from CLIENT by
METRO, subject to the adequacy of the RESERVE FUND as provided herein.
Notwithstanding anything to the contrary herein, METRO shall be entitled
to deduct from any advances to CLIENT the amount of any underpayments,
DISPUTES, unpaid BILLS over ninety (90) days old, and any fees or expenses
due to METRO."
Paragraph 5.1 of the Agreement is amended, modified and restated as
follows:
"INTEREST ON NET CASH EMPLOYED. CLIENT agrees to pay interest to
METRO upon the NET CASH EMPLOYED at an annual rate equal to the lesser
of the BASE LENDING RATE plus 2.0% or the maximum rate allowed by
applicable State or Federal law. Such interest shall be calculated on a
daily basis upon a year consisting of 360 days and shall be due and
payable daily as it accrues. BASE LENDING RATE as used herein shall be
the BASE LENDING RATE from time to time announced by Society
National Bank, Cleveland, Ohio on the day such BASE LENDING RATE must
be determined. Each change in the BASE LENDING RATE shall be effective
without notice to CLIENT on the date on which a change in the BASE
LENDING RATE shall have been made by the bank. The BASE LENDING RATE of
Society National Bank is currently 8.25%. For purposes of
calculating interest, CLIENT'S account shall be credited with payments
received from CUSTOMERS after allowance of three banking days
(Collection Days) to allow sufficient time for check clearance through
the Federal Reserve system. In no event shall the rate charged by METRO
exceed the maximum rate of interest permitted by applicable State or
Federal law."
Paragraph 5.2 of the Agreement is amended, modified, and restated to rad
as follows:
"FACTOR'S COMMISSION. CLIENT agrees to pay METRO a commission
equal to .4% of the face amount of BILLS purchased by METRO from CLIENT
as consideration for METRO'S services in, among other things,
making credit investigations, supervising the ledgering and collection
of BILLS purchased hereunder, generation of management accounting
reports, and assuming the CREDIT RISK when applicable. Such
commission shall be due and payable at the time such BILLS are purchased
and shall be deducted from any sums otherwise due CLIENT. If the total
face amount of BILLS purchased hereunder during the Initial Term or any
subsequent
<PAGE> 13
Renewal Term shall not equal or exceed the minimum sum of
$18,000,000, the commission for such term shall be computed on such
minimum sum."
Paragraph 6 of the Agreement is amended, modified and restated to read as
follows:
"RESERVE FUND. METRO may reserve and withhold from any payment or
credits otherwise to be made to CLIENT an amount in a RESERVE FUND equal
to 10.0% of the total outstanding and unpaid face amount of BILLS
purchased by METRO from CLIENT. Any under payments on BILLS due to a
DISPUTE shall be debited to the RESERVE FUND and any over payments on
BILLS to which CLIENT is legally entitled shall be credited to the
RESERVE FUND. METRO may charge to such RESERVE FUND any indebtedness of
CLIENT to METRO. CLIENT shall be obligated to pay METRO deficiencies,
if any, in such RESERVE FUND. METRO may withhold such additional
amounts in the RESERVE FUND as it may reasonably deem necessary to
cover and provide for any DISPUTES, unpaid BILLS purchased on a
RECOURSE BASIS which are more than ninety (90) days old, and any other
present or potential indebtedness of CLIENT to METRO. RESERVE FUNDS in
excess of those necessary to satisfy the above requirements shall be
available to be advanced to CLIENT as CLIENT so instructs METRO."
Paragraph 13.8 of the Agreement is amended, modified and restated to read
as follows:
"Except as METRO may otherwise consent, the terms of CUSTOMER'S
payment of BILLS shall be "Net 30 days" or less. Notwithstanding that
CLIENT'S BILLS are issued on terms of "Net 15 days", METRO shall treat
such BILLS as "Net 30 day" terms for purposes of aging and eligibility."
STERILE RECOVERIES, INC. METRO FACTORING, INC.
By: /s/ Richard T. Isel By: /s/ Richard G. Worthy
-------------------------- ----------------------------
Richard T. Isel, President Richard G. Worthy, President
<PAGE> 1
EXHIBIT 10.8
[Partial Amendment and Restatement as of February 1, 1996 of that certain
Purchase Money Note dated July 31, 1994 and delivered by Sterile
Recoveries, Inc. to AMSCO Sterile Recoveries, Inc., as the same was partially
amended and restated as of February 1, 1995]
AMENDED AND RESTATED PURCHASE MONEY NOTE
U.S. $9,880,832 Pittsburgh, Pennsylvania
July 31, 1994
FOR VALUE RECEIVED, AND INTENDING TO BE LEGALLY BOUND, the
undersigned, STERILE RECOVERIES, INC., a Florida corporation
("Borrower"), hereby promises to pay to the order of AMSCO STERILE
RECOVERIES, INC., a Delaware corporation ("ASRI"), in lawful money of the
United States of America in immediately available funds at the principal
office of ASRI at Two Chatham Center, Suite 1100, 112 Washington Place,
Pittsburgh, Pennsylvania 15219, or at such other location as ASRI may
designate in writing from time to time, the principal sum of Nine
Million Eight Hundred Eighty Thousand Eight Hundred Thirty-Two Dollars
($9,880,832), which shall be payable in accordance with the following
principal repayment schedule:
<TABLE>
<CAPTION>
Dates Amount of Payment
----- -----------------
<S> <C>
May 1, 1995 $ 100,000
June 1, 1995 $ 100,000
July 1, 1995 $ 100,000
August 1, 1995 $ 100,000
September 1, 1995 $ 100,000
October 1, 1995 $ 100,000
November 1, 1995 $ 100,000
December 1, 1995 $ 100,000
January 1, 1996 $ 100,000
February 1, 1996 $ 100,000
March 1, 1996 $ 100,000
April 1, 1996 $ 100,000
May 1, 1996 $ 100,000
June 1, 1996 $ 100,000
July 1, 1996 $ 100,000
August 1, 1996 $ 100,000
September 1, 1996 $ 100,000
October 1, 1996 $ 100,000
November 1, 1996 $ 100,000
December 1, 1996 $ 100,000
January 1, 1997 $ 100,000
February 1, 1997 $ 100,000
March 1, 1997 $ 100,000
April 1, 1997 $ 100,000
May 1, 1997 $ 100,000
June 1, 1997 $ 100,000
July 1, 1997 $ 100,000
August 1, 1997 $ 7,180,832
</TABLE>
Provided, however, that upon the occurrence of an Event of Default
hereunder (as defined below), the entire principal balance hereof,
together with all accrued and unpaid interest, shall become immediately due and
payable on and as of such date. This Purchase Money Note shall continue to
accrue interest at the Default Rate specified below following the
occurrence and during the continuation of any Event of Default. In addition,
principal
<PAGE> 2
outstanding under this Purchase Money Note shall be subject to
mandatory prepayment on the terms and conditions set forth in Section 3,
below.
1. Interest.
This Note shall bear interest on the average daily principal balance
hereof outstanding from the date hereof at the variable rate per annum (based
on a year of 360 days, counting the actual number of days elapsed) equal to
one and one-half percent (1.50%) above the rate per annum announced from
time to time by Mellon Bank, N.A., at its headquarters office in
Pittsburgh, Pennsylvania as its "prime rate" (the "Prime Rate"), such rate
to change automatically on the first Business Day (as defined below) of
each April, July, October and January and to remain fixed at such rate
until the first Business Day of the next calendar quarter. Interest will
be payable monthly in arrears on the first Business Day (as defined below)
of each month commencing September 1, 1994 and continuing on the first
Business Day of each succeeding month during the period that principal
remains outstanding and immediately upon any acceleration of payments under
this Purchase Money Note.
If any payment or action to be made or taken hereunder shall be stated
to be or become due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day and such
extension of time shall be included in computing interest in connection with
such payment. For purposes of this Purchase Money Note, "Business Day"
shall mean any day on which the primary business offices of Mellon Bank,
N.A. are open for business in Pittsburgh, Pennsylvania.
2. Default Interest.
Any payment not made when due hereunder shall bear interest at a rate
per annum (based on a year of 360 days and counting the actual number of
days elapsed) equal to four percent (4%) per annum above the Prime Rate in
effect from time to time (the "Default Rate"). Such interest rate will
continue to accrue before and after any judgment has been entered until the
Event of Default has been cured or all amounts due and owing under this
Purchase Money Note shall have been paid.
3. Payments by Borrower and Mandatory Prepayments.
(a) Payments of both principal and interest shall be made without
setoff, counterclaim or other deduction of any nature; provided,
however, that Borrower shall be entitled to exercise its common law offset
rights in respect of any indemnifiable loss arising under the Asset Purchase
Agreement dated July 31, 1994 between Borrower and ASRI (the "Asset Purchase
Agreement"), but only (i) following any final, non-appealable determination of
liability pursuant to the terms and conditions of such Asset Purchase
Agreement, or (ii) pursuant to any written compromise by ASRI of any
claim of Borrower for indemnifiable losses pursuant to such Asset Purchase
Agreement.
(b) Within five (5) Business Days of any Prepayment Triggering Event
(as defined below), the Borrower shall make a mandatory prepayment to ASRI of
the following amounts: (i) forty percent (40%) of the gross sales price of any
inventory, in the case of any Prepayment Triggering Event where the relevant
inventory is (y) sold to any entity with which Borrower has a continuing
written service contract or agreement and (z) the relevant inventory is subject
to a purchase money lien, or conditional sale or title retention arrangement in
favor of any unaffiliated supplier or trade creditor of Borrower, and (ii) one
hundred percent (100%) of the gross sales price of any inventory, in the case
of any other Prepayment Triggering Event. For purposes of this section,
"Prepayment Triggering Event" shall mean any sale by Borrower of its inventory,
whether or not in the ordinary course of business (provided, however, that
nothing contained in this Section 3(b) shall be construed to allow Borrower to
engage in any bulk sale of its inventory or any other transaction otherwise
prohibited by the Security Agreement (as defined below)). All mandatory
prepayments under this Section 3(b) shall be applied first to accrued but
unpaid interest and then to outstanding principal consistent with the order of
maturity of Borrower's obligations hereunder.
<PAGE> 3
(c) In addition, within five (5) Business Days of an initial public
offering of any equity securities of the Borrower, the Borrower shall make a
mandatory prepayment to ASRI of the entire outstanding principal balance
of this Note together with any interest, fees, penalties or any other sums
or amounts owing under this Note.
4. Purchase Money Security Interest.
This Note is the Purchase Money Note referred to in the Asset
Purchase Agreement, and is secured by a Purchase Money Security
Agreement of even date between Borrower and ASRI (the "Security
Agreement"). The Security Agreement contains certain representations,
warranties and covenants of Borrower and includes provisions and
remedies applicable upon the occurrence of an Event of Default
hereunder, which terms are incorporated herein by reference as though fully
set forth herein.
5. Events of Default.
The occurrence of one or another of the following events shall
constitute an "Event of Default" hereunder:
(i) Borrower fails to pay when due any amount of
principal (including any mandatory prepayment of principal under Section
3) which becomes payable hereunder;
(ii) Borrower fails to pay when due any amount of
interest payable hereunder, and such nonpayment continues for a period of
fifteen (15) days after the date when due;
(iii) Borrower defaults in the payment when due
(whether by acceleration or otherwise) of principal or interest or premium
on any other indebtedness or recourse financing arrangement of Borrower
involving indebtedness or other recourse obligations in excess of One Hundred
Thousand Dollars ($100,000) (whether evidenced by a bond, note, debenture,
deferred purchase price obligation, factoring or true sale arrangement,
capitalized lease, book entry or otherwise), provided any applicable cure
period shall have lapsed; or Borrower defaults in the performance of any
agreement under which any such indebtedness or recourse obligation is
created, if the effect of such default is to cause the holders of such
indebtedness or recourse obligation (or any person on behalf of such
holders) to accelerate the expressed maturity of such indebtedness or recourse
obligation;
(iv) Borrower fails to perform, keep or observe any term,
provision, condition, covenant, warranty or representation contained in
this Purchase Money Note or in the Security Agreement, which is required to
be performed, kept or observed by Borrower and such failure is not cured
within thirty (30) days of notification of such failure by ASRI;
(v) A default by Borrower shall occur and be continuing (any
applicable cure periods having passed) under any other agreement, document or
instrument, other than this Purchase Money Note or the Security Agreement,
to which Borrower is a party, the consequences of which can be reasonably
expected to have a material adverse effect on Borrower's business, the
collateral pledged pursuant to the Security Agreement or ASRI's interest
therein;
(vi) There shall occur any uninsured damage to or loss, theft
or destruction of any of the collateral pledged to ASRI pursuant to the
Security Agreement, which damage, loss, theft or destruction can be reasonably
expected to have a material adverse effect on Borrower's business, the
collateral pledged pursuant to the Security Agreement or ASRI's interest
therein;
(vii) Any judgment, decree or order involving the payment
by Borrower of money in excess of One Hundred Thousand Dollars ($100,000)
shall be entered against Borrower and such judgment, decree or order shall
continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied, stayed or
bonded pending appeal;
(viii) A notice of lien, levy or assessment is filed of
record with respect to all or any of Borrower's assets by the United States, or
any department, agency or instrumentality thereof, or by any state,
<PAGE> 4
county, municipal or other governmental agency, including, without
limitation, the Pension Benefit Guaranty Corporation, or if any taxes or
debts owing at any time or times hereafter to any one of such entities
becomes payable (which in the aggregate with other such claims or taxes
outstanding at the same time are in excess of Ten Thousand Dollars
($10,000)), except where any such claim for taxes owed is being disputed in
good faith by Borrower after making adequate provision for the payment
thereof;
(ix) Borrower ceases to be solvent or admits in writing its
inability to pay its debts as they mature;
(x) The collateral pledged to ASRI pursuant to the
Security Agreement or any other of Borrower's assets are attached, seized,
levied upon or subjected to a writ or distress warrant; or the collateral
pledged to ASRI or any other of Borrower's assets come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter; or
an application is made by any person other than Borrower for the
appointment of a receiver, trustee or custodian for any of Borrower's assets
and the same is not dismissed within thirty (30) days after the application
therefor;
(xi) An application is made by Borrower for the
appointment of a receiver, trustee or custodian for any of Borrower's assets;
or a petition under any section or chapter of the federal Bankruptcy Code
or any similar law or regulation shall be filed by Borrower; or Borrower
makes an assignment for the benefit of its creditors or any case or
proceeding is filed by Borrower for its dissolution, liquidation or
termination; or
(xii) Borrower ceases to conduct its business as now
conducted; or Borrower is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs
and such injunction, restraint or other preventative order is not dismissed
within thirty (30) days after the entry thereof; or a petition under any
section or chapter of the federal Bankruptcy Code or any similar law or
regulation is filed against Borrower or any case or proceeding is filed
against Borrower for its dissolution or liquidation, and such petition,
case or proceeding is not dismissed within thirty (30) days after the filing
thereof;
Upon the occurrence and continuation of an Event of Default
mentioned in any of paragraphs (i) through (viii), all of the
Borrower's obligations hereunder may, at the option of ASRI and without demand,
notice or legal process of any kind, be declared, and immediately
shall become, due and payable. Upon the occurrence of an Event of Default
mentioned in any of paragraphs (ix) through (xii), all of Borrower's
obligations hereunder shall immediately and automatically become due and
payable, without demand, notice or legal process of any kind.
6. Miscellaneous.
All capitalized terms used herein shall, unless otherwise defined herein,
have the same meanings assigned to such terms in the Security Agreement.
Except as otherwise expressly provided herein, Borrower waives
presentment, demand, notice, protest, dishonor and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Purchase Money Note and the Security Agreement.
This Purchase Money Note may be prepaid by Borrower at any time without
prepayment penalty or premium.
This Purchase Money Note shall bind Borrower and its successors and
assigns, and the benefits hereof shall inure to the benefit of ASRI and its
successors and assigns. All references herein to "Borrower" and "ASRI" shall
be deemed to apply to Borrower and ASRI, respectively, and their respective
successors and assigns. This Purchase Money Note may not be voluntarily
negotiated, assigned, transferred or participated by ASRI prior to
August 1, 1996; thereafter, it may be voluntarily negotiated, assigned or
transferred to any direct or indirect subsidiary of AMSCO International,
Inc.
This Purchase Note and any other documents delivered in connection
herewith and the rights and obligations of the parties hereto and thereto
shall, for all purposes, be governed by and construed and enforced in
accordance
<PAGE> 5
with the substantive laws of the Commonwealth of Pennsylvania without giving
effect to its principles of conflicts-of-laws.
POWER TO CONFESS JUDGMENT: BORROWER HEREBY AUTHORIZES AND
EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR BORROWER, AND, WITH
OR WITHOUT DECLARATION FILED, CONFESS JUDGMENT AGAINST BORROWER IN FAVOR
OF THE HOLDER HEREOF, AS OF ANY TERM, FOR THE UNPAID BALANCE HEREOF AND
INCLUDING WITHOUT LIMITATION ALL ACCRUED AND UNPAID INTEREST (INCLUDING
INTEREST AT DEFAULT RATE), CHARGES, EXPENSES OR OTHER IMPOSITIONS PAYABLE
HEREUNDER, WHETHER BY ACCELERATION OR OTHERWISE WITH COSTS OF SUIT WITH
RELEASE OF ALL ERRORS. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS
JUDGMENT SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH
EXERCISE SHALL BE HELD BY ANY COURT TO BE VALID, VOIDABLE OR VOID, BUT THE
POWER SHALL BE HELD BY ANY COURT TO BE VALID, VOIDABLE OR VOID, BUT THE POWER
SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS
OFTEN AS HOLDER SHALL ELECT, UNTIL SUCH TIME AS HOLDER SHALL HAVE
RECEIVED PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS.
BY SIGNING THIS INSTRUMENT, BORROWER HEREBY ACKNOWLEDGES THAT IT HAS
READ THIS NOTE, INCLUDING WITHOUT LIMITATION, THE CONFESSION SET FORTH
HEREIN, HAS HAD THE OPPORTUNITY TO HAVE THE SAME REVIEWED BY LEGAL
COUNSEL, UNDERSTANDS THE SAME, AND AGREES TO THE PROVISIONS CONTAINED
HEREIN, INCLUDING, WITHOUT LIMITATION, THE CONFESSION OF JUDGMENT
PROVISION AND UNDERSTANDS THAT A CONFESSION OF JUDGMENT CONSTITUTES A
WAIVER OF RIGHTS BORROWER OTHERWISE WOULD HAVE TO PRIOR NOTICE AND HEARING
BEFORE A JUDGMENT IS ENTERED AGAINST IT AND WHICH MAY RESULT IN A COURT
JUDGMENT AGAINST BORROWER WITHOUT PRIOR NOTICE OR HEARING AND THAT SUBJECT TO
THE PROVISIONS OF SECTION 3(a) OF THIS NOTE, THIS NOTE MAY BE COLLECTED
FROM BORROWER REGARDLESS OF ANY CLAIM BORROWER MAY HAVE AGAINST ASRI OR THE
HOLDER HEREOF.
/s/ JBH
Initial
POWER TO EXECUTE ON A JUDGMENT WITHOUT HEARING: BORROWER HEREBY
AUTHORIZES AND EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF
RECORD OR THE SHERIFF WITHIN THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE,
TO TAKE ALL ACTION ALLOWED BY OR PROVIDED FOR IN THE PENNSYLVANIA RULES
OF CIVIL PROCEDURE OR OTHER APPLICABLE RULES OF CIVIL PROCEDURE TO
EXECUTE ON ANY JUDGMENT ENTERED AGAINST BORROWER PURSUANT TO THE
CONFESSION OF JUDGMENT ENTERED AGAINST BORROWER PURSUANT TO THE
CONFESSION OF JUDGMENT SET FORTH ABOVE WITHOUT PRIOR NOTICE OR HEARING OF ANY
NATURE WHATSOEVER. NO SINGLE EXERCISE OF THE FOREGOING POWER TO EXECUTE ON
JUDGMENT WITHOUT A HEARING SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR
NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE VALID, VOIDABLE OR
VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED
FROM TIME TO TIME AS OFTEN AS THE HOLDER SHALL ELECT UNTIL SUCH TIME AS
THE HOLDER SHALL HAVE RECEIVED PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS.
BY SIGNING THIS INSTRUMENT BORROWER HEREBY ACKNOWLEDGES THAT IT HAS
READ THIS NOTE, INCLUDING WITHOUT LIMITATION, THE CONFESSION OF JUDGMENT
AND THE POWER TO EXECUTE ON A JUDGMENT WITHOUT A HEARING PROVISIONS, HAS
HAD THE OPPORTUNITY TO HAVE THE SAME REVIEWED BY LEGAL COUNSEL, UNDERSTANDS
THE SAME AND AGREES THAT THE PROVISIONS CONTAINED HEREIN, INCLUDING WITHOUT
LIMITATION, THE POWER TO CONFESS JUDGMENT AND TO EXECUTE ON JUDGMENT WITHOUT
A HEARING, AND UNDERSTANDS THAT THE POWER TO EXECUTE ON A JUDGMENT WITHOUT A
HEARING
<PAGE> 6
CONSTITUTES A WAIVER OF RIGHTS BORROWER OTHERWISE WOULD HAVE TO PRIOR NOTICE
AND A HEARING BEFORE EXECUTION ON A JUDGMENT, AND THAT SUBJECT TO THE
PROVISIONS OF SECTION 3(a) OF THIS NOTE THIS NOTE MAY BE COLLECTED FROM
BORROWER REGARDLESS OF ANY CLAIM THAT BORROWER MAY HAVE AGAINST ASRI OR THE
HOLDER HEREOF.
This Amended and Restated Purchase Money Note shall be deemed a partial
amendment and restatement only and shall not constitute a novation.
WITNESS the due execution hereof on and as of the date first above
written.
ATTEST: STERILE RECOVERIES, INC.,
a Florida corporation
- ------------------------- By: /s/ John B. Hofmann
-------------------------
Name: Name: John B. Hofmann
------------------- -------------------------
Title: Title: General Manager
------------------- -------------------------
WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN
AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE
USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR FOR FAILURE ON ITS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
<PAGE> 7
STATE OF MARYLAND
COUNTY OF HOWARD
The foregoing instrument was acknowledged before me this 5th day of
April, 1996, by John Hofmann of Sterile Recoveries, Inc., a Florida
corporation, on behalf of the corporation. He is personally known to me or
has produced Maryland drivers license as identification.
Name: /s/ Marjorie A. Ebersberger
----------------------------------
Notary Public, State of Maryland
--------------
Notary Commission No. N/A
------------------
My commmission expires:
July 1, 1996
- -----------------------
<PAGE> 1
EXHIBIT 10.9
PURCHASE MONEY SECURITY AGREEMENT
This PURCHASE MONEY SECURITY AGREEMENT is made as of July 31, 1994, by
and between AMSCO STERILE RECOVERIES, INC. ("Secured Party"), a Delaware
corporation with its chief executive offices at Suite 5000, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15219, and STERILE RECOVERIES, INC.
("Debtor"), a Florida corporation with its chief executive offices at 28100
U.S. Highway North, Suite 201, Clearwater, Florida 34621.
W I T N E S S E T H:
WHEREAS, Secured Party and Debtor are parties to an Asset Purchase
Agreement of even date (the "Asset Purchase Agreement"), pursuant to which
Secured Party is selling substantially all of its assets to Debtor;
WHEREAS, a portion of the purchase price for the assets to be acquired
under to the Asset Purchase Agreement will be paid to Secured Party pursuant to
the terms of a Purchase Money Note of Debtor in the form of Exhibit A hereto
(the "Note"); and
WHEREAS, Debtor has agreed to secure its obligations to Secured Party
under the Note upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, the parties hereto, intending to be legally bound, hereby covenant and
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 When used herein, the following terms shall have the following
meanings:
Affiliate: any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, at least 10% of
the outstanding capital stock having ordinary voting power to elect the board
of directors (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) of Debtor, or which otherwise controls, is
controlled by or is under common control with Debtor, or any stockholder of
Debtor, or any Person which controls any stockholder of Debtor. For the
purpose of this definition, "control" means the possession, directly or
indirectly, of the power to direct or to cause the direction of management and
policies, whether through the ownership of voting securities, by contract or
otherwise.
Agreement: this Purchase Money Security Agreement as the same
may be amended, extended, supplemented or replaced.
Annual Business Plan: the plan of business operation for
Debtor, which plan shall be presented (a) by month through July 1, 1995 and (b)
by quarter thereafter, as well as by fiscal year in each case, and shall
include (i) a sales forecast, (ii) a net income forecast, (iii) a capital
expenditures forecast, and (iv) a cash flow forecast.
Business Day: any day on which the primary business offices
of Mellon Bank, N.A. are open for business in Pittsburgh, Pennsylvania. Unless
specifically denoted "Business Days" herein, references to "days" shall mean
calendar days.
Charges: shall have the meaning given to it in Section
3.01(D) hereof.
<PAGE> 2
Chattel Paper: shall have the meaning given such term under
Article 9 of the Uniform Commercial Code.
Collateral: all of the personal and real property and
interests in personal and real property described in Article 2 hereof and all
other property and interests in property which shall, from time to time, secure
payment of the Liabilities.
Contract Rights: shall have the meaning given such term under
Article 9 of the Uniform Commercial Code.
Debtor: Sterile Recoveries, Inc., a corporation organized and
existing under the laws of the State of Florida.
Default: shall have the meaning specified in Section 5.01.
Default Interest Rate: shall be the Default Rate per annum
specified in the Note, calculated on the basis of a 360-day year and counting
the number of days actually elapsed.
Documents: shall have the meaning given such term in Section
2.01(F) hereof.
Dollars and the symbol $: lawful money of the United States
of America, in such cash or currency thereof as at the time of payment is legal
tender for the payment of public and private debts.
Environmental Complaint: any complaint, order, citation or
adverse notice with regard to air emissions, water discharges, or any other
environmental, health or safety matter affecting Debtor or any of Debtor's real
or personal property from any governmental agency.
Environmental Law: any and all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions, controls,
sanctions or remedies relating to the environment or the placement or release
of any materials into the environment.
Equipment: all of Debtor's now owned or hereafter acquired
fixtures and equipment, including without limitation, furniture, vehicles and
trade fixtures, but excluding any such fixtures and equipment located at
Debtor's facility in Sugar Land, Texas.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended.
Event of Default: any of the events, conditions, acts or
omissions defined as such in the Note.
Fixtures: shall have the meaning given such term in Article 9
of the Uniform Commercial Code, but shall exclude any fixtures located at
Debtor's facility in Sugar Land, Texas.
Fundamental Change: Debtor enters into, causes, permits or
suffers at any time, directly or indirectly: (a) any transaction involving an
acquisition, merger, consolidation, or amalgamation of Debtor with or into any
other Person, (b) Debtor's liquidation, winding up or dissolution, or (c) any
conveyance, sale, lease, assignment, transfer or other disposition, in one
transaction or a series of related or unrelated transactions, to any one or
more Persons, of all or substantially all of the Debtor's property, business or
assets, whether now owned or hereafter acquired.
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<PAGE> 3
GAAP: generally accepted accounting principles, consistently
applied, which shall include, without limitation, the official interpretations
thereof as defined by the Financial Accounting Standards Board, its
predecessors and successors.
General Intangibles: shall mean and include all intangible
personal property of every kind and nature (other than accounts receivable, as
defined by the Uniform Commercial Code) now owned or hereafter acquired by
Debtor, including, without limitation, choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, trademarks, trade names, trade secrets, good will, copyrights,
registrations, licenses, franchises, tax refund claims and computer programs.
Hazardous Materials: shall include, but shall not be limited
to, any chemical, material, substance or waste (including without limitation
petroleum products) (collectively and individually, a "substance") which is or
may become injurious to the public health, safety, or welfare or to the
environment or which otherwise is deemed or determined to be extremely
hazardous, hazardous, toxic or otherwise a pollutant or contaminant (including
without limitation any substance defined as a "hazardous substance" or a
"pollutant or contaminant" in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq.,
or any substance defined as a "hazardous waste" or as hazardous, toxic or a
pollutant by the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901, et seq., or the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Section 1801, et seq.), and any other substances the
ownership, possession, use, handling, storage, generation, treatment, burial,
deposit, transport, presence, release, spill, discharge, leak, dumping or
disposal of which is regulated under any other federal, state or local
Environmental Law.
Indebtedness: (i) all obligations of Debtor for borrowed
money, (ii) all obligations of Debtor evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of Debtor to pay the deferred
purchase price of property or services, including trade accounts payable
arising in the ordinary course of business, (iv) all obligations of Debtor as
lessee under capital leases, (v) all obligations of Debtor to reimburse any
bank or other person in respect of amounts actually paid under a letter of
credit or similar instrument (vi) all debt of others secured by a lien on any
asset of Debtor, whether or not such debt is assumed by Debtor, (vii) all debt
of others guaranteed by Debtor and (viii) all factoring, true sale or other
receivables financing arrangements between Debtor and any other party.
Instruments: shall have the meaning given such term in
Article 9 of the Uniform Commercial Code.
Inventory: any and all goods, merchandise and other personal
property, including, without limitation, goods in transit, wheresoever located
and whether now owned or hereafter acquired by Debtor which is or may at any
time be held as finished goods, raw materials, or work-in-process, including,
without limitation, (a) all such property the rental, sale or other disposition
of which has given (or may give) rise to the generation of any account
receivable, (b) all such property which has been returned to or repossessed or
stopped in transit by Debtor, and (c) all packing, shipping and advertising
materials relating to all or any such property.
Liabilities: all of Debtors liabilities, obligations and
Indebtedness to Secured Party of any and every kind and nature (including,
without limitation, interest, fees, charges, expenses, attorneys' fees,
indemnities and other sums chargeable to Debtor by Secured Party and future
advances made to or for the benefit of Debtor) arising under this Agreement,
the Note or under any of the Other Agreements, whether heretofore, now or
hereafter owing, arising, due or payable from Debtor or Secured Party, whether
as drawer, maker, endorser, guarantor, surety or otherwise and howsoever
evidenced created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or liquidated or otherwise, including obligations of
performance (but excluding any liabilities, obligations and Indebtedness to
Secured Party arising under the Asset Purchase Agreement or the Service
Agreement (as such terms are defined in the Asset Purchase Agreement).
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<PAGE> 4
Lien: any mortgage, pledge, security interest, encumbrance,
lien, charge, Charge or claim upon property of any kind, whether or not
voluntarily given (including without limitation any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction, and the
recording of or agreement to provide any instrument for recording under the
recording or other laws of any state or other jurisdiction).
Material Adverse Change: means any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Agreement, (b) is or could reasonably be expected to be material
and adverse to the condition (financial or otherwise) or business operations of
Debtor or to the prospects of Debtor, (c) materially impairs or could
reasonably be expected to materially impair the ability of Debtor to duly and
punctually pay or perform the Liabilities or (d) materially impairs or could
reasonably be expected to materially impair the ability of Secured Party to
enforce its legal remedies pursuant to this Agreement or any Other Agreement;
provided, however, that in the case of clauses (a) and (d), above, such an
event or circumstance shall not include a situation arising solely out of the
actions or activities of Secured Party.
Maximum Permissible Dividend Rate: a dividend rate determined
as follows: the Debtor shall determine the net increase in federal income tax
and state income tax liabilities of each of its shareholders for any year in
which Debtor is a Subchapter S corporation on account of items of income, loss,
or credit attributable to the respective shareholders for federal income tax
and state income tax purposes. The Debtor shall then divide the amount so
determined with respect to each shareholder by the number of shares of the
Debtor's common capital stock held by that shareholder. The highest quotient
obtained by such calculation shall be the Maximum Permissible Dividend Rate for
each shareholder.
Note: The Purchase Money Note of Debtor attached hereto as
Exhibit A.
Other Agreements: all Supplemental Documentation and all
agreements, instruments and documents, including, without limitation, the Note,
the chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, reimbursement agreements,
financing statements, subordination agreements, trust account agreements and
all other written matter whether heretofore, now or hereafter executed by or on
behalf of Debtor with respect to or in connection with the lending transaction
contemplated by this Agreement (excluding, however, the obligations of Debtor
to Secured Party arising under the Asset Purchase Agreement and the Service
Agreement.
Permitted Liens: shall mean
(a) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business and which are not yet due and
payable;
(b) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation, or to participate in any
fund in connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs;
(c) Liens of landlords, mechanics, materialmen,
warehousemen, carriers, or other like liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable;
(d) Liens, security interests or mortgages in favor of
Secured Party;
(e) Liens in favor of landlords of Debtor if such liens
are subordinated in writing to Secured Party's Prior Security Interest;
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<PAGE> 5
(f) Liens on Debtor's accounts receivable in favor of
Metro Factors, Inc. perfected as of the date hereof;
(g) Liens securing the obligations of Debtor to pay the
deferred purchase price of property or services, provided such obligations are
incurred in the ordinary course of Debtor's business and do not exceed at any
one time an aggregate principal balance of $500,000;
(h) Liens in favor of Lee R. Kemberling against Debtor's
equipment and fixtures located at its Sugar Land, Texas facility;
(i) Pre-existing liens against Debtor's assets which were
perfected or attached to such assets during the period Secured Party had title
to and ownership of such assets; and
(j) Liens granted in favor of any secured party in
connection with any extension, renewal, modification, amendment, refinancing or
replacement of any secured obligation of Debtor existing on the date hereof,
provided such extension, renewal, modification, amendment, refinancing or
replacement does not increase the original principal balance of the secured
obligation existing as of the date hereof.
Person: any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency body or department thereof).
Reportable Event: an event described in Section 4043(3) of
ERISA.
Schedule of Inventory: the Schedule of Inventory referred to
in Section 2.05 hereof.
Secured Party's Prior Security Interest: the security
interest granted to Secured Party hereunder.
Solvent: means that, at fair valuation thereof, the sum of
all of Debtor's assets exceeds all Indebtedness and Debtor is able to pay all
of its Indebtedness as it becomes due.
Stock: all shares, options, rights, equity interests,
participations or other equivalent interests (howsoever designated) of or in a
corporation, whether voting or non-voting, including, without limitation,
common stock, warrants, preferred stock, convertible debentures and all
agreements, instruments and documents convertible (in whole or in part, upon
the occurrence of some contingency or otherwise) to any one or more or all of
the foregoing.
Supplemental Documentation: agreements, instruments,
documents, financing statements, warehouse receipts, bills of lading,
landlord's and warehouseman's waivers, and other written matter necessary or
requested by Secured Party to perfect and maintain and continue Secured Party's
Prior Security Interest and Secured Party's first priority Lien in the
Collateral.
Uniform Commercial Code: the Uniform Commercial Code of the
Commonwealth of Pennsylvania, as amended from time to time.
1.02 Other Terms. All other terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings ascribed to
them by the Uniform Commercial Code to the extent the same are used or defined
therein. Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP.
1.03 Rules of Construction. The words "hereunder," "hereof" and
"herein" refer to this Agreement as a whole and not to any particular article,
section, subsection or clause contained in this
- 5 -
<PAGE> 6
Agreement unless the context requires otherwise. The words "above" or "below"
in a section refer to elsewhere in that section as the context requires.
ARTICLE II
COLLATERAL: GENERAL TERMS
2.01 Security Interest in Personal Property. To secure the prompt
payment to Secured Party of the Liabilities, Debtor hereunder grants to Secured
Party a continuing security interest in and to all of the following property
and interests in property of Debtor, whether now owned or existing, hereafter
acquired or arising, or in which Debtor now or hereafter has any rights, and
wheresoever located (the "Collateral"):
(A) Equipment;
(B) Inventory;
(C) All monies, residues and property of any kind of
Debtor now or at any time hereafter in the possession or under the control of
Secured Party or a bailee of Secured Party;
(D) All General Intangibles, Contract Rights, Chattel
Paper constituting customer service contracts, Fixtures and Instruments;
(E) All accessions to, substitutions for and all
replacements, products or proceeds of the foregoing, including, without
limitation, proceeds of insurance policies insuring the aforesaid collateral
and documents covering the aforesaid collateral, and property received wholly
or partly in trade or exchange for such collateral, and all rents, revenues,
issues, profits and proceeds arising from the sale, lease, license,
encumbrances, collection of any other temporary or permanent disposition of
such items or any interest therein, whether or not they constitute "proceeds"
as defined in the Uniform Commercial Code; and
(F) All books, records, documents and ledger receipts of
Debtor pertaining to any of the foregoing, including, without limitation,
customer lists, credit files, computer records, computer programs, storage
media and computer software used or required in connection with generating,
processing and storing such books and records or otherwise used or acquired in
connection with documenting information pertaining to the aforesaid Collateral
("Documents").
Secured Party's security interest hereunder does not extend to (i)
accounts receivable of Debtor or chattel paper other than customer service
contracts or (ii) any reserve fund maintained by Metro Factors, Inc. for the
benefit of Debtor.
2.02 Perfection. Debtor acknowledges that it is the intent of
Debtor and Secured Party that all personal property and Fixtures now owned or
hereafter acquired by Debtor shall be Collateral to secure the Liabilities. To
the extent that Article 9 of the Uniform Commercial Code does not govern the
creation and/or perfection of Secured Party's Prior Security Interest intended
to be created hereunder, Debtor agrees to execute and deliver such further
documents and instruments as Secured Party may from time to time request in
order to, in the opinion of counsel to Debtor, adequately create and fully
perfect a valid first priority Lien in favor of Secured Party with respect to
such property.
2.03 Further Assurances. Debtor shall execute and deliver to
Secured Party, at any time hereafter, all Supplemental Documentation that
Secured Party may reasonably request, in form and substance acceptable to
Secured Party, and pay the costs of any recording or filing of the same.
Debtor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
Debtor, immediately upon demand therefor by
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<PAGE> 7
Secured Party, shall deliver to Secured Party any and all evidence of ownership
of any of the Equipment (including, without limitation, certificates of title
and applications for title).
2.04 Inspection. At any time or times hereafter, any of Secured
Party's officers, employees or agents shall have the right, at any time during
Debtor's usual business hours and upon forty-eight hours advance notice (except
that such notice shall not be required following the occurrence and continuance
of an Event of Default), to inspect the Collateral and all records related
thereto (and to copy excerpts from such records), and shall have access to the
premises upon which any of the Collateral is located, and the right to discuss
any matter pertaining to the Collateral.
2.05 Records and Schedules of Inventory. With respect to
Inventory, Debtor shall keep correct and accurate records, itemizing and
describing the kind, type and quantity of Inventory, Debtor's costs therefor
and sale or rental price thereof, and withdrawals therefrom and additions
thereto, and shall furnish to Secured Party a current schedule of Inventory
("Schedule of Inventory") within thirty (30) days after the end of each
calendar quarter, supported by such documents as Secured Party may reasonably
request. Unless otherwise waived by Secured Party in writing, a physical
inventory shall be conducted no less frequently than annually, and a report
based on such inventory shall promptly thereafter be provided to Secured Party
together with such supporting information, including, without limitation,
invoices relating to Debtor's purchase of goods listed in said report, as
Secured Party may reasonably request; provided, however, that Secured Party may
waive the necessity of an annual physical audit if management of Debtor and its
external auditors demonstrate to Secured Party's satisfaction that the accuracy
of Debtor's inventory system negates the necessity for such an audit.
2.06 Proceeds of Equipment. Subject to the provisions of Section
4.02(I) hereof, upon any sale, transfer, lease or other disposition of any
Equipment, Debtor shall either (i) deliver all of the cash proceeds thereof to
Secured Party, which proceeds shall be applied to the repayment of the
Liabilities consistent with their order of maturity, or (ii) use the proceeds
to finance the purchase by Debtor of replacement Equipment performing
substantially the same function, such purchase to be consummated not later than
sixty (60) days after such disposition, and shall deliver to Secured Party
written evidence of the use of the proceeds for such purchase. All such
replacement Equipment purchased by Debtor with proceeds of insurance shall be
free and clear of all Liens, except for Secured Party's Prior Security
Interest. Notwithstanding anything to the contrary in this Section 2.06,
Debtor shall have the right to sell Equipment having an aggregate market value
of $50,000 in any calendar year without complying with the requirements of this
Section 2.06.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
3.01 General Warranties and Representations. Debtor warrants and
represents to Secured Party that:
(A) Debtor has good, indefeasible and merchantable title
to and ownership of the Collateral, free and clear of all Liens except
Permitted Liens;
(B) Debtor is not involved in any labor dispute which
would have a material adverse effect on the assets, operations or financial
condition of Debtor, or on the Collateral; there are no strikes, lockouts or
walkouts relating to any labor contracts and no such contract is scheduled to
expire prior to the scheduled repayment of the Note;
(C) Debtor is not in violation of any applicable statute,
regulation or ordinance of any governmental authority having jurisdiction over
its activities, or of any order, writ, injunction or
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<PAGE> 8
decree of any court or any federal, state, municipal or other governmental
authority, which would in any respect adversely affect the Collateral or
Debtor's business, property, assets, operations or condition, financial or
otherwise;
(D) Debtor has filed all federal, state and local tax and
other reports required by law to be filed and has paid, to the extent due and
payable, all taxes, levies, assessments, charges, liens, claims or encumbrances
upon or relating to the Collateral, the Liabilities, employees, payroll, income
and gross receipts, ownership or use of any of its assets, and any other aspect
of its business or financial affairs, as the case may be (collectively, the
"Charges"), except any Charges being contested in good faith and by appropriate
proceedings; and the accruals and reserves on the books of Debtor in respect of
federal taxes are adequate and Debtor has no knowledge of any unpaid
assessments for additional federal or state taxes for any fiscal period;
(E) The Collateral and Debtor's books and records,
including, without limitation, computer programs, printouts and other computer
materials and records concerning the Collateral, are at the locations set forth
in Schedule 1 attached hereto and shall at all times hereafter be kept and/or
maintained solely at such locations or such other locations as Secured Party
may consent to in writing;
(F) The addresses specified on Schedule 1 hereto include
and designate Debtor's chief executive office, principal place of business and
other offices and places of business and constitute all of Debtor's offices and
places of business;
(G) Debtor has reviewed the schedule of Equipment in
Schedule 2 attached hereto and, to Debtor's knowledge, all Equipment is kept
and/or maintained solely at one of the addresses set forth in Schedule 1
attached hereto;
(H) Debtor was organized and incorporated under the laws
of the State of Florida and, since its date of incorporation, has not been
known by or used any other corporate or fictitious name in any jurisdiction;
(I) Debtor has sufficient capital to carry on all
businesses and transactions in which it now engaged or is about to engage, is
Solvent and will continue to be Solvent after the creation of Secured Party's
Prior Security Interest in the Collateral; and
(J) Except for the lien of Metro Factors, Inc. in certain
Chattel Paper and General Intangibles of Debtor, the liens and security
interests granted to Secured Party pursuant to this Agreement constitute valid
and perfected first priority security interests under the Uniform Commercial
Code in the Collateral.
ARTICLE IV
COVENANTS AND CONTINUING AGREEMENTS
4.01 Affirmative Covenants. From the date hereof and thereafter
until the Liabilities have been paid in full, Debtor covenants and agrees that
it shall:
(A) Keep and maintain proper books of account and
records, satisfactory to Secured Party, and prepare financial statements and
cause to be furnished to Secured Party the following (all of the foregoing and
following to be kept and prepared in accordance with GAAP, unless Debtor's
certified public accountants concur in any changes therein and such changes are
disclosed to Secured Party and are consistent with GAAP):
(i) as soon as available, but not later than one
hundred twenty (120) days after the close of each fiscal year of Debtor,
reviewed financial statements of Debtor as at the end of
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<PAGE> 9
and for such year, including a balance sheet, a statement of income and a
statement of sources and uses of funds as at the end of and for such fiscal
year;
(ii) as soon as available, but not later than
thirty (30) days from the end of each calendar month, an internally prepared
balance sheet and statements of profit and loss and a statement of changes in
financial position for the period from the beginning of the fiscal year to the
date of such statement, prepared in accordance with GAAP;
(iii) the inventory reports described in Section
2.05;
(iv) concurrently with the delivery of the
financial statements and information described in subsection (i), above, and
quarterly with the information described in subsection (ii), above, a
certificate of the Chief Financial Officer of Debtor certifying to Secured
Party that such statements are true, complete and correct, specifically stating
that Debtor is in compliance with the covenants established pursuant to the
terms hereof, that no Event of Default has occurred which was continuing at the
end of the period covered by such financial statements or on the date of such
certificate (or, if an Event of Default has occurred and was continuing at the
end of such period or on the date of the certificate, indicating the nature of
such Event of Default and the action which Debtor proposes to take with respect
thereto);
(v) on or before the last day of the first
quarter of each fiscal year of Debtor, Debtor's Annual Business Plan; and
(vi) as soon as available, but not later than
three (3) days after receipt thereof, a copy of each management letter or
similar communication from Debtor's accountants;
(B) Promptly upon, but in no event later than three (3)
Business Days after Debtor's realization of the occurrence thereof, inform
Secured Party, in writing, of (i) any litigation affecting Debtor, whether or
not the claim is considered by Debtor to be covered by insurance, and of the
institution of any suit or administrative proceeding which may adversely affect
the operations, financial condition or business of Debtor or Secured Party's
Lien on the Collateral; and (ii) any reduction in, or inability to obtain or
renew, the insurance coverages required by or contemplated under this Agreement
or in effect on the date hereof;
(C) Provide Secured Party with copies of all agreements
entered into hereafter by Debtor relating to the storage or warehousing of
Inventory and all real property leases or similar agreements between Debtor or
any of its Affiliates and any other Person, whether Debtor or its Affiliate is
lessor or lessee thereunder;
(D) Keep and maintain the Equipment in good operating
condition and repair; make all necessary replacements thereof so that the value
and operating efficiency thereof shall at all times be maintained and
preserved; and promptly inform Secured Party of any material additions to or
deletions from the Equipment;
(E) Except for Permitted Liens, pay promptly when due all
of the Charges, and promptly discharge any liens, encumbrances or other claims
against the Collateral;
(F) Keep and preserve in full force and effect its
corporate existence and promptly obtain (within thirty (30) days of the date
hereof) all necessary qualifications to do business, and shall preserve such
qualifications and pay all taxes, assessments and charges levied upon Debtor
and its income, profits and property; and
(G) Cause at all times to be kept recorded and filed all
required financing and continuation statements and all other required
Supplemental Documentation and papers, in such manner and in such places as are
required by law in order fully to perfect, preserve and protect
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<PAGE> 10
Secured Party's Prior Security Interest pursuant to this Agreement, and cause
to be paid all taxes, fees and other charges in connection with such recording
and/or filing not to exceed $5,000 in the aggregate.
4.02 Negative Covenants. From the date hereof and thereafter until
the Liabilities have been paid in full, and unless Debtor shall have obtained
the express prior written consent of Secured Party, Debtor covenants and agrees
that it shall not:
(A) Cause, permit or suffer any Fundamental Change;
(B) Make any debt or equity investment in excess of
$50,000 in any other operating business or company or in any joint venture or
partnership;
(C) Declare or pay dividends upon any of Debtor's Stock
or make any distributions of Debtor's property or assets to any Person,
including, without limitation, any Affiliates, shareholders, directors,
officers or employees of Debtor (provided, however, that so long as no Event of
Default has occurred and is continuing at the time of payment, Debtor shall be
permitted to pay stock dividends and cash dividends at the Maximum Permissible
Dividend Rate in any fiscal year of Debtor during which Debtor is a "Subchapter
S Corporation" as defined by the Internal Revenue Code of 1986);
(D) Redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of Debtor's Stock (except as otherwise required by
the Shareholders Agreement dated July 27, 1994 among Debtor's shareholders upon
the death of any of such shareholders) or make any change in Debtor's capital
structure or in any of its business objectives, purposes and operations which
might in any way adversely affect the due and punctual repayment of the
Liabilities;
(E) (i) Incur or suffer to exist any Indebtedness in
excess of (a) that reflected on Debtor's balance sheet as of this date and (b)
any additional Indebtedness not in excess of the following amounts in calendar
years 1995 and 1996:
<TABLE>
<CAPTION>
Additional
Year Indebtedness
---- ------------
<S> <C>
1994 $2,000,000
1995 $3,000,000
1996 $5,000,000
</TABLE>
(ii) make loans, advances or extensions of credit
to any other Person, except on ordinary credit terms in connection with sales
or leases of Inventory in the ordinary course of Debtor's business; or
(iii) directly or indirectly guarantee or
otherwise, in any way, become liable with respect to any obligations or
liabilities of any Person;
(F) Except for Permitted Liens, voluntarily or
involuntarily encumber, pledge, mortgage, or grant a security interest in, or
assign, sell, lease, dispose of or transfer, whether by sale, merger,
consolidation, liquidation, dissolution or otherwise, any of Debtor's assets
(other than any sale of Inventory constituting a Prepayment Triggering Event
pursuant to the Note, or sales of Equipment otherwise permitted by Section
2.06);
(G) Make any loans or advances of money (other than
routine advances for travel expenses) to officers, directors, stockholders or
Affiliates of Debtor;
(H) Make capital expenditures (including capitalized
leases) in any fiscal year exceeding the following amounts:
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<PAGE> 11
<TABLE>
<CAPTION>
Year Limit
---- -----
<S> <C>
1994 $ 700,000
1995 2,300,000
1996 4,400,000
</TABLE>
(I) Change its name or use any fictitious name, change
the location of its corporate headquarters, remove its books and records and/or
the Collateral from the locations set forth on Schedule 1 (except for removal
of Inventory upon its sale or lease or in accordance with any rental agreement,
or the movement of Equipment or Inventory between the locations set forth on
Schedule 1), or keep any of such books and records and/or the Collateral in the
ordinary course of Debtor's business at any other office(s) and location(s)
unless in any and each such case (i) Debtor gives Secured Party written notice
thereof and of the new location of said books and records and/or the Collateral
at least thirty (30) days prior thereto and (ii) the other office or location
is within the continental United States;
(J) Increase, from one fiscal year of Debtor to the next,
the aggregate compensation paid to Debtor's officers and directors by more than
ten percent (10%), or increase the compensation payable to the following
individuals by more than ten percent (10%) from one fiscal year to the next:
Richard T. Isel
Wayne R. Peterson
James T. Boosales
4.03 Payment of Charges. If Debtor, at any time or times
hereafter, shall fail to pay the Charges when due or promptly obtain the
discharge of such Charges or of any Lien asserted against the Collateral,
Secured Party may, without waiving or releasing any obligation or liability of
Debtor hereunder of any Event of Default, in its sole discretion, at any time
or times thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which Secured Party
deems advisable. All sums so paid by Secured Party, together with any and all
fees (including reasonable attorneys' fees), court costs, expenses and other
charges relating thereto, shall be due and payable by Debtor upon demand by
Secured Party, and shall be additional Liabilities hereunder secured by the
Collateral, and shall bear interest from the date due until paid by Debtor at
the Default Interest Rate.
4.04 Insurance; Payment of Premiums. Debtor shall maintain
insurance with respect to the Collateral and the use thereof with financially
sound and reputable insurers in such amounts and against such liabilities and
hazards as customarily is maintained by other companies operating similar
businesses and, in any event, in an amount satisfactory to Secured Party. Each
policy of insurance currently in effect is listed and described on Schedule 3
attached hereto. Debtor shall deliver to Secured Party the original (or a
certified copy) of each policy of insurance and evidence of payment of all
premiums therefor. Such policies of insurance shall contain an endorsement, in
form and substance acceptable to Secured Party, which shall (i) specify Secured
Party as an additional insured and as lender loss payee, as its interest may
appear, and (ii) contain such other provisions as Secured Party may reasonably
request. Each policy shall further provide that no cancellation of such
policies for any reason (including, without limitation, non-payment of premium)
nor any change therein shall be effective until at least thirty (30) days after
receipt by Secured Party of written notice of such cancellation or change.
Debtor shall notify Secured Party promptly of any occurrence causing a material
loss or decline in value of the Collateral and the estimated (or actual, if
available) amount of such loss or decline. All policies of insurance on the
Collateral shall be with insurers recognized as adequate by prudent business
persons and all such policies shall be in such amounts as may be satisfactory
to Secured Party. In the event Debtor, at any time hereafter, shall fail to
obtain or maintain any of the policies of insurance required above or to pay
any premium in whole or in part relating thereto, then Secured Party, without
waiving or releasing any obligations of or any Default by
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<PAGE> 12
Debtor hereunder, may at any time thereafter (but shall be under no obligation
to) obtain and maintain such policies of insurance and pay such premium and
take any other action with respect thereto which Secured Party deems advisable.
All sums so disbursed by Secured Party, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be due and
payable by Debtor upon demand by Secured Party, shall be additional Liabilities
hereunder secured by the Collateral, and shall bear interest from the date due
until paid by Debtor at the Default Interest Rate.
4.05 Application of Insurance and Condemnation Proceeds. Any
monies received by Secured Party constituting insurance proceeds shall be
disbursed to Debtor on such terms as are deemed appropriate by Secured Party
for the repair, restoration and/or replacement of property in respect of which
such proceeds were received.
4.06 Survival of Obligations. So long as any of the Liabilities
remain outstanding, no termination (regardless of cause or procedure) of this
Agreement or the Other Agreements shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of Debtor or Secured Party relating
to (i) any transaction or event occurring or matter existing prior to such
termination, (ii) the Collateral or (iii) any undertaking, agreement, covenant,
warranty or representation of Debtor or Secured Party with respect to such
transaction, event or matter or the Collateral.
ARTICLE V
EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
5.01 Events of Default. The occurrence or existence of any Event
of Default (as defined by the Note) shall constitute an Event of Default
hereunder.
5.02 Acceleration of Liabilities. Upon the occurrence and
continuation of an Event of Default, all of the Liabilities shall be due and
payable as provided by the Note.
5.03 Remedies. Upon and after an Event of Default, Secured Party
shall have the following rights and remedies:
(A) In addition to all of the rights and remedies
contained in this Agreement or in any of the Other Agreements, all of the
rights and remedies of a secured party under the Uniform Commercial Code or
other applicable law, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by law;
(B) The right to (i) enter upon the premises of Debtor,
without any obligation to pay rent to Debtor, through self-help and without
judicial process, without first obtaining a final judgment or giving Debtor
notice and opportunity for a hearing on the validity of Secured Party's claim,
or any other place or places where the Collateral is located and kept, and
remove the Collateral therefrom to the premises of Secured Party or any agent
of Secured Party, for such time as Secured Party may desire, in order to
effectively collect or liquidate the Collateral or (ii) require the Debtor to
assemble the Collateral and make it available to Secured Party at a place to be
designated by Secured Party, in its sole discretion; and
(C) The right to (i) sell or to otherwise dispose of all
or any Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sales or sales, with such notice as
may be required by law, in lots or in bulk, for cash or on credit, all as
Secured Party, in its sole discretion, may deem advisable; (ii) adjourn such
sales from time to time with or without notice; (iii) conduct such sales on
Debtor's premises or elsewhere and use Debtor's premises without charge for
such sales for such time or times as Secured Party may see fit. Secured Party
is hereby granted a license or other right to use, without charge, Debtor's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, and any property of a similar nature,
as it pertains to the Collateral, in advertising for sale and selling any
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<PAGE> 13
Collateral and Debtor's rights under all licenses and all franchise agreements
shall inure to Secured Party's benefit. Secured Party shall have the right
to8sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set off the amount
of such price against the Liabilities. The proceeds realized from the sale of
any Collateral shall be applied first to the reasonable costs, expenses and
attorneys' fees and expenses incurred by Secured Party for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second to interest due upon any of the Liabilities; and third to
the principal of the Liabilities. If any deficiency shall arise, Debtor shall
remain liable to Secured Party therefor.
5.04 Notice. Any notice required to be given by Secured Party of a
sale, lease, other disposition of the Collateral or any other intended action
by Secured Party, if given five (5) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to Debtor.
ARTICLE VI
MISCELLANEOUS
6.01 Appointment of Secured Party as Debtor's Lawful Attorney. In
order to permit Secured Party to take the actions described in this Section
6.01, Debtor irrevocably designates, makes, constitutes and appoints Secured
Party (and all Persons designated by Secured Party) as Debtor's true and lawful
attorney (and agent-in-fact) and Secured Party, or Secured Party's agent, may,
without notice to Debtor:
(A) At such time or times hereafter as Secured Party or
said agent, in its sole discretion, may determine, in Debtor's or Secured
Party's name, endorse Debtor's name on any checks, notes, drafts or any other
payment relating to and/or proceeds of the Collateral which come into the
possession of Secured Party or are under Secured Party's control; and
(B) Sign the name of Debtor on any of the Supplemental
Documentation and deliver any of the Supplemental Documentation to such Persons
as Secured Party, in its sole discretion, may determine is necessary to
perfect, maintain, continue or protect Secured Party's security interest in the
Collateral.
6.02 Modification of Agreement; Sale of Interest. This Agreement
and the Other Agreements may not be modified, altered or amended, except by an
agreement in writing signed by Debtor and Secured Party. Subject to the
limitation set forth in the Note on the Secured Party's right to dispose of the
Note, Debtor otherwise consents to Secured Party's participation, sale,
assignment, transfer or other disposition of its rights hereunder.
6.03 Expenses (Including Attorneys' Fees). Debtor shall pay or
reimburse Secured Party on demand for all its expenses (including, but not
limited to, attorneys' fees) of, or incidental to:
(A) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Secured Party, Debtor or any other Person) in any
state or federal court (including a bankruptcy court) or any alternative
dispute resolution forum, in any way relating or with respect to (y) the
Collateral or determining or protecting Secured Party's interests in or under
the Collateral or (z) this Agreement or any of the Other Agreements or the
performance hereof or thereof or the Liabilities or the payment or performance
thereof;
(B) Any attempt in any state or federal court (including
a bankruptcy court) or any alternative dispute resolution forum, to enforce any
rights of Secured Party against Debtor or any other Person which may be
obligated to Secured Party by virtue of this Agreement or any of the Other
Agreements; and/or
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<PAGE> 14
(C) Any attempt, whether or not in any state or federal
court (including a bankruptcy court) or any alternative dispute resolution
forum, to inspect, verify, protect, collect, sell, liquidate or otherwise
dispose of the Collateral.
Such expenses shall be additional Liabilities hereunder secured by the
Collateral. All of the foregoing expenses shall be due and payable upon demand
by Secured Party. Any such expense not paid when due shall bear interest from
the date due until paid at the Default Interest Rate.
6.04 Waiver by Secured Party. Secured Party's failure, at any time
or times hereafter, to require strict performance by Debtor of any provision of
this Agreement shall not waive, affect or diminish any right of Secured Party
thereafter to demand strict compliance and performance. Any suspension or
waiver by Secured Party of an Event of Default by Debtor under this Agreement
or the Other Agreements shall not suspend, waive or affect any other Event of
Default by Debtor under this Agreement or the Other Agreements, whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Debtor contained in this Agreement or the Other Agreements
and no Event of Default by Debtor under this Agreement or the Other Agreements
shall be deemed to have been suspended or waived by Secured Party, unless such
suspension or waiver is by an instrument in writing signed by an officer of
Secured Party and directed to Debtor specifying such suspension or waiver.
6.05 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law. If, however, any provision of this Agreement shall be
prohibited by or be invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement, unless the ineffectiveness of such provision materially and
adversely alters the benefits accruing to either party hereunder.
6.06 Parties. This Agreement and the other Agreements shall be
binding upon and inure to the benefit of the successors and assigns of Debtor
and Secured Party. This provision, however, shall not be deemed to modify
Section 6.02 hereof.
6.07 Conflict re: Terms. All of the Other Agreements and all
Schedules and Exhibits referred to in this Agreement shall be and be deemed to
be incorporated herein by reference for all purposes, notwithstanding that any
one or more of such other Agreements, Exhibits and/or Schedules may not be
physically attached to or otherwise accompany any counterpart or copy of this
Agreement. Except as otherwise provided in this Agreement and except as
otherwise provided in the Other Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the Other
Agreements, the provisions contained in this Agreement shall govern and
control.
6.08 Waivers by Debtor. Except as otherwise expressly provided for
in this Agreement, Debtor waives: (i) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Secured Party on which Debtor may in any way be liable and
hereby ratifies and confirms whatever Secured Party may do in this regard; (ii)
all rights to notice of a hearing prior to Secured Party's taking possession or
control of, or to Secured Party's replevin, attachment or levy upon the
Collateral or any bond or Secured Party to exercise any of Secured Party's
remedies; and (iii) the benefit of all valuation, appraisement and exemption
laws. Debtor acknowledges that it has been advised by counsel with respect to
this Agreement and the transactions evidenced by this Agreement.
6.09 Environmental Matters. (A) Debtor hereby agrees to indemnify
Secured Party and hold Secured Party harmless from and against any and all
losses, liabilities, including strict liability, damages, injuries, expenses,
including reasonable attorneys' fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered by, or
asserted against,
- 14 -
<PAGE> 15
Secured Party by any Person for, with respect to, or as a direct or indirect
result of, the presence on or under any property owned or operated by Debtor,
or the escape, seepage, leakage, spillage, discharge, emission or release, of
any Hazardous Materials the environmental clean-up costs for which could result
in a lien, judgment or claim against Debtor or any of its property.
(B) If Debtor receives any notice from any Person, or has
any knowledge of (i) the happening of any event involving the spill, release,
leak, seepage, discharge or clean-up of any hazardous materials or (ii) any
Environmental Complaint, then Debtor shall notify Secured Party as soon as
possible, but in any event within not more than three (3) Business Days.
(C) After the occurrence of any Environmental Complaint
or the presence on property operated by Debtor of a Hazardous Material, Secured
Party shall have the right, in its sole discretion, to require Debtor to
perform (at Debtor's expense) an environmental audit at the relevant facility
and, if deemed necessary by Secured Party, an environmental risk assessment,
each of which must be satisfactory to Secured Party, of such property and the
hazardous waste management practices and/or hazardous waste disposal sites used
by Debtor. Said audit and/or risk assessment must be by an environmental
consultant satisfactory to Secured Party, in its reasonable discretion.
(D) All amounts payable pursuant to this Section 6.09
which are not paid when due shall bear interest from the date due until paid at
the Default Interest Rate.
(E) The provisions of this Section 6.09 shall survive
payment in full of the Liabilities and termination of the transactions
described in this Agreement.
6.10 Governing Law; Submission to Jurisdiction. THIS AGREEMENT HAS
BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT PITTSBURGH,
PENNSYLVANIA, AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED AND
ENFORCED, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS, IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
AGREEMENTS EXECUTED, DELIVERED AND PERFORMED WITHIN SUCH COMMONWEALTH. AS PART
OF THE CONSIDERATION THIS DAY RECEIVED, DEBTOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE CITY OF
PITTSBURGH, COMMONWEALTH OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON DEBTOR, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO DEBTOR AT THE ADDRESS STATED ON THE FIRST
PAGE HEREOF (OR SUCH OTHER ADDRESS AS MAY BE DULY DESIGNATED BY DEBTOR PURSUANT
TO SECTION 6.11 HEREOF) AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF. DEBTOR AGREES THAT IF IT AT ANY TIME COMMENCES
ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
LIABILITIES, IT WILL COMMENCE SUCH ACTION OR PROCEEDING ONLY IN A STATE OR
FEDERAL COURT LOCATED WITHIN THE CITY OF PITTSBURGH, COMMONWEALTH OF
PENNSYLVANIA. DEBTOR WAIVES ALL RIGHTS TO TRIAL BY JURY. DEBTOR WAIVES ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
6.11 Notice. Except as otherwise provided herein, any notice or
other written communication required hereunder shall be in writing, and shall
be deemed to have been validly served, given or delivered (a) upon deposit in
the United States mails, with proper postage prepaid, (b) by and delivery, (c)
by overnight express mail courier, or (d) by telecopier, and addressed to the
party to be notified at the address set forth below or at such other address as
each party may designate for itself in writing by like notice.
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<PAGE> 16
To Secured Party:
AMSCO Sterile Recoveries, Inc.
c/o Mr. Daniel P. Barry
AMSCO International, Inc.
One Mellon Bank Center
500 Grant Street, Suite 5000
Pittsburgh, Pennsylvania 15219
with a copy to:
William J. Rieflin, Esq.
General Counsel and Secretary
AMSCO International, Inc.
One Mellon Bank Center
500 Grant Street, Suite 5000
Pittsburgh, Pennsylvania 15219
Telecopy: (412) 338-6501
To Debtor:
Sterile Recoveries, Inc.
28100 U.S. Highway North, Suite 201
Clearwater, Florida 34621
Telecopy: (813) 726-8959
with a copy to:
David S. Felman, Esq.
Glenn Rasmussen & Fogarty
100 South Ashley Drive, Suite 1300
P.O. Box 3333
Tampa, Florida 33601-3333
Telecopy: (813) 229-5916
6.12 Section Titles. The article and section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties
thereto.
6.13 Prior Understanding. This Agreement and the Note supersede
all prior understanding and agreements, whether written or oral, between the
parties hereto and thereto relating to the lending transaction provided for
herein or therein.
6.14 Exceptions to Covenants. Debtor shall not be deemed to be
permitted to take any action or fail to take any action under any exception to
any covenant contained herein or by reason of permissible limits contained in
any covenant contained herein if such action or omission would result in the
violation of any other covenant herein.
6.15 Holiday Payments. If any payment to be made to Secured Party
hereunder shall become due on a date not a Business Day, such payment shall be
made on the next succeeding Business Day and interest shall accrue on any
principal amount of such payment until the date on which such principal amount
is paid to Secured Party.
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<PAGE> 17
6.16 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound hereby, this
Agreement has been duly signed, sealed and delivered by the undersigned as of
the day and year specified at the beginning hereof.
ATTEST: STERILE RECOVERIES, INC.
/s/ [Illegible] By: /s/ James T. Boosales
- ---------------------------------- --------------------------------
Name: Name: J. T. Boosales
------------------------- --------------------------------
Title: Title: Executive Vice President
------------------------- -------------------------------
ATTEST: AMSCO STERILE RECOVERIES, INC.
/s/ Susan E. Minahan By: /s/ William J. Rieflin
- ---------------------------------- -------------------------------
Name: Susan E. Minahan Name: Wm. J. Rieflin
------------------------- -------------------------------
Title: Title: Secretary
------------------------- -------------------------------
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<PAGE> 18
EXHIBIT A
PURCHASE MONEY NOTE
U.S. $9,871,250 Pittsburgh, Pennsylvania
July 31, 1994
FOR VALUE RECEIVED, AND INTENDING TO BE LEGALLY BOUND, the
undersigned, STERILE RECOVERIES, INC., a Florida corporation ("Borrower"),
hereby promises to pay to the order of AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("ASRI"), in lawful money of the United States of America
in immediately available funds at the principal office of ASRI at Suite 5000,
One Mellon Bank Center, Pittsburgh, Pennsylvania 15219, or at such other
location as ASRI may designate in writing from time to time, the principal sum
of Nine Million Eight Hundred Seventy-One Thousand Two Hundred Fifty Dollars
($9,871,250), which shall be payable in accordance with the following principal
repayment schedule:
<TABLE>
<CAPTION>
Date Amount of Payment
---- -----------------
<S> <C>
May 1, 1995 $2,000,000
February 1, 1996 2,871,250
August 1, 1997 5,000,000
</TABLE>
Provided, however, that upon the occurrence of an Event of Default hereunder
(as defined below), the entire principal balance hereof, together with all
accrued and unpaid interest, shall become immediately due and payable on and as
of such date. This Purchase Money Note shall continue to accrue interest at
the Default Rate specified below following the occurrence and during the
continuation of any Event of Default. In addition, principal outstanding under
this Purchase Money Note shall be subject to mandatory prepayment on the terms
and conditions set forth in Section 3, below.
1. Interest.
This Note shall bear interest on the average daily principal balance
hereof outstanding from the date hereof at the variable rate per annum (based
on a year of 360 days, counting the actual number of days elapsed) equal to one
and one-half percent (1.50%) above the rate per annum announced from time to
time by Mellon Bank, N.A., at its headquarters office in Pittsburgh,
Pennsylvania as its "prime rate" (the "Prime Rate"), such rate to change
automatically on the first Business Day (as defined below) of each April, July,
October and January and to remain fixed at such rate until the first Business
Day of the next calendar quarter. Interest will be payable monthly in arrears
on the first Business Day (as defined below) of each month commencing September
1, 1994 and continuing on the first Business Day of each succeeding month
during the period that principal remains outstanding and immediately upon any
acceleration of payments under this Purchase Money Note.
If any payment or action to be made or taken hereunder shall be stated
to be or become due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day and such
extension of time shall be included in computing interest in connection with
such payment. For purposes of this Purchase Money Note, "Business Day" shall
mean any day on which the primary business offices of Mellon Bank, N.A. are
open for business in Pittsburgh, Pennsylvania.
<PAGE> 19
2. Default Interest.
Any payment not made when due hereunder shall bear interest at a rate
per annum (based on a year of 360 days and counting the actual number of days
elapsed) equal to four percent (4%) per annum above the Prime Rate in effect
from time to time (the "Default Rate"). Such interest rate will continue to
accrue before and after any judgment has been entered until the Event of
Default has been cured or all amounts due and owing under this Purchase Money
Note shall have been paid.
3. Payments by Borrower and Mandatory Prepayments.
(a) Payments of both principal and interest shall be made
without setoff, counterclaim or other deduction of any nature; provided,
however, that Borrower shall be entitled to exercise its common law offset
rights in respect of any indemnifiable loss arising under the Asset Purchase
Agreement dated July 31, 1994 between Borrower and ASRI (the "Asset Purchase
Agreement"), but only (i) following any final, nonappealable determination of
liability pursuant to the terms and conditions of such Asset Purchase
Agreement, or (ii) pursuant to any written compromise by ASRI of any claim of
Borrower for indemnifiable losses pursuant to such Asset Purchase Agreement.
(b) Within five (5) Business Days of any Prepayment
Triggering Event (as defined below), the Borrower shall make a mandatory
prepayment to ASRI of the following amounts: (i) forty percent (40%) of the
gross sales price of any inventory, in the case of any Prepayment Triggering
Event where the relevant inventory is (y) sold to any entity with which
Borrower has a continuing written service contract or agreement and (z) the
relevant inventory is subject to a purchase money lien, or conditional sale or
title retention arrangement in favor of any unaffiliated supplier or trade
creditor of Borrower, and (ii) one hundred percent (100%) of the gross sales
price of any inventory, in the case of any other Prepayment Triggering Event.
For purposes of this section, "Prepayment Triggering Event" shall mean any sale
by Borrower of its inventory, whether or not in the ordinary course of business
(provided, however, that nothing contained in this Section 3(b) shall be
construed to allow Borrower to engage in any bulk sale of its inventory or any
other transaction otherwise prohibited by the Security Agreement (as defined
below)). All mandatory prepayments under this Section 3(b) shall be applied
first to accrued but unpaid interest and then to outstanding principal
consistent with the order of maturity of Borrower's obligations hereunder.
4. Purchase Money Security Interest.
This Note is the Purchase Money Note referred to in the Asset Purchase
Agreement, and is secured by a Purchase Money Security Agreement of even date
between Borrower and ASRI (the "Security Agreement"). The Security Agreement
contains certain representations, warranties and covenants of Borrower and
includes provisions and remedies applicable upon the occurrence of an Event of
Default hereunder, which terms are incorporated herein by reference as though
fully set forth herein.
5. Events of Default.
The occurrence of one or another of the following events shall
constitute an "Event of Default" hereunder:
(i) Borrower fails to pay when due any amount of
principal (including any mandatory prepayment of principal under Section 3)
which becomes payable hereunder;
(ii) Borrower fails to pay when due any amount of
interest payable hereunder, and such nonpayment continues for a period of
fifteen (15) days after the date when due;
(iii) Borrower defaults in the payment when due
(whether by acceleration or otherwise) of principal or interest or premium on
any other indebtedness or recourse financing
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<PAGE> 20
arrangement of Borrower involving indebtedness or other recourse obligations in
excess of One Hundred Thousand Dollars ($100,000) (whether evidenced by a bond,
note, debenture, deferred purchase price obligation, factoring or true sale
arrangement, capitalized lease, book entry or otherwise), provided any
applicable cure period shall have lapsed; or Borrower defaults in the
performance of any agreement under which any such indebtedness or recourse
obligation is created, if the effect of such default is to cause the holders of
such indebtedness or recourse obligation (or any person on behalf of such
holders) to accelerate the expressed maturity of such indebtedness or recourse
obligation;
(iv) Borrower fails to perform, keep or observe
any term, provision, condition, covenant, warranty or representation contained
in this Purchase Money Note or in the Security Agreement, which is required to
be performed, kept or observed by Borrower and such failure is not cured within
thirty (30) days of notification of such failure by ASRI;
(v) A default by Borrower shall occur and be
continuing (any applicable cure periods having passed) under any other
agreement, document or instrument, other than this Purchase Money Note or the
Security Agreement, to which Borrower is a party, the consequences of which can
be reasonably expected to have a material adverse effect on Borrower's
business, the collateral pledged pursuant to the Security Agreement or ASRI's
interest therein;
(vi) There shall occur any uninsured damage to or
loss, theft or destruction of any of the collateral pledged to ASRI pursuant to
the Security Agreement, which damage, loss, theft or destruction can be
reasonably expected to have a material adverse effect on Borrower's business,
the collateral pledged pursuant to the Security Agreement or ASRI's interest
therein;
(vii) Any judgment, decree or order involving the
payment by Borrower of money in excess of One Hundred Thousand Dollars
($100,000) shall be entered against Borrower and such judgment, decree or order
shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without being vacated, discharged, satisfied, stayed or bonded
pending appeal;
(viii) A notice of lien, levy or assessment is filed
of record with respect to all or any of Borrower's assets by the United States,
or any department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
Pension Benefit Guaranty Corporation, or if any taxes or debts owing at any
time or times hereafter to any one of such entities becomes payable (which in
the aggregate with other such claims or taxes outstanding at the same time are
in excess of Ten Thousand Dollars ($10,000)), except where any such claim for
taxes owed is being disputed in good faith by Borrower after making adequate
provision for the payment thereof;
(ix) Borrower ceases to be solvent or admits in
writing its inability to pay its debts as they mature;
(x) The collateral pledged to ASRI pursuant to
the Security Agreement or any other of Borrower's assets are attached, seized,
levied upon or subjected to a writ or distress warrant; or the collateral
pledged to ASRI or any other of Borrower's assets come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors and
the same is not cured within thirty (30) days thereafter; or an application is
made by any person other than Borrower for the appointment of a receiver,
trustee or custodian for any of Borrower's assets and the same is not dismissed
within thirty (30) days after the application therefor;
(xi) An application is made by Borrower for the
appointment of a receiver, trustee or custodian for any of Borrower's assets;
or a petition under any section or chapter of the federal Bankruptcy Code or
any similar law or regulation shall be filed by Borrower; or Borrower makes
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<PAGE> 21
an assignment for the benefit of its creditors or any case or proceeding is
filed by Borrower for its dissolution, liquidation or termination; or
(xii) Borrower ceases to conduct its business as
now conducted; or Borrower is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs
and such injunction, restraint or other preventative order is not dismissed
within thirty (30) days after the entry thereof; or a petition under any
section or chapter of the federal Bankruptcy Code or any similar law or
regulation is filed against Borrower or any case or proceeding is filed against
Borrower for its dissolution or liquidation, and such petition, case or
proceeding is not dismissed within thirty (30) days after the filing thereof;
Upon the occurrence and continuation of an Event of Default mentioned
in any of paragraphs (i) through (viii), all of the Borrower's obligations
hereunder may, at the option of ASRI and without demand, notice or legal
process of any kind, be declared, and immediately shall become, due and
payable. Upon the occurrence of an Event of Default mentioned in any of
paragraphs (ix) through (xii), all of Borrower's obligations hereunder shall
immediately and automatically become due and payable, without demand, notice or
legal process of any kind.
6. Miscellaneous.
All capitalized terms used herein shall, unless otherwise defined
herein, have the same meanings assigned to such terms in the Security
Agreement.
Except as otherwise expressly provided herein, Borrower waives
presentment, demand, notice, protest, dishonor and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Purchase Money Note and the Security Agreement.
This Purchase Money Note may be prepaid by Borrower at any time
without prepayment penalty or premium.
This Purchase Money Note shall bind Borrower and its successors and
assigns, and the benefits hereof shall inure to the benefit of ASRI and its
successors and assigns. All references herein to "Borrower" and "ASRI" shall
be deemed to apply to Borrower and ASRI, respectively, and their respective
successors and assigns. This Purchase Money Note may not be voluntarily
negotiated, assigned, transferred or participated by ASRI prior to August 1,
1996; thereafter, it may be voluntarily negotiated, assigned or transferred to
any direct or indirect subsidiary of AMSCO International, Inc.
This Purchase Note and any other documents delivered in connection
herewith and the rights and obligations of the parties hereto and thereto
shall, for all purposes, be governed by and construed and enforced in
accordance with the substantive laws of the Commonwealth of Pennsylvania
without giving effect to its principles of conflicts-of-laws.
BORROWER DOES HEREBY EMPOWER THE PROTHONOTARY OR ANY ATTORNEY OF ANY
COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR BORROWER
AT ANY TIME AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, AND, WITH OR WITHOUT
ONE OR MORE COMPLAINTS FILED, CONFESS JUDGMENT OR JUDGMENTS AGAINST BORROWER IN
ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA IN FAVOR OF ASRI,
ITS SUCCESSORS AND ASSIGNS, FOR THE UNPAID PRINCIPAL BALANCE OF THIS NOTE AND
ALL INTEREST ACCRUED HEREON, TOGETHER WITH COSTS OF SUIT AND REASONABLE
ATTORNEYS' FEES, FOR COLLECTION OF SUCH SUMS, AND BORROWER HEREBY FOREVER
WAIVES AND RELEASES ANY AND ALL ERRORS IN SAID PROCEEDINGS AND WAIVES STAY OF
EXECUTION AND STAY, CONTINUANCE OR ADJOURNMENT OF SALE ON EXECUTION. THE
AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT
BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, AND MAY BE EXERCISED FROM TIME
TO TIME AND AS OFTEN AS ASRI OR ITS SUCCESSORS AND ASSIGNS SHALL DEEM NECESSARY
OR DESIRABLE.
- 4 -
<PAGE> 22
WITNESS the due execution hereof on and as of the date first above written.
ATTEST: STERILE RECOVERIES, INC.,
a Florida corporation
By:
- ------------------------ ------------------------
Name: Name:
------------------ ------------------------
Title: Title:
------------------ ------------------------
WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO
NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE
USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR FOR FAILURE ON ITS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
- 5 -
<PAGE> 23
ACKNOWLEDGMENT OF ACCEPTANCE
The undersigned hereby acknowledges the delivery, receipt and
acceptance of this Purchase Money Note at Pittsburgh, Pennsylvania on July 31,
1994.
AMSCO STERILE RECOVERIES, INC.
By:
----------------------
Name:
----------------------
Title:
----------------------
- 6 -
<PAGE> 24
COMMONWEALTH OF PENNSYLVANIA )
SS.
COUNTY OF ALLEGHENY )
On this, the _________ day of _____________________________________,
1994, before me, a notary public, personally appeared
__________________________________________________________________ and
______________________________ ___________________________________________
respectively, who acknowledged themselves to be the duly elected ____________
__________________________________ and _______________________________________
of AMSCO STERILE RECOVERIES, INC., a Delaware corporation, and that they as
such officers, being authorized to do so, executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
themselves as such officers.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________________
Notary Public
My commission expires:
- 7 -
<PAGE> 25
COMMONWEALTH OF PENNSYLVANIA )
SS.
COUNTY OF ALLEGHENY )
On this, the _________ day of _____________________________________,
1994, before me, a notary public, personally appeared
__________________________________________________________________ and
______________________________ ___________________________________________
respectively, who acknowledged themselves to be the duly elected ____________
__________________________________ and _______________________________________
of STERILE RECOVERIES, INC., a Florida corporation, and that they as such
officers, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by
themselves as such officers.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________________
Notary Public
My commission expires:
- 8 -
<PAGE> 26
SCHEDULE 1
LOCATIONS OF COLLATERAL
1. California
a) 425 Hester Street
San Leandro, CA
(Alameda County)
b) 2240 E. Artesia Boulevard
Long Beach, CA 90805
(Los Angeles County)
2. Florida
a) 28100 U.S. Highway North (Headquarters)
Suite 201
Clearwater, FL 34621
(Pinellas County)
b) 11300 Interchange Circle North
Miramar, FL
(Dade County)
c) 4501 Acline Street
Tampa, FL 33619
(Hillsborough County)
3. Maryland
a) 6675 Business Parkway
Elkridge, MD
(Howard County)
4. Michigan
a) 39120 Webb Drive
Westland, MI 48185-1978
(Wayne County)
5. North Carolina
a) 1416 Dogwood Way
Mebane, NC
(Alamance County)
<PAGE> 27
6. Pennsylvania
a) Bay 9, Building 207
79 North Industrial and Research Park
North Drive
Sewickley, PA 15143
(Allegheny County)
7. Texas
a) Suite 169
1441 Patton Place
Carrollton, TX 75007
(Dallas County)
8. Utah
a) 2297 West Custer Road
Salt Lake City, UT
(Salt Lake County)
<PAGE> 28
SCHEDULE 2
Attached are the list of fixed assets indicating acquisition value and
accumulated depreciation in detail, and net book value in total by location for
the following facilities:
1) Clearwater
2) Tampa
3) Dallas
4) Chicago
5) Detroit
6) Raleigh Durham
7) Los Angeles
8) Baltimore
9) Houston
10) Salt Lake
11) Central Stores
Fixed assets for each location are classified into the following categories:
buildings (B), computers (C), furniture and fixtures (F), land improvements
(L), lease improvements (I), equipment (E), machinery (M), and office
mechanical (O).
Part of Tampa fixed assets consist of assets located in Miami and Atlanta
depots. Furthermore, assets in San Francisco are included in Los Angeles
facility. Assets in Pittsburgh and Louisville depots are included in Baltimore
and Detroit facilities respectively,
<PAGE> 1
EXHIBIT 10.10
[FORM OF] REGISTRATION AGREEMENT
This Registration Agreement (this "Agreement") is executed by STERILE
RECOVERIES, INC. (the "Company"), a Florida corporation, and [_______________]
(the "Registered Owner"), to record their agreement regarding the Company's
grant to the Registered Owner of certain rights to register shares of the
Company's common stock, $.001 par value (the "Common Stock"), to be acquired by
the Registered Owner. The Company and the Registered Owner agree as follows:
1. SCOPE AND PURPOSE. This Agreement applies to the following shares of
Common Stock that are owned by, or issuable to, the Registered Owner on and
after the effective date of this Agreement (collectively, the "Shares"): (a)
the 18,797 shares of Common Stock that were acquired by the Registered Owner
from Richard T. Isel pursuant to a letter agreement dated December 15, 1995;
(b) all additional shares of Common Stock issued or distributed to the
Registered Owner in respect of the shares of Common Stock described in clause
(a) above pursuant to a stock split, stock dividend, capital adjustment,
recapitalization, reorganization, reclassifica tion, or other similar
transaction; (c) all shares of Common Stock issued or distributed to the
Registered Owner in respect of any shares of Common Stock acquired pursuant to
any of the transactions described in clauses (a) - (b) above; and (d) any
securities (whether or not Common Stock) issued or distributed to the
Registered Owner in exchange, conversion, or substitu tion for any of the
foregoing shares of Common Stock, whether pursuant to a merger, split-up,
spin-off, share exchange, consolidation, reorganization, recapitalization,
reclassification, or otherwise.
2. TERM. This Agreement is for a term beginning on its execution date
and ending on the earlier of the following: (a) the last date on which the
Registered Owner holds any Shares; or (b) the date when all the Shares can be
publicly sold in a block transaction in compliance with the volume limitations
of SEC Rule 144, promulgated by the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended (the "Securities Act"), or without
restriction pursuant to paragraph (k) of Rule 144.
3. INCIDENTAL REGISTRATION RIGHTS.
(a) GENERALLY. If the Company, at any time or from time to time during
the term of this Agreement, authorizes a registration of Common Stock under the
Securities Act on Form S-1, S-2, or S-3 or any registration form available to a
"small business issuer," as that term is defined in SEC Rule 405 (or any
registration form promulgated by the SEC in substitution of one of those
forms), it shall use reasonable efforts to include in that registration any of
the Shares that
<PAGE> 2
the Registered Owner elects to register for public sale, to the extent
permitted by section 5 and the applicable registration form. The Company
promptly shall notify the Reg istered Owner of each proposed registration, and,
if it re ceives from the Registered Owner a written request within 20 days
after its notice to the Registered Owner, the Company shall use reasonable
efforts to include in its registration the lesser of (i) the number of Shares
specified in the Registered Owner's registration request or (ii) that number of
Shares permitted pursuant to subsection (b) or section 5(b) below. If more
than one holder of registration rights requests to include shares of Common
Stock in a registration, the minimum number of Shares that the Company must
include in the registration pursuant to section 5(b) will be allocated pro rata
among the holders of registration rights requesting participation in the
registration, in proportion to the number of Shares of Common Stock that each
specifies in its registration request. If the registration will involve an
underwritten distribution of Common Stock by the Company, (i) the Company shall
use reasonable efforts to include in the underwriting all the Shares that the
Registered Owner is entitled to include in the registration, (ii) the
Registered Owner shall sell the registered Shares through the underwriter or
syndicate of underwriters selected by the Company, and (iii) the Registered
Owner shall enter into an underwriting agreement in customary form with the
underwriter or syndicate of underwriters selected by the Company, which will
provide (among other things) for the Company, the Registered Owner, and each
underwriter (and each person who controls each underwriter within the meaning
of section 15 of the Securities Act) to grant to each other (and to each person
who controls each of them within the meaning of section 15 of the Securities
Act) reciprocal indemnification against liabilities under the Securities Act,
subject to such limitations as are appropriate to reflect the parties'
respective interests in the underwriting.
The Company is not required to include any of the Shares in a registration
that covers any of the following: (A) securities other than the Common Stock;
(B) Common Stock proposed to be issued in exchange for assets or securities of
another corporation; (C) Common Stock to be issued pursuant to a transaction
registered on Form S-4 (or any registration form promulgated by the SEC in
substitution for that form); or (D) a stock option, stock bonus, stock
purchase, or other employee benefit or compensation plan or securities issued
or issuable pursuant to any such plan.
At any time after giving written notice of its intention to register
shares of Common Stock and before the effective date of the registration
statement filed in connection with the registration, the Company may, by
written notice to the Registered Owner, elect to postpone the registration or
elect
-2-
<PAGE> 3
not to register the shares of Common Stock and be relieved of its obligation to
register the Shares.
(b) Priority in Incidental Registrations. If a registration
involves an underwritten public offering of Common Stock (or securities
convertible into Common Stock) pursuant to a registration statement under the
Securities Act, and the managing underwriter advises the Company that, in its
view, the number of shares of Common Stock which the Company, the Registered
Owner, and any other persons intend to include in such registration exceeds the
largest number of shares of Common Stock that can be sold without having an
adverse effect on the offering (the "Maximum Offering Size"), the Company will
include in such registration, in the priority listed below, shares of Common
Stock up to the Maximum Offering Size:
(i) first, shares of Common Stock to be sold for the Company's own
account;
(ii) second, shares of Common Stock requested to be included in the
registration by the Registered Holder and other persons entitled to
registration rights, allocated (if necessary) pro rata among those
shareholders on the basis of the relative number of shares of Common
Stock each such shareholder has requested to be included in the
registration; provided that the number of shares of Common Stock
requested by any shareholder to be included in the registration may be
reduced by a proportion not to exceed the proportion by which the number
of shares of Common Stock requested by any other person to be included in
the registration is reduced; and
(iii) third, shares of Common Stock to be sold for the account of
holders of shares of Common Stock other than the Company and the holders
of registration rights, with such priorities among them as the Company
shall determine.
4. HOLDBACK AGREEMENT. If any registration of Common Stock shall be in
connection with an underwritten public offering, the Registered Owner agrees
not to effect any public sale or distribution, including any sale pursuant to
Rule 144 or any successor provision under the Securities Act, of any Shares and
not to effect any public sale or distribution of any other equity security of
the Company or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of
such public offering) during the 14 days prior to, and during the 120-day
period (or, in the case of an initial public offering, the 180-day period)
beginning on, the closing date of such registration statement (except as part
of the registration); provided that the Registered Owner has received written
notice of the registration at least two business days
-3-
<PAGE> 4
prior to the anticipated beginning of the 14-day period referred to above.
5. CONDITIONS TO REGISTRATION. The Company's obliga tions under this
Agreement to register any Shares owned by the Registered Owner are subject to
the following conditions:
(a) The minimum number of Shares that the Registered Owner who is
entitled to registration may include in a registration is the lesser of (i)
10,000 Shares, (ii) all of the Shares owned by the Registered Owner, or (iii)
the maximum number of Shares permitted to be included by the Registered Owner
under section 3(b);
(b) The maximum number of Shares that the Registered Owner and all
other holders of registration rights are entitled to include in a registration
is 10% of the aggregate number of shares of Common Stock being sold in the
offering;
(c) The Registered Owner must provide to the Company all information,
and take all action, as the Company reasonably requests with reasonable advance
notice, to enable it to comply with any applicable law or regulation or to
prepare the registration statement that will cover the Shares that will be
included in the registration;
(d) Before the filing of a registration statement pertaining to the
registration, the Registered Owner must deliver to the Company an agreement
containing the following agreements and representations:
(i) All sales of the Shares included in the registration will be
made in a manner contemplated by the SEC's General Instructions for use
of the applicable registration statement form;
(ii) The Registered Owner promptly shall notify the Company in
writing when all the Shares included in the registration have been sold,
and, if any of them are not sold before the 91st day after the effective
date of the registration statement, the Registered Owner promptly shall
notify the Company of the number of Shares sold during the three-month
period following the effective date of the reg istration and during each
ensuing three-month period, until all the Shares included in the
registration have been sold;
(iii) The Registered Owner shall pay all sales commissions,
underwriting discounts, and fees and expenses of its legal counsel
pertaining to the public offering of the Shares included in the
registration;
-4-
<PAGE> 5
(iv) If during the effectiveness of the registration statement
for the registration, the Company notifies the Registered Owner of the
occurrence of any intervening event that, in the opinion of the Company's
legal counsel, causes the prospectus included in the registration
statement not to comply with the Securities Act, the Registered Owner,
promptly after receipt of the Company's notice, shall cease making any
offers, sales, or other dispositions of the Shares included in the
registration until the Registered Owner receives from the Company copies
of a new, amended, or supplemented prospectus complying with the
Securities Act, and if so directed by the Company, deliver to the Company
all copies of the most recent prospectus covering such Shares at the time
of receipt of such notice; and
(v) If the Company is selling any Common Stock pursuant to the
registration, the Registered Owner shall sell those Shares that are
included in the registration on the same terms (including the method of
distribution) as those on which the other shares of Common Stock included
in the registration will be offered and sold;
(e) The Registered Owner must have duly authorized, executed, and
delivered to the Company (i) an irrevocable power of attorney naming an
attorney-in-fact specified by the Company for the purpose of entering into and
carrying out the underwriting agreement and acting for the Registered Owner in
all matters in connection therewith, (ii) a custody agreement depositing the
Shares in custody in negotiable form for the purpose of delivery pursuant to
the underwriting agreement and containing other and usual provisions, and (iii)
an agreement to the effect that the Registered Owner will not take any action
that might reasonably be expected to cause or result in the manipulation of the
price of any security to facilitate the sale of Shares pursuant to the
registration statement; and
(f) The inclusion of the Shares in the registration must not
violate any provisions of the Securities Act, any rules or regulations
promulgated under the Securities Act, or any contractual obligation of the
Company.
6. ADDITIONAL COVENANTS OF COMPANY. If the Company is required to
register any of the Shares pursuant to this Agreement, the Company shall:
(a) Use reasonable efforts to keep the registration statement current
and effective until the earlier of (i) the date when the Company receives notice
from the Registered Owner that all the Shares included in the registration
statement have been sold, or, (ii) the 90th day following the
-5-
<PAGE> 6
later of (A) the date when the SEC declares the registration statement
effective, or (B) the date when the Registered Owner is permitted by the
managing underwriter of the regis tered offering to begin selling any of the
Shares included in the registration; and the Company shall take all action that
is necessary or appropriate to obtain, maintain, and continue the effectiveness
of the registration statement during the foregoing period, including the filing
of all post-effective amendments to the registration statement or supplements
of the prospectus; provided that the Company may amend the registration
statement to withdraw unsold Shares following the foregoing period, subject to
applicable SEC rules and regulations;
(b) Furnish to the Registered Owner, without charge, the following: (i)
two manually signed copies of the registration statement and each amendment to
it, including all exhibits, documents, and financial statements filed with them
or incorporated by reference in them; (ii) that number of conformed copies of
the registration statement and each amendment to it, including all financial
statements but excluding all exhibits and other documents filed with them or
incorporated by reference in them, as the Registered Owner may reasonably
request; and (iii) promptly after the filing of the registration statement, and
thereafter from time to time during the period when a prospectus is required to
be delivered under the Securities Act, as many copies of each preliminary,
definitive, and amended or supplemented prospectus as the Registered Owner
may reasonably request;
(c) Promptly notify the Registered Owner in writing of the following: (i)
the date when the registration statement or any post-effective amendment to it
becomes effective, and the date when any amendment to the registration
statement or supplement to a prospectus is filed with the SEC; (ii) any request
or suggestion by the SEC staff for any amendment to the registration statement
or supplement to the prospectus or for additional information, including the
nature and substance of the SEC's request or suggestion; (iii) the issuance by
the SEC of a stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; (iv) the
suspension of qualification of any Shares for sale in any jurisdiction or the
initiation of any proceedings for that purpose; and (v) the Company's
intention to file an amendment to the registration statement, or a supplement
to any prospectus, that differs from the prospectus on file when the regis
tration statement became effective and including documents deemed to be
incorporated by reference into a prospectus;
(d) Use reasonable efforts to prevent the SEC from issuing a stop order
suspending the effectiveness of the registration statement or, if a stop order
is issued, to obtain the withdrawal of it at the earliest possible moment;
-6-
<PAGE> 7
(e) To the extent requested by the Registered Owner, take all
reasonable action necessary to qualify any Shares included in the registration
for offer and sale under the "Blue Sky" or securities laws of those states of
the United States of America that the Registered Owner reasonably (in light of
the Registered Owner's plan of distribution) designates in writing to the
Company and maintain those qualifications in effect for so long as is required
for the distribution of the Shares included in the registration, except that
the Company is not required to (i) qualify to transact business as a foreign
corporation in any state in which it has not then so qualified, (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction; and
(f) Otherwise use reasonable efforts to comply with all applicable
rules and regulations of the SEC, and if so required by the Securities Act,
generally make available to the Company's security holders as soon as
practicable, but not later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of
section 11(a) of the Securities Act), which need not be certified by
independent public accountants unless required by the Securities Act or the
rules and regulations under the Securities Act, covering a twelve-month period
beginning not later than the first day of the Compa ny's fiscal quarter next
following the effective date of the registration statement.
The Company will not be liable for the failure of any registration to
become effective, provided that the Company complies with the foregoing
obligations.
7. PAYMENT OF EXPENSES. Except for those expenses expressly required by
this Agreement to be paid by the Registered Owner, the Company shall pay all
costs and expenses incident to every registration of any Shares under this
Agreement, including the following: the registration fee of the SEC (except
with respect to Shares of Common Stock of Registered Holders, which expense
shall be borne pro rata by the Registered Holders); the fee of the National
Association of Securities Dealers, Inc.; the premium for any indemnity
insurance policy with respect to the offering subject to registration; the
expenses of qualifying any Shares for sale under the "Blue Sky" or securities
laws of any state, including filing fees and legal fees and costs pertaining to
the qualification and the preparation of any Blue Sky Survey or Memorandum
(except with respect to qualification in states in which the Company would not
have qualified Shares for sale but for the request of Registered Holders, which
expenses shall be borne pro rata by the Registered Holders); the fees and
expenses of the Company's legal counsel and independent public accountants
in
-7-
<PAGE> 8
connection with the registration; the cost of preparing, printing, and
delivering the registration statement, all related prospectuses, and all
amendments and supplements to the registration statement or any prospectus; and
all other costs and expenses of obtaining and maintaining the effectiveness
of the registration statement. The foregoing expenses do not include any
underwriting fees, discounts, or commissions attributable to the sale of
Shares, for which the Registered Owner will be responsible.
8. INDEMNIFICATION. In connection with each registra tion of any Shares
under the Securities Act pursuant to this Agreement, the Registered Owner (to
the extent of the aggregate offering price of those Shares registered for the
Registered Owner in the registration) shall indemnify and hold harmless the
Company (and every person who controls the Company within the meaning of
section 15 of the Securities Act) from and against all cost, loss, claims,
damage, expense, and liability to which any of them becomes subject under the
Securities Act or any state securities laws (including fines, interest,
penalties, amounts paid in settlement, and costs reasonably incurred in
investigating, defending, and settling any claim), to the extent that they
arise out of, or are based on, any untrue statement or alleged untrue statement
of a material fact contained in the registration statement (or any amendment to
it), or any prospectus (or any amendment or supplement to it), that relates to
the sale of any Shares, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but only if the untrue statement or alleged untrue statement, or
the omission or alleged omission, was made in reliance upon, and in conformity
with, information furnished to the Company in writing by the Registered Owner
expressly for use in the registration statement (or any amendment to it) or any
related prospectus (or any amendment or supplement to it).
The Company shall indemnify and hold harmless the Registered Owner (and
every person who controls the Registered Owner within the meaning of section 15
of the Securities Act) against any and all costs, loss, claims, damage,
expense, and liability to which any of them becomes subject under the
Securities Act or any state securities laws (including fines, interest,
penalties, amounts paid in settlement, and costs reasonably incurred in
investigating, defending, and settling any claim) to the extent that they arise
out of, or are based on, any untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or any amendment to it),
or any prospectus (or any amendment or supplement to it), that relates to the
sale of any Shares, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they
-8-
<PAGE> 9
were made, not misleading, except for an untrue statement or omission, or an
alleged untrue statement or omission, that was included in the registration
statement (or any amendment to it) or in any prospectus (or any amendment or
supplement to it) in reliance on, and in conformity with, written information
furnished to the Company by the Registered Owner expressly for use in the
registration statement (or any amendment to it) or any related prospectus (or
any amendment or supplement to it).
Each indemnified party promptly shall notify each indemnifying party of
any claim asserted or action commenced against it that is subject to the
indemnification provisions of this section, but failure to so notify an
indemnifying party will not relieve the indemnifying party from any liability
pursuant to these indemnity provisions or otherwise, unless the failure
materially prejudices the rights or obligations of the indemnifying party.
Without limiting what might be materially prejudicial to an indemnifying party,
the failure of an indemnified party to notify an indemnifying party of a
lawsuit within ten days after the date when the indemnified party is served
with a copy of the complaint, petition, or other pleading asserting the
indemnifiable claim will be considered materially prejudicial to the rights and
obligations of any indemnifying party who was not also served with a copy of
the complaint, petition, or other pleading asserting the indemnifiable claim.
The indemnifying party may participate at its own expense in the defense,
or, if the indemnifying party so elects within a reasonable time, the
indemnifying party may assume the defense, of any action commenced against the
indemnified party that is the subject of indemnification under this section. If
the indemnifying party elects to assume the defense of any indemnified action,
the indemnified party, and each controlling person who is a defendant in the
action, will be entitled to employ separate counsel and participate in the
defense of the action at its own expense.
An indemnified party shall not settle an indemnified claim or action
without the prior written consent of the indemnifying party and the
indemnifying party will not be liable for any settlement made without its
consent. The indemnifying party shall notify the indemnified party whether or
not it will consent to a proposed settlement within ten days after it receives
from the indemnified party notice of the proposed settlement, summarizing all
the terms and conditions of settlement. The indemnifying party's failure to
notify the indemnified party within that ten-day period whether or not it
consents to the proposed settlement will constitute its consent to the proposed
settlement.
-9-
<PAGE> 10
This indemnity does not apply to any untrue statement or omission, or any
alleged untrue statement or omission that was made in a preliminary prospectus
but remedied or eliminated in the final prospectus (including any amendment or
supplement to it), if a copy of the definitive prospectus (including any
amendment or supplement to it) was delivered to the person asserting the claim
at or before the time required by the Securities Act and the delivery of the
definitive prospectus (including any amendment or supplement to it) constitutes
a defense to the claim asserted by the person. This indemnity further does not
apply to the extent that any such loss, claim, damage, expense or liability
results from the fact that a current copy of the prospectus (as amended or
supplemented) was not sent or given to the person asserting any such loss,
claim, damage, expense or liability at or prior to the written confirmation of
the sale of the Shares concerned to such person if it is determined that the
Company has provided such prospectus and it was the responsibility of the
Registered Owner to provide the person with a current copy of the prospectus
(as amended or supplemented) and the current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage, expense, or
liability.
9. PARTICIPATION IN PUBLIC OFFERING. No person may participate in any
underwritten public offering hereunder unless such person (i) agrees to sell
such person's securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of those underwriting arrangements and these
registration rights.
10. GOVERNING LAW; REMEDIES. The validity, interpretation, construction,
and enforcement of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the
laws of those jurisdictions pertaining to resolution of conflicts with laws of
other jurisdictions. The proper, exclusive, and convenient venue for all legal
proceedings arising out of this Agreement is Hillsborough County, Florida, and
the Company and the Registered Owner waive any defense, whether asserted by
motion or pleading, that Hillsborough County, Florida, is an improper or
inconvenient venue. The Company and the Registered Owner consent to the
personal jurisdiction of the state and federal courts in Hillsborough County,
Florida, with respect to any litigation arising out of this Agreement.
11. NOTICES. Every notice, consent, demand, approval, and request
required or permitted by this Agreement will be valid only if it is in writing,
delivered personally or by telex, telecopy, telegram, commercial courier, or
first class,
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<PAGE> 11
postage prepaid United States mail (whether or not certified or registered and
regardless of whether a return receipt is received by the sender), and
addressed by the sender to the party who is the intended recipient at its
address most recently designated to the other party by notice given in
accordance with this section. A validly given notice, consent, demand,
approval, or request will be effective on the earlier of its receipt, if
delivered personally or by telex, telecopy, telegram, or commercial courier, or
the third day after it is postmarked by the United States Postal Service, if it
is delivered by United States mail. Each party promptly shall notify the other
parties of any change in its principal mailing address.
12. EXECUTION; EFFECTIVE DATE. The parties may execute this Agreement in
counterparts. Each executed counterpart will constitute an original document,
and all of them, together, will constitute the same agreement. This Agreement
will become effective when each party has executed and delivered a counterpart
to every other party.
13. MISCELLANEOUS. As used in this Agreement, (a) the word "including" is
always without limitation; (b) the word "days" refers to calendar days,
including Saturdays, Sundays, and holidays, (c) words in the singular number
include words of the plural number and vice versa; (d) the word "person"
includes a trust, corporation, partnership, joint venture, association,
unincorporated organization, public body or authority, and a government or any
governmental body, agency, authority, department, or subdivision, as well as a
natural person; and (e) the word "costs" includes all internal expenses, the
fees, costs, and expenses of experts, witnesses, collection agents, and
supersedeas bonds, and all attorneys' fees, costs, and expenses, whether
incurred before or after demand or commencement of legal proceedings, and
whether incurred pursuant to trial, appellate, mediation, arbitration,
bankruptcy, administrative, or judgment-execution proceedings. The headings
preceding the text of the sections of this Agreement are solely for convenient
reference and neither constitute a part of this Agreement nor affect its
meaning, interpretation, or effect. Unless otherwise expressly indicated, all
references in this Agreement to a section are to a section of this Agreement.
Whenever possible, each provision of this Agreement should be construed and
interpreted so that it is valid and enforceable under applicable law. However,
if a provision in this Agreement is held by a court to be invalid or
unenforceable under applicable law, that provision will be deemed separable
from the remaining provisions of this Agreement and will not affect the
validity, interpretation, or effect of other provisions of this Agreement or
the application of that provision to circumstances in which it is valid and
enforceable. When any provision of this Agreement requires or prohibits action
to be taken by a person, the provision applies regardless of whether the action
is taken directly or indirectly by the
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<PAGE> 12
person. Nothing in this Agreement, whether express or implied, is intended or
should be construed to confer upon, or to grant to, any person, except the
parties to this Agreement, any right, remedy, or claim under or because of
either this Agreement or any provision of it. This Agreement records the
final, complete, and exclusive understandings among the parties regarding the
subject matter of this Agreement and supersedes any prior or
contemporaneous agreement, understanding, or representation, oral or written,
by any of them. The registration rights granted pursuant to this Agreement are
not assignable by the Registered Owner. A waiver, amendment, discharge,
extension, termination, or modification of this Agreement will be valid and
effective only if it is in writing and signed by both the parties to this
Agreement. A written waiver of a right, remedy, or obligation under any
provision of this Agreement will not constitute a waiver of the provision
itself, a waiver of any succeeding right, remedy, or obligation under the
provision, or a waiver of any other right, remedy, or obligation under this
Agreement.
EXECUTED: December 21, 1995, in Clearwater, Florida.
STERILE RECOVERIES, INC.
By: (SEAL)
-------------------------
Richard T. Isel
President
-----------------------------------
NAME:
------------------------------
ADDRESS:
---------------------------
-----------------------------------
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<PAGE> 1
EXHIBIT 10.11
PART OF THIS NOTE MAY BE CONVERTED INTO COMMON STOCK IN ACCORDANCE
WITH THE TERMS, CONDITIONS, AND RESTRICTIONS SET FORTH IN THIS NOTE. THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURI- TIES LAW, AND HAS BEEN ISSUED BY THE COMPANY IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. ACCORDINGLY,
EXCEPT AS EXPRESSLY AUTHORIZED UNDER SECTION 3 OF THE CONVERTIBLE NOTE
AGREEMENT EXECUTED BY LENDER AND THE COMPANY ON ABOUT MARCH 1, 1996, THIS
NOTE MUST BE HELD UNTIL MATURITY IN ACCORDANCE WITH ITS TERMS AND CANNOT
BE SOLD, ASSIGNED, ENDORSED, OR OTHERWISE TRANSFERRED, ABSENT REGISTRA- TION
OF THE TRANSACTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND EVERY
APPLICABLE STATE SECURITIES LAW OR DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THE TRANSACTION IS
NOT REQUIRED UNDER THOSE LAWS.
$1,000,000.00
STERILE RECOVERIES, INC.
CONVERTIBLE DEMAND PROMISSORY NOTE
STERILE RECOVERIES, INC. (the "Company"), a Florida corporation,
promises to pay to LEE R. KEMBERLING ("Lender"), or his registered or
approved assigns, on demand at any time on or after March 1, 1997, at 4721
Coconut Palm Court, N.E., St. Petersburg, FL 33703, the principal amount of
ONE MILLION AND NO/DOLLARS ($1,000,000.00), and to pay interest on the unpaid
principal amount from the date of this Convertible Demand Promissory Note
(this "Note"), at the rate, on the dates, and subject to the conditions
specified in this Note. A PORTION OF THIS NOTE MAY BE CONVERTED INTO COMMON
STOCK OF THE COMPANY IN ACCORDANCE WITH THE TERMS, CONDITIONS, AND RESTRICTIONS
SET FORTH BELOW, AND THE HOLDER OF THIS NOTE IS NOT ENTITLED TO RECEIVE UPON
CONVERSION ANYTHING OTHER THAN COMMON STOCK AND A REPLACEMENT DEMAND
PROMISSORY NOTE FOR ANY REMAINING BALANCE NOT CONVERTED INTO STOCK IN
SATISFACTION OF THE INDEBTEDNESS EVIDENCED BY THIS NOTE. As used in this
instrument, the term "Note" includes any Note issued and delivered in exchange
and substitution for this Note.
1. Interest. Interest will accrue on the unpaid principal amount of
this Note, from the date of this Note until its payment in full, at an annual
rate of 8.5% per annum. Accrued interest is payable in conjunction with any
principal payment made by demand or prepayment in accordance with section 2 or
3 of this Note, respectively. Until (i) payment in full is demanded by
Lender or (ii) this Note is prepaid in full by the Company, all accrued
interest shall be payable monthly, beginning on April 1, 1996, and continuing
on the first day of each succeeding month until this Note is paid in full.
<PAGE> 2
The Company and the holder of this Note intend to comply strictly with
applicable law regulating the maximum allowable rate or amount of interest
that Lender may charge and collect on this Note. Accordingly, and
notwithstanding anything in this Note to the contrary, the aggregate amount
of interest and other charges constituting interest under applicable law that
are payable, chargeable, or receivable under this Note shall not exceed the
maximum amount of interest now allowed by applicable law or any greater
amount of interest allowed because of a future amendment to existing law. The
Company is not liable for any interest in excess of the maximum lawful
amount, and any excess interest charged or collected by the holder of this
Note will constitute an inadvertent mistake and, if charged but not paid, will
be cancelled automatically, or, if paid, will be either refunded to the
Company or credited against the outstanding principal amount of this Note,
at the election of the Company.
2. Demand Restrictions. Lender may demand payment of all or any part
of this Note at any time on or after March 1, 1997. However, Lender may only
demand payment of all or any part of the unpaid principal amount, with all
accrued interest being payable automatically at the time the outstanding prin-
cipal is paid. The Company shall tender payment of the amount demanded on or
before the 60th day after receiving written notice from Lender of the demand
for payment.
3. Prepayment of Note. The Company may (but is not required to in
the absence of a demand) prepay this Note in whole or in part at any time
on or after March 1, 1997, without penalty or premium to the holder of this
Note. Upon any prepayment of this Note, the Company may require the
holder of this Note to surrender it to the Company either (a) in exchange
for a new Note in a principal amount equal to the unpaid principal amount
of the surrendered Note, or (b) for the purpose of noting on this Note
the principal amount prepaid. Upon full payment of this Note, the holder of
this Note shall surrender it to the Company for cancellation. The Company may
not prepay this Note before March 1, 1997.
4. Place and Method of Payment. The Company shall pay all principal
and interest under this Note by wire transfer or by a cashier's check that
is payable in legal tender of the United States of America and is mailed and
addressed to the registered holder of this Note at the address shown in the
register maintained by the Company for that purpose. If any payment or
conversion date under this Note occurs on a day that is a Saturday, Sunday,
or bank holiday in Tampa, Florida, that payment or conversion date will be
extended automatically to the next succeeding day that is not a Saturday,
Sunday, or bank holiday in Tampa, Florida, and, during the extension, the
Company shall pay interest on the unpaid principal amount at the rate
stated for the payment of interest. The Company
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<PAGE> 3
shall pay all principal and interest due under this Note without any
presentation of the Note. Any repayment of this Note will be applied first to
accrued interest and then to principal.
5. Conversion. Upon written notice provided by Lender to the Company
in accordance with section 6 of this Agreement before March 1, 1997, up to
$750,000 of the principal amount of this Note (the "Convertible Principal")
will be converted automatically into common stock, $.001 par value, of the
Company ("Common Stock"). The notice of conversion must specify the portion
of the Convertible Principal to be converted. All unpaid accrued interest will
be paid to Lender upon conversion in accordance with section 7 below. Subject
to the provisions of section 8, the conversion rate shall be $5.85 per share
of common stock. Lender's conversion rights shall commence on the date of
this Note and terminate on March 1, 1997 (the "Conversion Period").
Lender's conversion rights will also terminate for any principal amount for
which Lender accepts prepayment of the Note before March 1, 1997. Lender
may partially convert this Note for any portion of the Convertible Principal
from time to time, so long as the aggregate principal amount converted over
the term of the Note does not exceed $750,000. Lender and the Company
acknowledge that, subject to future adjustments based on the anti-dilution
provisions of this Note, Lender will be entitled to receive 128,205 shares of
Common Stock upon the conversion of all of the Convertible Principal during
the Conversion Period. Lender would be entitled to receive 85,470 Shares
on conversion of $500,000 of the Note.
The Company shall pay any documentary stamp or similar issue or
transfer tax due in connection with the Common Stock pursuant to the
conversion of this Note. However, the holder of this Note shall pay any such
taxes that become due because the Common Stock is issued in a name other than
the holder's name. The Company shall reserve out of its authorized but
unissued Common Stock sufficient shares of Common Stock to allow for the
conversion of this Note. All shares of Common Stock issuable upon conversion
of this Note must be fully paid and nonassessable. The Company shall comply
with all securities laws regulating the offer, sale, and delivery of the Com-
mon Stock pursuant to the conversion of this Note.
6. Conversion Procedure. To convert this Note, the holder of this
Note must: (a) deliver to the president or corporate secretary of the Company
written notice of his election to convert; and (b) surrender this Note to the
Company in exchange for the Common Stock at a closing held at the offices of
Riden Earle & Kiefner for purposes of effecting the conversion. This
closing will be held within 10 days following the holder's notice of his
intention to do so. The date when the holder of this Note has satisfied
all of the preceding requirements will constitute the conversion election
date. The
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<PAGE> 4
Company and Lender agree that, upon the conversion of any
shares of Common Stock pursuant to this Note, those shares shall be
issued subject to the terms and conditions of the Registration Agreement
dated September 13, 1995, between the Company and Lender. Both parties have
executed an amendment to the Registration Agreement confirming the
applicability of the terms, conditions, and restrictions of the Registration
Agreement to the converted shares of Common Stock. At closing, the
Company will deliver to Lender a replacement demand promissory note
evidencing the remaining balance due under this Note. The replacement demand
promissory note will contain the same terms and conditions as are contained in
this Note, except that conversion rights will apply only to any remaining
portion of the Convertible Principal that has not been converted.
7. Issuance of Common Stock. As soon as possible after the conversion
date (but in any event within ten business days thereafter), the Company
shall deliver to the converting holder of this Note a certificate
evidencing the number of full shares of Common Stock issuable to the holder
pursuant to the conversion and a cashier's check or wire transfer for the
value of any fractional share. The person in whose name the certificate
evidencing the Common Stock is registered will be treated on or after the
conversion date as the holder of record of the Common Stock issued pursuant
to the conversion. The Company shall not issue a fractional share of Common
Stock upon conversion of this Note. Instead, the Company shall pay to the
holder the value of the fractional share, which will be determined by
dividing the total principal balance due under this Note by the number of
shares to be issued upon the conversion to obtain the conversion price per
full share and then multiplying that value by the fraction and rounding the
result to the nearest whole cent.
8. Anti-Dilution. If the Company does any of the following (a
"Dilutive Event") during the Conversion Period: (a) becomes a subsidiary
of any other entity pursuant to a tender offer or exchange offer; (b)
merges, consolidates, effects a share exchange with, or transfers all or
substantially all its assets to, any other entity; (c) makes any dis-
tribution of its assets to holders of its Common Stock as a liquidation or
partial liquidation or return of capital; (d) changes, divides,
contracts, increases, or otherwise reclassifies its Common Stock into
the same or a different number of shares, with or without par value, or into
shares of any class or classes; or (e) declares or distributes to the
holders of Common Stock (i) a noncash dividend payable in any property or
securities of the Company, (ii) any cash payable by dividend or otherwise out
of the capital surplus (as distinguished from the earned surplus) of
the Company, or (iii) cash, property, or securities in connection with
a spin-off, split-up, reclassification, recapitalization, combination of
shares, or similar rearrangement of the Company's
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<PAGE> 5
capital stock; then, upon the conversion of this Note after the record
date for, or the occurrence of, each Dilutive Event, the holder of this
Note will be entitled to receive, in addition to, or in substitution for,
the shares of Common Stock otherwise issuable upon conversion of this Note,
the additional or different amount of shares of Common Stock and other
securities and property (including cash) resulting from every Dilutive Event
that the holder of this Note would have been entitled to receive if the holder
had (1) converted this Note immediately before the Dilutive Event and had
been the record owner of the number of shares of Common Stock issuable
pursuant to the conversion since that time, and (2) had participated in
every Dilutive Event as a holder of that number of shares of Common Stock and
had retained all shares of Common Stock and other or additional securities
and property (including cash) receivable during that period, after giving
effect to all the Dilutive Events that occurred during that period.
Whenever an adjustment occurs in the number or kind of securities and other
property (including cash) issuable or distributable upon conversion of this
Note, the Company promptly shall deliver to the holder of this Note a
notice describing in reasonable detail the facts requiring the adjustment
and the number and kind of securities and other property (including cash)
issuable upon conversion of this Note after the adjustment.
9. Reorganization of Company. If the Company is a party to a merger,
consolidation, a lease or transfer of all or substantially all its assets, or
a merger that changes or reclassifies its outstanding Common Stock, the
person obligated to deliver cash, securities, or other property upon conversion
of this Note shall enter into a written modification of the Note. If the
issuer of the securities to be delivered upon conversion of this Note is an
affiliate of the party to the transaction that is the lessee, survivor, or
transferee, that issuer shall join in the modification of this Note.
The modification of the Note must provide that the holder of a Note may
convert it into the kind and amount of cash, securities, or other assets that
he would have owned immediately after the lease, merger, transfer, or
consolidation if he had converted the Note immediately before the effective
date of the transaction. In the case of a lease or transfer of all or
substantially all the Company's assets and a subsequent continuation of
the Company without any distribution to its shareholders of the
consideration received pursuant to the transaction (whether cash, securities,
or other property), the modification of the Note must provide that the holder
of the Note has the right thereafter to convert the Note into only the kind
and amount of consideration that would have been received by a holder of
that number of shares of Common Stock into which the Note could have been
converted immediately before the lease or transfer, if the consideration
received by the Company pursuant to the transaction had been distributed
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<PAGE> 6
pro rata among all the holders of the Company's outstanding capital stock
as of the effective date of the transaction. The modification of the
Note also must provide for adjustments that will be as nearly equivalent
as is practical to the adjustments required by this Note. The successor of
the Company shall mail to the holder of this Note a duly executed
counterpart of the written modification of the Note and a notice briefly
describing the effect of the modification. To the extent the preceding
provisions apply, the provisions of this Note requiring adjustment of the
number of shares of Common Stock to be issued upon the conversion of this
Note as a result of a change in capital stock do not apply.
10. Company Determinations Final. Any determination made by the Company
or its board of directors regarding the following will be conclusive:
computation of fractional shares; adjustment of the conversion rate under this
Note; determination of when an adjustment is not required; or determination
of when an adjustment of the conversion rate can be deferred because it is
diminimus.
11. Person Deemed Owner. The Company may treat the person in whose
name this Note is registered on its books as the absolute owner of this Note
for the purpose of receiving any payment or Common Stock under this Note and
for all other purposes. All payments or Common Stock issued to the
registered holder of this Note, or upon his order, will satisfy, to the
extent of the amount paid or issued, the Company's liability under this
Note for the amount paid or issued. Any demand, request, or consent of the
registered holder of this Note will be conclusive and binding on that holder
and upon all future holders and registered owners of the Note.
12. Defaults and Remedies. An occurrence of any of the following events
will constitute a "Default" under this Note:
(a) The nonpayment when due of any principal or accrued interest
under this Note, whether at maturity, by acceleration, or otherwise,
which continues 15 days after Lender provides to the Company written
notice of nonpayment;
(b) The adoption of a resolution by the Company's board of
directors for the dissolution or liquidation of the Company;
(c) The issuance by the Florida Department of State of a
certificate of involuntary dissolution of the Company, if the Company is
not reinstated as a corporation within 30 days after the effective date
of involuntary dissolution;
(d) The Company merges into, consolidates with, or leases or
transfers all or substantially all its
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<PAGE> 7
assets to, any other person unless (i) the person is a corporation or
limited partnership; (ii) the person assumes by a written assumption and
modification of the Note the obligations of the Company under the Note
(except that it need not assume the obligation of the Company as to
conversion of the Note if pursu- ant to section 9 above the Company or
another person enters into a written modification of the Note obligating
it to deliver cash, securities, or other property upon conversion of
the Note); and (iii) a Default does not exist immediately after the
transaction;
(e) The filing by the Company of a petition seeking relief or
reorganization under any bankruptcy, insolvency, or other debtor
relief law or the Company giving written notice to any creditor of a
proposed general assignment for the benefit of its creditors;
(f) The filing of a bankruptcy petition against the Company that
is not dismissed within 30 days after it is filed;
(g) The appointment of a trustee, receiver, or custodian for the
Company generally or for all or substantially all its assets;
(h) The sequestration or assumption of custody by a court of
competent jurisdiction of all or substantially all the assets of the
Company, if the custody or sequestration is not terminated within 30
days after it becomes effective;
(i) The entry of a final judgment against the Company for the
payment of money or damages in excess of 10% of its consolidated total
assets, if the judgment is not discharged or the issuance of a writ of
execution or similar process with respect to the judgment is not
stayed within the time allowed by law; or
(j) The issuance of a levy, garnishment, attachment, writ of
execution, or similar process against the Company (whether or not
pursuant to a final judgment) in connection with a claim for the payment
of money or damages in excess of 10% of its consolidated total assets, if
the writ is not stayed or vacated within ten days after its issuance.
Upon the occurrence at any time of a Default, unless the Note has been
converted fully into Common Stock, the holder of this Note may accelerate the
maturity date of this Note and declare the entire unpaid principal amount
of this Note and all
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<PAGE> 8
interest accrued on it immediately due and payable without further notice
to the Company, and the holder of this Note also may proceed otherwise to
protect its rights as provided by applicable law. The Company and every other
person liable at any time for payment of this Note waive presentment, pro-
test, notice of protest, and notice of dishonor with respect to this Note.
Every right, power, or remedy conferred by this Note on the holder of this
Note, or by any agreement or instrument executed pursuant to it, is not
exclusive of any other right, power, or remedy conferred on the holder of this
Note in this Note or in any other agreement or instrument now or later
available to it at law or in equity.
13. Renewals, Extensions, and Indulgences. The Company expressly
consents to all renewals and extensions of this Note, as a whole or in
part, and all delays in time of payment or other performance under this Note,
that the holder of this Note allows, without limitation and without notice to,
or further consent of, the Company.
14. Notices. Every notice, consent, and demand required or permitted
by this Note will be valid only if it is (a) given in writing, (b) hand
delivered or sent by telex, telecopy, telegraph, commercial courier, or
the United States Postal Service, and (c) addressed by the sender, if to
the Company: to Sterile Recoveries, Inc., 28100 U.S. Highway 19 North, Suite
241, Clearwater, Florida 34621, Attention: James T. Boosales; and, if to
the holder of this Note: to the address set forth in the first paragraph of
this Note, or to such other addresses as either party designates by written
notice to the other. A validly given notice, consent, or demand will be
effective on the earlier of its receipt, if hand delivered or sent by
telex, telecopy, telegraph, or commercial courier, or the third day after it
is postmarked by the United States Postal Service for dispatch by first class,
postage prepaid, United States mail (whether or not certified or registered
and regardless of whether a return receipt is requested or received).
15. No Recourse Against Others. A director, officer, employee, or
shareholder, as such, of the Company is not liable for, and, by accepting
this Note, each holder of this Note waives and releases all of them from
liability for, any obligation of the Company under this Note or any claim
based on, in respect of, or by reason of, those obligations or their
creation. This waiver and release are part of the consideration for the
issue of the Note.
16. Security. Payment of this Note is secured by (a) a perfected
first-priority deed of trust executed in favor of the Company encumbering
certain real property of the Company located in Fort Bend County, Texas, and
(b) a first-priority security agreement executed by the Company encumbering
the
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<PAGE> 9
equipment of the Company at the real property of the Company
located in Fort Bend County, Texas.
17. Choice of Law; Legal Proceedings. The validity, construction,
interpretation, and enforcement of this Note are governed by the laws of
the State of Florida, excluding the laws of that state pertaining to the
resolution of conflicts with laws of other jurisdictions.
18. Payment of Costs. In any litigation or other dispute (including
trial, pretrial, appellate, bankruptcy, or judgment execution proceedings)
between the parties that relate to this Note or any mortgage or other agreement
relating to this Note, the losing party shall reimburse the prevailing party,
on its demand, for all costs and expenses that are incurred by the
prevailing party as the result of that dispute or litigation.
19. Securities Law Restrictions on Transfer. Except as otherwise
provided under section 2 of the Convertible Note Agreement executed by
Lender and the Company on or about the date of this Note, this Note and any
Common Stock issued upon conversion of this Note cannot be transferred or
disposed of (by sale, gift, pledge, foreclosure, or otherwise) except upon
receipt by the Company of evidence satisfactory to it (including an opinion
of counsel satisfactory to it) that such transfer or other disposition will
not violate the Securities Act of 1933, as amended, or any applicable state
securities law. The holder of this Note agrees that the certificate or certif-
icates representing Common Stock issued upon conversion of this Note will
bear a restrictive legend to the foregoing effect.
20. Replacement of Note. Upon its receipt from the registered holder
of this Note of evidence reasonably satisfactory to it of the loss,
theft, mutilation, or destruction of this Note, the Company shall execute,
issue, and deliver to the holder of this Note, without charge and in
substitution or exchange for the Note that has been lost, stolen, mutilated,
or destroyed, a new Note of like tenor and dated and bearing interest from
the date through which interest has been paid on the lost, stolen, mutilated,
or destroyed Note. The Company may condition its issuance of a replacement
Note on (a) in the case of loss, theft, or destruction, its receipt of
indemnity reasonably satisfactory to the Company, and (b) in the case of
mutilation, the surrender and cancellation of the mutilated Note.
21. Miscellaneous. The titles and headings preceding the text of the
sections of this Note are solely for convenient reference and neither
constitute a part of this Note nor affect its meaning, interpretation, or
effect. Unless otherwise expressly indicated, all references in this
Note to a section are to a section of this Note. A waiver, amendment,
discharge, extension, termination, or modification of this
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<PAGE> 10
Note will be valid and effective only if it is in writing and signed by
the Company and the holder of this Note. In addition, a written waiver by the
holder of this Note of a Default will not operate as a waiver of either any
other Default or a succeeding Default under the same provision or as a waiver
of the provision itself. No delay or course of dealing by the holder of
this Note will constitute a waiver of any right, power, or remedy of the
holder of this Note, except to the extent manifested in writing by the
holder of this Note and except when this Note expressly requires a right,
power, or remedy to be executed within a specified time.
EXECUTED: March 1, 1996 STERILE RECOVERIES, INC.
By: /s/ John A. Hamilton
---------------------------
John A. Hamilton
Assistant Secretary
[CORPORATE SEAL]
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<PAGE> 1
EXHIBIT 10.12
STERILE RECOVERIES, INC.
CONVERTIBLE NOTE AGREEMENT
The undersigned ("Lender") agrees to loan to STERILE RECOVERIES,
INC. (the "Company"), a Florida corporation, the amount of $1 million (the
"Loan"), subject to the following terms and conditions:
1. The Loan. Lender agrees to make the Loan to the Company on the
terms further set forth in the Convertible Demand Promissory Note attached
to this Agreement as Exhibit "A" (the "Note"). For a limited time, up to
$750,000 of the principal balance of the Note will be convertible by Lender
into shares of Common Stock, $.001 par value (the "Common Stock"), of the
Company at a price per share of $5.85, subject to dilution and other
provisions set forth in the Note. The Loan will be secured by a first priority
lien on real property located in Fort Bend County, Texas, that is described
on the attached Exhibit "B," pursuant to a Deed of Trust, Security
Agreement, and Assignment of Rental attached to this Agreement as Exhibit "C"
(the "Deed of Trust"). The Loan will be further secured by a first
perfected security interest in the personal property listed on the attached
Exhibit "D" pursuant to a Security Agreement in the form attached as Exhibit
"E" (the real and personal property hereinafter will be referred to
collectively, as the "Collateral"). The full amount of the Loan is payable
by wire transfer to an account designated by the Company and will be payable
in full to the Company when (a) this Agreement is tendered to the
Company, (b) this Agreement has been accepted by the Company, as evidenced
by the signature of its President or other authorized agent or officer, and
(c) each of the conditions precedent in section 5 of this Agreement have been
satisfied.
2. Assignment; Binding Effect. Lender shall not offer, sell, assign,
pledge, hypothecate, or otherwise transfer or encumber any of his rights
under this Agreement, except that Lender may transfer his rights under this
Agreement to his spouse or any family trust for which Lender or his spouse
serves as trustee so long as such a transfer does not disqualify the
Company from obtaining or maintaining Subchapter S tax status.
3. Company Representations and Warranties. As of the date it
accepts Lender's agreement to make the Loan, the Company represents and
warrants to Lender the following:
(a) The Company is a corporation incorporated and validly
existing in good standing under the laws of the State of Florida and has all
requisite power and authority to own its assets and to conduct its business as
now conducted.
<PAGE> 2
(b) The Company's execution, delivery, and performance of
this Agreement have been authorized by all requisite corporate action of
the Company, will not conflict with its bylaws or articles of
incorporation, and will not constitute a breach or violation of, or a default
under, any material lease, contract, agreement, instrument, indenture, or
mortgage to which the Company is a party or to which any significant
part of its property is subject. This Agreement is a valid and binding
obligation of the Company.
(c) The real property located in Fort Bend County, Texas, and
which is to be mortgaged to Lender as security for the Note, is in compliance
with all applicable environmental laws and regulations and, after due and
diligent inquiry, the Company has no knowledge of any deposits, storage (other
than chemicals and other substances maintained on the property in the
ordinary course of the Company's business and in compliance with
all applicable environmental laws and regulations), seepage, or
filtration at, upon, under, or within the property or any contiguous
real estate of oil, petroleum or chemical liquids or solids, liquid or
gaseous products, or any other substance designated by applicable law as
environmentally hazardous.
(d) All information provided by the Company to Lender in
connection with the Loan was accurate when provided and will remain
materially accurate at the time of closing unless the Company expressly
notifies Lender in writing of any change. Lender acknowledges that the
information provided does not constitute all information that might be
important to him as an investor, and that he has had access to and an
opportunity to conduct a diligence investigation regarding the Company.
4. Lender Representations and Warranties. Lender represents and
warrants to the Company the following:
(a) He is making the Loan and if he exercises his option to do
so, will purchase the Common Stock through conversion of the Note,
solely for his own account, as principal, for investment purposes, and not
with a view to, or for resale in connection with, any distribution
or underwriting of the Note or Common Stock or any rights to purchase the
Note or Common Stock. He is not participating, directly or indirectly, in any
distribution or underwriting of the Note or Common Stock. He is not investing
in the Note or Common Stock as an agent, nominee, or representative for the
account or benefit of another person or entity, and he has not agreed or
arranged to sell, assign, transfer, subdivide, or otherwise dispose of all
or any part of the Note or Common Stock to another person or entity.
(b) He understands that (i) no state or federal agency has
passed upon the Note and Common Stock or made any
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<PAGE> 3
finding or determination as to the fairness of the Note and Common Stock as
an investment, (ii) the Note and Common Stock have not been, and will not
be, registered under either the Securities Act of 1933, as amended, or any
state securities law including the Florida Securities and Investor Protection
Act, as amended, (iii) the Common Stock can be offered for sale, sold,
assigned, pledged, hypothecated, or otherwise transferred or encumbered
only if the transaction is registered under those laws or qualifies
for an available exemption from registration under those laws, and (iv) the
Company has not agreed, and is not obligated, to register any resale or
other transfer of the Common Stock under the Securities Act of 1933,
as amended, or any state securities law, or to take any action to enable
him to qualify for an exemption from registration under any of those laws
with respect to a resale or other transfer of the Common Stock.
(c) Except for a transfer to his spouse or to a family trust
for which Lender or his spouse serves as trustee that does not disqualify
the Company from obtaining or maintaining Subchapter S tax status, he will
not offer, sell, assign, pledge, hypothecate, or otherwise transfer or encumber
at any time the Note or any Common Stock absent registration of the
transaction under the Securities Act of 1933, as amended, the Florida
Securities and Investor Production Act, as amended, and every other applicable
state securities law or an opinion of counsel satisfactory to the
Company that registration is not required under any of those laws.
(d) He understands that, in furtherance of the transfer
restrictions stated above, (i) the Company will record stop transfer
instructions in its stock record books to restrict an impermissible resale
or other transfer of the Common Stock, (ii) the Note and each certificate
evidencing the Common Stock will bear a restrictive legend in
substantially the following form:
The [Note or Common Stock] evidenced by this certificate have not
been registered under either the Securities Act of 1933, as amended,
or the securities laws of any state. These securities cannot be
offered for sale, sold, assigned, pledged, hypothecated, or otherwise
transferred or encumbered at any time, as a whole or in part,
absent registration of the transaction under the Securities Act of 1933,
as amended, and every applicable state securities law or delivery to
the Company of a satisfactory opinion of counsel to the effect that
registration of the transaction under those laws is not required.
, and (iii) a legend substantially identical to the one
described above will be placed on every new stock certificate
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<PAGE> 4
that is issued upon a transfer or exchange of the Common Stock.
(e) He understands that an established trading market does
not exist for the Note or the Common Stock, and none is likely to develop
in the absence of a registered public offering of the Company's common stock.
(f) He understands that (i) the Company is not, and will not be,
required to file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, and (ii)
the Company has not agreed, and is not under any obligation, to supply him
with any information to enable him to sell the Note or Common Stock.
(g) He has received from the Company and carefully read the
documents included in the "Disclosure Documents" dated February 26, 1996,
pertaining to the offering of the Note and Common Stock, and all of the
other documentation furnished by the Company to him.
(h) He has been given adequate opportunity to evaluate this
investment, including opportunities to (i) question officers of the
Company, (ii) obtain any additional information necessary to evaluate the
investment or to verify any information or representation contained in the
Disclosure Documents, and (iii) make such other investigation as he
considered appropriate or necessary to evaluate the business and financial
affairs and condition of the Company.
(i) Management of the Company has answered all questions asked
by him and his legal and financial advisors, and they have either furnished to
him, or granted him full and unrestricted access to, all records, contracts,
documents, and other information requested by him and his legal and financial
advisors, with respect to the Note, the Common Stock, the Company, and
the business and financial affairs and condition of the Company.
(j) He understands that the Note and the Common Stock are a
speculative investment and that there are substantial risks incident to
an investment in the Note and the Common Stock. As a director of the
Company, he is knowledgeable concerning the business of the Company. He has
carefully considered and understands the risks and other factors
affecting the suitability of the Note and Common Stock as an investment for
him.
(k) He understands that any forecasts or projections furnished to him
by the Company are only an orderly prediction of future results based on
estimates and assumptions of the Company's management that eventually might
or might not be substantiated and that neither the Company nor any officer or
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<PAGE> 5
director of the Company assures or guarantees in any way that the projected
results will be achieved. He understands that the risks identified in the
Disclosure Documents might adversely affect the Company's ability to
realize the projected results.
(l) He understands that neither the Company, any officer or
director of the Company, nor any professional advisor of the Company,
makes any representation or warranty to him with respect to, or assumes any
responsibility for, the federal income tax consequences to him of an investment
in the Note or Common Stock.
(m) Because of his knowledge and experience in financial and
business matters, he is able to evaluate the merits, risks, and other
factors bearing upon the suitability of the Note and the Common Stock as an
investment for him, and he has been afforded adequate opportunity to
evaluate this proposed investment in light of those factors, his financial
condition, and his investment knowledge and experience.
(n) He has adequate net worth and annual income to provide for
his current needs and possible future contingencies and does not
have an existing or foreseeable future need for liquidity of his investment
in the Note or Common Stock. Also, he is otherwise able to bear the economic
risk of an investment in the Note or Common Stock, and has sufficient net
worth and annual income to sustain a loss of all or part of his investment in
the Common Stock if that were to occur and to withstand the probable
inability to publicly sell, transfer, or otherwise dispose of the Common
Stock for an indefinite period of time.
(o) He is a natural person whose principal residence and domicile are
in the State of Florida.
(p) He is not an officer, director, partner, proprietor,
shareholder, or otherwise directly or indirectly affiliated with any
business organization that competes with the Company's business.
(q) He is one of the following: (i) an officer or director of
the Company; (ii) a natural person whose net worth, individually or
jointly with his spouse, exceeds $1,000,000; or (iii) a natural person
whose individual income exceeded $200,000 or whose joint income with his
spouse exceeded $300,000, for each of the last two years and who
reasonably expects to have at least that amount of income in the current
calendar year.
(r) He shall not take any action, including a transfer of
his rights under this Agreement that would otherwise be authorized
pursuant to this Agreement, that would
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<PAGE> 6
disqualify the Company from obtaining or maintaining Subchapter S
tax status.
(s) He shall indemnify and hold harmless the Company, its
legal counsel, and its agents, officers, employees, affiliates, and
professional advisors from all cost, loss damage, expense, and liability
(including fines, penalties, and legal fees, costs and expenses) arising out
of any omission or misrepresentation by him of a fact in this Agreement.
5. Funding Contingencies. Lender's obligation to make the Loan to
the Company shall be wholly contingent on the satisfaction of the following
conditions:
(a) The Note and all other documentation reasonably requested
by Lender or Lender's legal counsel relating to the instruments granting
Lender a first-priority lien on the Collateral, are executed,
delivered to, and approved by, Lender, including, without limitation,
the Deed of Trust, Security Agreement, relevant UCC-1 financing
statements, and a binding title insurance commitment insuring the
validity and priority of Lender's mortgage lien on the real
property has been delivered to Lender.
(b) Lender has reviewed and approved a certificate of the
Company confirming that the transactions contemplated by this
Agreement have been authorized and that ____________, the
President, any Vice President of the Company, or another specified
agent of the Company is authorized to execute all relevant Loan
documentation on the Company's behalf.
(c) Lender completes such other due diligence review concerning the
Collateral, its environmental condition, and the lien documentation
securing the Note as he reasonably deems necessary or
appropriate.
Upon execution of this Agreement and satisfaction of the other
conditions precedent to the Loan, Lender shall tender to the
Company the sum of $1,000,000 as proceeds of the Loan.
6. Miscellaneous. Every notice required or permitted by this Agreement
will be valid only if it is in writing, delivered personally or be
telex, telecopy, telegram, commercial courier, or first class, postage
prepaid, United States mail (whether or not certified or registered, and
regardless of whether a return receipt is received by the sender), and
addressed, if to the Company, at 28100 U.S. Highway 19 North, Suite 201,
Clearwater, Florida 34621, and,
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<PAGE> 7
if to Lender, at the address specified on the signature page of this
Agreement, or to such other addresses as either party designates by prior
written notice to the other. A validly given notice will be effective on the
earlier of its receipt, if delivered personally or by telex, telecopy,
telegram, or commercial courier, or the third day after it is postmarked by
the United States Postal Service, if it is delivered by United States mail.
Each party promptly shall notify the other party of any change in its
principal mailing address. This Agreement records the final, complete,
and exclusive understanding between Lender and the Company with respect to
the transactions contemplated by its and supersedes any prior or
contemporaneous agreement, representation, or understanding, oral or
written, by either of them. A waiver, amendment, modification, or
termination of this Agreement, or any provision of it, will be valid
and effective only if it is in writing and signed by or on behalf of each
party to this Agreement. The validity, construction, interpretation, and
enforcement of this Agreement are governed by the laws of the State of
Florida, excluding the laws of that state relating to resolution of conflicts
with laws of other jurisdictions. This Agreement has been written in the
masculine gender solely for convenience, and masculine words should be
construed to include correlative neuter and feminine words.
7. Execution. The parties may execute this Agreement in counterparts.
Each executed counterpart will constitute an original document, and all
executed counterparts, together, will constitute the same Agreement.
This Agreement will become effective when each party has executed and delivered
to the other party a counterpart of it.
8. REGISTRATION RIGHT. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE FLORIDA SECURITIES ACT. LENDER SHOULD BE AWARE THAT
SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT PROVIDES, IN RELEVANT
PART, AS FOLLOWS: "WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA,
ANY SALE IN FLORIDA MADE PURSUANT TO . . . 517.061(11) SHALL BE VOIDABLE BY
THE PURCHASER IN SUCH SALE EITHER WITHIN THREE DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY THE PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF
THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER."
THE AVAILABILITY OF THE PRIVILEGE TO VOID SALES
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<PAGE> 8
PURSUANT TO SECTION 517.061(11) IS HEREBY COMMUNICATED TO
LENDER.
EXECUTED: March 1, 1996
EXECUTION CLAUSE - INDIVIDUALS
- ----------------------------- ----------------------------
Name of Joint Name of Lender
Lender (if any)
/s/ Lee. R. Kemberling
- ----------------------------- ----------------------------
Signature of Joint Signature of Lender
Lender (if any)
###-##-####
- ----------------------------- ----------------------------
Social Security Number Social Security Number
(Joint Lender) (Lender)
Form of Ownership:
_____ Individual
_____ Tenants-by-entirety
_____ Tenants-in-common
_____ Joint tenants with
right of survivorship
ADDRESS CLAUSE
RESIDENCE BUSINESS
____________________________ ____________________________
Street Address Mailing
____________________________ ____________________________
City State Zip Code City State Zip Code
____________________________ ____________________________
Telephone Number Telephone Number
Send mailings to: ___ business address ___ residence address
_________________________
_________________________
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<PAGE> 9
ACCEPTANCE
This Convertible Note Agreement is accepted and agreed to by Sterile
Recoveries, Inc. on March __, 1996.
STERILE RECOVERIES, INC.
By: /s/ R. T. Isel
----------------------------
Name: R. T. Isel
Title: President
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<PAGE> 10
LEGAL DESCRIPTION
All of Amsco Sterile Recovery Center, a Subdivision in Fort Bend County, Texas,
according to the map or plat thereof, recorded in Slide No. 1222/A of the Plat
Records of Fort Bend County, Texas.
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is executed by CLAYTON W.
PAGE ("Employee"), a Florida resident whose principal address is 112
Bayside Court, Sanford, Florida 32771, and STERILE RECOVERIES, INC. (the
"Company"), a Florida corporation with its principal executive office and
place of business at 28100 U.S. Highway 19 North, Suite 201,
Clearwater, Florida 34621.
Background
The Company is engaged in business throughout the United States. The
Company's businesses include furnishing both reusable and disposable
products to hospitals and other medical facilities. Employee will be
employed by the Company as its President Disposable Products Division and
will be one of its principal executive officers. This Agreement evidences
Employee's terms of employment with the Company, including provisions to
protect the Company's trade secrets, customer goodwill, and confidential
business information, and the Company's investment in Employee's training.
This Agreement is executed pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") dated as of February 26, 1996, among Employee, the
Company and Surgipro, Inc. ("Surgipro"), of which Employee was sole
shareholder. The Company acquired Surgipro for stock and a promissory
note pursuant to the Merger Agreement. The non-compete provisions in this
Agreement are partially in consideration of the Company's acquisition of
Surgipro.
Operative Terms
Employee and the Company agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement,
the Company shall employ Employee as President of its Disposable Products
Division, and Employee shall serve in the employ of the Company in that
capacity. Employee shall be responsible for such duties as are reasonable
for an employee in such capacity and as from time to time are assigned to
him by an officer of the Company or the Company's board of directors. At
all times while employed by the Company, Employee shall serve and promote
the business interests of the Company in good faith, with his full, best,
and dedicated efforts, with fidelity and loyalty, in compliance with all
rules, policies, practices, directives, and procedures of the Company.
Employee faithfully and industriously shall devote all normal working hours
(subject to sick leave, vacation time, and outside endeavors provided for and
permitted by the terms of this Agreement) to the good faith performance of his
duties.
<PAGE> 2
The Company shall furnish to Employee office space, secretarial
assistance, and such other services, amenities, and facilities as are
adequate for the performance of Employee's duties.
2. Term. Except as otherwise provided in this Agreement, this
Agreement is for a term of three years, beginning as of February 26, 1996
(the "Effective Date"), and ending March 1, 1999.
3. Compensation.
(a) Base Compensation. For all services rendered to it by Employee,
the Company shall pay to Employee base compensation at an annual rate of
$120,000, beginning on the Effective Date of this Agreement, payable in
arrears every two weeks in 26 equal, consecutive installments beginning on
about March 15, 1996.
(b) Bonus Compensation. Employee will be eligible to receive an
additional bonus of up to 35% of base salary, contingent on achievement of
the profit plan goals of the Company and the Disposable Products Division to
be established by the Company's Board of Directors.
(c) Benefit Participation. The Company shall make available to
Employee the insurance benefit it affords to other full-time executives of
the Company. All payments will be subject to withholding and other taxes.
4. Expenses. The Company shall reimburse Employee for all travel,
lodging, entertainment, and miscellaneous out-of-pocket business expenses
incurred by him in the good faith performance of his duties under this
Agreement that the Company, in its sole discretion, determines are both
reasonable in amount and necessary to the Company's business, in accordance
with the Company's written expense policy.
5. Relationship Between Parties. Employee's relationship with the
Company pursuant to this Agreement is that of an employee and not that of an
independent contractor.
6. Termination Upon Death or Disability.
(a) Death. If Employee dies, his employment and this Agreement
will terminate immediately and the Company shall pay to Employee's heirs
or his personal representative all base compensation owed to Employee
through the last day of the two-week pay period in which he dies, and
the Company will not have any further liability or obligation under this
Agreement.
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<PAGE> 3
(b) Disability. If Employee suffers any disability (total or
partial, temporary or permanent) that materially impairs his ability to
perform to the reasonable satisfaction of the Company's Board of
Directors any significant duty assigned to him under this Agreement or by
the Board of Directors, the Company will continue to pay Employee the full
compensation provided under section 3 during the period of disability
and until the Scheduled Termination Date, regardless of Employee's
ability to perform his duties under this Agreement during the period of
disability. However, the Company is excused from performing any of
its compensation obligations to Employee for as long as Employee is
receiving the disability benefits payable under any disability insurance
policy provided by the Company at its sole cost.
In the absence of an agreement between Employee and the Company, the
determination of whether Employee has a disability that materially impairs
his ability to perform any significant duty will be determined by the
Company's Board of Directors, in good faith, based on a written medical
opinion that is certified by a medical doctor selected by the Company.
7. Termination; Resignation; Severance Payments.
(a) Termination for Specified Act. The Company may terminate
Employee's employment under this Agreement before the expiration of its
stated term, without further obligation, if any of the following events
occurs:
(i) Contravention of Written Directive or Shareholders
Agreement. Employee acts in contravention of a written directive
from the Company's board of directors consistent with Employee's
duties under section 1 and not inconsistent with applicable law;
(ii) Misconduct. Employee commits a material act or omission
constituting fraud, gross negligence, or willful misfeasance in his
performance of his duties under this Agreement;
(iii) Conduct Injurious to Reputation. Employee engages in
any conduct or activity materially injurious to the Company's
reputation;
(iv) Absence. Employee fails to work for the Company for a
period of time
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<PAGE> 4
that exceeds his available sick leave and vacation time by more
than ten days, except pursuant to a disability described in section
6(b);
(v) Criminal Activity. Employee is convicted in a court of
competent jurisdiction of either aiding, abetting, or committing
any theft, conversion, or embezzlement from the Company (or any of
its subsidiaries or shareholders) or any criminal offense involving
moral turpitude that materially and adversely affects
Employee's reputation or his ability to perform his duties or
obligations to the Company under this Agreement; or
(vi) Misrepresentation. The Company learns that Employee knew
that any representation or warranty in the Merger Agreement
of Surgipro or Employee was materially false, misleading,
incomplete, or inaccurate on the date of that agreement.
Employee's refusal to relocate from Orlando to another location
will not constitute grounds for termination under this subsection 7(a).
Termination of Employee's employment under this Agreement based on any
of the foregoing events will be effective immediately after Employee is
given written notice of termination specifying the reason for it. The
Company shall pay to Employee 30 days after the effective date of the
termination the cash sum of (A) all base compensation and expense
reimbursements owed or accrued as of the termination date pursuant
to sections 3 or 4; plus (B) compensation for all unused vacation time,
if any, accrued on the termination date.
(b) Resignation by Employee. If Employee resigns, the Company
shall pay to Employee within 30 days after the date of his resignation the
cash sum of (i) all base compensation and expense reimbursements owed
or accrued on the termination date pursuant to sections 3 or 4; plus (ii)
compensation for all unused vacation time, if any, accrued on the date
of his resignation.
(c) Termination for Other Reasons. The Company may terminate
Employee's employment under this Agreement at any time upon 30 days
prior written notice to Employee (the "Termination Date") for any
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<PAGE> 5
reason (other than those reasons permitted by subsections (a) or
(b)). In the event the Company terminates Employee's employment
pursuant to this subsection 7(c), the Company shall continue to pay
through the balance of the term of this Agreement all base compensation
Employee would have received pursuant to section 3 after the Termination
Date and throughout the remainder of the term of this Agreement and
shall pay to Employee on the Termination Date the cash sum of: (i) all
base compensation and expense reimbursements owed or accrued on the
Termination Date pursuant to sections 3 or 4; plus (ii) unused vacation
time, if any, accrued on the Termination Date.
8. Competition and Trade Secrets.
(a) Employee, directly or indirectly, in any capacity, either for
himself, or on behalf of any corporation, partnership, joint venture,
business trust, or other person or entity, shall not:
(i) During the term of this Agreement, for any
additional period of time that Employee continues to be an employee
of the Company, and for a period of three years immediately after
Employee's employment with the Company ceases, (i) engage in any
business, or acquire an interest in any business, or become affiliated
as an agent, employee, partner, consultant, director, officer,
stockholder, or proprietor of any business, that competes with the
business of the Company as specified in the "Background" portion
of this Agreement in the geographic locations where the Company has
performed its services within the year preceding the relevant
date on which performance is being measured; (ii) contact,
solicit, divert, do business with, or accept business from,
any person who has been a customer or supplier of the Company or
Surgipro during the three preceding years, if such business is
of the kind in which the Company or Surgipro is engaged; (iii)
influence or attempt to influence any employee of the Company to
terminate his employment with the Company for the purpose of working
for a competitor of the Company; nor (iv) influence or attempt to
influence any agent, customer, supplier, or distributor who has a
business relationship with the Company to cease or adversely alter its
business relations with the Company; and
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<PAGE> 6
(ii) At any time, while this Agreement remains in effect and
thereafter, divulge, disclose, or communicate, for any reason or in
any manner, to any person or entity, any information (written or
otherwise) concerning trade secrets or other confidential in-
formation relating to the Company's business or financial affairs,
including, without limiting the generality of the foregoing, the
name of any customer or supplier or the business plans, methods,
processes, and operating procedures of the Company.
(b) Employee makes the preceding covenants in consideration for,
and as a necessary condition of, Employee's continued employment by the
Company. The preceding covenants are independent of any obligation of the
Company to Employee, including any obligations of the Company to
Employee under this Agreement or arising from any aspect of the
employment relationship, and are not subject to any setoff, defense,
deduction, or counterclaim based on any claim Employee might have
against the Company. Employee stipulates that the geographic scope,
duration, and description of the Company's business of these
restrictions are reasonable limitations necessary to protect the
Company's business interests, and that the restrictions do not unduly
oppress Employee's occupational future or opportunities and that
Employee has been adequately compensated for these restrictions. The
"prohibited period" of the obligation set forth in paragraph (a)(i) above
will be extended by any period of time during which Employee is in breach
of the obligation.
(c) Each provision of the preceding covenants should be construed
and interpreted so that it is valid and enforceable under applicable law.
However, if a court of competent jurisdiction determines that the
duration, geographical area, or proscribed activities of the
restrictions under this Agreement would cause strict application of those
restrictions to be invalid or unenforceable in a particular jurisdic-
tion, the restrictions automatically will be reformed to shorten their
duration, diminish their geographical area, or confine their proscribed
activities to the extent necessary (but only to that extent) to make
the restrictions valid and enforceable.
9. Remedy at Law Insufficient. Employee acknowledges that damages at
law will be an insufficient remedy if Employee violates the terms of section
8, and that the Company would suffer a decrease in value and irreparable
damage as a result
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<PAGE> 7
of such violation. Accordingly, on a violation of any of those
covenants, the Company, without excluding or limiting any other available
remedy, shall be entitled to the following remedies:
(a) Upon posting a bond of up to $25,000 and filing with a
court of competent jurisdiction an appropriate pleading and affidavit
specifying each obligation breached by Employee, automatic entry by a court
having jurisdiction of an order granting an injunction or specific
performance compelling Employee to comply with that obligation, without
proof of monetary damage or an inadequate remedy at law; and
(b) Reimbursement of all costs and expenses incurred by the
Company in enforcing those obligations or otherwise defending or
prosecuting any litigation arising out of Employee's obligations, including
premiums for bonds, fees for experts and investigators, and legal fees,
costs, and expenses incurred before a lawsuit is filed and in trial,
appellate, bankruptcy, and judgment-execution proceedings.
The foregoing remedies are cumulative to all other remedies afforded by
law or in equity, and the Company may exercise any such remedy
concurrently, independently, or successively. If for any reason a court of
competent jurisdiction determines that the Company is not entitled to an
injunction based on a breach of an obligation under section 8, Employee shall
pay to the Company as liquidated damages, on demand in immediately
available legal tender of the United States of America, a sum equal to all
profits, remuneration, or other consideration Employee gains from all
activities in breach or contravention of any of Employee's obligations.
10. Assignment; Binding Effect; Survival of Covenants. Neither party
may assign rights or delegate his obligations under this Agreement without
the prior written consent of the other party, and any assignment or
delegation without the prior written consent of the other party will be
invalid and ineffective against the other party. This Agreement is binding
on, and inures to the benefit of, any successor or approved assignee of
Employee and the Company.
11. Form; Execution; Interpretation. The titles and headings
preceding the text of the sections of this Agreement have been inserted solely
for convenient reference and neither constitute a part of this Agreement nor
affect its meaning, interpretation, or effect. Unless otherwise expressly
indicated, all references in this Agreement to a section are to a section
of this Agreement. The parties may execute this Agreement in
counterparts. Each executed counterpart of this Agreement will constitute
an original document, and all of them together will constitute the same
agreement. This Agree-
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<PAGE> 8
ment will become effective as of the Effective Date, when each party has
signed and delivered a counterpart of it to the other party. This
Agreement records the final, complete, and exclusive expression of the
understandings between the parties with respect to the matters addressed in it
and supersedes any prior or contemporaneous agreement, representation, or
understanding, oral or written, by either of them. If a provision of this
Agreement is held by a court of competent jurisdiction to be unenforceable,
that provisions will be deemed severable from the remaining provisions of
this Agreement and will not affect the validity, interpretation, or effect
of the other provisions of this Agreement or the application of that provi-
sion to other circumstances in which it is enforceable.
12. Notices. Every notice, request, demand, consent, approval, and
other communication required or permitted under this Agreement will be
valid only if it is in writing and delivered personally or by telex,
telecopy, telegram, commercial courier, or first-class, postage prepaid,
United States mail, and addressed by the sender to the intended recipient at
the appropriate address specified in the first paragraph of this Agreement,
or at any other address that a party designates by notice to the other
party. A validly given notice, request, demand, consent, approval, or
other communication will be effective on the earlier of its receipt, if
delivered personally or by telex, telecopy, telegram, or commercial courier,
or the third day after it is postmarked by the United States Postal
Service, if delivered by first-class, postage prepaid United States mail.
Each party shall notify the other of any change in its or his mailing address
that is listed in this Agreement.
13. Modification; Waiver. A waiver, discharge, amendment, or
modification of this Agreement will be valid and effective only if it is
evidenced by a writing signed by or on behalf of the party against whom the
waiver, discharge, amendment, or modification is sought to be enforced. No
course of dealing or delay by either party to this Agreement in exercising
any right, power, or remedy under this Agreement will operate as a
waiver of any right, power, or remedy of that party, except to the extent
expressly manifested in writing by that party. The failure at any time
of either party to require performance by the other party of any provision
of this Agreement will not affect the party's right thereafter to enforce the
provision or this Agreement. In addition, a waiver by either party of a
breach of any provision of this Agreement will not constitute a waiver of
any succeeding breach of the provision or a waiver of the provision itself.
14. Choice of Law; Litigation. The validity, construction,
interpretation, and enforcement of this Agreement are governed by the laws
of the State of Florida, excluding the laws of that state relating to
resolution of conflicts with laws of other jurisdictions. Each party to
this Agreement
-8-
<PAGE> 9
consents and agrees that Pinellas County, Florida, is the proper,
convenient, and exclusive venue for any legal proceedings in state or federal
court relating to this Agreement, and each party waives any defense, whether
asserted by motion or pleading, that Pinellas County, Florida, is an
improper or inconvenient venue. The prevailing party in any litigation
arising out of or pursuant to this Agreement shall be entitled to payment
from the other party, on demand, of all costs and expenses of the litigation
(including reasonable legal fees, costs, and expenses) incurred by that
prevailing party in enforcing this Agreement or otherwise defending or
prosecuting any litigation arising out of this Agreement, whether incurred
before a lawsuit is filed, or in trial, appellate, bankruptcy, or
judgment-execution proceedings.
15. Acknowledgment. EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ
THIS AGREEMENT, HAD SUFFICIENT OPPORTUNITY TO ASK QUESTIONS AND RECEIVE
SATISFACTORY ANSWERS ABOUT IT, UNDERSTANDS HIS RIGHTS AND OBLIGATIONS UNDER
IT, AND SIGNED IT OF HIS OWN FREE WILL AND VOLITION. EMPLOYEE FURTHER
ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE COMPANY TO SEEK LEGAL COUNSEL
IN THE PREPARATION AND EXECUTION OF THIS AGREEMENT.
EXECUTED MARCH 1, 1996, TO BE EFFECTIVE AS OF FEBRUARY 26, 1996.
WITNESSES:
/s/ Clayton W. Page
- --------------------------- --------------------
Name: CLAYTON W. PAGE
----------------------
/s/ Lori M. Greaves
- ---------------------------
Name: Lori M. Greaves
----------------------
(As to Mr. Page)
STERILE RECOVERIES, INC.
By:/s/ Richard T. Isel
---------------------(SEAL)
Richard T. Isel
President
-9-
<PAGE> 10
STATE OF FLORIDA )
COUNTY OF
--------- )
The foregoing instrument was acknowledged before me this ____ day of
March, 1996, by Clayton W. Page, who is personally known to me (or who has
produced a Florida driver's license as identification).
-------------------------------
My commission expires: Name:
--------------------------
Notary Public, State of Florida
Commission No.
----------------
(NOTARIAL SEAL)
STATE OF FLORIDA )
COUNTY OF HILLSBOROUGH
------------ )
The foregoing instrument was acknowledged before me this 29th day of
February, 1996, by Richard T. Isel, as President of Sterile Recoveries, Inc.
a Florida corporation, on behalf of the corporation, who is personally
known to me (or who has produced a Florida driver's license as identification).
/s/ Betty C. Atkins
-------------------------------
My commission expires: Name: Betty C. Atkins
--------------------------
Notary Public, State of Florida
Commission No.
----------------
(NOTARIAL SEAL)
-10-
<PAGE> 1
EXHIBIT 10.16
LEASE AGREEMENT
BETWEEN
COASTAL 2920 CORPORATION
AND
AMSCO STERILE RECOVERIES INC.
DATE: AUGUST 16, 1991
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
SECTION DESCRIPTION PAGE
<S> <C> <C>
1 LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3 EXHIBITS AND ADDENDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4 DELIVERY OF POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6 INTEREST AND LATE CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8 TENANT'S USE OF THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9 SERVICES AND UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
10 CONDITION OF THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11 CONSTRUCTION, REPAIR AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12 ALTERATIONS AND ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13 LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14 RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
15 CERTAIN RIGHTS RESERVED BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16 ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18 SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19 DESTRUCTION OR DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
20 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
22 TENANT'S INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
23 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
24 SUBORDINATION AND ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
25 TENANT ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
26 TRANSFER OF LANDLORD'S INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
27 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
28 BROKERAGE FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
29 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
30 GOVERNMENT ENERGY OR UTILITY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
31 RELOCATION OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
32 QUITE ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
33 OBSERVANCE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
34 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
35 CURING TENANT'S DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
36 SIGN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
37 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
38 SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
39 EXECUTION OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
EXHIBIT "A" FLOOR PLANS SHOWING THE PREMISES
EXHIBIT "B" SITE PLAN OF THE PROJECT
EXHIBIT "C" BUILDING STANDARD WORK LETTER
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" GUARANTEE (This Exhibit was Approved for Deletion Prior to Execution)
EXHIBIT "F" SIGN
INVENTORY LIST
</TABLE>
ii
<PAGE> 3
COASTAL 2920 OFFICE BUILDING LEASE
This Lease between Coastal 2920 Corporation, a Florida corporation,
(hereinafter "Landlord"), and Amsco Sterile Recoveries Inc., a Delaware Corp.,
(hereinafter "Tenant'), is dated August 16, 1991.
1. LEASE OF PREMISES.
In consideration of the Rent (as defined at Section 5) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A", and further described at Section 2.k. The Premises are located within the
Building and Project described in Section 2.1. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees, to use of the Common Areas (as defined
at Section 2.d).
2. DEFINITIONS.
As used in this Lease, the following terms shall have the following meanings:
2.a. Annual Base Rent: $93,338.00 plus applicable Florida State Sales tax
(presently 7%) on each installment of such rent payable with each such
installment. Calculated at $14.00 per s.f. of Tenant's Rentable area.
2.b. Monthly Installments of Base Rent (including sales tax): $8,322.64
2.C. Commencement Date: August 10, 1991
2.d. Common Areas: the building lobbies, common corridors and hallways,
restrooms, and parking areas, stairways, elevators and other generally
understood public or common areas. Landlord shall have the right to
regulate or restrict the use of the Common Areas.
2.e. Base Year: the calendar year (January 1st - December 31st) of the
year of the commencement date.
2.f. Expiration Date: October 31, 1994 unless otherwise sooner terminated
in accordance with the provisions of this Lease.
2.g. Landlord's Mailing Address: P.O. Box 1465, Dunedin, Florida
34697-1465.
2.h. Tenant's Mailing Address: 28100 U.S. Hwy. 19 North, Suite 201,
Clearwater, Fl 34621
2.i. Broker(s) and Sales Agent(s): NONE.
2.j. Parking: Tenant shall be permitted to park cars on a non-exclusive
basis in the area(s) designated by Landlord for parking. Tenant shall
abide by any and all parking regulations and rules established from
time to time by Landlord or Landlord's parking operator.
2.k. Premises: that portion of the Building containing approximately 5900
square feet of Usable Area, shown by diagonal lines on Exhibit "A",
located on the second floor of the Building and known as Suite 201.
Usable square feet is defined as that square footage measured to the
center of partitions that separate the premises from adjoining
premises and to the outer finished surface of all other walls.
Initials: /s/ JKL
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/s/ WRP
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<PAGE> 4
2.l. Project: the building of which the Premises are a part (the
"Building") and any other buildings or improvements on the real
property (the "Property") located at 28100 U.S. Highway 19 North,
Clearwater, Florida and further shown on Exhibit "B".
2.m. Rentable Area: as to both the Premises and the Project, the
respective measurements of floor area as may from time to time be
subject to lease by Tenant and all tenants of the Project,
respectively, as determined by Landlord and applied on a consistent
basis throughout the Project. For the purpose of this Lease the
Tenant's Rentable Area shall be the Usable area increased by a factor
of 13% or .6667 square feet.
2.n. Security Deposit: none
2.o. State: the State of Florida
2.p. Tenant's First Adjustment Date: November 1, 1993.
2.q. Tenant's Proportionate Share: (5900/74,450) = 7.92% Such share is a
fraction, the numerator of which is the Usable Area of the Tenant's
Premises, and the denominator of which is the Usable Area of the
Project, as determined by Landlord. The Project consists of one
building containing a total Usable Area of 74,450 square feet.
2.r. Tenant's Use: the Premises shall be used for general office purposes
which shall include, without hereby limiting, use for all functions
and activities which a general office may engage in, and for no
other purpose without the written consent of Landlord, Tenant shall not
occupy or use the Premises in any manner that would constitute waste or
nuisance or would disturb the quiet enjoyment of the other tenants in
the Building.
2.s. Term: the period commencing on the Commencement Date and expiring at
midnight on the Expiration Date.
3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
3.a. Exhibit "A" - Floor Plan showing the Premises.
3.b. Exhibit "B" - Site Plan of the Project.
3.c. Exhibit "C" - Building Standard Work Letter.
3.d. Exhibit "D" - Rules and Regulations.
3.e. Exhibit "E" - Guarantee. (This Exhibit was Approved for Deletion
Prior to Execution)
3.f. Exhibit "F" - Sign.
Inventory List.
4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord shall not be subject to any liability
for such failure, the Expiration Date
Initials: /s/ JKL
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/s/ WRP
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2
<PAGE> 5
shall change to reflect the intended full term of this Lease and the validity
of this Lease shall not be impaired, but Rent shall be abated until delivery of
possession. "Delivery of possession" shall be deemed to occur on the date
Landlord completes Landlord's Work as defined in Exhibit "C". If Landlord
permits Tenant to enter into possession of the Premises before the Commencement
Date, such possession shall be subject to the provisions of this Lease,
including, without limitation, the payment of Rent.
5. RENT.
5.a. Payment of Base Rent.
Tenant agrees to pay the Base Rent for the Premises. Monthly
Installments of Base Rent shall be payable in advance on the first day
of each calendar month of the Term. If the Term begins (or ends) on
other than the first (or last) day of a calendar month, the Base Rent
for the partial month shall be prorated on a per diem basis. Tenant
shall pay Landlord the first Monthly Installment of Base Rent when
Tenant executes the Lease.
5.b. Project Operating Costs.
5.b.1. In order that the Rent payable during the Term reflect any
increase in Project Operating Costs, Tenant agrees to pay to Landlord,
as Rent, Tenant's Proportionate Share of all increases in costs,
expenses and obligations attributable to the Project and its
operation, all as provided below.
5.b.2. If, during any calendar year during the Term, Project
Operating Costs exceed the Project Operating Costs for the Base Year
as defined in Section 2.e, Tenant shall pay to Landlord annually, in
addition to the Base Rent and all other payments due under this Lease,
an amount equal to Tenant's Proportionate Share of such excess Project
Operating Costs ("Excess Expenses") in accordance with the provisions
of this Section 5.b.2. The term "Project Operating Costs" shall
include all those items described in the following subparagraphs, (1)
and (2).
(1) All taxes, assessments, water and sewer charges and
other similar governmental charges levied on or attributable
to the Building or Project or their operation, including
without limitation,
(i) real property taxes or assessments levied or
assessed against the Building or Project,
(ii) assessments or charges levied or assessed
against the Building or Project by any redevelopment
agency, and
(iii) any tax measured by gross rentals received
from the leasing of the Premises, Building or
Project, excluding any net income, franchise, capital
stock, estate or inheritance taxes by the State or
Federal government or their agencies, branches or
departments; provided that if at any time during the
Term any governmental entity levies, assesses or
imposes on Landlord any
(1) general or special, ad valorem or
specific, excise, capital levy or other tax,
assessment, levy or charge directly on the
Rent received under this Lease or on the rent
received under any other leases of space in
the Building or Project, or
(2) any license fee, excise or franchise
tax, assessment, levy or charge measured by
or based, in whole or in part, upon such
rent, or
(3) any transfer, transaction, or
similar tax, assessment, levy or charge based
directly or indirectly upon the transaction
represented by this Lease or such other
leases, or
(4) any occupancy, use, per capita or
other tax, assessment, levy or charge based
directly or indirectly upon the use or
occupancy of the Premises or other premises
within the Building or Project, then any
Initials: /s/ JKL
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3
<PAGE> 6
such taxes, assessments, levies and charges
shall be deemed to be included in the term
Project Operating Costs.
(2) Operating costs incurred by Landlord in maintaining
and operating the Building and Project, including without
limitation the following: costs of
(i) utilities;
(ii) supplies;
(iii) insurance (including public liability,
property damage, earthquake, and fire and extended
coverage insurance) for the full replacement cost of
the Building and Project as required by Landlord or
its lenders for the Project;
(iv) services of independent contractors;
(v) compensation (including employment taxes and
fringe benefits) of all persons who perform duties
connected with the operation, maintenance, repair or
overhaul of the Building or Project, and equipment,
improvements and facilities located within the
Project, including without limitation engineers,
janitors, painters, floor waxers, window washers,
security and parking personnel and gardeners (but
excluding persons performing services not uniformly
available to or performed for substantially all
Building or Project tenants);
(vi) (This Section Approved for Deletion Prior to
Execution);
(vii) management of the Building or Project,
whether managed by Landlord or an independent
contractor (including, without limitation, an amount
equal to the fair market value of any on-site
manager's office);
(vii) rental expenses for (or a reasonable
depreciation allowance on) personal property used in
the maintenance, operation or repair of the Building
or Project;
(ix) costs, expenditures or charges (whether
capitalized or not) required by any governmental or
quasi-governmental authority;
(3) Increase, if any, to be limited to a cap of 7.5%.
However pro rata real estate tax increases shall be passed
through in full.
5.b.3. Tenant's Proportionate Share of Project Operating Costs shall
be payable by Tenant to Landlord as follows:
(1) Tenant's Proportionate Share of Excess Expenses in
any Calendar Year having less than 365 days shall be
appropriately prorated.
(2) If any dispute arises as to the amount of any
additional rent due hereunder, Tenant shall have the right
after reasonable notice and at reasonable times to inspect
Landlord's accounting records at Landlord's accounting office
and, if after such inspection Tenant still disputes the amount
of additional rent owed, a certification as to the proper
amount shall be made by a mutually agreed upon certified
public accountant, which certification shall be final and
conclusive. Tenant agrees to pay the cost of such
certification unless it is determined that Landlord's original
statement overstated Project Operating Costs by more than
three percent (3%).
5.c. Base Rent Adjustment. On November 1, 1993, and annually thereafter
the base rent shall become 105% of the immediate past year's amount
and shall be payable as described in this lease plus appropriate state
sales tax.
5.d. Definition of Rent. All costs and expenses which Tenant assumes or
agrees to pay to Landlord under this Lease shall be deemed additional
rent (which, together with the Base Rent, is sometimes referred to as
the "Rent"). The Rent shall be paid to the Building manager (or other
person) and at such place as Landlord may from time to time designate
in writing, without any prior demand therefor and without deduction or
offset, in lawful money of the United States of America.
Initials: /s/ JKL
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/s/ WRP
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4
<PAGE> 7
5.e. Rent Control. If the amount of Rent or any other payment due under
this Lease violates the terms of any governmental restrictions on such
Rent or payment, then the Rent or payment due during the period of
such restrictions shall be the maximum amount allowable under those
restrictions.
5.f. Taxes Payable by Tenant. In addition to the Rent and any other
charges to be paid by Tenant hereunder, Tenant shall reimburse
Landlord upon demand for any and all taxes payable by Landlord (other
than net income taxes) which are not otherwise reimbursable under this
Lease, whether or not now customary or within the contemplation of the
parties, where such taxes are upon, measured by or reasonably
attributable to:
5.f.1. the cost or value of Tenant's equipment, furniture, fixtures
and other personal property located in the Premises, or the cost or
value of any leasehold improvements made in or to the Premises by or
for Tenant, other than Building Standard Work made by Landlord,
regardless of whether title to such improvements is held by Tenant or
Landlord;
5.f.2. the gross or net Rent payable under this Lease, including,
without limitation, any rental or gross receipts tax levied by any
taxing authority with respect to the receipt of the Rent hereunder;
5.f.3. the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any
portion thereof; or
5.f.4. this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises.
6. INTEREST AND LATE CHARGES.
If Tenant fails to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear interest at the maximum rate then allowed by law or three percent
over the prime rate then being charged by Chase Manhattan Bank of Florida,
N.A., or if not available then a mutually agreed upon Money Center Bank,
whichever is less, after 15 days. Tenant acknowledges that the late payment of
any Monthly Installment of Base Rent will cause Landlord to lose the use of
that money and incur costs and expenses not contemplated under this Lease,
including without limitation administrative and collection costs and processing
and accounting expenses, the exact amount of which is extremely difficult to
ascertain. Therefore, in addition to interest, if any such installment is not
received by Landlord within ten (10) days from the date it is due, Tenant shall
pay Landlord a late charge equal to ten percent (10%) of such installment.
Landlord and Tenant agree that this late charge represents a reasonable
estimate of such costs and expenses and is fair compensation to Landlord for
the loss suffered from such nonpayment by Tenant. Acceptance of any interest
or late charge shall not constitute a waiver of Tenant's default with respect
to such nonpayment by Tenant nor prevent Landlord from exercising any other
rights or remedies available to Landlord under this Lease or by law.
7. SECURITY DEPOSIT.
(This Section was Approved for Deletion Prior to Execution)
8. TENANT'S USE OF THE PREMISES.
Tenant shall use the Premises solely for the purposes set forth in Tenant's Use
Clause. Tenant shall not use or occupy the Premises in violation of law or any
covenant, condition or restriction affecting the Building or Project or the
certificate of occupancy issued for the Building or Project, and shall, upon
notice from Landlord, immediately discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
law or the certificate of occupancy.
Initials: /s/ JKL
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/s/ WRP
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5
<PAGE> 8
Tenant, at Tenant's own cost and expense, shall comply with all laws,
ordinances, regulations, rules and/or any directions of any governmental
agencies or authorities having jurisdiction which shall, by reason of the
nature of Tenant's use or occupancy of the Premises or its use or occupation.
A judgment of any court of competent jurisdiction or the admission by Tenant in
any action or proceeding against Tenant that Tenant has violated any such laws,
ordinances, regulations, rules and/or directions in the use of the Premises
shall be deemed to be a conclusive determination of that fact as between
Landlord and Tenant. Tenant shall not knowingly do or permit to be done
anything which will invalidate or increase the cost of any fire, extended
coverage or other insurance policy covering the Building or Project and/or
property located therein, and shall comply with all rules, orders, regulations,
requirements and recommendations of the Insurance Services Office, Commercial
Risk Services, or any other organization performing a similar function. Tenant
shall promptly upon demand reimburse Landlord for any additional premium charge
for such policy by reason of Tenant's failure to comply with the provisions of
this Section provided Tenant has been notified and been given a reasonable time
to cure. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them, or
use or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on, or about the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises.
9. SERVICES AND UTILITIES.
9.a. Provided that Tenant is not in default hereunder, Landlord agrees to
furnish to the Premises during generally recognized business days, and
during hours determined by Landlord in its sole discretion, and
subject to the Rules and Regulations of the Building or Project,
electricity for heating, ventilation and air conditioning ("HVAC") as
is reasonably necessary in Landlord's judgment for the comfortable use
and occupancy of the Premises. If Tenant desires HVAC at any other
time, Landlord shall use reasonable efforts to furnish such service
upon reasonable notice from Tenant and Tenant shall pay Landlord's
charges therefor on demand. Landlord shall also maintain and keep
lighted the common stairs, common entries and restrooms in the
Building. Landlord shall not be in default hereunder or be liable for
any damages directly or indirectly resulting from, nor shall the Rent
be abated by reason of:
(i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the
foregoing services,
(ii) failure to furnish or delay in furnishing any such
services where such failure or delay is caused by accident or
any condition or event beyond the reasonable control of
Landlord, or by the making of necessary repairs or
improvements to the Premises, Building or Project, or
(iii) the limitation, curtailment or rationing of, or
restrictions on, use of water, electricity, gas or any other
form of energy serving the Premises, Building or Project.
Landlord shall not be liable under any circumstances for a loss of or
injury to property or business, however occurring, through or in
connection with or incidental to failure to furnish any such services.
If Tenant uses heat generating machines or equipment in the Premises
which affect the temperature otherwise maintained by the HVAC system,
Landlord reserves the right to install supplementary air conditioning
units in the Premises and the cost thereof, including the cost of
installation, operation and maintenance thereof, shall be paid by
Tenant to Landlord upon demand by Landlord.
9.b. Tenant shall not, without the written consent of Landlord, use any
apparatus or device in the Premises, including without limitation,
electronic data processing machines, punch card machines or machines
using in excess of 120 volts. Tenant shall not connect any apparatus
with electric current except through existing electrical outlets in
the Premises. Tenant shall not consume water in excess of that
usually furnished or supplied for the use of the Premises as general
office space (as determined by Landlord), without first procuring the
written consent
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of Landlord, which Landlord may refuse, and in the event of consent,
Landlord may have installed a water meter in the Premises to measure
the amount of water consumed. The cost of any such meter and of its
installation, maintenance and repair shall be paid for by the Tenant
and Tenant agrees to pay to Landlord promptly upon demand for all such
water consumed as shown by said meter, at the rates charged for such
services by the local public utility plus any additional expense
incurred in keeping account of the water so consumed. If a separate
meter is not installed, the excess cost for such water shall be
established by an estimate made by a utility company.
9.c. Landlord shall provide janitorial service to the Premises which cost
is included and a part of the Operating Expenses for the Office
Building. Such janitorial services shall include those customarily
provided to a tenant in a first class office building, including
rubbish removal, emptying of waste baskets, light dusting, vacuuming,
cleaning glass doors, dusting and polishing hardware on doors and
trash removal from the Office Premises.
9.d. Additional janitorial service to the Premises (including but not
limited to carpet shampooing, interior window washing and wood
polishing) shall be at Tenant's request and expense.
9.e. In the event utilities are separately metered, Tenant shall pay
promptly upon demand for all utilities consumed at utility rates
charged by the local public utility plus any additional expense
incurred by Landlord in keeping account of the utilities so consumed.
Tenant shall be responsible for the maintenance and repair of any such
meters at its sole cost.
9.f. Landlord shall furnish elevator service, lighting replacement for
common area lights, restroom supplies, window washing and common area
janitorial services in a manner that such services are customarily
furnished to comparable office buildings in the area.
10. CONDITION OF THE PREMISES.
Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave
Landlord written notice on or before the commencement Date. No promise of
Landlord to alter, remodel, repair or improve the Premises, the Building or the
Project and no representation, express or implied, respecting any matter or
thing relating to the Premises, Building, Project or this Lease (including,
without limitation, the condition of the Premises, the Building or the Project)
have been made to Tenant by Landlord or its Broker or Sales Agent, other than
as may be contained herein or in a separate exhibit or addendum signed by
Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
11.a. Landlord's Obligations. Landlord shall perform Landlord's Work to the
Premises as described in Exhibit "C". Landlord agrees to repair and
maintain in good order and condition, ordinary wear and tear excepted,
the roof, outside walls, foundations and structural portions (both
interior and exterior) of the Leased Premises and Building. There is
excepted from the preceding covenant, however: repair or replacement
of broken plate or window glass (except in case of damage by fire or
other casualty covered by Landlord's fire and extended coverage policy
or caused by Landlord's employees, agents, or invitees); repair of
damage caused by Tenant, its employees, agents, contractors,
customers; and interior repainting and redecoration. Landlord shall
perform all maintenance and repair work within a reasonable time
period.
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11.b. Tenant's Obligations.
(1) Tenant shall perform Tenant's Work to the Premises as
described in Exhibit "C".
(2) Tenant at Tenant's sole expense shall, except for services
furnished by Landlord pursuant to Section 9 hereof, maintain the
non-structural interior portions of the Leased Premises in good order,
condition and repair, including the interior surfaces of the ceilings,
walls and floors, all doors, all interior windows, all plumbing, pipes
and fixtures, electrical wiring, switches and fixtures, Tenant's
Building Standard Work (as such term is defined in Exhibit "C"
hereto), and return the same at the expiration or termination of this
Lease in as good condition as received by Tenant, ordinary wear and
tear, damage or destruction by fire, flood, civil commotion or
unavoidable cause excepted.
(3) Tenant shall be responsible for all repairs and alterations in
and to the Premises, Building and Project and the facilities and
systems thereof, the need for which arises out of:
(i) (Entire Section was Approved for Deletion Prior to
Execution),
(ii) (Entire Section was Approved for Deletion Prior to
Execution),
(iii) (Entire Section was Approved for Deletion Prior to
Execution),
(iv) the act, omission, misuse or negligence of Tenant,
its agents, contractors, employees or invitees.
(4) If Tenant fails to maintain the Premises in good order,
condition and repair, Landlord shall give Tenant notice to do such
acts as are reasonably required to so maintain the Premises. If
Tenant fails to promptly commence such work as is reasonably required
and diligently prosecute it to completion, then Landlord shall have
the right to do such acts and expend such funds at the expense of
Tenant as are reasonably required to perform such work, any amount so
expended by Landlord shall be paid by Tenant promptly after demand
with interest at the prime commercial rate then being charged by CHASE
BANK OF FLORIDA, N.A plus two percent (2%) per annum, from the date of
such work, but not to exceed the maximum rate then allowed by law.
Landlord shall have no liability to Tenant for any damage,
inconvenience, or interference with the use of the Premises by Tenant
as a result of performing any such work.
11.c. Compliance with Law. Landlord and Tenant shall each do all acts
required to comply with all applicable laws, ordinances, and rules of
any public authority relating to their respective maintenance
obligations as set forth herein.
11.d. Waiver by Tenant. Tenant expressly waives the benefits of any statute
now or hereafter in effect which would otherwise afford the Tenant the
right to make repairs at Landlord's failure to keep the Premises in
good order, condition and repair.
11.e. Load and Equipment Limits. Tenant shall not place a load upon any
floor of the Premises which exceeds the load per square foot which
such floor was designed to carry, as determined by Landlord or
Landlord's structural engineer. The cost of any such determination
made by Landlord's structural engineer shall be paid for by Tenant
upon demand. Tenant shall not install business machines or mechanical
equipment which causes noise or vibration to such a degree as to be
objectionable to Landlord or other Building tenants.
11.f. Except as otherwise expressly provided in this Lease, Landlord shall
have no liability to Tenant nor shall Tenant's obligations under this
Lease be reduced or abated in any manner whatsoever by reason of any
inconvenience, annoyance, interruption or injury to business arising
from Landlord's making any repairs or changes which Landlord is
required or permitted by this Lease or by any other Tenant's lease or
required by law to make in or to any portion of the Project, Building
or the Premises. Landlord shall nevertheless use reasonable efforts
to minimize any interference with Tenant's business in the Premises.
11.g. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical,
electrical, plumbing, HVAC or other systems serving, located in, or
passing through the Premises.
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11.h. Upon the expiration or earlier termination of this Lease, Tenant shall
return the Premises to Landlord clean and in good condition as when
the Tenant took possession, except for normal wear and tear. Any
damage to the Premises, including any structural damage, resulting
from Tenant's use or from the removal of Tenant's fixtures,
furnishings and equipment pursuant to Section 13.b shall be repaired
by Tenant at Tenant's expense.
12. ALTERATIONS AND ADDITIONS.
12.a. Tenant shall not make any additions, alterations or improvements to
the Premises without obtaining the prior written consent of Landlord
which consent will not be unreasonably withheld. Landlord's consent
may be conditioned on Tenant's removing any such additions,
alterations or improvements upon the expiration of the Term and
restoring the Premises to the same condition as on the date Tenant
took possession. All work with respect to any addition, alteration or
improvement shall be done in a good and workmanlike manner by properly
qualified and licensed personnel.
12.b. Tenant shall pay the costs of any work done on the Premises pursuant
to Section 12.a and shall keep the Premises, Building and Project free
and clear of any liens of any kind. Tenant shall protect, indemnify,
defend against and keep Landlord free and harmless from all liability,
loss, damage, costs, attorneys' fees and any other expense incurred on
account of claims by any person performing work or furnishing
materials or supplies for Tenant or any person claiming under Tenant.
12.c. Tenant shall keep Tenant's leasehold interest, and any additions or
improvements which are or become the property of Landlord under this
Lease, free and clear of all attachment or judgment liens. Before the
actual commencement of any work for which a claim or lien may be
filed, Tenant shall give Landlord notice of the intended commencement
date with sufficient time before that date to enable Landlord to post
notices of nonresponsibility or any other notices which Landlord deems
necessary for the proper protection of Landlord's interest in the
Premises, Building or the Project, and Landlord shall have the right
to enter the Premises and post such notices at any reasonable time.
12.d. Landlord may require, at Landlord's sole option, that Tenant provide
to Landlord, at Tenant's expense, security for the payment of all
costs to be incurred in connection with such work and insurance
against liabilities which may arise out of such work. The security
and insurance which may be required pursuant to this Section 12.d
shall be in form and substance, and in the case of insurance with a
company, satisfactory to Landlord. Nothing contained in this Section
12.d shall relieve Tenant of its obligation under Section 12.b to keep
the Premises, Building and Project free of all liens.
12.e. Unless their removal is required by Landlord as provided in Section
12.a, all additions, alterations and improvements made to the Premises
shall become the property of Landlord and be surrendered with the
Premises upon the expiration of the Term; provided, however, Tenant's
equipment, machinery and trade fixtures which can be removed without
damage to the Premises shall remain the property of Tenant and may be
removed, subject to the provisions of Section 13.b.
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.
13.a. All fixtures, equipment, improvements and appurtenances attached to or
built into the Premises at the commencement of or during the Term,
whether or not by or at the expense of Tenant
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("Leasehold Improvements"), shall be and remain a part of the
Premises, shall be the property of Landlord and shall not be removed
by Tenant, except as expressly provided in Section 13.b.
13.b. All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located in
the Premises and acquired by or for the account of Tenant, without
expense to Landlord, which can be removed without structural damage to
the Building, all furniture, furnishings and other articles of movable
personal property owned by Tenant and located in the Premises
(collectively "Tenant's Property") shall be and shall remain the
property of Tenant and may be removed by Tenant at any time during the
Term; provided that if any of Tenant's Property is removed, Tenant
shall promptly repair any damage to the Premises or to the Building
resulting from such removal.
14. RULES AND REGULATIONS.
Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D" and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make. Landlord shall not be responsible for any
violation of said rules and regulations by other tenants or occupants of the
Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord reserves the following rights, exercisable without liability to Tenant
for:
(a) damage or injury to property, person or business,
(b) causing an actual or constructive eviction from the Premises,
or
(c) disturbing Tenant's use or possession of the Premises:
15.a. To name the Building and Project and to change the name or street
address of the Building and Project;
15.b. To install and maintain all signs on the exterior and interior of the
Building and Project;
15.c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;
16. ASSIGNMENT AND SUBLETTING.
No assignment of this Lease or sublease of all or any part of the Premises
shall be permitted, except as provided in this Section 16.
16.a. Tenant shall not, without the prior written consent of Landlord,
assign or hypothecate this Lease or any interest herein or sublet the
Premises or any part thereof, or permit the use of the Premises by any
party other than Tenant. Any of the foregoing acts without such
consent shall be void and shall, at the option of Landlord, terminate
this Lease. This Lease shall not, nor shall any interest of Tenant
herein, be assignable by operation of law without the written consent
of Landlord.
16.b. If at any time or from time to time during the Term Tenant desires to
assign this Lease or sublet all or any part of the Premises, Tenant
shall give notice to Landlord setting forth the terms and provisions
of the proposed assignment or sublease, and the identity of the
proposed assignee or subtenant. Tenant shall promptly supply Landlord
with such information
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concerning the business background and financial condition of such
proposed assignee or subtenant as Landlord may reasonably request.
Landlord shall have the option, exercisable by notice to Tenant within
twenty (20) days after Tenant's notice is given, either to sublet such
space from Tenant at the rent and at the other terms set forth in this
Lease for the term set forth in Tenant's notice, or, in the case of an
assignment, to terminate this Lease. If Landlord does not exercise
such option, Tenant may assign the Lease or sublet such space to such
proposed assignee or subtenant on the following further conditions:
(1) Landlord shall have the right to approve such
proposed assignee or subtenant, which approval shall not be
unreasonably withheld within 15 days and all financial and
personal data has been received;
(2) The assignment or sublease shall be on the same terms
set forth in the notice given to Landlord;
(3) No assignment or sublease shall be valid and no
assignee or sublessee shall take possession of the Premises
until an executed counterpart of such assignment or sublease
has been delivered to Landlord;
(4) No assignee or sublessee shall have a further right
to assign or sublet except on the terms herein contained; and
16.c. Notwithstanding the provisions of paragraphs a and b above, Tenant may
assign this Lease or sublet the Premises or any portion thereof,
without Landlord's consent and without extending any recapture or
termination option to Landlord, to any corporation which controls, is
controlled by, or is under common control with Tenant, or to any
corporation resulting from a merger or consolidation with Tenant, or
to any person or entity which acquires all the assets of Tenant's
business as a going concern, provided that:
(i) the assignee or sublessee assumes, in full, the
obligations of Tenant under this Lease,
(ii) Tenant remains fully liable under this Lease, and
(iii) the use of the Premises under Section 2.k remains
unchanged.
16.d. No subletting or assignment shall release Tenant of Tenant's
obligations under this Lease or alter the primary liability of Tenant
to pay the Rent and to perform all other obligations to be performed
by Tenant hereunder. The acceptance of Rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any
provision hereof. In the event of default by an assignee or subtenant
of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against such assignee,
subtenant or successor. Landlord may consent to subsequent
assignments of the Lease or sublettings or amendments or modifications
to the Lease with assignees of Tenant, without notifying Tenant, or
any successor of Tenant, and without obtaining its or their consent
thereto and any such actions shall not relieve Tenant of liability
under this Lease.
16.e. (This Section was Approved for Deletion Prior to Execution).
17. HOLDING OVER.
If after the expiration of the Term, Tenant remains in possession of the
Premises with Landlord's permission (express or implied), Tenant shall become a
tenant from month to month only, upon all the provisions of this Lease (except
as to Term and Base Rent), but the "Monthly Installments of Base Rent" payable
by Tenant shall be increased to one hundred twenty-five percent (125%) of the
Monthly Installments of Base Rent payable by Tenant at the expiration of the
Term. Such monthly rent shall be payable in advance on or before the first day
of each month. If either party desires to terminate such month to month
tenancy, it shall give the other party not less than thirty (30) days advance
written notice of the date of termination.
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18. SURRENDER OF PREMISES.
18.a. Tenant shall peaceably surrender the Premises to Landlord on the
Expiration Date, in broom-clean condition and in as good condition as
when Tenant took possession, exception for normal wear and tear.
Tenant shall, on Landlord's request, remove Tenant's Property on or
before the Expiration Date and promptly repair all damage to the
Premises or Building caused by such removal.
18.b. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant's Property left on the
Premises shall be deemed to be abandoned, and, at Landlord's option,
title shall pass to Landlord under this Lease as by a bill of Sale.
If Landlord elects to remove all or any part of such Tenant's
Property, the cost of removal, including repairing any damage to the
Premises or Building caused by such removal, shall be paid by Tenant.
On the expiration date Tenant shall surrender all keys to the
Premises.
19. DESTRUCTION OR DAMAGE.
19.a. In the event that the Leased Premises or the Building are destroyed or
damaged by fire, earthquake, explosion, flood, windstorm or other
casualty to such degree that the Tenant is unable to continue normal
business therein or if in Tenant's opinion the Premises or Building
are rendered untenantable or unfit for occupancy, within a period of
thirty (30) days thereafter, the Tenant shall have the option to
declare this Lease terminated as of the date of such damage or
destruction by giving written notice to such effect to the Landlord,
and the rent shall be apportioned as to date of such damage and all
prepaid rent shall forthwith be repaid. In the event Tenant does not
exercise this option, the Landlord shall have the right to render such
Leased Premises or Building tenantable by repairs within ninety (90)
days therefrom. If said Premises are not rendered tenantable within
said time, it shall be optional with either party hereto, upon written
notification, to cancel this Lease and, in the event of cancellation,
the rent shall be paid only to the date of such fire or casualty.
During any time that the Leased Premises are untenantable due to the
causes set forth in this paragraph, rent thereof shall be abated.
Notwithstanding the foregoing, Landlord shall have the right to cancel
this Lease if the Building is substantially destroyed and Landlord
decides not to rebuild it, even if the Leased Premises are not
damaged.
19.b. If any other portion of the Building or Project is totally destroyed
or damaged to the extent that in Landlord's opinion repair thereof
cannot be completed within ninety (90) days, Landlord may elect upon
notice to Tenant given within thirty (30) days after the date of such
fire or other casualty, to repair such damage, in which event this
Lease shall continue in full force and effect, subject to the
abatement of Base Rent provision as set forth in Section 19.a. If
Landlord does not elect to make such repairs, this Lease shall
terminate as of the date of such fire or other casualty. Tenant shall
have the right to terminate this Lease if repairs cannot be completed
within 120 days. Tenant must make election to terminate by written
notification to Landlord at not less than three full months prior to
such termination.
19.c. If the Premises are to be repaired under this Section 19, Landlord
shall repair at its cost any injury or damage to the Building and
Building Standard Work in the Premises. Tenant shall be responsible
at its sole cost and expense for the repair, restoration and
replacement of any other Leasehold Improvements and Tenant's Property.
Landlord shall not be liable for any loss of business, inconvenience
or annoyance arising from any repair or restoration or any portion of
the Premises, Building or Project as a result of any damage from fire
or other casualty.
19.d. This Lease shall be considered an express agreement governing any case
of damage to or destruction of the Premises, Building or Project by
fire or other casualty, and any present or
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future law which purports to govern the rights of Landlord and Tenant
in such circumstances, in the absence of express an agreement, shall
have no application.
20. EMINENT DOMAIN.
20.a. In the event that the Leased Premises or Building shall be taken for
public use by the city, state, federal government, public authority or
other corporation having the power of eminent domain, then this Lease
shall terminate as of the date on which possession thereof shall be
taken for such public use or, at the option of Tenant, as of the date
on which Premises shall become unsuitable for Tenant's regular
business by reason of such taking; provided, however, that if only a
part of the Leased Premises occurs, and Tenant elects not to terminate
the Lease, there shall be a proportionate reduction of the rent to be
paid under this Lease from and after the date such possession is taken
for public use. Lessee shall have the right to participate, directly
or indirectly, in any award for such public taking to the extent that
it may have suffered compensable damage as a Lessee on account of such
public taking.
20.b. In the event of a partial taking of the Premises which does not result
in a termination of this Lease, and Tenant elects not to terminate as
provided in 20.a. above, Landlord shall restore the remaining portion
of the Premises as nearly as practicably to its condition prior to the
condemnation or taking, but only to the extent of Building Standard
Work. Tenant shall be responsible at its sole cost and expense for
the repair, restoration and replacement of any other Leasehold
Improvements and Tenant's Property.
21. INDEMNIFICATION.
21.a. Tenant shall indemnify and hold Landlord harmless against and from
liability and claims of any kind for loss or damage to property of
Tenant or any other person, or for any injury to or death of any
person, arising out of:
(1) Tenant's use and occupancy of the Premises, or any
work, activity or other things allowed or suffered by Tenant
to be done in, on or about the Premises;
(2) any breach or default by Tenant of any of the
Tenant's obligations under this Lease; or
(3) any negligent or otherwise tortious act or omission
of Tenant, its agents, employees, and by counsel satisfactory
to Landlord, protect and defend Landlord in any action or
proceeding arising from any such claim and shall indemnify
Landlord against all costs, attorney's fees, expert witness
fees and any other expenses incurred in such action or
proceeding.
Tenant hereby assumes all risk of damage or injury to any person or
property in, on or about the Premises occupied by Lessee except where
such damage or injury is caused by Landlord's negligence or any event
occurring beyond the bounds or scope of the Premises. Landlord will
indemnify Tenant from any claim arising from any activity in the
common areas and in which the Tenant has no responsibility or is not
in any way involved.
21.b. Landlord shall not be liable for injury or damage which may be
sustained by the person or property of Tenant, its employees, invitees
or customers, or any other person in or about the Premises, caused by
or resulting from fire, steam, electricity, gas, water or rain which
may leak or flow from or into any part of the Premises, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures,
whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or Project or from
other sources. Landlord shall not be liable for any damage arising
from any act or omission of any other tenant of the Building Project.
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22. TENANT'S INSURANCE.
22.a. All insurance required to be carried by Tenant hereunder shall be
issued by responsible insurance companies acceptable to Landlord and
Landlord's mortgagee and qualified to do business in the State. Each
policy shall name Landlord as an additional insured, as their
respective interests may appear. Each policy shall contain:
(i) a cross-liability endorsement,
(ii) a provision that such policy and the coverage
evidenced thereby shall be primary and non-contributing with
respect to any policies carried by Landlord and that any
coverage carried by Landlord shall be excess insurance, and
(iii) a waiver by the insurer of any right of subrogation
against Landlord, its agents, employees, and representatives,
which arises or might arise by reason of any payment under
such policy, or by reason of any act or omission of Landlord,
its agents, employees or representatives.
A copy of each paid up policy (authenticated by the insurer) or
certificate of the insurer evidencing the existence and amount of each
insurance policy required hereunder shall be delivered to Landlord
before the date Tenant is first given the right of possession of the
Premises, and thereafter within thirty (30) days after any demand by
Landlord hereunder. No such policy shall be cancelable except after
ten (10) days written notice to Landlord. Tenant shall furnish
Landlord with renewals or "binders" of any such policy at least ten
(10) days prior to the expiration thereof. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may
(but shall not be required to) procure said insurance on Tenant's
behalf and charge the Tenant the premiums together with a twenty-five
percent (25%) handling charge, payable upon demand. Tenant shall have
the right to provide such insurance coverage pursuant to blanket
policies obtained by the Tenant, provided such blanket policies
expressly afford coverage to the Premises, Landlord, Landlord's
mortgagee and Tenant as required by this Lease.
22.b. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect policies of casualty insurance
covering:
(i) all Leasehold Improvements (including any
alterations, additions or improvements as may be made by
Tenant pursuant to the provisions of Section 12 hereof), and
(ii) trade fixtures, merchandise and other personal
property from time to time in, on or about the Premises, in an
amount not less than eighty percent (80%) of their actual
replacement cost from time to time, providing protection
against any peril included within the classification "Fire and
Extended Coverage" together with insurance against sprinkler
damage, vandalism and malicious mischief.
The proceeds of such insurance shall be used for the repair or
replacement of the property so insured. Upon termination of this
Lease following a casualty as set forth herein, the proceeds under:
(i) above shall be paid to Landlord and the proceeds
under
(ii) above shall be paid to Tenant.
22.c. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect workers' compensation
insurance as required by law and comprehensive public liability and
property damage insurance with respect to the construction of
improvements on the Premises, the use, operation and condition of the
Premises and the operations of Tenant in, on or about the Premises,
providing personal injury and broad form property damage coverage for
not less than One Million Dollars ($1,000,000.00) combined single
limit for bodily injury death and property damage liability.
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22.d. Not less than every three (3) years during the Term, Landlord and
Tenant shall mutually agree to increases in all Tenant's insurance
policy limits for all insurance to be carried by Tenant as set forth
in this Section 22.
23. WAIVER OF SUBROGATION.
23.a. Landlord and Tenant each hereby waive all rights of recovery against
the other and against the officers, employees, agents and
representatives of the other, on account of loss by or damage to the
waiving party or its property or the property of others under its
control, to the extent that such loss or damage is insured against
under any fire and extended coverage insurance policy which either may
have in force at time of the loss or damage.
23.b. Tenant shall, upon obtaining the policies of insurance required under
this Lease, give notice to its insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT
24.a. Upon written request of Landlord, or any first mortgagee or first deed
of trust beneficiary of Landlord, or ground lessor of Landlord, Tenant
shall, in writing, subordinate its rights under this Lease to the lien
of any first mortgage or first deed of trust, or to the interest of
any lease in which Landlord is lessee, and to all advances made or
hereafter to be made thereunder. However, before signing any
subordination agreement, Tenant shall have the right to obtain from
any lender or lessor of Landlord requesting such subordination, an
agreement in writing providing that as long as Tenant is not in
default hereunder, this Lease shall remain in effect for the full
Term. The holder of any security interest may, upon written notice to
Tenant, elect to have this Lease prior to its security interest
regardless of the time of the granting or recording of such security
interest.
24.b. In the event of any foreclosure sale, transfer in lieu of foreclosure
or termination of the lease in which Landlord is lessee, Tenant shall
attorn to the purchaser, transferee or lessor, as the case may be, and
recognize that party as Landlord under this Lease, provided such party
acquires and accepts the Premises subject to this Lease and assumes
all obligations of Landlord.
25. TENANT ESTOPPEL CERTIFICATES.
25.a. Within ten (10) days after written request from Landlord, Tenant shall
execute and deliver to Landlord or Landlord's designee a written
statement certifying:
(1) that this Lease is unmodified and in full force and
effect, or is in full force and effect as modified and stating
the modifications;
(2) the amount of Base Rent and the date to which Base
Rent and additional rent have been paid in advance;
(3) the amount of any security deposited with Landlord;
and
(4) that Landlord is not in default hereunder or, if
Landlord is claimed to be in default, stating the nature of
any claimed default.
25.b. Any such statement may be relied upon by a purchaser, assignee or
lender. Tenant's failure to execute and deliver such statement within
the time required shall at Landlord's election be a default under this
Lease and shall also be conclusive upon Tenant that:
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(1) this Lease is in full force and effect and has not
been modified except as represented by Landlord;
(2) there are no uncured defaults in Landlord's
performance and that Tenant has no right of offset,
counterclaim or deduction against Rent; and
(3) not more than one month's Rent has been paid in
advance.
26. TRANSFER OF LANDLORD'S INTEREST.
26.a. In the event of any sale or transfer by Landlord of the Premises,
Building or Project, and assignment of this Lease by Landlord,
Landlord shall be and is hereby entirely freed and relieved of any and
all liability and obligations contained in or derived from this Lease
arising out of any act, occurrence or omission relating to the
Premises, Building or Project or this Lease occurring after the
consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord
under this Lease.
26.b. If any security deposit or prepaid Rent has been paid by the Tenant,
Landlord may transfer the security deposit or prepaid Rent to
Landlord's successor and upon such transfer, Landlord shall be
relieved of any and all further liability with respect thereto.
27. DEFAULT.
27.a. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
(l) If Tenant abandons or vacates the Premises; or
(2) If Tenant fails to pay any Rent or any other charges
required to be paid by Tenant under this Lease and such
failure continues for ten (10) days after such payment is due
and payable; or
(3) If Tenant fails to promptly and fully perform any
other covenant, condition or agreement contained in this Lease
and such failure continues for thirty (30) days, or if such
default cannot reasonably be cured within thirty (30) days and
Tenant fails to commence to cure within that thirty (30) day
period, after written notice thereof from Landlord to Tenant;
or
(4) If a Writ of Attachment or Execution is levied on
this Lease or on any of Tenant's Property; or
(5) If Tenant makes a general assignment for the benefit
of creditors, or provides for an arrangement, compensation,
extension or adjustment with its creditors; or
(6) If Tenant files a voluntary petition for relief, or
if a petition against Tenant in a proceeding under the federal
bankruptcy laws or other insolvency laws is filed and not
withdrawn or dismissed within forty-five (45) days thereafter,
or if under the provisions of any law providing for
reorganization or winding up of corporations, any court of
competent jurisdiction assumes jurisdiction, custody or
control of Tenant or any substantial part of its property and
such jurisdiction, custody or control remains in force
unrelinquished, unstayed or unterminated for a period of
forty-five (45) days; or
(7) If in any proceeding or action in which Tenant is a
party, a trustee, receiver, agent or custodian is appointed to
take charge of the Premises or Tenant's Property (or has the
authority to do so) for the purpose of enforcing a lien
against the Premises or Tenant's Property; or
(8) If Tenant is a partnership or consists of more than
one (1) person or entity, if any partner of the partnership or
other person or entity is involved in any of the acts or
events described in subparagraphs 4 through 7 above.
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27.b. Remedies. In the event of Tenant's default hereunder, and in addition
to any other rights or remedies Landlord may have under any law,
Landlord shall have the right, at Landlord's option, upon five (5)
days written notice and without any further notice or demand of any
kind, to do the following:
(1) Landlord may terminate this Lease and the Term
created hereby, in which event Landlord may forthwith
repossess the Premises and be entitled to recover forthwith as
damages a sum of money equal to the value of the Rent provided
to be paid by Tenant for the balance of the Term, less the
fair rental value of the Premises for said period, and any
other sum of money and damages owed by Tenant to Landlord.
Should the fair rental value exceed the value of the Rent
provided to be paid by Tenant for the balance of the Term of
the Lease, Landlord shall have no obligation to pay to Tenant
the excess of any part thereof.
(2) Landlord may terminate Tenant's right of possession
and may repossess the Premises by forcible entry and detainee
suit, by taking peaceful possession or otherwise, without
demand or notice of any kind to Tenant and without terminating
this Lease, in which event Landlord may, but shall be under no
obligation to, relet the same for the account of Tenant, for
such Rent and upon such terms as shall be satisfactory to
Landlord. For the purpose of such reletting, Landlord is
authorized to decorate or to make any repairs, changes,
alterations, or additions in or to the Premises that may be
necessary or convenient. If Landlord shall fail to relet the
Premises, Tenant shall pay to Landlord as damages a sum equal
to the amount of rental preserved in this Lease for the
balance of its original Term. If the Premises are relet and a
sufficient sum shall not be realized from such reletting after
paying all of the costs and expenses of such decorations,
repairs, changes, alterations and additions and the expense of
such reletting and of the collection of the rent accruing
therefrom to satisfy the rent provided for in this Lease,
Tenant shall satisfy and pay any such deficiency upon demand
therefor from time to time. Tenant agrees that Landlord may
file suit to recover any sums falling due under the terms of
this paragraph from time to time and that no suit or recovery
of any portion due Landlord hereunder shall be any defense to
any subsequent action brought for any amount not theretofore
reduced to judgment in favor of Landlord.
(3) Tenant hereby constitutes and irrevocably appoints
any attorney of any court to be the true and lawful attorney
of the Tenant, and, in the name, place and stead of the
Tenant, to appear for and on behalf of the Tenant in any court
of record at any time in any suit or suits brought against the
Tenant for the enforcement of any right hereunder by the
Landlord, to waive trial by jury.
(4) The waiver by Landlord of any breach of any term,
covenant or condition of this Lease shall not be deemed a
waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or
condition. Acceptance of Rent by Landlord subsequent to any
breach hereof shall be deemed a waiver of any preceding breach
other than the failure to pay the particular Rent so accepted,
regardless of Landlord's knowledge of any breach at the time
of such acceptance of Rent. Landlord shall not be deemed to
have waived any term, covenant or condition unless Landlord
gives Tenant written notice of such waiver.
27.c. Landlord's Default. If the Landlord fails to perform any covenant,
condition or agreement contained in this Lease within thirty (30) days
after receipt of written notice from Tenant specifying such default,
or if such default cannot reasonably be cured within thirty (30) days,
if Landlord fails to commence to cure within that thirty (30) day
period, then Landlord shall be liable to Tenant for any damages
sustained by Tenant as a result of Landlord's breach; provided,
however, it is expressly understood and agreed that if Tenant obtains
a money judgment against Landlord resulting from any default or other
claim arising under this Lease, that judgment shall be satisfied only
out of the rents, issues, profits, and other income actually received
on account of Landlord's right, title and interest in the Premises,
Building or Project,
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and no other real, personal or mixed property of Landlord (or of any
of the partners which comprise Landlord, if any) wherever situated,
shall be subject to levy to satisfy such judgment. If, after notice
to Landlord of default, Landlord (or any first mortgagee or first deed
of trust beneficiary of Landlord) fails to cure the default as
provided herein, then Tenant shall have the right to cure that default
at Landlord's expense and Landlord will pay immediately upon demand on
receipt of written and accepted bill for charges incurred by Tenant
and pay interest at 12% p.a. on any arrears after 30 days.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate
broker or agent in connection with this Lease or its negotiation except Broker
and Sales Agent. Tenant shall protect, defend, indemnify and hold Landlord
harmless from any cost, expense or liability (including costs of suit and
reasonable attorneys' fees) for any compensation, commission or fees claimed by
any other real estate broker or agent in connection with this Lease or its
negotiation by reason of any act of Tenant.
29. NOTICES.
All notices, approvals and demands permitted or required to be given under this
Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. Mail, postage prepaid, and
addressed as follows:
As to Tenant:
------------
AMSCO STERILE RECOVERIES, INC.
28100 U.S. 19 NORTH, SUITE 201
CLEARWATER, FL 34621
With Copies to:
---------------
ATT:
Amsco International Inc.
2424 West 23 Street
Erie, PA 16514
As to Landlord:
---------------
Coastal 2920 Corporation
P. 0. Box 1465
Dunedin, Florida 34697-1465
With Copies to:
---------------
Coastal Builders, Inc.
2920 US Hwy 19 North, Suite 208
Clearwater, Florida 34621
Attention: Jason K. Lesser, President
Landlord and Tenant may from time to time designate another place for receipt
of future notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, or restrictions on the use or consumption of energy or other utilities
during the Term, both Landlord and Tenant shall be bound thereby. In the event
of a difference in interpretation by Landlord and Tenant of any such
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controls, the interpretation of Landlord shall prevail, and Landlord shall have
the right to enforce compliance therewith including the right of entry into the
Premises to effect compliance.
31. RELOCATION OF PREMISES.
(Entire Section Approved for Deletion Prior to Execution)
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Tenant shall, at its sole cost and expense, promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force, and with the
requirements of any board of fire insurance underwriters or other similar
bodies now or hereafter constituted, relating to or affecting the condition,
use or occupancy of the Premises, excluding structural changes not related to
or affected by Tenant's improvements or acts. The judgment of any court of
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether Landlord is a party thereto or not, that Tenant has violated any law,
statute, ordinance or governmental rule, regulation or requirement, shall be
conclusive of that fact as between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or Tenant
which is due to strikes, labor disputes, inability to obtain labor, materials,
equipment or reasonable substitutes there of, acts of God, governmental
restrictions or regulations or controls, judicial orders, enemy or hostile
government actions, civil commotion, fire or other casualty, or other causes
beyond the reasonable control of the party obligated to perform hereunder,
shall excuse performance of the work by that party for a period equal to the
duration of that prevention, delay or stoppage. Nothing in this Section 34
shall excuse or delay Tenant's obligation to pay Rent or other charges under
this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to after notice as set forth in
applicable clauses of this Lease) without waiving such default, perform the
same for the account and at the expense of Tenant. Tenant shall pay Landlord
all costs of such performance promptly upon receipt of a bill therefor.
36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or
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outside of windows or doors, without the written consent of Landlord. Landlord
shall have the right to remove any signs or other matter, installed without
Landlord's permission, without being liable to Tenant by reason of such
removal, and to charge the cost of removal to Tenant as additional rent
hereunder, payable within ten (10) days of written demand by Landlord.
37. MISCELLANEOUS.
37.a. Accord and Satisfaction; Allocation of Payment. No payment by Tenant
or receipt by Landlord of a lesser amount than the Rent provided for
in this Lease shall be deemed to be other than on account of the
earliest due Rent, nor shall any endorsement or statement of any check
or letter accompanying any check or payment as Rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of the
Rent or pursue any other remedy provided for in this Lease. In
connection with the foregoing, Landlord shall have the absolute right
in its sole discretion to apply any payment received from Tenant to
any account or other payment of Tenant then not current and due or
delinquent.
37.b. Addenda. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision contained
in the addendum shall control, unless otherwise provided in the
addendum.
37.c. Attorneys' Fees. If any action or proceeding is brought by either
party against the other pertaining to or arising out of this Lease,
the finally prevailing party shall be entitled to recover all costs
and expenses, including reasonable attorneys' fees incurred on account
of such action or proceeding.
37.d. Captions, Articles and Section Numbers. The captions appearing within
the body of this Lease have been inserted as a matter of convenience
and for reference only and in no way define, limit or enlarge the
scope or meaning of this Lease. All references to Article and Section
numbers refer to Articles and Sections in this Lease.
37.e. Changes Requested by Lender. Neither Landlord nor Tenant shall
unreasonably withhold its consent to changes or amendments to this
Lease requested by any lender on Landlord's interest, so long as these
changes do not alter the basic business terms of this Lease or
otherwise materially diminish any rights or materially increase any
obligations of the party from whom consent to such change or amendment
is requested.
37.f. Choice of Law. This Lease shall be construed and enforced in
accordance with the laws of the State.
37.g. Consent. Notwithstanding anything contained in this Lease to the
contrary, Tenant shall have no claim, and hereby waives the right to
any claim, against Landlord for money damages by reason of any
refusal, withholding or delaying by Landlord of any consent, approval
or statement of satisfaction, and in such event, Tenant's only
remedies therefor shall be an action for specific performance,
injunction or declaratory judgment to enforce any right to such
consent, etc.
37.h. Corporate Authority. If Tenant is a corporation, each individual
signing this Lease on behalf of Tenant represents and warrants that he
is duly authorized to execute and deliver this Lease on behalf of the
corporation, and that this Lease is binding on Tenant in accordance
with its terms. Tenant shall, at Landlord's request, deliver a
certified copy of a resolution of its board of directors authorizing
such execution.
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37.i. Counterparts. This Lease may be executed in multiple counterparts,
all of which shall constitute one and the same Lease.
37.j. Execution of Lease; No Option. The submission of this Lease to Tenant
shall be for examination purposes only, and does not and shall not
constitute a reservation of or option for Tenant to lease, or
otherwise create any interest of Tenant in the Premises or any other
premises within the Building or Project. Execution of this Lease by
Tenant and its return to Landlord shall not be binding on Landlord,
notwithstanding any time interval, until Landlord has in fact signed
and delivered this Lease to Tenant.
37.k. Furnishing of Financial Statements, Tenant's Representations. In
order to induce Landlord to enter into this Lease, Tenant agrees that
it shall promptly furnish Landlord, from time to time, upon Landlord's
written request, financial statements reflecting Tenant's current
financial condition. Tenant represents and warrants that all
financial statements, records and information furnished by Tenant to
Landlord in connection with this Lease are true, correct and complete
in all respects.
37.l. Further Assurances. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
37.m. Prior Agreements; Amendments. This Lease contains all of the
agreements of the parties with respect to any matter covered or
mentioned in this Lease, and no prior agreement or understanding
pertaining to any such matter shall be effective for any purpose. No
provisions of this Lease may be amended or added to except by an
agreement in writing signed by the parties or their respective
successors in interest.
37.n. Recording. Tenant shall not record this Lease without the prior
written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a "short form" memorandum of this Lease
for recording purposes.
37.o. Severability. A final determination by a court of competent
jurisdiction that any provision of this Lease is invalid shall not
affect the validity of any other provision, and any provision so
determined to be invalid shall, to the extent possible, be construed
to accomplish its intended effect.
37.p. Successors and Assign. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the
parties.
37.q. Time of the Essence. Time is of the essence in this Lease.
37.r. Waiver. No delay or omission in the exercise of any right or remedy
of Landlord upon any default by Tenant shall impair such right or
remedy or be construed as a waiver of such default.
37.s. Delinquent Rent. The receipt and acceptance by Landlord of delinquent
Rent shall not constitute a waiver of any other default; it shall
constitute only a waiver of timely payment for the particular Rent
payment involved.
37.t. Surrender. No act or conduct of Landlord, including, without
limitation, the acceptance of keys to the Premises, shall constitute
an acceptance of the surrender of the Premises by Tenant before the
expiration of the Term.
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37.u. Landlord's Consent. Landlord's consent to or approval of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.
38. SPECIAL PROVISIONS
38.a. Furniture Buyout: Thirty days after the signing of this Lease, Tenant
will deposit with Landlord the sum of $6151.97 for the purchase of the
furniture described in the attached inventory supplied by Chase
Manhattan Bank of Florida. If for any reason Tenant's occupancy ends
before October 31, 1992 Landlord shall have the option to pay to
Tenant the sum $6151.97 for ownership of the same inventory as above.
38.b. Signage: Landlord will provide signage space on the outside pylon
sign as shown on attached sketch. Landlord shall be responsible for
the cost of preparing such sign once.
38.c. Additional Buildout: Landlord shall stain and add provincial molding
trim to interior doors and to inside of exterior doors of the
Premises. Landlord will replace vinyl base molding with wood except
in kitchen/break area and storage/copy area. Moldings and base will
be stained to match existing mahogany color.
38.d. Renewal Option: Providing that Tenant shall not be in default under
any of the terms and provisions of this Lease, Landlord grants to
Tenant the option to renew this lease for one term of three (3) years.
However, in order to exercise this option, Tenant shall provide
written notice in the manner provided in Paragraph 29 of this Lease to
the Landlord not later than July 1, 1994.
38.e. Rent Commencement: Rent payments will commence on November 1, 1991.
38.f. Initial Space: Landlord agrees to deliver immediate possession to
that portion of the Premises shown on Exhibit "A" outlined in red of
approximately 3900 sq. ft. and for purposes of this clause to be known
as the "Initial Space". Landlord and Tenant agree to cooperate to
minimize any inconvenience or interference to either party's business
operation to complete the additional improvements as noted in 38.c. of
this Lease. That portion of the Premises shown on Exhibit "A" not
outlined in red of approximately 2000 sq. ft. and for Purposes of this
clause to be known as the "Expansion Space" shall be improved by
Landlord according to the following schedule:
1. Tenant shall provide Landlord with an acceptable
space plan on or before October 1, 1991. Space plan to be
completed by designee of Landlord.
2. Landlord will be responsible for finishing the
expansion space in the same manner of finish as the Initial
Space except without columns, without cove ceilings, walls to
ceiling height and according to Buildout letter attached to
this Lease as Exhibit "C".
3. Landlord shall be substantially complete with all
improvements on or before January 1, 1992.
38.g. Rent Concessions:
1. Payment of rent will commence on November 1, 1991, for that
area known as the Initial Space comprising approximately 3900 sq. ft.
2. Full payment of rent shall commence on completion and
acceptance of expansion space, subject to rent concessions in terms of
3. below. In the event space known as
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Expansion Space is not substantially complete, then rent shall
continue as partial payment as in 38.g.1 above until Expansion Space
is ready for Tenant use and accepted by Tenant. Tenant shall not
unreasonably refuse acceptance and shall do so in a timely manner.
3. Payment of rent for October 1992, October 1993 and October
1994 is waived subject to tenant not being in default in terms of this
lease.
38.h. Existing Lease:
This lease is subject to Landlord signing a mutual release with Chase
Bank of Florida who currently has a lease on the designated premises.
In the event no release is signed within 60 days of this agreement all
parties to this lease shall be released from all rights and
obligations in terms of this contract and any liabilities that may
arise therefrom. Tenant shall have sixty days notice to vacate
premises in the event release is not obtained.
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39. EXECUTION OF LEASE
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
set forth on page one (1) hereof.
<TABLE>
<S> <C>
Witnesses: Landlord:
/s/ Eugene Maxon /s/ Jason K. Lesser
- ---------------------------------------------- -------------------------------------------------------
President
/s/ Thomas R. Kapp COASTAL 2920 CORPORATION
- --------------------------------------------- -------------------------------------------------------
- --------------------------------------------- -------------------------------------------------------
Witnesses: Tenant:
/s/ Eugene Maxon Sterile Recoveries, Inc.
- ---------------------------------------------- -------------------------------------------------------
/s/ Thomas R. Kapp /s/ Wayne R. Peterson
- ---------------------------------------------- -------------------------------------------------------
Wayne R. Peterson
Vice President
- ---------------------------------------------- -------------------------------------------------------
</TABLE>
STATE OF FLORIDA
COUNTY OF PINELLAS
Sworn, subscribed and acknowledged to and before me by Jason K. Lesser
as President of Coastal 2920, Landlord of the foregoing Lease Agreement, this
21st day of August, 1991.
/s/ Marsha L. Lesser
---------------------------------------
STATE OF FLORIDA
COUNTY OF PINELLAS
Sworn, subscribed and acknowledged to and before me by Wayne R. Peterson
as Vice President of Sterile Recoveries, Inc., Tenant of the foregoing Lease
Agreement, this 21st day of August, 1991.
/s/ Marsha L. Lesser
--------------------------------------
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EXHIBIT "A"
WALL LEGEND
(Consisting of two pages)
This Exhibit depicts the plans of that portion of the second floor
known as Suite 201 in the Coastal 2920 office building located at 28100 U.S.
Highway 19 North, Clearwater, Florida. Page 1 of 1 of Exhibit "A" includes the
entry area, kitchen, offices 1 through 9 and secretarial area #1. Page 2 of 2
of Exhibit "A" shows a portion of the reception area and kitchen, a work room,
telephone room, offices 9 through 14 and secretarial area #2.
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EXHIBIT "B"
SITE PLAN
The site plan illustrates the Coastal 2920 building foot print,
parking and landscape diagram for the real property located at 28100 U.S.
Highway 19 North, Clearwater, Florida, including legend on site data and
building square footage.
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EXHIBIT "C"
BUILDING STANDARD WORK LETTER
Except as otherwise provided below, Landlord's work shall be shown on plans
(the "Plans") prepared by Landlord's architect, Graham Design Associates, P.A.,
("Architect"), or Engineer, Paul E. Hagler, P.E., ("Engineer"), for Coastal
2920 Corporation and approved by the City of Dunedin. Copies of the plans are
available for Tenant's review at Landlord's Office.
In addition to Landlord's work, Landlord shall also provide the following items
at no cost to Tenant:
1. Exterior Walls - party and corridor walls shall be 1/2"
drywall plus soundboard.
2. Interior Partitions - Landlord shall provide interior
partitions of 10 lineal feet for every one hundred and twenty-five
(125) square feet within the office premises. Interior partitions
shall be from floor to suspended ceiling height. Interior partitions
shall be constructed of 25 ga. metal. framing @ 24" o.c. covered with
1/2" drywall.
3. Doors - In addition to the minimum number of entrance doors
required by the Building Code of Pinellas County, Landlord shall
provide one (1) office door per twenty (20) lineal feet of interior
partitioning. All doors will be 3'-0" x 6'-8" x 1 3/4" solid core
birch veneer (stain grade) wood doors in 5/4 f.j. painted jambs with
three hinges and one standard passage lock set.
4. Electric Outlets - Landlord shall provide one (1) 110-120 volt
duplex receptacle per seventy-five (75) square feet within the leased
premises.
5. Lighting and Light Switches - Landlord shall furnish and
install three (3) 2' X 4' recessed fluorescent light fixtures per two
hundred (200) square feet within the leased premises and electrical
switches equal to the number of doors installed.
6. Telephone Outlets - Landlord shall provide one (1) 100 SE
conduit and receptacle box for each 150 square feet in the Office
Premises. Tenant shall provide outside wiring and connection as
required by Tenant's contractor.
7. Floor covering - Landlord shall provide wall-to-wall carpet
from a selection of standard carpets, including pad, vinyl base and
installation. Tenant shall be responsible to pay the excess of cost
of such floor covering in excess of $7.00 per yard.
8. Ceiling - Landlord shall provide a 2' X 4' suspended metal
grid ceiling with revealed edge, non directional acoustical tile.
9. Wall Covering - Landlord shall provide one coat of white paint
primer and one coat of white paint over the interior side of all
drywall surfaces furnished by Landlord.
10. Window Covering - Any window covering shall be at Tenant's
expense; providing, however, pursuant to the rules and regulations of
the Landlord all window covering must be of a type and color approved
by Landlord.
11. Air Conditioning - Landlord will provide zoned and centralized
heating and air conditioning system for the Office Premises in a
capacity and with sufficient duct work extended to exterior walls and
windows so that the distribution capacity will be sufficient to
maintain the offices in a comfortable working condition.
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12. Permit - The cost of all building permits to perform work
which is part of Landlord's work shall be paid by the Landlord.
13. Plumbing - All plumbing brought to and within the office
Premises shall be at Tenant's expense and of specification approved by
Architect. Tenant shall have access to central plumbing for the floor
in which the Office Premises is located.
14. Fire Sprinkler System -- Landlord will provide a complete fire
sprinkler system to be incorporated in and be a part of the office
Building.
15. Special Provisions - All building standard work as enumerated
in 1. to 14. above shall be subject to specific requirements in terms
of Section 38 in the attached lease.
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EXHIBIT "D"
RULES AND REGULATIONS
ATTACHED TO AND MADE A PART OF THIS LEASE
1. No Tenant shall obtain for use upon the Premises ice, drinking water,
towels or other similar service or accept barbering or boot blacking
services on the Premises, except from persons authorized by Landlord
and at the hours and under regulations fixed by Landlord.
2. The bulletin board or directory of the Building will be provided for
the display of the names and location of Tenant only; Landlord
reserves the right to exclude any other names therefrom.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose
other than ingress and egress from the Premises. The halls, passages,
exits, entrances, elevators, stairways, balconies and roof are not for
the use of the general public and Landlord shall in all cases retain
the right to control and prevent access thereto by all persons whose
presence, in the judgment of Landlord, may be prejudicial to the
safety, character, reputation or best interest of the Building and its
Tenant; provided that nothing herein contained shall be construed to
prevent such access to persons with whom Tenant normally deals in the
ordinary course of Tenant's business unless such persons are engaged
in illegal activities. No Tenant, employees nor invitees of any
Tenant shall go upon the roof of the Building.
4. Tenant shall not alter any lock or install any new or additional locks
or any bolts on any doors of the Premises.
5. The toilet room urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they are constructed;
no foreign substance of any kind whatsoever shall be thrown therein,
and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant, its employees. or
invitees who caused it.
6. Tenant shall not overload the floor of the Premises or mark, drive
nails, screw or drill into the partitions, woodwork or plaster or in
any way deface the Premises or any part thereof, notwithstanding
normal office decorations or work boards.
7. No furniture, freight or equipment of any kind shall be brought into
the Building without the consent of Landlord and all moving of the
same into and out of the Building shall be done at such time and in
such manner as Landlord shall designate. All safes and other heavy
equipment brought into the Building shall be subject to certification
by an engineer acceptable to the Landlord. Landlord will not be
responsible for loss of or damage to any safe or property from any
cause; all damage done to the Building by moving or maintaining any
such safe or other property shall be repaired at the expense of
Tenant.
8. Tenant shall not employ any person or persons other than the janitor
of Landlord for purpose of cleaning the Premises unless otherwise
agreed to by Landlord. Except with the written consent of Landlord,
no person or persons other than those approved by Landlord shall be
permitted to enter the Building for the purpose of cleaning the same.
Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and
cleanliness. Landlord shall in no way be responsible to any Tenant
for any loss of property on the Premises however occurring or for any
damage done to the effects of any Tenant by the janitor or any other
employee or any other person. Janitorial service shall include
ordinary dusting and cleaning by the janitor assigned to such work and
shall not include
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cleaning of carpets or rugs, except normal vacuuming, or moving of
furniture or other special services.
9. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or objectionable
to Landlord or other occupants of the Building by reason of noise,
odors and/or vibrations, or interfere in any way with Tenant or those
having business therein, nor shall any animals or birds be brought in
or about the Premises or the Building.
10. No cooking, except with microwave, shall be done or permitted by any
Tenant on the Premises, nor shall the Premises be used for the storage
of merchandise, for washing clothes, for lodging, or for any improper,
objectionable or immoral purposes.
11. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material, or
use any method of heating or air conditioning other than that supplied
by Landlord.
12. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced to the Premises. No boring or
cutting for wires is permitted without the consent of Landlord. The
location of telephones, call boxes and other office equipment affixed
to the Premises shall be subject to the approval of Landlord.
13. Each Tenant, upon termination of its tenancy, shall deliver to
Landlord all keys to the Building and all parts thereof which shall
have been furnished Tenant or which Tenant shall have had made, and in
the event of loss of any keys so furnished, shall pay to Landlord
therefor.
14. No Tenant shall lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the
Premises in any manner except as approved by Landlord. The expense of
repairing any damage resulting from violation of this rule or from
removal of any floor covering shall be borne by the Tenant, its
contractors, employees or invitees who may have caused the damage.
15. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators,
except between hours and in such elevators as shall be designated by
Landlord.
16. On Saturdays, Sundays, legal holidays, and on other days between the
hours of 6:00 P.M. and 8:00 A.M. the following day, access to the
Building, or to the halls corridors, elevators or stairways in the
Building, or to the Premises, may be refused unless the person seeking
access is known to the person or employee of the Building in charge
and has a pass or is properly identified. The Landlord shall in no
case be liable for damages for any error with regard to the admission
or exclusion of any person. In case of invasion, mob, riot, public
excitement, or other commotion, the Landlord reserves the right to
prevent access to the Building during the continuances of same by
closing the doors or otherwise, for the safety of the Tenant and
protection of the Building and property in the Building.
17. Tenant shall see that the doors of the Premises are closed and
securely locked before leaving the Building and must observe strict
care and caution that all water faucets or water apparatus are
entirely shut off before Tenant or Tenant's employees leave the
Building, and that all electricity shall likewise be carefully shut
off so as to prevent waste or damage. For any default or carelessness
Tenant shall make good all injuries sustained by other tenants or
occupants of the Building or Landlord.
18. Landlord reserves the right to exclude or expel from the Building, any
person who, in the
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judgment of Landlord, is intoxicated or under the influence of drugs,
or who shall in any manner commit any act in violation of any of the
rules and regulations of the Building.
19. The requirements of Tenant will be attended to only upon application
at the office of the Building. Employees of Landlord will not perform
any work or do anything outside of their regular duties unless under
special instructions from Landlord.
20. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent
of the Landlord.
21. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and the street address of the
Building.
22. Tenant shall not disturb, solicit, or canvas any occupant of the
Building and shall cooperate to prevent the same.
23. Without the written consent of Landlord, Tenant shall not use the name
of the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
24. Tenant shall not place any sign upon the Premises or Building or
conduct any action thereon except as set forth in Exhibit "E", which
has received the approval of the Landlord as a part of this Lease.
25. Landlord shall furnish heating and air conditioning during the hours
of 7:30 A.M. through 6:30 P.M., Monday through Friday (except
holidays), and 8:00 A.M. through 12:00 P.M. on Saturdays. In the
event Tenant requires heating and air conditioning during off hours,
Sunday or holidays, Landlord shall, on notice, provide this at an
hourly rate to be established by Landlord.
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<PAGE> 34
EXHIBIT "F"
SIGN
Drawing of the pylon monument sign, measuring approximately 30'0" high
x 15'0" wide, located at the northwest corner of the intersection of U.S.
Highway 19 North and Republic Drive for the benefit of all tenants of the
Coastal 2920 building.
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CLEARWATER 2ND FLOOR
<TABLE>
<CAPTION>
ASSET # DESCRIPTION PURCHASE PRICE SALE PRICE
------- ----------- -------------- ----------
<S> <C> <C> <C>
5500 COUCH, 91" 975.00 341.00
5501 CHAIR, UPHOLSTERED 512.00 179.00
5502 CHAIR, UPHOLSTERED 512.00 179.00
5506 TABLE, CORNER 347.00 121.00
5509 CHAIR, CONFERENCE 559.00 195.00
5510 CHAIR, CONFERENCE 559.00 195.00
5511 CHAIR, CONFERENCE 559.00 195.00
5512 CHAIR, CONFERENCE 559.00 195.00
5513 CHAIR, CONFERENCE 559.00 195.00
5514 CHAIR, CONFERENCE 559.00 195.00
6216 CHAIR, HIGH BACK PULL-UP 400.00 140.00
6217 CHAIR, HIGH BACK PULL-UP 400.00 140.00
6268 CHAIR, HIGH BACK PULL-UP 295.00 103.00
6403 DESK, MAHOGANY TABLE 1,150.00 402.00
6472 DESK, DOUBLE PEDESTAL 750.00 262.00
6525 CHAIR, HIGH BACK PULL-UP 280.00 98.00
6645 DESK, DOUBLE PEDESTAL 615.00 215.00
6646 CREDENZA 375.00 131.00
6647 FILE, 2 DRAWER 300.00 105.00
6648* DESK, EXECUTIVE TABLE 1,380.00 483.00
6653 CHAIR, EXECUTIVE 460.00 161.00
6665* DESK, DOUBLE PEDESTAL 615.00 215.00
6683 CHAIR, HIGH BACK PULL-UP 295.00 103.00
6684 CREDENZA 400.00 140.00
6690 CREDENZA, 8 DRAWER 920.00 322.00
6706 CHAIR, HIGH BACK PULL-UP 277.00 96.00
6753 CREDENZA, 4 DRAWER, 2 DOOR 345.00 120.00
6766 CREDENZA, 8 DRAWER, 2 DOOR 920.00 322.00
6785 CHAIR, HIGH BACK PULL-UP 390.00 136.00
6834 CHAIR, HIGH BACK PULL-UP 277.00 96.00
</TABLE>
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<TABLE>
<CAPTION>
ASSET # DESCRIPTION PURCHASE PRICE SALE PRICE
------- ----------- -------------- ----------
<S> <C> <C> <C>
6867 CHAIR, HIGH BACK PULL-UP 295.00 103.00
6905 CHAIR, HIGH BACK PULL-UP 390.00 136.00
6924 CHAIR, HIGH BACK PULL-UP 390.00 136.00
7002 DESK, DOUBLE PEDESTAL 615.00 215.00
7016 CHAIR, HIGH BACK PULL-UP 277.00 96.00
7018 CREDENZA 920.00 322.00
7025 CHAIR, HIGH BACK PULL-UP 277.00 96.00
7034 CREDENZA, 8 DRAWER, 2 DOOR 920.00 322.00
7035 FILE, 2 DRAWER 300.00 105.00
7040 CHAIR, EXECUTIVE 320.00 112.00
7078 DESK, EXECUTIVE TABLE 1,150.00 402.00
7082 CHAIR, LOW BACK 368.00 128.00
7083 CHAIR, LOW BACK 368.00 128.00
7126 CHAIR, LOW BACK 368.00 128.00
7208 CHAIR, LOW BACK 368.00 128.00
7209 CHAIR, LOW BACK 368.00 128.00
7711 CHAIR, HIGH BACK PULL-UP 258.00 90.00
7712 CHAIR, HIGH BACK PULL-UP 258.00 90.00
7771 CHAIR, HIGH BACK PULL-UP 258.00 90.00
7772 CHAIR, HIGH BACK PULL-UP 258.00 90.00
6245 DESK, EXECUTIVE 440.00 154.00
6990 CHAIR, ARM, HIGH BACK PULL-UP 277.00 96.00
8072 REFRIGERATOR 370.00 129.00
NONE 4 OPERATOR CHAIRS @ $120.00 480.00 168.00
NONE 4 SIDE CHAIRS @ $250.00 1,000.00 350.00
NONE FILE, 2 DRAWER METAL 120.00 42.00
6272* CREDENZA 375.00 93.00
NONE TABLE DESK 1,150.00 402.00
8260 CORNER TABLE 180.00 63.00
NONE DESK, EXECUTIVE SECRETARY 820.00 287.00
NONE 3 CHAIRS, LOW BACK @ $368.00 1,104.00 386.00
12261 CONFERENCE TABLE 6 FT. 555.00 194.00
</TABLE>
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<TABLE>
<CAPTION>
ASSET # DESCRIPTION PURCHASE PRICE SALE PRICE
------- ----------- -------------- ----------
<S> <C> <C> <C>
NONE DRUM TABLE 210.00 73.00
NONE 1 LOUNGE TABLE AND
5 WOODEN CHAIRS 430.00 150.00
NONE LOVE SEAT 250.00 87.00
---------- ----------
SUB TOTAL $33,031.00 $11,499.00
7% SALES TAX 804.93
TOTAL $12,303.93
</TABLE>
TOTAL BOOK VALUE IS $ 0.00
SALE PRICE IS 65% OFF PURCHASE PRICE.
* REPRESENTS 75% OFF PURCHASE PRICE (DAMAGED)
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ADDENDUM 1
Addendum to Lease agreement dated August 16, 1991 by and between Coastal 2920
Corporation, a Florida corporation, (hereinafter Landlord) and Amsco Sterile
Recoveries, Inc., a Delaware corporation. (hereinafter Tenant).
1. With effect from October 1, 1992 Tenant shall Lease additional space
on second floor adjacent to Tenant's existing space. The additional space as
designated in Exhibit A.1 comprises 3382 square feet of usable space.
2. In terms of Paragraph 2.a. annual base rent shall be increased by
$53,503.24 to $146,841.24 plus applicable Florida sales tax.
3. In term of Paragraph 2.m. the rentable area is increased to 10,488.66 square
feet.
4. In terms of Paragraph 2.q. Tenant's proportionate share shall be
12.47% (9282/74450).
5. Monthly rent including sales tax at current rate shall be $13,093.34.
6. There shall be no rent concessions (as per 38.q.3 of Lease) for the
additional space.
7. Premises shall be rented in as-is condition subject to Landlord
cleaning carpets and walls.
8. All other terms and conditions of the Lease shall apply.
Signed and witnessed this the 5th day of October 1992.
Witness: Landlord:
- ------- --------
/s/ Eugene Maxon /s/ Joel Traub
- --------------------------------- ----------------------------------------
/s/ Jason Lesser
- --------------------------------- ----------------------------------------
Witness: Tenant: AMSCO Sterile Recoveries, Inc.
- ------- ------
/s/ Lydia P. Zickefoose /s/ Wayne R. Peterson
- --------------------------------- ----------------------------------------
Wayne R. Peterson
/s/ Linda A. Sloan Vice President
- --------------------------------- ----------------------------------------
<PAGE> 39
ADDENDUM 2
Addendum to Lease agreement dated August 16, 1991 and Addendum dated October 5,
1992 by and between Coastal 2920 Corporation, a Florida corporation,
(hereinafter referred to as Landlord) and Amsco Sterile Recoveries Inc., a
Delaware corporation, (hereinafter referred to as Tenant).
1. With effect from June 1, 1993 Tenant shall lease additional space on
second floor adjacent to Tenant's existing space. The additional
space as designated in Exhibit Add.2.1, comprises two office suites
currently marked #209 and #202, of 3,662 sq. ft. and 921 sq.ft. usable
space, and referred to as Expansion 1 and Expansion 2 respectively.
2. Rent shall be due for Expansion 1 from June 1, 1993 and for Expansion
2 from date of vacancy of existing tenant. It is anticipated that the
existing tenant will vacate on or about June 15, 1993.
3. Landlord shall complete alterations, as per Exhibit Add.2.1, to
additional space by June 30, 1993 for Expansion 1 and within 30 days
of existing tenant vacating for Expansion 2.
4. In the event Landlord has not substantially completed the alterations
within the time permitted for each additional expansion space in terms
of 3. above, no further rent shall be due for the specific additional
space until the alterations are substantially complete.
5. Build out to match current standards in existing Suite 209 and carpet
to match emerald green of expansion space referred to in Addendum 1.
6. In terms of Paragraph 2.f. of Lease agreement dated August 16, 1993
the expiration date of the initial term of the Lease shall be extended
by two years to October 31, 1996.
7. In terms of Paragraph 2.a. of the Lease agreement and Paragraph 2. of
the Addendum, referred to above, the annual base rent shall be
increased by $72,503.06 to $219,280.13 plus applicable sales tax.
8. Monthly rent including sales tax at current rate shall be $19,489.54.
9. There shall be no rent concessions (as per 38.q.3. of Lease) for the
additional space.
10. In terms of Paragraph 2.q. Tenant's proportionate share shall be
18.56% (13816/74450).
11. All other terms and conditions of the Lease agreement dated August 16,
1991 and Addendum dated October 5, 1992 shall remain in full force and
effect.
Signed and Witnessed this the 23rd day of June 1993.
Witness: Landlord:
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/s/ Eugene Maxon /s/ Joel Traub
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Vice President
Coastal 2920 Corp.
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Witness: Tenant:
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/s/ Wayne R. Peterson /s/ Richard T. Isel
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Asst. Secretary President
6/23/93 6/23/93
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AMSCO STERILE RECOVERIES INC.
REVISED RENT CALCULATION AT JUNE 1, 1993
<TABLE>
<S> <C>
Rent for existing space $ 13,024.68
Rent for expansion spaces
Expansion 1
4138.06 sq.ft. rentable @ $14.00 p.a.
plus sales tax 5,165.68
-----------
Due June 1, 1993 $ 18,190.36
- ----------------
Expansion 2
1040.73 sq.ft. rentable @ $14.00 p.a.
plus sales tax 1,299.18
-----------
Revised monthly rent $ 19,489.54
-----------
</TABLE>
* Revision as per Addendum 2
* Expansion 2 rent only due when existing tenant vacates and will be
adjusted pro rata for portion of month
<PAGE> 41
ADDENDUM 3
THIS ADDENDUM 3 (this "Addendum") to Lease is made as of May 31, 1994,
by and among COASTAL 2920 CORPORATION, a Florida corporation ("Landlord"), and
INTERNATIONAL DATA MATRIX, INC., a Florida corporation ("I.D. Matrix"), and
AMSCO STERILE RECOVERIES, INC., a Delaware corporation ("Tenant").
RECITALS
A. Tenant is the lessee under a Lease Agreement dated August 19,
1991 (the "Original Lease"), wherein Landlord leased to Tenant approximately
5900 square feet of Useable Area (6667 square feet of Rentable Area) in an
office building located at 28100 U.S. Highway 19 North, Clearwater, Florida, as
reflected on the floor plan at attached hereto as Exhibit A (the "Original
Premises"). The Original Lease has been amended by an Addendum dated October
5, 1992 and an Addendum dated June 23, 1993 (together, the "Addenda"). The
Original Lease and the Addenda are herein collectively referred to as the
"Existing Lease".
B. Tenant desires to terminate the Existing Lease to the extent
that it relates to the Original Premises, and I. D. Matrix desires to lease the
Original Premises from Landlord pursuant to a lease of even date herewith (the
"Matrix Lease").
NOW, THEREFORE, In consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the
parties agree as follows:
1. Definitions: Capitalized terms used but not defined herein
shall have the same meaning as used in the Existing Lease.
2. Partial Termination: The Existing Lease is hereby terminated,
to the extent that it relates to the Original Premises, effective as of June
30, 1994 ("Effective Date"). Tenant agrees to vacate the Original Premises on
or before June 24, 1994. As of the Effective Date:
(a) The Premises will consist solely of the space which
was added thereto by the Addenda consisting of 7,916.326 square feet of Useable
Area and 8,945.448 square feet of Rentable Area;
(b) The term "Annual Base Rent" shall mean $131,498.08,
plus applicable Florida State sales tax.
(c) The term "Monthly Installments of Base Rent"
including applicable Florida State sales tax shall mean $11,725.25.
(d) The term "Tenant's Proportionate Share" shall mean
7,916.326/74,450 = 10.63%.
3. Termination Fee. In consideration of the foregoing, Tenant
agrees that, upon the Effective Time of this Addendum (as defined in Section 10
hereof), Tenant shall pay Landlord the sum of Seventy-six Thousand Eight
Hundred Dollars ($76,800.00).
4. Telephone Easement. Notwithstanding the foregoing, Landlord
and I.D. Matrix hereby grant an easement to Tenant to use the Original Premises
to locate its phone system equipment and connections, the switch for which will
be located in the existing telephone room. Tenant shall have access to and
from the Original Premises (at any reasonable time, upon reasonable oral notice
to I.D. Matrix) in order to use, maintain, repair and replace such equipment
and connections.
<PAGE> 42
5. Right of First Offer. If at any time during the Term, Tenant
elects to assign, sublet or permit any third party to use any space which is
contiguous to the Original Premises, Tenant shall give I.D. Matrix written
notice of that fact (the "First Offer Notice"), and i.D. Matrix shall have the
first opportunity to negotiate a sublease with Tenant for such contiguous space
(but only to the extent that Tenant elects to vacate the same) on such terms
and conditions as may be acceptable to Tenant and I.D. Matrix, provided that
(a) Tenant and I.D. Matrix agree to use good faith efforts to agree upon the
terms and conditions of a sublease, consistent with Exhibit B attached hereto;
and (b) if I.D. Matrix and Tenant are unable to execute and deliver to each
other a sublease within ten (10) business days following I.D. Matrix's receipt
of the First Offer Notice, then I.D. Matrix's rights under this Paragraph shall
expire and Tenant shall have no obligation or liability whatsoever to I.D.
Matrix under this Section 5. Provided I.D. Matrix is not then in default under
the Matrix Lease, Landlord hereby consents to the sublease contemplated hereby.
In the event that Tenant and Landlord mutually agree to terminate the Existing
Lease, Tenant shall promptly provide written notice of that fact to I.D.
Matrix.
6. Brokers. Landlord, Tenant and I.D. Matrix each warrants that
they have dealt with no other real estate broker in connection with this
transaction except CB COMMERCIAL REAL ESTATE GROUP, INC. (the "Broker"), which
represents I.D. Matrix. I.D. Matrix warrants and represents to Landlord and
Tenant that the total real estate brokerage commission payable to the Broker in
connection with both this Addendum and the Matrix Lease is Nine Thousand and
00/100 Dollars ($9,000.00) (the "Commission"). Upon the Effective Time of this
Addendum, Tenant shall pay Broker the Commission.
7. Mutual Release. Upon the Effective Date of this Addendum,
Landlord and Tenant hereby mutually release each other with respect to any and
all claims which they may now have against the other under the Existing Lease,
but only to the extent that any such claims relate to the Original Premises,
provided, however, that this release shall not relate to the obligations of
Landlord and Tenant under this Addendum.
8. Access and Use During June, 1994. Tenant agrees to provide
access to the Original Premises to I.D. Matrix prior to June 24, 1994 for
purposes of changes, improvements and the like. It is hereby agreed that I.D.
Matrix's occupancy shall begin June 24, 1994. I.D. Matrix hereby agrees to
indemnify and hold Tenant harmless from any and all claims, suits, damages or
injuries caused by I.D. Matrix resulting from said access and use during June,
1994.
9. Notices. Any notice, consent, approval, request or demand
permitted or required hereby must be made in accordance with the requirements
of Section 29 of the Existing Lease and the address of I.D. Matrix for such
purpose is 28100 U.S. 19 North, Suite 200, Clearwater, Florida 34621.
10. Binding Effect. The provisions of this Addendum bind the
parties and their respective successors and assigns, provided, however, that
I.D. Matrix has executed this Addendum solely for the purposes of being bound
by Sections 4, 5, 6, 8, 9 and 10 hereof. Except as expressly amended hereby,
the Existing Lease shall remain in full force and effect.
11. Counterparts, Legal Effect. This Addendum may be executed in
any number of counterparts, each of which shall be deemed an original but all
such counterparts shall constitute but one and the same instrument. This
Addendum shall have no legal effect whatsoever unless and until such time (the
"Effective Time") as all three of the parties hereto have executed it (or a
counterpart hereof) and deliver it (or such counterpart) to all of the other
parties hereto.
2
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto, with the intent to be legally
bound hereby, have caused this Addendum to be executed by their respective duly
authorized officers as of the date first written above.
SIGNED AND ACKNOWLEDGED COASTAL 2920 CORPORATION
IN THE PRESENCE OF:
/s/ Jason Lesser By: /s/ Joel Traub
- ----------------------------- -------------------------------------
Printed Name: Joel Traub
Name: Jason Lesser -------------------------------------
-------------------- Title: Vice President
-------------------------------------
SIGNED AND ACKNOWLEDGED
IN THE PRESENCE OF: AMSCO STERILE RECOVERIES, INC.
/s/ Jason Lesser
- ----------------------------- By: /s/ Lawrence A. Martone
Printed -------------------------------------
Name: Jason Lesser Name: Lawrence A. Martone
-------------------- -------------------------------------
Title: Chief Financial Officer
-------------------------------------
SIGNED AND ACKNOWLEDGED
IN THE PRESENCE OF: INTERNATIONAL DATA MATRIX, INC.
/s/ Jason Lesser
- ----------------------------- By: /s/ Stephen M. Wagman
Printed -------------------------------------
Name: Jason Lesser Name: Stephen M. Wagman
-------------------- -------------------------------------
Title: Vice President
-------------------------------------
STATE OF FLORIDA )
)
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this 31st dy of
May, 1994 by Joel Traub of COASTAL 2920 CORPORATION, a Florida corporation. He
is personally known to me or has produced_____________________ as
identification and did take an oath.
/s/ Linda A. Sloan
--------------------------------------------
Notary Public in and for the STATE OF FLORIDA
Linda A. Sloan
--------------------------------------------
Typed or Printed Name of Notary
My Commission Expires:
NOTARY PUBLIC STATE OF FLORIDA
MY COMMISSION EXP JULY 2, 1994
BONDED THRU GENERAL INS. UND.
3
<PAGE> 44
STATE OF FLORIDA )
)
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this 31st dy of
May, 1994 by Lawrence A. Martone of AMSCO STERILE RECOVERIES, INC., a Delaware
corporation. He is personally known to me or has produced______________ as
identification and did take an oath.
/s/ Linda A. Sloan
----------------------------------------------
Notary Public in and for the STATE OF FLORIDA
Linda A. Sloan
----------------------------------------------
Typed or Printed Name of Notary
My Commission Expires:
NOTARY PUBLIC STATE OF FLORIDA
MY COMMISSION EXP JULY 2, 1994
BONDED THRU GENERAL INS. UND.
STATE OF FLORIDA )
)
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this 31st dy of
May, 1994 by Stephen M. Wagman of INTERNATIONAL DATA MATRIX, INC., a Florida
corporation. He is personally known to me or has produced ___________________
__________________________ as identification and did take an oath.
/s/ Linda A. Sloan
----------------------------------------------
Notary Public in and for the STATE OF FLORIDA
Linda A. Sloan
----------------------------------------------
Typed or Printed Name of Notary
My Commission Expires:
NOTARY PUBLIC STATE OF FLORIDA
MY COMMISSION EXP JULY 2, 1994
BONDED THRU GENERAL INS. UND.
4
<PAGE> 45
EXHIBIT "A"
DEMISED PREMISES
OF ADDENDUM #3
Plans of all of the office space originally described in Exhibit "A"
and covering offices 1 through 14 of the original lease space. The entire
space is cross hatched.
<PAGE> 46
EXHIBIT "B"
During the sublease, the rental rate on such contiguous space shall be
calculated as follows:
(i) $10.50 per year, per square foot of rentable area for the
period from August 1, 1994 through June 30, 1995;
(ii) $11.50 per year, per square foot of rentable area for the
period from July 1, 1995 through June 30, 1996; and
(iii) $12.50 per year, per square foot of rentable area for the
remainder of the term of the Matrix lease.
<PAGE> 47
GENERAL OFFICES - CLEARWATER
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts
the foregoing assignment and agrees to assume, perform and be bound by all of
the duties, obligations and liabilities of Assignor under the Lease, arising on
and after the date of this instrument for the remainder of the term of the
Lease and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the 31st day of July, 1994.
<TABLE>
<S> <C>
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
--------------------------------
/s/ Kathleen Clover By: Wm. J. Rieflin
- ---------------------------------- -----------------------------
Print Name: Kathleen Clover Its: Secretary
----------------------- ----------------------------
- ----------------------------------
Print Name:
-----------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
--------------------------------
/s/ Kathleen Clover By: J. T. Boosales
- ---------------------------------- -----------------------------
Print Name: Kathleen Clover Its: E.V.P.
----------------------- ----------------------------
- ----------------------------------
Print Name:
-----------------------
</TABLE>
- 2 -
<PAGE> 49
EXHIBIT A
General Offices, Clearwater, Florida.
A. Lease agreement dated August 16, 1991 between Coastal 2920 Corporation
as Landlord and AMSCO Sterile Recoveries, Inc. as Tenant.
B. Addendum dated October 5, 1992 between Coastal 2920 Corporation as
Landlord and AMSCO Sterile Recoveries, Inc. as Tenant.
C Addendum 2 dated June 23, 1993 between Coastal 2920 Corporation as
Landlord and AMSCO Sterile Recoveries, Inc. as Tenant.
D Addendum 3 dated May 31, 1994 among Coastal 2920 Corporation as
Landlord and International Data Matrix, Inc. as new tenant of part of
premises, and AMSCO Sterile Recoveries, Inc. as Tenant.
<PAGE> 1
EXHIBIT 10.17
LEASE BETWEEN
WINCHESTER HOMES INC.
and
WEYERHAEUSER REAL ESTATE COMPANY
Landlord
AND
AMSCO STERILE RECOVERIES, INC.
Tenant
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C> <C>
1. Grant/Term/Use. . . . . . . . . . . . . . . . . . . 1
2. Rent. . . . . . . . . . . . . . . . . . . . . . . . 2
3. Construction and Acceptance of Leased Premises. . . 2
4. Operating Expenses. . . . . . . . . . . . . . . . . 2
5. Security Deposit. . . . . . . . . . . . . . . . . . 5
6. Utilities . . . . . . . . . . . . . . . . . . . . . 5
7. Maintenance and Repair by Landlord. . . . . . . . . 5
8. Control . . . . . . . . . . . . . . . . . . . . . . 5
9. Occupancy by Tenant . . . . . . . . . . . . . . . . 5
10. Insurance; Indemnity. . . . . . . . . . . . . . . . 6
11. Repairs . . . . . . . . . . . . . . . . . . . . . . 7
12. Tenant's Property . . . . . . . . . . . . . . . . . 7
13. Improvements and Alterations by Tenant. . . . . . . 8
14. Casualty. . . . . . . . . . . . . . . . . . . . . . 8
15. Subletting and Assignment . . . . . . . . . . . . . 9
16. Liens . . . . . . . . . . . . . . . . . . . . . . . 9
17. Condemnation. . . . . . . . . . . . . . . . . . . . 9
18. Parking . . . . . . . . . . . . . . . . . . . . . . 9
19. Access. . . . . . . . . . . . . . . . . . . . . . . 11
20. Signs . . . . . . . . . . . . . . . . . . . . . . . 10
21. Subordination . . . . . . . . . . . . . . . . . . 10
22. Tenant's Default. . . . . . . . . . . . . . . . . . 10
23. Landlord's Remedies . . . . . . . . . . . . . . . . 12
24. Quiet Enjoyment . . . . . . . . . . . . . . . . . . 13
25. Financing . . . . . . . . . . . . . . . . . . . . . 13
26. Holdover Tenancy. . . . . . . . . . . . . . . . . . 14
27. Estoppel Certificate/Financial Statement. . . . . . 14
28. Miscellaneous . . . . . . . . . . . . . . . . . . . 14
29. Special Provisions. . . . . . . . . . . . . . . . . 17
30. Landlord's Default. . . . . . . . . . . . . . . . . 18
</TABLE>
EXHIBIT "A" - Leased Premises
EXHIBIT "A-1" - Land
EXHIBIT "B" - Annual Base Rent
EXHIBIT "C" - Landlord's Work
EXHIBIT "C-1" - Tenant's Work
EXHIBIT "D" - Certificate
EXHIBIT "E" - Rules and Regulations
KEY TERMS
(a) "Additional Rent" is defined in Section 2.
(b) "Base Rent" is defined in Section 2.
(c) "Commencement Date" is defined in Section 1
(d) "Common Areas" is defined in Section l(a).
(e) "Declaration" is defined in Section 4(b).
<PAGE> 3
LEASE
THIS LEASE (the "Lease") is made as of the 28th day of August, 1992, by
and between (i) AMSCO Sterile Recoveries, Inc. ("Tenant") , a Delaware
corporation, (ii) Winchester Homes Inc. ("WHI") , a Delaware corporation, and
Weyerhaeuser Real Estate Company ("WRECO"), a Washington corporation
("Landlord").
WITNESSETH THAT, for and in consideration of the rentals herein reserved,
the mutual covenants and agreements herein set forth and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
covenant and agree as follows:
1. GRANT/TERM/USE. (a) Subject to the terms, conditions and provisions
hereof, Landlord does hereby demise, lease and let unto Tenant, and Tenant does
hereby rent and take from Landlord, approximately 32,050 square feet of space
(the "Leased Premises") (as outlined on Exhibit "A" attached hereto and made a
part hereof), being a portion of that certain building (the "Building")
located, or to be constructed by Landlord, at 6675 Business Parkway, on the
land (the "Land") described on Exhibit "A-1" attached hereto and made a part
hereof; together with the nonexclusive revocable license to use, in common with
all others entitled to such use, the Common Areas. The Building, Common Areas
and Land are hereinafter sometimes collectively referred to as the "Project."
The term "Common Areas" is hereby defined as those areas forming a part of the
Land and/or Building designated by Landlord for the nonexclusive, general
common use of tenants and their employees, agents, licensees, invitees and the
like, including, without limitation, all parking areas, access roads, trash
pickup and/or dumpster areas, truckways, driveways, loading docks, delivery and
pickup passages and areas, sidewalks, ramps, landscaped and planted areas,
retaining walls, roof, exterior walls (including window frames but excluding
window panes), downspouts, lighting facilities and the like.
(b) This Lease shall be in full force and effect from the date first
above written. The term of this Lease (the "Term") shall be for a period of
125 months commencing on the Commencement Date. The term "Commencement Date"
is hereby defined as September 1, 1992. Tenant shall be granted five (5)
months of free Base Rent from the Commencement Date.
Tenant shall be entitled to renew the Lease for up to two (2) additional
terms (each of which is hereinafter referred to as a "Renewal Term") of five
(5) years each, commencing on the date on which (but for such renewal) the
then-current Term would have expired. Tenant shall have this right provided
for each Renewal Term, Tenant (i) gives written notice to Landlord of Tenant's
decision to exercise its renewal no later than one hundred eighty (180) days
prior to the expiration of the then current Term, and (ii) no Event of Default
exists at the time of exercise of such option or on the date the applicable
Renewal Term is to commence. Should Tenant elect not to exercise its renewal
during the first renewal period, said remaining Renewal Term shall be null and
void.
Each Renewal Term shall be upon the same terms and conditions as
contained in the Lease; provided, however, that the Base Rent during the first
year of each Renewal Term shall be increased by the cumulative annual increase
in the index now known as the "United States Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners and Clerical Workers," all items for
Baltimore, Maryland MSA (1982-1984=100) herein referred to as the "Index". The
Base Rent during the initial year (Year 11) of the first Renewal Term (years
11-15) shall increase over Year 10's Base Rent by the cumulative amount of the
increase in the Index over years 6-10, not to exceed six percent (6%) a year.
The Base Rent for the remaining years (12-15) of the initial Renewal Term will
remain constant with Year 11's Base Rent.
The Base Rent during the initial year (Year 16) of the second Renewal
Term (years 16-20) shall increase over Year 15's Base Rent by the cumulative
amount of the increase in the Index over Year's 11-15. The Base Rent for the
remaining years (17-20) of the second Renewal Term will remain constant with
Year 16's Base Rent. Exhibit "B" illustrates the formula.
(c) Tenant shall use and occupy the entire Leased Premises during the
entire Term solely for the purpose of a laundry, sterilization and hospital
reprocessing facility with related offices. Landlord represents that the
Leased Premises are zoned M-1.
Landlord acknowledges that AMSCO Sterile Recoveries, Inc.'s proposed use
of the Leased Premises (i) entails the handling of soiled operating room linens
and other materials from hospitals, medical clinics, laboratories and other
health services related facilities, and (ii) the use of industrial detergents,
bleaches and disinfectants. Provided that (i) such handling and use is
performed in a safe and first class manner in compliance with all applicable
laws, statutes, rules, regulations and interpretations thereof, including, but
not limited to, Environmental Laws, and all reasonable rules and regulations as
Landlord shall prescribe, and (ii) AMSCO Sterile Recoveries, Inc. is the
"Tenant" hereunder, Landlord consents to such use and handling. Tenant
acknowledges that it is Tenant's responsibility, and Tenant covenants, to fully
comply with all applicable statutes, laws, rules, regulations, orders and
interpretations thereof.
<PAGE> 4
2. RENT. Commencing on the Commencement Date as adjusted by the free rent
period, Tenant shall, and hereby covenants and agrees to, pay to Landlord
during each Lease Year of the Term an annual base rental ("Base Rent") as set
forth on Exhibit "B" attached hereto and made a part hereof. The term "Lease
Year" is hereby defined as each successive twelve consecutive month period
beginning on the Commencement Date. The annual Base Rent shall be paid by
Tenant in lawful money of the United States in equal consecutive monthly
installments on or before the first day of each calendar month in advance.
Base Rent for any partial month shall be prorated at the rate of 1/30th of the
monthly Base Rent per day. Tenant shall pay to Landlord as additional rent
("Additional Rent") hereunder all charges and other amounts required to be paid
by Tenant to Landlord under this Lease, whether or not designated herein as
rent or additional rent. The term "Rent" is hereby defined as Base Rent and
Additional Rent. All Rent shall be paid by Tenant to Landlord, without any
deduction or setoff at Landlord's address set forth at Section 28(b) hereof.
3. CONSTRUCTION AND ACCEPTANCE OF LEASED PREMISES. (a) Landlord shall
proceed to commence the work to be performed by Landlord (the "Landlord's
Work"), as described in Exhibit "C" attached hereto and made a part hereof),
with such minor variations as Landlord may deem advisable. The Landlord's Work
be deemed "substantially complete" on the date Landlord, or Landlord's
architect, certifies that Landlord has substantially completed the Landlord's
Work. Further, the Landlord's Work shall be deemed substantially complete on
the date the Landlord's Work would have been substantially complete but for one
or more of the following causes: (i) changes in the Landlord's Work requested
by Tenant; (ii) delays in furnishing materials or procuring labor required by
Tenant for installation or work in the Leased Premises which are not
encompassed within the Landlord's Work; (iii) any failure by Tenant to promptly
furnish any required plans and specifications, information, requirement,
approval or consent; or (iv) the performance of any work or activity in or on
the Leased Premises, or any other acts or omissions, by Tenant or any of the
Tenant's employees, agents, contractors or others acting for or on behalf of
Tenant. If Tenant is unable to construct the Tenant's Alterations (as
described in Exhibit "C-1" attached hereto and made a part hereof) due solely
to force majeure (for purposes of this sentence, force majeure being those
occurrences which would excuse the performance by Landlord of its obligations
hereunder pursuant to Section 28(n) hereof, but, in and all events, excluding
those occurrences and every delay due to Tenant's inability to perform its
financial obligations or pay any amounts due, or charges or sums owing to any
person(s) whatsoever those occurrences and delays that Landlord would not have
experienced if Landlord were constructing such Tenant's Alterations and those
items and matters described in (i)-(iv) in the immediately preceding sentence),
the Commencement Date and Tenant's payment of Base Rent and any Additional Rent
shall, unless and until Tenant, or any one claiming by, through or under
Tenant, first commences beneficial use of all or any portion of the Leased
Premises, be extended one (1) day for each day of delay caused solely by such
force majeure (as certified to Landlord and Tenant by Landlord's architect).
If, for any reason whatsoever, the Leased Premises are not ready for occupancy
on or prior to the Commencement Date, this Lease shall remain in full force and
effect, Landlord shall not be deemed to be in default hereunder or otherwise
liable in damages or otherwise to Tenant and the Term shall not be affected.
(b) Tenant agrees to furnish to Landlord, on or before the Commencement
Date, all final and permanent certificates of occupancy, permits and licenses
from all applicable local authorities necessary or required with respect to the
occupation and use of the Leased Premises by Tenant as herein contemplated;
provided, however, that Tenant's failure to do so shall not delay the
Commencement Date.
(c) Landlord shall give Tenant at least 10 days' prior written notice
of the date Landlord expects the Landlord's Work to be substantially complete.
Tenant agrees to take possession of the Leased Premises and complete Tenant's
Alterations (as described in Exhibit C-1) no later than the Commencement Date,
and Tenant's failure to do so shall be an Event of Default hereunder. Tenant's
initial occupancy of the Leased Premises shall be deemed an acknowledgment that
the Leased Premises is in good and tenantable order and that Landlord has fully
completed the Landlord's Work (except for those items agreed to by Landlord and
Tenant specified on a punchlist delivered by Tenant to Landlord within two (2)
days of the date Landlord's Work is substantially complete following any joint
walk-through and inspection of the Leased Premises by Landlord and Tenant).
Landlord and Tenant each agree that at the request of the other they will, at
any time on or after the Commencement Date, execute and deliver a certificate
in the form of Exhibit "D" attached hereto and made a part hereof; provided,
however, that the failure to do so shall not affect any of the terms hereof.
(d) Tenant may occupy the Leased Premises for purposes of performing
its Alterations (as described in Section 13 and Exhibit C-1) on August 10, 1992,
provided that Tenant complies with the following: (i) Tenant shall take all
necessary measures to ensure that its contractors shall cooperate in all ways
with Landlord's contractors to avoid any delay to the work performed or to be
performed by Landlord's contractors and any conflict in any other way with the
performance of such work, (ii) Tenant shall comply with all reasonable
procedures and regulations prescribed by the Landlord, and (iii) prior to
commencing such work, Tenant delivers to Landlord the policies of insurance
required by the Lease to be in effect from the commencement of such work.
4. OPERATING EXPENSES. (a) In addition to Base Rent, Tenant shall pay as
Additional Rent during each Lease Year of the Term, Tenant's Prorata Share of
(i) Common Area Maintenance Expenses estimated to be fifteen cents ($0.15) per
square foot of leasable area of the
2
<PAGE> 5
building, (ii) Real Estate Taxes per square foot of leasable area of the
Building in excess of forty cents ($.40) per square foot of leasable area of
the Building and (iii) Insurance Costs per square foot of leasable area of the
Building in excess of nine cents ($0.09) per square foot of leasable area of
the Building. "Tenant's Prorata Share" shall be the percentage determined by
dividing the total leasable area of the Leased Premises by the total leasable
area of the Building. On the date hereof, Tenant's Prorata Share of the
141,600 square foot building is projected to be 23% (twenty-three percent).
(b) "Common Area Maintenance Expenses" shall mean any and all costs and
expenses whatsoever incurred or paid by Landlord relating to or in connection
with operating, maintaining, repairing, and replacing, and providing services
to, the Building, Common Areas and the Land (and all easements, rights and
appurtenances thereto), including, but not limited to: (i) costs and expenses
of operating, maintaining, repairing, replacing, lighting, painting, decorating
and cleaning the Project, removing snow, ice and debris therefrom, and policing
and regulating traffic therein and thereon; (ii) assessments or charges imposed
pursuant to the Declaration of Covenants, Conditions and Restrictions of
Meadowridge Business Park, dated December 27, 1989, as amended, superseded or
supplemented, from time to time (as amended, superseded or supplemented, the
"Declaration"); (iii) depreciation of machinery and equipment used for such
operations; (iv) costs and expenses of supplies and equipment and maintenance
and service contracts; (v) costs and expenses of replacing, repairing, repaving
and striping pavements, curbs, walkways, parking areas, driveways and
truckways, drainage and lighting facilities and other Common Areas amenities;
(vi) all utility expenses, costs and charges; (vii) contributions with respect
to, and costs and expenses of maintenance, repair and replacement of, on and
off-site utility systems serving the Project; (viii) all landscaping
(including, but not limited to, maintenance and new and replacement plantings),
(ix) amortization expenses; (x) charges and costs of or by contractors and
agents employed by Landlord; (xi) commissions, wages, salaries and other labor
costs of all persons engaged in such maintenance, operation, repair and the
like (including, but not limited to, taxes, insurance, medical and other
benefits); (xii) except for any capital expenditures incurred in replacing the
roof, any capital expenditures incurred either to reduce Common Area
Maintenance Expenses, to comply with any governmental law, order, requirement
or regulation or to replace existing structures, equipment and machinery, such
capital costs to be amortized over such reasonable period as Landlord shall
determine, together with interest at the rate paid by Landlord on any funds
borrowed for such expenditures; (xiii) legal and accounting fees and charges
(except as otherwise provided hereinafter); and (xiv) any other expenses or
charges included in Common Area Maintenance Expenses with respect to comparable
office-warehouse buildings in the Baltimore/Washington Corridor area. Common
Area Maintenance Expenses shall not include any of the following: any
management expenses, ground rent; interest and amortization of funds borrowed
by Landlord (except as specifically provided above); leasing commissions and
advertising, legal, and space planning expenses incurred in procuring tenants
for the Building; and salaries, wages, or other compensation paid to officers
or executives of Landlord in their capacities as officers and executives. If
less than ninety-five percent (95%) of the leasable area of the Building is
occupied by tenants at all times during any calendar year, then Common Area
Maintenance Expenses for such year shall include all additional costs and
expenses that Landlord reasonably determines would have been incurred had
ninety-five percent (95%) of the Building been occupied at all times during
such year by tenants.
(c) "Real Estate Taxes" for which Tenant is responsible for only its
Prorata Share, shall mean any and all real estate taxes, assessments, water and
sewer rents and charges, liens, charges, levies and other governmental
impositions and charges of every kind and nature whatsoever, general or
special, ordinary or extraordinary, foreseen or unforeseen, assessed, levied or
imposed upon, or arising in connection with, the Building or the Land or
assessed, levied or imposed upon, or arising in connection with, the fixtures,
machinery, equipment or systems, in, upon or used in connection with the
operation of the Building or the Land; including, but not limited to,
metropolitan district water and sewer charges, any assessments for public
facilities or improvements for the area in which the Project is located and
taxes, assessments, charges and the like upon this Lease or any rents from the
use, occupancy or possession of the Project. If, because of any change in the
method of taxation of real estate or because of the enactment of any new tax by
federal, state, county or local government, any other tax or assessment is
imposed upon Landlord, or the rents or income derived from the Project, in
substitution for, or in lieu of, or in addition to, any tax or assessment which
would otherwise be included within Real Estate Taxes, such other tax or
assessment shall be deemed included within Real Estate Taxes hereunder. Real
Estate Taxes shall also include all expenses incurred by Landlord in obtaining
or attempting to obtain a reduction of Real Estate Taxes, including, but not
limited to, legal fees incurred on a contingency basis.
Landlord shall have no obligation to contest or appeal an assessment of
Real Estate Taxes. Provided that (i) Landlord shall not have first commenced
the proceedings hereinafter described (whether before or after Tenant's notice
described hereinafter), (ii) Tenant's hereinafter described protest or appeal
shall not trigger a default under any Mortgage, (iii) Tenant is in full, timely
and strict compliance with all of its obligations hereunder including, but not
limited to, Tenant's obligation to pay, on a timely basis as set forth in
Section 4(e), Tenant's Prorata Share of Real Estate Taxes (including those the
subject of Tenant's protest, petition or appeal), and (iv) Tenant diligently
and continuously prosecutes such protest, appeal or petition, the Tenant shall
have the right, to protest or appeal any such assessment and/or tax rate
relating to Real Estate Taxes, to petition for a refund or rebate of the whole
or part of any Real Estate Taxes, and to carry on any proper proceedings, legal
or otherwise, in connection therewith. Tenant agrees to give Landlord written
notice of Tenant's election to commence any such proceedings at least thirty
(30) days prior to initiation of such proceedings. The
3
<PAGE> 6
cost and expense of any such proceedings instituted by Tenant shall be borne
by Tenant. In the event Tenant shall obtain an abatement, reduction, or
refund, an appropriate adjustment or refund shall be made by Landlord to Tenant
in the amount due from or paid by Tenant on account of Real Estate Taxes.
(d) "Insurance Costs" shall mean all insurance costs and expenses
incurred or paid by Landlord relating to all insurance of whatsoever nature
kept or caused to be kept by Landlord and/or the Landlord under the Master
Lease (as defined in Section 29 hereof) in connection with the ownership,
operation, use or management of the Project, including, but not limited to, any
and all policies of fire and extended coverage insurance (including, without
limitation, extended and broad form coverage risks, mudslide, land subsidence,
flood and earthquake), rent and business interruption insurance, boiler
insurance, sprinkler insurance, comprehensive general public liability
insurance (including, without limitation, an all-risk liability endorsement)
and excess liability insurance.
(e) Tenant's Prorata Share of such Common Area Maintenance Expenses, Real
Estate Taxes and Insurance Costs for each calendar year shall be paid in
monthly installments in advance on the first day of each calendar month,
commencing with the Commencement Date, in amounts reasonably estimated by
Landlord to be Tenant's Prorata Share thereof based upon, among other things,
actual expenses, if any, incurred with respect to the immediately preceding
calendar year. Such estimates may be revised, at any time and from time to
time during such calendar year (but in no event more often than 4 times during
any calendar year), in which event Tenant shall immediately commence making
monthly payments hereunder pursuant to such new statement and, in addition,
with the next monthly payment of Base Rent, pay to Landlord the difference
between monthly payments for the preceding months based on such revised
statement and the amount actually paid by Tenant with respect to such preceding
months; it being understood, acknowledged and agreed, however, that as to
Common Area Maintenance Expenses, Real Estate Taxes and Insurance Costs payable
or paid in advance by Landlord, Tenant covenants and agrees to pay Tenant's
Prorata Share thereof within 10 days after receipt of Landlord's written demand
therefor. Within 120 days following the expiration of such calendar year,
Landlord shall furnish to Tenant a written statement showing the actual amount
of Tenant's Prorata Share of Common Area Maintenance Costs, Real Estate Taxes
and Insurance Costs for such calendar year and the payments thereto made by
Tenant. If the payments made by Tenant shall exceed Tenant's actual share of
such costs, Tenant shall, provided Tenant is not in default hereunder, (giving
effect to all, if any, notice and right to cure periods hereunder) be entitled
to a credit for such excess against payments next thereafter due to Landlord
pursuant to this Section 4; it being understood, acknowledged and agreed,
however, that if Tenant is indebted to Landlord hereunder in any amount for any
reason whatsoever, Landlord may deduct such amount owed from such overpayment.
If Tenant's share of such costs shall exceed the payments made by Tenant,
Tenant shall pay to Landlord the deficiency within 30 days after Landlord shall
submit the aforesaid statement to Tenant. Tenant's obligations pursuant to
this Section 4 shall survive the expiration or sooner termination of this
Lease. Landlord's failure to provide the statement called for above in this
Section 4(e) shall not release or relieve Tenant of Tenant's obligations under
this Section 4 or elsewhere in this Lease.
Provided that (i) Tenant is in full, timely and strict compliance with all
of its obligations hereunder, (giving effect to all, if any, notice and right
to cure periods hereunder) and (ii) Tenant provides Landlord with a written
statement requesting to audit Landlord's books and records with respect to
Common Area Maintenance Expenses, Real Estate Taxes and Insurance Costs within
ninety (90) days after Tenant's receipt of Landlord's statement, then Tenant
shall have the right to employ an independent auditor to inspect and audit
Landlord's books and records relating to Common Area Maintenance Expenses, Real
Estate Taxes and Insurance Costs for the calendar year in question, such
inspection and audit to be performed not later than ninety (90) days after the
expiration of such ninety (90) day period. If Tenant elects to employ such
auditor, Tenant shall provide Landlord not less than three (3) days' notice of
the date on which the auditor shall examine Landlord's books and records during
regular business hours and Landlord shall cooperate with such auditor. If such
audit shows that the amounts paid by Tenant to Landlord on account of increases
in such charges exceeded the amounts to which Landlord was entitled hereunder
and Landlord agrees with such audit, Landlord shall refund to Tenant the amount
of such excess within thirty (30) days of the date Landlord is notified in
writing of the error. If such audit shows that the amounts paid by Tenant to
Landlord on account of increases in such charges were less than the amounts to
which Landlord was entitled hereunder, Tenant shall, within thirty (30) days
pay to Landlord the amount of such shortfall. All costs and expenses of any
such audit shall be paid by Tenant, except if such audit discloses (and
Landlord agrees) that the amounts paid by Tenant to Landlord exceeded the
amounts to which Landlord was entitled by more than five percent (5%), in which
event Landlord shall reimburse Tenant within thirty (30) days for the
reasonable out-of-pocket costs and expenses incurred by Tenant in such audit.
In the event of any such audit, Tenant shall not disclose, any of the
information audited to any other person or entity. Furthermore, no auditor
shall be allowed access to Landlord's books and records described above, unless
and until such auditor executes and delivers to Landlord a confidentiality
agreement satisfactory to Landlord.
(f) Landlord will attempt to ensure that real estate assessments and
insurance rates are as low as those obtainable under reasonable circumstances.
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5. SECURITY DEPOSIT. Upon the execution of this Lease, Tenant shall pay
to Landlord $11,217.50 ("the Deposit") as security for the faithful performance
by Tenant of all of the terms, covenants, and conditions of this Lease
(including, but not limited to, the payment of Rent). In the event Tenant
fully complies with all terms and conditions of this Lease, the Deposit shall
be refunded to Tenant within 60 days following the end of the initial ten (10)
year Term. Landlord may, but is not obligated to, without waiving or
satisfying such Event of Default, or waiving or limiting any other rights or
remedies of Landlord or limiting Tenant's liability to Landlord, apply all or
any portion of the Deposit on account of any Event of Default hereunder, as
well as on account of any expenses incurred or paid, or damages suffered, by
Landlord in connection with such failure, and Tenant, within 5 days following
receipt of written notice of demand, shall replenish the amount necessary to
restore the full Deposit. Landlord may commingle the Deposit with any other
accounts that Landlord holds, and Landlord shall not be obligated to pay any
interest accrued on the Deposit to Tenant. In the event of a sale or other
transfer of the Project (or Landlord's interest therein), Landlord shall have
the right to transfer to such purchaser or other party the Deposit and Landlord
thereupon shall be released by Tenant from all liability for the return
thereof, and Tenant agrees to look to the new landlord solely for the return
thereof.
6. UTILITIES. Tenant shall be solely responsible for, and promptly pay as
and when due, all charges and assessments for separately metered heat, gas,
electricity, water, telephone, sewer and other utilities used, consumed or
provided to or on the Leased Premises and shall, at Tenant's sole cost and
expense, arrange with the appropriate utility companies for the provision of
such utilities to the Leased Premises. Notwithstanding anything herein to the
contrary, Landlord shall not be liable in any respect for any damages
whatsoever, whether to or with respect to person, property, Tenant's business
or otherwise, for interruption in, or stoppage, suspension or curtailment of,
any utility service or system (whether caused by or arising out of Landlord's
need to make repairs or any other reason whatsoever), nor shall the same (a)
constitute a constructive eviction or interference or disturbance with Tenant's
use, possession or enjoyment of the Leased Premises, (b) constitute grounds for
abatement, reduction or rebate, in whole or in part, of Rent or any other sum
payable by Tenant hereunder, or (c) release or relieve Tenant of or from any of
Tenant's obligations hereunder.
Notwithstanding anything herein to the contrary, in the event that the
provision of any utility is interrupted due solely to the negligence of
Landlord, Tenant shall receive an abatement of Rent until the provision of such
utility is restored. In the event that Landlord receives written notice of a
scheduled cut-off in the provision of utilities, then as an accommodation to
Tenant, Landlord shall notify Tenant of same; provided, however, that Landlord
shall have no liability for failure to send such notice, and such failure shall
not be a default by Landlord hereunder.
7. MAINTENANCE AND REPAIR BY LANDLORD. Landlord shall, subject to the
provisions of Sections 14 and 17 hereof and so long as Tenant is not in default
hereunder, (giving effect to all, if any, notice and right to cure periods
hereunder) keep the foundation, the exterior walls (except plate glass windows,
doors, door closure devices, window and door frames, molding, locks and
hardware and painting or other treatment of interior and exterior walls, all of
which shall be Tenant's responsibility to maintain, replace and repair) and the
roof of the Leased Premises in good repair, ordinary wear and tear excepted.
Any repairs required to be made by Landlord under this Lease which are caused
solely by the act, omission or negligence of Tenant, or Tenant's, agents,
employees, subtenants, licensees, invitees, visitors, contractors, servants,
customers or others acting, through or under Tenant or for or on behalf of
Tenant (collectively, "Tenant's Agents"), shall be paid for by Tenant, at any
time and from time to time, upon receipt of Landlord's written demand to the
extent not covered by any net insurance proceeds paid or payable to Landlord
therefor. In the event that the Leased Premises should become in need of
repairs required to be made by Landlord hereunder, Tenant shall immediately
give written notice thereof to Landlord and Landlord shall not be obligated in
any way to commence any such repairs until a reasonable time shall have elapsed
after Landlord's receipt of such written notice.
8. CONTROL. The Common Areas shall be subject to Landlord's sole
management and control and shall be operated and maintained in such manner as
Landlord, in its sole discretion, shall determine. Without limiting the
generality of the immediately preceding sentence, Landlord reserves the
exclusive right to install, construct, remove, maintain and operate lighting
systems, facilities, improvements, buildings, equipment and signs on, in or to
all parts of the Common Areas and the Building; increase, reduce or change the
number, size, height, layout, or locations of buildings, walks, driveways and
truckways, parking areas and/or Common Areas now or hereafter forming a part of
the Project; make alterations or additions to the Building; close temporarily
all or any portion of the Common Areas to make repairs, changes or to avoid
public dedication; grant easements, or replat or subdivide or make such other
changes to the Land, as Landlord shall deem necessary; place, relocate and
operate utility lines through, over or under the Leased Premises necessary to
serve other portions of the Building; and use or permit the use of all or any
portion of the roof of the Building.
Provided that the Tenant is in full, timely and strict compliance with its
obligations hereunder (giving effect to all, if any, notice and right to cure
periods hereunder), Landlord agrees that it will not prevent access to the
Leased Premises in the exercise of its rights in this Section 8.
9. OCCUPANCY BY TENANT. (a) Tenant covenants and agrees to, at its sole
cost and expense, observe and comply with the provisions of (i) all matters of
record (including, but not limited
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to, the Declaration), (ii) all building, zoning, fire and other governmental
laws, ordinances, regulations, requirements, codes, certificates of occupancy
and rules, (iii) the orders and directives (pursuant to law) of public
officials applicable to the Leased Premises and/or the balance of the Project
or the conduct of the business in the Leased Premises by Tenant, (iv) all
rules, regulations, orders and requirements of carriers of insurance insuring
the Project of which Tenant has received a copy; and (v) the Rules and
Regulations, attached hereto as Exhibit "E" and made a part hereof, and any
additions thereto and modifications thereof as adopted by Landlord from time to
time. Tenant also covenants and agrees to, at its sole cost and expense,
observe and comply with, and not cause Landlord to be in default or breach
under, the Master Lease. Notwithstanding anything herein to the contrary,
Tenant, at its sole cost and expense, shall make any and all repairs,
alterations, additions and improvements of any nature whatsoever required by
any governmental authority by reason of Tenant's use or occupancy of the Leased
Premises.
(b) Tenant shall not keep or allow to be kept anything within the
Leased Premises, or use or permit the use of the Leased Premises for any
purpose or in any manner, which causes or might cause an increase in the
insurance premium cost of, or invalidate or breach or conflict with, any
insurance policy carried on all or any part of the Project, or cause any
existing or prospective insurer to refuse to issue any insurance policy with
respect to all or any portion of the Project or the Landlord's business, or
create any risk of fire or other hazard. Tenant shall pay as Additional Rent,
upon receipt of Landlord's written demand therefor, any such increased premium
cost caused solely by Tenant's use or occupation of the Leased Premises or
Tenant's storage of goods. Tenant, at its sole cost and expense, shall comply
with all rules, regulations, orders and requirements of the American Insurance
Association (formerly the National Board of Fire Underwriters) and of any other
similar body having jurisdiction over the Project.
10. INSURANCE; INDEMNITY. (a) Tenant shall, at Tenant's sole cost and
expense, carry and keep in force at all times during the Term (i) a policy of
comprehensive general public liability insurance, together with a contractual
liability endorsement, with limits of not less than $1,000,000 in respect of
bodily injury to or death of any one person, an amount not less than $5,000,000
in respect to bodily injuries or death(s) occurring in any one occurrence and
an amount not less than $500,000 in respect of property damaged or destroyed;
(ii) fire and extended coverage insurance covering the full replacement cost of
all alterations, additions, partitions, improvements, equipment, furniture,
fixtures and inventory made or placed by Tenant in the Leased Premises against
"all-risk" of physical loss; (iii) worker's compensation insurance with limits
not less than that required by law; and (iv) such additional amounts of
insurance and additional types of coverage as Landlord may reasonably request
from time to time. Tenant's liability hereunder shall not be limited to the
insurance coverage maintained, or required to be maintained pursuant hereto, by
Tenant. All such policies shall be with companies licensed to do business in
the state in which the Land is located, and from a responsible company
satisfactory to Landlord, and contain a waiver of subrogation as to the
property and perils as described in Section 10(d) below. Landlord, Landlord's
Mortgagee if requested by Landlord, and the Master Lease landlord, its
trustees, investment advisors and consultants, and the officers, agents and
employees of any of the foregoing, shall be named as additional insureds under
such insurance policies. All such insurance policies shall be without any
deductible, shall be primary and noncontributing with any insurance carried by
the Landlord, shall be written on an "occurrence" basis and not on a
"claims-made" basis, and shall contain endorsements requiring 45 days' notice
to Landlord prior to any cancellation or any reduction in amount of coverage.
Tenant shall deliver to Landlord as a condition precedent to Tenant's taking
occupancy of the Leased Premises (but not to Tenant's obligation to pay Rent),
a complete duplicate copy of all such policies and all other policies
maintained by Tenant, and shall also deliver copies thereof to Landlord not
less than 30 days prior to the expiration date of each such policy. Tenant's
failure to comply with any of the requirements of this Section 10(a) shall be
an Event of Default.
(b) Neither Landlord, nor any of Landlord's partners, officers,
members, directors, agents or employees, shall, to the extent permitted by law,
have any liability to Tenant, or to Tenant's Agents, for any damage, injury,
loss or claim based on or arising out of any cause whatsoever, including,
without limitation, the following: repair to any portion of the Leased
Premises, Building or Common Areas; interruption in the use of the Leased
Premises or any equipment therein; any accident or damage resulting from any
use or operation by Landlord, Tenant or any person or entity of heating,
cooling, electrical, sewerage or plumbing equipment or apparatuses; termination
of this Lease by reason of damage to the Leased Premises or the Building; fire,
robbery, theft, vandalism, mysterious disappearance or any other casualty;
actions of any other tenant of the Building or of any other person or entity;
failure or inability to furnish any service specified in this Lease; and
leakage in any part of the Leased Premises or the Building from water, rain,
ice or snow that may leak into, or flow from, any part of the Leased Premises
or the Building, or from drains, pipes or plumbing fixtures in the Leased
Premises or the Building. Notwithstanding the foregoing, Landlord shall not,
except as set forth in Section 10(d) below or elsewhere herein, be released
from liability to Tenant for any injury caused by Landlord's willful misconduct
or gross negligence. In no event, however, shall Landlord have any liability
to Tenant on account of any claims for the interruption of or loss to Tenant's
business or for any indirect damages or consequential losses.
(c) Tenant shall, to the extent permitted by law, reimburse Landlord
for, and shall defend (upon Landlord's request), indemnify and hold Landlord,
its partners, officers, members, directors, employees and agents, harmless from
and against, any and all costs, damages, claims,
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liabilities, expenses (including, but not limited to, reasonable attorneys'
fees and court and litigation costs), losses, demands, actions, causes of
action, judgments, proceedings and obligations of any nature whatsoever
suffered by or claimed against Landlord, directly or indirectly, resulting
from, based on or arising out of, in whole or in part, (i) Tenant's possession,
use and/or occupancy of the Leased Premises and the business conducted therein
or therefrom by Tenant (whether or not damage or loss occurs in or on the
Leased Premises, the Common Areas or elsewhere); (ii) any act or omission of
Tenant, or any of Tenant's Agents; and/or (iii) Tenant's breach of Tenant's
obligations under this Lease (including, but not limited to, a breach of the
provisions of Section 28(u) hereof). The provisions of Section 10(b) above and
this Section 10(c) shall survive the expiration or sooner termination of this
Lease with respect to any claims, liabilities and the like attributable to
acts, omissions, occurrences and/or conditions existing or occurring prior to
such expiration or termination.
(d) Without limiting the provisions of Section 10(b) above or any
other provisions hereof as to Landlord, Landlord and Tenant each hereby release
the other, and Tenant also releases the Master Lease landlord, its trustees,
investment advisors and investment consultants, and the officers, agents and
employees of any of the foregoing, from any and all liability or responsibility
to the other or anyone claiming through or under them, by way or subrogation or
otherwise, from or with respect to any loss or damage to property caused by
fire or any other perils insured under policies of insurance covering such
property (but only to the extent of the insurance proceeds payable under such
policies), even if such loss or damage is attributable to the fault or
negligence of the other party, or anyone for whom such party may be
responsible, including any other tenants or occupants of the Building. The
foregoing notwithstanding, this mutual release shall be applicable and in
force and effect only to the extent lawful at the time any claim is made, and
in any event only with respect to loss or damage occurring during such times as
the releasor's policies shall contain a clause or endorsement providing that
any such release shall not adversely affect or impair said policies or
prejudice the right of the releasor to recover thereunder. Landlord and Tenant
shall request their respective insurance carriers to include in its policies
such a clause or endorsement. If additional cost shall be charged therefor,
the party responsible for procuring such insurance shall pay such additional
costs. If Tenant fails to obtain or maintain any such property insurance
policies as required hereunder, Tenant's release of Landlord shall remain and
be deemed in full force and effect as to the coverage thereof as if such
policies, and an insurer's waiver of subrogation endorsement, were obtained and
in full force and effect; provided, however, that nothing herein shall excuse
Tenant's failure to maintain any insurance required hereunder or constitute a
waiver or limitation of any other rights and remedies of Landlord in the event
Tenant fails to maintain any insurance.
11. REPAIRS. Except as to Landlord's obligations pursuant to Sections 7,
14, and 17 hereof, and in addition to all other repair, maintenance and
replacement obligations of Tenant set forth herein, Tenant agrees to maintain
the Leased Premises at all times during the Term in a neat, clean and sanitary
condition and in good order and repair and shall make all needed repairs and
replacements thereto. Such maintenance, replacement and repair shall be at the
sole cost of Tenant and shall include, but not be limited to, the maintenance,
replacement and repair of floor coverings, ceilings and walls, front and rear
doors, all glass on the Leased Premises, all plumbing units, pipes and
connections, and all heating, ventilating and air conditioning equipment and
systems. If Tenant fails to comply with the provisions of this Section 11 and
such failure continues for 5 days after written notice from Landlord (such
notice requirement and 5-day period being waived, however, in the event of an
emergency), Landlord may without waiving such failure, perform any such
required maintenance, replacement and repairs and (a) the cost incurred,
together with a supporting cost breakdown together with interest thereon at the
rate that is 2 percentage points above the Prime Rate accruing as of the date
of each such advance by Landlord, (including, but not limited to, construction,
permit, engineering, design, and architectural fees and expenses), shall each
be Additional Rent payable by Tenant to Landlord within 10 days after Tenant's
receipt of notice from Landlord that such Additional Rent is due and payable.
The term "Prime Rate" is hereby defined as the prime rate of interest publicly
announced by Maryland National Bank, which rate shall automatically change if,
as and when such prime rate changes from time to time.
12. TENANT'S PROPERTY. Furnishings, equipment, machinery and trade
fixtures that can be installed by Tenant without drilling, cutting or otherwise
defacing the Leased Premises (collectively, "Tenant's Personal Property") may
be installed by Tenant on the Leased Premises and shall, subject to the
provisions of Section 23(d) hereof, be the property of Tenant. On the
expiration of this Lease, if Tenant is not in default hereunder, Tenant may
remove any such property (and shall remove any such property if directed by
Landlord) and shall repair any damage caused by such removal and reimburse
Landlord for Landlord's cost of so repairing the Leased Premises; it is
understood, however, that with respect to a default (but not an Event of
Default), Tenant shall have the right to cure any such default prior to when
such default becomes an Event of Default, and in the event of such timely cure,
Tenant shall be entitled to remove such property, subject to the terms
aforesaid. If Tenant fails to remove the Tenant's Personal Property as
required under this Lease, Landlord may do so upon written notice to Tenant and
Landlord shall not be liable for any loss or damage to such property of Tenant
which may occur during Landlord's removal thereof, or Landlord may treat such
property as abandoned and remove and keep the same, and Tenant shall pay the
entire cost of such removal to Landlord upon Tenant's receipt of Landlord's
written demand therefor. Tenant agrees to pay all taxes on Tenant's Personal
Property and if such taxes are levied against Landlord, or the assessed value
of the Project is increased by inclusion of a value placed on such property,
Tenant shall pay such taxes to Landlord on demand if Landlord is required to
pay such taxes (or reimburse Landlord on demand if
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Landlord pays such taxes). Notwithstanding anything herein to the contrary,
any property placed by Tenant in or about the Leased Premises or the Building
shall be at the sole risk of Tenant, and Landlord shall not in any manner be
responsible therefor. The provisions of this Section 12 shall survive the
expiration or sooner termination of this Lease.
Landlord acknowledges that the removal of Tenant's trade fixtures may
necessitate removal of non-structural walls or partitions; provided, however
and notwithstanding anything herein to the contrary, Tenant may not remove any
walls or partitions without complying with the following: (i) Tenant shall
obtain the prior written consent of the Landlord, (ii) such removal and repair
shall be done (a) in such a manner as to minimize interference with the use and
enjoyment of the balance of the Project by other tenants or by Landlord, or
with other construction in the Project, and (b) in good and workmanlike manner
and in compliance with all applicable laws.
13. IMPROVEMENTS AND ALTERATIONS BY TENANT. (a) Following Tenant's
completion of Tenant's work as described on Exhibit C-1, Tenant may not without
Landlord's prior written approval (which may be withheld in Landlord's sole and
absolute discretion), make or permit any additions, improvements, alterations,
substitutions, replacements or modifications, structural or otherwise, to the
Leased Premises (including, but not limited to, all electrical, heating,
ventilating, air conditioning, plumbing or mechanical systems within the Leased
Premises) (collectively, the "Alterations"), or attach any machines, fixtures
or equipment to the Leased Premises. All Alterations, and machines, equipment
and fixtures (other than the Tenant's Personal Property provided the same are
installed at no cost or expense to Landlord), which may be made or installed by
either party upon the Leased Premises shall be and remain the property of
Landlord and shall remain upon and be surrendered with the Leased Premises,
unless Landlord requests their removal, in which event Tenant shall remove the
same and restore the Leased Premises to good order and repair, reasonable wear
and tear and damage by fire or other casualty excepted at Tenant's sole cost
and expense and Tenant shall pay the entire cost of such removal to Landlord
upon Tenant's receipt of Landlord's written demand therefor. If Tenant fails
to remove such Alterations and property and restore the Leased Premises as
aforesaid, Landlord may do so and Tenant shall pay the entire cost thereof to
Landlord as Additional Rent within 10 days after Tenant's receipt of Landlord's
written demand therefor. Any such Alterations performed by Tenant shall be
done, at Tenant's sole cost and expense, in strict conformity with any plans and
specifications approved by Landlord prior to Tenant commencing such work and in
such a manner to minimize interference with other construction in the Building
or on the Land in progress and with the use or enjoyment of all or any portion
of the balance of the Project by any other tenants. All work performed shall
be done in a good and workmanlike manner by contractors approved by Landlord
and with materials of comparable quality, value, utility and appearance as
originally installed in the Leased Premises. Landlord's consent to or approval
of and Alterations (or the plans and specifications therefor) shall not
constitute a representation or warranty by Landlord, nor Landlord's acceptance,
that the same comply with (a) sound architectural and/or engineering practices,
or (b) applicable laws, regulations, rules, codes, ordinances and other
governmental requirements, and Tenant shall be solely responsible for ensuring
all compliance with the matters referred to in (a) and (b) above in this
sentence. In each instance in which Landlord's approval is requested or
required hereunder, Tenant shall reimburse Landlord as Additional Rent, upon
receipt of written demand therefor, for all out-of-pocket costs and expenses
incurred or paid by Landlord during such review process, (including, but not
limited to, construction, permit, engineering, design, architectural fees and
expenses), regardless of whether such request is approved by Landlord.
(b) Nothing contained in this Lease shall be deemed or construed in any
way as constituting the consent or request of, or order or authorization by,
Landlord, express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of any labor, or the
furnishing of any materials, that would give rise to the filing of any lien
against the Leased Premises, or the Project, or any part thereof. Landlord
shall have the right to post and keep posted on the Leased Premises any notices
that may be provided by law or which Landlord may deem to be proper for the
protection of Landlord, the Leased Premises and the Project from such lien(s).
(c) Tenant's projected date for completion of its Alterations is
September 1, 1992.
14. CASUALTY. (a) If the Leased Premises is destroyed or damaged by fire,
earthquake or other casualty (collectively, a "Casualty") and Landlord and
Tenant do not elect to terminate this Lease as herein provided, Landlord shall,
subject to the terms hereof and obtaining all necessary public approvals and
solely to the extent of net insurance proceeds actually received by Landlord
(and free of all claims by Mortgagees (as defined in Section 21), the landlord
under the Master Lease and others, and all expenses) and provided such Casualty
is not due to the negligence or wrongful acts of Tenant, or any of Tenant's
Agents, proceed in a reasonable manner to rebuild and restore the Leased
Premises or such part thereof as may be destroyed or damaged to as near its
former condition as circumstances will reasonably permit. During the period of
such rebuilding and restoration, Base Rent shall, provided such Casualty is not
due to the negligence or other wrongful acts of Tenant, or Tenant's Agents, be
abated in the same ratio as the square footage of the portion of the Leased
Premises rendered untenantable; to the extent, and so long as, however, the
Leased Premises remains untenantable and Tenant has not continued to make use
of such portion of the Leased Premises.
In the event of such Casualty, Landlord shall obtain the judgment of an
architect (or contractor or other professionals, as needed), which judgment
shall be certified by such architect (or
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professionals) to Landlord and Tenant (the "Architect's Certification"),
estimating the approximate amount of time needed to restore or rebuild the
Leased Premises substantially to its condition prior to the occurrence of such
Casualty, taking into account issuance of building permits, distribution of
insurance proceeds and all other relevant factors. If, however, the
Architect's Certification indicates that such destruction or damage cannot be
repaired within 180 days after the date of such Casualty, Landlord, and Tenant
(provided (i) such Casualty is not due, in whole or in part, to the negligence
or wrongful acts of Tenant, or any of Tenant's Agents, and (ii) no Event of
Default then exists), may elect to terminate this Lease by giving written
notice of such election to the other within 90 days after the date of such
Casualty, in which event this Lease and the tenancy created hereunder shall
terminate as of the date of such notice and Rent shall (except to the extent
Tenant has continued to make use of all or any of the Leased Premises) be
abated as of such date of such Casualty.
If the work to be provided by Landlord in connection with such repair
of the Leased Premises is not substantially completed (as determined by such
Architect or other professional) on or before that date (the "Outside
Restoration Date") which is sixty (60) days after the date specified in the
Architect's Certification as the approximate completion date, Landlord and
Tenant shall each have the right to elect to terminate this Lease by giving
written notice of such election to the other within ten (10) days after the
Outside Restoration Date. If Landlord or Tenant elects to terminate this Lease
pursuant to the provisions of the immediately preceding sentence, this Lease
and the tenancy created hereunder shall terminate thirty (30) days after either
party receives such written termination notice from the other party; provided,
however, that this Lease and such tenancy shall not terminate and such
termination notice shall be deemed withdrawn if Landlord substantially
completes such repair work prior to the expiration of such thirty (30) day
period. Upon the termination of this Lease pursuant to the provisions of the
two (2) immediately preceding sentences, Rent (except to the extent Tenant has
continued to make use of all or any of the Leased Premises) shall be abated as
of the date of such Casualty.
(b) If Landlord is required to repair the Leased Premises under the
provisions of this Section 14, Landlord's obligation shall be limited to the
Landlord's Work, excluding, in any event, all alterations, fixtures or signs
installed by Tenant and all floor coverings, furniture, equipment and
decorations or other Tenant's Personal Property. Tenant, at Tenant's expense,
shall promptly perform all repairs and restoration not required to be done by
Landlord and shall promptly re-enter the Leased Premises to perform such work.
(c) Anything contained herein to the contrary notwithstanding, if
(i) the proceeds of Landlord's fire and extended coverage insurance maintained
specifically with respect to the Building (recovered or recoverable), or the
Master Lease landlord's fire and extended coverage insurance with respect to
the Building (if the Master Lease landlord is obligated to maintain fire and
extended coverage insurance and the Landlord does not carry such insurance)
(recovered or recoverable), as a result of any damage to the Leased Premises by
any Casualty (exclusive of rent insurance) shall be insufficient to pay fully
for the cost of repair of the Leased Premises, (ii) the Leased Premises shall
be damaged by a Casualty which is not covered by Landlord's fire and extended
coverage insurance maintained specifically with respect to the Building, or
(iii) the Building is so severely damaged by fire or other Casualty (although
the Leased Premises may not be affected) that Landlord decides in Landlord's
sole and absolute discretion not to rebuild or reconstruct the Building,
Landlord shall have the right to terminate this Lease by giving written notice
of such termination to Tenant within 90 days after the date of such Casualty in
which event this Lease and the tenancy created hereunder shall terminate as of
the date of such notice and Rent shall (except to the extent Tenant has
continued to make use of all or any of the Leased Premises) be abated as of the
date of such Casualty.
15. SUBLETTING AND ASSIGNMENT. Without the prior written consent of
Landlord in each instance, which consent may be withheld in Landlord's sole and
absolute discretion, Tenant shall not directly or indirectly (in one or more
transactions), voluntarily, involuntarily or by operation of law, assign,
transfer, pledge, mortgage or otherwise hypothecate or encumber all or any
portion of Tenant's legal or equitable interest in this Lease or in the Leased
Premises, nor sublet all or any portion of the Leased Premises, nor enter into
any management, license, concession or other contract or agreement which
provides for a direct or indirect transfer of operating control over the
business operated in, or the use or occupancy of, the Leased Premises.
Notwithstanding this, Landlord's consent shall not be unreasonably withheld
solely for transfers between AMSCO Sterile Recoveries, Inc. and its parent
AMSCO International, Inc. Any direct or indirect transfer, sale, pledge or
other disposition, in a single transaction or cumulatively during the Term, of
at least 25% of the ownership interests in Tenant (or any lesser percentage if
sufficient to transfer voting control (if Tenant is a corporation) or
management control (if Tenant is a partnership)), as well as of any general
partnership interest in Tenant if Tenant is a limited partnership, shall each
be deemed an assignment of this Lease; provided, however, that this limitation
shall not apply with respect to the transfer of voting stock in a corporation,
all the outstanding voting stock of which is listed on a national securities
exchange as defined in the Securities Exchange Act of 1934. Any assignment,
sublease or other such transfer without Landlord's prior written consent shall
be voidable by Landlord, and, at Landlord's election, shall constitute an Event
of Default hereunder. Consent by Landlord to one or more assignments,
sublettings or encumberings of this Lease or the Leased Premises shall not
operate as a waiver of Landlord's rights (and the requirement of Landlord's
consent), or be deemed Landlord's consent, with respect to any subsequent
assignment, subletting or encumbering. Notwithstanding any assignment or
subletting, Tenant, and each and every guarantor of this Lease and Tenant's
obligations hereunder, shall at all
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times remain fully and primarily responsible and liable for the payment of all
Rent and other monetary obligations herein specified and for the compliance
with and performance of all of the Tenant's other obligations under this Lease.
Landlord's consent, if any, to any assignment or sublease will not be effective
unless and until (a) Landlord receives a fully executed copy of the assignment
or sublease agreement, and (b) in the case of an assignment, Tenant delivers to
Landlord an assumption of liability agreement in form satisfactory to Landlord
including an assumption by the assignee of all of the obligations of Tenant and
the assignee's ratification of, and agreement to be bound by, all of the terms,
conditions and provisions of this Lease.
16. LIENS. Tenant shall keep the Project free and clear of and from any
and all liens or encumbrances arising out of any work performed, materials
furnished or obligations incurred by Tenant or otherwise arising out of
Tenant's use or occupancy of the Leased Premises. An Event of Default shall
exist if at any time any such lien or encumbrance is filed, claimed or recorded
against, or otherwise exists with respect to, the Leased Premises or the
Building and Tenant shall fail to have said lien or encumbrance discharged of
record, or bonded over so as to forever remove such lien or encumbrance as an
encumbrance upon the Project, within 10 days after Tenant receives notice such
lien or encumbrance is filed, claimed or recorded against, or otherwise exists
with respect to, the Project. Tenant shall promptly notify Landlord if Tenant
learns that a lien has been, is about to or might be filed against the Leased
Premises.
17. CONDEMNATION. (a) In the event of a taking by any public or
quasi-public authority under the power of eminent domain, condemnation or
expropriation, or in the event of a conveyance in lieu thereof, (all of which
events are herein collectively referred to as a "Taking"), of the whole of the
Leased Premises, then this Lease shall terminate and Tenant shall have no
further Base Rent obligation effective upon the date title to the Leased
Premises vests in the condemning authority and Base Rent and Additional Rent
shall be adjusted as of such date.
(b) In the event of a Taking of less than all of the Leased Premises,
then this Lease shall terminate only as to the part taken as of the date title
vests in the condemning authority or the date the condemning authority takes
possession of the Leased Premises, whichever first occurs; provided, however,
that in the event of a Taking of more than 25% (but less than all) of the
Leased Premises, then Landlord and Tenant shall each have the right to
terminate this Lease by written notice given to the other effective within 60
days after the date title vests in the condemning authority.
(c) If the nature, location or extent of any Taking affecting the
Building (whether or not including the Leased Premises) or the Land is such
that Landlord elects in Landlord's sole and absolute discretion to demolish all
or a portion of the Building, then Landlord may terminate this Lease by giving
at least 60 days' written notice of termination to Tenant at any time after
such Taking. This Lease shall terminate on the date specified in such notice,
and monthly Base Rent and Additional Rent shall be adjusted to such date.
(d) If there shall be a Taking, and this Lease is not terminated as
set forth above in this Section 17, then this Lease shall continue in full force
and effect, except that the Base Rent shall be reduced to be that sum which
bears the same proportion to the Base Rent in effect immediately prior to such
Taking as the leasable area of the Leased Premises remaining after such Taking
bears to the leasable area of the Leased Premises immediately preceding such
Taking. Following receipt of the compensation awarded or payment made for such
Taking, Landlord shall commence to make all necessary repairs or alterations to
restore that portion of the Leased Premises remaining to as near its former
condition as the circumstances will reasonably permit; provided, however, that
Landlord shall in no event be required to spend for such repairs and
alterations any sums in excess of the amount of the compensation or payment for
such Taking actually received by Landlord (and free of all claims by Mortgagees
and others) which is attributable to the part of Leased Premises taken
(excluding the proportionate part thereof attributable to the then current
market value of the Project taken) less the cost of collecting such
compensation or payment and provided further that Landlord's obligation shall
be limited to the Landlord's Work and Landlord shall have no obligation to
repair, restore or replace any alterations, fixtures or signs made or installed
by Tenant or any floor coverings, furniture, equipment or decorations or other
Tenant's Personal Property (the repair, restoration and replacement of which
shall be the sole obligation of, and be promptly performed by, Tenant).
(e) Tenant shall have no claim against Landlord or the condemning
authority for any portion of the amount of the condemnation award or settlement
that may be claimed as damages by Tenant as a result of such Taking or for the
value of any unexpired Term, and all condemnation awards and similar payments
shall be paid and belong to Landlord. Notwithstanding the foregoing, Tenant
may, subject to the provisions of the Master Lease, make a separate claim
against the condemning authority for a separate award or payment for the value
of Tenant's trade fixtures and for relocation costs, provided such awards do
not reduce Landlord's award.
18. PARKING. Tenant agrees not to overburden the parking areas and
facilities and agrees to cooperate with Landlord and other tenants in the use
of parking areas and facilities, and, in any event, shall use such parking
areas and facilities in accordance with the terms and conditions of the
Declaration and such rules and regulations promulgated by Landlord. Tenant
acknowledges and agrees that, except as set forth in the immediately following
sentence, all parking areas and facilities shall be for the nonexclusive use of
all tenants in the Building, their employees, invitees and others; provided,
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however, that Tenant, its employees, invitees and customers, shall not have the
right to use any parking spaces or facilities which are reserved for
handicapped parking (unless handicapped, but subject to the rights of other
handicapped persons) or other tenants or which are otherwise set aside or
reserved by Landlord. Landlord hereby agrees to designate 40 parking spaces in
the immediate vicinity of the Leased Premises for the exclusive use of Tenant,
its employees and invitees; it being understood, acknowledged and agreed,
however, that Landlord shall have no obligation whatsoever to monitor or police
the use of such parking spaces and shall have no liability of any nature
whatsoever if all or any of such spaces are used by any other parties,
including, but not limited to, other tenants in the Building.
19. ACCESS. Landlord reserves and shall have the right (for itself, its
agents, employees and contractors) to enter the Leased Premises at all
reasonable times with 24 hours notice (or at any time in the event of an
emergency) to inspect the same, to show the Leased Premises to prospective
purchasers, Mortgagees or tenants, to post notices of nonresponsibility or
notices required by law, and to alter, improve or repair the Leased Premises,
adjacent premises and any other portion of the Building or any systems serving
any of the same (it being understood, acknowledged and agreed that nothing in
this sentence shall obligate Landlord to perform any work); provided, that the
entrance to the Leased Premises shall not be unreasonably blocked thereby. In
no event whatsoever shall Tenant be entitled to any abatement of Rent with
respect to any such entry or such repairs or other work, nor shall such entry
or use of the Leased Premises constitute a constructive eviction or release or
relieve Tenant of or from any of Tenant's obligations hereunder. Further,
Tenant hereby waives any claim for any damages whatsoever, for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or enjoyment of the Leased Premises or any other loss occasioned by such entry
or such repairs or other work.
20. SIGNS. All signs and symbols placed in the doors or windows or
elsewhere about the Leased Premises, or upon any other part of the Building,
including building directories, shall comply with and satisfy all conditions of
the Declaration and all laws, ordinances, regulations, requirements and the
like and shall, in any event, not be placed or installed without the prior
written approval of the Landlord. Any signs or symbols which have been placed
without approval may be removed by Landlord at the sole cost and expense of
Tenant. All signs shall be maintained by Tenant at its sole cost and expense
during the Term and upon the expiration or sooner termination of this Lease all
signs installed by Tenant shall be removed and any damage resulting therefrom
shall be promptly repaired at Tenant's sole cost and expense. The provisions
of this Section 20 shall survive the expiration or sooner termination of this
Lease.
21. SUBORDINATION. This Lease, and the rights of Tenant hereunder, are
and shall be, without further action by any party, subject and subordinate to
the lien, terms, conditions, operation and effect of any and all Mortgage(s)
now or hereafter encumbering or otherwise affecting the Land or Building and
all advances made or hereafter to be made upon the security thereof, and the
rights of any Mortgagee thereunder or with respect to each such Mortgage. The
term "Mortgage" means any mortgage, deed of trust, ground lease or other
security or financing instrument encumbering or otherwise affecting the Land or
Building and all renewals, replacements, modifications, consolidations,
recastings, refinancings or extensions thereof. At the election of any holder
or beneficiary of any Mortgage (collectively, a "Mortgagee"), this Lease shall
be superior to the lien of the applicable Mortgage. Upon request by Landlord,
Tenant agrees to execute whatever documentation may be required to further
affect the provisions of this Section 21. Tenant agrees that if any
proceedings are brought pursuant to a Mortgage (whether or not for foreclosure
of the Mortgage) or termination of any ground lease, Tenant, if requested to do
so by the purchaser or other successor to Landlord pursuant to foreclosure or
other proceedings under the Mortgage (including, but not limited to, any
Mortgagee or ground lessor), or pursuant to any conveyance in lieu of
foreclosure, shall recognize and attorn to such party as Landlord under this
Lease, and shall make all payments required hereunder to such new landlord
without deduction or set-off and, upon the request of such purchaser or other
successor, execute, deliver and acknowledge documents confirming such
attornment. Tenant waives the provisions of any law or regulation, now or
hereafter in effect, which may give or purport to give Tenant any right to
terminate or otherwise adversely affect this Lease and the obligations of
Tenant hereunder in the event that any such foreclosure or termination or other
proceeding is prosecuted or completed. Landlord agrees to use reasonable
efforts to request a non-disturbance agreement for the benefit of the Tenant
from each Mortgagee.
22. TENANT'S DEFAULT. Each of the following shall be an "Event of
Default" dy Tenant hereunder:
(a) Tenant shall fail to pay when due any installment of Base Rent,
Additional Rent or any other charge or payment required of Tenant hereunder
after five (5) days notice from Landlord;
(b) Subject to the provisions of Section 22(h) below, Tenant shall
violate or fail to perform any of the other terms, conditions, covenants or
agreements of this Lease, and such violation or failure shall continue for a
period of 30 days after Tenant's receipt of written notice thereof to Tenant
from Landlord or if such failure cannot be cured within 30 days, then within
such additional time, not to exceed 30 days, to effect such cure provided
Tenant promptly commences and diligently pursues such cure;
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(c) Tenant shall (i) make a general assignment for the benefit of its
creditors, (ii) make a transfer in fraud of creditors, (iii) admit in writing
its general inability to pay its debts when due, (iv) file any petition for, or
answer seeking or consenting or acquiescing to, bankruptcy, reorganization,
moratorium, liquidation, composition, extension, readjustment, arrangement,
insolvency, dissolution or similar relief under any federal, state or other
statute, law or regulation or otherwise, or (v) have filed against it any
petition seeking any relief mentioned in (iv) above in this sentence that is
not stayed or dismissed within 30 days;
(d) Any execution, levy, attachment or other process of law shall
occur upon Tenant's Personal Property (or other property in the Premises) or
Tenant's interest in the Leased Premises;
(e) (i) A trustee, receiver, liquidator or similar officer shall be
appointed for Tenant or any guarantor of this Lease for a substantial part of
Tenant's or any such guarantor's property and such appointment is consented or
acquiesced to by Tenant or any such guarantor, (ii) if not consented or
acquiesced to, such appointment shall not be stayed or dismissed within 30 days
after such appointment, or (iii) Tenant or any such guarantor shall seek the
appointment of any such trustee, receiver, liquidator or similar officer;
(f) Tenant shall vacate or abandon all or any of the Leased Premises
or shall remove or manifest an attempt to remove, not in the ordinary course of
business, Tenant's goods and property from all or any of the Leased Premises;
(g) Any act or omission by Tenant, or any of Tenant's Agents, which
constitutes a default by Landlord, or does, could or might result in any
liability of Landlord, under the Master Lease; and
(h) Any other act, failure or omission specifically referred to
herein as an Event of Default.
23. LANDLORD'S REMEDIES. (a) If an Event of Default shall have occurred
and be continuing with regard to the making of any payment or the doing of any
act herein required to be made or done by Tenant, then Landlord may, but shall
not be required to, make such payment or do such act, and the making of such
payment or the doing of such act by Landlord shall not operate to cure such
Event of Default or to estop Landlord from the pursuit of any right or remedy
to which Landlord would otherwise be entitled. Any installment(s) of Base Rent
or Additional Rent unpaid for 5 days after the date when due shall be subject
to a late charge equal to 5% of such installment payable as Additional Rent to
Landlord upon Tenant's receipt of Landlord's demand therefor. In addition, any
installments of Base Rent or Additional Rent not paid when due, and any
payments by Landlord hereunder on Tenant's behalf or for Tenant's benefit,
shall bear interest until paid at the rate that is 2 percentage points above
the Prime Rate (but in no event greater than the maximum rate permitted under
the laws of the state in which the Land is located) and such interest, and all
amounts paid by Landlord on Tenant's behalf, shall constitute Additional Rent
hereunder due and payable upon Tenant's receipt of Landlord's demand therefor.
In the event any litigation or other court proceeding arises out of this Lease,
the prevailing party shall be entitled to recover its costs and expenses
resulting therefrom, including without limitation reasonable attorneys' fees
and expenses and court costs, whether incurred before trial, at trial, on
appeal or in bankruptcy.
(b) If an Event of Default shall have occurred, Landlord, at
Landlord's option, may terminate this Lease by written notice to Tenant,
whereupon, on the date of such notice or any later termination date set forth
therein, all rights of Tenant hereunder shall expire and terminate, everything
herein required on the part of Landlord to be done and performed shall cease,
and this Lease shall end and terminate, except, and provided in all events,
however, that Tenant shall forever remain liable for all of Tenant's
obligations hereunder (including, but not limited to, the payment of Rent), no
matter when first accruing, occurring or arising, as herein provided over the
entire Term as if this Lease had not been terminated. Landlord agrees to use
commercially reasonable efforts to seek to relet the Leased Premises.
(c) If an Event of Default shall have occurred, with or without
terminating this Lease, Landlord may enter upon and take possession of the
Leased Premises and expel or remove Tenant and any other person who may be
occupying the Leased Premises or any part thereof, without being liable for
trespass, prosecution or any claim for any damages or liability therefor.
Landlord may thereupon make such alterations and repairs as, in Landlord's
absolute discretion, may be necessary to relet the Leased Premises, and relet
the Leased Premises or any part thereof, alone or together with other portions
of the Building, in Landlord's name, Tenant's name or otherwise, without notice
to Tenant, for such rent and such use, and for such period of time and subject
to such terms and conditions as Landlord, in its absolute discretion, may deem
advisable and receive the rent therefor. Landlord agrees to use commercially
reasonable efforts to seek to relet the Leased Premises. Tenant shall be
liable for any and all expenses (including, but not limited to, reasonable
attorneys' fees, disbursements and brokerage fees) incurred by Landlord in
reentering and repossessing the Leased Premises, in correcting (but not waiving
or curing, or estopping Landlord from asserting any rights or remedies with
respect to) any default of Tenant, in painting, altering, repairing or dividing
the Leased Premises, in protecting and preserving the Leased Premises by use of
security guards and caretakers, and in reletting the Leased Premises. Tenant
shall, over the entire Term as if such repossession, and any such termination,
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had not occurred, remain liable for and pay to Landlord, on demand, any
deficiency between (i) the amount of Rent payable by the Tenant hereunder, and
(ii) any amount received by Landlord pursuant to any reletting after deducting
all of Landlord's expenses as described in the immediately preceding sentence
(all amounts so received by Landlord to be applied on account of Tenant's
obligations hereunder in any order that Landlord deems fit in Landlord's sole
discretion). Suit may be brought by Landlord at any time and from time to time
to enforce collection of such differences, and any suit brought by Landlord to
enforce collection of such differences for any one month shall not prejudice
Landlord's right to enforce the collection of any difference for any subsequent
month(s) in subsequent separate actions at any time and from time to time, as
said damages shall have been made more easily ascertainable by successive
relettings. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such prior Event
of Default. Tenant's liability shall survive the institution of summary
proceedings and the issuance of any warrant hereunder. No entry or taking
possession of the Leased Premises by Landlord will be construed as an election
on Landlord's part to terminate this Lease unless a written notice expressly
stating such intention is sent to Tenant.
(d) Landlord shall, to the extent permitted by law, have (in addition
to all other rights and remedies whatsoever) a right of distress for rent and a
lien on all of Tenant's personal property, and other property on the Leased
Premises, as security for all Rent and any other sums payable under this Lease.
(e) If Landlord terminates this Lease pursuant hereto, Landlord shall
be entitled to recover from Tenant at any time thereafter, and Tenant shall pay
to Landlord on demand, as and for liquidated and agreed final damages for such
Event of Default, an amount equal to the difference between (i) all Base Rent,
Additional Rent and other sums which would be payable under this Lease from the
date of such demand through the end of the Term (as if this Lease had not been
terminated), and (ii) the fair market rental value of the Leased Premises over
the same period (net of all expenses and all vacancy periods reasonably
projected by Landlord to be incurred in connection with the reletting of the
Leased Premises), discounted at the rate of five percent (5%) per annum.
Nothing herein shall be construed to affect or prejudice Landlord's right to
prove, and claim in full, unpaid Rent accrued prior to termination of this
Lease or Landlord's right to assert any indemnity claims pursuant hereto.
(f) Tenant, on its own behalf and on behalf of all persons claiming
by, through or under Tenant, including all creditors, does hereby specifically
waive and surrender any and all rights and privileges, so far as is permitted
by law, which Tenant and all such persons might otherwise have under any
present or future law (i) to the service of any notice to quit or of Landlord's
intention to re-enter or to institute legal proceedings, which notice may
otherwise be required to be given, (ii) to redeem the Leased Premises or the
Lease, (iii) to re-enter or repossess the Leased Premises, (iv) to restore the
operation of this Lease, with respect to any dispossession of Tenant by
judgment or warrant of any court or judge, or any re-entry by Landlord, or any
expiration or termination, whether such dispossession, re-entry, expiration or
termination shall be by operation of law or pursuant to the provisions of this
Lease, or (v) to the benefit of any law which exempts property from liability
for debt or for distress for rent. The words "dispossession," "re-enter,"
"entry," "re-entry," "reentered," "possess," "repossession," "repossess" and
"redeem" and the like as used in this Lease shall not be deemed to be
restricted to their technical legal meanings.
(g) Tenant hereby consents to the exercise of personal jurisdiction
over Tenant by the state court, and, if federal jurisdiction shall be
applicable, the United States District Court, with respect to the county in
which the Land is located.
(h) All and each of Landlord's rights and remedies set forth herein
shall be in addition to all rights and remedies at law or in equity or by
statute or otherwise, all of which are separate, distinct and cumulative and no
one of them, whether or not exercised by Landlord, shall be deemed in exclusion
of any of the others. Without limiting the generality of the foregoing, in the
event Tenant fails to take possession of the Leased Premises as herein required,
Tenant shall, among other things, be obligated to pay Landlord in full for all
Landlord's Exhibit C tenant improvements constructed or installed within the
Leased Premises and for all materials ordered at Tenant's request for the
Leased Premises. The exercise or beginning of the exercise by Landlord of any
right or remedy shall not prejudice the simultaneous or later exercise of any
other rights or remedies.
24. QUIET ENJOYMENT. If, and so long as, Tenant pays the Rent and fully
performs and observes each and every term, covenant, obligation and condition
herein contained to be performed or observed by Tenant, Tenant shall enjoy the
Leased Premises during the Term without hindrance or molestation by Landlord,
subject to the terms, covenants and conditions of this Lease and the lien,
terms, conditions, operation and effect of (i) any and all Mortgage(s) and the
rights of any Mortgagee thereunder or with respect thereto, and (ii) the Master
Lease and the rights of the Master Lease landlord thereunder or with respect
thereto.
25. FINANCING. (a) If, in connection with obtaining, or pursuant to, any
temporary, construction, permanent or other financing for the Building and/or
the Land, any lender shall request reasonable modifications of this Lease as a
condition to such financing, Tenant shall execute,
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acknowledge and deliver any such modification to Landlord within ten (10) days
after Tenant's receipt thereof, provided such modifications do not increase the
financial obligations of Tenant hereunder or materially and adversely affect
Tenant's use and enjoyment of the Leased Premises as herein provided.
(b) Tenant agrees that no Mortgagee shall be (i) bound by any payment
of Base Rent or Additional Rent for more than 1 month in advance, (ii) bound by
any amendment or modification of this Lease made without the consent of such
Mortgagee, (iii) liable for damages for any breach, act or omission of any
prior Landlord, (iv) bound to effect or pay for any construction for Tenant's
occupancy, (v) subject to any offsets or defenses that Tenant may have against
any prior Landlord, or (vi) have any obligation with respect to the Deposit or
Tenant's Prepaid Rent unless, and to the extent, the same has been physically
delivered to such Mortgagee.
26. HOLDOVER TENANCY. If (without execution of a new lease or written
extension) Tenant shall holdover after the expiration of the Term, then Tenant
shall, subject to Landlord's written consent but without execution of a new
lease, become a tenant at sufferance at a monthly rental equal to one and
one-half of the Rent due under the terms of this Lease, commencing said tenancy
with the first day next after the end of the Term. Tenant, as a tenant at
sufferance, shall be subject to all of the conditions and covenants of this
Lease as though the tenancy had originally been a monthly tenancy. During the
holdover period, each party hereto shall give to the other at least 30 days'
written notice to quit the Leased Premises, except in the event of nonpayment
of Rent when due, or of the breach of any other covenant or default hereunder
by Tenant (without giving effect to any notice or right to cure period), in
which event Tenant shall not be entitled to any notice to quit, the usual 30
days' notice to quit being expressly waived. The foregoing shall not
constitute Landlord's consent to any holdover by Tenant. Notwithstanding the
foregoing, if Landlord shall desire to regain possession of the Leased Premises
at the expiration of the Term, Landlord may re-enter and take possession of the
Leased Premises by any legal action or process in force in the jurisdiction in
which the Land is located, and Landlord shall have the right to recover all
direct or indirect costs, expenses, legal expenses, attorneys' fees, damages,
loss of profits or any other costs incurred by Landlord as a result of Tenant's
failure or inability to deliver possession of the Leased Premises to Landlord
when required under this Lease.
27. ESTOPPEL CERTIFICATE/FINANCIAL STATEMENT. Within 10 days after
request therefor from Landlord, Tenant shall deliver, in recordable form, a
certificate to any proposed Mortgagee or purchaser, or to Landlord, together
with a true and correct copy of this Lease, certifying (i) whether this Lease
is in full force and effect and without modification and binding on Tenant in
accordance with its terms, (ii) the amount of any prepaid rent and/or security
deposit paid by Tenant to Landlord, (iii) whether Landlord has performed all of
Landlord's obligations due to be performed under this Lease and/or whether
there are any defenses, counterclaims, deductions or offsets outstanding or
other excuses for Tenant's performance under this Lease, (iv) whether or not
the Term has commenced and Tenant has accepted possession of the Leased
Premises, (v) the Commencement Date, (vi) the amount of Rent currently due and
payable, and (vii) any other information reasonably requested by Landlord or
such proposed Mortgagee or purchaser (including, but not limited to, the
accuracy of Tenant's representation in Section 29(b) hereof, whether or not
Landlord or Tenant is in default under this Lease (or whether any event has
occurred which by notice or lapse of time or both could result in a default),
and whether any actions are pending against Tenant under any bankruptcy laws or
other laws for the relief of debtors). Tenant covenants and agrees that, at
any time, within 30 days after notice and demand by Landlord, Tenant will
furnish to Landlord Tenant's most recent financial statements as of the end of
Tenant's last fiscal year certified by an independent certified public
accountant or Tenant's chief financial officer, and Tenant consents to the
delivery of same by Landlord to lenders or prospective lenders or purchasers of
all or part of the Project or of any interest in a Mortgage.
28. MISCELLANEOUS.
(a) Amendment. This Lease may not be amended or modified except in
writing and signed by Landlord and Tenant.
(b) Notices. All notices required by this Lease shall be in writing
and shall be effective, if mailed, when mailed by certified mail, return receipt
requested, or, if sent by messenger, when personally delivered, as follows (or
to such other address designated by written notice thereof to the other given
in accordance with the terms of this Section 28(b)):
Notice to Landlord: Notice to Tenant:
Winchester Commercial AMSCO Sterile Recoveries, Inc.
Suite 205 28100 U.S. Highway 19
4041 Powder Mill Road Clearwater, Florida 34621
Calverton, MD 20705 Attention: Wayne Peterson
Attention: Vice President/
Division Manager
14
<PAGE> 17
with a copy to: Jones, Day, Reavis & Pogue
500 Grant Street
31st Floor
Pittsburgh, PA 15219
Attention: Mary Beth Pfohl
(c) Binding Effect. Subject to the provisions of Section 15 hereof
and all other restrictions set forth herein, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns.
(d) Limitation of Landlord's Liability. Notwithstanding any
provision to the contrary contained herein, Tenant shall look solely to the
estate and interest of Landlord in and to the Land and the Building, and
Landlord (and each party executing this Lease as Landlord if Landlord is
composed of more than one person or entity) shall have no personal liability,
in the event of any claim against Landlord (or any party executing this Lease
as Landlord if Landlord is composed of more than one person or entity) arising
out of or in connection with this Lease, the relationship of Landlord and
Tenant, or Tenant's use of the Leased Premises, and Tenant agrees that the
liability of Landlord (and each party executing this Lease as Landlord if
Landlord is composed of more than one person or entity) arising out of or in
connection with this Lease, the relationship of Landlord and Tenant, or
Tenant's use of the Leased Premises, shall be limited solely to such estate and
interest of Landlord in and to the Land and the Building and that Landlord (and
each party executing this Lease as Landlord if Landlord is composed of more
than one person or entity) shall have no personal liability as provided above
in this sentence. No properties or assets of Landlord (and each party
executing this Lease as Landlord if Landlord is composed of more than one
person or entity) other than the estate and interest of Landlord (and each
party executing this Lease as Landlord if Landlord is composed of more than
one person or entity) in and to the Land and the Building, and no property
owned by any partner, officer, member, director or trustee in or of Landlord
(and each party executing this Lease as Landlord if Landlord is composed of
more than one person or entity), shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgement (or other judicial
process) or for the satisfaction of any other remedy of Tenant arising out of
or in connection with this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Leased Premises. Further, in no event whatsoever shall
any partner, officer, member, director or trustee in or of Landlord (and each
party executing this Lease as Landlord if Landlord is composed of more than one
person or entity) have any liability or responsibility whatsoever arising out
of or in connection with this Lease, the relationship of Landlord and Tenant,
or Tenant's use of the Leased Premises.
(e) Accord And Satisfaction. No receipt and retention by Landlord
of any payment tendered by Tenant in connection with this Lease, or application
of the Deposit, will give rise to, or support or constitute, an accord and
satisfaction, notwithstanding any accompanying statement, instrument or other
assertion to the contrary (whether by notation on a check or in a transmittal
letter or otherwise), unless Landlord expressly agrees in a separate writing to
an accord and satisfaction.
(f) Severability. If any term or provision, or any portion thereof,
of this Lease, or the application thereof to any person or circumstances shall,
to any extent, be illegal, invalid or unenforceable, the remainder of this Lease
or the application of such term or provision to persons or circumstances other
than those as to which it is held illegal, invalid or unenforceable, shall not
be affected thereby, and each term and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law. It is the intention of
the parties hereto that if any such provision is held to be illegal, invalid or
unenforceable, there will be added in lieu thereof a provision as similar in
terms to such provision as is legal, valid and enforceable. The above
notwithstanding, if any provision of this Lease shall be held to be illegal,
invalid or unenforceable as aforesaid, and such term affects the Rent,
Landlord's obligations to Tenant or otherwise affects the economic bargain
agreed to by Landlord and Tenant in this Lease, Landlord shall have the
additional option of terminating this Lease by delivering notice to Tenant
after the determination of such illegality, invalidity or unenforceability
stating a date of termination no sooner than 30 days after the date of such
notice; upon which termination this Lease shall end and terminate, and all
rights and obligations of Landlord and Tenant hereunder shall cease, except,
however, as to Tenant's obligations that accrued or arose on or prior to such
date and as otherwise expressly provided herein.
(g) Waiver/Consent. No term, condition or provision of this Lease
shall be deemed waived, unless waived in writing by the party against whom such
waiver is to be enforced. One or more waivers of any covenant, term or
condition of this Lease by either party shall not be construed as a waiver of a
subsequent breach of the same covenant, term or condition. The consent or
approval by either party to or of any act by the other party requiring such
consent or approval hereunder shall not be deemed to waive or render
unnecessary consent to or approval of any subsequent similar act.
(h) Time. Time is of the essence hereof.
(i) Applicable Law. This Lease shall be construed according to the
laws of the state in which the Land is located.
(j) Anticipatory Repudiation. If, prior to the commencement of the
Term, Tenant notifies Landlord of or otherwise unequivocally demonstrates an
intention to repudiate this Lease,
15
<PAGE> 18
Tenant shall pay in full for all tenant improvements constructed or installed
within the Leased Premises by Landlord as of the date of such breach and for
materials ordered at Tenant's request for the Leased Premises, reasonable
attorneys' fees, brokerage fees, costs of reletting and loss of Rent.
(k) Entire Agreement. This Lease sets forth all the covenants,
promises, agreements, conditions and understandings between Landlord and Tenant
concerning the Leased Premises, Building and Project, and there are no
covenants, promises, agreements, conditions or understandings, either oral or
written, between them other than as set forth herein.
(l) Waiver of Jury Trial. Landlord and Tenant each hereby waive
trial by jury in any action, proceeding or counterclaim brought by either of
them against the other, on any claim or matter whatsoever arising out of or in
any way connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use and occupancy of the Leased Premises and/or any claim of injury or
damage.
(m) Captions. Any headings preceding the text of the several
Sections or Subsections hereof are inserted solely for convenience of reference
and shall not constitute a part of this Lease, nor shall they affect the
meaning, construction or effect of this Lease.
(n) Force Majeure. In the event that Landlord shall be delayed,
hindered in or prevented from the performance of any act or obligation required
hereunder by reason of acts of God, strikes, lockouts, labor troubles or
disputes, inability to procure or shortage of materials or labor, failure of
power or any utilities whatsoever, delay in transportation, fire, vandalism,
accident, flood, severe weather, other casualty, restrictive governmental laws,
regulations, or orders (including, but not limited to, mandated changes in
plans and specifications or the Landlord's Work resulting from changes in
pertinent codes and regulations or interpretations thereof), riot,
insurrection, civil commotion, sabotage, explosion, war, natural or local
emergency, acts or omissions of others, including, but not limited to, Tenant,
or other reasons of a similar or dissimilar nature not solely the fault of, or
under the exclusive control of, Landlord, then performance of such act shall be
excused for the period of the delay and the period for the performance of any
such act shall be extended for the period equivalent to the period of such
delay.
(o) Surrender. Tenant agrees to yield up and surrender the Leased
Premises, at the expiration or earlier termination of this Lease, clean and
neat, and in the same condition and repair in which they are required to be
kept by Tenant throughout the Term, reasonable wear and tear excepted.
(p) Effect of Submission. The submission by Landlord to Tenant of
this Lease shall not constitute a reservation of, or an option for, the leasing
of the Leased Premises and this Lease shall have no binding force and effect
unless and until executed by Landlord and Tenant and, if required pursuant to
applicable loan documents, approved by any current Mortgagee.
(q) Recording. Tenant shall not record this Lease or a memorandum or
other notice thereof without the written consent of Landlord (which consent may
be withheld in Landlord's sole and absolute discretion), and Tenant's recording
of this Lease or a memorandum or other notice thereof will be void and an Event
of Default hereunder.
(r) Independent Covenants. Tenant's covenants to pay Rent, and any
other payments required of Tenant hereunder, are independent of all other
covenants and agreements herein contained. All obligations of Landlord
hereunder shall be construed as covenants, not as conditions.
(s) Brokers. Landlord and Tenant represent and warrant to each other
that, except as set forth below in this Section 28(s), neither has had any
dealings, negotiations or consultations with respect to the Leased Premises or
this transaction with any broker or other intermediary. In the event that any
broker or other intermediary claims a commission or other compensation with
respect to this transaction, the party alleged to have created the right to
such commission or compensation shall be responsible for and will indemnify and
save harmless the other party from and against any and all costs, fees,
expenses (including, without limitation, reasonable attorneys' fees),
liabilities and claims incurred or suffered by the other party as a result
thereof. Landlord hereby represents that in the event W.C. Pinkard and CB
Commercial are entitled to a commission with respect to the transaction herein
contemplated, Landlord shall be responsible for, and shall indemnify, defend
and hold Tenant harmless from and against, any such commission claimed.
(t) Counterparts. This Lease may be executed in counterparts, each
of which shall constitute one and the same agreement.
(u) Hazardous Waste. The term "Hazardous Substances," as used in
this Lease, shall mean pollutants, petroleum, contaminants, infectious, toxic or
hazardous wastes, asbestos, radioactive materials, polychlorinated biphenyls or
any other substances, materials or debris, the removal of which is required or
the use, handling, deposit, or storage of which is restricted, prohibited,
regulated or penalized by any "Environmental Law", which term shall mean any
federal, state or local law, statute, ordinance, rule, code, regulation or
requirement directly or indirectly relating to pollution or protection of the
environment. Tenant hereby covenants and agrees, for itself, its agents,
contractors, subtenants and employees, that (i) no activity will be conducted
on all or any part of the Leased
16
<PAGE> 19
Premises or`balance of the Project that will produce or cause the release of
any Hazardous Substances or otherwise violate or fail to comply with any
Environmental Law; (ii) the Leased Premises and the balance of the Project will
not be used in any manner for the storage (for any period of time whatsoever)
of any Hazardous Substances; (iii) no portion of the Leased Premises or balance
of the Project will be used as a landfill or a dump; (iv) no underground tanks
of any type will be installed on the Leased Premises or the balance of the
Project; (v) no surface or subsurface conditions shall exist or come into
existence that constitute, or with the passage of time may constitute, a
public or private nuisance on the Leased Premises or the balance of the
Project; and (vi) no Hazardous Substances shall be brought onto or into the
Leased Premises or balance of the Project. If any such Hazardous Substance
is brought or found located in or on the Leased Premises, the same shall be
immediately removed by Tenant, with proper disposal, and all required cleanup
procedures shall be diligently undertaken pursuant to all Environmental Laws,
by Tenant, at Tenant's sole cost and expense. If, at any time during or after
the Term, the Leased Premises are found to be so contaminated or subject to
said conditions, or if Tenant shall, by act or omission, breach any of its
obligations under this Section 28(u), an Event of Default shall exist. The
provisions of this Section 28(u) shall survive the expiration or earlier
termination of this Lease.
Notwithstanding the foregoing, Landlord acknowledges that AMSCO Sterile
Recoveries, Inc.'s proposed use of the Leased Premises (i) entails the handling
of soiled operating room linens and other materials from hospitals, medical
clinics, laboratories and other health services related facilities, and (ii)
the use of industrial detergents, bleaches and disinfectants. Provided that
(i) such handling and use is performed in a safe and first class manner in
compliance with all Environmental Laws and all reasonable rules and regulations
as Landlord shall prescribe, and (ii) AMSCO Sterile Recoveries, Inc. is the
"Tenant" hereunder, Landlord consents to such use and handling.
(v) Authority. Tenant represents and warrants that the individual
executing this Lease on behalf of Tenant is authorized to execute and deliver
this Lease; that Tenant is validly formed or organized and in good standing in
the state of its incorporation or formation and authorized to transact business
in the jurisdiction in which the Land is located; that Tenant has the power and
authority to enter into this Lease; and that all action required to authorize
Tenant to enter into this Lease has been taken. Upon receipt of Landlord's
request, Tenant will provide Landlord with evidence satisfactory to Landlord
confirming all of the above representations and warranties.
(w) Joint and Several. In the event that this Lease is executed by
more than one party as Tenant, the liability of all such parties shall be
deemed to be joint and several for all purposes hereunder.
(x) Transfer by Landlord. In the event of any sale, transfer or other
disposition of Landlord's interest in the Project, Landlord shall automatically
and without any further act or instrument be released and relieved of and from
any and all obligations and liabilities of Landlord occurring from and after
the day of any such transfer and in such event Landlord's successor or
transferee by accepting such sale, transfer or assignment shall thereby
automatically assume and be liable for all obligations and liabilities of
Landlord which accrue from and after such sale or transfer and Tenant agrees to
look solely to such successor or transferee for the performance of any such
duties and obligations and in satisfaction of all such obligations and
liabilities under this Lease Agreement.
(y) Landlord. If this Lease is executed by more than one (1) party as
Landlord, each such party may, at its election, send notices, execute
certificates and other instruments, and take any other actions (including, but
not limited to, giving or withholding the Landlord's consent to Tenant requests
and giving notices of termination of this Lease), as Landlord on behalf of all
such parties with respect to or in connection with this Lease, the relationship
of Landlord and Tenant or Tenant's use of the Leased Premises. Further, if
this Lease is executed by more than one (1) party as Landlord, each such party,
and its partners, officers, members, directors, agents and employees, shall be
entitled to all rights, benefits, remedies, entitlements, releases and
indemnities of the Landlord, and its partners, officers, members, directors,
agents and employees, hereunder. Without limiting the generality of the
immediately preceding sentence, (a) each party executing this Lease as Landlord
shall be named insured under the insurance policies maintained by Tenant
pursuant to Section 10(a) hereof, and (b) all references to Landlord in
Sections 10(b), 10(c), and 10(d), and in the next to last sentence in Section
12, of this Lease shall also be deemed to refer to each party executing this
Lease as Landlord.
29. SPECIAL PROVISIONS.
(a) Tenant acknowledges that Landlord (as tenant) leases the Project
from The Riggs National Bank of Washington, D.C., as Trustee of the
Multi-Employer Property Trust (the "Trust") (as landlord) pursuant to that
certain Master Lease (the"Master Lease"), dated July 20, 1992, pursuant to
which the Trust leases the Project to Landlord for a period of time.
(b) Tenant hereby represents and warrants to Landlord that, with the
exception of this Lease, neither the Tenant nor any affiliate of the Tenant is
a tenant under a lease or any other tenancy arrangement (1) with the
Multi-Employer Property Trust; (2) with The National Bank of Washington
Multi-Employer Property Trust, the previous name of the Multi-Employer Property
Trust; (3) with the Alameda Industrial Properties Joint Venture; (4) with the
Harman International Business Campus Joint Venture; (5) with the
Beaverton-Redmond Tech Properties; (6) with the Corporate Drive Corporation
17
<PAGE> 20
as Trustee of the Corporate Drive Nominee Realty Trust; (7) with Goldbelt Place
Joint Venture; or (8) involving any property in which the trusts named in
clauses (1) or (2) are known by the Tenant to have an ownership interest.
(c) Notwithstanding anything to the contrary contained in this Lease,
(1) this Lease is subordinate to the Master Lease; (2) if not sooner terminated
or expired, this Lease will not terminate upon expiration or termination of the
Master Lease (except, however, in the case of the condemnation of the entire
Premises) but will, except as aforesaid, automatically be converted into a
direct lease between the Trust (as landlord) and the Tenant (as tenant),
provided that, the Landlord (and each party executing this Lease as Landlord)
on the date hereof will, except to the extent such Landlord (and each such
party executing this Lease as Landlord) is released from liability (or its or
their liability is limited) hereunder or is indemnified hereunder, remain
responsible, subject to the terms of this Lease and without waiving any
defenses, claims, rights, remedies or the like of such Landlord (or such
parties executing this Lease as Landlord), for any act, event or omission of
such Landlord hereunder first occurring prior to the expiration or termination
of the Master Lease; (3) on and after the expiration or termination of the
Master Lease, the Tenant will attorn to the Trust and render all performances
required by this Lease, to the Trust; and (4) Tenant agrees not to prepay Base
Rent or other sums due under this Lease more than one (1) month in advance,
other than security deposits or advance payments of rent for the first month or
months of the term of this Lease which are paid to Landlord on execution of
this Lease.
(d) Consent to the execution of this Lease by Landlord is required
from the Trust. Notwithstanding the execution hereof by Landlord and Tenant,
this Lease shall be null and void, and neither the Landlord nor the Tenant shall
have any rights or obligations hereunder, unless and until the Trust consents
to the execution hereof by Landlord and Tenant. If the Trust fails to consent
within fifteen (15) days after the execution hereof, Tenant may terminate this
lease by delivery of written notice to Landlord within five (5) days after the
expiration of the fifteen (15) day period.
30. LANDLORD'S DEFAULT. In the event that Landlord fails to perform any
of its obligations hereunder, and such failure continues for sixty (60) days
after Landlord has received written notice from Tenant specifying in detail
such failure, then Tenant shall have the right to perform such obligations and
to be reimbursed by Landlord, within thirty (30) days after submission to
Landlord of receipts and other backup information of documentation for the
reasonable out-of-pocket direct costs incurred by Tenant in performing such
obligation, provided, that the following conditions be satisfied: (i) such
performance by Tenant will not violate the Master Lease, (ii) such performance
by Tenant will not trigger a default under any Mortgage or agreement to which
Landlord is a party, (iii) such performance does not entail entrance by Tenant
into the premises of other tenants in the Project, (iv) such performance will
not interfere with other tenant's use and enjoyment of their premises and the
Common Areas, (v) such performance does not affect any structural portions of
the Project or, except for the Tenant's roof, any building systems therein,
(vi) Tenant has given, in addition to the notice of the failure hereinbefore
described, ten (10) days prior notice to Landlord of the date Tenant will
commence such performance, and (vii) Landlord has not commenced such
performance.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed as of the date first above written.
LANDLORD:
WITNESS: Winchester Homes lnc.,
a Delaware Corporation
/s/ Elizabeth Pelton By: /s/ Lawrence B. Burrows [SEAL]
- -------------------------- ---------------------------------
Its: Vice President/Division Manager
---------------------------------------
WEYERHAEUSER REAL ESTATE COMPANY,
a Washington corporation
/s/ Darlene Kramer By: /s/ C. Stephen Lewis [SEAL]
- -------------------------- ----------------------------------
President
---------------------------------------
TENANT:
WITNESS: AMSCO Sterile Recoveries, Inc.
----------------------------------------
/s/ Lydia Zickefoose By: /s/ Wayne R. Peterson [SEAL]
- ------------------------- ---------------------------------
Its: Assistant Secretary
----------------------------------------
18
<PAGE> 21
EXHIBIT "A"
6675 Business Parkway
Meadowridge Business Park
Howard County, Maryland
32,050 s.f. demised for AMSCO
This Exhibit illustrates the Site Plan layout for 6675 Business Parkway,
Meadowridge Business Park, Howard County, Maryland. It illustrates one main
curb cut in the front of the building, the parking and landscape plan
surrounding the building of which the premises are a part, and the leased
premises as indicated by cross-hatching a 32,050 square foot area within the
illustrated building. The building indicated has a depth of 210 feet with no
frontage dimensions. The building also indicates 40 by 40 joist spacing with
50 foot joist spacing at the rear of the building. While parking is
illustrated, there are no parking counts and the drawing is not to scale.
<PAGE> 22
EXHIBIT "B"
ANNUAL BASE RENT
<TABLE>
<S> <C> <C>
1. Years I - 5: $134,610 per year; $11,217.50 per month.
2. Years 6 - 10: $160,250 per year; $13,354.17 per month.
3. Renewal Term Example:
</TABLE>
<TABLE>
<CAPTION>
Years 11-15 Years 16-20
----------------------- ---------------------------
Year Month Year(1) Month
----------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
If CPI Index is
3% per year $184,287.50 $15,357.29 $211,930.63 $17,660.89
If CPI Index is
6% per year $ 208,325 $17,360.42 $270,822.50 $22,568.54
If CPI Index is
9% per year $ 208,325 $17,360.42 $302,071.25 $25,172.60
</TABLE>
- --------------------------------
(1) Increase over Year 15 Base Rent.
<PAGE> 23
EXHIBIT "C"
LANDLORD'S WORK
Landlord at Landlord's sole cost, to provide the following to Leased Area:
1. Demising wall - 10' high constructed of CMU, with remaining 14'
constructed of drywall.
2. Separately metered 1200 amp @ 480 V electric service.
3. Separately metered sufficient gas service to provide 14 million
BTU's per hour.
4. Separately privately metered three (3) inch water line.
5. 6" sewer.
6. Five (5) loading docks:
- 3, 48" high, 9' x lO'
- 1, 24" high, 12' x l5'
- 1, 48" high, 12' x l5'
<PAGE> 24
EXHIBIT "C-1"
TENANT'S WORK
The plans and specifications which comprise the construction documents as
prepared by Best, Griner and Associates Engineers, Inc. and Bitterli &
Associates Architects are listed as follows:
<TABLE>
<S> <C>
- - Bound 8 1/2" x 11" specifications dated June 24, 1992.
- - Addendum No. 1 dated July 3, 1992.
- - Supplemental sketches SK/AE 1 through 3 dated July 3, 1992 (On 8 1/2" x 11" sheets).
- - Supplemental sketches SK/AE 4 through 7 dated July 28, 1992 (On 8 1/2" x 11" sheets).
- - 24" x 36" drawings including the following:
Cover sheet dated 6/24/92 with latest revision #4 dated 8/17/92
Sheet EA-1 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-2 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-2A dated 8/13/92
Sheet EA-3 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-3A dated 8/13/92
Sheet EA-4 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-4A dated 8/13/92
Sheet EA-5 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-SA dated 8/13/92
Sheet EA-6 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-7 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-8 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-9 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-10 dated 6/24/92 with latest revision #5 dated 8/21/92
Sheet EA-11 dated 6/24/92 with latest revision #4 dated 8/13/92
Sheet EA-12
Sheet P-1 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet P-1A dated 8/13/92
Sheet P-2 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet P-2A dated 8/13/92
Sheet P-3 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet P-3A dated 8/13/92
Sheet P-4 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet P-5 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet P-6 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet MP-1 dated 6/24/92 with latest revision #1 dated 8/13/92
Sheet MP-2 dated 8/13/92
Sheet M-1 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet M-1A dated 8/13/92
Sheet M-2 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet M-3 dated 6/24/29 with latest revision #1 dated 8/13/92
Sheet E-1 dated 6/24/92 with latest revision #1 dated 8/13/92
Sheet E-2 dated 6/24/92 with latest revision #1 dated 8/13/92
Sheet E-2A dated 8/13/92
Sheet E-3 dated 6/24/92 with latest revision #2 dated 8/21/92
Sheet E-3A dated 8/13/92
Sheet E-4 dated 6/24/92 with latest revision #1 dated 8/13/92
- - 24" x 36" supplemental drawings including sheet SD-1 through SD-14 dated
6/24/92.
</TABLE>
Tenant shall construct these improvements using union contractors and labor so
long as the union: (i) pricing is not greater than five percent (5%) over the
non union pricing, and (ii) timing is not greater than the non union timing.
If either of these criteria are not met, Tenant, with Landlord's assistance,
will use it's best efforts in working with the Baltimore Building Trades
Council to achieve the criteria. If, after these efforts, these criteria
cannot be met, Tenant shall have the right to award its construction contract
to non union contractors.
Tenant shall bid its plans to qualified, experienced contractors, licensed to
do business within Howard County, Maryland. A minimum of three (3) bidders
shall be union contractors.
<PAGE> 25
EXHIBIT "D"
CERTIFICATE
Declaration by Landlord and Tenant
As to Date of Delivery and Acceptance of
Possession, Commencement Date and
Rentable Square Feet
Attached to and made part of the Lease dated the __________ day of
__________________, 19____, entered into by and between
_____________________________________________________, a
________________________, as Landlord, and
_____________________________________________, a ________________________, as
Tenant.
Landlord and Tenant do hereby declare that (a) the Commencement Date is
hereby established to be ________________________, 19____, (b) the Term of the
Lease shall expire on _______________________, 19____, (c) for purposes of this
Lease, the leasable area of the Demised Premises is ___________, and (d) the
Tenant's Prorata Share is ______%.
Landlord and Tenant agree that the Lease is in full force and effect as of
the date hereof.
Tenant further agrees that Landlord has fulfilled all of Landlord's
obligations under the Lease required to be fulfilled by Landlord on or prior to
the date hereof, and Tenant has no right of set-off against any rentals.
LANDLORD:
WITNESS/ATTEST: ---------------------------------
- ------------------------------ By:
-----------------------------
Its: [SEAL]
-----------------------
TENANT:
---------------------------------
By:
------------------------------
Its: [SEAL]
-----------------------
<PAGE> 26
EXHIBIT "E"
RULES AND REGULATIONS
The following rules and regulations have been formulated for the safety
and well-being of all tenants of the Building.
Landlord may waive the compliance by any tenant to any of these rules and
regulations, provided that (i) no waiver shall be effective unless signed by
Landlord or Landlord's authorized agent, (ii) any such waiver shall not relieve
such tenant from the obligation to comply with such rule or regulation in the
future unless expressly consented to by Landlord, and (iii) no waiver granted
to any tenant shall relieve any other tenant from the obligation of complying
with the rules and regulations unless such other tenant has received a similar
waiver in writing from the Landlord.
Landlord shall not be responsible to any tenant for the nonobservance or
violation of or by any other tenant of any of these rules and regulations at
any time.
1. The Common Areas shall not be obstructed or encumbered by Tenant or
used for any purpose other than ingress and egress to and from the Leased
Premises. Landlord shall have the right to control and operate the Common
Areas in such manner as Landlord, in Landlord's sole discretion, deems best for
the benefit of the tenants generally. No tenant shall permit the visit to the
Leased Premises of persons in such numbers or under such conditions as to
interfere with the use and enjoyment by other tenants of the Common Areas.
2. No awnings, antennas or other projections shall be attached to the
outside walls of the Building.
3. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in the halls, corridors or
vestibules or other Common Areas of the Building without the prior written
consent of Landlord.
4. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, chemicals, paints, cleaning fluids or other
substances shall be thrown or placed therein. Without limiting any of the
provisions of the Lease which this Exhibit E forms a part of and the rights and
remedies of Landlord thereunder, all damages resulting from any misuse of the
plumbing fixtures shall be borne by the tenant who, or whose servants,
employees, agents, visitors or licensees, shall have caused the same.
5. There shall be no marking, painting, drilling into or other form(s) of
defacing of any part of the Project (exclusive of the Leased Premises) or of
any part of the Leased Premises visible from the Common Areas. Tenant shall
not construct, maintain, use or operate within the Leased Premises any
electrical device, wiring or apparatus in connection with a loud speaker system
or other sound system, except as reasonably required for its communication
system and approved prior to the installation thereof by Landlord. No such
loud speaker or sound system shall be constructed, maintained, used or operated
outside of the Leased Premises.
6. No bicycles, vehicles, animals, birds or pets of any kind shall be
brought into or kept in or about the Leased Premises. No cooking (except for
hot-plate cooking by Tenant's employees for their own consumption, the
equipment for and location of which are first approved by Landlord) shall be
done or permitted by Tenant on the Leased Premises. Tenant shall not cause or
permit any unusual or objectionable odors to be produced upon or permeate or
originate from the Leased Premises. Tenant shall be obligated to maintain
sanitary conditions in any area approved by Landlord for food preparation and
consumption.
7. Other than as expressly permitted under the Lease, no space in the
Building shall be used for the manufacturing of goods, merchandise or other
property, or for the sale at auction of merchandise, goods or property of any
kind. The office area of the Leased Premises may be used only for office use.
8. No tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Building or neighboring
buildings or premises or those having business with them whether by the use of
any mechanical instrument, radio, talking machine, tape machine, unmusical
noise, other sound or sound system or in any other way. No tenant shall throw
anything out of the doors or windows or down the corridors or stairs. In
addition, Tenant shall not permit any vibration from the operation of Tenant's
machines, fixtures, mechanical equipment or otherwise to exist to any degree or
extent as to be objectionable to Landlord or any other tenant(s) in the
Building.
9. No flammable, combustible, explosive, hazardous or toxic fluid,
chemical or substance shall be brought into, or kept or generated upon, the
Leased Premises or balance of the Project.
<PAGE> 27
10. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in the
existing locks or the mechanisms thereof. The doors leading to the Common
Areas shall be kept closed during business hours except as they may be used for
ingress or egress. Each tenant shall, upon the termination or expiration of
its tenancy, restore to the Landlord all keys of or to offices, storage, toilet
rooms, or with respect to any and all other portions of the Leased Premises or
Building, either furnished to, or otherwise procured by, such tenant, and in
the event of the loss of any keys so furnished, such tenant shall pay to
Landlord the cost thereof.
11. Tenant shall not pay any employees on the Leased Premises, except
those actually working for Tenant on the Leased Premises.
12. Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself to any
Building management, security guard on duty or security system monitor. Each
tenant shall be responsible for all persons for whom he authorizes entry into
or exit out of the Building, and shall be liable to Landlord for all acts or
omissions of such persons.
13. The Leased Premises shall not, at any time, be used for lodging or
sleeping or any immoral or illegal purpose.
14. Tenant, before closing and leaving the Leased Premises at any time,
shall see that all windows are closed and all lights turned off.
15. Landlord's employees shall not perform any work or do anything outside
of their regular duties, unless under special instruction from the management
of the Building. The requirements of tenants will be attended to only upon
application to Landlord and any such special requirements shall be billed to
the applicable tenant (and paid with the next installation of Base Rent) at the
schedule of charges maintained by Landlord from time to time or at such charge
as is agreed upon in advance by Landlord and such tenant.
16. Canvassing, soliciting and peddling in the Building are prohibited and
each tenant shall cooperate to prevent the same.
17. There shall not be used in any space or in the public halls of the
Building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks except those equipped with rubber tires
and side guards, and each tenant shall be responsible to Landlord for any loss
or damage resulting from any deliveries of such tenant to the Building. All
material handling equipment used on the concrete warehouse floor shall have
rubber tires.
18. Mats, trash, or other objects shall not be placed in the Common Areas.
19. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside or
inside of the Building, or on any other portion of the Project, without the
prior written consent of the Landlord and the Meadowridge Business Park
Architectural Review Committee. In the event of the violation of the foregoing
by any tenant, Landlord may charge the expense incurred by such removal to the
tenant responsible for such violation.
20. Tenant shall not affix any floor covering to any floor of the Leased
Premises with adhesive or glue of any kind without obtaining Landlord's prior
written consent.
2
<PAGE> 28
BALTIMORE FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts the
foregoing assignment and agrees to assume, perform and be bound by all of the
duties, obligations and liabilities of Assignor under the Lease, arising on and
after the date of this instrument for the remainder of the term of the Lease
and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged AMSCO STERILE RECOVERIES, INC.,
in the presence of: a Delaware corporation
/s/ Wm. J. Rieflin
------------------------------
/s/ Kathleen Clover By: Wm. J. Rieflin
- ----------------------------- --------------------------
Print Name: Kathleen Clover Its: Secretary
------------------ --------------------------
- -----------------------------
Print Name:
------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
---------------------------
/s/ Kathleen Clover By: J. T. Boosales
- ------------------------------ ---------------------------
Print Name: Kathleen Clover Its: E.V.P.
------------------- ---------------------------
- ------------------------------
Print Name:
------------------
-2-
<PAGE> 30
EXHIBIT A
Baltimore facility, Baltimore, Maryland.
Lease dated August 28, 1992 among Winchester Homes Inc. and
Weyerhaeuser Real Estate Company as Landlord and AMSCO Sterile
Recoveries, Inc. as Tenant.
<PAGE> 1
EXHIBIT 10.18
TEXAS
INDUSTRIAL NET LEASE
THIS LEASE, dated March 19, 1992, for purposes of reference only, is made
and entered into by and between THE TRUSTEES OF THE ESTATE OF JAMES CAMPBELL,
DECEASED ("Landlord"), and AMSCO Sterile Recoveries Inc., a Delaware
corporation ("Tenant").
WITNESSETH
1. Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord for the term of this Lease and at the rental and upon the
conditions set forth below, the Premises described in the Basic Lease
Information and identified on the floor plan attached hereto as Exhibit A
("Premises"). Subject to any obligations of Landlord as set forth in an
exhibit to this Lease covering initial improvement of the Premises, if any,
Tenant shall accept the Premises in its "as-is" condition at the commencement
of the term. The Premises are located within the building commonly known as
described in the Basic Lease Information (the "Building").
2. Term. The term of this Lease shall commence and, unless sooner
terminated as hereinafter provided, shall end on the dates respectively
specified in the Basic Lease Information. If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant at the
commencement of the term, this Lease shall not be void or voidable, nor shall
Landlord be liable to Tenant for any loss or damage resulting therefrom, but in
that event, subject to any contrary provisions in any agreement with Landlord
covering initial improvement of the Premises, rental shall be waived for the
period between commencement of the term and the time when Landlord can deliver
possession. No delay in delivery of possession shall operate to extend the
term. It is specifically agreed by Landlord and Tenant, that Tenant shall be
permitted to occupy the Premises during Landlord's construction of the Tenant
Improvements, as described in Exhibit C hereto. It is further agreed that
during construction of the Tenant Improvements, Landlord shall provide
temporary electrical power to Tenant so that Tenant may commence construction
of Tenant's Work, as described in Exhibit C hereto.
3. Rent.
(a) Tenant shall pay to Landlord as rental the amount specified in
the Basic Lease Information as the Base Rent, payable in advance on the
commencement of the term and on or before the first day of each and every
successive calendar month during the term. If the term commences on other than
the first day of a calendar month, the first payment of rent shall be
appropriately prorated on the basis of a 30-day month.
(b) Tenant shall pay, as additional rent, all amounts of money
required to be paid to Landlord by Tenant hereunder in addition to monthly base
rent, whether or not the same be designated "additional rent." If such amounts
are not paid at the time provided in this Lease, they shall nevertheless be
collectible as additional rent with the next installment of monthly rent
thereafter falling due, but nothing herein contained shall be deemed to suspend
or delay the payment of any amount of money at the time the same becomes due
and payable hereunder, or limit any other remedy of Landlord.
(c) Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent and other amounts due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any trust deed covering the Premises. Accordingly, if
any installment of rent or any other sums due from Tenant shall not be received
by Landlord within ten days of when due, Tenant
<PAGE> 2
shall pay to Landlord a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
(d) Any amount due to Landlord, if not paid when due, shall bear
interest from the date due until paid at the rate of 10% per annum, or if a
higher rate is legally permissible, at the highest rate legally permitted,
provided that interest shall not be payable on late charges incurred by Tenant
nor on any amounts upon which late charges are paid by Tenant to the extent
such interest would cause the total interest to be in excess of that legally
permitted. Payment of interest shall not excuse or cure any default hereunder
by Tenant.
(e) All payments due from Tenant to Landlord hereunder shall be
made to Landlord without deduction or offset in lawful money of the United
States of America at Landlord's address for notices hereunder, or to such other
person or at such other place as Landlord may from time to time designate in
writing to Tenant.
4. Taxes and Operating Insurance.
(a) This Lease is a net lease and Base Rent and additional rent
shall be paid to and received by Landlord net of all costs and expenses to
Landlord other than taxes upon the income of Landlord from all sources. Tenant
shall pay its percentage share, as specified in the Basic Lease Information, of
all Property Taxes assessed in respect of the Building during the term, and its
percentage share of all Operating Expenses paid or incurred by Landlord during
the term. Landlord shall have the primary right to contest or otherwise appeal
an assessment of Property Taxes. However, if Landlord chooses not to appeal an
assessment of Property Taxes and Tenant believes that the Property Taxes
assessed against the Building are excessive, Tenant shall have the right, in
its own name and at its own expense, to appeal the assessment of Property Taxes
to the appropriate authority. Tenant's right to appeal or contest the
assessment of Property Taxes is contingent upon Tenant paying the assessed
amount of the Property Taxes pending the outcome of Tenant's appeal or contest.
If Tenant is successful in its appeal and a tax refund or abatement is ordered,
then Tenant shall receive its proportionate share of the tax savings in the
form of a credit towards future assessments of additional rent.
(b) For the purposes hereof, "Property Taxes" shall mean all real
property taxes, assessments or governmentally imposed fees or charges (and any
tax or assessment levied wholly or partly in lieu thereof) levied, assessed,
confirmed, imposed, or which becomes a lien against the Building (which for the
purposes of defining "Property Taxes" shall include the land underlying the
Building) or payable during the term. In the event the Building is not
separately assessed for tax purposes, then the Property Taxes to be paid by
Tenant shall be Tenant's percentage share of the product obtained by
multiplying the total of the Property Taxes levied against the tax parcel of
which the Building is a part by a fraction, the numerator of which is the
rentable area of the Building and the denominator of which is total rentable
area of all improvements located within the tax parcel of which the Building is
a part.
(c) For the purposes hereof, "Operating Expenses" shall mean all
expenses and costs of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the ownership and operation
of the Building of which the Premises is a part, and surrounding property and
supporting facilities, including, without limitation: (i) all license, permit,
and inspection fees; (ii) premiums for any insurance maintained by Landlord
with respect to the Building and the project of which the Premises is a part in
excess of the Base Insurance; (iii) all supplies, materials, and equipment
rental; (iv) all maintenance, repair, janitorial, security, and service costs,
including the cost of a full service contract for the heating, ventilating and
air conditioning systems; (v) repair, replacement, and maintenance costs,
including, but not limited to, sidewalks, landscaping, roof repair, service
areas, mechanical rooms, parking areas, Building exterior, pipes, ducts,
conduits, wires and driveways (excluding those paid for by proceeds of
insurance of other parties and alterations
-2-
<PAGE> 3
attributable solely to tenants of the Building other than Tenant); (vi)
amortization of capital improvements to the extent such capital improvements
are intended to reduce other Operating Expenses or to the extent that they are
required by governmental authorities; (vii) all charges for heat, gas and other
utilities used or consumed in the Building and surrounding lots, entranceways,
and sidewalks; and (viii) all other operating, management, and other expenses
incurred by Landlord in connection with the operation of the Building. Landlord
shall not collect in excess of one hundred percent (100%) of all of Landlord's
Operating Expenses and Landlord shall not recover, through Operating Expenses,
any item of cost more than once.
(d) Tenant shall pay to Landlord each month at the same time and in
the same manner as monthly rent 1/12th of Landlord's estimate of Property Taxes
and Operating Expenses for the then current calendar year. Within 90 days
after the close of each calendar year, or as soon after such 90-day period as
practicable, Landlord shall deliver to Tenant a statement of actual Property
Taxes and Operating Expenses for such calendar year. If on the basis of such
statement Tenant owes an amount that is less than the estimated payments for
such calendar year previously made by Tenant, Landlord shall refund such excess
to Tenant. If on the basis of such statement Tenant owes an amount that is
more than the estimated payments for such calendar year previously made by
Tenant, Tenant shall pay the deficiency to Landlord within 15 days after
delivery of the statement. The obligations of Landlord and Tenant under this
subparagraph with respect to the reconciliation between estimated payments and
actual Property Taxes and Operating Expenses for the last year of the term
shall survive the termination of the Lease.
5. Other Taxes. Tenant shall pay or reimburse Landlord for any taxes
upon, measured by or reasonably attributable to the cost or value of Tenant's
equipment, furniture, fixtures and other personal property located in the
Premises or leasehold improvements made in or to the Premises at Tenant's
expense; for any taxes, assessments, fees or charges imposed by any public
authority or private community maintenance association upon or by reason of the
development, possession, use or occupancy of the Premises or the parking
facilities used by Tenant in connection with the Premises; and for any gross
receipts tax imposed with respect to the rental payable hereunder.
6. Use.
(a) The Premises shall be used and occupied by Tenant for the
purpose of a laundry and sterilization facility and in accordance with the
Rules and Regulations attached to this Lease as Exhibit B and for no other
purpose. Tenant shall, at Tenant's expense, comply promptly with all applicable
statutes, ordinances, rules, regulations, orders and requirements in effect
during the term regulating the use by Tenant of the Premises. Tenant shall not
use or permit the use of the Premises in any manner that will tend to create
waste or a nuisance, or which shall tend unreasonably to disturb other tenants
of the Building, nor shall Tenant, its employees, agents or invitees damage the
Premises, the Building or related improvements, nor place or maintain any signs
on or visible from the exterior of the Premises without Landlord's written
consent, or use any corridors, sidewalks or other areas outside of the Premises
for storage or any purpose other than access to the Premises. Notwithstanding
any other provision of this Lease, Tenant shall not use, keep or permit to be
used or kept on the Premises any foul or noxious gas or substance, nor shall
Tenant do or permit to be done anything in and about the Premises, either in
connection with activities hereunder expressly permitted or otherwise, which
would cause a cancellation of any policy of insurance (including fire
insurance) maintained by Landlord in connection with the Premises or the
Building or which would violate the terms of any covenants, conditions or
restrictions affecting the Building or the land on which it is located.
Landlord acknowledges that Tenant will be handling, among other things, soiled
operating room linens from hospitals, medical clinics, laboratories and other
health services related facilities. Landlord hereby consents to Tenant's
activities as described in this subparagraph 6(a).
(b) Tenant shall strictly comply with all statutes, laws, ordinances,
rules, regulations, and precautions now or hereafter mandated or advised by any
federal, state, local or other governmental agency with respect to the use,
generation, storage, or disposal of hazardous, toxic, or
-3-
<PAGE> 4
radioactive materials (collectively, "Hazardous Materials"). As herein used,
Hazardous Materials shall include, but not be limited to, those materials
identified in Tex. Rev. Civ. Stat. Ann art. 4476-13 Section 1(4) (Vernon Supp.
1987), as amended from time to time, and those substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or other similar
designations in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq. and any other
governmental statutes, laws, ordinances, rules, regulations, and precautions.
Tenant shall not cause, or allow anyone else to cause, any Hazardous Materials
to be used, generated, stored, or disposed of on or about the Premises or the
Building, without the prior written consent of Landlord, which consent may be
withheld in the sole discretion of Landlord, and which consent may be revoked
at any time. Tenant's indemnification of Landlord pursuant to this Lease shall
extend to all liability, including all foreseeable and unforeseeable
consequential damages, directly or indirectly arising out of the use,
generation, storage, or disposal of Hazardous Materials by Tenant or any person
claiming under Tenant, including, without limitation, the cost of any required
or necessary repair, cleanup, or detoxification and the preparation of any
closure or other required plans, whether such action is required or necessary
prior to or following the termination of this Lease, to the full extent that
such action is attributable, directly or indirectly, to the use, generation,
storage, or disposal of Hazardous Materials by Tenant or any person claiming
under Tenant. Neither the written consent by Landlord to the use, generation,
storage, or disposal of Hazardous Materials nor the strict compliance by Tenant
with all statutes, laws, ordinances, rules, regulations, and precautions
pertaining to Hazardous Materials shall excuse Tenant from Tenant's obligation
of indemnification. Notwithstanding anything to the contrary contained in this
Lease, Landlord acknowledges that Tenant intends to use industrial detergents
and bleaches in its laundry operations and disinfectants throughout the
Premises. Landlord expressly consents to Tenant's use of these substances as
the substances are essential to Tenant's business.
7. Utilities.
(a) Tenant shall pay for all water, sewer, gas, electricity, heat,
cooling energy, telephone, refuse collection and other utility-type services
furnished to Tenant or the Premises, together with all related installation or
connection charges or deposits. Wherever it is practical to do so such
services shall be separately metered or charged to Tenant by the provider
thereof and paid for directly by Tenant. To the extent any of the foregoing
services are provided by Landlord, Tenant shall reimburse Landlord for all
costs incurred by Landlord in connection with the provision of such services
based on Landlord's reasonable estimate of the level of Tenant's use or
consumption of such services. Landlord shall bill Tenant on monthly or other
periodic basis for such services and payment shall be made by Tenant within 10
days after submittal of Landlord's statement. Landlord acknowledges that
Tenant's business must operate a minimum of 16 hours per day. Landlord
therefore will endeavor in good faith to provide Tenant with advance notice of
all scheduled utility interruptions.
(b) Landlord shall not be liable in damages, consequential or
otherwise, nor shall there be any rent abatement, arising out of any
interruption whatsoever in utility services which is due to fire, accident,
strike, governmental authority, acts of God, or other causes beyond the
reasonable control of Landlord or any temporary interruption in such service
which is necessary to the making of alterations, repairs, or improvements to
Building or any part of it.
8. Maintenance, Repairs and Alterations.
(a) Subject to the provisions of paragraph 10 below, and except for
damages caused by Tenant, its agents or invitees, Landlord shall keep in good
condition and repair the foundations and exterior walls and roof of the
Building and all common areas within and around the Building not leased to
tenants. Tenant expressly waives the benefits of any statute now or hereafter
in effect which would otherwise afford Tenant the right to terminate this Lease
because of Landlord's failure to keep the Premises or the Building in good
order, condition and repair.
-4-
<PAGE> 5
(b) Tenant shall, at Tenant's expense, maintain the interior portion
of the Premises (including, but not limited to, all plumbing and electrical
connections, outlets and lightbulbs) and any exterior glass or skylights in
good condition and repair. If Tenant fails to do so Landlord may, but shall
not be required to, enter the Premises and put them in good condition, and
Landlord's costs thereof shall automatically become due and payable as
additional rent. Tenant shall be responsible for the provision, at its own
expense, of appropriate janitorial services for the Premises. Tenant shall
also cause to be maintained, at its expense and in good operating condition and
repair, all heat, ventilating and air conditioning equipment installed in the
Premises. At the expiration of the term Tenant shall deliver up possession of
the Premises in good condition and repair, only ordinary wear and tear
excepted. Notwithstanding anything to the contrary contained in this Lease,
Landlord acknowledges that at the expiration of the term, Tenant shall be
permitted to remove from the Premises all of Tenant's trade fixtures. Tenant
will not remove either the heating, ventilation and air conditioning system or
the 1200 Amp, 480 volt electrical service panel installed in the Premises.
Landlord further acknowledges that removal of these trade fixtures may
necessitate removal of walls or partitions. Following Tenant's removal of its
trade fixtures, Tenant shall restore the Premises, ordinary wear and tear
excepted.
(c) Tenant shall not, without Landlord's prior consent, make any
alterations, improvements or additions in or about the Premises. As a
condition to giving such consent, Landlord may require that Tenant remove any
such alterations, improvements or additions at the expiration of the term, and
to restore the Premises to their prior condition. Before commencing any work
relating to alterations, additions or improvements affecting the Premises,
Tenant shall notify Landlord of the expected date of commencement thereof and
of the anticipated cost thereof, and shall furnish complete drawings and
specifications describing such work as well as such information as shall
reasonably be requested by Landlord substantiating Tenant's ability to pay for
such work. Landlord shall then have the right at any time and from time to
time to post and maintain on the Premises such notices as Landlord reasonably
deems necessary to protect the Premises and Landlord from mechanics' liens or
any other liens. In any event, Tenant shall pay when due all claims for labor
or materials furnished to or for Tenant at or for use in the Premises. Tenant
shall not permit any mechanics' liens to be levied against the Premises for any
labor or materials furnished to Tenant or claimed to have been furnished to
Tenant or to Tenant's agents or contractors in connection with work of any
character performed or claimed to have been performed on the Premises by or at
the direction of Tenant. All alterations, improvements or additions in or
about the Premises performed by or on behalf of Tenant shall be done in a
first-class, workmanlike manner and in compliance with all applicable laws,
ordinances, regulations and orders of any governmental authority having
jurisdiction thereover, as well as the requirements of insurers of the Premises
and the Building. Prior to commencing any such work, Tenant or Tenant's
contractor shall purchase builder's risk insurance in an amount no less than
the value of the complete work of alteration, addition or improvement on an
all-risk basis, covering all perils then customarily covered by such insurance.
In addition, prior to the commencement of such work, Tenant or Tenant's
contractor shall furnish to Landlord performance and payment bonds in a form
and issued by a surety reasonably acceptable to Landlord in an amount equal to
the cost of such work of alteration, improvement or addition. Notwithstanding
anything in this paragraph 8 to the contrary, upon Landlord's request, Tenant
shall remove any contractor, subcontractor or material supplier from the
Premises if the work or presence of such person or entity results in labor
disputes in or about the Building or damage to the Premises or Building. In no
event, however, shall Tenant be deemed obligated under the terms of this
paragraph 8 to violate the provisions of any order issued by a court of
competent jurisdiction. Subject to the provisions of subparagraph (b) of this
paragraph 8, all alterations, improvements or additions which may be made on
the Premises shall become the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the term; provided, however,
that Tenant's machinery, equipment and trade fixtures, shall remain the
property of Tenant and may be removed by Tenant.
-5-
<PAGE> 6
9. Insurance and Indemnity.
(a) Tenant shall obtain and maintain during the term of this Lease
comprehensive general liability insurance with a combined single limit for
personal injury and property damage in an amount not less than $2,000,000, and
employer's liability and workers' compensation insurance as required by law.
Tenant's comprehensive general liability insurance policy shall be endorsed to
provide that (1) it may not be cancelled or altered in such a manner as
adversely to affect the coverage afforded thereby without 30 days' prior
written notice to Landlord, (2) Landlord is named as additional insured, (3)
the insurer acknowledges acceptance of the mutual waiver of claims by Landlord
and Tenant pursuant to subparagraph (b) below, and (4) such insurance is
primary with respect to Landlord and that any other insurance maintained by
Landlord is excess and noncontributing with such insurance. If, in the opinion
of Landlord's insurance adviser, based on a substantial increase in recovered
liability claims generally, the specified amounts of coverage are no longer
adequate, such coverage shall be appropriately increased. Tenant shall also
obtain and maintain insurance ("Personal Property Insurance") covering
leasehold improvements paid for by Tenant and Tenant's personal property and
fixtures from time to time in, on, or at the Premises, in an amount not less
than 100% of the full replacement cost, without deduction for depreciation,
providing protection against events protected under "Fire and Extended
Coverage," as well as against sprinkler damage, vandalism, and malicious
mischief. Any proceeds from the Personal Property Insurance shall be used for
the repair or replacement of the property damaged or destroyed, unless this
Lease is terminated under an applicable provision herein. If the Premises are
not repaired or restored following damage or destruction in accordance with
other provisions herein, Tenant shall receive any proceeds from the Personal
Property Insurance allocable to Tenant's trade fixtures. Prior to the
commencement of the term, Tenant shall deliver to Landlord a duplicate of such
policy or a certificate thereof with endorsements, and at least 30 days prior
to the expiration of such policy or any renewal thereof, Tenant shall deliver
to Landlord a replacement or renewal binder, followed by a duplicate policy or
certificate within a reasonable time thereafter. If Tenant fails to obtain
such insurance or to furnish Landlord any such duplicate policy or certificate
as herein required, Landlord may, at its election, without notice to Tenant and
without any obligation to do so, procure and maintain such coverage and Tenant
shall reimburse Landlord on demand, as additional rent, any premium so paid by
Landlord. Tenant shall obtain and maintain business interruption insurance in
an amount not less than Tenant's annual gross revenue but not less than an
amount adequate to provide for payment of Base Rent and other amounts due
Landlord under this Lease during a one year interruption of Tenant's business
by fire or other casualty. Tenant shall have the right to provide all
insurance coverage required herein to be provided by Tenant pursuant to blanket
policies so long as such coverage is expressly afforded by such policies. All
policies of insurance described in this paragraph, and all insurers providing
said insurance, shall be subject to the reasonable approval of Landlord.
(b) Landlord hereby waives all claims against Tenant, and Tenant's
officers, directors, partners, employees, agents and representatives for loss
or damage to the extent that such loss or damage is insured against under any
valid and collectable insurance policy insuring Landlord or would have been
insured against but for any deductible amount under any such policy, and Tenant
waives all claims against Landlord including Landlord's officers, directors,
partners, employees, agents and representatives for loss or damage to the
extent such loss or damage is insured against under any valid and collectable
insurance policy insuring Tenant or required to be maintained by Tenant under
this Lease, or would have been insured against but for any deductible amount
under any such policy.
(c) Tenant hereby waives all claims against Landlord for damage to any
property or injury to or death of any person in, upon or about the Premises or
the Building arising at any time and from any cause except as the result of the
actions or omissions of Landlord, its employees, agent or assigns or the
actions of another tenant, and Tenant shall hold Landlord harmless from and
defend Landlord against (i) all claims for damage to any property or injury to
or death of any person arising from the use of the Premises by Tenant, except
such as is caused by the sole negligence or willful misconduct of Landlord, its
agents, employees or contractors, or (ii) arising from the negligence or
willful misconduct of Tenant, its employees, agents or contractors in, upon or
about those portions of
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<PAGE> 7
the Building other than the Premises. The foregoing indemnity obligation of
Tenant shall include reasonable attorneys' fees, investigation costs and all
other reasonable costs and expenses incurred by Landlord from the first notice
that any claim or demand is to be made or may be made. The provisions of this
paragraph 9 shall survive the termination of this Lease with respect to any
damage, injury or death occurring prior to such termination.
10. Damage or Destruction.
(a) If during the term the Premises are totally or partially
destroyed, or any other portion of the Building is damaged in such a way that
Tenant's use of the Premises is materially interfered with, from a risk which
is wholly covered by insurance proceeds made available to Landlord for such
purpose, Landlord shall proceed with reasonable diligence to repair the damage
or destruction and this Lease shall not be terminated; provided, however, that
if in the opinion of Landlord's architect the work of repair cannot be
completed within 90 days of the date of the event causing the damage or
destruction, then Landlord may at its election terminate the Lease by notice
given to Tenant. Notwithstanding anything to the contrary contained in this
Paragraph 10, Tenant shall have the right to terminate this Lease if Landlord
opts to repair the Premises as provided herein and in Landlord's architect's
opinion such repairs cannot be completed within 180 days of the date of the
event causing the damage or destruction.
(b) If during the term the Premises are totally or partially
destroyed, or any other portion of the Building is damaged in such a way that
Tenant's use of the Premises is materially interfered with, from a risk which
is not wholly covered by insurance proceeds made available to Landlord for
repair or reconstruction, Landlord may at its election by notice to Tenant
either restore the Premises or terminate this Lease.
(c) If destruction or damage results in structural damage to the
Premises and materially interferes with Tenant's use of the Premises, and if
this Lease is not terminated as above provided, rent shall be abated during the
period required for the work of repair based upon the degree of interference
with Tenant's use of the Premises. Except for abatement of rent, Tenant shall
have no claim against Landlord for any loss suffered by Tenant due to damage or
destruction of the Premises or any work of repair undertaken as herein
provided.
11. Eminent Domain. If all or any part of the Premises shall be taken as
a result of the exercise of the power of eminent domain or sold by Landlord
under threat thereof, this Lease shall terminate as to the part so taken as of
the date of taking or sale. In the case of a partial taking, Tenant shall have
the right to terminate this Lease as to the balance of the Premises by notice
to Landlord within 30 days after such date if 50% of the Premises shall be
taken. Other than compensation or damages awarded to Tenant as a result of
Tenant's leasehold interest in the Premises, Landlord shall be entitled to any
and all compensation, damages, income, rent, awards, or any interest therein
whatsoever which may be paid or made in connection with the condemnation or
taking, and Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease or otherwise. In the event of a taking as
described in this Paragraph 11, Tenant shall have the right to petition the
condemning authority for an award of damages including relocation expenses, the
loss of Tenant's trade fixtures and other personal property and such other
damages as the condemning authority sees fit. In the event of a partial taking
of the Premises which does not result in a termination of this Lease, the
monthly rental thereafter to be paid shall be reduced by the amount that the
usefulness of the Premises to Tenant for its business purposes has been
reduced. In the event of a taking, Landlord and Tenant agree to cooperate with
one another regarding presentation of their respective claims to the condemning
authority.
12. Assignment and Subletting. Tenant shall not, without the prior
written consent of Landlord, assign this Lease, or sublet the Premises, or any
portion of the Premises. Any assignment or subletting shall be expressly
subject to all terms and provisions of this Lease, including the provisions
pertaining to the use of the Premises, and shall be at Landlord's sole and
absolute discretion.
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<PAGE> 8
In the event of any assignment or subletting, Tenant shall remain fully liable
for the performance of all Tenant's obligations under this Lease. Tenant shall
not assign its rights under this Lease or sublet the Premises without first
obtaining a written agreement from the proposed assignee or sublessee, and
approved in form and content by Landlord, whereby the assignee or sublessee
agrees to be bound by the terms of this Lease. No assignment or subletting,
even with consent from Landlord, shall constitute a novation of this Lease.
As used in this paragraph 12, the term "assign" or "assignment" shall
include, without limitation, any sale, transfer, or other disposition of all or
any portion of Tenant's estate under this Lease, whether voluntary or
involuntary, and following:
(1) If Tenant is a corporation: (i) any dissolution, merger,
consolidation, or other reorganization of Tenant, or (ii) a sale of
more than 50% of the value of the assets of Tenant, or (iii) if
Tenant is a corporation with fewer than 500 shareholders, sale or
other transfer of a controlling percentage of the capital stock of
Tenant. The phrase "controlling percentage" means the ownership of,
and the right to vote, shares possessing at least 50% of the total
combined voting power of all classes of Tenant's stock issues,
outstanding and permitted to vote for the election of directors;
(2) If Tenant is a trust, the transfer of more than 50% of the
beneficial interest of Tenant, or the dissolution of the trust;
(3) If Tenant is a partnership or joint venture, the withdrawal,
or the transfer of the interest of any general partner, or joint
venturer, or the dissolution of the partnership, or joint venture;
(4) If Tenant is composed of tenants-in-common, the transfer of
interest by any co-tenants, or the partition or dissolution of the
co-tenancy.
In the event of an occurrence of an event of default while the
Premises is assigned or sublet, Landlord, in addition to any other remedies
provided by this Lease or by law, may, at Landlord's option, collect directly
from the assignee or sublessee all rents becoming due under the assignment or
subletting and apply those rents against any sums due to Landlord under this
Lease. Other than with respect to that payment of rent, no direct collection
by Landlord from any assignee or sublessee shall release Tenant from the
performance of its obligations under this Lease. In addition, should Tenant
sublease the Premises and the sublease requires the sublessee to pay rent in an
amount greater than the rent required to be paid under this Lease, Landlord
shall be entitled to receive rent from Tenant in an amount equal to that
required by the sublease.
13. Default by Tenant.
(a) The following events shall constitute events of default under
this Lease:
(1) A default by Tenant in the payment of any rent or other
sum payable hereunder for a period of 10 days after the same is due, provided
that if Tenant has failed three or more times in any twelve-month period to pay
any rent or other sum within 10 days after the due date, no grace period shall
thereafter be applicable hereunder;
(2) A default by Tenant in the performance of any of the
other terms, covenants, agreements or conditions contained herein and, if the
default is curable, the continuation of such default for a period of 30 days
after written notice by Landlord or beyond the time reasonably necessary for
cure if the default is of the nature to require more than 30 days to remedy,
provided that if Tenant has defaulted in the performance of the same obligation
three or more times in any twelve-month period and notice of such default has
been given by Landlord in each instance, no cure period shall thereafter be
applicable hereunder;
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<PAGE> 9
(3) The bankruptcy or insolvency of Tenant, any transfer
by Tenant in fraud of creditors, assignment by Tenant for the benefit of
creditors, or the commencement of any proceedings of any kind by or against
Tenant under any provision of the Federal Bankruptcy Act or under any other
insolvency, bankruptcy or reorganization act unless, in the event any such
proceedings are involuntary, Tenant is discharged from the same within 60 days
thereafter; the appointment of a receiver for a substantial part of the assets
of Tenant; or the levy upon this Lease or any estate of Tenant hereunder by any
attachment or execution; and
(4) Tenant shall fail to take possession of the Premises
within 30 days after the commencement of the term of the Lease, or Tenant shall
abandon all or a substantial portion of the Premises.
(b) Upon the occurrence of default, as defined in the article above,
Landlord shall have the option of pursuing one or more of the following
remedies:
(1) accelerate payment of the remaining rent
installments due under the terms of this Lease or any extension of this Lease,
which shall, in said event, immediately become due and payable in full to
Landlord; and,
(2) terminate this Lease and re-enter the Premises
pursuant to the article below; and
(3) re-enter and repossess the Premises and relet and
receive rent for the Premises, in which case Tenant shall pay Landlord an
amount equal to any deficiency that may arise between the total rent which
Landlord would have received from Tenant had Tenant remained on the Premises
until the end of the term and paid rent, and the rent actually received by
Landlord for the Premises during the term of this Lease, both from Tenant and
from such parties as may lease the Premises following termination; and
(4) re-enter and repossess the Premises and collect from
Tenant, as agreed, liquidated, final damages, all rent and other charges which
would have been payable by Tenant to Landlord during the term of this Lease,
less the fair rental value of the Premises during the remainder of said term.
Landlord's pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies provided in this Lease, or any other
remedies provided by law.
(c) In the event this Lease is terminated, in accordance with any
provision of this Lease permitting such termination, Tenant shall immediately
surrender the Premises to Landlord. Should Tenant fail to make such surrender,
Landlord shall have the right to re-enter the Premises as provided below.
In the event Landlord is permitted to make re-entry upon the Premises
under the terms of this Lease and by law, then Landlord or its agents or
employees may at any subsequent time enter upon and repossess the Premises and
expel and remove by force, if necessary, Tenant, its agents, employees,
sublessees, invitees, licensees, and concessionaires, if any, and third
parties, together with any property found upon the Premises. Landlord shall be
entitled to the benefits of all provisions of law respecting the speedy
recovery of land and tenements held over by Tenant, including the proceeding of
forcible entry and detainer. Tenant waives any right of service of notice to
re-enter as may be provided by present or future law. Landlord and its agents
shall not be subject to prosecution, or liability as a result of said lawful
entry or repossession, and Tenant shall compensate Landlord for its reasonable
expenses of making such lawful entry and repossession.
14. Default by Landlord. Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord hereunder within a
reasonable time, but in no event later than 30 days
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<PAGE> 10
after notice by Tenant to Landlord specifying wherein Landlord has failed to
perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than 30 days are required for performance, then
Landlord shall not be in default if Landlord commences performance within such
30 day period and thereafter diligently prosecutes the same to completion. In
the event of a default by Landlord, Tenant shall have the right to perform or
contract for the performance of the obligation that Landlord has refused or
neglected to perform and to offset the cost of such performance against the
monthly installment of base rent due for the month immediately following
Tenant's performance of Landlord's obligation.
15. Security Deposit. On execution of this Lease Tenant shall deposit
with Landlord the sum specified in the Basic Lease Information (the "deposit").
The deposit shall be held by Landlord as security for the performance by
Tenant of all of the provisions of this Lease. If Tenant fails to pay rent or
other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Landlord may use, apply or retain all of any portion
of the deposit for the payment of any rent or other charge in default, or the
payment of any other sum to which Landlord may become obligated by Tenant's
default, or to compensate Landlord for any loss or damage which Landlord may
suffer thereby. If Landlord so uses or applies all or any portion of the
deposit, then within 10 days after demand therefor Tenant shall deposit cash
with Landlord in an amount sufficient to restore the deposit to the full amount
thereof, and Tenant's failure to do so shall be a material breach of this
Lease. Landlord shall not be required to keep the deposit separate from its
general accounts. If Tenant performs all of Tenant's obligations hereunder,
the deposit, or so much thereof as has not heretofore been applied by Landlord,
shall be returned, without payment of interest for its use, to Tenant (or, at
Landlord's option, to the last assignee, if any, of Tenant's interest
hereunder) no later than 30 days following the expiration of the term hereof,
and after Tenant has vacated the Premises. No trust relationship is created
herein between Landlord and Tenant with respect to the deposit.
16. Tenant's Trade Fixtures. In the event of both Tenant's default as
defined in Paragraph 13(a) of this Lease and Landlord's pursuit of the remedies
contained in Paragraphs 13(b)(2), 13(b)(3) or 13(b)(4), all of Tenant's
fixtures and trade fixtures located within the Premises shall be deemed
abandoned by Tenant and shall become the personal property of Landlord. During
the term of this Lease, Tenant covenants that it shall not, without the prior
written consent of Landlord, allow a lien or security interest of any kind to
attach to Tenant's fixtures and trade fixtures. In addition, Tenant agrees
that it will not remove the trade fixtures identified on Exhibit E to this
Lease from the Premises during the term of this Lease without Landlord's prior
written consent. Upon request by Landlord, Tenant agrees to execute and
deliver to Landlord a financing statement sufficient to perfect Landlord's
interest in Tenant's fixtures and trade fixtures as herein set forth. In the
event of Tenant's default as defined in Paragraph 13(a) and the deemed
abandonment of Tenant's fixtures and trade fixtures as provided in this
Paragraph 16 Tenant shall, upon Landlord's request, execute a Bill of Sale in
form satisfactory to Landlord evidencing the transfer of ownership of the
fixtures and trade fixtures from Tenant to Landlord. Tenant hereby appoints
Landlord as Tenant's attorney-in-fact for the sole purpose of executing and
delivering the Bill of Sale required of Tenant pursuant to this Paragraph 16 in
the event Tenant fails to deliver an executed Bill of Sale to Landlord within
ten (10) days of Landlord's written request for same.
17. Estoppel Certificate.
(a) Tenant shall at any time upon not more than 10 days' prior
notice from Landlord execute, acknowledge and deliver to Landlord a statement
certifying (1) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect), (2) the date to which the
rent, security deposit, and other sums payable hereunder have been paid, (3)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults, if any, which
are claimed, and (4) such other matters as may reasonably be requested by
Landlord. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Building.
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<PAGE> 11
(b) Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant, (1) that this Lease is in full force and
effect, without modification except as may be represented by Landlord, (2) that
there are no uncured defaults in Landlord's performance, and (3) that not more
than one month's rent has been paid in advance. Tenant hereby appoints
Landlord as Tenant's attorney-in-fact to execute and deliver the statement
required of Tenant under this paragraph 17 upon Tenant's failure to do so
within ten days of Landlord's request therefor.
(c) If Landlord desires to finance or refinance the Building,
within 10 days of Landlord's request, Tenant shall deliver to any lender
designated by Landlord such financial statements of Tenant as may be reasonably
required by such lender. All such financial statements shall be received by
Landlord in confidence and shall be used for the purposes herein set forth.
18. Subordination. This Lease, at Landlord's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation for security now or hereafter placed upon the Building and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give notice
thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of
trust, or ground lease, whether this Lease is dated prior to or subsequent to
the date of said mortgage, deed of trust or ground lease or the date of
recording thereof. If any mortgage or deed of trust to which this Lease is
subordinate is foreclosed or a deed in lieu of foreclosure is given to the
mortgagee or beneficiary, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure; if
any ground lease to which this Lease is subordinate is terminated, Tenant shall
attorn to the ground lessor. Tenant agrees to execute any documents required
to effectuate such subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be, or to evidence
such attornment.
19. Attorneys' Fees. The prevailing party in any legal action brought by
the parties shall be entitled to recover for the fees of its attorneys in such
amount as the court may adjudge reasonable.
20. Notices. All notices, consents, demands and other communications
from one party to the other given pursuant to the terms of this Lease shall be
in writing and shall be deemed to have been fully given when deposited in the
United States mail, certified or registered, postage prepaid, and addressed as
follows: to Tenant at the address specified in the Basic Lease Information or
to such other place as Tenant may from time to time designate in a notice to
Landlord; to Landlord at the address specified in the Basic Lease Information,
or to such other place and with such other copies as Landlord may from time to
time designate in a notice to Tenant; or, in the case of Tenant, delivered to
Tenant at the Premises.
21. General Provisions.
(a) This Lease shall be governed by and construed in accordance
with the laws of the State of Texas.
(b) The invalidity of any provision of this Lease, as determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
(c) This Lease contains all agreements of the parties with respect
to any matter mentioned herein, and may be modified in writing only, signed by
the parties.
(d) No waiver by Landlord or Tenant of any provision hereof shall be
deemed a waiver of any other provision or of any subsequent breach by Tenant or
Landlord of the same or any
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<PAGE> 12
other provision. Landlord's consent to or approval of any act shall not be
deemed to render unnecessary the obtaining of Landlord's consent to or approval
of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord
shall not be a waiver of any preceding breach by Tenant of any provision
hereof, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.
(e) If Tenant remains in possession of the Premises or any part
thereof after the expiration of the term with the consent of Landlord, such
occupancy shall be a tenancy from month to month at a rental in the amount of
one and one half the last month's rental during the term plus all other charges
payable hereunder, and upon all of the terms hereof.
(f) Subject to the provisions of this Lease restricting assignment or
subletting by Tenant, this Lease shall bind the parties, their personal
representatives, successors and assigns.
(g) Landlord and Landlord's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers or lenders, and making such alterations,
repairs, improvements or additions to the Premises or to the Building as
Landlord may deem necessary or desirable. Landlord will endeavor to use its
best efforts not to interfere with Tenant's operations and to provide Tenant
with 24-hour prior notice of such entry. Landlord may at any time during the
last 120 days of the term place on or about the Premises any ordinary "For
Lease" sign.
(h) Tenant shall not conduct any auction at the Premises without
Landlord's prior consent.
(i) The voluntary or other surrender of this Lease by Tenant, the
mutual cancellation thereof or the termination of this Lease by Landlord as a
result of Tenant's default shall, at the option of Landlord, terminate all or
any existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
(j) If Tenant is a corporation, each individual executing this
Lease on behalf of Tenant represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of the corporation in accordance with
a duly adopted resolution of the Board of Directors and that this Lease is
binding upon the corporation in accordance with its terms.
(k) The term "Landlord" as used herein means the then owner of the
Building and in the event of a sale of the Building the selling owner shall be
automatically relieved of all obligations of Landlord hereunder, except for
acts or omissions of Landlord theretofore occurring.
(l) Any liability which may arise as a consequence of the execution
of this Lease by or on behalf of the Trustees under the Will and of the Estate
of James Campbell, deceased, shall be a liability of the Estate of James
Campbell and not the personal liability of any trustee, corporate officer of a
trustee, employee, or beneficiary of the Estate of James Campbell.
Notwithstanding anything to the contrary set forth in this Lease, it is
specifically understood and agreed by Tenant that there shall be absolutely no
personal liability on the part of Landlord with respect to any of the terms,
covenants, conditions of this Lease, and Tenant shall look solely to the
equity, if any, of Landlord in the Premises for the satisfaction of each and
every remedy of Tenant in the event of any breach by Landlord of any of the
terms, covenants, and conditions of this Lease to be performed by Landlord;
such exculpation of personal liability to be absolute and without any exception
whatsoever, and no other property or assets of Landlord shall be subject to
levy, execution, or other enforceable procedure for the satisfaction of
Tenant's remedies.
(m) Tenant and Landlord warrant that they have had no dealings with
any real estate brokers or agents other than the Brokers identified in the
Basic Lease Information in connection with the Premises or this Lease. Tenant
and Landlord each agree to indemnify each other and hold
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<PAGE> 13
each other harmless from and against all claims, demands, costs or liabilities
(including, without limitation, attorneys' fees) asserted by any party other
than the Brokers based upon alleged dealings of that party with Landlord or
Tenant in connection with the Premises or this Lease.
(n) Within 10 days of Landlord's request therefore, Tenant shall
execute and deliver such amendments of this Lease as shall have been required
by Landlord's lender in connection with the making of a loan to be secured by
the Premises or the Building, provided such amendment does not increase the
obligations of Tenant under this Lease or materially adversely affect Tenant's
leasehold interest.
22. Exhibits. The exhibits and addendum, if any, specified in the Basic
Lease Information are attached to this Lease and by this reference made a part
hereof.
IN WITNESS WHEREOF, the parties have executed this Lease on the respective
dates indicated below.
TENANT LANDLORD
AMSCO Sterile Recoveries, Inc. The Trustees of the Estate of James
Campbell, deceased
By: /s/ Wayne R. Peterson By: /s/ Roy S. Robins
--------------------------- -------------------------------------
Name: Wayne R. Peterson Name: Roy S. Robins
-------------------------- --------------------------------
Title: Asst. Secretary Title: Director Mainland Properties
------------------------- -------------------------------
By: /s/ Sydni L. Roberson, CPM
----------------------------------
Name: Sydni L. Roberson
--------------------------------
Title: Senior Asset Manager
-------------------------------
Date of Execution Date of Execution
by Tenant: March 19, 1992 by Landlord:
--------------------- -------------------------
Approved as to form:
By: /s/ L. Kelly Jones
---------------------------
Date: 3/24/92
--------------------------
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<PAGE> 14
EXHIBIT A
Patton Place
Trinity Mills Dist. Center IV
Illustration of the Site Plan entitled, "Trinity Mills Distribution Center
IV," illustrates a building of 656 feet of frontage at 160 feet of depth
fronting on Patton Place indicating a parking and landscaping plan with three
curb cuts on Patton Place. The demised premises are marked out by an "X" along
the column lines in Building IV of the multi-tenant Distribution Center. The
drawing is not to scale and indicates a railroad track running along the south
side of the building.
<PAGE> 15
EXHIBIT B
RULES AND REGULATIONS
1. All deliveries shall be made to designated service or receiving areas and
Tenant shall request delivery trucks to approach their service or
receiving areas by designated service routes and drives. All delivered
goods shall immediately be moved into Tenant's premises and shall not be
left in parking or receiving areas overnight. Tenant shall not store
equipment or pallets outside the Premises.
2. Tractor trailers which are unhooked or parked such that the dolly wheels
are beyond the concrete loading apron shall use steel plates under dolly
wheels to prevent damage to the asphalt paving surface. In addition,
wheel blocking shall be available for use. No parking or storing of such
trailers shall be permitted in the auto parking areas of the Project or on
the streets adjacent thereto.
3. Forklifts which operate on asphalt paving areas shall not have solid
rubber tires, but rather shall have tires which will not damage the
asphalt.
4. Tenant is responsible for storage and removal of all Tenant's trash,
refuse, and garbage. All trash shall be contained in suitable receptacles
stored behind a screened enclosure at locations approved by Landlord.
5. Tenant shall not dispose of the following items in sinks or commodes:
plastic products (plastic bags, straws, boxes); sanitary napkins, tea
bags; cooking fats, cooking oils; any meat scraps or cutting residue;
petroleum products (gasoline, naptha, kerosene, lubricating oils); paint
products (thinner, brushes); or any other items which the same are not
designed to receive. All areas of the Premises, including vestibules,
entrances, doors, fixtures, windows and plate glass, shall be maintained
in a safe, neat, and clean condition.
6. Walls, floors, and ceilings shall not be defaced in any way and no one
shall be permitted to mark, nail, screw, or drill into, paint or in any
way mar any exterior building surface.
7. Other than permitted under the Lease, Tenant shall not permit or suffer
any advertising medium to be placed on building walls, on Tenant's doors
or exterior windows, on the sidewalks or on the parking lot areas or light
poles. No permission, express or implied, is granted to exhibit or
display any banner, pennant, sign, or trade or seasonal decoration of any
size, style or material within the Project where such may be visible from
outside any building without the express written approval of Landlord.
8. Tenant shall not permit or suffer the use of any advertising medium which
extends outside of the Premises, including, without limiting the
generality of the foregoing, flashing lights, searchlights, loud speakers,
phonographs, radios, or television. No radio, television, or other
communication antenna equipment or device is to be mounted, attached, or
secured to any part of the roof, exterior surface, or anywhere outside the
Premises, without the prior written consent of Landlord.
9. Tenant shall not permit or suffer merchandise of any kind at any time to
be placed, exhibited, or displayed outside its Premises, nor shall Tenant
use the exterior sidewalks or exterior walkways of the Project to display,
store, or place any merchandise or goods. No sale of merchandise by
tenant sale, truck load sale or the like shall be permitted within the
Project.
10. Tenant shall not permit or suffer any portion of the Premises to be used
for lodging purposes.
<PAGE> 16
11. Before leaving the Premises unattended, Tenant shall determine that the
Premises are securely locked and that all water faucets and powered
equipment are turned off. All avenues of ingress and egress shall remain
unobstructed at all times.
12. No locks other than those provided by Landlord shall be placed on any
doors or windows, nor shall any changes be made to the mechanism of
existing locks. No duplicate keys shall be made; all extra keys will be
furnished by Landlord at Tenant's expense and all keys shall be
surrendered upon termination of the Lease.
13. The cost of any special electrical circuits for items such as copying
machines, computers, and microwave ovens shall be borne by Tenant. Tenant
shall not upgrade electrical equipment without the prior written consent
of Landlord.
14. No windows, doors, or other light or air sources that reflect or admit
light or air into the office areas shall be covered or obstructed, except
for suitable and approved window drapes or blinds, nor shall any articles
be placed on window sills.
15. No awning or other projections shall be attached to, or be visible from,
the exterior of the building. No blinds or drapes shall be attached to,
hung in, or used in connection with any window or door of the Premises
except in accordance with the standards adopted by Landlord with
Landlord's prior written approval; in all events where applicable, any
blinds, shades, or drapes shall be installed on the interior side of
windows or doors.
16. Any office frontage or windows which expose any interior storage to
public view must be draped or covered with blinds.
17. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with in any manner whatever occupants of
the Project or neighboring buildings or premises or those having business
with them. Tenant shall not throw anything out of doors or window, or
onto public or common areas of the Project.
18. In no event shall any person store any flammables in the Premises such as
gasoline, kerosene, naptha, and benzine, or explosives or any other
article of an intrinsically dangerous nature.
19. Canvassing, soliciting, and peddling in the Project are prohibited.
Landlord reserves the right to eject from the Project any solicitors,
canvassers, or peddlers and any other persons who, in the judgment of
Landlord, are annoying or interfering with Tenant's or Landlord's
operations or who are otherwise undesirable.
20. Tenant acknowledges that the appearance of its offices exposed to public
view from outside the building must be maintained with particular
attention to orderliness, cleanliness, and an image of professional
quality and high standards.
21. Tenant and its employees shall be deemed to have read these Rules and
Regulations, and to have agreed to abide by them as a condition to
Tenant's occupancy of the Premises.
22. Landlord reserves the right to make such other and further rules and
regulations as in Landlord's judgment may be helpful for the safety, care,
and cleanliness of the Premises and for the preservation of good order
therein. Tenant agrees to abide by all rules and regulations hereinabove
stated and any additional rules and regulations which are adopted by
Landlord.
2 of 2
<PAGE> 17
EXHIBIT C
INITIAL IMPROVEMENT OF THE PREMISES
1. Tenant Improvements. Landlord, through its general contractor, shall
furnish and install within the Premises a 1200 Amp, 480V electrical service and
service panel and a two inch water service, separately metered to the Premises
(the "Tenant Improvements"). The quantities, character and manner of
installation of all of the Tenant Improvements shall be subject to the
limitations imposed by any applicable governmental regulations.
2. Allocation of Cost. Landlord shall bear the cost of all Tenant
Improvements, architectural and engineering services and permits.
3. Tenant's Work.
(a) Any items or work beyond the scope of the Tenant Improvements
for which Tenant contracts separately (hereinafter "Tenant's Work"), shall be
subject to Landlord's policies and schedules and shall be conducted in such a
way as not to hinder, cause any disharmony with or delay work of improvements
in the Building. To this end, Tenant's Work shall conform with a schedule
determined by Landlord's contractor and no work shall be done by Tenant which
would cause Landlord's contractor to be dependent upon such work for completion
of Landlord's contractor's work. In no event shall work involving the
sprinkler, plumbing, mechanical, electrical power, lighting or fire safety
systems of the Building be performed by other than Landlord's approved
subcontractors and all telecommunications and other special electrical
equipment shall be installed under the supervision of Landlord's electrical
subcontractor.
(b) Not less than five days prior to the date Tenant desires to
commence Tenant's Work, it shall give a written request to Landlord setting
forth or accompanied by all of the following:
(1) A description and schedule for the work to be performed;
(2) The names and addresses of all contractors, subcontractors
and material suppliers who will perform Tenant's Work;
(3) Copies of all plans and specifications pertaining to that
portion of Tenant's Work;
(4) Copies of all licenses and permits which may be required in
connection with the performance of Tenant's Work;
(5) Certificates of insurance indicating compliance with the
insurance requirements set forth in the Lease;
(6) Performance and labor materials bonds from the contractors
named in the construction contracts (which have been approved by
Landlord) in an amount not less than the contract amount specified in the
construction contract for Tenant's Work; and, at Landlord's request,
evidence of the availability of funds sufficient to pay for all such work.
All of the foregoing shall be subject to Landlord's approval, which
approval shall not unreasonably be withheld.
(c) Tenant shall be responsible for any hoisting charges incurred in
connection with Tenant's Work and for any expenses incurred by Landlord due to
inadequate cleanup by those performing Tenant's Work.
<PAGE> 18
(d) If any supplier, contractor or worker performing Tenant's Work
hinders or delays, directly or indirectly, any other work of improvement in the
Building or performs any work which may or does impair the quality, integrity
or performance of any portion of the Building, Landlord shall give notice to
Tenant and immediately thereafter, Tenant shall cause such supplier, contractor
or worker immediately to remove all of its tools, equipment and materials and
to cease working in the Building. Tenant shall reimburse Landlord, within 10
days of Tenant's receipt of Landlord's written invoice, for the cost of any
repairs or corrections of the improvements or of any portion of the Building or
the cost of any delays caused by or resulting from the actions or omissions of
anyone performing Tenant's Work.
7. Completion and Rental Commencement Date. Notwithstanding anything to
the contrary contained in the Lease, Tenant's obligation for the payment of
rental under the Lease shall not commence until the earlier to occur of (i)
issuance of a Certificate of Occupancy or (ii) 90 days from the date of
Tenant's possession. Landlord will deliver possession of the premises to
Tenant on March 19, 1992, at which time Tenant may commence Tenant's Work.
Tenant acknowledges and agrees that the Tenant Improvements to be completed by
Landlord pursuant to Paragraph 1 above may not be completed prior to Landlord's
delivery of the Premises to Tenant. Landlord and Tenant agree to cooperate in
proceeding diligently to complete their respective work. If Landlord shall be
delayed in delivering possession of the Premises to Tenant beyond March 19,
1992, as a result of the following occurrence then the commencement date of
Tenant's obligation for payment of rental shall be advanced by the number of
days of such delay. All time periods referred to in this Exhibit C shall be
computed on a calendar basis with no allowance for holidays or weekends.
(a) Failure by Landlord and Tenant to execute the Lease by March
19, 1992.
TENANT LANDLORD
/s/ WRP /s/ SLR
- ----------------------------- ----------------------------------
Initial Initial
2 of 2
<PAGE> 19
EXHIBIT D
APPROVED PLANS AND SPECIFICATIONS FOR
TENANT'S IMPROVEMENT OF PREMISES
This exhibit depicts the final approved Tenant Plans and Specifications
for tenant improvements to be constructed within the leased premises.
<PAGE> 20
EXHIBIT E
Tenant's Trade Fixtures That Will Not be Moved From the Premises by Tenant
Without Landlord's Prior Written Consent:
<TABLE>
<CAPTION>
Item Manufacturer P.O. #
---- ------------ --------
<S> <C> <C> <C>
1. Washers Braun DAL-2559
2. Dryers Braun DAL-2559
3. Conveyor System/Micro-Processor Braun DAL-2559
4. Negative Air System CBP --
5. Reliance 777 Washer Hoplab G-2545
6. Sterilizers AMSCO G-2545
7. Cart Washers Basil G-2545
</TABLE>
<PAGE> 21
ADDENDUM "A"
OPTION TO EXTEND TERM AND CANCELLATION OPTION
This addendum is attached to and made a part of that certain lease dated
March 19, 1992 (the "Lease"), by and between the Trustees of the Estate of
James Campbell, deceased, acting in their fiduciary and not in their individual
capacities ("Landlord"), and AMSCO STERILE RECOVERIES, INC. ("Tenant"),
covering the property commonly known as 1441 Patton Place, Suite 169,
Carrollton, Texas (the "Premises'').
I. OPTION TO EXTEND TERM
Grant of Option
Provided that Tenant shall fully and faithfully perform all the terms and
conditions imposed upon it under the Lease, Landlord grants to Tenant one
option (the "Option") to extend the Lease beyond the Term Expiration provided
in the Basic Lease Information for an additional period of 10 years (the
"Extension"), on the same terms, conditions, and covenants set forth in the
Lease, except as provided below. The Extension shall commence on the day
following the Term Expiration specified in the Basic Lease Information.
Exercise of Option
The Option shall be exercisable only by written notice, pursuant to
paragraph 20 of the Lease, delivered to Landlord at least one year prior to the
Term Expiration. If Tenant fails to deliver to Landlord written notice
exercising the Option within the time period described above, the Option shall
lapse, and there shall be no further right of Tenant to extend the lease term
beyond the Term Expiration. The Option shall be exercisable by Tenant upon the
express condition precedent that, at the time of the exercise, and at all times
prior to commencement of the Extension, Tenant shall not be in default under
any of the provisions of the Lease. The Option is personal to Tenant, and may
not be exercised by any assignee or subtenant of Tenant.
Rent at Fair Rental Value
The rent during the Extension shall be determined, and the rent shall be
increased on the first day of the Extension, to the fair rental value of the
Premises. Upon Tenant's exercise of the Option, it shall specify in the notice
to Landlord its evaluation of the fair rental value of the Premises ("Tenant's
Rent") for the Extension, within 60 days thereafter, Landlord shall deliver to
Tenant a notice stating either (1) Landlord's agreement with Tenant's Rent, in
which event such amount shall be fixed as the rent payable by Tenant during the
Extension, or (2) Landlord's evaluation of such fair rental value ("Landlord's
Rent"). If Landlord and Tenant are unable to agree upon such fair rental value
within 45 days following the date Landlord sends its notice to Tenant
specifying Landlord's Rent, the matter shall be determined pursuant to the
following subparagraph.
Determination of Fair Rental Value
Landlord and Tenant shall endeavor in good faith to agree upon a single
appraiser. If Landlord and Tenant are unable to agree upon a single appraiser
within 60 days following Landlord's notice to Tenant specifying Landlord's
Rent, each shall then, by written notice to the other, within 90 days following
Landlord's notice to Tenant specifying Landlord's Rent, appoint one appraiser.
Within ten
<PAGE> 22
days after the two appraisers are appointed, the two appointed appraisers shall
appoint a third appraiser. If either Landlord or Tenant fails to appoint its
respective appraiser within the prescribed time period, the single appraiser
appointed shall determine the fair rental value of the Premises. If the two
appointed appraisers fail to agree upon the third appraiser, he or she shall be
appointed by the then-president of the Carrollton Board of Realtors. Each
party shall bear the cost of the appraiser appointed by it, and the parties
shall share equally the cost of the third appraiser. The fair rental value of
the Premises shall be determined by the average of the two of the three
appraisals which are closest in amount, and the third appraisal shall be
disregarded. In no event, however, shall the rent payable during the Extension
be less than Tenant's Rent nor more than Landlord's Rent. Further, the rent
payable during the Extension shall in no event be less than the rent payable
during the primary term of the Lease.
Definition of Fair Rental Value
The "fair rental value" of the Premises shall mean the price a ready and
willing tenant would pay, at the time of the commencement of the Extension, as
monthly rent to a ready and willing landlord of property comparable to the
Premises, if such property were exposed for lease on the open market for a
reasonable period of time, and taking into account all of the purposes for
which such property may be used, and not just the use proposed to be made of
the Premises by Tenant.
Continuation of Prior Rent
If, for any reason, the fair rental value is not determined prior to
commencement of the Extension, then, in each instance, Tenant shall continue to
pay to Landlord the rent applicable for the Premises immediately prior to the
Extension, until the fair rental value is determined, and when same is
determined, Tenant shall pay to Landlord, within ten days after receipt of
written notice, the difference, if any, between the rent actually paid by
Tenant to Landlord and the new rent as determined under this Provision.
Condition of Premises
Tenant shall accept the Premises in the condition then-existing as of the
commencement of the Extension. Landlord shall not be responsible for
performing any work or furnishing any materials to the Premises, except that it
shall continue its obligations under the terms of the Lease.
Information Request
Upon Landlord's request during the last three years prior to the Term
Expiration, or during the Extension, Tenant shall execute and deliver to
Landlord an instrument, in form reasonably satisfactory to Landlord, which
states either (a) that Tenant has not exercised the Option, or (b) that Tenant
has exercised the Option. In the event the Option has been exercised, such
instrument shall set forth all the modifications to the Lease resulting from
the Option being exercised, including, but not limited to, the new fixed rent,
as determined by agreement between the parties or by the appraisers, whichever
is applicable. However, Tenant's failure to execute or deliver such instrument
shall not vitiate any provision of this Option, and if Tenant's time to
exercise the Option has not yet expired, the giving of any notice under this
subparagraph shall not preclude the Option being exercised thereafter.
2
<PAGE> 23
II. CANCELLATION OPTION
So long as Tenant is not in default under any of the provisions of the
Lease, Landlord hereby grants to Tenant the option to terminate the Lease as of
March 31, 1997, as if such date were the Term Expiration as contained within
the Basic Lease Information, by (a) giving Landlord written notice, pursuant to
the notice provisions contained within paragraph 20 of the Lease, to that
effect on or before March 31, 1996, (b) paying to Landlord with such notice the
sum of $50,000.00, representing agreed-upon liquidated damages for the
abridgment of the term of the Lease, and (c) performing all of its obligations
pursuant to the Lease through such early termination date, including the
surrender of the Premises on or before said date. If Tenant fails to deliver
to Landlord written notice exercising this cancellation option, together with
payment of the liquidated damages, prior to March 31, 1996, this cancellation
option shall lapse, and the Lease shall continue to the Term Expiration. Upon
such early termination, Tenant shall upon demand from Landlord execute and
deliver to Landlord a written surrender of lease, in recordable form reasonably
satisfactory to Landlord.
TENANT: LANDLORD:
- ------- ---------
AMSCO STERILE RECOVERIES, INC. THE TRUSTEES OF THE ESTATE OF
JAMES CAMPBELL, DECEASED
By: /s/ Wayne R. Peterson By: /s/ Roy S. Robins
------------------------ -----------------------------
Name: Wayne R. Peterson Name: Roy S. Robins
----------------------- -----------------------------
Title: Asst. Secretary Title: Director Mainland Properties
---------------------- -----------------------------
By: /s/ Sydni L. Roberson, CPM
-----------------------------
Name: Sydni L. Roberson
-----------------------------
Title: Senior Asset Manager
-----------------------------
3
<PAGE> 24
ASSIGNMENT AND MODIFICATION OF LEASE BETWEEN
THE ESTATE OF JAMES CAMPBELL ("LANDLORD") AND
AMSCO STERILE RECOVERIES, INC. ("ASSIGNOR"), COVERING
APPROXIMATELY 20,014 SQUARE FEET LOCATED AT
1441 PATTON PLACE, CARROLLTON, TEXAS (THE "LEASE"),
TO STERILE RECOVERIES, INC. ("ASSIGNEE")
WHEREAS, Landlord and Assignor have previously entered into the Lease
with regard to real property located at 1441 Patton Place, Suite 169,
Carrollton, Texas 75007 (the "Premises"), and
WHEREAS, Assignee has previously purchased substantially all of the
assets of Assignor, and
WHEREAS, Assignor desires to assign the Lease to Assignee, and
Assignee desires to assume and perform all of the duties and obligations to be
performed by Assignor pursuant to the terms of the Lease;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained within this assignment and modification agreement, the parties have
agreed as follows:
I. ASSIGNMENT OF LEASE
For value received, Assignor hereby sells, assigns, and transfers to
Assignee all its right, title, and interest in and to the Lease. A true and
correct photocopy of the Lease is attached to this assignment and modification
agreement as exhibit "a", and is hereby incorporated into this assignment and
modification agreement for all intents and purposes as if fully set forth at
length verbatim.
II. ACCEPTANCE OF ASSIGNMENT
Assignee hereby accepts the above assignment, agrees to assume and
perform all the duties and obligations to be performed by Assignor under the
terms of the Lease, as modified by this agreement, to the same extent as if
Assignee had originally been named as the tenant in said Lease.
III. ASSIGNOR'S CONTINUING LIABILITY
Notwithstanding the terms of this assignment and modification
agreement, Assignor expressly acknowledges that, pursuant to the terms of the
Lease, Assignor remains fully liable for the performance of all tenant
obligations pursuant to the terms of the Lease, and that this assignment and
modification agreement does not constitute a novation of the Lease.
IV. CANCELLATION OPTION DELETED
The parties to this assignment and modification agreement expressly
agree that the cancellation option in favor of Tenant, as contained within
Article 11 of Addendum "A" of the Lease, is hereby deleted and cancelled in its
entirety. The parties expressly agree that neither Assignor nor Assignee has
any rights whatsoever to cancel the Lease prior to the Term Expiration.
V. CONDITION OF PREMISES AT TERMINATION
Paragraph 8(b) of the Lease is modified by adding the following
language:
Upon the Term Expiration, or the earlier termination of the
Lease, Tenant shall (1) deliver the Premises to Landlord with
all improvements located upon the Premises in good repair and
condition, reasonable wear and tear excepted (subject to
Tenant's maintenance obligations), (2) deliver to Landlord all
keys to the Premises, and (3) remove all signage placed by or
at Tenant's request upon the Premises, the Building, or the
land upon which the Building is located. Further, Tenant
shall surrender the Premises broom clean and in the same
condition as received by Tenant upon the Term Commencement of
this Lease. More specifically, Tenant agrees, upon
surrendering the Premises to Landlord, to restore the Premises
as required by the provisions of the "General Notes" contained
within the Restoration Agreement attached to this assignment
and modification of lease as exhibit "b", and which is hereby
incorporated into this assignment and modification of lease
for all intents and purposes as if fully set forth at length
verbatim. Provided Tenant has performed all of its
obligations pursuant to the Lease, Tenant may remove all
unattached trade fixtures, furniture, and personal property
placed on the Premises by Tenant (but Tenant shall not remove
any such item which was paid for, in whole or in part, by
Landlord). All items not so removed shall, at the option of
Landlord, be deemed abandoned by Tenant and may be
appropriated, sold, stored, destroyed, or otherwise disposed
of by
Initials:/s/ WJR/RSR/CAS
---------------
<PAGE> 25
Landlord without notice to Tenant, and without any obligation
to account for such items, and Tenant shall pay the costs
incurred by Landlord in connection with such disposition. All
work required of Tenant under this paragraph shall be
coordinated with Landlord, and shall be performed in a good
and workmanlike manner in accordance with all laws, and so as
not to damage the Premises or the Building, or unreasonably
interfere with other tenants' use of their premises. Tenant
shall, at its sole expense, repair all damage to the Premises
or the Building caused by any work performed by Tenant
pursuant to this paragraph. Tenant's obligation to perform
under this covenant shall survive the expiration or earlier
termination of the Lease.
VI. ADDITIONAL FINANCING STATEMENT
Upon execution of this assignment and modification agreement, Assignee
agrees to execute and deliver to Landlord a UCC-1 financing statement granting
Landlord an interest in Assignee's fixtures and trade fixtures located within
the Premises, same being subject to Landlord's lien pursuant to paragraph 16
of the Lease.
Assignor agrees to subordinate its lien upon Assignee's fixtures and
trade fixtures to the lien in favor of Landlord, and Assignor further agrees to
execute such documents to accomplish said subordination as may be reasonably
requested by Landlord.
VII. RATIFICATION OF LEASE
Assignor and Assignee specifically ratify and approve the terms of the
Lease, except as modified above, specifically including, but not limited to,
paragraph 16 dealing with Assignee's trade fixtures.
VIII. CONSENT TO ASSIGNMENT
Landlord consents to the above assignment. Landlord represents that
any default, if any, occasioned by the prior attempted assignment from Assignor
to Assignee has been cured.
<TABLE>
<S> <C>
ASSIGNOR: LANDLORD:
- --------- ---------
AMSCO STERILE RECOVERIES, INC. THE TRUSTEES OF THE ESTATE OF
JAMES CAMPBELL,DECEASED, ACTING
By: /s/ William J. Rieflin IN THEIR FIDUCIARY AND NOT IN
--------------------------------- THEIR INDIVIDUAL CAPACITIES
Name: William J. Rieflin
---------------------------------
Title: Secretary
---------------------------------
By: /s/ Roy S. Robins
------------------------------------
Its: Director, Mainland Properties/West
------------------------------------
Date of execution by Assignor: 3/12/9 By: /s/ Clyde A. Skeen
---------- Its: Asset Manager
------------------------------------
ASSIGNEE:
- ---------
STERILE RECOVERIES, INC.
By: /s/ Wayne R. Peterson
------------------------------------
Wayne R. Peterson
Executive Vice President
Date of execution by Assignee: 3/11/96 Date of execution by Landlord: 4/15/96
---------- -----------
APPROVED AS TO FORM:
By: /s/ L. Kelly Jones
------------------------------------
L. Kelly Jones
Date: 1/5/96
-----------------------------------
</TABLE>
2 Initials:/s/ WJR/RSR/CAS
---------------
<PAGE> 26
EXHIBIT A
Lease dated March 19, 1992 between the Landlord, The Trustees of the
Estate of James Campbell, deceased, and Tenant, AMSCO Sterile Recoveries, Inc.
pertaining to the leased premises located at Suite 169, 1441 Patton Place,
Carrollton, Texas.
<PAGE> 27
EXHIBIT B
TO ASSIGNMENT AND MODIFICATION OF LEASE
RESTORATION AGREEMENT
The "Restoration Agreement," illustrates the Site Plan of the demised
premises including all improvements in place. The entire premises is shaded
with the exception of the office space in the front of the premises and the
following general notes are included as part of the Floor Plan:
1. The 1987 Edition of AIA Document A201, "General Conditions of the
Contract for Construction" is a part of these contract documents.
2. Trammell Crow standard interior finish out specifications are a part
of these contract documents.
3. Contractors shall verify all existing conditions and required
dimensions, as they relate to the intent of the new construction,
prior to the start of construction. Report any discrepancies between
existing work and the drawings to the architect prior to commencing
work.
4. Demolish hatched area including: All partitions, ceiling, machinery
and equipment attached to concrete floor. Patch and repair all areas
affected by demolition and new work. Patch and repair work shall
match existing finishes for texture, color and materials.
5. All existing electrical, telephone and date lines are to remain,
unless shown to be removed or unless located in the partitions
scheduled to be removed.
6. Leave gas fired unit heaters in warehouse area in good working order.
7. Relamp and reballast existing light fixtures as needed at remaining
office area only.
8. Revise and/or provide exit signage and emergency lighting as required
by local codes.
9. Existing HVAC units to be used to serve remaining office space.
Verify the condition of equipment. Repair units and/or revise
ductwork as required to serve all spaces.
10. Provide new partition with 3 5/8" MTL. studs and 5/8" GYP. BO. at each
side and relocate (1) right-hand door to swing toward warehouse space,
to be located at the west end of the corridor 110.
<PAGE> 28
DALLAS FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts
the foregoing assignment and agrees to assume, perform and be bound by all of
the duties, obligations and liabilities of Assignor under the Lease, arising on
and after the date of this instrument for the remainder of the term of the
Lease and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
--------------------------------
/s/ Kathleen Clover By: Wm. J. Rieflin
- ---------------------------------------- -----------------------------
Print Name: Kathleen Clover Its: Secretary
----------------------------- ----------------------------
- ----------------------------------------
Print Name:
-----------------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
--------------------------------
/s/ Kathleen Clover By: J. T. Boosales
- ---------------------------------------- -----------------------------
Print Name: Kathleen Clover Its: E.V.P.
----------------------------- ----------------------------
- ----------------------------------------
Print Name:
-----------------------------
-2-
<PAGE> 30
EXHIBIT A
Dallas facility, Carrollton, Texas.
Texas Industrial Net Lease dated March 19, 1992 between the Trustees of the
Estate of James Campbell, Deceased as Landlord and AMSCO Sterile Recoveries,
Inc. as Tenant.
<PAGE> 1
EXHIBIT 10.19
LEASE
THIS LEASE is made as of the 30th day of March, 1992, by and between
Walter D'Aloisio, 23158 Churches, Southfield, Michigan 48034 as Lessor and
Amsco Sterile Recoveries, Inc., a Subsidiary of American Sterilizer Co., 28100
U.S. Highway 19 N., Suite 201, Clearwater, Florida 34621 as Lessee,
IN CONSIDERATION of the rents to be paid and the mutual covenants,
promises and agreements herein set forth, Lessor and Lessee agree as follows:
Lessor hereby leases unto Lessee premises situated in the City of
Westland, County of Wayne, State of Michigan, described as set forth on Exhibit
"A" attached hereto and made a part hereof.
TO HAVE AND TO HOLD for a term of ten (10) years five months* from and
after the commencement of the term as hereinafter provided. * First five
months are rent free as to base rent.
SECTION 1
CONSTRUCTION OF IMPROVEMENTS
1.01 Lessor agrees, at Lessor's sole cost and expense, to complete certain
improvements to the building located on the land described in Exhibit "A" in
accordance with Plans enumerated on Exhibit "B", which Plans have been approved
by both parties and which are by this reference made a part hereof. No minor
change from such specifications which may be necessary during the preparation
of the premises for Lessee shall affect, change or invalidate this Lease. See
Section 1.02 of attached Rider.
SECTION 2
TERM OF LEASE
2.01 The term of this lease shall begin on April 1, 1992, and shall end on
September 30, 2002 unless sooner terminated as herein set forth. The term as
fixed by this Section 2 shall hereafter be referred to as the "original term".
2.02 If Lessor shall be unable for any reason to give possession of the
premises on the date of the commencement of the term hereof, Lessor shall not
be subject to any liability for the failure to give possession on such date but
the rent to be paid herein shall not commence until the premises are ready for
occupancy by Lessee.* No such failure to give possession on the date of the
commencement of the term shall affect the validity of this Lease or the
obligations of Lessee hereunder. Permission is given to Lessee to enter into
possession of the premises, or to occupy premises other than the leased
premises, prior to the date specified as the commencement of the term of this
Lease, Lessee covenants and agrees that such occupancy shall be deemed to be
under all the terms, covenants, conditions and provisions of this Lease. *
Notwithstanding anything herein to the contrary, rent payments shall abate
until Tenant's improvements are complete and a Certificate of Occupancy from
the City of Westland has been issued, but in no event later than September 1,
1992.
2.03 On the commencement date or within a reasonable time thereafter upon
request by Lessor, Lessee shall execute a written instrument confirming the
Commencement Date and the date on which the term shall end.
SECTION 3
BASE RENTAL
3.01 In consideration of the leasing aforesaid, Lessee hereby covenants
and agrees to pay Lessor, at such place as Lessor may hereafter from time to
time designate in writing, a minimum net rental for the original term of the
lease equal in total amount to Six Hundred Eighty Five Thousand One Hundred
Forty and 00/00 Dollars ($685,140.00), payable monthly in advance on the first
day of each month in equal installments of Four Thousand Seven Hundred Ninety
Eight Dollars ($4,798.00) for twelve consecutive months. Receipt of Four
Thousand Seven Hundred Ninety Eight Dollars ($4,798.00), representing the
September, 1992 rent is hereby acknowledged and beginning September 1, 1993 the
rent is Five Thousand Two Hundred Seventy Eight Dollars ($5,278.00) per month
payable on the first day of each month for the next 47 consecutive months and
beginning September 1, 1998 the rent is Six Thousand Two Hundred Thirty Seven
Dollars ($6,237.00) per month payable on the first day of each month for the
next 59 consecutive months.
3.02 Lessor and Lessee intend that the minimum net rental shall be net to
Lessor, so that this lease shall yield, net, to Lessor, not less than the
minimum net rent specified in Section 3.01 hereof during the term of this
lease, and that all costs, expenses and charges of every kind and nature
relating to the demised premises which may be attributable to, or become due
during the term of this
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lease shall be paid by Lessee and that Lessor shall be indemnified and saved
harmless by Lessee from and against the same.
SECTION 4
TAXES, ASSESSMENTS AND UTILITIES
4.01 Lessee agrees to pay as additional rent for the demised premises all
taxes and assessments, general and special, and all water rates, and all other
governmental impositions which may be levied upon said premises or any part
thereof, or upon any building or improvements at any time situated thereon,
until the termination of the original term and of any extended term of this
lease. All of such taxes, assessments, water rates, and other impositions
shall be paid by Lessee before they shall become delinquent. The property
taxes and assessments for the first and last year of the original term or any
extended term as the case may be, shall be prorated between Lessor and Lessee
so that Lessee will be responsible for any such tax or assessments attributable
to the period during which Lessee has possession of the premises in the year in
which this lease is terminated. The so-called "due-date" method of proration
shall be used, it being presumed that taxes and assessments are payable in
advance. In the event that during the term of this lease (i) the real property
taxes levied or assessed against the real property shall be reduced or
eliminated, whether the cause thereof is a judicial determination of
unconstitutionality, a change in the nature of the taxes imposed, or otherwise,
and (ii) there is levied, assessed or otherwise imposed upon the Lessor, in
substitution for all or part of the tax thus reduced or eliminated, a tax
(hereinafter called the "Substitute Tax") which imposes a burden upon Lessor by
reason of its ownership of the real property, then to the extent of such
burdens the Substitute Tax shall be deemed a real estate tax for purposes of
this paragraph.
4.02 Lessee also agrees to pay all charges made against the premises for
gas, heat, electricity and all other utilities during the continuance of this
lease as the same shall become due.
4.03 In the event that payment of any or all of the foregoing taxes,
assessments and utilities are to be made from an escrowed fund required to be
established by Lessor as Mortgagor under the terms of any first mortgage on the
demised premises, then Lessor shall so notify Lessee. Lessee shall not be
required to directly pay such taxes, assessments and utilities as are paid from
such escrowed fund, but shall instead, as additional rent, pay to Lessor on the
first (1st) day of each month of the lease term an amount equal to the amount
required to be paid by Lessor under the terms of such first mortgage to the
escrowed fund on account of such charges. If the actual taxes, assessments and
utilities, when due, exceed the total amounts from time to time paid therefor
by Lessee, then the Lessee shall, upon demand, pay any deficiency to Lessor.
If such payments by Lessee, over the term of the lease, exceed the amount of
taxes, assessments and utilities paid therefrom, such excess shall be refunded
by Lessor to Lessee at the expiration of the lease term, or when such excess is
refunded by the mortgagee to Lessor, whichever first occurs.
SECTION 5
USE OF PREMISES
5.01 It is understood and agreed between the parties that the premises
during the continuance of this lease shall be used and occupied for the
operation of a laundry and sterilization facility and related service only and
for no other purpose without the prior written consent of Lessor. Lessee
agrees that it will not use or permit any person to use the demised premises or
any part thereof for any use or purposes in violation of the laws of the United
States, the State of Michigan, the ordinances or other regulations of the City
of Westland, or of any other lawful authorities. During the original term or
any extended term, the Lessee will keep the demised premises and every part
thereof and all buildings at any time situated thereon in a clean and wholesome
condition and generally will comply with all lawful health and police
regulations. All signs and advertising displayed in and about the premises
shall be such only as to advertise the business carried on upon the premises
and Lessor shall control the location, character and size thereof. No signs
shall be displayed except as approved in writing by the Lessor, and no awning
shall be installed or used on the exterior of said building unless approved in
writing by the Lessor.
SECTION 6
LIABILITY INSURANCE AND INDEMNITY
6.01 At and after the commencement of the original term of the lease,
Lessee agrees to defend, indemnify and save Lessor harmless from any liability
for damages, including costs and reasonable attorney's fees of Lessor, to any
person or property upon the leased premises from any cause whatsoever. Lessee
further agrees that it will obtain at or prior to the commencement of the lease
term and maintain at all times thereafter until the termination of this lease,
for the mutual benefit of Lessor, Lessor's mortgagee, and of Lessee, and naming
Lessor and Lessor's mortgagee as insured parties, general public liability
insurance including blanket contractual coverage against claims for or
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arising out of personal injury, death or property damage, occurring in, on, or
about the demised premises or property in, on, or about the streets, sidewalks
or premises adjacent to the demised premises, such insurance to afford
protection to the limit at the beginning of the term of not less than Two
Million Dollars ($2,000,000.00) with respect to injury or death of a single
person, and to the limit of not less than Two Million Dollars ($2,000,000.00)
with respect to any one occurrence, and to the limit of not less than Two
Million Dollars ($2,000,000.00) with respect to any one occurrence of property
damage and thereafter in such changed amounts as the Lessor may reasonably
require. Lessee shall furnish evidence suitable to Lessor that such insurance
policy or policies are in force at or prior to the commencement of the original
term of the lease and shall continue to provide Lessor with such evidence with
respect to such policies as are from time to time in force until the
termination of this lease. Such policy or policies shall provide for thirty
(30) days' prior written notice to Lessor of cancellation.
SECTION 7
REPAIRS
7.01 Lessee covenants and agrees at its own expense to keep the building
or buildings on the demised premises, including all structural,* electrical,
mechanical and plumbing systems, at all times in good appearance and repair
except for reasonable and normal wear and tear. Lessee shall also pay all
other expenses in connection with the maintenance of the premises including
repair and upkeep of grounds, sidewalks, driveways and parking areas in a
first-class condition.
Notwithstanding any other provision of the lease, from and after the
Lessee has taken occupancy of the demised premises any repairs, additions or
alterations to the building or any of its systems (e.g., plumbing, electrical,
mechanical) structural* or non-structural, which are required by any law,
statute, ordinance, rule, regulation or governmental authority or insurance
carrier, including, without limitation, OSHA, shall be the obligation of the
Lessee. Lessor shall assign to Lessee the benefit of all guarantees and
warranties covering the building and its systems. * Lessee shall not be
required to make structural capital improvements. Lessor shall maintain roof
and four outer walls and exterior sidewalks.
SECTION 8
ALTERATIONS
8.01 The parties agree that Lessee shall not make any alterations,
additions or improvements to the premises without the written consent of
Lessor* and, if required by the terms of any mortgage on the premises, the
written consent of the mortgagee. All alterations, additions or improvements
made by either of the parties hereto upon the premises shall be the property of
Lessor and shall remain upon and be surrendered with the premises at the
termination of this lease, except that alterations, additions or improvements
made by Lessee shall be removed and the premises restored by Lessee if so
requested by Lessor. * Such consent shall not be unreasonably withheld or
delayed.
8.02 Lessee shall remove its trade fixtures at the end of the lease term
and leave the Premises broom clean in safe condition free of any city code
violations.
SECTION 9
LIENS
9.01 After the commencement of the term of the lease, the Lessee will keep
the premises free of liens of any sort and will hold the Lessor harmless from
any liens which may be placed on the premises except those attributable to the
acts of the Lessor.
SECTION 10
FIRE INSURANCE AND EXTENDED COVERAGE
10.01 Lessee agrees that it will at all times during the term of the
lease, at its own expense, keep the building and all other improvements on the
demised premises insured for the full replacement cost thereof, and at the
beginning of the term for at least Two Million Dollars ($2,000,000.00), against
loss by fire with standard extended risk coverage, vandalism and malicious
mischief and sprinkler leakage. Lessee shall also carry "business
interruption" insurance throughout the term in an amount adequate to cover the
obligations of Lessee under this Lease. Each such policy shall provide for
thirty (30) days' written notice to Lessor of any cancellation. Duplicate
original policies evidencing such insurance shall be delivered to Lessor
together with receipts evidencing payment of the premiums
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relating to such insurance. Certificates of renewal thereof shall be
delivered to Lessor at least thirty (30) days prior to the expiration dates of
the respective policies to which they relate.
10.02 Lessee shall cause each insurance policy described in Section 10.01
to be written in a manner so as to provide that the insuring company waives all
right of recovery by way of subrogation against Lessor in connection with any
loss or damage covered by any such policies.
10.03 In case Lessee shall at any time fail, neglect or refuse to
insure such buildings and improvements and to keep the same insured as
hereinbefore provided, then Lessor may at its election procure or renew such
insurance, and any amounts paid therefor by Lessor shall be so much additional
rental due from Lessee to Lessor at the next rent day after any such payment
with interest at the rate of ten (10%) percent per annum from the date of
payment thereof by Lessor until the repayment thereof to Lessor by Lessee.
10.04 In the event of loss under any such policy or policies, the
insurance proceeds shall be paid to Lessor or Lessor's mortgagee; thereafter,
such proceeds shall be paid out for the expense of repairing or rebuilding the
buildings or improvements which have been damaged or destroyed if it shall
appear to the satisfaction of Lessor and Lessor's mortgagee that the amount of
insurance money shall at all times be sufficient to pay for the completion of
said repairs or rebuilding.
10.05 In the event that payment of premiums relative to any insurance
required under this Section 10 is to be made from an escrowed fund required to
be established by Lessor as mortgagor under the terms of any first mortgage on
the demised premises, then Lessor shall so notify Lessee. Lessee shall not be
required to directly pay such premiums as are paid from such escrowed fund but
shall, instead, as additional rent, pay to Lessor an amount equal to the amount
required to be paid by Lessor under the terms of such first mortgage to the
escrowed fund on account of such premiums. If the actual premiums, when due,
exceed the total amounts from time to time paid therefor by Lessee, then the
Lessee shall, upon demand, pay any deficiency to Lessor. If such payments by
Lessee over the term of the lease, exceed the amount of premiums paid
therefrom, such excess shall be refunded by Lessor to Lessee at the expiration
of the lease term, or when such excess is refunded by the mortgagee to Lessor,
whichever first occurs.
SECTION 11
DAMAGE BY FIRE OR OTHER CASUALTY
11.01 It is understood and agreed that if the premises hereby leased be
damaged or destroyed in whole or in part by fire or other casualty during the
term hereof, the Lessor, if there are sufficient insurance proceeds, as
supplemented, if necessary, by a deposit tendered by Lessee pursuant to 11.02
hereof, will repair and restore the same to good tenantable condition with
reasonable dispatch. The rent herein provided for shall not abate, whether or
not the entire premises are untenantable.
11.02 If the insurance proceeds are insufficient to cover the cost of
repairing and restoring the premises to good tenantable condition, Lessee shall
deposit with Lessor or the mortgagee of any first mortgage on the premises the
amount by which such proceeds are insufficient and Lessor shall thereupon
proceed with such repairs and restoration as hereinabove provided; if Lessee
fails to make such a deposit, the Lessor shall be under no obligation to make
such repairs or undertake such restoration, or to use any portion of the
insurance proceeds for such restoration and repair, but the Lessee shall not
thereby be relieved of its obligations to repair and restore the premises to
good tenantable condition.
11.03 Lessee shall have the option, exercisable by written notice to
Lessor upon restoration of the premises, to extend the original term of this
Lease (or the extension of the term during which the damage or destruction
occurred; as the case may be) for a period equal to the period, if any, during
which Lessee was deprived of the use of all or a significant portion of the
premises by reason of such damage or destruction. Lessee's option must be
exercised within twenty (20) days following completion of the work of
restoration and repair.
SECTION 12
EMINENT DOMAIN
12.01 In the event, during the term of this Lease, proceedings shall be
instituted under the power of eminent domain which shall result in the taking
of any part of the building on the leased premises, or the taking of a portion
of the parking area if the number of spaces is thereby reduced to such an
extent that Lessee's business is significantly and adversely affected, and
which shall result in an eviction total or partial of the Lessee therefrom,
then at the time of such eviction, this Lease shall be void and the term above
demised shall cease and terminate; and if Lessee shall thereafter continue in
possession of the premises or any part thereof, it shall be a lease from month
to month and for no longer term, anything in this instrument to the contrary
notwithstanding. If there is only a partial taking, not including a portion of
the building or reducing parking to the extent described in the
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previous sentence, the Lessor shall restore the premises to the extent
necessary to permit Lessee to continue its use of the premises. Provided,
further, that the whole of any award for any portion of the leased premises
taken by reason of said condemnation proceedings shall be solely the property
of and payable to the Lessor; and provided further, that the whole of any award
for removal and relocation expenses in any such condemnation proceedings shall
be the sole property of, and be payable to the Lessee. It is further agreed
that in any such condemnation proceedings the Lessor and Lessee shall each seek
its own award and at its own expense.
SECTION 13
ASSIGNMENT
13.01 Lessee shall not assign or sublet the demised premises or any part
thereof without first obtaining the Lessor's written consent except that the
Lessee may, without Lessor's consent,* assign or sublet all or any part of the
premises to wholly or substantially owned subsidiaries of the Lessee, and
provided that Lessee is not at such time in default hereunder, and provided
further that such successor shall execute an instrument in writing assuming all
of the obligations and liabilities to the Lessor, and provided further that
such assignment or subletting shall not operate to release Lessee from its
obligations under the lease. * Such consent shall not be unreasonably withheld
or delayed.
SECTION 14
INSPECTION OF PREMISES
14.01 Lessee agrees to permit Lessor and the authorized representatives of
Lessor to enter the demised premises at all reasonable times during business
hours for the purpose of inspecting the same. Lessor agrees to give 24 hour
prior notice to Lessee.
SECTION 15
FIXTURES AND EQUIPMENT
15.01 All fixtures and equipment paid for by the Lessor and all fixtures
and equipment which may be paid for and placed on the premises by the Lessee
from time to time but which are so incorporated and affixed to the buildings
that their removal would involve damage or structural change to the buildings,
shall be and remain the property of the Lessor.
15.02 All furnishings, equipment and fixtures other than those specified
in Section 15.01, which are paid for and placed on the premises by Lessee from
time to time (other than those which are replacements for fixtures originally
paid for by Lessor) shall remain the property of the Lessee.
SECTION 16
NOTICE OR DEMANDS
16.01 All notices to or demands upon Lessor or Lessee desired or required
to be given under any of the provisions hereof shall be in writing. Any
notices or demands from Lessor to Lessee shall be deemed to have been duly and
sufficiently given if a copy thereof has been mailed by United States mail in
an envelope properly stamped and addressed to Lessee at the address of the
demised premises or Lessee's registered office in Michigan at such time, or at
such other address as Lessee may have last furnished in writing to the Lessor
for such purpose, and any notices or demands from Lessee to Lessor shall be
deemed to have been duly and sufficiently given if mailed by United States mail
in an envelope properly stamped and addressed to Lessor at the address last
furnished by written notice from Lessor to Lessee. The effective date of such
notice shall be one business day following the delivery of the same to the
United States Post Office for mailing.
SECTION 17
BANKRUPTCY
17.01 Lessee covenants and agrees that if any one or more of the following
events occur, namely:
(a) Lessee shall be adjudged bankrupt or insolvent or a trustee
shall be appointed for Lessee after a petition has been filed for
Lessee's reorganization or arrangement under the Federal Bankruptcy Laws,
as now or hereafter amended, or under the laws of any State, and any such
adjudication or appointment shall not have been vacated or stayed or set
aside within thirty (30) days from the date of the entry or granting
thereof; or
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(b) Lessee shall file, or consent to any petition in bankruptcy or
arrangement under the Federal Bankruptcy Laws, as now or hereafter
amended, or under the laws of any State; or
(c) A Decree or order appointing a receiver of the property of
Lessee shall be made and such decree or order shall not have been
vacated, stayed or set aside within thirty (30) days from the date of the
entry or granting thereof or Lessee shall apply for or consent to the
appointment of a receiver for Lessee; or
(d) Lessee shall make any assignment for the benefit of creditors;
Then it shall be lawful for Lessor, at his election, to declare the term of the
lease ended, and the said premises and the buildings and improvements then
situated thereon or any part thereof, either with or without process of law, to
re-enter, and Lessee and all persons occupying in or upon the same under it to
expel, remove and put out, and the said premises and the buildings and
improvements then situated thereon again to repossess and enjoy.
SECTION 18
DEFAULT, RE-ENTRY AND DAMAGES
18.01 In case any rent shall be due and remain unpaid for more than ten
(10) days after due or if default be made in any of the other covenants,
agreements, stipulations or conditions herein contained and such default shall
continue for a period of thirty (30) days after written notice of such default,
or if the leased premises shall be deserted or vacated, Lessor, in addition to
other rights or remedies it may have, shall have the immediate right to
re-entry and may remove all persons and property from the premises; such
property may be removed and stored in any other place in the building in which
the leased premises are situated, or in any other place, for the account of,
and at the expense and at the risk of Lessee. Lessee hereby waives all claims
for damages which may be caused by the re-entry of Lessor and taking possession
of the premises or removing or storing of furniture and property as herein
provided, and will save Lessor harmless from any loss, costs or damages
occasioned Lessor thereby, and no such re-entry shall be considered or
construed to be a forcible entry.
18.02 Should Lessor elect to re-enter as herein provided or should it take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this lease or it may from time to time, without
terminating this lease, re-let the premises or any part thereof for such term
or terms and at such rental or rentals and upon such other terms and conditions
as Lessor in its sole discretion may deem advisable, with the right to make
alterations and repairs to the premises. Rentals received by Lessor from such
re-letting shall be applied as follows:
First, to the payment of any indebtedness, other than rent due
hereunder from Lessee to Lessor, including all damages sustained by
Lessor as a result of the default of Lessee;
Second, to the payment of rent due and unpaid hereunder;
Third, to the payment of the sum specified in Section 3.02 hereof;
Fourth, to the payment of any cost of such re-letting;
Fifth, to the payment of the cost of any alterations or repairs to
the premises;
and the residue, if any, shall be held by Lessor and applied in payment of
future rent as the same may become due and payable hereunder. Should such
rentals received from such re-letting during any month be less than that amount
agreed to be paid that month by Lessee hereunder, the Lessee shall pay such
deficiency to Lessor. Such deficiency shall be calculated and paid monthly.
No such re-entry or taking possession of the premises by Lessor shall be
construed as an election on its part to terminate this lease unless a written
notice of such intention be given to Lessee or unless the termination thereof
be decreed by a Court of Competent jurisdiction. Notwithstanding any such
re-letting without termination, Lessor may at any time thereafter elect to
terminate this lease for such previous breach. Should Lessor at any time
terminate this lease for any breach, in addition to any other remedy, it may
recover from Lessee all damages it may incur by reason of such breach,
including the cost of recovering the premises, and including the worth at the
time of such termination of the excess, if any, of the amount of rent and
charges equivalent to rent reserved in this Lease for the remainder of the
stated term, over the then reasonable rental value of the premises for the
remainder of the stated term.
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SECTION 19
SURRENDER OF PREMISES ON TERMINATION
19.01 Whenever this lease shall be terminated, whether by lapse of time,
forfeiture, or in any other way, Lessee will yield and deliver up the demised
premises, including the building and improvements thereon and the fixtures and
equipment belonging to Lessor therein contained, peaceably to Lessor in as good
repair as when taken, except for reasonable and normal wear and tear, and
except for damage or destruction resulting from causes which are covered by
insurance in accordance with Section 10 hereof.
SECTION 20
PERFORMANCE BY LESSOR OF THE COVENANTS OF LESSEE
20.01 Should Lessee at any time fail to do any of the things required
to be done by it under the provisions of this lease, Lessor at its option, and
in addition to any and all other rights and remedies of Lessor in such event,
may (but shall not be required to) do the same or cause the same to be done,
and the reasonable amount of any money expended by Lessor in connection
therewith shall be due from Lessee to Lessor as additional rent on or before
the next rental due date bearing interest at the rate of eleven (11%) percent
per annum from the date of payment until the repayment thereof to Lessor by
Lessee. On default in such payment, Lessor shall have the same remedies as on
default in payment of rent.
SECTION 21
RIGHTS TO MORTGAGE
21.01 Lessor reserves the right to subject and subordinate this lease at
all times, to the lien of any mortgage or mortgages now or hereafter placed
upon Lessor's interest in the said premises and on the land and buildings of
which the said premises are a part or upon any buildings hereafter placed upon
the land of which the leased premises form a part, provided in each instance
that the mortgagee shall in writing agree that Lessee's quiet possession of the
premises shall not be disturbed so long as the Lessee is not in default in the
performance of the terms and conditions of this Lease. Lessee covenants and
agrees to execute and deliver upon demand such further instrument or
instruments subordinating this lease to the lien of any such mortgage or
mortgages as shall be desired by Lessor and any mortgagees or proposed
mortgagees and hereby irrevocably appoints Lessor the attorney-in-fact of
Lessee to execute in compliance with this Section 21.01 and deliver any such
instrument or instruments for and in the name of Lessee.
SECTION 22
COVENANTS OF QUIET ENJOYMENT
22.01 Lessor covenants and agrees to and with Lessee that at all times
when Lessee is not in default under the terms of and during the term of this
lease, Lessee's quiet and peaceable enjoyment of the demised premises shall not
be disturbed or interfered with by Lessor or any person claiming by, through,
or under Lessor.
SECTION 23
SECURITY DEPOSIT
23.01 The Lessor herewith acknowledges the receipt of Four Thousand Seven
Hundred Ninety Eight Dollars (4,798.00), which it is to retain as security for
the faithful performance of all of the covenants, conditions, and agreements of
this lease, but in no event shall the Lessor be obliged to apply the same upon
rents or other charges in arrears or upon damages for the Lessee's failure to
perform the said covenants, conditions, and agreements; the Lessor may so apply
the security at its option; and the Lessor's right to the possession of the
premises for nonpayment of rent or for any other reason shall not in any event
be affected by reason of the fact that the Lessor holds this security. The
said sum if not applied toward the payment of rent in arrears or toward the
payment of damages suffered by the Lessor by reason of the Lessee's breach of
the covenants, conditions, and agreements of this lease is to be returned to
the Lessee when this lease is terminated, according to these terms, and in no
event is the said security to be returned until the Lessee has vacated the
premises and delivered possession to the Lessor.
In the event that the Lessor repossesses itself of the said premises
because of the Lessee's default or because of the Lessee's failure to carry out
the covenants, conditions, and agreements of the lease, the Lessor may apply
the said security upon all damages suffered to the date of said
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repossession and may retain the said security to apply upon such
damages as may be suffered or shall accrue thereafter by reason of the Lessee's
default or breach. The Lessor shall not be obliged to keep the said security
as a separate fund, but may mix the said security with its own funds.
SECTION 24
HOLDING OVER
24.01 In the event of Lessee herein holding over after the termination of
this lease, thereafter the tenancy shall be from month to month in the absence
of a written agreement to the contrary, subject to all the conditions,
provisions and obligations of this lease insofar as the same are applicable to
a month to month tenancy.
SECTION 25
REMEDIES NOT EXCLUSIVE; WAIVER
25.01 Each and every of the rights, remedies and benefits provided by this
lease shall be cumulative, and shall not be exclusive of any other of said
rights, remedies and benefits, or of any other rights, remedies and benefits
allowed by law.
25.02 One or more waivers of any covenant or condition by Lessor shall not
be construed as a waiver of a further or subsequent breach of the same covenant
or condition, and the consent or approval by Lessor to or of any act by Lessee
requiring Lessor's consent or approval shall not be deemed to waive or render
unnecessary Lessor's consent or approval to or of any subsequent similar act by
Lessee.
SECTION 26
RIGHT TO SHOW PREMISES
26.01 The Lessee hereby agrees that for a period commencing ninety (90)
days prior to the termination of this Lease, the Lessor may show the premises
to prospective Lessees, and ninety (90) days prior to the termination of this
Lease, Lessor may display about said premises the usual and ordinary "For
Lease" signs.
SECTION 27
MISCELLANEOUS
27.01 This lease shall be construed and enforced in accordance with the
laws of the State of Michigan.
27.02 If any term or provision of this lease shall to any extent be held
invalid or unenforceable, the remaining terms and provisions shall not be
affected thereby, but each term and provision of this lease shall be valid and
enforced to the fullest extent permitted by law.
27.03 The captions of this lease are for convenience only and are not to
be construed as part of this lease and shall not be construed as defining or
limiting in any way the scope or intent of the provisions hereof.
27.04 Whenever herein the singular member is used, the same shall include
the plural and the masculine gender shall include the feminine and neuter
genders.
27.05 This lease contains the entire agreement between the parties hereto
and previous negotiations leading thereto and it may be modified only by an
agreement in writing signed by Lessor and Lessee. Lessor and Lessee hereby
expressly declare that no representations have been made other than those
expressly set forth herein.
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<PAGE> 9
IN WITNESS WHEREOF the Lessor and Lessee have executed this lease as of
the date set forth at the outset hereof.
SEE ATTACHED RIDER FOR ADDITIONAL TERMS AND CONDITIONS:
WITNESSES: LESSOR: WALTER D'ALOISIO
/s/ ED BURGER BY: /s/ WALTER D'ALOISIO
- ----------------------------- -----------------------------------
- -----------------------------
/s/ LYDIA P. ZICKEFOOSE LESSEE: AMSCO STERILE RECOVERIES, A
- ----------------------------- SUBSIDIARY OF AMERICAN STERILIZER CO.
/S/ JUDITH A. STEFFENS By: /s/ Wayne R. Peterson
- ----------------------------- ----------------------------------
Wayne R. Peterson
Its: Asst. Secretary
----------------------------------
9
<PAGE> 10
RIDER TO THE AGREEMENT TO LEASE
DATED MARCH 30, 1992
BY AND BETWEEN WALTER D'ALOISIO,
AN INDIVIDUAL AS LESSOR AND AMSCO STERILE
RECOVERIES, INC., A DELAWARE CORPORATION, AS LESSEE
This Rider shall modify, add and replace by substitution to and deletion
from the Agreement of Lease dated March 30, 1992 by and between WALTER
D'ALOISIO, as Lessor, and AMSCO STERILE RECOVERIES, INC., as Lessee (the
"Lease"). Where any section, provision or clause of the Lease is modified or
deleted by this Rider, the unaltered portions of that section, provision or
clause shall remain in effect. If and to the extent that this Rider is
inconsistent with the Lease or any attachment or exhibit thereto, this Rider
shall control.
RECITALS
1. The first paragraph of the Recitals is amended by correctly identifying
the Lessee as "Amsco Sterile Recoveries, Inc., a Delaware corporation, having
its corporate headquarters at 28100 U.S. Highway 19 North, Suite 201,
Clearwater, Florida 34621."
SECTION 1
Construction of Improvements
Section 1.01.
Section 1.01 of the Lease is amended by deleting the phrase "prior to the
commencement of the term of this Lease" from the first line of Section 1.01.
Section 1.02.
Section 1 of the Lease is amended by adding a new Section 1.02 which
states in its entirety:
1.02. Immediately after full execution hereof, Lessee may have full
access to the Premises except in those areas of the Premises where Lessor
shall complete its work ("Lessor's Work"). Lessor's Work shall consist
of the following:
(a) Lessor shall install, at its sole cost and expense, an
electric service and service panel providing 1200 amperes, 480
volts, three phase electrical service.
(b) Lessor shall construct, at its sole cost and expense, two
exterior truckwells with exterior vestibules adjacent to the east
(rear) wall parallel to that wall at the northernmost truck door
opening and the southernmost truck door opening as more fully
delineated in Exhibit B hereto and made a part hereof.
Construction of said truckwells shall be in accordance with all
applicable state and local codes and ordinances and shall include
dock levelers and truck doors.
<PAGE> 11
(c) Lessor agrees to install at Lessee's option, a standard
industrial floor at a cost not to exceed $1.66 per square foot of
floor installed. The floor shall be a minimum six inch thick
reinforced slab. If Lessor opts to install the floor herein
specified, Lessee shall pay Lessor the cost of such installation.
(d) Lessor agrees, at its sole cost and expense, to remove any
interior gas fired unit heaters now on the Premises not needed by
Lessee for its intended use of the Premises.
Lessor acknowledges that following the Lessor's performance of
Lessor's Work, Lessee shall perform construction and other installation
activities in connection with preparing the Premises for Lessee's
intended use. Such construction work and installation activities shall
be referred to as "Lessee's Work." Lessor further acknowledges that in
order for Lessee to utilize the Premises for its intended use, Lessee
requires a minimum level of utility service. In this regard, Lessee
requires a minimum two inch domestic water line, a minimum one and one
half inch (five pound or 14,000,000 BTU per operation hour) natural gas
line and a minimum four inch sewer line. Lessor represents that the
water, natural gas and sewerage service available to the Premises meets
the above parameters.
Lessor agrees to cooperate with Lessee and to complete Lessor's Work
in a timely manner so as not to interfere with or otherwise delay the
performance of Lessee's Work. In this regard, Lessor shall complete
Lessor's Work no later than 45 calendar days following the date of full
execution of this Lease. Lessor further consents to Lessee entering upon
the Premises to perform Lessee's Work at the same time Lessor is
performing Lessor's Work.
Section 1.03.
Section 1 of the Lease is amended by adding a new Section 1.03 which
states in its entirety:
1.03. Notwithstanding anything to the contrary contained in this
Lease, and with the exception of Lessor's Work, Lessee accepts the
Premises "as is."
SECTION 2
Term of Lease
Section 2.02.
Section 2.02 of the Lease is deleted and the following substituted
therefor:
Lessor shall provide possession of the Premises to Lessee as of the
Lease Commencement Date. Notwithstanding anything to the contrary
contained in this Lease, Lessee's obligation to pay basic rent and
additional rent shall not begin until such time as Lessee's Work is
completed and a Certificate of Occupancy from the City of Westland has
been issued, but in no event later than September 1, 1992 ("Rent
Commencement Date"). Notwithstanding the foregoing, in the event a
Certificate of Occupancy has not been issued with respect to this
Premises on or before September 1, 1992, and such delay or failure
results solely from Lessor not timely completing Lessor's Work, then the
Rent Commencement Date of this Lease shall be delayed to the date of the
issuance of the Certificate of Occupancy and correspondingly the
expiration date of the Lease and all other dates provided herein shall be
adjusted accordingly. In the event of a delay in the Rent Commencement
Date as above described, Lessee's obligation to pay basic rent shall be
abated in the amount of two (2) days of basic rent for each one (1) day
of delay after September 1, 1992.
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<PAGE> 12
SECTION 3
Basic Rent
Section 3.01.
Section 3.01 of the Lease is amended by deleting the second sentence of
the section in its entirety and substituting the following therefor:
Receipt of Four Thousand Seven Hundred Ninety-Eight Dollars
($4,798.00), representing September 1992 basic rent is hereby
acknowledged. Beginning September 1, 1993, the basic rent shall be
$5,278.00 per month payable on the first day of each calendar month for
the next 47 consecutive months, and beginning September 1, 1998, the
basic rent shall be $6,237.00 per month payable on the first day of each
month for the next 59 consecutive months.
SECTION 4
Taxes, Assessment and Utilities
Section 4.01.
Section 4.01 of the Lease is amended to add the following sentences at th
end of the section:
For purposes of the this Lease, "taxes" shall include all federal,
state and local governmental taxes, assessments and charges (including,
but not limited to, general real estate taxes and assessments) of every
kind and nature which Lessor is or shall become obligated to pay because
of or in connection with the ownership, leasing, management, control or
operation of the Premises, or of the personal property, fixtures,
machinery, equipment located therein. Taxes shall not include any
federal, state or local sales, use, franchise, capital stock,
inheritance, general income, gift or state taxes. In the event Lessor
opts to have Lessee pay taxes directly as provided in this Section 4.01,
Lessor shall either (1) make all necessary arrangements for tax bills or
assessments to be delivered directly to Lessee from the relevant taxing
authorities or (2) in the event tax bills are delivered to Lessor from
the taxing authority, forward the relevant tax bills or invoices to
Lessee within ten (10) days of Lessor's receipt of same.
Section 4.02.
Section 4.02 of the Lease is amended to add the following sentence at the
end of this section.
Lessor acknowledges that all utilities serving the Premises are
capable of being separately metered. It is the intent of the parties
hereto that all utility service be separately metered and that the
relevant public utility authorities invoice Lessee directly for Lessee's
use of utilities.
Section 4.03.
Section 4.03 of the Lease is amended by deleting the last two sentences in
Section 4.03 and substituting the following therefor:
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<PAGE> 13
No more than sixty days following the last day of each calendar year
of the term of this Lease, Lessor shall provide Lessee with a written
statement comparing the amount of taxes paid by Lessor in and for the
calendar year or part thereof just ended ("Taxes Paid") with Lessee's
share of the taxes actually incurred for the same period ("Taxes Owed").
If the amount of Taxes Paid exceeds the amount of Taxes Owed, Lessor
shall give Lessee a credit towards future payments of additional rent in
the amount of the overage. If, however, the amount of the Taxes Owed
exceeds the amount of the Taxes Paid, Lessee shall pay Lessor, as
additional rent, the difference within thirty days of Lessee's receipt of
Lessor's invoice for same.
SECTION 5
Use of Premises
Section 5.01.
Section 5.01 of the Lease is amended by:
(a) Deleting the words "or the Declaration of Covenants and
Restrictions, dated ___________________ recorded (a copy of which is
attached hereto as Exhibit "___", to which Declaration this lease is
hereby expressly made subject)" from the first sentence of Section 5.01.
(b) By adding the following sentences immediately following the
second sentence Section 5.01:
Lessor acknowledges that Lessee will be handling, among other
things, soiled operating room linens and other materials from
hospitals, medical clinics, laboratories and other health services
related facilities. Lessor hereby consents to Lessee's activities
as herein described. Further, Lessor states that according to the
City of Westland, the Premises is currently zoned I-1 and Lessee's
intended use of the Premises is a permitted use within the I-1
zoning classification.
SECTION 6
Liability Insurance and Indemnity
Section 6.01.
Section 6.01 of the Lease is amended by:
(a) Deleting the first sentence of Section 6.01 and inserting the
following therefor:
At and after the commencement of the term of this Lease,
Lessee agrees to protect and save and keep Lessor forever harmless
and indemnified against and from any penalty or damage or charge
imposed for any violation of any law or ordinance directly
applicable to or affecting the Premises, whether or not occasioned
by the neglect of Lessee or those holding under Lessee. Lessee
will at all times protect, indemnify and save and keep harmless
Lessor against and from all claims, loss, costs, damages or
expenses arising from an accident or other occurrence on or about
the
4
<PAGE> 14
Premises causing injury to any person or property whomsoever or
whatsoever, unless caused by or due to the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessee will
protect, indemnify, save and keep harmless Lessor against and from
any and all claims, loss, costs, damages or expenses arising out of
any failure of Lessee to comply with and perform the requirements
and provisions of this Lease.
SECTION 7
Repairs
Section 7.01.
Section 7.01 of the Lease is amended as follows:
(a) By deleting the word "structural" in the second line of the
first paragraph of Section 7.01.
(b) By deleting the word "sidewalks" in the fifth line of the first
paragraph of Section 7.01.
(c) By inserting the word "time" immediately prior to the word
"Lessee" in the first line of the second paragraph of Section 7.01.
(d) By inserting the word ", replacements" immediately following the
word "additions" in the second line of the second paragraph of Paragraph
7.01.
(e) By deleting the words "structural or nonstructural" in the third
line of the second paragraph of Section 7.01.
(f) By inserting the phrase, ", unless the need for the repairs,
additions, or alterations at issue, was caused by the grossly negligent
conduct of Lessor" at the end of the first sentence in the second
paragraph of Section 7.01.
(g) By adding the following at the end of the second paragraph of
Section 7.01:
Lessee shall not be required to make structural capital
improvements to the Premises. It shall be the obligation of Lessor
hereunder to maintain the roof, four outer walls and sidewalks of
the Premises throughout the term of this Lease.
5
<PAGE> 15
SECTION 8
Alterations
Section 8.01.
Section 8.01 of the Lease is amended by inserting the words ", which
consent shall not be unreasonably withheld or delayed", immediately following
the word "Lessor" in the second line of Section 8.01.
Section 8.02.
Section 8 of the Lease is amended by adding a new Section 8.02 which shall
state in its entirety:
8.02. Notwithstanding any provision contained in this Lease to the
contrary, Lessor acknowledges that at the expiration of the term, Lessee
will remove from the Premises all of Lessee's trade fixtures. At the
expiration of the term, Lessee will not remove the heating, ventilation
and air conditioning system or the 1200 ampere, 480 volt electrical
service panel installed in the Premises. Following Lessee's removal of
its trade fixtures, Lessee shall leave the Premises broom clean, in safe
condition and free of municipal code violations.
SECTION 9
Liens
Section 9.01.
Section 9.01 of the Lease is deleted in its entirety and the following
substituted therefor:
After the commencement of the term of the Lease, the Lessee will
keep the Premises free of liens of any sort and will hold the Lessor
harmless from any liens that may be placed on the Premises (except those
attributable to acts of Lessor) and all costs, interest and reasonable
attorney's fees associated therewith. Any liens placed against the
Premises by reason of Lessee's conduct shall be removed within thirty
(30) days of such placement. Lessee shall, upon Lessor's demand, furnish
to Lessor all waivers of lien executed in connection with any work
performed on the Premises by or on behalf of Lessee.
SECTION 10
Fire Insurance and Extended Coverage
Section 10.01.
Section 10.01 of the Lease is amended by deleting the third sentence of
Section 10.01 in its entirety.
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<PAGE> 16
Section 10.02.
Section 10.02 of the Lease is deleted in its entirety.
Section 10.03.
Section 10.03 of the Lease is amended by deleting the phrase "or to carry
any required 'business description' insurance" from the second and third lines
of Section 10.03.
Section 10.04.
Section 10.04 is deleted in its entirety and the following substituted
therefor:
In the event Lessee fulfills its obligations to carry insurance as
set forth in Section 10.01 above, and in the event of a loss under such
insurance policy or policies, then the proceeds of such insurance (other
than "business interruption insurance") shall be paid to Lessor (or
Lessor's mortgagee). Said proceeds shall be used by Lessor for the
expense of repairing and rebuilding the Premises. If Lessor does not
repair or restore the Premises following damage or destruction, Lessee
shall be entitled to all proceeds from the insurance policies identified
in Section 10.01 allocable to Lessee's trade fixtures. In addition, if
Lessor does not repair or restore the Premises following damage or
destruction, Lessee shall be entitled to a portion of the proceeds from
the insurance policies identified in Section 10.01 allocable to the
heating, ventilation and air conditioning system installed by Lessee in
the Premises equal to the ratio that the number of months remaining in
the base term of the Lease at the time of the damage or destruction bears
to the total number of months in the base term of the Lease.
Section 10.05.
Section 10.05 of the Lease is deleted in its entirety.
Section 10.06.
Section 10 of the Lease is amended by adding a new Section 10.06 which
shall state in its entirety:
Each insurance policy carried by Lessor or Lessee and insuring all
or any part of the Premises, including improvements, alterations and
changes in and to the Premises made by either Lessor or Lessee, Lessee's
trade fixtures and the contents of the Premises, shall be written in a
manner to provide that the insurance company waives all right of recovery
by way of subrogation against Lessor or Lessee, as the case may be, in
connection with any loss or damage to the Premises or to Lessee's trade
fixtures or personal property caused by any of the perils covered by fire
and extended coverage insurance. Lessor and Lessee hereby waive any and
every right or cause of action for the events which occur or accrue
during the term of this Lease, or any extension thereof, for any and all
loss of, or damage to, any of either party's respective property or
interests which loss or damage is covered by valid fire and extended
coverage insurance.
7
<PAGE> 17
SECTION 11
Damage by Fire or Other Casualty
Section 11.01-11.03.
Sections 11.01-11.03 are deleted in their entirety and the following
substituted therefor:
If the Premises, the building or the improvements therein (including
Lessee's trade fixtures) should be partially or totally damaged or
destroyed by fire or other cause, then, subject to the limitations
hereinafter set forth, Lessor shall repair, to the extent of available
insurance proceeds, the damage, and restore, replace and rebuild the
improvements and Premises to the condition originally provided with
reasonably dispatch after notice to it of the damage or destruction.
If the Premises shall be damaged or destroyed, basic rent and
additional rent payable hereunder shall not abate.
Lessee may, at its option, cancel this Lease as of the date of such
damage or destruction, by written notice to Lessor delivered within
thirty days after the date of such damage or destruction if, in Lessee's
reasonable judgment (i) the Premises is totally or substantially
destroyed, damaged or untenantable or (ii) the Premises cannot be
restored to its condition immediately prior to such damage or destruction
within 120 days, in the event of partial destruction, or 180 days, in the
event of total or substantial destruction, thereafter. In addition, in
the event of partial destruction, Lessee may cancel this Lease as of the
date of such damage or destruction by written notice to Lessor delivered
no later than 120 days after the date of such damage or destruction if
Lessor has not by then completed the making of the repairs and restored,
replaced and rebuilt the Premises to the extent required herein.
Similarly, in the event of total or substantial destruction, Lessee may
cancel this Lease as of the date of such damage or destruction by written
notice to Lessor delivered no later than 180 days after the date of such
damage or destruction if Lessor has not by then completed the making of
the repairs and restored, replaced and rebuilt the Premises to the extent
required herein.
If the damage to the Premises should be so extensive that Lessor
shall decide not to repair or rebuild the Premises, this Lease shall be
terminated as of the date of such damage or destruction by written notice
from the Lessor or Lessee given within sixty days after such damage or
destruction, and Lessee shall thereupon promptly vacate the Premises.
Unless this Lease is terminated as provided in this section, Lessor
shall repair, restore, replace and rebuild the Premises to substantially
its condition prior to such damage or destruction and shall be entitled
to retain the proceeds of the insurance specified in Section 10.01 (other
than "business interruption" insurance) for this purpose.
No damages, compensation or claims shall be payable by Lessor for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Premises. Lessor shall use its best
efforts to effect such repairs promptly and in such manner as not to
unreasonably interfere with Lessee's occupancy.
8
<PAGE> 18
SECTION 12
Eminent Domain
Section 12.01.
Section 12.01 is deleted in its entirety and the following substituted
therefor:
In the event that the whole or substantially the whole of the
Premises shall be condemned or taken permanently, for any public or
quasi-public use, this Lease and the estate hereby granted, shall cease
and terminate as of the date of taking of possession for such use or
purpose.
If less than whole or less than substantially the whole of Premises
shall be condemned or taken permanently or if the whole or substantially
the whole of the Premises is condemned or taken temporarily, this Lease
shall remain in full force and effect except that (i) if the taking shall
nevertheless be so extensive that Lessor shall decide not to restore the
surrounding buildings or improvements, then Lessor (whether or not the
Premises are affected) may, at its option, terminate this Lease and the
term and estate hereby granted shall be terminated as of the date of such
taking or possession or such use, or (ii) Lessee may if more than
twenty-five percent of the improvements on the Premises shall be
condemned or taken elect at any time within thirty days of the date of
such taking to cancel this Lease upon written notice to Lessor and
thereupon this Lease shall terminate upon the date Lessee may specify in
such notice. Upon any such taking or condemnation and the continuing in
force of this Lease as to any part of the Premises, the basic rent and
additional rent shall be abated in an amount representing the part of the
rent properly allocable to the portion of the Premises which may be
condemned or taken.
In the event of the termination of this Lease pursuant to the
provisions of this Section, this Lease and the term and estate hereby
granted shall expire as of the date of such termination in the same
manner and with the same effect as if that were the date set for the
normal expiration of the term of this Lease, and the basic rent and any
additional rent shall be apportioned as of that date.
Lessor shall be entitled to receive the entire award arising from
any condemnation proceeding.
Notwithstanding the foregoing, in the event of a condemnation or
taking pursuant to this section, Lessee shall be entitled to appear,
claim, prove and receive in the condemnation proceedings such amounts as
may be separately awarded to Lessee for removal expenses, business
dislocation, damages and moving expenses. In addition, Lessee shall be
entitled to receive from the condemnation award the value of Lessee's
trade fixtures. Such value shall be the original cost less depreciation
up to the date of the taking. In the event Lessee shall make a claim
against the condemning authority as described herein, Lessor agrees to
cooperate with Lessee and assist Lessee in its claim by making all of
Lessor's records with respect to Lessee's use of the Premises and
Lessee's Work available to Lessee.
In the event of a condemnation or taking as described in this
section, and if the Lease has not been terminated as a result thereof,
Lessor shall, to the extent of the condemnation award received, proceed
with reasonable diligence to repair and restore the Premises to
substantially its former condition to the extent feasible.
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<PAGE> 19
SECTION 13
Assignment
Section 13.01.
Section 13.01 is amended to add the phrase ", which consent will not be
unreasonably withheld or delayed" immediately following the word "consent" the
second time the word appears in the second line of Section 13.01.
SECTION 14
Inspection of Premises
Section 14.01.
Section 14.01 of the Lease is amended to add the following sentence at the
end of the section.
In this regard, Lessor agrees to provide Lessee with telephonic
notice at least 24 hours prior to any inspection of the Premises.
SECTION 15
Fixtures and Equipment
Section 15.01.
Section 15.01 of the Lease is amended to add the following sentences at
the end of Section 15.01.
Notwithstanding anything to the contrary contained in this Lease,
Lessor acknowledges that at the expiration of the term, Lessee will
remove from the Premises all of Lessee's trade fixtures. Lessee will not
remove either the heating, ventilation and air conditioning system or the
1200 ampere, 480 volt electrical service panel installed in the Premises.
Lessor further acknowledges that the removal of these trade fixtures may
necessitate removal of walls or partitions. In such event, Lessee agrees
to restore the Premises to good order and repair, reasonable wear and
tear and damage by fire or other casualty excepted.
SECTION 17
Bankruptcy
Section 17.01.
Section 17.01(b) is amended to add the phrase "and such petition or
arrangement is not withdrawn within thirty days of filing" immediately
following the word "State" in the second line of Section 17.01(b).
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<PAGE> 20
SECTION 18
Default, Reentry and Damages
Section 18.01.
The last sentence of Section 18.01 is amended by inserting the word
"lawful" immediately prior to the word "re-entry" in the ninth line of Section
18.01.
Section 18.02.
Section 18.02 is amended by:
(a) Deleting the subparagraph contained in the first paragraph of
section 18.02 in its entirety and substituting the following therefor:
First, to the payment of any indebtedness, other than rent due
hereunder from Lessee to Lessor, including all costs incurred by
Lessor as a result of the default of Lessee.
Second, to the payment of rent due and unpaid hereunder;
Third, to the payment of any cost of such reletting; and
Fourth, to the payment of the cost of any alterations or
repairs to the Premises.
(b) Deleting the last sentence of the second paragraph of Section
18.02 in its entirety.
SECTION 19
Surrender of Premises on Termination
Section 19.01.
Section 19.01 is amended by adding the following sentence at the end of
section 19.01.
Notwithstanding anything to the contrary contained in this Lease,
Lessor acknowledges that at the expiration of the term, Lessee will
remove from the Premises all of Lessee's trade fixtures. Lessee will not
remove either the heating, ventilation and air conditioning system or the
1200 ampere, 480 volt electrical service panel installed in the Premises.
Lessor further acknowledges that the removal of these trade fixtures may
necessitate removal of walls or petitions. In such event, Lessee agrees
to restore the Premises to good order and repair, reasonable wear and
tear and damage by fire or other casualty excepted.
11
<PAGE> 21
SECTION 20
Performance by Lessor of the Covenants of Lessee
Section 20.01.
Section 20.01 is amended by:
(a) Deleting the phrase "on or before the next rental due date
bearing interest at the rate of eleven (11%) percent per annum from the
date of payment until the repayment thereof to Lessor by Lessee" in the
fifth, sixth and seventh lines of Section 20.01 and substituting the
phrase "within ten days of Lessee's receipt of Lessor's invoice for same"
therefor; and
(b) Adding a new second sentence stating "Any amount due Lessor from
Lessee pursuant to this Section 20.01 shall bear interest at a rate of
eleven (11%) percent per annum accruing from the date the payment is due
to Lessor".
SECTION 25
Remedies Not Exclusive; Waiver
Section 25.02.
Section 25.02 is deleted in its entirety and the following substituted
therefor:
One or more waivers of any covenant or condition contained herein by
either party to this Lease shall not be construed as a waiver of a
further or subsequent breach of the same covenant or condition and the
consent or approval by a party to or of any act by the other party
requiring the consenting party's consent or approval hereunder shall not
be deemed to waive or render unnecessary that party's consent or approval
to or of any subsequent similar act by the nonconsenting party.
ADDITIONAL PROVISIONS
SECTION 28
Hazardous Materials
28. Lessee shall be fully responsible, at its own expense, for the
control and appropriate handling of any toxic chemicals or other substances
used or stored on the Premises in connection with Lessee's business conducted
therein. Lessee shall not spill, introduce, discharge or bury any toxic
chemical, substance or contaminant of any kind in, on or under the Premises or
any portion thereof, or permit the discharge thereon into the sanitary or storm
sewer or water system serving the Premises
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<PAGE> 22
and/or industrial park in which the Premises are located, or into any municipal
or other governmental water system or storm and/or sanitary sewer system,
without first obtaining the written license permit or other approval of all
governmental agencies having jurisdiction thereover, and in any event, Lessee
shall employ all appropriate safeguards and procedures necessary or appropriate
to protect such systems from contamination. Lessee shall undertake, at
its expense, any necessary and/or appropriate cleanup process in connection
with any breach of the foregoing covenant and without limiting Lessee's other
indemnity or insurance obligations under this Lease, Lessee shall indemnify and
hold harmless Lessor from and against all liability, whether direct, indirect,
consequential or otherwise, arising from any incident or occurrence on or about
the Premises or the industrial park in which the Premises are located
pertaining to toxics. Notwithstanding anything to the contrary contained in
this Lease, Lessor acknowledges that Lessee intends to use industrial
detergents and bleaches in its laundry operations and disinfectants throughout
the Premises. Lessor expressly consents to Lessee's use of these substances as
the substances are essential to Lessee's business. Lessee acknowledges that
Lessor's consent to Lessee's use of these substances does not relieve Lessee of
its obligations under this Section 28.
SECTION 29
Option to Extend Term
29. The Lessee shall have the right and option to extend the term of this
Lease for two (2) additional periods of five (5) years in duration, such
additional period to commence upon the expiration of the original term of this
Lease or the first extension; provided, however, that Lessee does not default
under any of the terms, covenants and conditions of this Lease. Said extension
shall be on all terms and conditions as set forth herein, except that the
minimum rental provided in Section 3 shall be established as set forth below:
The annual rental for the extension shall be an amount equal to the
purchasing power of $69,000 on April 1, 1992. It is mutually agreed that
the rental rate for the extension period shall be determined by dividing
the sum of $69,000 by the index figure for April 1, 1992 of the
"Consumer's Price Index for Urban Wage Earners and Clerical Workers,
United States," all items, and Major Group Figures, revised 1977, which
index is now published monthly in the "Monthly Labor Review" the Bureau
of Labor Statistics of the United States Department of Labor, or its
successor index, and multiplying the result by the corresponding index
figure for
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<PAGE> 23
September 1, 2002 and September 1, 2007 respectively, but not less
than an annual basic rental figure of $74,844.
Lessee shall give to Lessor written notice of its intention to
extend the original term of this Lease (and any subsequent extensions)
not more than twelve (12) months nor less than six (6) months prior to
the expiration of the original term or any subsequent extensions of this
Lease. These options to renew are personal to the Lessee and may not be
assigned without the Lessor's prior written consent.
SECTION 30
Brokerage
30.01. Except as set forth below, each party hereto represents that no
agent or finder negotiated or arranged this Lease, and that no fees or
commissions are due anyone for the procurement hereof, and each party agrees to
indemnify and hold the other harmless from and against any claims, judgments,
suits, costs, reasonable attorneys' fees and other expenses which the party so
indemnified may incur by reason of claims by any persons, firm or corporation
claiming any brokerage commissions, finders fee or similar compensation based
upon any alleged negotiations or dealings with such indemnifying party, which
are contrary to the foregoing representation. Notwithstanding the foregoing,
the parties acknowledge that Grubb & Ellis was the procuring cause of this
Lease transaction and that Burger Easton Mercier Rideout & Company ("Burger")
was the listing agent. Further, the parties acknowledge that the fees and
commissions due Grubb & Ellis and Burger will be paid by Lessor.
30.02. Edward R. Burger, a licensed broker with Burger, will have a
nominal ownership interest, together with Lessor, in the Premises.
SECTION 31
Parking
31. Lessor agrees to provide Lessee an additional ten (10) parking spaces
in connection with existing parking on Lessor's property to the immediate south
of the Premises until such time that Lessor provides a perpendicular row of
approximately 25 car parking spaces on the land immediately east of the
Premises in place of the currently existing parking at the rear of the
building.
14
<PAGE> 24
SECTION 32
Driveways
32. Lessor and Lessee acknowledge that Lessee shall have the right to use
the driveway located between the Premises and the adjacent building in common
with the owner and/or tenant(s) of this adjacent building. In addition, Lessee
shall have the right to use the private roadway located behind the Premises and
the adjacent building for purposes of ingress and egress to the Premises.
Lessor and Lessee acknowledge that the owner and/or tenant(s) of the adjacent
building shall have the right to use the private roadway located behind the
Premises and the adjacent building for purposes of ingress and egress to the
adjacent building.
LESSOR:
/s/ Walter D'Aloisio
---------------------------------
Walter D'Aloisio
LESSEE:
AMSCO Sterile Recoveries, Inc.
/s/ Wayne R. Peterson
---------------------------------
By: Wayne R. Peterson
--------------------------
Title: Asst. Secretary
--------------------------
15
<PAGE> 25
INDIVIDUAL
STATE OF MICHIGAN )
) SS.
COUNTY OF OAKLAND )
The foregoing instrument was acknowledged before me this 1st day of April,
1992, by Walter D'Aloisio.
/s/ [Illegible]
---------------------------------------
Notary Public, Oakland County, Michigan
My commission expires: 3/3/96
-----------------
CORPORATION
STATE OF FLORIDA )
) SS.
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this 31st day of
March, 1992, by Wayne R. Peterson of AMSCO Sterile Recoveries, Inc., a
corporation, on behalf of the corporation.
/s/ Linda A. Sloan
---------------------------------------
Notary Public, Pinellas County, Florida
My commission expires: 7/2/94
----------------
PARTNERSHIP
STATE OF MICHIGAN )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
_____________________, 19___, by __________________________, partner on behalf
of ______________________________________ a partnership.
----------------------------------------
Notary Public, County, Michigan
My commission expires:
-----------------
16
<PAGE> 26
EXHIBIT "A"
Lots 18 and 19 Tonquish Industrial Park Subdivision No. 2
Also commonly known as 39120 Webb Drive, Westland, Michigan
(S.E. corner Webb Drive and Webb Court being 39100 to 39120 Webb Drive)
<PAGE> 27
EXHIBIT "B"
LESSOR'S PLANS AND SPECIFICATIONS
1. Lessor shall construct, at its sole cost and expense, two exterior
truckwells with exterior vestibules adjacent to the east (rear) wall
parallel to that wall at the northernmost truck door opening and the
southernmost truck door openings as more fully delineated as follows:
Page 1 of 4 - illustrates the site plan for the subject property
with truck docks. The property consists of a land area of approximately
2.83 acres, total building area of 20,232 s.f. excluding the additional
dock areas. The building is approximately 241 feet 4 inches by 96 feet
with a height of 21 feet located at the southeast corner of Webb Drive
and Webb Court, Westland, Michigan. The drawing was prepared for
D'Aloisio Development Co. by Michael S. Downes & Associates, Inc.,
architect. The plans are dated March 6, 1992, Plan No. 9101 & 2106,
Sheet No. 1.
Page 2 of 4 - illustrates the partial floor plan for new loading
docks added to the building and a foundation plan for new loading docks.
The plan is dated March 6, 1992, Plan #2106, Sheet No. 2.
Page 3 of 4 - illustrates a west elevation of the building showing
vertical elevations of new truck dock and safety railing and a partial
south elevation of the southern most dock and a partial north elevation
of the northern most dock. The plan is dated March 6, 1992, Plan #2106,
Sheet No. 3.
Page 4 of 4 - illustrates a Cross Section 1 of Dock #2 showing below
grade footings, a Cross Section 2 of Dock #1 showing below grade
footings, a Cross Section 3 of Dock #1 and the existing building showing
the dock adjoined to the building, a Cross Section 4 of Dock #2 showing
footings and dock door elevations and a Cross Section 5 of Dock #1
showing footings and dock door elevations. The plan is dated March 6,
1992, Plan #2106, Sheet No. 4.
2. Lessor shall install, at its sole cost and expense, an electric service
and service panel providing 1200 amperes, 480 volts, three phase
electrical service.
3. Lessor agrees to install at Lessee's option and cost, a standard
industrial floor at a cost not to exceed $1.66 per square foot of floor
installed. The floor shall be a minimum six inch thick reinforced slab.
4. Lessor agrees, at its sole cost and expense, to remove any interior gas
fired unit heaters now on the Premises not needed by Lessee.
<PAGE> 28
DETROIT FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowLedged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts the
foregoing assignment and agrees to assume, perform and be bound by all of the
duties, obligations and liabilities of Assignor under the Lease, arising on and
after the date of this instrument for the remainder of the term of the Lease
and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
/s/ Kathleen Clover ---------------------------------
- ----------------------------------- By: Wm. J. Rieflin
Print Name: Kathleen Clover Its: Secretary
- -----------------------------------
Print Name:
------------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
/s/ Kathleen Clover ---------------------------------
- ----------------------------------- By: J. T. Boosales
Print Name: Kathleen Clover Its: E. V. P.
- -----------------------------------
Print Name:
------------------------
2
<PAGE> 30
EXHIBIT A
Detroit facility, Westland, Michigan
Lease dated March 30, 1992 between Walter D'Aloisio as Lessor and
AMSCO Sterile Recoveries, Inc. as Lessee.
<PAGE> 31
[AMSCO Sterile Recoveries, Inc.]
July 21, 1994
Mr. Walter D'Aloisio
23158 Churches
Southfield, Michigan 48034
Re: Premises Located at 39120 Webb Drive, Westland, Michigan
Dear Mr. D'Aloisio:
Reference is hereby made to that certain Lease Agreement, dated March 30,
1992, by and between Walter D'Aloisio as landlord ("Landlord"), and AMSCO
Sterile Recoveries, Inc., a Delaware corporation ("Tenant"), as modified and
amended by a Rider to the Agreement of Lease, by and between such parties,
demising the captioned premises (as so modified, the "Lease").
Please be advised that Tenant is negotiating for the sale of all or
substantially all of its rights, properties and assets, specifically including
the leasehold estate created by the Lease, to Sterile Recoveries, Inc., a
newly-formed Florida corporation in which Tenant's former principal executives
own a majority interest ("Buyer"). Buyer intends to continue the operation of
the business formerly operated by Tenant, and in connection with the proposed
transaction Tenant would intend to assign, and Buyer would intend to acquire,
the leasehold interest and estate created by the Lease. The Lease provides, in
pertinent part, that Tenant may not assign the Lease without Landlord's written
consent, and expressly states that such consent shall not be unreasonably
withheld or delayed.
Tenant acknowledges that it would, if consent were to be granted to the
assignment requested hereby, remain liable under the Lease after the effective
date of any such assignment, in accordance with the terms of the Lease.
Moreover, in view of the Buyer's experience in the actual operation of the
business and the proposed continuation of the use of the premises which is
expressly permitted by the terms of the Lease, we believe that neither the
creditworthiness of the Tenant nor the use of the Premises would be affected in
any adverse fashion by the proposed assignment of the Lease to Buyer.
Accordingly, we formally request your consent, as Landlord, to the proposed
assignment of the Lease to Buyer. We have, for your reference, attached hereto
a proposed draft of the Assignment and Assumption Agreement pursuant to which
Tenant and Buyer would propose to effect the assignment to which this request
relates; please note that the Buyer would be obligated by the terms of such
instrument, to assume and perform, as and when due, all of the obligations
required to be performed by the originally named tenant under the Lease.
Please advise whether the enclosed form of Assignment and Assumption Agreement
satisfies the requirement contained in the Lease for an instrument pursuant to
which the Buyer would assume liability thereunder in connection with the
proposed assignment.
In connection with the financing which Buyer intends to use in connection
with the aforementioned transaction, Buyer would propose to grant to Tenant a
security interest in certain of the equipment and fixtures which would be owned
by it and located at or in the Premises demised by the Lease. We would request
that you subordinate any lien or security interest which you may have in such
equipment or fixtures to the security interest which Buyer would furnish to
Tenant, and have enclosed a form of Landlord's Waiver pursuant to which such
subordination could be confirmed.
<PAGE> 32
Price Pioneer Company, Ltd.
July 21, 1994
Page 2
The parties' negotiations relating to the proposed transaction described
above are, unfortunately, extremely time-sensitive. We must, therefore,
request that you reply to the foregoing request as promptly as possible. If
the foregoing assignment is acceptable to you, please so indicate by signing
where indicated on this letter, and by returning the signed copy to the
undersigned (c/o Charles A. Schliebs) by telecopy at 412-394-7959. A hard-copy
counterpart of this request, together with an execution form of the Landlord's
Waiver, will be provided to you by Federal Express, and we would request that
you sign and return the Waiver promptly after your receipt of that package.
Many thanks in advance for your cooperation on this matter. Please feel free
to contact the undersigned if you should have any questions regarding this
matter.
AMSCO STERILE RECOVERIES, INC.
By: /s/ Anthony M. Lacerne
----------------------------------
Anthony M. Lacerne
The undersigned hereby consents to the assignment of the Lease by
Tenant to Buyer.
/s/ Walter D'Aloisio
- ----------------------------------
Walter D'Aloisio
<PAGE> 33
DETROIT FACILITY
LANDLORD'S WAIVER
WHEREAS, WALTER D'ALOISIO, ("Landlord") is the owner of certain real
estate located in Westland, Wayne County, Michigan, and more particularly
described on Exhibit A, attached hereto and made a part hereof by this
reference, a portion of which is presently leased to STERILE RECOVERIES, INC.,
a Florida corporation ("SRI"), as successor in interest to AMSCO Sterile
Recoveries, Inc. as tenant pursuant to a lease more particularly described on
Exhibit A-1 and made a part hereof by this reference (the "Lease"); and
WHEREAS, SRI is issuing a Purchase Money Note in an original principal
amount not to exceed $10,000,000 to AMSCO Sterile Recoveries, Inc., a Delaware
corporation ("Lender") and in connection therewith SRI has offered to grant a
security interest to Lender in certain general intangibles, accounts,
equipment, fixtures and inventory (the "Collateral") including, without
limitation, the Collateral listed on Exhibit B attached hereto and made a part
hereof, and Lender is willing to make such loan only if the Landlord
subordinates and waives as to Lender any claims, demands, or rights the
Landlord may now have or hereafter acquire with respect to said Collateral.
NOW, THEREFORE, the Landlord, intending legally to be bound hereby, agrees
as follows:
1. That any and all liens, claims, demands or rights, including, but not
limited to the right to levy or distrain for unpaid rent which the Landlord now
has or may hereafter acquire on or in any of the Collateral under or in respect
of the Lease shall be subordinate and inferior to the liens and security
interest of Lender, and the Landlord hereby specifically waives with respect to
Lender, and its successor and assigns only all rights of levy, distraint or
execution with respect to said Collateral.
2. That the Collateral now or hereafter pledged to Lender or in which
Lender has or is granted a security interest shall, at all times, be considered
to be personal property and shall not constitute fixtures or become a part of
the Premises, so long as any monies are owing to Lender by SRI. Lender may at
all times enter upon the Premises or any other premises where said Collateral
may be found and remove the same; provided said removal does not damage the
premises and if said removal does cause damage, then Lender will fix and repair
same.
3. Lender may, without affecting the validity of this Waiver, extend the
terms of payment of the indebtedness of SRI to the Lender or alter the
performance of any of the terms and conditions of any security agreement
without the consent of the Landlord and without giving notice thereof to the
Landlord.
4. This Agreement shall be construed and governed under the laws of
Michigan.
5. Landlord stipulates that the foregoing waiver and subordination is not
intended to extend to any property which, in accordance with the laws of the
State of Michigan, would properly be characterized as "fixtures" and part of
the real property owned by Landlord.
IN WITNESS WHEREOF, the undersigned executed this agreement as of the 26th
day of July, 1994.
/s/ Walter D'Aloisio
-----------------------------------
Walter D'Aloisio
<PAGE> 34
EXHIBIT B TO LANDLORD'S WAIVER
All of SRI's now owned or hereafter acquired inventory, meaning goods,
merchandise and other personal property which are or may at any time be held
for sale or lease, furnished under any contract of service or held as raw
materials, work-in-process, supplies or materials used or consumed in its
business, including without limitation returned and repossessed goods, and all
equipment, trade fixtures, other tangible personal property, furniture and
vehicles, together with all accessions, parts, accessories and appurtenances
thereto appertaining or attached or kept or used or intended to be used in
connection therewith and all substitutions, renewals, improvements,
replacements, additions, products and proceeds thereto.
<PAGE> 1
EXHIBIT 10.20
STANDARD INDUSTRIAL LEASE -- MULTI-TENANT
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Parties. This Lease, dated, for reference purposes only, February 24,
1992, is made by and between Borstein Enterprises, a California corporation
(herein called "Lessor") and AMSCO Sterile Recoveries, Inc., a Delaware
corporation (herein called "Lessee").
2. Premises, Parking and Common Areas.
2.1 Premises. Lessor hereby leases to Lessee and Lessee leases
from Lessor for the term, at the rental, and upon all of the conditions set
forth herein, real property situated in the County of Los Angeles, State of
California commonly known as 2240 E. Artesia Boulevard, Long Beach, CA 90805
and described as an industrial building approximately 30,384 square feet in
size which is part of a larger industrial complex as shown on Exhibit "A",
herein referred to as the "Premises", as may be outlined on an Exhibit attached
hereto, including rights to the Common Areas as hereinafter specified but not
including any rights to the roof of the Premises or to any Building in the
Industrial Center. The Premises are a portion of a building, herein referred
to as the "Building." The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the "Industrial
Center."
2.2 Vehicle Parking. Lessee shall be entitled to 67 vehicle
parking spaces, unreserved and unassigned, on those portions of the Common
Areas designated by Lessor for parking. Lessee shall not use more parking
spaces than said number. Said parking spaces shall be used only for parking by
vehicles no larger than full size passenger automobiles or pick-up trucks,
herein called "Permitted Size Vehicles." Vehicles other than Permitted Size
Vehicles are herein referred to as "Oversized Vehicles."
2.2.1 Lessee shall not permit or allow any vehicles that
belong to or are controlled by Lessee or Lessee's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
2.2.2 If Lessee permits or allows any of the prohibited
activities described in paragraph 2.2 of this Lease, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.
2.3 Common Areas - Definition. The term "Common Areas" is defined
as all areas and facilities outside the Premises and within the exterior
boundary line of the Industrial Center that are provided and designated by the
Lessor from time to time for the general non-exclusive use of Lessor, Lessee
and of other lessees of the Industrial Center and their respective employees,
suppliers, shippers, customers and invitees, including parking areas, loading
and unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.4 Common Areas - Lessee's Rights. Lessor hereby grants to
Lessee, for the benefit of Lessee and its employees, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas. Any such storage shall be permitted only by the prior
written consent of Lessor or Lessor's designated agent, which consent may be
revoked at any time. In the event that any unauthorized storage shall occur
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the
cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.5 Common Areas - Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations with respect
thereto. Lessee agrees to abide by and conform to all such rules and
regulations, and to cause its employees, suppliers, shippers, customers, and
invitees to so abide and conform. Lessor shall not be responsible to Lessee
for the non-compliance with said rules and regulations by other lessees of the
Industrial Center. Lessor shall apply and enforce the rules and regulations
against all tenants of the Industrial Center in a uniform manner.
2.6 Common Areas - Changes. Lessor shall have the right, in
Lessor's sole discretion, from time to time:
(a) To make changes to the Common Areas, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, landscaped areas and walkways;
(b) To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available; (c) To designate
other land outside the boundaries of the Industrial Center to be a part of the
Common Areas; (d) To add additional buildings and improvements to the Common
Areas; (e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; (f) to do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Industrial Center as Lessor may, in
the exercise of sound business judgment, deem to be appropriate.
2.6.1 Lessor shall at all times provide the parking
facilities required by applicable law and in no event shall the number of
parking spaces that Lessee is entitled to under paragraph 2.2 be reduced.
3. Term.
3.1 Term. The term of this Lease shall be for One Hundred and
Twenty-Six (126) months commencing on See Addendum Paragraph 53 and ending on
See Addendum Paragraph 53 unless sooner terminated pursuant to any provision
hereof.
Initials: /s/ WRP
---------
/s/ ASB
<PAGE> 2
3.2 Delay in Possession. Notwithstanding said commencement date,
if for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent or perform any other obligation of Lessee under the terms
of this Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Lessee; provided, however, that if
Lessor shall not have delivered possession of the Premises within sixty (60)
days from said commencement date, Lessee may, at Lessee's option, by notice in
writing to Lessor within ten (10) days thereafter, cancel this Lease, in which
event the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to
said commencement date, such occupancy shall be subject to all provisions of
this Lease, such occupancy shall not advance the termination date, and Lessee
shall pay rent for such period at the initial monthly rates set forth below.
4. Rent.
4.1 Base Rent. Lessee shall pay to Lessor, as Base Rent for the
Premises, without any offset or deduction, except as may be otherwise expressly
provided in this Lease, on the 1st day of each month of the term hereof,
monthly payments in advance of $ See Addendum Paragraph 51. Lessee shall pay
Lessor upon execution hereof $8,811.36 as Base Rent for Seventh (7th) month of
the Lease. Rent for any period during the term hereof which is for less than
one month shall be a pro rata portion of the Base Rent. Rent shall be payable
in lawful money of the United States to Lessor at the address stated herein or
to such other persons or at such other places as Lessor may designate in
writing.
4.2 Operating Expenses. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of all Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions:
(a) "Operating Expenses" is defined, for purposes of this
Lease, as all costs incurred by Lessor, if any, for:
(i) The operation, repair and maintenance, in
neat, clean, good order and condition, of the following:
(aa) The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities and fences and gates;
(bb) Trash disposal services;
(cc) Tenant directories;
(dd) Fire detection systems including
sprinkler system maintenance and repair;
(ee) Security services;
(ff) Any other service to be provided by
Lessor that is elsewhere in this Lease stated to be an "Operating Expense;"
(ii) Any deductible portion of an insured loss
concerning any of the items or matters described in this paragraph 4.2;
(iii) The cost of the premiums for the liability
and property insurance policies to be maintained by Lessor under paragraph 8
hereof;
(iv) The amount of the real property tax to be
paid by Lessor under paragraph 10.1 hereof;
(v) The cost of water, gas and electricity to
service the Common Areas;
(b) The inclusion of the improvements, facilities and
services set forth in paragraph 4.2(a)(i) of the definition of Operating
Expenses shall not be deemed to impose an obligation upon Lessor to either have
said improvements or facilities or to provide those services unless the
Industrial Center already has the same, Lessor already provides the services,
or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.
(c) Lessee's Share of Operating Expenses shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time of Lessee's Share of annual
Operating Expenses and the same shall be payable monthly or quarterly, as
Lessor shall designate, during each twelve-month period of the Lease term, on
the same day as the Base Rent is due hereunder. In the event that Lessee pays
Lessor's estimate of Lessee's Share of Operating Expenses as aforesaid, Lessor
shall deliver to Lessee within sixty (60) days after the expiration of each
calendar year a reasonably detailed statement showing Lessee's Share of the
actual Operating Expenses incurred during the preceding year. If Lessee's
payments under this paragraph 4.2(c) during said preceding year exceed Lessee's
Share as indicated on said statement, Lessee shall be entitled to credit the
amount of such overpayment against Lessee's Share of Operating Expenses next
falling due. If Lessee's payments under this paragraph during said preceding
year were less than Lessee's Share as indicated on said statement, Lessee shall
pay to Lessor the amount of the deficiency within ten (10) days after delivery
by Lessor to Lessee of said statement.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $8,811.36 as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount then required
of Lessee. If the monthly rent shall, from time to time, increase during the
term of this Lease, Lessee shall, at the time of such increase, upon written
demand from Lessor, deposit with Lessor additional money as a security deposit
so that the total amount of the security deposit held by Lessor shall at all
times bear the same
2
Initials: /s/ WRP
---------
/s/ ASB
<PAGE> 3
proportion to the then current Base Rent as the initial security deposit bears
to the initial Base Rent set forth in paragraph 4. Lessor shall not be
required to keep said security deposit separate from its general accounts. If
Lessee performs all of Lessee's obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Lessor, shall be returned,
without payment of interest or other increment for its use, to Lessee (or, at
Lessor's option, to the last assignee, if any, of Lessee's interest hereunder)
at the expiration of the term hereof, and after Lessee has vacated the
Premises. No trust relationship is created herein between Lessor and Lessee
with respect to said Security Deposit.
6. Use. See Addendum Paragraph 6.1
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in the
state existing on the date that the Lease term commences, but without regard to
the use for which Lessee will occupy the Premises, does not violate any
covenants or restrictions of record, or any applicable building code,
regulation or ordinance in effect on such Lease term commencement date. In the
event it is determined that this warranty has been violated, then it shall be
the obligation of the Lessor, after written notice from Lessee, to promptly, at
Lessor's sole cost and expense, rectify any such violation. In the event
Lessee does not give to Lessor written notice of the violation of this warranty
within six months from the date that the Lease term commences, the correction
of same shall be the obligation of the Lessee at Lessee's sole cost. The
warranty contained in this paragraph 6.2(a) shall be of no force or effect if,
prior to the date of this Lease, Lessee was an owner or occupant of the
Premises and, in such event, Lessee shall correct any such violation at
Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a) Lessee shall,
at Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements of any fire insurance underwriters or rating bureaus, now in
effect or which may hereafter come into effect, whether or not they reflect a
change in policy from that now existing, during the term or any part of the
term hereof, relating in any manner to the Premises and the occupation and use
by Lessee of the Premises and of the Common Areas. Lessee shall not use nor
permit the use of the Premises or the Common Areas in any manner that will tend
to create waste or a nuisance or shall tend to disturb other occupants of the
Industrial Center.
6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and
free of debris on the Lease commencement date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, air
conditioning, heating, and loading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the event that it is
determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting forth
with specificity the nature of the violation, to promptly, at Lessor's sole
cost, rectify such violation other than with respect to latent defects,
Lessee's failure to give such written notice to Lessor within thirty (30) days
after the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior to
the date of this Lease, Lessee was an owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee
hereby accepts the Premises in their condition existing as of the Lease
commencement date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use of the
Premises, and any covenants or restrictions of record, and accepts this Lease
subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agent
has made any representation or warranty as to the present or future suitability
of the Premises for the conduct of Lessee's business.
7. Maintenance, Repairs, Alterations and Common Area Services.
7.1 Lessor's Obligations. Subject to the provisions of paragraph
4.2 (Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) and 9 (Damage or
Destruction) and except for damage caused by any negligent or intentional act
or omission of Lessee, Lessee's employees, suppliers, shippers, customers, or
invitees, in which event Lessee shall repair the damage, Lessor, at Lessor's
expense, subject to reimbursement pursuant to paragraph 4.2, shall keep in good
condition and repair the foundations, exterior walls, structural condition of
interior bearing walls, and roof of the Premises, as well as the parking lots,
walkways, driveways, landscaping, fences, signs and utility installations of
the Common Areas and all parts thereof, as well as providing the services for
which there is an Operating Expense pursuant to paragraph 4.2. Lessor shall
not, however, be obligated to paint the exterior or interior surface of
exterior walls, nor shall Lessor be required to maintain, repair or replace
windows, doors or plate glass of the Premises. Lessor shall have no obligation
to make repairs under this paragraph 7.1 until a reasonable time after receipt
of written notice from Lessee of the need for such repairs. Lessee expressly
waives the benefits of any statute now or hereafter in effect which would
otherwise afford Lessee the right to make repairs at Lessor's expense or to
terminate this Lease because of Lessor's failure to furnish any Common Area
Services when such failure is caused by accident, breakage, repairs, strikes,
lockout, or other labor disturbances or disputes of any character, or by any
other cause beyond the reasonable control of Lessor.
7.2 Lessee's Obligations.
(a) Subject to the provisions of paragraphs 6 (Use), 7.1
(Lessor's Obligations), and 9 (Damage or Destruction), and except for
conditions on the premises caused by Lessor's or Lessor's agents', employees',
or invitee's negligence, Lessee, at Lessee's expense, shall keep in good order,
condition and repair the Premises and every part thereof (whether or not the
damaged portion of the Premises or the means of repairing the same are
reasonably or readily accessable to Lessee) including, without limiting the
generality of the foregoing, all plumbing, heating, ventilating and air
conditioning systems, electrical and lighting facilities and equipment within
the Premises, fixtures, interior walls and interior surfaces of exterior walls,
ceilings, windows, doors, plate glass, and skylights located within the
Premises. Lessor reserves the right to procure and maintain the ventilating
and air conditioning system
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maintenance contract and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof. At the completion of Lessee's tenancy, it
is Lessee's responsibility to insure that the HVAC system is operating
correctly and that it has been maintained.
(b) If Lessee fails to perform Lessee's obligations under
this paragraph 7.2 or under any other paragraph of this Lease, Lessor may enter
upon the Premises after ten (10) days' prior written notice to Lessee (except
in the case of emergency, in which no notice shall be required), perform such
obligations on Lessee's behalf and put the Premises in good order, condition
and repair, and the cost thereof together with interest thereon at the maximum
rate then allowable by law shall be due and payable as additional rent to
Lessor together with Lessee's next Base Rent installment.
(c) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the good
condition ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices.
Lessee shall repair any damage to the Premises occasioned by the installation
or removal of Lessee's trade fixtures, alterations, furnishings and equipment.
Notwithstanding anything to the contrary otherwise stated in this Lease, Lessee
shall leave the air lines, power panels, electrical distribution systems,
lighting fixtures, space heaters, air conditioning, plumbing and fencing on the
Premises in good operating condition. See Addendum Paragraph 7.2(c) for
additional terms and conditions.
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written
consent make any alterations, improvements, additions, or Utility Installations
in, on or about the Premises, or the Industrial Center, except for
nonstructural alterations to the Premises not exceeding $2,500 in cumulative
costs, during the term of this Lease. In any event, whether or not in excess
of $2,500 in cumulative cost, Lessee shall make no change or alteration to the
exterior of the Premises nor the exterior of the Building nor the Industrial
Center without Lessor's prior written consent. As used in this paragraph 7.3
the term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing. Lessor may require that
Lessee remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration of the term, and restore the Premises
and the Industrial Center to their prior condition. Lessor may require Lessee
to provide Lessor, at Lessee's sole cost and expense, a lien and completion
bond in an amount equal to one and one-half times the estimated cost of such
improvements, to insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work. Should Lessee make
any alterations, improvements, additions or Utility Installations without the
prior approval of Lessor, Lessor may, at any time during the term of this
Lease, require that Lessee remove any or all of the same. Lessee shall submit
Lessee's improvement plans for Lessor's approval prior to the commencement of
construction. The provisions of Paragraph 7.3(a) shall not apply to Lessee's
equipment or to improvements which Lessee is required to remove at the end of
the lease.
(b) Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Industrial Center that Lessee
shall desire to make and which requires the consent of the Lessor shall be
presented to Lessor in written form, with proposed detailed plans. If Lessor
shall give its consent, the consent shall be deemed conditioned upon Lessee
acquiring a permit to do so from appropriate governmental agencies, the
furnishing of a copy thereof to Lessor prior to the commencement of the work
and the compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or
for use in the Premises, which claims are or may be secured by any mechanic's
or materialmen's lien against the Premises, or the Industrial Center, or any
interest therein. Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises or the
Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises or the Industrial Center, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a surety
bond satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises and the Industrial Center free from the effect of such lien or claim.
In addition, Lessor may require Lessee to pay Lessor's reasonable attorneys
fees and costs in participating in such action if Lessor shall decide it is to
Lessor's best interest to do so.
(d) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall be the property
of Lessor and shall remain upon and be surrendered with the Premises at the
expiration of the Lease term, unless Lessor requires their removal pursuant to
paragraph 7.3(a). Notwithstanding the provisions of this paragraph 7.3(d),
Lessee's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
and other than Utility Installations, shall remain the property of Lessee and
may be removed by Lessee subject to the provisions of paragraph 7.2.
7.4 Utility Additions. Lessor reserves the right to install new
or additional utility facilities throughout the Building and the Common Areas
for the benefit of Lessor or Lessee, or any other lessee of the Industrial
Center, including, but not by way of limitation, such utilities as plumbing,
electrical systems, security systems, communication systems, and fire
protection and detection systems, so long as such installations do not
unreasonably interfere with Lessee's use of the Premises.
8. Insurance; Indemnity. See Addendum Paragraph 8.9 for additional terms
and conditions.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's
expense, obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage Insurance insuring
Lessee and Lessor against any liability arising out of Lessee use, occupancy or
maintenance of the Premises and the Industrial Center. Such insurance shall be
in an amount not less than $1,000,000.00 per occurrence. The policy shall
insure
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performance by Lessee of the indemnity provisions of this paragraph 8. The
limits of said insurance shall not, however, limit the liability of Lessee
hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor, but not Lessee, against
any liability arising out of the ownership, use, occupancy or maintenance of
the Industrial Center in an amount not less than $1,000,000.00 per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss
or damage to the Industrial Center improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in an amount not to
exceed the full replacement value thereof, as the same may exist from time to
time, providing protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, flood
(in the event same is required by a lender having a lien on the Premises)
special extended perils ("all risk", as such term is used in the insurance
industry), plate glass insurance and such other insurance as Lessor deems
advisable. In addition, Lessor shall obtain and keep in force, during the term
of this Lease, a policy of rental value insurance covering a period of one
year, with loss payable to Lessor, which insurance shall also cover all
Operating Expenses for said period. In the event that the Premises shall
suffer an insured loss as defined in paragraph 9.1(g) hereof, the deductible
amounts under the casualty insurance policies relating to the Premises shall be
paid by Lessee.
8.4 Payment of Premium Increase.
(a) After the term of this Lease has commenced, Lessee
shall not be responsible for paying Lessee's Share of any increase in the
property insurance premium for the Industrial Center specified by Lessor's
insurance carrier as being caused by the use, acts or omissions of any other
lessee of the Industrial Center, or by the nature of such other lessee's
occupancy which create an extraordinary or unusual risk.
(b) Lessee, however, shall pay the entirety of any
increase in the property insurance premium for the Industrial Center over what
it was immediately prior to the commencement of the term of this Lease if the
increase is specified by Lessor's insurance carrier as being caused by the
nature of Lessee's occupancy or any act or omission of Lessee.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least "A", or such
other rating as may be required by a lender having a lien on the Premises, as
set forth in the most current issue of "Best's Insurance Guide." Lessee shall
not do or permit to be done anything which shall invalidate the insurance
policies carried by Lessor. Lessee shall deliver to Lessor copies of liability
insurance policies required under paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance within seven (7) days after the
commencement date of this Lease. No such policy shall be cancellable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals or
"binders" thereof.
8.6 Waiver of Subrogation. Lessee and Lessor each hereby release
and relieve the other, and waive their entire right of recovery against the
other for loss or damage arising out of or incident to the perils insured
against which perils occur in, on or about the Premises, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. Lessee and Lessor shall, upon obtaining the policies of insurance
required give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor
from and against any and all claims arising from Lessee's use of the Industrial
Center, or from the conduct of Lessee's business or from any activity, work or
things done, permitted or suffered by Lessee in or about the Premises or
elsewhere and shall further indemnify and hold harmless Lessor from and against
any and all claims arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, or employees, and from and against all costs, reasonable
attorney's fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon, and in case any action or
proceeding be brought against Lessor by reason of any such claim, Lessee upon
notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in
such defense except for actions caused by Lessor's or other tenant's negligence
or misconduct. Lessee, as a material part of the consideration to Lessor,
hereby assumes all risk of damage to property of Lessee or injury to persons,
in, upon or about the Industrial Center arising from any cause and Lessee
hereby waives all claims in respect thereof against Lessor.
8.8 Exemption of Lessor from Liability. Except for claims,
conditions, expenses or liabilities caused by Lessor's or Lessor's employee's
or agent's negligence, Lessee hereby agrees that Lessor shall not be liable for
injury to Lessee's business or any loss of income therefrom or for damage to
the goods, wares, merchandise or other property of Lessee, Lessee's employees,
invitees, customers, or any other person in or about the Premises or the
Industrial Center, nor shall Lessor be liable for injury to the person of
Lessee, Lessee's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Industrial Center, or
from other sources or places and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Lessee. Lessor
shall not be liable for any damages arising from any act or neglect of any
other lessee, occupant or user of the Industrial Center, nor from the failure
of Lessor to enforce the provisions of any other lease of the Industrial
Center.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean if the Premises
are damaged or destroyed to the extent that the cost of repair is less than
fifty percent of the then replacement cost of the Premises.
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(b) "Premises Total Destruction" shall mean if the
Premises are damaged or destroyed to the extent that the cost of repair is
fifty percent or more of the then replacement cost of the Premises.
(c) "Premises Building Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is less than fifty percent of the then replacement cost
of the Building.
(d) "Premises Building Total Destruction" shall mean if
the Building of which the Premises are a part is damaged or destroyed to the
extent that the cost to repair is fifty percent or more of the then replacement
cost of the Building.
(e) "Industrial Center Buildings" shall mean all of the
buildings on the Industrial Center site.
(f) "Industrial Center Buildings Total Destruction" shall
mean if the Industrial Center Buildings are damaged or destroyed to the extent
that the cost of repair is fifty percent or more of the then replacement cost
of the Industrial Center Buildings.
(g) "Insured Loss" shall mean damage or destruction which
was covered by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(h) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to the
condition that existed immediately prior to the damage occurring excluding all
improvements made by lessees.
9.2 Premises Partial Damage; Premises Building Partial Damage.
See Addendum Paragraph 9.2(c) for additional terms and conditions.
(a) Insured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is
damage which is an Insured Loss and which falls into the classification of
either Premises Partial Damage or Premises Building Partial Damage, then Lessor
shall, at Lessor's expense, repair such damage to the Premises, but not
Lessee's fixtures, equipment or tenant improvements, as soon as reasonably
possible and this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is
damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), which damage prevents Lessee from using the
Premises, Lessor may at Lessor's option either (i) repair such damage as soon
as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence
of such damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease, Lessee shall have the right
within ten (10) days after the receipt of such notice to give written notice to
Lessor of Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day
period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.3 Premises Total Destruction; Premises Building Total
Destruction; Industrial Center Buildings Total Destruction.
(a) Subject to the provisions of paragraphs 9.4 and 9.5,
if at any time during the term of this Lease there is damage, whether or not it
is an Insured Loss, and which falls into the classifications of either (i)
Premises Total Destruction, or (ii) Premises Building Total Destruction, or
(iii) Industrial Center Buildings Total Destruction, then Lessor may at
Lessor's option either (i) repair such damage or destruction, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible at
Lessor's expense, and this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after the date of
occurrence of such damage of Lessor's intention to cancel and terminate this
Lease, in which case this Lease shall be cancelled and terminated as of the
date of the occurrence of such damage.
9.4 Damage Near End of Term.
(a) Subject to paragraph 9.4(b), if at any time during
the last six months of the term of this Lease there is substantial damage,
whether or not an Insured Loss, which falls within the classification of
Premises Partial Damage, Lessor may at Lessor's option cancel and terminate
this Lease as of the date of occurrence of such damage by giving written notice
to Lessee of Lessor's election to do so within 30 days after the date of
occurrence of such damage.
(b) Notwithstanding paragraph 9.4(a), in the event that
Lessee has an option to extend or renew this Lease, and the time within which
said option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days after
the occurrence of an Insured Loss falling within the classification of Premises
Partial Damage during the last six months of the term of this Lease. If Lessee
duly exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option
during said twenty (20) day period, then Lessor may at Lessor's option
terminate and cancel this Lease as of the expiration of said twenty (20) day
period by giving written notice to Lessee of Lessor's election to do so within
ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.
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9.5 Abatement of Rent; Lessee's Remedies.
(a) In the event Lessor repairs or restores the Premises
pursuant to the provisions of this paragraph 9, the rent payable hereunder for
the period during which such damage, repair or restoration continues shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of rent, if any, Lessee shall have no claim
against Lessor for any damage suffered by reason of any such damage,
destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this paragraph 9 and shall not commence such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by giving
Lessor written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event this Lease shall
terminate as of the date of such notice.
9.6 Termination - Advance Payments. Upon termination of this
Lease pursuant to this paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
9.7 Waiver. Lessor and Lessee waive the provisions of any statute
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes. See Addendum Paragraph 10.6 for additional terms
and conditions.
10.1 Payment of Taxes. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Industrial Center subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 Additional Improvements. Lessee shall not be responsible for
paying Lessee's Share of any increase in real property tax specified in the tax
assessor's records and work sheets as being caused by additional improvements
placed upon the Industrial Center by other lessees or by Lessor for the
exclusive enjoyment of such other lessees. Lessee shall, however, pay to
Lessor at the time that Operating Expenses are payable under paragraph 4.2(c)
the entirety of any increase in real property tax if assessed solely by reason
of additional improvements placed upon the Premises by Lessee or at Lessee's
request.
10.3 Definition of "Real Property Tax." As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Industrial Center or any
portion thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Industrial
Center or in any portion thereof, as against Lessor's right to rent or other
income therefrom, and as against Lessor's business of leasing the Industrial
Center. The term "real property tax" shall also include any tax, fee, levy,
assessment or charge (i) in substitution of, partially or totally, any tax,
fee, levy, assessment or charge hereinabove included within the definition of
"real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed for a
service or right not charged prior to June 1, 1978, or, if previously charged,
has been increased since June 1, 1978, or (iv) which is imposed as a result of
a transfer, either partial or total, of Lessor's interest in the Industrial
Center or which is added to a tax or charge hereinbefore included within the
definition of real property tax by reason of such transfer, or (v) which is
imposed by reason of this transaction, any modifications or changes hereto, or
any transfers hereof.
10.4 Joint Assessment. If the Industrial Center is not separately
assessed, Lessee's Share of the real property tax liability shall be an
equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed, such proportion to be
determined by Lessor from the respective valuations assigned in the assessor's
work sheets or such other information as may be reasonably available. Lessor's
reasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to the
Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises in the Building.
12. Assignment and Subletting.
12.1 Lessee Affiliate. Lessee may assign or sublet the Premises,
or any portion thereof, without Lessor's consent, to any corporation which
controls, is controlled by or is under common control with Lessee, or to any
corporation resulting from the merger or consolidation with Lessee, or to any
person or entity which acquires all the assets of Lessee as a going concern of
the business that is being conducted on the Premises, all of which are referred
to as "Lessee Affiliate," provided that before such assignment shall be
effective said assignee shall assume, in full, the obligations of Lessee under
this Lease. Any such assignment shall not in any way, affect or limit the
liability of
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Lessee under the terms of this Lease even if after such assignment or
subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.
12.2 Terms and Conditions of Assignment. Regardless of Lessor's
consent, no assignment shall release Lessee of Lessee's obligations hereunder
or after the primary liability of Lessee to pay the Base Rent and Lessee's
Share of Operating Expenses, and to perform all other obligations to be
performed by Lessee hereunder. Lessor may accept rent from any person other
than Lessee pending approval or disapproval of such assignment. Neither a
delay in the approval or disapproval of such assignment nor the acceptance of
rent shall constitute a waiver or estoppel of Lessor's right to exercise its
remedies for the breach of any of the terms or conditions of this paragraph 12
or this Lease. Consent to one assignment shall not be deemed consent to any
subsequent assignment. In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting
remedies against said assignee.
12.3 Terms and Conditions Applicable to Subletting. Regardless of
Lessor's consent, the following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be included
in subleases:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease
heretofore or hereafter made by Lessee, and Lessor may collect such rent and
income and apply same toward Lessee's obligations under this Lease; provided,
however, that until a default shall occur in the performance of Lessee's
obligations under this Lease, Lessee may receive, collect and enjoy the rents
accruing under such sublease. Lessor shall not, by reason of this or any other
assignment of such sublease to Lessor nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a default
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents due and to become due under the sublease. Lessee agrees that
such sublessee shall have the right to rely upon any such statement and request
from Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary, Lessee
shall have no right or claim against such sublessee or Lessor for any such
rents so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective
unless and until it has been approved in writing by Lessor. In entering into
any sublease, Lessee shall use only such form of sublease as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublessee shall, by
reason of entering into a sublease under this Lease, be deemed, for the benefit
of Lessor, to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.
(c) If Lessee's obligations under this Lease have been
guaranteed by third parties, then a sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to
such sublease and the terms thereof.
(d) The consent by Lessor to any subletting shall not
release Lessee from its obligations or alter the primary liability of Lessee to
pay the rent and perform and comply with all of the obligations of Lessee to be
performed under this Lease.
(e) The consent by Lessor to any subletting shall not
constitute a consent to any subsequent subletting by Lessee or to any
assignment or subletting by the sublessee.
(f) In the event of any default under this Lease, Lessor
may proceed directly against Lessee, any guarantors or any one else responsible
for the performance of this Lease, including the sublessee, without first
exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.
(g) In the event Lessee shall default in the performance
of its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of Lessee under such sublease from
the time of the exercise of said option to the termination of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to Lessee or for any other prior defaults of
Lessee under such sublease.
(h) Each and every consent required of Lessee under a
sublease shall also require the consent of Lessor.
(i) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor's prior written consent.
(j) Lessor's written consent of any subletting of the
Premises by Lessee shall not constitute an acknowledgement that no default then
exists under this Lease of the obligations to be performed by Lessee nor shall
such consent be deemed a waiver of any then existing default, except as may be
otherwise stated by Lessor at the time.
(k) With respect to any subletting to which Lessor has
consented, Lessor agrees to deliver a copy of any notice of default by Lessee
to the sublessee. Such sublessee shall have the right to cure a default of
Lessee within ten (10) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset
from and against Lessee for any such defaults cured by the sublessee.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet
the Premises or request the consent of Lessor to any assignment or subletting
or if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith, such attorneys fees not to exceed $350.00 for each such
request.
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13. Default; Remedies.
13.1 Default. The occurrence of any one or more of the following
events shall constitute a material default of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by
Lessee.
(b) The failure by Lessee to make any payment of rent or
any other payment required to be made by Lessee hereunder, as and when due,
where such failure shall continue for a period of three (3) days after written
notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee
with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer
statutes such Notice to Pay Rent or Quit shall also constitute the notice
required by this subparagraph.
(c) Except as otherwise provided in this Lease, the
failure by Lessee to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, other than
described in paragraph (b) above, where such failure shall continue for a
period of thirty (30) days after written notice thereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's noncompliance is such that
more than thirty (30) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commenced such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion. To the extent permitted by law, such thirty (30) day notice shall
constitute the sole and exclusive notice required to be given to Lessee under
applicable Unlawful Detainer statutes.
(d) (i) The making by Lessee of any general arrangement
or general assignment for the benefit of creditors; (ii) Lessee becomes a
"debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Lessee, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee's assets located at the Premises or
of Lessee's interest in this Lease, where possession is not restored to Lessee
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within
thirty (30) days. In the event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement
given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, was materially false.
13.2 Remedies. In the event of any such material default by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default:
(a) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease and the term hereof
shall terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover from
Lessee all damages incurred by Lessor by reason of Lessee's default including,
but not limited to, the cost of recovering possession of the Premises; expenses
of reletting, including necessary renovation and alteration of the Premises,
reasonable attorney's fees, and any real estate commission actually paid; the
worth at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent for the balance of the term after the time of
such award exceeds the amount of such rental loss for the same period that
Lessee proves could be reasonably avoided; that portion of the leasing
commission paid by Lessor pursuant to paragraph 15 applicable to the unexpired
term of this Lease.
(b) Maintain Lessee's right to possession in which case
this Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all
of Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other unpaid monetary obligations
of Lessee under the terms of this Lease shall bear interest from the date due
at the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless
Lessor fails to perform obligations required of Lessor within a reasonable
time, but in no event later than thirty (30) days after written notice by
Lessee to Lessor and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor's obligation
is such that more than thirty (30) days are required for performance then
Lessor shall not be in default if Lessor commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion. If Lessor has not provided Lessee with the name and address of the
holder of any first mortgage or Deed of Trust covering the Premises in writing,
Lessee shall have no obligation to notify same of any default by Lessor.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expenses or other
sums due hereunder will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Property. Accordingly, if any installment of Base
Rent, Operating Expenses, or any other sum due from Lessee shall not be
received by Lessor or Lessor's designee within ten (10) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a late charge equal to 6% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Lessor will incur by reason of late payment by Lessee. Acceptance of
such late charge by Lessor shall in no event constitute a waiver of Lessee's
default with respect to such overdue amount, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder. In the event that a
late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of any of the aforesaid monetary obligations of
Lessee, then Base Rent shall automatically become due and payable quarterly in
advance, rather than monthly,
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notwithstanding paragraph 4.1 or any other provision of this Lease to the
contrary. See Addendum Paragraph 14 for additional terms and conditions.
14. Condemnation. If the Premises or any portion thereof or the
Industrial Center are taken under the power of eminent domain, or sold under
the threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first
occurs. If more than ten percent of the floor area of the Premises, or more
than twenty-five percent of that portion of the Common Areas designated as
parking for the Industrial Center is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the premises remaining, except that the rent shall be reduced in the
proportion that the floor area of the Premises taken bears to the total floor
area of the Premises. No reduction of rent shall occur if the only area taken
is that which does not have the Premises located thereon. Any award for the
taking of all or any part of the Premises under the power of eminent domain or
any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
award for loss of or damage to Lessee's trade fixtures and removable personal
property. In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall pay any amount
in excess of such severance damages required to complete such repair.
15. Broker's Fee. See Addendum Paragraph 15 for additional terms and
conditions.
(a) Upon execution of this Lease by both parties, Lessor shall pay
to The Seeley Company in cooperation with Equities Group Licensed real estate
broker(s), a fee as set forth in a separate agreement between Lessor and said
broker(s), or in the event there is no separate agreement between Lessor and
said broker(s), the sum of $ (Per separate agreement) , for brokerage services
rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option, as
defined in paragraph 40.1 of this Lease, which is granted to Lessee under this
Lease, or any subsequently granted option which is substantially similar to an
Option granted to Lessee under this Lease, or if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or if Lessee remains in possession of the Premises after
the expiration of the term of this Lease after having failed to exercise an
Option, or if said broker(s) are the procuring cause of any other lease or sale
entered into between the parties pertaining to the Premises and/or any adjacent
property in which Lessor has an interest, then as to any of said transactions,
Lessor shall pay said broker(s) a fee in accordance with the schedule of said
broker(s) in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but
also on behalf of any person, corporation, association, or other entity having
an ownership interest in said real property or any part thereof, when such fee
is due hereunder. Any transferee of Lessor's interests in this Lease, whether
such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this paragraph 15. Said broker shall be a
third party beneficiary of the provisions of this paragraph 15.
16. Estoppel Certificate.
(a) Each party (as "responding party") shall at any time upon not
less than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises or of the
business of the requesting party.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.
(c) If Lessor desires to finance, refinance, or sell the Property,
or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three (3) years' financial statements of Lessee. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and
shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only
the owner or owners, at the time in questions, of the fee title or a lessee's
interest in a ground lease of the Industrial Center, and except as expressly
provided in paragraph 15, in the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then the
grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall,
subject as aforesaid, be binding on Lessor's successors and assigns, only
during their respective periods of ownership. Lessor shall remain fully liable
to Lessee for Lessor's acts (or omissions) committed while Lessor.
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18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at the
maximum rate then allowable by law from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence with respect to the
obligations to be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under
the terms of this Lease, including but not limited to Lessee's Share of
Operating Expenses and insurance and tax expenses payable shall be deemed to be
rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein. No
prior or contemporaneous agreement or understanding pertaining to any such
matter shall be effective. This Lease may be modified in writing only, signed
by the parties in interest at the time of the modification. Except as
otherwise stated in this Lease, Lessee hereby acknowledges that neither the
real estate broker listed in paragraph 15 hereof nor any cooperating broker on
this transaction nor the Lessor or any employee or agents of any of said
persons has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of the Premises or the Property and
Lessee acknowledges that Lessee assumes all responsibility regarding the
Occupational Safety Health Act, the legal use and adaptability of the Premises
and the compliance thereof with all applicable laws and regulations in effect
during the term of this Lease except as otherwise specifically stated in this
Lease.
23. Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and
if given personally or by mail, shall be deemed sufficiently given if addressed
to Lessee or to Lessor at the address noted below the signature of the
respective parties, as the case may be. Either party may by notice to the
other specify a different address for notice purposes except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for notice purposes. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any
provision hereof, other than the failure of Lessee to pay the particular rent
so accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rent.
25. See Addendum Paragraph 24 for additional terms and conditions.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions
of this Lease pertaining to the obligations of Lessee, but all Options, if any,
granted under the terms of this Lease shall be deemed terminated and be of no
further effect during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State where the Industrial Center is located and any litigation
concerning this Lease between the parties hereto shall be initiated in the
county in which the Industrial Center is located.
30. Subordination.
(a) This Lease and any Option granted hereby, at Lessor's option,
shall be subordinate to any ground lease, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Industrial Center
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease and any
Options granted hereby prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Lessee, this Lease and
such Options shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease or such Options are dated prior or subsequent to the
date of said mortgage, deed of trust or ground lease or the date of recording
thereof.
(b) Lessee agrees to execute any documents required to effectuate
an attornment, a subordination or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease, as the
case may be. Lessee's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Lessee hereunder
without further notice to Lessee or, at Lessor's option. Lessor shall execute
such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does
hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. Attorney's Fees. If either party or the broker(s) named herein bring
an action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled to
his reasonable
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attorney's fees to be paid by the losing party as fixed by the court. The
provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. Lessor's Access. Upon 24-hour telephone notice, Lessor and Lessor's
agents shall have the right to enter the Premises at reasonable times for the
purpose of inspecting the same, showing the same to prospective purchasers,
lenders, or lessees, and making such alterations, repairs, improvements or
additions to the Premises or to the building of which they are part as Lessor
may deem necessary or desirable. Lessor may at any time place on or about the
Premises or the Building any ordinary "For Sale" signs and Lessor may at any
time during the last 120 days of the term hereof place on or about the Premises
any ordinary "For Lease" signs. All activities of Lessor pursuant to this
paragraph shall be without abatement of rent, nor shall Lessor have any
liability to Lessee for the same. Lessor shall use its best efforts to not
interfere with Lessee's operation.
33. Auctions. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises or the
Common Areas without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises or the
Industrial Center without Lessor's prior written consent. Under no
circumstances shall Lessee place a sign on any roof of the Industrial Center.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent
shall not be unreasonably withheld or delayed.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Property.
39. Options.
39.1 Definition. As used in this paragraph the word "Option" has
the following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other space within the Industrial Center or other
property of Lessor or the right of first offer to lease other space within the
Industrial Center or other property of Lessor; (3) the right or option to
purchase the Premises or the Industrial Center, or the right of first refusal
to purchase the Premises or the Industrial Center, or the right of first offer
to purchase the Premises or the Industrial Center, or the right or option to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor or the right of first offer to purchase other property
of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this Lease
is personal to the original Lessee and may be exercised only by the original
Lessee while occupying the Premises who does so without the intent of
thereafter assigning this Lease or subletting the Premises or any portion
thereof, and may not be exercised or be assigned, voluntarily and
involuntarily, by or to any person or entity other than Lessee, provided,
however, that an Option may be exercised by or assigned to any Lessee Affiliate
as defined in paragraph 12.1 of this Lease. The Options, if any, herein
granted to Lessee are not assignable separate and apart from this Lease, nor
may any Option be separated from this Lease in any manner, either by
reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options. See Addendum Paragraph 39.4(a)
for additional provisions.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i)
during the time commencing from the date Lessor gives to Lessee a notice of
default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the
noncompliance alleged in said notice of default is cured, or (ii) during the
period of time commencing on the date after a monetary obligation to Lessor is
due from Lessee and unpaid (without any necessity for notice thereof to Lessee)
and continuing until the obligation is paid, or (iii) at any time after an
event of default described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without
any necessity of Lessor to give notice of such default to Lessee), nor (iv) in
the event that Lessor has given to Lessee three or more notices of default
under paragraph 13.1(b), or paragraph 13.1(c), whether or not the defaults are
cured, during the 12 month period of time immediately prior to the time that
Lessee attempts to exercise the subject Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise
an Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the term
of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessee fails to commence to cure a default specified in paragraph 13.1(c)
within thirty (30) days after the date that Lessor gives notice to Lessee of
such default and/or Lessee fails thereafter to diligently prosecute said cure
to completion, or (iii) Lessee commits a default described in paragraph
13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give
12
Initials: /s/ WRP
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/s/ ASB
<PAGE> 13
notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more
notices of default under paragraph 13.1(b), or paragraph 13.1(c), whether or
not the defaults are cured.
40. Security Measures. Lessee hereby acknowledges that Lessor shall have
no obligation whatsoever to provide guard service or other security measures
for the benefit of the Premises or the Industrial Center. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole
option, from providing security protection for the Industrial Center or any
part thereof, in which event the cost thereof shall be included within the
definition of Operating Expenses, as set forth in paragraph 4.2(b).
41. Easements. Lessor reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so
long as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure to
do so shall constitute a material default of this Lease by Lessee without the
need for further notice to Lessee.
42. Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said party
to pay such sum or any part thereof, said party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
43. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. Conflict. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions, if any, shall be controlled by
the typewritten or handwritten provisions.
45. Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease. This Lease
shall become binding upon Lessor and Lessee only when fully executed by Lessor
and Lessee.
46. Addendum. Attached hereto is an addendum or addenda containing
paragraphs 4.2(a) through 59 which constitute a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
THIS LEASE HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR
APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO: THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL
AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
<TABLE>
<S> <C>
LESSOR LESSEE
Borstein Enterprises, a California corporation AMSCO Sterile Recoveries, Inc., a Delaware
corporation
By /s/ Alan S. Borstein By /s/ Wayne R. Peterson
------------------------------------------- --------------------------------------
Alan S. Borstein, President Wayne R. Peterson, Asst. Secretary
Executed on 4/16/92
--------------
ADDRESS FOR NOTICES AND RENT ADDRESS
2601 Ocean Park Boulevard 28100 U.S. Highway 19 North
Suite 208 Suite 201
Santa Monica, CA 90405 Clearwater, FL 34621
</TABLE>
<PAGE> 14
ADDENDUM TO STANDARD INDUSTRIAL LEASE
(Buildings 1, 4, 5 & 6)
LESSOR: BORSTEIN ENTERPRISES, A CALIFORNIA CORPORATION
LESSEE: AMSCO STERILE RECOVERIES, INC., A DELAWARE CORPORATION
DATED: February 24, 1992
4.2(a) "Lessee's Share" is defined, for purposes of this Lease, as
that percentage which at any given time the square footage of
the Premises bears to the square footage of the total leasable
space in the Industrial Center at such time.
4.2(b) (Continued) "Operating Expenses" shall include, in addition to the
other items set forth in this Lease, (i) exterior painting of
the Building.
6.2(b) (Continued) Without limiting the generality of Paragraph 6.2(b) of this
Lease, Lessee assumes all responsibility regarding the
Occupational Safety Health Act and all responsibility
regarding the legal use of, the adaptability of, and the
compliance of the Premises to all applicable laws and
regulations enforced during the term of this Lease.
6.3(c) Unless otherwise specified by Lessor, the ceilings of the
Premises and any other part of the Building are not suitable
for storage of any kind. Lessee shall not use the ceilings or
the roof of the Premises or the building for storage or any
other activity whatsoever.
7.1 (Continued) Lessee expressly waives the benefit of any statute now or
hereafter in effect which would otherwise afford Lessee the
right to make repairs to the Premises at Lessor's expense,
including without limitation, Sections 1941 and 1942 of the
California Civil Code, or to terminate this Lease because of
Lessor's failure to keep the Premises in good order, condition
and repair. Lessee shall not be responsible for the payment
of or reimbursement to Landlord of the costs of structural
repairs to the Building.
8.1 (Continued) If Lessee shall fail to procure and maintain said liability
insurance, Lessor may, but shall not be required to, procure
and maintain the same, but at the expense of Lessee. No more
frequently than each three (3) years, if, in the reasonable
opinion of Lessor, the amount of liability insurance required
hereunder is not adequate, Lessee shall increase said
insurance coverage as required by Lessor. The failure of
Lessor to require any additional insurance coverage shall not
be deemed to relieve Lessee from any obligations under this
Lease.
8.3 (Continued) Lessee shall at its own expense, maintain standard fire and
extended coverage insurance and such other insurance as
is deemed appropriate by Lessor upon any leasehold
improvements, alterations or additions thereto constructed by
Lessee. The obligations of Lessor to carry any insurance as
provided in this Lease may be brought within the coverage of a
so-called blanket policy or policies of insurance carried and
maintained by Lessor covering the Premises and other property.
If Lessor's insurance coverage has a deductible clause, the
deductible amount shall not exceed $1,000 per occurrence, and
Lessee shall be liable for such deductible amount.
8.9 Lessee's Actions. Lessee shall not do or permit to be done
anything which shall invalidate any of the insurance policies
referred to in Paragraphs 8.1, 8.2 or 8.3 of this Lease,
provided Lessee has been provided copies of said insurance
policies.
9.8 Uninsured Losses. Notwithstanding any other provision of this
Lease to the contrary, in the event of any damage or
destruction to the Premises, the Building or the Industrial
Center which is uninsured or for which the cost of repair or
replacement exceeds the amount of insurance proceeds actually
received by Lessor, Lessor shall have no obligation to repair
or replace any such damage or destruction and may, at its
option, elect to terminate this Lease upon written notice to
Lessee within thirty (30) days of the occurrence of such
damage or destruction.
9.7 Waiver. Lessee hereby waives the provisions of California
Civil Code Sections 1932(2) and 1933(4) which relate to
termination of Leases when the thing leased is destroyed, and
agrees that such event shall be governed by the terms of this
Lease.
12.1 Less shall not voluntarily or by operation of law, assign,
transfer, mortgage, sublet or otherwise transfer or encumber
all or any part of Lessee's interest in this Lease or in the
Premises without Lessor's prior written consent, which consent
shall not be unreasonably withheld or delayed. Any attempted
assignment, transfer, mortgage, encumbrance or subletting
without such consent shall be void, and shall constitute a
breach of this Lease without the need for notice to Lessee
under Paragraph 13.1. In the event Lessor consents to any
such assignment, transfer or subletting, Lessee shall pay to
Lessor, in addition to all other amounts payable under this
Lease, fifty percent (50%) of the amount of any rentals or
other consideration payable by such assignee, transferee or
sublessee to Lessee in excess of the rentals payable by Lessee
to Lessor under this Lease.
Initials: /s/ WRP
---------
/s/ ASB
<PAGE> 15
21. (Continued) As used in this Lease, the terms "rent" and "rental" include
not only the total amount of the Base Rent, described in
Paragraph 4.1, but also all charges and expenses to be paid or
defrayed by Lessee under this Lease in consideration for the
use of the Premises and the Industrial Center, including
without limitation, taxes and assessments, utility charges,
insurance premiums, common area charges, maintenance expenses,
and all other charges equivalent to rent as contemplated by
California Civil Code Section 1951(a).
25. Lessee shall not record this Lease without Lessor's prior
written consent, and such recording without Lessor's consent
shall, at the option of Lessor, constitute a non-curable
default of Lessee hereunder.
26. Holding Over. During any hold-over period, the month to month
rent will be one hundred and fifty percent (150%) of the rent
due for the last month of the Lease Term.
48. Failure of Lessee to Pay Claims. Should Lessee fail to pay or
discharge or cause to be paid and discharged, at the time or
times called for in this Lease, any claim (other than bonded
claims referred to in Paragraph 7.3(c)), tax, assessment,
insurance premium or other lien or charge required to be paid
by Lessee under this lease, or any claim for damages arising
out of the repair, maintenance or use of the Premises, or to
satisfy any judgment rendered on any contested lien or claim,
then Lessor may, at its option but only after ten (10) days
written notice to Lessee, pay such claim, tax, assessment,
insurance premium, lien, or other charge, or settle or
discharge any action therefor, or satisfy any judgment
thereon. All costs, expenses and other sums incurred or paid
by Lessor in connection therewith shall be paid to Lessor by
Lessee upon demand. If Lessee desires, in good faith, to
contest any such lien or claim, and it so notifies Lessor of
its intention to do so and furnishes to Lessor a surety bond
in an amount equal to one and one-half (1-1/2) times the
amount of such contested lien or claim indemnifying Lessor
against liability for same, all within thirty (30) days after
such lien comes into existence or such claim is first made, as
the case may be, Lessee shall not be in default hereunder and
Lessor shall not satisfy such lien or claim until five (5)
days after the determination of the validity thereof.
49. Signage. Lessee may place a sign that has been approved by
the Landlord on the building in a position approved by
Landlord. Lessee agrees to remove the sign at the end of the
lease and restore the area to its original condition.
50. Tenant shall do everything necessary and proper in order to
comply with California Proposition 65 as it relates to its
operations in and its occupancy of the Premises. The Tenant
shall defend, indemnify and hold harmless the Landlord and its
real estate manager in the event that either or both are found
liable under Proposition 65 with respect to any act or
omission by Tenant, its agents, employees or subcontractors.
2
Initials: /s/ WRP
--------
/s/ ASB
<PAGE> 16
ADDENDUM TO STANDARD INDUSTRIAL LEASE--MULTI-TENANT
LESSOR: BORSTEIN ENTERPRISES, A CALIFORNIA CORPORATION
LESSEE: AMSCO STERILE RECOVERIES, INC., A DELAWARE CORPORATION
DATED: February 24, 1992
4.2(b) (Continued) Lessee shall have the right, at its sole cost and expense,
to audit Lessor's calculation of Lessee's Share of Operating
Expenses following the submittal of Lessor's annual expense
reconciliation each year. Such right to audit shall also
provide that if Lessee's audit reveals that Lessee has paid a
share of Operating Expenses in excess of the amount property
allocable to Lessee's use of the Premises, then Lessor shall
give Lessee a credit towards future payments of Operating
Expenses in the amount of Lessee's overpayment. In addition,
if Lessee's overpayment of Operating Expenses is in excess of
five percent (5%) of that properly allocated to Lessee, then
Lessor shall pay the costs of Lessee's audit.
6.1 USE: Lessee will use the Premises for the purpose of a
laundry, sterilization and hospital reprocessing facility.
Lessor acknowledges that Lessee will be handling, among other
things, soiled operating room linens and other materials from
hospitals, medical clinics, laboratories and other health
services related facilities. Lessor hereby consents to
Lessee's activities as herein described. Further, Lessor
hereby represents that the Premises is presently zoned MG and
MG-150.
7.2(c) Notwithstanding the terms and conditions of Paragraph 7.2(c)
in the body of the pre-printed lease form, on the last day of
the term hereof, or on any sooner termination, Lessee shall
remove all walls and foundations subdividing the storage and
manufacturing areas which it installs, except for the office
walls, and shall fill in all pits and remove all utility
installations back to the nearest disconnect. Lessee shall
leave the HVAC system and office power panel and distribution
system in place. Lessor and Lessee shall mutually agree which
walls are to be removed when Lessor approves the plans for
construction.
8.10 INDEMNITY - LESSOR: Lessor shall indemnify and hold harmless
Lessee from and against any and all claims arising from
Lessor's use of the Industrial Center, or from the conduct of
Lessor's business or from any activity, work or things done,
permitted or suffered by Lessor in or about the Premises or
elsewhere and shall further indemnify and hold harmless Lessee
from and against any and all claims arising from any breach or
default in the performance of any obligation on Lessor's part
to be performed under the terms of this Lease, or arising from
any act or omission of Lessor, or any of Lessor's agent's,
contractors, or employees, and from and against all costs,
reasonable attorney's fees, expenses and liabilities incurred
in the defense of any such claim or any action or proceeding
brought thereon; and in case any action or proceeding be
brought against Lessee by reason of any such claim, Lessor,
upon notice from Lessee, shall defend the same at Lessor's
expense by counsel reasonably satisfactory to Lessee and
Lessee shall cooperate with Lessor in such defense, except for
actions caused by Lessee's or other tenant's negligence or
misconduct.
9.2 Notwithstanding the terms and conditions of Paragraph 9.2 in
the body of the pre-printed lease form, Lessor shall notify
Lessee in writing within thirty (30) days following the date
of occurrence, of Lessor's intention to rebuild the Premises.
If Lessor elects not to rebuild the Premises, or if Lessor
fails to notify Lessee within said period, Lessee shall have
the right to rebuild the Premises and be reimbursed with and
to the extent of any proceeds which may be paid from any
insurance policy on the Premises.
10.6 REAL PROPERTY TAXES: Lessor shall have the primary right to
contest or otherwise appeal an assessment of real estate
taxes. However, if Lessor chooses not to appeal an assessment
of real estate taxes, and Lessee believes that the real estate
taxes assessed against the Premises or the Industrial Center
are excessive, Lessee shall have the right, in its own name,
and at its own expense, to appeal the assessment of real
estate taxes to the appropriate authorities. If Lessee is
successful in its appeal and a tax refund or abatement is
ordered, then Lessee shall receive its proportionate share of
the tax savings in the form of a credit towards future
assessments of real estate taxes.
14. CONDEMNATION: In the event of a condemnation or taking
pursuant to this Paragraph, Lessee shall be entitled to
appear, claim, prove and receive in the condemnation
proceeding such amounts as may be separately awarded to Lessee
for removal expenses, business dislocation damages and moving
expenses. In addition, Lessee shall be entitled to receive
from the condemnation award the value of Lessee's trade
fixtures and Lessee's improvements to the extent paid for by
Lessee. In for Lessee's trade fixtures and Lessee's
improvements to the extent paid for by Lessee. In the event
Lessee makes a claim against the condemning authority as
described herein, Lessor agrees to cooperate with Lessee and
assist Lessee in its claim by making all of Lessor's records
with respect to Lessee's use of the Leased Premises and
Lessee's improvements available to Lessee.
15. BROKER'S FEES: Except as set forth in Paragraph 15(a) each
party hereto represents that no agent or finder negotiated or
arranged this Lease, and that no fees or commissions are due
anyone for the procurement hereof, and each party agrees to
indemnify and hold the other harmless from and against any
claims, judgments, suits, costs, reasonable attorney's fees
and other expenses which the party so indemnified may incur by
reason of claims by any person, firm or corporation claiming
any brokerage
Initials: /s/ WRP
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/s/ ASB
<PAGE> 17
commissions, finder's fees or similar compensation based upon
any alleged negotiations or deadlines with such indemnifying
party which are contrary to the foregoing representation.
24. WAIVERS: No waiver by Lessee or any provision hereof shall be
deemed a waiver of any other provision hereof or of any
subsequent breach by Lessor of the same or any other
provision. Lessee's consent to, or approval of, any act shall
not be deemed to render unnecessary the obtaining of Lessee's
consent to or approval of any subsequent act by Lessee. The
payment of rent hereunder by Lessee shall not be a waiver of
any preceding breach by Lessor of any provision hereof,
regardless of Lessor's knowledge of such preceding breach at
the time of acceptance of such rent.
39.4(a) The reference to Paragraph 13.1(d) in this Paragraph 39.4(a) shall
apply only if Lessee and the Bankruptcy Court have not ratified the
Lease and abandoned the Premises.
47. LESSOR'S DETERMINATION CONCLUSIVE: If Lessee shall engage in
an activity which will create an extraordinary common area
expense, Lessor shall give written notice to Lessee to correct
such activity and Lessee shall cease such activity. If Lessee
does not or cannot cease such activity, Lessor shall have the
right to, in Lessor's reasonable determination, in good faith,
to charge Lessee an additional amount for such additional
common area expense.
51. BASE RENT: The monthly base NNN rent shall be as follows:
<TABLE>
<CAPTION>
Month Monthly NNN Base Rent
----- ---------------------
<S> <C>
1 - 6 $ 0.00
7 - 36 8,811.36
37 - 66 9,722.88
67 - 96 10,938.24
97 - 126 12,153.60
</TABLE>
52. TENANT IMPROVEMENTS: Lessor, at Lessor's sole cost and
expense, shall complete or pay for the following improvements,
as specified below:
(a) Increase the capacity of the existing electrical
power panel to 1,200 amps at 277/480 volts.
(b) Pay the fixed fee charged by the Long Beach Water
Department to install a two inch (2") water meter.
(c) Reimburse Lessee for Lessee's actual cost incurred to
install a two inch (2") water line from the water
meter installed in Paragraph 52(b) above, to the
inside face of the concrete building wall.
53. COMMENCEMENT OF THE LEASE: The initial term of this Lease
shall commence upon substantial completion of the Tenant
Improvement of Paragraph 52(a) above, and shall expire at 5:00
PM on the last day of the one hundred and twenty-sixth (126th)
month starting from said commencement date. Lessor and Lessee
shall promptly execute an amendment to this Lease confirming
the commencement and expiration of the initial term as soon as
the commencement date is determined.
54. LESSEE'S RIGHT TO CANCEL: Lessee shall have the right to
cancel the Lease effective at the end of the sixty-sixth
(66th) month by giving Lessor written notice no later than
5:00 PM on the last day of the sixtieth (60th) month of the
Lease along with payment of an amount equal to the one-half
(1/2) of the cost of the tenant improvements specified in
Paragraph 52(a), (b) and (c) above; plus $26,434.08 which is
one-half (1/2) of the base rent abatement that was granted at
the beginning of the lease, plus one- half (1/2) of the real
estate fee that was paid.
55. RENT ABATEMENT: Paragraph 51 provides that no base rent shall
be due or payable for the first six (6) months of the Lease
(the "Abatement Months", collectively). The entire base rent
otherwise due and payable for the Abatement Months shall
become immediately due and payable upon the occurrence of an
event of default by Lessee under this Lease if said default is
not cured within the time permitted under the terms of this
Lease.
56. PAYMENT OF PROPERTY TAXES: As provided in Paragraphs 4.2 and
10.1, Lessee shall reimburse Lessor for Lessee's share of the
real property tax and any increase thereof, except for an
increase which results from the sale or transfer of the
Premises or the industrial park which they are a part thereof
during the initial term of the Lease.
Initials: /s/ WRP
---------
/s/ ASB
2
<PAGE> 18
ADDENDUM TO
STANDARD LEASE
DATED February 24, 1992
BY AND BETWEEN Borstein Enterprises and AMSCO Sterile Recoveries, Inc.
57 First OPTION TO EXTEND
A. Lessor hereby grants to Lessee the option to extend the term of this
Lease for a five (5) year period commencing when the prior term expires upon
each and all of the following terms and conditions:
(i) Lessee gives to Lessor, and Lessor actually receives, on a
date which is prior to the date that the option period would commence (if
exercised) by at least six (6) and not more than nine (9) months, a written
notice of the exercise of the option to extend this lease for said additional
term, time being of the essence. If said notification of the exercise of said
option is not so given and received, this option shall automatically expire;
(ii) The provisions of paragraph 39, including the provision
relating to default of Lessee set forth in paragraph 39.4 of this Lease are
conditions of this Option;
(iii) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply;
(iv) The monthly rent for each month of the option period shall be
calculated as follows:
Provided that Lessee shall have exercised its option to extend
the term of this Lease in accordance with the provisions set
forth in this Option to Extend, the minimum monthly rental
shall be adjusted effective the first month of the Option
Term, to a sum equal to ninety-five percent (95%) of the then
fair rental value of the leased premises. As used herein, the
term "fair rental value" is defined to mean the monthly rental
on a NNN basis for comparable buildings then being offered for
lease or leased within the six months preceding the adjustment
date in the same geographical area with similar interior
improvements and uses as the leased premises.
Lessor shall provide Lessee with such "fair rental value"
within thirty (30) days of Lessor's receipt of Lessee's
exercise of Option. Lessee shall have thirty (30) days within
which to accept Lessor's determination of fair rental value.
If Lessee does not accept Lessor's determination of Fair
Rental Value, Fair Rental Value shall be determined by the
following appraisal procedure: Within ten (10) days after the
expiration of Lessee's thirty (30) day acceptance, Lessor and
Lessee shall each select a qualified licensed real estate
broker having at least ten (10) years experience in industrial
space in the county where the Premises are located. Each of
the two brokers so selected shall, as soon thereafter as
practicable, but, in no event, later than fifteen (15) days
after such independent brokers selection submit its good faith
estimate of the Fair Rental Value for a five (5) year lease of
the Premises. If the higher of said estimates is not more
than one hundred five percent (105%) of the lower of said
estimates, the Fair Rental Value shall be the average of the
submitted values. Otherwise, the two selected brokers shall
within five (5) days select a third mutually acceptable
independent broker, meeting the above criteria, who shall
review the estimates submitted by the two originally selected
brokers, and, as soon thereafter as practicable, but, in no
event, later than fifteen (15) days after such independent
brokers selection select one of the two estimates as the more
accurate appraisal of the Fair Rental Value. The estimate so
selected by the mutually appointed broker shall be the Fair
Rental Value. The decision so rendered shall be binding on
Lessor and Lessee.
Initials: /s/ WRP
--------
/s/ ASB
OPTION TO EXTEND
<PAGE> 19
ADDENDUM TO
STANDARD LEASE
DATED February 24, 1992
BY AND BETWEEN Borstein Enterprises and AMSCO Sterile Recoveries, Inc.
58 Second OPTION TO EXTEND
A. Lessor hereby grants to Lessee the option to extend the term of this
Lease for a five (5) year period commencing when the prior term expires upon
each and all of the following terms and conditions:
(i) Lessee gives to Lessor, and Lessor actually receives, on a
date which is prior to the date that the option period would commence (if
exercised) by at least six (6) and not more than nine (9) months, a written
notice of the exercise of the option to extend this lease for said additional
term, time being of the essence. If said notification of the exercise of said
option is not so given and received, this option shall automatically expire;
(ii) The provisions of paragraph 39, including the provision
relating to default of Lessee set forth in paragraph 39.4 of this Lease are
conditions of this Option;
(iii) All of the terms and conditions of this Lease except where
specifically modified by this option shall apply;
(iv) The monthly rent for each month of the option period shall be
calculated as follows:
Provided that Lessee shall have exercised its option to extend
the term of this Lease in accordance with the provisions set
forth in this Option to Extend, the minimum monthly rental
shall be adjusted effective the first month of the Option
Term, to a sum equal to ninety-three percent (93%) of the then
fair rental value of the leased premises. As used herein, the
term "fair rental value" is defined to mean the monthly rental
on a NNN basis for comparable buildings then being offered for
lease or leased within the six (6) months preceding the
adjustment date in the same geographical area with similar
interior improvements and uses as the leased premises.
Lessor shall provide Lessee with such "fair rental value"
within thirty (30) days of Lessor's receipt of Lessee's
exercise of Option. Lessee shall have thirty (30) days within
which to accept Lessor's determination of fair rental value.
If Lessee does not accept Lessor's determination of Fair
Rental Value, Fair Rental Value shall be determined by the
following appraisal procedure: Within ten (10) days after the
expiration of Lessee's thirty (30) day acceptance, Lessor and
Lessee shall each select a qualified licensed real estate
broker having at least ten (10) years experience in industrial
space in the county where the Premises are located. Each of
the two brokers so selected shall, as soon thereafter as
practicable, but, in no event, later than fifteen (15) days
after such independent brokers selection submit its good faith
estimate of the Fair Rental Value for a five (5) year lease of
the Premises. If the higher of said estimates is not more
than one hundred five percent (105%) of the lower of said
estimates, the Fair Rental Value shall be the average of the
submitted values. Otherwise, the two selected brokers shall
within five (5) days select a third mutually acceptable
independent broker, meeting the above criteria, who shall
review the estimates submitted by the two originally selected
brokers, and, as soon thereafter as practicable, but, in no
event, later than fifteen (15) days after such independent
brokers selection select one of the two estimates as the more
accurate appraisal of the Fair Rental Value. The estimate so
selected by the mutually appointed broker shall be the Fair
Rental Value. The decision so rendered shall be binding on
Lessor and Lessee.
Initials: /s/ WRP
---------
/s/ ASB
OPTION TO EXTEND
<PAGE> 20
ADDENDUM TO
STANDARD LEASE
DATED February 24, 1992
BY AND BETWEEN Borstein Enterprises and AMSCO Sterile Recoveries, Inc.
59 RENT ESCALATIONS
(a) On the first (1st) day of the thirty-first (31st) month of the
first (1st) and second (2nd) option periods (if said options are exercised),
the monthly rent payable under paragraph 4 of the attached Lease shall be
adjusted by the increase, if any, from the date the Option commenced, in the
Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department
of Labor for Urban Wage Earners and Clerical Workers, Los Angeles-Long
Beach-Anaheim, California (1967 = 100), "All Items", herein referred to as
"C.P.I."
(b) The monthly rent payable in accordance with paragraph (a) of
this Addendum shall be calculated as follows: the rent payable for the first
month of the term of the respective option period, shall be multiplied by a
fraction the numerator of which shall be the C.P.I. of the calendar month
during which the adjustment is to take effect, and the denominator of which
shall be the C.P.I. for the calendar month in which the respective option
period commences. The sum so calculated shall constitute the new monthly rent
hereunder, but in no event, shall such new monthly rent be less than the rent
payable for the month immediately preceding the date for rent adjustment.
(c) Pending receipt of the required C.P.I. and determination of
the actual adjustment, Lessee shall pay an estimated adjusted rental, as
reasonably determined by Lessor by reference to the then available C.P.I.
information. Upon notification of the actual adjustment after publication of
the required C.P.I., any overpayment shall be credited against the next
installment of rent due, and any underpayment shall be immediately due and
payable by Lessee. Lessor's failure to request payment of an estimated or
actual rent adjustment shall not constitute a waiver of the right to any
adjustment provided for in the Lease or this addendum.
(d) In the event the compilation and/or publication of the C.P.I.
shall be transferred to any other governmental department or bureau or agency
or shall be discontinued, then the index most nearly the same as the C.P.I.
shall be used to make such calculation. In the event that Lessor and Lessee
cannot agree on such alternative index, then the matter shall be submitted for
decision to the American Arbitration Association in accordance with the then
rules of said association and the decision of the arbitrators shall be binding
upon the parties. The cost of said Arbitrators shall be paid equally by Lessor
and Lessee.
Initials: /s/ WRP
---------
/s/ ASB
---------
RENT ESCALATIONS
<PAGE> 21
"EXHIBIT A"
Artesia Business Centre - Summary
<TABLE>
<CAPTION>
BUILDING
NO. ADDRESS SIZE OFFICES
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 2220 E. Artesia Blvd. 75,444 square ft. 3,580 sq. ft.
1A 2210 E. Artesia Blvd. 42,426 square ft. 1,790 sq. ft.
1B 2200 E. Artesia Blvd. 33,018 sq. ft. 1,790 sq. ft.
2 2300-2370 E. Artesia Blvd. 29,092 sq. ft. varies per unit
(units from 3,326 sq. ft.)
3 2380-2388 E. Artesia Blvd. 26,563 sq. ft. varies per unit
(units from 5,050 sq. ft.)
4B 2230 E. Artesia Blvd. 21,087 sq. ft. 901 sq. ft.
5 Phase 2 - 30,384 sq. ft. to be determined
2240-2250 E. Artesia Blvd.
6 Phase 2 - 54,870 sq. ft. to be determined
2392-2396 E. Artesia Blvd.
</TABLE>
<PAGE> 22
LONG BEACH FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts
the foregoing assignment and agrees to assume, perform and be bound by all of
the duties, obligations and liabilities of Assignor under the Lease, arising on
and after the date of this instrument for the remainder of the term of the
Lease and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
------------------------------------
/s/ Kathleen Clover By: Wm J. Rieflin
- ------------------------------------ ---------------------------
Print Name: Kathleen Clover Its: Secretary
------------------------ ---------------------------
- ------------------------------------
Print Name:
------------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
------------------------------------
/s/ Kathleen Clover By: J. T. Boosales
- ------------------------------------ ----------------------------
Print Name: Kathleen Clover Its: E.V.P.
------------------------ ----------------------------
2
<PAGE> 24
EXHIBIT A
Long Beach facility, Long Beach, California.
Standard Industrial Lease - Multi-Tenant (American Industrial Real
Estate Association) dated February 24, 1992 between Borstein
Enterprises as Lessor and AMSCO Sterile Recoveries, Inc. as Lessee.
<PAGE> 1
EXHIBIT 10.21
LEASE
BETWEEN
INDUSTRIAL DEVELOPMENT ASSOCIATES
AND
AMSCO STERILE RECOVERIES, INC.
CAROLINA CENTRAL INDUSTRIAL CENTER
MEBANE, NORTH CAROLINA
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
Premises and Construction
-------------------------
Section 1.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Work to Be Performed by Landlord at Landlord's Expense . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Work To Be Performed by Tenant at its Expense with
Landlord's Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Lease Term
----------
Section 2.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Rent
----
Section 3.1 Annual Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.3 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.5 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
Occupancy
---------
Section 4.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.2 Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.4 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V
Transfers
---------
Section 5.1 Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI
Parking
-------
Section 6.1 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII
Maintenance, Alterations and Additional Space
---------------------------------------------
Section 7.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.2 Common Area Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.3 Alterations by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII
Surrender of Leased-Promises
----------------------------
Section 8.1 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.2 Tenant Equipment Excepted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IX
Mechanic's Liens
----------------
Section 9.1 Mechanic's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE X
Insurance and Indemnity
-----------------------
Section 10.1 Casualty Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10.3 Public Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10.4 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XI
Eminent Domain
--------------
Section 11.1 Total Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11.2 Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 11.4 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE XII
Damage and Destruction
----------------------
Section 12.1 Restoration of Damaged or Destroyed Leased
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 12.2 No Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XIII
Default by Tenant
-----------------
Section 13.1 Tenant's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 13.2 Remedies Not Exclusive; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 13.3 Cure by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 13.4 Cure by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XIV
Bankruptcy
----------
Section 14.1 Effect of Bankruptcy or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XV
----------
Miscellaneous
-------------
Section 15.1 Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 15.2. Subordination, Non-disturbance and Attornment Agreement . . . . . . . . . . . . . . . . . . . . . 14
Section 15.3 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 15.4 Right to Enter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.5 Laws of North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.9 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.11 Assignment of Landlord's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.12 Transfer by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 15.13 Limitation of Execution against Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.14 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.15 Contingency as to Termination of Prior Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XVI
Miscellaneous
-------------
Section 16.1 Liability for Brokerage or Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE OF EXHIBITS
Exhibit A Demised Plan of the Leased Premises
Exhibit 8 Landlord's Plans
Exhibit C Tenant's Plans
Exhibit D Site Plan
Exhibit E Rider
Exhibit F Parking
</TABLE>
<PAGE> 5
CAROLINA CENTRAL INDUSTRIAL CENTER
LEASE
THIS AGREEMENT OF LEASE is made as of this 22nd day of April, 1992, by
and between INDUSTRIAL DEVELOPMENT ASSOCIATES, a Maryland limited partnership,
having a place of business c/o Heritage Properties, Inc. at 515 Fairmount
Avenue, Towson, Maryland 21204 ("Landlord"), as Landlord, and AMSCO
STERILE RECOVERIES, INC., a Delaware corporation, having a place of business at
28100 U.S. Highway 19 North, Suite 201, Clearwater, Florida 34621 ("Tenant") as
Tenant.
ARTICLE I
Premises and Construction
1.1 Premises. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, land and improvements constituting a portion of Lot No. 6
as shown on the Consolidated Map of the Property of Industrial Development
Associates known as Carolina Central Industrial Center, Phase I, by Alley,
Williams, Carmen & King, Inc., Engineers, dated February 11, 1991 and recorded
in Plat Book 43, at page 51, Alamance County, N.C. Registry, and also shown on
drawing recorded in Plat Book 31, at page 30, Alamance County Registry, the
same being shown as 25,500 square feet of space in the building constructed on
said lot known as Building No. 6 (the "Building") as referred to on Exhibits
"A-I," and "A-2" and on Exhibit "B," together with and subject to an access
road to Maple Lane shown on the said consolidated map above referred to, which
access road may be used by all lawful occupants of Lots No. 7 and 8 or any
portion thereof, their employees, agents and invitees, this building being
known as 1416 Dogwood Way in the City of Mebane, Alamance County, North
Carolina, together with and subject to easements for utilities now serving the
premises and shown on said Consolidated Map (the "Leased Premises"). The
Landlord may, now or hereafter in its discretion, cause the portion of the
building leased hereunder and that not so leased to be assigned separate street
numbers. The rentable square feet has been determined as the area within
dimensions measured from the center of any interior demising wall to the
outside of any exterior wall constituting a wall of the demised portion of the
building. Demising wall will be constructed by Landlord upon execution of the
Lease (See Rider #1).
1.2 Work to be Performed by Landlord at Landlord's Expense.
Landlord, at its cost and expense, shall perform and complete such work on the
interior of Leased Premises as set forth in the plans and specifications
("Landlord's Plans") attached as Exhibit B to this Lease. During the period
Landlord is performing work on the Leased Premises pursuant to this section,
Tenant shall have the right to enter upon the Leased Premises to install its
fixtures, equipment and other property so long as Tenant does not unreasonably
interfere with Landlord in the performance of Landlord's work.
Landlord shall notify Tenant in writing as soon as the Leased Premises
are substantially completed in accordance with Plans and ready for Tenant to
take occupancy. Taking of possession
INITIAL: WRP/MJB
-------
<PAGE> 6
by Tenant shall be subject to punch list items for the Leased Premises
specified by the parties at the time Tenant takes possession.
1.3 Work to be Performed by Tenant at Tenant's Expense with
Landlord's Approval. Tenant at its cost and expense, shall perform and
complete such work on the interior of Leased Premises as set forth on the plans
and specifications ("Tenant's Plans") attached as Exhibit "C" to this Lease,
which Plans and Specifications supplied by Tenant are hereby approved in
writing by Landlord.
Tenant will be permitted to begin its work at the same time that the
Landlord commences its work. The Tenant will not interfere in any way with the
performance of Landlord's work.
ARTICLE II
Lease Term
2.1 Term. The term of this Lease shall begin on May 1, 1992, and
shall end on April 30, 2002, unless sooner terminated as herein provided in
this Lease, this period being called the "Term".
ARTICLE III
Rent
3.1 Annual Rent. Beginning on May 1, 1992, Tenant will have sixty
(60) days free rent. Tenant shall pay to Landlord annual rent in accordance
with the following schedule, without demand or setoff, in legal tender, and in
advance on the first day of each and every month in each year during the Term.
The annual rent shall be:
<TABLE>
<CAPTION>
Years Period Rent/SF Annual Rent Monthly Rent
----- ------ ------- ----------- ------------
<S> <C> <C> <C> <C>
5/1/92 - 6/30/92 Free Rent Free Rent Free Rent
1 7/1/92 - 4/30/93 $2.95 $62,687.40 $6,268.75
2 5/1/93 - 4/30/94 $2.95 $75,225.00 $6,268.75
3 5/1/94 - 4/30/95 $2.95 $75,225.00 $6,268.75
4 5/1/95 - 4/30/96 $2.95 $75,225.00 $6,268.75
5 5/1/96 - 4/30/97 $2.95 $75,225.00 $6,268.75
6 5/1/97 - 4/30/98 $3.54 $75,225.00 $6,268.75
7 5/1/98 - 4/30/99 $3.54 $90,270.00 $7,522.50
8 5/1/99 - 4/30/2000 $3.54 $90,270.00 $7,522.50
9 5/1/00 - 4/30/2001 $3.54 $90,270.00 $7,522.50
10 5/1/01 - 4/30/2002 $3.54 $90,270.00 $7,522.50
</TABLE>
2
INITIAL: WRP/MJB
-------
<PAGE> 7
Tenant shall make all rent payments to Landlord, Industrial Development
Associates, c/o Heritage Properties, Inc., 515 Fairmount Avenue, Towson,
Maryland 21204, or at such other address designated by Landlord in a written
notice to Tenant.
3.2 Impositions. Tenant's pro rata share of the annual real
estate taxes with respect to the Leased Premises and any special assessments
which may hereafter be imposed with respect to the Leased Premises, including,
without limitation, front foot or benefit assessments for sewerage, water or
paving and any rent or occupancy tax which may be imposed (collectively the
"Impositions"), for any tax year during the term of this Lease shall be paid by
the Tenant within thirty (30) days following receipt of a bill thereof from the
Landlord after such tax or assessment is due as part of additional rent for the
Leased Premises. Impositions shall be based on a square foot proportional
basis as to any assessed unit of which the Leased Premises are a part.
Unless otherwise required by Landlord, Tenant shall pay its share of
Impositions directly to the Landlord. Upon the request of Tenant, the Landlord
shall deliver copies of Imposition bills and notices to Tenant following their
receipt by Landlord.
Landlord shall have the primary right to contest or otherwise appeal
an assessment of real estate taxes. However, if Landlord chooses not to appeal
an assessment of real estate taxes, and Tenant believes that the real estate
taxes assessed against the Building and/or Premises are excessive, Tenant shall
have the right, in its own name, and at its own expense, to appeal the
assessment of real estate taxes to appropriate authorities. If Tenant is
successful in its appeal and a tax refund or abatement is ordered, then Tenant
shall receive its proportionate share of the tax savings in the form of a
credit towards future assessments of real estate taxes.
3.3 Utilities. Beginning on May 1, 1992, Tenant shall pay when
due, as part of additional rent, all charges for gas, electricity, sewer,
telephone, and all other utilities used or consumed at the Leased Premises.
Landlord shall provide that gas and electricity be separately metered for the
Leased Premises. Tenant shall pay all such bills directly to the billing
entity, and, upon request of Landlord, shall forward to Landlord a receipt or
other appropriate evidence that all such bills are paid (See Rider #2).
3.4 Expenses. Unless expressly otherwise provided in this Lease,
Tenant shall pay all costs, expenses and obligations of every kind relating to
the Leased Premises which may arise during the Term except, (a) municipal,
state, or federal income taxes or estate, succession, inheritance or gift
taxes, or corporation franchise taxes assessed against Landlord, (b) costs,
expenses, and obligations incurred by Landlord in connection with the sale or
mortgaging of the Leased Premises, and (c) costs of maintenance, repairs and
replacement for which Landlord is responsible under the terms of the Lease.
3.5 Security Deposit. Tenant shall pay to Landlord upon the
execution of this Lease the amount of Six Thousand Two Hundred Sixty-Eight
Dollars and Eighty Cents ($6,268.80) as a security deposit for the faithful
performance by Tenant of all the terms and conditions of this Lease. If any
3
INITIAL: WRP/MJB
-------
<PAGE> 8
amount owed by Tenant to Landlord as rent, additional rent or otherwise shall
be in arrears, Landlord may apply the security deposit toward such obligations
and Tenant agrees to re-establish the full amount of security deposit by paying
such additional amount along with the next monthly installment of rent.
Provided that the Tenant shall not be in default under this Lease, Landlord
shall return the security deposit to Tenant upon the termination of this Lease,
less the costs incurred by Landlord in correcting or satisfying any default by
Tenant under this Lease or in returning the Leased Premises to the same
condition as existed at the time Tenant took possession of the Leased Premises,
reasonable wear and tear and damage by fire or other casualty excepted. No
right or remedy available to Landlord under this Section shall be deemed to
preclude any other right or remedy to which Landlord might otherwise be
entitled by this Lease or under law.
ARTICLE IV
Occupancy
4.1 Quiet Enjoyment. Upon payment of the rent as required under
this Lease and performance by Tenant of all of the covenants and provisions of
this Lease to be performed by Tenant, Tenant shall have during the Lease Term
peaceful and quiet use and possession of the Leased Premises without hindrance
on the part of Landlord or others holding through or under the Landlord.
4.2 Use of Premises. Tenant may use the Leased Premises only for
the purpose of a laundry, sterilization and hospital reprocessing facility.
Landlord acknowledges that Tenant will be handling, among other things, soiled
operating room linens and other materials from hospitals, medical clinics,
laboratories and other health services related facilities. Landlord hereby
consents to Tenant's activities as herein described. Further, Landlord hereby
represents that the Leased Premises is zoned M-1, and that Tenant's use of the
Leased Premises is a permitted use within the M-1 zoning classification.
Notwithstanding anything to the contrary contained in this Lease, in the event
any statute, ordinance or regulation is imposed by an applicable governmental
authority upon Tenant that prohibits Tenant's intended use of the Premises as
set forth herein, Tenant shall be entitled to terminate this Lease, effective
as of date Tenant's use is no longer permitted by the applicable governmental
authorities.
4.3 Compliance with Law. Tenant shall at all times during the
Term, at its own expense, conform to and comply with all laws, regulations,
orders and other governmental requirements, or requirements of the Board of
Fire Underwriters, now or hereafter in force, affecting Tenant's use or
occupancy of all or any part of the Leased Premises. At all times during the
Term and for any period that Tenant enters the Leased Premises prior to the
commencement date to make its installations, Tenant indemnifies Landlord
against and agrees to save Landlord harmless from all expenses, liability, and
penalty, imposed or incurred for or because of any violation of any law,
regulation, order or other governmental requirement occasioned by the neglect
or omission, or willful act of Tenant, its customers, employees, visitors, or
invitees, independent contractors, or any person on the Leased
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Premises by permission or holding under Tenant unless such violation results
solely from an act or omission on the part of Landlord or an agent or employee
of Landlord. Following notice to Landlord, Tenant, by appropriate proceedings
conducted with due diligence at Tenant's expense in Tenant's name, may contest
in good faith the validity or enforcement of any applicable governmental
requirement provided that Landlord is not subjected to any fine or penalty.
4.4 Restrictive Covenants. At all times during the Term, Tenant
shall comply with, perform, and be bound by, all the terms, provisions,
conditions, restrictions, and covenants set forth in the covenants executed by
Industrial Development Associates, dated February 11, 1991, covering Carolina
Central Industrial Center, Phase I, filed for record March 7, 1991, and
recorded in Book 716, at page 613, Alamance County Registry. The Landlord,
having caused the Building and other improvements on the Leased Premises to be
constructed, acknowledges that the Leased Premises comply with the said
Restrictive Covenants and that the Tenant's intended use of the Leased
Premises, as stated in Section 4.2, is not a violation thereof.
ARTICLE V
Transfers
5.1 Subletting. Tenant shall not have the right to sublet the
Leased Premises, or any portion thereof, or to assign Tenant's interest in this
Lease, or any portion thereof, without the prior consent of Landlord, which
consent shall not be unreasonably withheld. Subletting or assignment shall not
relieve Tenant of its obligations to Landlord under this Lease. In the event
that the amount of the rent to be paid to the Tenant by any assignee or
sublessee is greater than the rent required to be paid by the Tenant to the
Landlord pursuant to this Lease, Tenant shall pay to Landlord any such excess
as is received by Tenant from such assignee or sublessee. Tenant shall not
have the right to sublet the Leased Premises at a rental rate less than the
rate stated in this Lease.
ARTICLE VI
Parking
6.1 Parking. Subject to such reasonable rules, regulations, or
conditions as Landlord may impose, Tenant shall be entitled to the use of
automobile parking areas, driveways, access roads, footways, and loading
facilities as shown on the site plan attached as Exhibit "F".
ARTICLE VII
Maintenance and Alterations
7.1 Maintenance and Repair. Tenant at its sole cost and expense,
shall perform all maintenance of an ordinary and recurring nature necessary to
maintain and keep in an orderly condition and in a good state of repair the
Leased Premises, including, but not by way of limitation, all interior walls,
windows, plumbing and sewerage facilities, air conditioning system, heating
system, electrical
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facility and equipment, exterior lighting on the building, pro-rata share of
the roof, and all other fixtures, equipment and appliances of every nature,
reasonable use and wear and fire and other casualty excepted (pro-rata share of
the roof shall, for the purpose of this section, mean the total rentable square
feet in the building divided into the rentable square feet leased to the Tenant
as specified in Section 1.1 hereof). The roof is a standing seam metal roof
supported by beams, bar joists and columns. It is understood between Landlord
and Tenant that Landlord will be responsible for repairs for the structural
portion of the roof which consists of the beams, bar joists and columns, and
for any replacement occasioned by casualty, destruction or obsolescence except
if the need for such repair or replacement is directly and solely caused by the
act or omission of Tenant and/or agent and/or employee of Tenant. Tenant will
be responsible for the repairs of the portion of the roof which consists of
standing seam metal roofing and the connecting functions thereof. Tenant shall
provide Landlord with evidence that Tenant has obtained quarterly inspections
and servicing by a licensed contractor for the heating, ventilation and air
conditioning systems servicing the Tenant's space in the building. The cost of
maintenance and repairs shall include all costs allocable to such maintenance
and repair in accordance with generally accepted accounting principles and the
terms hereof. Landlord shall maintain in good and presentable repair and
condition the structural parts of the Building and cause to be maintained the
common areas of the Industrial Center of which the Leased Premises are a part
as referred to in Section 7.2 of this Lease. Landlord will obtain
documentation on the condition of the roof from a licensed contractor before
Tenant installs any of its equipment. Tenant may repair and credit upon rent
any repairs to the Leased Premises which are a responsibility of the Landlord
which have not been made within sixty (60) days after written notice by the
Tenant to the Landlord calling attention to the need for such repairs, or
within twenty-four (24) hours after actual notice to the Landlord by the Tenant
in the event of an emergency. Except as expressly provided in this Lease,
Landlord shall not be called upon or obligated to make or pay any repairs,
replacements, restorations, improvements, alterations or additions whatsoever
in or about the Leased Premises (See Rider #3).
7.2 Common Area Maintenance. During the free rent period and for
each year during the Term and all renewal periods, Tenant shall pay as
additional rent upon receipt of a bill therefor from Landlord, a common area
maintenance charge representing Tenant's proportionate share of the cost to
Landlord of operating, maintaining, repairing and replacing the roads and
parking areas, street lighting, and exterior grounds in and around the Property
of which the Leased Premises are a part. Such charge shall be for repair of
the parking areas and for keeping them clear of snow, debris, and other rubbish
and for maintenance of all exterior grounds, grass, landscaping and related
areas. Tenant's proportionate share shall be the amount determined by
multiplying the total annual expense to the Landlord for so maintaining the
common areas by a fraction, the numerator of which is 25,500, representing the
number of square feet of the Leased Premises, and the denominator of which
shall be the sum of the floor area of the other buildings on the Property
(i.e., 319,597 SF) of which the Leased Premises are a part. The cost of
maintenance shall include all costs and expenses of operating,
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maintaining, repairing and replacing such areas allocable thereto in accordance
with generally accepted accounting principles.
7.3 Alterations by Tenant. Tenant, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed after submission of plans for such, shall not make any interior
alterations, structural alterations, changes to the exterior appearance of the
Leased Premises, additions, or other improvements to the Leased Premises,
except for maintenance and repair required of Tenant.
ARTICLE VIII
Surrender of Leased Premises
8.1 Surrender. Upon termination of the Term, or any earlier
termination of this Lease, Tenant shall surrender to Landlord the Leased
Premises, including all alterations, improvements and other additions, in good
order and repair, reasonable wear and tear and damage by fire or other casualty
excepted.
8.2 Tenant Equipment Excepted. Tenant shall be entitled to (or,
at Landlord's request, must) remove from the Leased Premises Tenant's office,
trade and manufacturing fixtures, furniture, equipment and signs, which Tenant
has installed on the Leased Premises prior to or during the Term at the cost of
Tenant. Plumbing, heating, ventilation, air-conditioning systems shall, upon
termination of the Lease, remain on the Leased Premises and become the property
of the Landlord. Tenant shall at its own cost and expense repair any and all
damage to the Leased Premises resulting from or caused by such removal, and
shall restore the Leased Premises to good order and condition, reasonable wear
and tear excepted.
ARTICLE IX
Mechanic's Liens
9.1 Mechanic's liens. Prior to approving any construction on the
Leased Premises by Tenant, Landlord shall have the right to require Tenant, or
Tenant's contractor for such construction, to furnish a bond in an amount equal
to the estimated cost of such construction with corporate surety approved by
Landlord for (a) completion of such construction and (b) indemnifying Landlord
and Tenant, as their interests may appear, against liens for labor and
materials, which bond shall be furnished before any work is begun or any
materials delivered. Landlord shall also have the right at any time before,
during or after such construction to require Tenant to furnish such other
assurances against mechanic's liens as may be reasonable including, but not
limited to, releases of liens signed by all contractors, subcontractors, and
suppliers, and affidavits executed by Tenant, Tenant's contractor or architect,
that all labor and material theretofore furnished have been paid in full.
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ARTICLE X
Insurance and Indemnity
10.1 Casualty Insurance. Beginning on the commencement of the Term
hereof of this Lease and continuing during the entire Term, Landlord shall keep
the Building on the Leased Premises insured against loss or damage by fire,
vandalism and other casualty to the extent now or hereafter covered under
standard extended coverage. Such insurance shall be in the amount of the full
replacement value of the Building (excluding leasehold improvements performed
by Tenant at Tenant's expense as provided in Exhibit C + C1) as the same may
increase from time to time. Landlord shall furnish Tenant with a copy of such
policy or with a certificate of the insurer that the same is in effect. The
Tenant shall pay Landlord as additional rent upon receipt of a bill therefor
from Landlord the annual premium for such insurance coverage. Such payment by
Tenant shall be based on a square foot proportional basis as to the total area
of any building of which the Leased Premises are a part.
Tenant shall at all times during the Term maintain at its own cost and
expense such casualty insurance against loss, damage, or destruction to all
signs, trade fixtures, tenant improvements which are specifically defined in
Exhibit C + C1, equipment, furniture and other installations and property
installed by Tenant on the Leased Premises, and shall, upon Landlord's request,
provide Landlord with certificates of insurance evidencing that such policies
are in force or copies of such policies.
Both Landlord and Tenant hereby agree to procure and maintain such
property and business interruption insurance as they deem appropriate for
protecting their respective interests.
10.2 Indemnity. At all times after Tenant takes possession of the
Leased Premises and for any period that Tenant enters the Leased Premises prior
to the Commencement Date to make its installations, Tenant shall protect,
indemnify, and save the Landlord harmless of, from and against any and all
actions, liabilities, damages, costs, expenses, fees, demands or claims of any
nature whatsoever arising from (a) any work or thing done in or about the
Leased Premises, and the improvements now or hereafter constructed thereon, or
any part thereof, by Tenant or its agents or employees or independent
contractors hired by Tenant, (b) injury to or death of persons or damage to
property on the Leased Premises or the improvements now or hereafter
constructed thereon, and (c) any negligent act or omission on the part of the
Tenant, or its employees or invitees or independent contractors arising out of
the occupancy or use of the Leased Premises and the improvements now or
hereafter constructed thereon, except that Tenant shall not be required to save
and hold Landlord harmless or to indemnify Landlord if the injury or loss is
due to a willful or negligent act or omission of the Landlord or its agents or
employees.
10.3 Public Liability Insurance. During all periods of
construction or reconstruction work performed by Tenant on the Leased Premises,
Tenant, at its own expense, shall keep in force, by advance payments of
premiums, workmen's compensation and builder's risk insurance reasonably
acceptable to Landlord.
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Beginning on the date of commencement of Tenant's entry upon the
Leased Premises and continuing during the entire Term, Tenant, at Tenant's
expense, shall keep in force, by advance payments of premiums, public liability
insurance in an amount of not less than Two Million dollars ($2,000,000.00),
this being a single limit policy for one or more claims thereunder because of
any one occurrence for personal injury or death and for damage to property,
insuring against any liability that may accrue on account of any occurrences in
or about the Leased Premises or in consequence of Tenant's occupancy of the
Leased Premises. Such insurance shall protect and indemnify not only against
any and all such liability, but also against all loss, expense and damage of
any and every sort and kind, including costs of investigation and reasonable
attorneys' fees and other costs of defense. All such insurance shall be with
insurers approved by Landlord, and all policies shall name Landlord and Tenant
as beneficiary as their respective interests may appear. Such policies shall
provide that notwithstanding any act or negligence of Tenant which might
otherwise result in a forfeiture, such policies shall not be canceled without
at least ten (10) days' prior written notice to each insured. Tenant shall
furnish Landlord with a copy of all such policies or a certificate that such
policies are in effect.
10.4 Waiver of Subrogation. Landlord and Tenant each waive and
release any and all rights to recover against the other or against the
officers, directors, shareholders, partners, employees or agents of the other
party for any loss or damage to such waiving party arising from any cause
covered by any insurance in effect at the time of such loss or damage.
Landlord and Tenant shall each have included in all policies or fire, extended
coverage, business interruption and other casualty insurance respectively
obtained by them covering the Leased Premises, the Building and contents
therein, a waiver by the insurer of all rights of subrogation or otherwise
against the other party hereto in connection with any loss or damage thereby
insured against. Any additional premium for such waiver shall be paid by the
primary insured.
ARTICLE XI
Eminent Domain
11.1 Total Taking. If the entire Leased Premises be taken under
the power of eminent domain or by purchase in lieu thereof (herein together
called "Eminent Domain"), this Lease shall terminate as of the date possession
is taken.
11.2 Partial Taking. If any portion of the Leased Premises shall
be taken under the power of Eminent Domain, and the portion not so taken would
not, in the reasonable judgment of Tenant, which shall be communicated in
writing to Landlord stating the reasons therefor within sixty (60) days
following the date on which Tenant receives notice of the condemning
authority's intention to take such property, be adequate for the continued
operation of Tenant's business, either unrestored or restored, or if Landlord
deems such restoration to be impractical, this Lease shall be deemed to have
terminated as of the date of taking of possession. If this Lease is not
terminated pursuant to this
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Section 11.2, Landlord, immediately following the taking, to the extent of
condemnation proceeds made available to Landlord, shall proceed to restore such
part of the Leased Premises as is not taken to as near the former condition of
the original Leased Premises, less all signs, trade fixtures, improvements,
furniture, and other installations and property installed by Tenant, as the
circumstances will permit, and Tenant shall continue to pay rent in full and to
utilize the Leased Premises for the operation of its business, provided,
however, that rental payments due hereunder shall be adjusted to reflect the
reduction in the size of the Leased Premises in the event of a partial taking
where the Lease is not terminated pursuant to the provisions hereof.
11.3 Damages. All damages awarded for any such taking under the
power of Eminent Domain shall be paid to the Landlord, except for damages
awarded for Tenant's fixtures and equipment used in operation of the Leased
Premises.
Without in any way detracting from the generality of the foregoing,
and subject to the provisions of North Carolina law as to the entitlement as
against the condemning authority by a Tenant as to assert claims by virtue of
takings pursuant to eminent domain, in the event of a condemnation or taking
pursuant to this paragraph, Tenant shall be entitled to appear, claim, prove
and receive in the condemnation proceedings such amounts as may be separately
awarded to Tenant for removal expenses, business dislocation damages and moving
expenses. In addition, Tenant shall be entitled to receive from the
condemnation award the value of Tenant's trade fixtures and Tenant's
improvements to the extent paid for by Tenant. In the event Tenant makes a
claim against the condemning authority as described herein, Landlord agrees to
cooperate with Tenant and assist Tenant in its claim by making all of
Landlord's records with respect to Tenant's use of the Leased Premises and
Tenant's improvements available to Tenant.
11.4 Rent. If this Lease is terminated as provided in this Article
XI, all rent shall be paid up to the date that possession is taken by the
condemning authority, and Landlord shall make a proportional refund to Tenant
of any rent or other amounts paid by Tenant which are applicable to any period
after that date and not yet earned.
ARTICLE XII
Damage and Destruction
12.1 Restoration of Damage or Destroyed Leased Premises. In the
event that the Building on the Leased Premises shall be damaged by fire or
other casualty covered by extended coverage insurance during the term of this
Lease, the Tenant shall give immediate notice thereof in writing to the
Landlord.
If the damage to the Building by such casualty shall render it
practicably unusable by the tenant, and Landlord shall promptly cause an
evaluation of such damage to be made and, within thirty days of its receipt of
notice of such casualty, shall determine if it: (a) is unwilling to proceed to
restore said premises, in which case it will give written notice of such
determination within such thirty day
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period to the Tenant, and the Lease shall thereupon be terminated and rental
payments thereunder shall cease (or be refunded) as of the date of the
casualty; or (b) is willing to proceed to restore same, which notice shall be
given to the Tenant in writing within such thirty day period and shall contain
an estimate of the time required to render the Building tenantable once more,
not to exceed 120 days. Should restoration of the Building be commenced
pursuant to (b) of this paragraph, the Landlord shall cause such repairs to be
pursued with due and reasonable diligence and to be completed within the
estimated time, not to exceed 120 days, subject to any delays resulting from
any force majeure.
12.2 No Abatement. Tenant shall not be entitled to any abatement
or diminution of rent during any period because of any casualty damage. Tenant
at all times shall maintain business interruption insurance with respect to the
business operated on the Leased Premises and rent abatement insurance in such
amounts as the Landlord shall reasonably request. It is understood between
Tenant and Landlord that Tenant's obligations may be met during a potential
business interruption from proceeds from the business interruption insurance as
contemplated by Section 10.1, not to exceed 120 days.
ARTICLE XIII
Default by Tenant
13.1 Tenant's Default. If Tenant (a) shall fail to pay any rent or
other sum of money due hereunder within ten (10) days after receipt or receipt
of refusal by the Landlord of notice of such failure or if Tenant shall fail to
pay any rent or other sum of money due hereunder within five days after the
same shall be due (provided however that the Landlord agrees to give written
notice to Tenant of any such failure of payment and such failure will not
constitute an event of default unless Tenant fails to make such payment on or
before the tenth day from and after receipt or refusal of such notice, and
provided further that such notice and grace period shall be required to be
provided by the Landlord and shall be accorded the Tenant, if necessary, only
twice during any consecutive twelve month period of the Term, with an event of
default to be deemed to have immediately occurred upon the third failure to
make a timely payment as aforesaid within any consecutive twelve month period
of the Term) or (b) shall fail to perform any other of the terms, conditions,
or covenants of this Lease to be observed or performed by Tenant for more than
thirty (30) days after written notice of such default shall have been mailed to
Tenant, unless such default is of a nature that it cannot practically be cured
within such thirty (30) day period and Tenant is proceeding with due diligence
to cure such default, or (c) shall abandon the Leased Premises, then at
Landlord's option and without limiting Landlord in the exercise of any other
right or remedy Landlord may have in law or equity on account of such default,
and without any further demand or notice, Landlord may:
(i) Re-enter the Leased Premises with or without process
of law, take possession of all improvements, additions, alterations,
equipment and fixtures thereon, eject all parties in possession
thereof therefrom, and, without terminating this Lease, at any time
and from time
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to time relet the Leased Premises or any part or parts thereof for the
account of Tenant or otherwise, receive and collect the rents
therefor, applying the rents first to the payment of such expenses as
Landlord may have paid, assumed or incurred in recovering possession
of the Leased Premises, including costs, expenses and reasonable
attorneys' fees, and for placing the Leased Premises in good order and
condition or preparing or altering the same for reletting, and all
other expenses, commission and charges paid, assumed or incurred by
Landlord in or in connection with reletting the Leased Premises, and
then to the fulfillment of the covenants of Tenant. Any such
reletting may be for the remainder of the Term of this Lease or for a
longer or shorter period. Landlord may execute any lease made
pursuant to the terms hereof either in Landlord's name or in the name
of tenant, as Landlord may see fit, and the subtenant therein shall be
under no obligation whatsoever for the application by Landlord of any
rent collected by Landlord from such subtenant to any and all sums,
due and owing or which may become due and owing under the provisions
of this Lease. Tenant shall not have any right or authority to
collect any rent from subtenant. In any case and whether or not the
Leased Premises or any part thereof be relet, Tenant shall pay to
Landlord all sums required to be paid by Tenant up to the time of re-
entry by Landlord. Thereafter Tenant, if required by Landlord, shall
pay to Landlord, until the end of the Term of this Lease, the
equivalent of the amount of all rent and other charges required to be
paid by Tenant under the terms of this Lease, less the proceeds of
such reletting during the Term of this Lease, if any, after payment of
the expenses of Landlord. Such rent shall be due and payable on the
several rent days herein specified, and Landlord need not wait until
the termination of this Lease to recover any rent by legal action or
otherwise. Re-entry by Landlord shall not constitute an election to
terminate this Lease unless Landlord gives Tenant notice of Landlord's
election to terminate.
(ii) Declare this Lease at an end, re-enter the Leased
Premises with or without process of law, eject all parties in
possession thereof therefrom and repossess and enjoy the Leased
Premises together with all improvements thereto, and Landlord shall
thereupon be entitled to recover from Tenant any rent due from Tenant
to Landlord as of the date of such re-entry, and subject to the
Landlord's duty to mitigate damages, the amount of rent and charges
equivalent to rent provided for in this Lease for the balance of the
Term. For the purpose of this subparagraph (ii), all Impositions and
contributions to expenses and other items paid by Tenant shall be
projected over the term of the Lease at an average increase of such
items as may have occurred since the date of this Lease to the date of
default.
13.2 Remedies Not Exclusive; No Waiver. The remedies of Landlord
set forth in this Lease are cumulative and are in addition to and not exclusive
of any other remedy of Landlord herein given or which may be permitted by law,
and if any breach or threatened breach by Tenant of this Lease occurs, Landlord
shall be entitled to enjoin such breach or threatened breach and shall have the
right to invoke any right and remedy allowed by law or in equity or by statute
or otherwise in addition to
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rights set forth in this Lease. Tenant shall permit any lawful re-entry as
provided for in this Article without hindrance to Landlord, and Landlord shall
not be liable in damages or guilty of trespass because of such lawful re-
entry. The failure of Landlord to insist, in any one or more instances, upon a
strict performance of any of the covenants of this Lease or to exercise any
option contained herein, shall not be construed as a waiver or a relinquishment
for the future of such covenant or option. A receipt by Landlord of rent with
knowledge of the breach of any covenants of this Lease shall not be deemed a
waiver of such breach. No waiver by either party to this Lease of any
provision thereof shall be deemed to have been made unless in writing and
signed by the party so waiving.
13.3 Cure by Landlord. If Tenant at any time defaults in making
payment or in performing any other obligation under this Lease within the time
required allowing notice, Landlord may cure such default by payment of the
amount due or performance of such obligation and Landlord may collect from
Tenant as additional rent the costs thereof, together with interest at the rate
of fifteen percent (15%) per annum from the date of payment until reimbursement
by Tenant.
13.4 Cure by Tenant. If Landlord at any time defaults in making
any payment or performing any Landlord's covenant hereunder which would impair
the Tenant's leasehold estate and its right of quiet enjoyment hereunder,
Tenant may cure such default by payment of the amount due or performance of
such obligation and may collect from the Landlord the costs thereof, together
with interest at the rate of fifteen percent (15%) per annum from the date of
payment until reimbursement by the Landlord, provided that such default on the
part of the Landlord shall have continued thirty (30) days after written notice
to the Landlord by the Tenant, except that in the event of an emergency
jeopardizing the Tenant's right of occupancy or quiet enjoyment of the
premises, only twenty-four (24) hours actual notice shall be required rather
than thirty (30) days written notice.
ARTICLE XIV
Bankruptcy
14.1 Effect of Bankruptcy or other Proceedings. If at any time any
bankruptcy or any reorganization proceeding is instituted by or against Tenant
either in the State or Federal Courts, or if a receiver is appointed under the
Bankruptcy Act, for its business or property on or in the Leased Premises, or
if any lien is assessed against Tenant or its property on or in the Leased
Premises, or if Tenant shall make an assignment for the benefit of creditors or
voluntarily or involuntarily take advantage of any debtor relief proceedings
under present or future law, Landlord in addition to any other remedies
provided Landlord in the event of Tenant's default as set forth in this Lease
or under any applicable law, shall have the option, to be exercised by written
notice given to Tenant, to declare this Lease terminated at any time after the
expiration of twenty (20) days following the commencement of such proceeding or
the assertion of such lien, unless the proceeding is dismissed or the lien
discharged and unless all payments of rent and other payments required by this
Lease to be made by Tenant to Landlord are paid promptly during such period of
twenty (20) days. Landlord
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shall under no circumstances be required to permit a receiver or any person
claiming through or under Tenant to retain possession of the Leased Premises.
Landlord need not lease the Leased Premises to such receiver or person, and
Landlord shall be entitled to immediate possession of the Leased Premises. Any
repossession or termination hereunder shall not operate in any way to prejudice
or affect the right of Landlord for recovery of rent or other charges
theretofore accrued, thereafter accruing or to any other damages, nor shall any
such termination or repossession ever be construed as a waiver of or an
election not to claim future damages on account of such breach, but all such
damages, including all future rentals, shall be fully recoverable by Landlord.
ARTICLE XV
Miscellaneous
15.1 Recording. Tenant shall not record this Lease without the
written consent of the Landlord, however upon the request of either party the
other shall join in the execution of a memorandum or "short form" lease for the
purpose of recordation, describing the parties, premises, and the term hereof
and incorporating this lease by reference therein.
15.2 Subordination, Non-disturbance and Attornment Agreement. This
Lease shall be subject to and subordinate at all times to the lien of any
mortgages or deeds of trust now or hereafter made by the Landlord on the Leased
Premises, and to all advances made or hereafter to be made thereunder.
Although this subordination provision shall be self-operative and no further
instrument of subordination shall be required, Tenant will, nevertheless, upon
request of the Landlord, enter into a subordination, non-disturbance and
attornment agreement with reference to any present or future lender whose loan
is secured by a deed of trust secured in whole or in part upon all or a portion
of the Leased Premises, providing in terms reasonably and customarily required
by said lender and deemed appropriate by its legal counsel for such purposes,
for the subordination of this Lease to said deed of trust and any modifications
or extensions thereof, with the Tenant's use, possession or enjoyment of the
premises hereunder to be assured so long as there is no default hereunder, with
the Tenant agreeing to attorn to any transfer of the Landlord's title in said
premises by reason of foreclosure or trust, including the Lender if it be the
purchaser.
15.3 Estoppel Certificates. Each party agrees at reasonable
intervals and from time to time upon not less than ten (10) days' prior written
notice by the other to execute, acknowledge and deliver a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect (or
if there have been modifications, that the Lease is in full force and effect as
modified and stating the modifications), (ii) the dates to which the rent and
other charges have been paid in advance, if any, and (iii) stating whether or
not to the best knowledge of the signer of such certificate the signing party
is in default in performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which the signer may
have knowledge. Each party acknowledges
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that any such statement delivered under this Lease may be relied upon by third
parties not a party to this Lease.
15.4 Right to Enter. Landlord and its agents shall have the right
upon at least 24 hours prior notice by fax or voice telephone, except in the
event of an emergency to enter the Leased Premises at reasonable hours, and at
any time if any emergency exists, to examine the Leased Premises, or to make
such repairs and alterations as shall be reasonably necessary for the safety
and preservation of the Leased Premises, or during the last twelve (12) months
of the Term, provided Tenant has not notified Landlord of his intent to extend
the Term, to show both the interior and exterior of the Leased Premises to
prospective tenants or purchasers and to place "For Rent" or "For Sale" signs
thereon.
15.5 Laws of North Carolina. This Lease shall be construed and
applied in accordance with the laws of the State of North Carolina.
15.6 Severability. Any provision or provisions of this Lease which
shall prove to be invalid, void, or illegal shall in no way affect or impair or
invalidate any other provision, and the remaining provision shall remain in
full force and effect.
15.7 Headings. The headings of the various Articles and Sections
of this Lease are inserted for reference only and shall not to any extent have
the effect of modifying, amending or changing the express terms and provisions
of this Lease.
15.8 Notices. Any notice, request, demand, approval, or consent to
be given under this Lease shall be in writing and shall be deemed to have been
received when mailed by United States, registered or certified mail, postage
prepaid, or by a commercial overnight courier or delivery by a company
regularly doing business in both the state of origin and in the state of
destination of such notice, addressed to the other party at the addresses set
forth in the first paragraph of this Lease.
Either party may at any time change its address by mailing a notice,
as specified in this Section, that such change is desired and setting forth the
new address.
15.9 Force Majeure. In no event shall Landlord be liable for, nor
shall Tenant have the right to terminate this Lease for delays in the
prosecution of Landlord's share of construction beyond Landlord's control
("Force Majeure"), including (but not limited to) delays caused directly or
indirectly by strikes, lockouts, the unavailability of labor or material, acts
of God, acts of any Federal, State, or Local governmental agency or authority,
war, insurrection, rebellion, riot, civil disorder, fire, explosion, windstorm,
hail, snow, extreme cold, rain, flood, damage from aircraft, vehicles, or
smoke, or by any other casualty of a substantial enough nature to cause delay.
15.10 Successors. This Lease shall be binding upon and inure to the
benefit, as the case may require, of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
15.11 Assignment of Landlord's Interest. If Landlord should ever
assign this Lease or the rents hereunder to a creditor as security for a debt,
Tenant shall, after notice of such assignment and upon demand by Landlord or
the assignee, pay all sums thereafter becoming due Landlord hereunder
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to the assignee and give all notices required to be given Landlord hereunder
both to Landlord and the assignee.
15.12 Transfer by Landlord. If Landlord sells, leases or in any
manner transfers title to the Leased Premises, including foreclosure sale by
judicial proceeding or otherwise the Landlord shall be relieved of all
covenants and obligations arising hereunder, provided the Landlord is not then
in default hereunder and that such transferee shall agree to assume all
covenants and obligations of the Landlord hereunder. Tenant agrees that it
will attorn to such transferee, provided such transferee has assumed Landlord's
covenants and obligations hereunder, and Tenant shall continue to perform all
of the terms, covenants, and conditions, and obligations of this Lease.
15.13 Limitation of Execution against Landlord. If Tenant obtains a
money judgment against Landlord, any of its partners or its successors or
assigns under any provision of, or with respect to this Lease or on account of
any matter, condition or circumstance arising out of the relationship of the
parties under this Lease, or of Tenant's occupancy of the Property, Tenant
shall be entitled to have execution upon such judgment only upon Landlord's
estate in the Leased Premises, and not out of any other assets of Landlord, any
of its partners, or its successors or assigns; and Landlord shall be entitled
to have any such judgment so qualified as to constitute a lien only on the fee
simple estate subject to any liens antedating any such judgment except that
this limitation shall not apply to the extent that any such judgment against
Landlord is covered by insurance.
15.14 Time of Essence. Time is of the essence in this Lease.
15.15 Contingency as to Termination of Prior Lease. This agreement
of lease and the obligations of all parties hereto are contingent upon the
execution by Konica Manufacturing, U.S.A., Inc., a North Carolina corporation,
and Industrial Development Associates of an agreement terminating that certain
lease dated December 1, 1988, wherein Industrial Development Associates, as
Landlord demised unto said Konica the said premises herein leased for a term
commencing December 1, 1988, and ending May 31, 1992.
ARTICLE XVI
Miscellaneous
16.1 Liability for Brokerage or Other Fees. Neither party shall be
in any way liable for a brokerage commission, finders fee, or similar
compensation based upon any contract which the other may have made with any
person, firm, or corporation in connection with the negotiation of this Lease,
and each party shall hold the other harmless on account thereof, each
indemnifying the other against any claims, judgments, suits, costs, reasonable
attorneys' fees, and other reasonably necessary expenses which may be incurred
by the party so indemnified on account thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATTEST: LANDLORD:
INDUSTRIAL DEVELOPMENT ASSOCIATES, a
Maryland limited partnership, Landlord,
By Meridian Inc., a General Partner
/s/ [Illegible] By: /s/ Michael J. Batza, Jr.
- -------------------------------- --------------------------------
Assistant Vice President
ATTEST: TENANT:
AMSCO STERILE RECOVERIES, INC.
/s/ Lydia P. Zickefoose By: /s/ Wayne R. Peterson
- -------------------------------- --------------------------------
Assistant Secretary
STATE OF MARYLAND
COUNTY OF BALTIMORE
I, Pamela S. Rurka, a Notary Public of said County and State, do
hereby certify that Michael J. Batza, Jr., personally came before me this day
and acknowledged that (s)he is Assistant Secretary of Meridian, Inc., a
Maryland corporation which formerly was named MSC Corporation, a general
partner, of Industrial Development Associates, a Maryland limited partnership,
and that by authority duly given and as the act of said corporation as a
general partner of said limited partnership acting in its behalf by authority
duly given to said general partner, the foregoing instrument was signed in the
name of Meridian, Inc., as a general partner by its Assistant Vice President,
sealed with its corporate seal, and attested by himself/herself as its
Assistant Secretary. Witness my hand and official seal this 28th day of April,
1992.
/s/ Pamela S. Rurka
-----------------------
Notary Public
My Commission Expires: 8/1/94
STATE OF FLORIDA
COUNTY OF PINELLAS
I, Linda A. Sloan, a Notary Public of said County and State, do hereby
certify that Wayne R. Peterson, personally came before me this day and
acknowledged that (s)he is Assistant Secretary of AMSCO Sterile Recoveries,
Inc., and that by authority duly given and as the act of said corporation, the
foregoing instrument was signed in its name by its (Vice) President, sealed
with its corporate seal, and attested by himself as its Assistant Secretary.
Witness my hand and official seal this 22nd day of April, 1992.
/s/ Linda A. Sloan
---------------------
Notary Public
My Commission Expires: NOTARY PUBLIC STATE OF FLORIDA
My COMMISSION EXP JULY 2, 1994
BONDED THRU GENERAL INS. UND.
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Schedule of Exhibits to
Lease between Industrial Development Associates
AMSCO Sterile Recoveries, Inc.
Exhibit A Demised Plan of the Leased Premises
Exhibit B Landlord's Plans
Exhibit C Tenant's Plans
Exhibit D Site Plan
Exhibit E Rider
Exhibit F Parking
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Exhibit A to Lease between
Industrial Development Associates and
AMSCO Sterile Recoveries, Inc.
DEMISED PLAN OF LEASED PREMISES
The plans illustrate the demising walls of leased premises with
dimensions of 120 feet 1 inch and a depth of 200 feet 2 inches and a vestibule
area of 35 feet by 51 feet 2 inches, a total of approximately 25,500 square
feet.
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Exhibit B to Lease between
Industrial Development Associates and
AMSCO Sterile Recoveries, Inc.
Landlord will complete all Tenant Improvements listed in #1. These
improvements will be in accordance with plans and specifications attached
hereto as Exhibit B-1 which has been coordinated and approved by both Tenant
and Landlord.
1. Tenant's Demising Wall - Landlord is responsible for completion of
construction of Tenant's demising wall with cost to be shared by both
Tenant and Landlord.
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Exhibit C to Lease between
Industrial Development Associates and
AMSCO Sterile Recoveries, Inc.
Tenant will complete, at Tenant's expense, all tenant improvements in
Item #2. These improvements will be in accordance with plans and
specifications attached hereto as Exhibit C-1 which Tenant has coordinated and
received prior approval from Landlord. Landlord will approve, prior to the
start of construction, any and all contractors whom Tenant chooses to complete
such work.
1. Tenant's Demising Wall. Cost to be shared by both Tenant and Landlord
for Tenant's Demising Wall.
2. Plans and specifications for the remainder of the desired Tenant
improvements to be completed by Tenant are to be submitted to Landlord
in accordance with the paragraph above.
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EXHIBIT D
SITE PLAN
Site Plan Carolina Central Industrial Center, Mebane, North Carolina
dated December 5, 1989 titled "Site Map". This exhibit illustrates the entire
Carolina Central Industrial Center showing the location of the Carolina Central
Industrial Center just north of Interstate 85 adjacent to Holmes Road on the
eastern boundary and Third Street Extension on the northern boundary. It
includes 15 platted parcels and illustrates the building of which the leased
premises are a part is located on 4.6 acres and designated as parcel #6. It is
located at the northeast corner of Dogwood Way and Maple Lane. There are two
map inserts printed as part of this Site Plan showing the location of the
Carolina Central Industrial Center within the city of Mebane and within the
state of North Carolina. They are titled "Vicinity Map" and "Regional Map" and
are not to scale.
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Exhibit E to Lease between
Industrial Development Associates and
AMSCO Sterile Recoveries, Inc.
Rider to
AMSCO Sterile Recoveries, Inc.
Lease at Building #6
This Rider to Agreement of Lease for leased premises in the Building
#6 at Carolina Central Industrial Center, is made as of this ______ day of
____________________, 19_____, by and between Industrial Development Associates
("Landlord") and AMSCO Sterile Recoveries, Inc. ("Tenant"). In the event of
any inconsistencies between the terms of this Rider and the terms of the
Agreement of Lease to which this Rider is attached, the terms of this Rider
will control.
Rider #1 Improvements of Leased Premises
Tenant will be responsible for construction of the demising wall and
one-half (1/2) of the total cost to complete the wall, or $13,282. Tenant will
pay to Landlord, in cash, its proportionate share of the cost in advance or no
later than lease signing. Landlord will be responsible for the remaining cost
to complete the demising wall, or $13,282.
Rider #2 Utilities
Landlord intends to separately meter water in the Leased Premises at
Tenant's sole cost and expense.
Rider #3 Maintenance and Repair
Upon termination of the Lease, Tenant shall be required, at its own
expense, to restore the roof to a condition reasonably acceptable by Landlord,
including the completion of any and all repairs of penetrations of the roof
made by the Tenant and/or Tenant's agents during the course of occupancy.
Rider #4 Option to Terminate
Tenant will have the option to terminate its lease at the end of the
fifth (5th) year of the lease term and pay Landlord a penalty of $28,000.
Tenant will be required, at its own expense, to restore the premises to its
original condition, normal wear and tear excepted. Tenant will notify
Landlord, in writing, of its intent to terminate its lease Two Hundred and
Seventy (270) days before the end of the fifth (5th) year of the lease term.
Rider #5 Renewal Option
Provided that Tenant is not in default under this Lease, Tenant shall
have the option to renew this lease for two (2) additional terms of five (5)
years at the rental rate of $4.25/SF for year 4/1/2002 - 3/31/2007 and at the
rental rate of $5.10/SF for year 4/1/2007 - 3/31/2012. During such renewal
term, all terms and conditions of this Lease shall remain in full force and
effect as during the initial term, except for the increased rental rate herein
provided for. Tenant shall exercise its option by notifying Landlord in
writing two hundred seventy (270) days prior to the expiration of this Lease.
Rider #6 Signage
Landlord shall permit tenant to maintain one sign in front of the
building at Tenant's sole cost and expense. Landlord shall designate the
appropriate location for Tenant's sign.
Rider #7 Financial
Tenant shall supply Landlord with financial statements on an annual
basis upon written request by Landlord.
WITNESS: LANDLORD: INDUSTRIAL DEVELOPMENT
ASSOCIATES
By:
- ---------------------------- ---------------------------------------
---------------------------------------
WITNESS: TENANT: AMSCO STERILE RECOVERIES, INC.
/s/ Lydia P. Zickefoose By: /s/ Wayne R. Peterson
- ---------------------------- --------------------------------------
Wayne R. Peterson, Assistant Secretary
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EXHIBIT F
PARKING PLAN
These plans illustrate a site plan containing 4.6 acres showing the
property outlined on the corner of Dogwood Way and Maple Lane. It contains a
foot print of the entire building of which the leased premises are a part. It
also diagrams a single curb cut on Dogwood Way to the front of the building and
a single curb cut on Maple Lane to the rear of the building. There are no
dimensions.
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CAROLINA CENTRAL INDUSTRIAL CENTER
RESTRICTIVE COVENANTS
RECITALS
Landlord is the owner of the Leased Premises and other real property
in the area known as Carolina Central Industrial Center, and has caused such
Property to be subdivided for use as an industrial center and desires to
subject the Leased Premises to similar (but not necessarily identical)
restrictive covenants imposed upon certain other (but not necessarily all) real
property of the Landlord in the area, said restrictive covenants being
hereafter set forth to covenants, agreements and restrictions (the
"Restrictions") for the benefit of the Landlord, its successors and assigns, as
hereinafter set forth.
THEREFORE, Landlord hereby declares that the Leased Premises shall be
subject to the Restrictions hereinafter set forth.
Article I. The Property. The Property subject hereto is
situated in Alamance County, North Carolina and is more particularly described
in Exhibit A attached to the Lease and made part hereof.
Article II. Definition of Terms. Wherever used in these
Restrictions the following terms shall have the following meanings:
"Occupant" shall mean and refer to persons or entities in
actual possession of any parcel on the Leased Property.
"Tenant" shall mean and refer to the Lessee of the Leased
Property.
"Restrictions" shall mean and refer to the covenants and
restrictions contained herein.
"Person" shall mean artificial persons as well as natural
persons and includes the plural.
"Leased Property" shall mean and refer to that certain
property described in Exhibit A attached hereto and made part hereof.
"Street" shall mean any street, highway, road or other
thoroughfare adjoining or within the Leased Property.
"Structure" shall mean and refer to any thing or device the
placement of which upon the Leased Property might affect the physical
appearance thereof, including, by way of illustration and not limitation,
buildings, sheds, covered patios, fountains, swimming, wading or other pools,
trees, shrubbery, paving, curbing, landscaping or fences or walls more than
three (3) feet in height or any sign or signboard. "Structure" shall also mean
any excavation or fill, the volume of which exceeds ten (10) cubic yards; or
any excavation, fill, ditch, diversion dam or other thing or device which
affects or alters the natural flow of surface waters upon or across the Leased
Property or other property of the Landlord adjacent thereto or in the vicinity
thereof or which affects or alters the flow of any water in any natural or
artificial stream, wash or drainage channel upon or across said property.
Article III. Duration and Modification of Restrictions.
1. Duration. These Restrictions shall continue from the
date of this Lease throughout the term of this Lease and any extension thereof
and thereafter until January 1, 2020, subject to modification or termination
pursuant to Article III, Section 2.
2. Modification or Termination. These Restrictions may
at any time after the date hereof be modified in any particular, or terminated
in their entirety, by the recording among the Office of the Register of Deeds
of Alamance County, North Carolina, of an instrument of modification or
termination executed jointly by the Landlord, the Tenant and their successors
and assigns, (excluding mortgagees, holders of security devices who are not in
possession, lessees and tenants).
Article IV. Use of Property; Restrictions.
1. No Residences. No building or other Structure on the
property shall be used, temporarily or permanently, as a residence.
2. Building Height Limitation. All buildings shall be
limited to a height of fifty (50) feet above finished grade elevation; except
that this height limitation may be exceeded, with written approval of the
Landlord.
3. Parking. All present and future vehicle parking,
including trucks, trailers, employee and visitor parking, shall be provided on
the Leased Property and shall comply with all provisions of the applicable
governmental requirements. All parking areas are to be paved to provide
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dust-free all-weather surfaces with macadam, concrete or any approved
material other than gravel. No parking area will be permitted within
set back lines (fifty feet on primary roads and thirty feet on
secondary roads) except that lots bounded by more than one road may
have parking areas within the set-back lines along roads other than
the one on which the building fronts if, in the judgment of the
Landlord, the parking area is set back a reasonable distance and is
properly screened from both front and side roads. Off-street parking
spaces will be provided in accordance with the following:
(a) one space - size 10' x 20' for automobiles
per 1,000 square feet of warehouse space;
(b) one space - size 10' x 20' for automobiles
per 600 square feet of manufacturing space; and
(c) one space - size 10' x 20' for automobiles
per 250 square feet of office space.
4. Loading. No loading docks shall be permitted on the
front of any building, and, except where a lot is bounded by three or more
streets, no loading docks shall be permitted on the side of any building facing
a street.
5. Storage. No material, supplies, or products shall be
stored or permitted to remain on the Leased Property outside a permanent
structure without the prior written consent of Landlord. Approval of outside
storage will be granted only where storage is screened from view by a masonry
wall, or other appropriate screen six (6) feet in height or rising two (2) feet
above the stored material, whichever is higher.
6. Materials. Without the Landlord's prior written
consent the use of concrete block or cinder block for outside facing of
exterior walls will not be permitted or will any frame structures be permitted.
7. Signs. A scale drawing in color of any sign,
billboard, trademark or advertising device to be used on any lot or the
exterior of any building or structure will be submitted to Landlord in
triplicate for the written approval of Landlord. Normally the Tenant's trade
mark and/or trade name may be displayed on the building in the manner in which
they are generally used by the Tenant.
8. Open Area. Not more than fifty percent (50%) of any
lot area shall be covered by Structures.
9. Color. No building or Structure shall be painted,
repainted, stuccoed or be surfaced with any material unless and until Landlord
approves the color and/or material in writing.
10. Ground Cover. All set-back areas facing roads
between the front building line and the curb, with the exception of driveways,
sidewalks, and other walkways shall be used exclusively for the planting and
growing of trees, shrubs, lawns and other ground covering or material as
approved by Landlord. If developed lots are not properly maintained, Landlord
may undertake such maintenance as may be necessary, at the expense of the
Tenant.
11. Nuisance. The Tenant shall not cause or make (or
permit to be caused or made) any excessive noise, odors, harmful sewage or
vibration that could be deemed objectionable to other occupants and that would
conflict with the purposes of restrictions of the Leased Property, and shall
not create or maintain a nuisance. Each Tenant must provide for trash disposal
from his building.
No use will be made of the Leased Premises or any portion
thereof or any building or Structure thereon at any time, or shall any
materials or products be manufactured, processed or stored thereon or therein,
which shall cause an undue fire hazard to adjoining properties, or which shall
constitute a nuisance or cause the emission of noxious odors or gases or smoke,
or cause noises or other conditions which might injure the character of the lot
in question or neighboring properties or which shall constitute a violation of
any law of the United States, the State of North Carolina, or Alamance County,
Town of Mebane, or any regulation or ordinance promulgated thereunder.
12. Unused Area. All unused land area that is planned
for future building expansion or other purposes shall be maintained and kept
free of unsightly plant growth, stored material, rubbish and debris.
Article V. Setbacks. No Structure, or any part thereof or
projection therefrom, shall be erected nearer than fifty (50) feet from any
primary road adjacent to the Leased Property (a primary road being a public
right-of-way sixty feet or more in width) nor nearer than thirty (30) feet from
any secondary road adjacent to the Leased Property (a secondary road being a
public right-of-way less than sixty feet in width), nor nearer than thirty (30)
feet from any side or rear boundary line of the parcel on which the Structure
is erected.
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Article VI. Plans and Specifications.
1. No Structure, building, fence, wall sign, advertising
device, roadway, loading facility, outside storage facility, parking area, sit
grading, planting, landscaping, facility for industrial waste or sewage
disposal, nor any other improvement shall be commenced, erected or constructed,
nor shall any addition thereto or change in alteration therein be made (except
to the interior of a building), nor shall any change in the use of any premises
be made, until the plans and specifications therefor, showing the nature, kind,
shape, heights, materials, color scheme, lighting and locations on the lot of
the proposed improvements, grading, landscaping or alterations and the proposed
use or change in the use of the premises, shall have been submitted to and
approved in writing by the Landlord and a copy of such plans and specifications
as finally approved left permanently with the Landlord. The Landlord shall
have the right to refuse to approve any plans or specifications or proposed use
of the premises for any reason which the Landlord in its sole discretion, may
deem in the best interests of the Leased Property and the Tenants, occupants,
or lessees or prospective owners or lessees of other properties in the area.
2. No parking will be permitted on the Streets on the
Leased Premises unless otherwise agreed to by Landlord, and the Tenant shall
provide on its property necessary and adequate parking facilities and private
driveways as approved by the Landlord under paragraph 1 of this Article VI.
3. Construction and alteration of all improvements on
the Leased Property shall be in accordance with the requirements of all
applicable Building, zoning, and other Codes and Regulations.
Article VII. Maintenance.
1. The Tenant shall at all times keep its premises,
buildings, improvements and appurtenances in a safe, clean, neat and sanitary
condition and shall comply with all laws, ordinances and regulations pertaining
to health and safety. The Tenant shall provide for the removal of trash and
rubbish from his premises.
2. During construction it shall be the responsibility of
the Tenant to insure that construction sites are kept free of unsightly
accumulations of rubbish and scrap materials, and the construction materials,
trailers, shacks and the like are kept in a neat and orderly manner.
3. The Landlord agrees to maintain all undeveloped land
owned by it within the area in a manner compatible with the provisions of this
Article VII.
Article VIII. Covenants, Enforceability.
1. These restrictions shall run with, burden, and bind
the Leased Property and shall bind and inure to the benefit of, and be
enforceable by the Landlord, its successors and assigns. The Landlord reserves
the right, however, from time to time hereafter to delineate, plat, grant or
reserve within the area such public streets, roads, sidewalks, ways and
appurtenances thereto, and such easement for drainage and public utilities, as
it may deem necessary or desirable for the development of the area (and from
time to time to change the location of the same) free and clear of these
restriction and covenants, and to dedicate the same to public use or to grant
the same to Alamance County and/or to appropriate governmental bodies or public
utility corporations.
2. Such covenants and restrictions shall be enforceable
by the Landlord, its successors and assigns.
3. If any violation or breach of any of these
Restrictions shall exist on the Leased Property, and the Tenant shall not have
taken reasonable steps toward the removal or termination of the same within
fifteen (15) days after written notice thereof, the Landlord shall have the
right, through its agents and employees, to enter upon the Leased Property,
with respect to any operation being conducted thereon, and summarily abate,
remove and extinguish any thing or condition that may be or exist thereon
contrary to the provisions hereof. The Landlord, or any such agent, shall not
thereby be deemed to have trespassed upon the Leased Property and shall be
subject to no liability to the Tenant or Occupant of the Leased Property for
such entry, abatement or removal.
The cost of any abatement or removal of violations authorized
under this Section shall be a binding, personal obligation of the Tenant as
well as a lien (enforceable in the same manner as a mortgage) upon the Leased
Property. The lien provided in this Section shall not be valid as against a
bona fide purchaser (or bona fide mortgagee) of the property in question unless
a suit to enforce such lien shall have been filed in a court of record in
Alamance County prior to the recordation in the Office of the Register of Deeds
of Alamance County of the deed or mortgage conveying the Property.
4. Violation of any of these Restrictions may be
enjoined, abated, restrained or otherwise remedied by appropriate legal or
equitable proceedings. Proceedings to restrain violation of these Restrictions
may be brought at any time that such violation appears reasonably likely to
occur in the future. In the event of proceedings brought by any party or
parties to enforce or restrain
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violation of any of these Restrictions, or to determine the rights or duties of
any person hereunder, the prevailing party in such proceedings may recover a
reasonable attorneys' fee to be fixed by the court, in addition to court costs
and any other relief awarded by the court in such proceedings.
5. The failure of the Landlord to enforce any of these
Restrictions to enforce the same shall in no event be deemed a waiver of its
rights to do so.
6. Waiver of any provision of these Restrictions shall
not be deemed a waiver thereof with regard to any subsequent violation thereof.
Article IX. Nominees and Successors of Landlord. The Landlord
may from time to time delegate any or all of its rights, powers, discretion and
duties hereunder to such agent or agents as it may nominate. It may also
permanently assign any or all of its powers and duties (including discretionary
powers and duties), obligations, rights, title, easements and estates reserved
to it by this Declaration to any one or more corporations, associations, or
persons.
Article X. Good Faith Lenders Clause. No violation of any of
these Restrictions shall defeat or render invalid the lien of any mortgage or
deed of trust made in good faith and for value upon the Leased Property;
provided however that any mortgagee or trustee or beneficiary under any deed of
trust in actual possession, or any purchaser at any trustees' or mortgagees'
foreclosure sale shall be bound by and subject to these Restrictions as fully
as the Tenant.
Article XI. Tenant's Covenants. The Tenant covenants for itself,
its successors and assigns, to observe, perform and be bound by these
Restrictions and, should it acquire title thereto, to incorporate them in any
deed or other conveyance of all or any portion of the Leased Property.
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RALEIGH/DURHAM FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts
the foregoing assignment and agrees to assume, perform and be bound by all of
the duties, obligations and liabilities of Assignor under the Lease, arising on
and after the date of this instrument for the remainder of the term of the
Lease and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
----------------------------------
/s/ Kathleen Clover By: Wm. J. Rieflin
- ---------------------------------- -------------------------------
Print Name: Kathleen Clover Its: Secretary
----------------------- ------------------------------
- ----------------------------------
Print Name:
-----------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
----------------------------------
/s/ Kathleen Clover By: J. T. Boosales
- ---------------------------------- -------------------------------
Print Name: Kathleen Clover Its: E.V.P.
----------------------- ------------------------------
-2-
<PAGE> 35
EXHIBIT A
Raleigh/Durham facility, Mebane, North Carolina.
Carolina Central Industrial Center Lease dated April 22, 1992 between
Industrial Development Associates as Landlord and AMSCO Sterile
Recoveries, Inc. as Tenant.
<PAGE> 36
[AMSCO STERILE RECOVERIES, INC.]
July 21, 1994
Industrial Development Associates
c/o Heritage Properties, Inc.
513 Fairmount Avenue
Towson, Maryland 21204
Attention: Mr. Richard Bechtold
Re: Premises Located in Mebane, Alamance County, North Carolina
Dear Mr. Bechtold:
Reference is hereby made to that certain Lease Agreement, dated April
25, 1992, by and between Industrial Development Associates, a Maryland limited
partnership, as landlord ("Landlord"), and AMSCO Sterile Recoveries, Inc., a
Delaware corporation ("Tenant"), demising the captioned premises (the "Lease").
Please be advised that Tenant is negotiating for the sale of all or
substantially all of its rights, properties, and assets, specifically including
the leasehold estate created by the Lease, to Sterile Recoveries, Inc., a
newly-formed Florida corporation in which Tenant's former principal executives
own a majority interest ("Buyer"). Buyer intends to continue the operation of
the business formerly operated by Tenant, and in connection with the proposed
transaction Tenant would intend to assign, and Buyer would intend to acquire,
the leasehold interest and estate created by the Lease. The Lease provides, in
pertinent part, that Tenant may not assign the Lease without Landlord's written
consent, and expressly states that such consent shall not be unreasonably
withheld or delayed.
Tenant acknowledges that it would, if consent were to be granted to
the assignment requested hereby, remain liable under the Lease after the
effective date of any such assignment, in accordance with the terms of the
Lease. Moreover, in view of the Buyer's experience in the actual operation of
the business and the proposed continuation of the use of the premises which is
expressly permitted by the terms of the Lease, we believe that neither the
creditworthiness of the tenant nor the use of the Premises would be affected in
any adverse fashion by the proposed assignment of the Lease to Buyer.
Accordingly, we formally request your consent, as Landlord, to the proposed
assignment of the Lease to Buyer. We have, for your reference, attached hereto
a proposed draft of the Assignment and Assumption Agreement pursuant to which
Tenant and Buyer would propose to effect the assignment to which this request
relates; please note that the Buyer would be obligated by the terms of such
instrument, to assume and perform, as and when due, all of the obligations
required to be performed by the originally named tenant under the Lease.
In connection with the financing which Buyer intends to use in
connection with the aforementioned transaction, Buyer would propose to grant to
Tenant a security interest in certain of the equipment and fixtures which would
be owned by it and located at or in the premises demised by the Lease. We
would request that you subordinate any lien or security interest which you may
have in such equipment or fixtures to the security interest which Buyer would
furnish to Tenant, and have enclosed a form of Landlord's Waiver pursuant to
which such subordination could be confirmed.
The parties' negotiations relating to the proposed transaction
described above are, unfortunately extremely time-sensitive. We must,
therefore, request that you reply to the foregoing request as promptly as
possible. If the foregoing assignment is acceptable to you, please so indicate
<PAGE> 37
Price Pioneer Company, Ltd.
July 21, 1994
Page 2
by signing where indicated on this letter, and by returning the signed copy to
the undersigned (c/o Charles A. Schliebs) by telecopy at 412-394-7959. A
hard-copy counterpart of this request, together with an execution form of the
Landlord's Waiver, will be provided to you by Federal Express, and we would
request that you sign and return the Waiver promptly after your receipt of that
package. Many thanks in advance for your cooperation on this matter. Please
feel free to contact the undersigned if you should have any questions regarding
this matter.
AMSCO STERILE RECOVERIES, INC.
By; /s/ Anthony M. Lacenere
------------------------------
Anthony M. Lacenere
The undersigned hereby consents to the assignment of the Lease by Tenant to
Buyer.
Industrial Development Associates
By: /s/ David S. Rhodes, President
------------------------------------
General Partner
Heritage Properties, Inc., Agent for
Industrial Development Associates
<PAGE> 38
LANDLORD'S WAIVER
WHEREAS, INDUSTRIAL DEVELOPMENT ASSOCIATES, a Maryland limited
partnership ("Landlord") is the owner of certain real estate located in MEBANE,
Alamance County, North Carolina, and more particularly described on Exhibit A,
attached hereto and made a part hereof by this reference, a portion of which is
presently leased to STERILE RECOVERIES, INC., a Florida corporation ("SRI"), as
successor in interest to AMSCO Sterile Recoveries, Inc. as tenant pursuant to a
lease more particularly described on Exhibit A-1 and made a part hereof by this
reference (the "Lease"); and
WHEREAS, SRI is issuing its Purchase Money Note in an original
principal amount not to exceed $10,000,000 to AMSCO Sterile Recoveries, Inc., a
Delaware corporation ("Lender") and in connection therewith SRI has offered to
grant a security interest to Lender in certain general intangibles, accounts,
equipment, fixtures and inventory (the "Collateral") including, without
limitation, the Collateral listed on Exhibit B attached hereto and made a part
hereof, and Lender is willing to make such loan only if the Landlord
subordinates and waives as to Lender any claims, demands, or rights the
Landlord may now have or hereafter acquire with respect to said Collateral.
NOW, THEREFORE, the Landlord, intending legally to be bound hereby
agrees as follows:
1. That any and all liens, claims, demands or rights, including
but not limited to the right to levy or distrain for unpaid rent which the
Landlord now has or may hereafter acquire on or in any of the Collateral shall
be subordinate and inferior to the liens and security interest of Lender, and
the Landlord hereby specifically waives with respect to Lender, and its
successor and assigns only all rights of levy, distraint or execution with
respect to said Collateral.
2. That the Collateral now or hereafter pledged to Lender or in
which Lender has or is granted a security interest shall, at all times, be
considered to be personal property and shall not constitute fixtures or become
a part of the Premises, so long as any monies are owing to Lender by SRI.
Lender may at all times enter upon the Premises or any other premises where
said collateral may be found and remove the same; provided said removal does
not damage the premises and if said removal does cause damage, then Lender will
fix and repair same.
3. Lender may, without affecting the validity of this Waiver,
extend the terms of payment of the indebtedness of SRI to the Lender or alter
the performance of any of the terms and conditions of any security agreement
without the consent of the Landlord and without giving notice thereof to the
Landlord.
4. This Agreement shall be construed and governed under the laws
of North Carolina.
IN WITNESS WHEREOF, the undersigned has caused this agreement to be
executed as of the 29th day of July, 1994.
INDUSTRIAL DEVELOPMENT ASSOCIATES,
a Maryland limited partnership
By: /s/ David S. Rhodes, President
-------------------------------
Heritage Properties, Inc.,
Agent for Industrial
Development Associates
<PAGE> 39
EXHIBIT B TO LANDLORD'S WAIVER
All of SRI's now owned or hereafter acquired inventory, meaning goods,
merchandise and other personal property which are or may at any time be held
for sale or lease, furnished under any contract of service or held as raw
materials, work-in-process, supplies or materials used or consumed in its
business, including without limitation returned and repossessed goods, and all
equipment, trade fixtures, other tangible personal property, furniture and
vehicles, together with all accessions, parts, accessories and appurtenances
thereto appertaining or attached or kept or used or intended to be used in
connection therewith and all substitutions, renewals, improvements,
replacements, additions, products and proceeds thereto.
<PAGE> 1
EXHIBIT 10.22
LEASE
PRICE BUSINESS CENTER - PIONEER
1700 SOUTH 2300 WEST STREET
CITY OF SALT LAKE, UTAH
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
ARTICLE 1 PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 3 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 4 POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 6 USE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 7 COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 8 ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 9 REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 10 LAWS, WASTE AND NUISANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 11 ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 12 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 13 ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 14 PARKING AND COMMON AREAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 15 INDEMNIFICATION OF LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 16 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 17 UTILITIES; JANITORIAL SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 18 NET LEASE; ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 19 PERSONAL PROPERTY TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 20 ENTRY AND INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 21 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 22 DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 23 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 24 MORTGAGE REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 25 RULES, REGULATIONS AND RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 26 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 27 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 28 LESSOR'S RIGHT TO CURE DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 29 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 30 TRANSFER OF LESSOR'S INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
TABLE OF CONTENTS - PAGE TWO
ARTICLE 31 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 32 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 33 SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 34 SURRENDER OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 35 LESSOR'S EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 36 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 37 ESTOPPEL CERTIFICATES AND FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 38 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 39 TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 40 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 41 LESSOR'S ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 42 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 43 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 44 AUTHORITY OF SIGNATORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 45 LESSEE'S OPTION TO TERMINATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 46 BREACH BY LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXHIBITS:
EXHIBIT "A" PRICE BUSINESS CENTER - PIONEER SITE PLAN
EXHIBIT "B" FLOOR PLAN
EXHIBIT "C" RULES, REGULATIONS AND RESTRICTIVE COVENANTS
</TABLE>
<PAGE> 3
LEASE SUMMARY
<TABLE>
<S> <C>
LESSOR: PRICE PIONEER COMPANY, LTD.
-------------------------------------------------------------
LESSEE: AMSCO STERILE RECOVERIES, INC.
-------------------------------------------------------------
TRADE NAME: AMSCO STERILE RECOVERIES, INC.
-------------------------------------------------------------
CENTER/PARK: PRICE BUSINESS CENTER - PIONEER
-------------------------------------------------------------
PREMISES: 2297 West Custer Road - #3
-------------------------------------------------------------
LEASE TERM: Ten (10) years 3 months
-------------------------------------------------------------
LEASE COMMENCEMENT DATE: September 1, 1993
-------------------------------------------------------------
RENT COMMENCEMENT DATE: September 1, 1993
-------------------------------------------------------------
RENT: Years Monthly Annual
-------------------------------------------------------------
1 - 3 $5,280.00 $63,360.00
-------------------------------------------------------------
4 - 6 $6,240.00 $74,880.00
-------------------------------------------------------------
7 - 10 $6,720.00 $80,640.00
-------------------------------------------------------------
USE: sterilization and cleaning of hospital equipment and
clothing.
-------------------------------------------------------------
OPTION TO EXTEND: 2 - 5 year options
-------------------------------------------------------------
LESSEE'S SHARE OF
COMMON AREA EXPENSES: pro rata share
-------------------------------------------------------------
LESSEE'S SHARE OF
TAX OBLIGATION: pro rata share
-------------------------------------------------------------
LESSEE'S SHARE OF
INSURANCE: pro rata share
-------------------------------------------------------------
SECURITY DEPOSIT: -0-
-------------------------------------------------------------
GUARANTORS: N/A
-------------------------------------------------------------
ADDRESSES FOR NOTICE:
LESSOR: LESSEE:
PRICE PIONEER COMPANY, LTD. AMSCO STERILE RECOVERIES, INC.
35 Century Park Way 28100 U.S. Highway 19 North
Salt Lake City, UT 84115 Suite 201
(801) 486-3911 Clearwater, FL 34621
</TABLE>
<PAGE> 4
Footnotes which were attached separately to the original lease prior
to its execution, have been incorporated into the text of this lease for
clarification, and are identified by: (1) brackets, (2) their corresponding
footnote number, and (3) an asterisk (also noted at bottom of page
indicating where footnote is located in original lease).
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into this 2nd day of September,
1993, by and between PRICE PIONEER COMPANY, LTD., a Utah limited partnership,
doing business in PRICE BUSINESS CENTER - PIONEER, as Lessor, and AMSCO STERILE
RECOVERIES, INC., as Lessee.
ARTICLE 1. PREMISES. Lessor is the owner of real property
situated in the City of Salt Lake, Salt Lake County, State of Utah, on which
Lessor is developing an exclusive preplanned office and commercial park, known
as the PRICE BUSINESS CENTER - PIONEER, which real property is shown on Exhibit
"A" and attached hereto and by this reference incorporated herein.
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
the certain premises in PRICE BUSINESS CENTER - PIONEER (hereinafter referred
to as the "Premises" and "Park" respectively) outlined in red on the plat of
PRICE BUSINESS CENTER - PIONEER attached hereto as Exhibit "A", said premises
containing a total of approximately 24,000 square feet of floor space. The
parties agree that this Lease is subject to the effect of any covenants,
conditions, restrictions, easements, mortgages or deeds of trust, ground
leases, rights of way and any other matters or documents of record; the effect
of any zoning laws of the city, county and state where the Park is situated,
and general and special taxes not delinquent. Lessee agrees that as to
Lessee's leasehold estate Lessee and all persons in possession or holding under
Lessee, will conform to and will not violate the terms of any covenants,
conditions or restrictions of record which may now or hereafter encumber the
Property (the "Restrictions"); and this Lease is subordinate to the
restrictions and any amendments or modifications thereto. [Future Amendments
cannot hinder Lessee's use of the Premises.](5)*
ARTICLE 2. PURPOSE. The Premises are to be used only for office
or other commercial purposes permitted in the Rules, Regulations and
Restrictive Covenants attached hereto as Exhibit "C", and for no other purpose
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld.
ARTICLE 3. TERM. The term of this Lease shall be for [ten (10)
years three (3) months, unless terminated earlier as provided for herein](4)*,
commencing [September 1, 1993.](2)* Lessor agrees that it will, at its sole
cost and expense and as soon as it is reasonably possible, commence and pursue
the completion of the improvements to be erected by Lessor as shown on the
attached Exhibit "D". [Lessor shall deliver possession of the Premises to the
Lessee one (1) week after full execution of this Lease for Lessee to enter and
commence Lessee's required build out. Lessor shall have sixty (60) days after
turn over of Premises to Lessee to complete its required work and to coordinate
with the Power Company for any modifications. However, Lessee and Lessor both
acknowledge Lessor has no control over the Power Company and its scheduling as
noted in Exhibit "D" attached hereto.](3)*
ARTICLE 4. POSSESSION.(3)* If Lessor, for any reason whatsoever,
cannot deliver possession of the Premises to Lessee at commencement of the term
hereof, this Lease shall not be void or voidable, nor shall Lessor be liable to
Lessee for any loss or damage resulting therefrom, but in that event, all rent
shall be abated during the period between the commencement of said term and the
time when Lessor delivers possession. As such, rent shall commence upon
delivery and the Lease term shall be extended by such period of delay.
ARTICLE 5. RENT. Lessee shall pay to Lessor, as rent for the
Premises during the term of this Lease:
<TABLE>
<CAPTION>
[Lease Years Monthly Rent
----------- ------------
<S> <C>
1 - 3 (plus the initial partial Lease Year, if any) $ 5,280.00
4 - 6 $ 6,240.00
7 - 10 $ 6,720.00](1)*
</TABLE>
payable on or before the first day of each calendar month during the term
hereof. Minimum rent for any partial month shall be prorated on a per diem
basis. [Lessee shall prepay one (1) month's rental upon signing of the Lease.
Upon Lessee receiving its Certificate of Occupancy, Lessee shall prepay three
(3) months rental to Lessor. These four months of prepaid rent shall be
applied to minimum rent for the months of September, October, November and
December of 1993. Lessee's next minimum rent payment shall be due January 1,
1994, and thereafter on the 1st day of each month of the Lease term.](3)**
__________________________________
* Footnote appears on page 1, with descriptive paragraph on page 1a.
** Footnote appears on page 2, with descriptive paragraph on page 2a.
<PAGE> 5
Rent shall be paid to Lessor without deduction or offset, in lawful
money of the United States of America and shall be paid at the office of Lessor
at 35 Century Park-Way, Salt Lake City, Utah 84115, or to such other place as
Lessor may from time to time designate by written notice to Lessee. Any
installment of rent, other sum or any portion of such installment or other sum
required under this Lease to be paid by Lessee which has not been paid within
[ten (10) days written notice](1)* after the due date thereof (withstanding
postal delays) shall, whether or not demand therefor is made or notice of
default is given, bear interest at the rate of one and one half percent
(1-1/2%) per month from the due date thereof or until paid in full. In
addition thereto, Lessor may charge a sum equal to five percent (5%) of each
unpaid amount as a service fee to compensate Lessor for the additional time and
expense necessitated in the handling of delinquent payments.
ARTICLE 6. USE OF PREMISES. Lessee shall not do or permit
anything to be done in or about the Premises, nor bring or keep anything
therein which will in any way increase the existing rate or affect any policy
of fire or other insurance upon the Premises or any of its contents. Lessee
shall not do or permit anything to be done in or about the Premises which will
in any way obstruct or interfere with the rights of other lessees or occupants
of the Park, injure or annoy them or use or allow the Premises to be used for
any improper, immoral, or unlawful purpose. Nor shall Lessee cause, maintain
or permit any nuisance in, on or about the Premises. Lessee shall not damage
or deface or otherwise commit or suffer to be committed any waste in or upon
the Premises. [Lessee may use the Leased Premises only for the purpose of a
laundry, sterilization and hospital reprocessing facility. Lessor acknowledges
that Lessee will be handling, among other things, soiled operating room linens
and other materials from hospitals, medical clinics, laboratories and other
health services related facilities. Lessor hereby consents to Lessee's
activities as herein described. Further, Lessor hereby represents that the
Leased Premises is zoned M-3 heavy industrial. Notwithstanding anything to the
contrary contained in this Lease, in the event any statute, ordinance or
regulation is imposed by an applicable governmental authority upon Lessee that
prohibits Lessee's intended use of the Premises as set forth herein, Lessee
shall be entitled to terminate this Lease, effective as of date Lessee's use is
no longer permitted by the applicable governmental authorities.](4)*
Lessee shall not place any sign or advertisement upon any exterior
wall or window without the prior written consent of Lessor, which consent shall
not be unreasonably withheld.
ARTICLE 7. COMPLIANCE WITH LAW. Lessee shall not use the
Premises or permit anything to be done in or about the Premises which will in
any way conflict with any law, statute, ordinance or government rule or
regulation now in force or which may hereafter be enacted or promulgated.
Lessee shall at its sole cost and expense promptly comply with all laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force or which may hereafter be in force and with the requirements of any board
of fire underwriters or other similar body now or hereafter constituted related
to or affecting the condition, use or occupancy of the Premises, excluding
structural changes not related to or affected by Lessee's improvements or acts.
The judgment of any court of competent jurisdiction or the admission of Lessee
in an action against Lessee, whether Lessor be a party thereto or not, that
Lessee has violated any such law, statute, ordinance or governmental rule,
regulation or requirement, shall be conclusive of that fact as between Lessor
and Lessee.
Lessee hereby accepts the Leased Premises in the condition existing as
the date of occupancy, [and subject to Exhibit "D"](2)*, subject to all
applicable zoning, municipal, county and state laws, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the term or any part of the term hereof regulating the Leased Premises.
For purposes hereof, "Hazardous Materials" shall mean any and all
flammable explosives, radioactive material, hazardous waste, toxic substance or
related material, including but not limited to, those materials and substances
defined as "hazardous substances", "hazardous materials", "hazardous wastes" or
"toxic substances" in the Environmental Laws. For purposes hereof,
"Environmental Laws" shall mean all local, state and federal laws, statues,
rules and regulations, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq.; the Hazardous Materials Transportation Act, 39 U.S.C.
Section 1801, et seq.; the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Federal
Clean Water Act 33 U.S.C. Section 1251 et seq.; the Clean Air Act 42 U.S.C.
Section 7401 et seq.; the Porter - Cologne Water Quality Act, including all
amendments thereto, replacements thereof, and regulations adopted and
publications promulgated pursuant thereto. Lessee agrees that during the term
of this Lease Lessee shall not be in violation of any federal, state or local
law, ordinance or regulation relating to industrial hygiene, soil, water, or
environmental conditions on, under or about the Leased Premises including, but
not limited to, the Environmental Laws. Lessee further agrees that during the
term of this Lease, there shall be no use, presence, disposal, storage,
generation, release, or threatened release of Hazardous Materials on, from or
under the Leased Premises. Lessee agrees to indemnify, defend, protect and
hold harmless Lessor, its directors, officers, employees, partners, and agents
from and against any and all losses,, claims, demands actions, damages (whether
direct or consequential), penalties, liabilities, costs and expenses, including
all attorneys' fees and legal expenses, arising out of any violation or alleged
violation of any of the laws or regulations referred to in this Article 7, or
breach of any of the provisions of this Article.
__________________________________
* Footnote appears on page 2, with descriptive paragraph on page 2a.
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<PAGE> 6
[Lessee acknowledges complete responsibility for all Infectious Waste (as
hereinafter defined) generated or originating on the Demised Premises, and
covenants to adequately, properly and in conformance with all local, state and
federal laws, rules and regulations handle, store and dispose of all such
Infections Waste. For purposes of this Lease, Infectious Waste shall mean
Bloodborne Pathogens, Regulated Waste and other potentially Infectious
Materials as defined in Section 1910.1030, Part 1910, Title 29 of the Code of
Federal Regulations as amended from time to time. Lessee shall indemnify and
hold Lessor harmless from any and all claims or damages arising out of Lessee's
use or occupancy of the premises.](3)*
ARTICLE 8. ALTERATIONS. Lessee shall not make or permit to be
made any alterations, additions or improvements to or of the Premises or any
part thereof without the written consent of Lessor, which consent shall not be
unreasonably withheld, [or delayed](1)* and any alterations, additions or
improvements to, or on the Premises, except movable furniture and trade
fixtures shall at once become a part of the realty and belong to Lessor.
Lessee shall submit working drawings for any such alterations, additions or
improvements to Lessor for Lessor's prior written approval. [Lessor shall turn
around Lessee's plans within one week after receipt. Lessor and Lessee
acknowledge turn around does not necessarily mean approval. Lessor and Lessee
acknowledge Lessee is to submit the final plans for Lessor's approval prior to
Lease execution so that the final approved plans may be attached hereto and
made a part of the Lease as Exhibit "F". Lessor and Lessee acknowledge Lessor
has reviewed and commented on Lessee's plans (May 10, 1993 letter from Eric
Davis) and Lessee shall submit final plans to be attached to the Lease within a
week of Lessee's execution of this Lease.](2)* Lessor hereby consents to the
alterations, additions or improvements shown on Exhibit "F", attached hereto,
and Lessor further agrees to complete any of Lessor's work, if any,
specifically as shown on Exhibit "D". In the event Lessor consents to the
making of any alterations, additions or improvements to the Premises by Lessee,
the same shall be made by Lessee at Lessee's sole cost and expense and
selection by Lessee of any contractor or person to construct or install the
same shall be subject to the prior written approval of Lessor, which approval
shall not be unreasonably withheld, and such work shall be performed in a
workmanlike manner.
Lessee shall keep the Premises and the Park in which the Leased
Premises are situated, free from any liens arising out of any work performed,
materials furnished or obligations incurred by Lessee. In the event a
mechanic's or other lien is filed against the Leased Premises or the Park of
which the Leased Premises forms a part as a result of a claim arising through
Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to at least one hundred fifty percent
(150%) of the amount of the contested lien, claim or demand, indemnifying
Lessor against liability for the same and holding the Leased Premises free from
the effect of such lien notice from Lessor. In addition, Lessor may require
Lessee to pay Lessor's attorneys' fees and costs in participating in any action
to foreclose such lien if Lessor shall decide it is to its best interest to do
so. [Lessor cannot step up and pay and expect reimbursement of such costs
before Lessee's cure period is up unless Lessor is in a position where
foreclosure proceedings have been indicated or Lessor is about to lose the
property.](4)*
Lessee shall return the Leased Premises to Lessor at the expiration or
earlier termination of this Lease in good and sanitary order, condition and
repair, free of rubble and debris, broom clean, reasonable wear and tear
excepted. [Lessee shall leave the Premises in the same condition as was
accepted at lease commencement, reasonable wear and tear excepted with the
following exceptions:
(a) Lessee shall be required to back fill vaults with
engineered fill and provide compaction test results indicating 95% compaction
modified proctor. However if during the term of the lease any environmental
contamination is discovered that would require the removal of such vaults, such
removal will be done at Lessee's sole cost and expense.
(b) Lessee shall demolish all areas of the concrete slab
around pits, vaults and plumbing trenches, back to the closest adjacent control
or construction joint (which are currently spaced on + 13'-6" and 8'-6"
centers) and replace such slabs with 6" 4000 psi concrete with 1/2" round 24"
smooth dowels 32" on center at the perimeter. All curbs and platforms shall be
removed leaving a smooth surface on the remaining slab.
(c) Lessee will do a complete demolition and removal of
the equipment and improvements, including floor coverings (not paint), however,
this will not include the east demising wall.
(d) Lessee must re-establish fire sprinklers to original
coverage meeting current codes (i.e. replace heads to original height).
(e) Lessee must re-establish original mechanical system
per original drawings and meeting current codes. Lessee shall remove all duct
work but may cap off units and properly seal such.
__________________________________
* Footnote appears on page 3, with descriptive paragraph on page 3a.
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<PAGE> 7
(f) Lessee shall remove exterior wall louvers and dock
door infill panels as part of demolition noted above. Lessee must install 1
new overhead door in the previously louvered location to match original plans.
Lessee shall save original adjacent overhead door and reinstall such upon
vacating the building. Oversized door shall be equipped with a new and smaller
seal to accommodate truck sizes per adjacent doors.
(g) Lessee shall remove from roof all pipes, and vent
stacks, weld in roof deck patches with accompanying structure per Lessor's
engineer and patch the roofing. Lessee shall be required to use Lessor's roof
contractor in order to maintain the roof warranty.
(h) Lessee shall save original light fixtures and
reinstall such in the original locations if Lessee vacates within the first
five years, if Lessee vacates the premises after the initial five years, Lessor
shall reinstall such fixtures at its sole cost and expense.](1)*
All damage to the Leased Premises caused by the removal of such trade fixtures
and other personal property that Lessee is permitted to remove under the terms
of this Lease and/or such restoration shall be repaired by Lessee at its sole
cost and expense prior to termination.
ARTICLE 9. REPAIRS. Lessee shall, at all times during the term
hereof, and at Lessee's sole cost and expense, keep, maintain and repair the
Premises in good and sanitary order and condition, including, without
limitation, replacement of all broken or damaged glass, replacement of light
globes or tubes and doors, window casements, heating and air conditioning
systems, plumbing, pipes, electrical wiring conduit, interior partitions,
fixtures, leasehold improvements and alterations.
Lessor shall, at its sole cost and expense, keep and maintain in good
repair, the exterior walls and roof of the Premises. By entering into the
Premises, Lessee shall be deemed to have accepted the Premises in "as-is"
condition and as being in good and sanitary order, condition and repair, and
Lessee agrees that on the last day of said term or sooner termination of this
Lease to surrender the Premises with appurtenance in the same condition as when
received [at lease commencement](2)* reasonable use and wear thereof and damage
by fire, act of God or by the elements is excepted. [Both parties acknowledge
"as-is" includes Lessor's scope of work as described in Exhibit "D".](6)*
Lessor shall pay for maintenance and repair as defined herein so long
as the need for same does not result from any wrongful or negligent act or
omission of Lessee or its employees, invitees or licensees. The cost of any
such maintenance, repair, janitorial or other service which becomes necessary
as a result of any such act or omission shall be borne by Lessee. Lessor shall
not be required to make any repairs unless and until Lessee has notified Lessor
in writing of the need for such repairs [except in emergency cases](3)* and
Lessor shall have a reasonable period of time thereafter within which to
commence and complete said repairs. Lessor shall act within seventy-two (72)
hours after receipt of written notice and shall pursue to completion with due
diligence; provided however, Lessor shall not be liable for any damages,
direct, indirect or consequential, or for damages for personal discomfort,
illness or inconvenience of Lessee by reason of failure of such equipment
facilities or systems or reasonable delays in the performance of such repairs,
replacements and maintenance, unless caused by the deliberate act or omission
of Lessor, its servants, agents, or employees or anyone permitted by it to be
in the Park, or through it in any way, the cost of the necessary repairs,
replacements or alterations shall be borne by Lessee who shall pay the same to
Lessor on demand. [Unless such necessary repairs, replacements or alterations
are Lessor's obligation, then the cost shall be borne by Lessor. Lessee shall
have the right to cure any Lessor default under this Article and charge Lessor
for such expenses, including fifteen percent (15%) to cover overhead which
demand for payment from Lessor shall be paid within thirty (30) days of
demand.](4)*
ARTICLE 10. LAWS, WASTE AND NUISANCE. (a) Lessee
covenants that it: (i) will comply with all governmental laws, ordinances,
regulations and requirements, now in force or which hereafter may be in force,
of any lawful governmental body or authority having jurisdiction over the
Premises; (ii) will keep the Premises and every part thereof in a clean, neat
and orderly condition, free of noise, odors or nuisances which are
[reasonably](5)* objectionable to Lessor or Lessee's neighbors; (iii) will in
all respects and at all times fully comply with all health and policy
regulations; (iv) shall not overload the floors or permit or allow any waste,
abuse, deterioration or destructive use of the Premises to occur.
(b) Lessee further covenants that it will (i) not cause
or permit any hazardous wastes to be brought upon or used in or about the
Premises; (ii) immediately notify Lessor of any environmental concern raised by
a private party or governmental agency as it relates to the Premises; and (iii)
immediately notify Lessor of any hazardous waste spill. In the event of a
violation hereof, Lessee shall immediately proceed, at Lessee's expense, to
remedy same. Failure of Lessee to commence clean up activities within five (5)
days after receipt of notice to so do shall result in a default under this
Lease. Lessor shall, thereafter, have the right, but not the obligation, to
remedy any environmental violation upon the Premises and Lessee shall promptly
reimburse Lessor for all costs relating thereto. Lessor further retains the
right, in its sole, but reasonable discretion, to conduct any environmental
tests on the Premises should Lessor suspect a violation to exist upon the
Premises.
__________________________________
* Footnote appears on page 4, with descriptive paragraph on page 4a.
4
<PAGE> 8
Lessee shall and does agree to indemnify and hold Lessor harmless from and
against any and all damages, costs, expenses and liability whatsoever,
including, without limitation, attorneys' fees that Lessor may incur because of
Lessee's violation of, or the resulting enforcement of, any Environmental Laws.
ARTICLE 11. ABANDONMENT. [Lessee may vacate the premises prior
to expiration provided Lessee continues to pay any and all charges due as well
as continues to fully maintain the premises.](1)*
ARTICLE 12. LIENS. Should any mechanic's or other liens be filed
against the Premises by reason of Lessee's acts or omissions or because of a
claim against Lessee or against Lessee's agents or contractors, Lessee shall
cause the same to be canceled and discharged of record and shall indemnify,
defend and hold Lessor harmless from any such lien and shall deal with any such
lien in accordance with the terms of Article 8 above.
ARTICLE 13. ASSIGNMENT AND SUBLETTING. The purpose of this Lease
is to transfer possession of the Leased Premises to Lessee for Lessee's
personal use in return for certain benefits, including rent, to be transferred
to the Lessor. Lessee's right to assign or sublet as stated in this Article is
subsidiary and incidental to the underlying purpose of this Lease. Lessee
acknowledges and agrees that it has entered into this Lease in order to acquire
the Leased Premises for its own personal use and not for the purpose of
obtaining the right to convey the leasehold to others. Lessee shall not assign
this Lease or sublet the Premises or any part thereof to occupy or use the
Premises or any portion thereof without the prior written consent of Lessor,
[which consent shall not be unreasonably withheld or delayed. Notwithstanding
the foregoing, Lessee shall be allowed to assign the lease to the parent
company or any of the parent company's subsidiaries or affiliate companies
without Lessor's prior approval provided Lessee remains liable under the lease
and provides Lessor with written documentation within fifteen (15) days of such
transaction.](2)* Acceptance of rent by Lessor of Lessee or Assignee shall not
be deemed approval or acceptance of assignment or subletting. Lessee shall
remain liable for all terms and conditions of this Lease Agreement at all times
upon Lease assignment or subletting. In the event Lessor grants permission in
writing for Lessee to sublet or assign, Lessee shall pay to Lessor Three
Hundred and No/100 Dollars ($300.00) to cover costs and inconvenience. Any
assignment or subletting by Lessee without Lessor's consent shall be a default
by Lessee hereunder.
ARTICLE 14. PARKING AND COMMON AREAS. Lessee shall have
nonexclusive parking rights for 43 parking spaces in the Parking Area adjacent
to or near Lessee's Premises. Lessor shall cause the parking and landscaped
areas surrounding the Premises to be graded, blacktopped, lighted and
landscaped at no expense to Lessee. Lessor has completed the landscaped areas
and driveways situated within the Park and outside of the Premises (hereinafter
referred to as the "Common Area") at no expense to Lessee.
Lessee, for the use and benefit of Lessee, its customers, invitees and
employees, shall have the nonexclusive right in common with Lessor and other
present and future owners, lessees and their agents, employees, customers,
licensees and sublessees, to use said Common and Parking Areas during the
entire term of this Lease or any extension thereof, for ingress and egress,
roadway, sidewalks and automobile/truck parking. [Lessee may park a maximum of
three (3) trucks overnite by the Premises. Lessor acknowledges Lessee will be
spraying out the inside of their trucks in the parking lot and Lessee shall do
such near one of the parking lot drains.](1)**
Lessor shall have the right, through reasonable rules, regulations
and/or restrictive covenants promulgated or modified by it from time to time,
to control use and operation of the Common Areas in order that the same may
occur in a proper and orderly fashion; provided, however, that any such
promulgated or modified rules, regulations and/or restrictive covenants shall
not discriminate against Lessee in favor of other lessees or portions of the
Park [or restrict lessee's initial intended use.](2)**
Lessor reserves the right to change from time to time the dimensions
and location of the Common Areas as shown on Exhibit "A" as well as the
dimensions identity and type of any building (except the Premises of Lessee)
shown on Exhibit "A" and to construct additional buildings, modifications of
existing buildings or other improvements in the Park.
ARTICLE 15. INDEMNIFICATION OF LESSOR. This Article 15 is
written and agreed to in respect of the intent of the parties to assign the
risk of loss whether resulting from negligence of the parties or otherwise, to
the party who is obligated hereunder to cover the risk of such loss with
insurance. Thus, the indemnity and waiver of claims provisions of this Lease
have as their object, so long as such object is not in violation of public
policy, the assignment of risk for a particular casualty to the party carrying
the insurance for such risk, without respect to the causation thereof.
Lessor and Lessee release each other, and their respective authorized
representatives, from any claims for damage to any person or to the Leased
Premises and the Building and other improvements
__________________________________
* Footnote appears on page 5, with descriptive paragraph on page 5a.
** Footnote appears on page 6, with descriptive paragraph on page 6.
5
<PAGE> 9
in which the Leased Premises are located, and to the fixtures, personal
property, Lessee's improvements and alterations of either Lessor or Lessee, in
or on the Leased Premises and the Building and other improvements in which the
Leased Premises are located, including loss of income, that are caused by or
result from risks insured or required under the terms of this Lease to be
insured against under any property insurance policies carried or to be carried
by either of the parties.
Each party shall cause each such insurance policy obtained by it to
provide that the insurance company waives all rights of recovery by way of
subrogation against either party in connection with any damage covered by such
policy. Neither party shall be liable to the other for any damage caused by
fire or any other risks insured against under any property insurance policy
carried under the terms of this Lease. If any such insurance policy cannot be
obtained with a waiver of subrogation without payment of an additional premium
charge above that charged by the insurance companies issuing such policies
without waiver of subrogation, the party receiving the benefit shall elect to
either forfeit the benefit or shall pay such additional premium to the
insurance carrier requiring such additional premium.
Lessee, as a material part of the consideration to be rendered to
Lessor, shall indemnify, defend, protect and hold harmless Lessor against all
actions, claims, demands, damages, liabilities, losses, penalties, or expenses
of any kind which may be brought or imposed upon Lessor or which Lessor may pay
or incur by reason of injury to person or property, from whatever cause, all or
in any way connected with the condition or use of the Leased Premises, or the
improvements or personal property therein or thereon, including without
limitation any liability or injury to the person or property of Lessee, its
agents, officers, employees or invitees. Lessee agrees to indemnify, defend
and protect Lessor and hold it harmless from any and all liability, loss, cost
or obligation on account of, or arising out of, any such injury or loss however
occurring, including breach of the provisions of this Lease and the negligence
for the parties hereto. Nothing contained herein shall obligate Lessee to
indemnify Lessor against its own sole or gross negligence or willful acts, for
which Lessor shall indemnify Lessee.
In the event any action, suit or proceeding is brought against Lessor
by reason of such occurrence, Lessee, upon Lessor's request will at Lessee's
expense resist and defend such action, suit or proceeding, or cause the same to
be resisted and defended by counsel designated either by Lessee or by the
insurer whose policy covers the occurrence and in either case approved by
Lessor. The obligations of Lessee under this Article arising by reason of any
occurrence taking place during the Lease term shall survive any termination of
this Lease.
Lessee, as a material part of the consideration to be rendered to
Lessor, hereby waives all claims against Lessor for damages to goods, wares,
merchandise and loss of business in, upon or about the Leased Premises and for
injury to Lessee, its agents, employees, invitees or third persons in or about
the Leased Premises from any cause arising at any time, including breach of the
provisions of this Lease and the negligence of the parties hereto.
Wherever in this Article the term Lessor or Lessee is used and such
party is to receive the benefit of a provision contained in this Article, such
term shall refer not only to that party but also to its officers, directors,
employees, partners and agents.
ARTICLE 16. INSURANCE. (a) Lessee agrees to secure and
keep in force from and after the date Lessor shall deliver possession of the
Premises to Lessee and throughout the Lease term, at Lessee's sole cost and
expense comprehensive General Liability insurance on the Premises under
Lessee's care, custody and control, and all areas appurtenant thereto, on an
occurrence basis with a minimum limit of liability in an amount of One Million
Dollars ($1,000,000.00) per occurrence, Two Million Dollars ($2,000,000.00)
aggregate. Evidence of said insurance shall be provided to Lessor within
thirty (30) days of occupancy and shall name Lessor as an additional insured.
The policy shall insure performance by Lessee of the indemnity provisions of
this Lease; shall cover contractual liability, and products liability; shall be
primary, not contributing with, and not in excess of coverage which Lessor may
carry; shall provide for severability of interest; shall provide that an act or
omission of one of the insured or additional insured which would void or
otherwise reduce coverage shall not void or reduce coverage as to the other
insured or additional insured; and shall afford coverage after the term of this
Lease (by separate policy or extension if necessary) for all claims based on
acts, omissions injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the term of this Lease. The
limits of said insurance shall not limit any liability of Lessee hereunder.
Not more frequently than every three (3) years, if, in the reasonable opinion
of Lessor, the amount of liability insurance required hereunder is not
adequate, Lessee shall promptly increase said insurance coverage as required by
Lessor, which adequacy shall be determined by the prevailing standard for
liability insurance in the Salt Lake industrial leasing market.
(b) Lessor shall procure insurance coverage insuring
Lessor against loss of, or damage to, the building in which the Premises are
located (Lessor's Building) by reason of fire and certain other casualties.
Such insurance shall be underwritten by a responsible insurance company
qualified to do business in the State where Lessor's Building is located and
shall be in the face amount equal to the full replacement cost of Lessor's
Building. Such insurance shall cover loss or damage by fire, and loss or
damage arising out of the normal extended coverage perils which are windstorm,
hail, acts of God, explosion, riot attending a strike, civil commotion,
aircraft, vehicles, and smoke.
6
<PAGE> 10
(c) At all times during the term hereof, Lessee shall
keep in force at its sole cost and expense, fire and extended coverage
insurance, and against sprinkler leakage or malfunction and water damage and
against vandalism and malicious mischief, Lessee's trade fixtures, furnishings,
equipment and contents upon the Premises in full replacement value thereof.
Lessee shall also obtain broad form boiler and machinery insurance on all
air-conditioning equipment, boilers and other pressure vessels or systems,
whether fired or unfired, which are installed by Lessee or which exclusively
serve the Premises. Such boiler and machinery insurance shall cover the
replacement value of such items.
(d) Each of the parties hereby waives any rights it may
have against the other party on account of any loss or damage to its property
(including Lessor's Building, the contents of such, and property located on the
Common Areas) which arises from any risk generally covered by fire and extended
coverage insurance, whether or not such party may have been negligent or at
fault in causing such loss or damage. Each of the parties shall obtain a
clause or endorsement in the policies of such insurance which each party
obtains in connection with this Lease to the effect right of subrogation
against the other party for loss covered by such insurance. It is understood
that such subrogation waivers may be operative only as long as such waivers are
available in the State where Lessor's Building is located. In the event
subrogation waivers are allegedly not operative in such State, notice of such
fact shall be promptly given by party obtaining the insurance in question to
the other party.
(e) [Other than the approved use outlined in Article 6
hereof,](1)* no use shall be made or permitted to be made on the Leased
Premises, nor acts done, which will increase the existing rate of
insurance upon the Building in which the Leased Premises are located, or cause
the cancellation of any insurance policy are located, or cause the cancellation
of any insurance policy covering the Building. Lessee shall at its sole cost
and expense, comply with any and all requirements pertaining to the Leased
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable property damage and public liability insurance,
covering the Leased Premises, the Building or the Park. Lessee agrees to pay
to Lessor, as additional rent, any increase resulting from Lessor's use in
premium on policies which may be carried by Lessor on the Leased Premises, the
Building or on the Park, or any blanket policies which include the Building or
Park, covering damage thereto and loss of rent caused by fire and other perils
above the rates for the least hazardous type of occupancy for office use.
Lessee further agrees to pay Lessor, as additional rent, any increases in such
premiums resulting from the nature of Lessee's occupancy or any act or omission
of Lessee. No such policy shall have a deductible in a greater amount than
[Twenty-Five Thousand Dollars ($25,000.00).](6)** Lessee shall also insure in
the same manner the physical value of all its Leasehold Improvements.
During the Lease term, the proceeds from any such policy or policies of
insurance shall be used for the repair or replacement of the property so
insured. Lessor shall have no interest in the insurance upon Lessee's
equipment and fixtures and will sign all documents necessary or proper in
connection with the settlement or any claim or loss by Lessee.
(f) [To the best of Lessor's knowledge, the Leased
Premises are free of asbestos and any hazardous waste as of the turn over date
to Lessee.](5)**
ARTICLE 17. UTILITIES; JANITORIAL SERVICE. (a) Lessee shall
be solely responsible for, and shall promptly pay before delinquency, all
charges for use or consumption of heat, sewer, water, gas, electricity,
telephone or any other utility services supplied to Lessee or to the Premises
during the term hereof. [Gas and electricity are separately metered directly
from the utility companies. Water is on one main meter to Lessor, Lessor shall
put in a sub meter for Lessee's space and shall bill Lessee for its use at the
same exact rate as Lessor is billed for the water from the City.](1)** Should
any utility service be provided on a joint meter to the Premises and to other
spaces within Lessor's Building, Lessee shall reimburse Lessor for its pro rata
share (based upon floor area square footage) of such jointly supplied utility
service. Such reimbursement shall be made within [thirty (30)](2)** days
following the receipt of Lessor's statement indicating the share owed by Lessee
and such shall be considered additional rent hereunder.
(b) Lessor shall not be liable in the event of any
interruption in the supply of any utility service to the Premises or to
Lessor's Building [unless directly caused by Lessor's acts or omissions.](3)**
Lessee agrees that it will not install any equipment which will exceed or
overload the capacity of any utility facilities and that if any equipment
installed by Lessee shall require additional utility facilities, the same shall
be installed at Lessee's expense in accordance with plans and specifications
first approved in writing by Lessor.
(c) Lessee shall provide at its sole expense regular
janitorial service for the Premises which shall include at least ordinary
dusting and cleaning, emptying of waste baskets and vacuuming. In addition,
Lessee shall provide an adequate sized dumpster for the storage of refuse in
the location depicted on Exhibit "A". [When Lessor and Lessee have determined
the size of such dumpster, then Lessor shall designate the placement of
such.](4)** Lessee shall arrange for the removal of such refuse and periodic
cleaning of such dumpster and the areas immediately adjacent thereto.
__________________________________
* Footnote appears on page 8, with descriptive paragraph on page 8.
** Footnote appears on page 9, with descriptive paragraph on page 9a.
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ARTICLE 18. NET LEASE; ADDITIONAL RENT. (a) It is the
intent of both parties that the minimum monthly rentals herein specified shall
be absolutely net to Lessor throughout the term of this Lease, that all costs,
expenses, and obligations of every kind relating to the Premises which may
arise or become due during the term hereof shall be paid by Lessee, except for
those which are specifically imposed upon Lessor pursuant to the terms of this
Lease. In furtherance thereof, Lessee specifically agrees to pay to Lessor as
additional rent, without demand therefor and without offset or deduction, the
expenses and charges set forth below:
(i) Lessee shall pay to Lessor its Proportionate
Share (as defined below) of the Park's Common Area operating costs. The
"Common Area operating cost" means the total cost and expense incurred in
connection with the ownership, maintenance, repair, and operation of Common
Areas, specifically including, without limitation, the costs and expenses for:
utilities for lighting and cleaning the Common Areas, watering vegetation,
personal property taxes and assessments on the Common Area personalty and
equipment; real property taxes and assessments on the land and improvements
comprising the exterior Common Areas (to the extent not included in
subparagraph (c) below; premiums for property damage and vandalism and
malicious mischief insurance covering exterior Common Areas and for public
liability insurance covering Lessor's activities on the Common Areas;
maintenance, repair and replacement (excluding capital charges) of Common Area
pavement, sidewalks, walls, fences, curbs and bumpers, floor and wall coverings
in interior Common Areas, and all interior and exterior directional signs;
gardening and the maintenance and replacement of landscaping and irrigation
systems; striping and line painting; sweeping; sanitary and flood control;
removal of snow, ice, trash, rubbish, garbage, and other refuse; cleaning,
repair and replacement of lighting fixtures including bulbs and ballasts;
depreciation on, or rentals for, machinery and equipment used in such
maintenance; the cost of supplies and personnel (and salaries, uniforms,
workmen's compensation insurance, group insurance, fidelity bonds and other
fringe benefits) to implement such service, to direct parking, and to police
the Common Areas; repair of all utility lines; custodial service for interior
Common Areas; fees required licenses and permits relating to the operation of
parking areas, and fifteen percent (15%) of all the foregoing costs (except for
the cost of taxes and insurance) to cover administrative and overhead expenses.
[Lessee shall have the option to audit Lessor's
records to verify the accuracy of such billings upon ten (10) days prior
written notice to Lessor. Such audit shall take place at Lessor's corporate
office during regular business hours.](1)*
(ii) Lessee shall pay to Lessor its Proportionate
Share (as defined below) of the cost of Lessor's property damage insurance
described in paragraph 16(b) above.
(iii) Lessee shall pay to Lessor its Proportionate
Share (as defined below) of all Real Estate Taxes (as defined below) levied
against Lessor's Building and land for any period occurring during the term of
this Lease.
"Real Estate Taxes" or "Taxes" shall mean and include
all general and special taxes, assessments, duties and levies, charged and
levied upon or assessed by any governmental authority against the Park
including the land, the Buildings, the Premises, any other improvements
situated on the land other than the Buildings, the various estates in the land
and the Buildings, any leasehold improvements, fixtures, installations
additions and equipment whether owned by Lessor or Lessee. Real Estate Taxes
shall also include the reasonable cost to Lessor contesting the amount,
validity, or the applicability of any Taxes mentioned in this Article. Further
included in the definition of Taxes herein shall be general and special
assessments, fees of every kind and nature, commercial rental tax, levy,
penalty or tax (other than inheritance, [income](2)* or estate taxes) imposed by
any authority having the direct or indirect power to tax, as against any legal
or equitable interest of Lessor in the Leased Premises or in the Park or on the
act of entering into this Lease or as against Lessor's right to rent or other
income therefrom, or as against Lessor's business of leasing the Leased
Premises, any tax, fee, or charge with respect to the possession, leasing,
transfer of interest, operation, management, maintenance alteration, repair,
use, or occupancy by Lessee of the Leased Premises or any portion of the Park,
or any tax imposed in substitution, partially or totally, for any tax
previously included within the definition of Taxes herein, or any additional
tax, the nature of which may or may not have been previously included within
the definition of Taxes. Further, if at any time during the term of this Lease
the method of taxation or assessment of real estate or the income therefrom
prevailing at the time of execution hereof shall be, or has been altered so as
to cause the whole or any part of the Taxes now or hereafter levied, assessed
or imposed on real estate to be levied, assessed or imposed upon Lessor, wholly
or partially, as a capital levy, business tax, permit or other charge, or on or
measured by the rents received therefrom, then such new or altered Taxes,
regardless of their nature, which are attributable to the Land the Buildings or
to other improvements on the land shall be deemed to be included within the
term "Real Estate Taxes" for purposes of this Article 18, whether in
substitution for, or in addition to any other Real Estate Taxes, save and
except that such shall not be deemed to include any enhancement of said tax
attributable to other income of Lessor. With respect to any general or special
assessments which may be levied upon or against the Leased Premises, the
Buildings, the Park, the underlying realty or which may be evidenced by
improvement or other bonds, or may be paid in annual or semi-annual
installments, only the amount of such
__________________________________
* Footnote appears on page 10, with descriptive paragraph on page 10.
8
<PAGE> 12
installment, pro rated for any partial year, and statutory interest, shall be
included within the computation of Taxes for which Lessee is responsible
hereunder. When possible, Lessee shall cause its trade fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee's said personal property
shall be assessed with Lessor's real property, Lessee shall pay to Lessor the
Taxes attributable to Lessee within [thirty (30)](1)* days after receipt of a
written statement setting forth the Taxes applicable to Lessee's property.
(b) All costs and expenses herein described which are
incurred on a Park-wide basis, such as exterior Common Area maintenance costs,
liability insurance, and taxes and assessments (if separate tax bills are not
available), shall be prorated among the various completed buildings within the
Park, including Lessor's Building, based upon the square foot area within such
buildings. Such portion of the Park-wide costs and expenses herein described
which are allocated to Lessor's Building plus those costs and expenses which
are incurred on a Building-wide basis, such as property damage insurance, shall
be added together and Lessee's Proportionate Share of the resulting total costs
and expenses shall be the ratio obtained by dividing the square foot floor area
of the Leased Premises by the total square foot floor area within Lessor's
Building. In all cases, floor area shall be measured from the outside of
exterior walls and from the center of common walls. Notwithstanding the
preceding provision of Article 18, Lessee's proportionate share as to certain
expenses may be calculated differently to yield a higher percentage share for
Lessee as to certain expenses in the event Lessor permits other lessees in the
Park to directly incur such expenses rather than have Lessor incur the expenses
in common for the Park (such as, by way of illustration, herein a Lessee
performs its own landscaping maintenance). In such case Lessee's proportionate
share of the applicable expense shall be calculated as having its denominator
the gross leasable area of all Premises in the Park less the gross leasable
area of Lessees who have incurred such expense directly. In any case in which
Lessee, with Lessor's consent, incurs such expenses directly, Lessee's
proportionate share will be calculated specially so that expenses of the same
character which are incurred by Lessor for the benefit of other Lessees in the
Park shall not be pro rated to Lessee. Nothing herein shall imply that Lessor
will permit Lessee or any other Lessee of the Park to incur any Common Area
Costs or Operating Costs. Any such permission shall be in the sole discretion
of the Lessor, which Lessor may grant or withhold in its arbitrary judgment.
(c) Lessee's Proportionate Share of the costs and
expenses herein described shall be estimated by Lessor for each twelve (12)
month period, as Lessor, in good faith, may determine and shall, where
possible, be based upon previous costs and expenses increased by an inflation
factor and anticipated forthcoming extraordinary expenditures. Lessee shall
pay in equal installments in advance on the first day of each calendar month
one-twelfth (1/12th) of its estimated Proportionate Share of such costs for
such period and any adjustments to be made as a result of any difference
between the amount paid by Lessee (as its estimated Proportionate Share) and
Lessee's actual Proportionate Share. In the case of a deficiency, Lessee shall
promptly remit the amount of such deficiency to Lessor. In the case of a
surplus, Lessor shall apply such surplus to payments next falling due from
Lessee hereunder. Notwithstanding the foregoing, however, Lessor may elect to
prorate certain costs and expenses, such as taxes and assessments, as they are
incurred and, with respect to such items, not following the "budget billing"
concept described in this subparagraph. [Notwithstanding the foregoing,
Lessee's proportionate share of common area maintenance expense only shall not
increase each year by more than eight percent (8%) over the base year's (1993)
dollar amount.](1)**
ARTICLE 19. PERSONAL PROPERTY TAXES. During the term hereof
Lessee shall pay prior to delinquency all taxes assessed against and levied
upon fixtures, furnishings, equipment and all other personal property of Lessee
as well as any alterations or leasehold improvements contained in the Premises
and when possible Lessee shall cause said fixtures, furnishings and equipment
to be assessed and billed separately from the real property of Lessor.
ARTICLE 20. ENTRY AND INSPECTION. Lessee shall permit Lessor and
its agents to enter into and upon the Premises at all reasonable times for the
purpose of inspecting the same or for the purpose of placing upon the property
in which the Premises are located any usual or ordinary signs advertising the
availability of the property for sale or lease prior to the expiration of this
Lease. Lessor or its agents may, during normal business hours, enter upon said
Premises and exhibit same to prospective lessees. [Entry for purposes of
reletting shall be limited to the last 90 days only, any entry for other
purposes, Lessor shall provide Lessee with a 24 hour verbal notice if possible,
and such entry by Lessor shall be escorted by Lessee or a representative of
Lessee.](2)**
ARTICLE 21. DEFAULT. In the event of any failure of Lessee to
pay any rental due [or other monetary default](3)** hereunder within [ten
(10)](4)** days after the same shall be due or any failure to perform any other
of the terms, conditions or covenants of this Lease to be observed or performed
by Lessee for more than [twenty (20)](5)** days after written notice of such
default shall have been given to Lessee or if Lessee or any guarantor of the
Lease shall become bankrupt or insolvent or file any debtor proceedings or take
or have taken against Lessee or any guarantor of this Lease in any court
__________________________________
* Footnote appears on page 11, with descriptive paragraph on page 11.
** Footnote appears on page 12, with descriptive paragraph on page 12a.
9
<PAGE> 13
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Lessee's or any such guarantor's
property or if Lessee or any such guarantor makes an assignment for the benefit
of creditors or petitions for or enters into an arrangement or suffer this
Lease to be taken under any writ of execution, Lessor, besides other rights or
remedies it may have, shall have the immediate right of re-entry and may remove
all persons and property from the Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Lessee, all without service of notice or resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage which
may be occasioned thereby. [Notwithstanding the foregoing, if such non-
monetary default cannot be cured within such twenty (20) day time frame, Lessee
shall commence and pursue with diligence to cure such default. Also, Lessee
shall have ninety (90) days to cure and dismiss any bankruptcy before it
becomes a default.](6)*
Should Lessor elect to re-enter, as herein provided, or should it take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this Lease or it may from time to time without
terminating this Lease, make such alterations and repairs as may be necessary
in order to relet the Premises and relet said Premises or any part thereof for
such term or terms (which may be for a term extending beyond the term of this
Lease) and at such rental or rentals and upon such other terms and conditions
as Lessor in its sole discretion may deem advisable, upon such reletting, all
rentals received by Lessor from such reletting shall be applied, first, to the
payment of any indebtedness other than rent due hereunder from Lessee to
Lessor, second, to the payment of any costs and expenses of such alterations
and repairs, third, to the payment of rent due and unpaid hereunder, and the
residue, if any, shall be held by Lessor and applied toward payment of future
rent as the same may become due and payable hereunder. If such rentals
received from such reletting during any month be less than that to be paid
during that month by Lessee hereunder, Lessee shall pay any such deficiency to
Lessor. Such deficiency shall be calculated and paid monthly. No such
re-entry or taking possession of said Premises by Lessor shall be construed as
an election on its part to terminate this Lease unless a written notice of such
intention be given to Lessee or unless the termination thereof be decreed by a
court of competent jurisdiction. Notwithstanding any such reletting without
termination, in addition to any other remedies it may have, it may recover from
Lessee all damages it may incur by reason of such breach, including the worth
at the time of such termination of the excess, if any, of the amount of rent
and charges equivalent to rent reserved in this Lease for the remainder of the
stated term over the then reasonable rental value of the Premises for the
remainder of the stated term, all of which amounts shall be immediately due and
payable from Lessee to Lessor.
In the event of default, all Lessee's fixtures, furniture, equipment,
improvements, additions, alterations and other personal property shall remain
on the subject Premises and in that event and continuing during the length of
said default, Lessor shall have the right to take the exclusive possession of
the same and to use the same, rent or charge free, until all defaults are
cured, or, at its option, at any time during the term of this Lease, to require
Lessee to forthwith remove the same, and Lessee hereby waives all rights to
notice and all common law and statutory claims and causes of actions which it
may have against Lessor subsequent to such date as regards to storage,
distribution, damage, loss of use and ownership of the personal property
affected by the terms of this Article. Lessee acknowledges Lessor's need to
relet the Leased Premises upon termination of this Lease for repossession of
the Leased Premises and understands that the forfeitures and waivers provided
herein are necessary to said reletting and to prevent Lessor incurring a loss
for inability to deliver the Leased Premises to a prospective Lessee.
It is agreed that Lessor shall have a first lien on all of the
equipment, fixtures, furnishings and other personal property brought upon the
Premises by Lessee for use thereon, [but only in the event of Lessee's
default.](1)** In the event of a default in the payment of any sum required to
be paid under this Lease by Lessee, Lessor shall have the right, at its option
[should such default continue after ten (10) days written notice to
Lessee,](2)** resort to legal process and without being deemed guilty of
trespass or becoming liable for any loss or damage which may be occasioned
thereby, to take possession of such personal property and sell the same at a
private or public sale and apply the proceeds thereof upon the sums owing to
Lessor hereunder.
The remedies given to Lessor in this section shall be in addition and
supplemental to all other rights or remedies which Lessor may have under the
laws then in force.
ARTICLE 22. DESTRUCTION. (a) If Lessor's Building shall be
partially damaged by fire or other casualty insured against under Lessor's
property damage insurance policies, Lessor shall, upon receipt of the insurance
proceeds, repair Lessor's Building to a condition which is substantially
similar to the condition in existence prior to such casualty.
(b) Notwithstanding the foregoing, however, if Lessor's
Building is damaged as a result of flood, earthquake, nuclear radiation or
contamination, act of war or other risk which is not
__________________________________
* Footnote appears on page 12, with descriptive paragraph on page 12a.
** Footnote appears on page 13, with descriptive paragraph on page 13.
10
<PAGE> 14
covered by Lessor's insurance, or if the Premises or Lessor's Building are
damaged to the extent of thirty-three and one third percent (33-1/3%) or more
of their then replacement value, or if the repair of the Premises, or Lessor's
Building, would require more than one hundred twenty (120) days, Lessor shall
either terminate this Lease upon written notice given to Lessee within twenty
(20) days following such casualty or commence as soon as is reasonably possible
the restoration of Lessor's Building [if Lessor decides to restore/rebuild,
Lessor shall complete such restoration within one hundred eighty (180) days
from the date of damage/casualty.](2)* Lessor's obligations to restore shall in
no way include any construction originally performed by Lessee or subsequently
undertaken by Lessee, but shall include solely that property constructed by
Lessor prior to commencement of the term hereof. [Lessor's
restoration/rebuilding work will however include Lessor's scope of work as
defined in Exhibit "D".](3)* The cost of any repairs to be made by Lessor,
pursuant to this Article 22 of this Lease, shall be paid by Lessor utilizing
available insurance proceeds. Lessee shall reimburse Lessor upon completion of
the repairs for any deductible for which no insurance proceeds will be obtained
under Lessor's insurance policy, or if other premises are also repaired, a pro
rata share based on total costs of the repair equitable apportioned to the
Leased Premises [if such damage or destruction was due to Lessee's negligence,
acts or omissions.](1)* Lessee shall, however, not be responsible to pay any
deductible or its share of any deductibles to the extent that Lessee's payment
would be in excess of $10,000.00 if Lessee's consent has not been received by
Lessor, unless such denial of consent by Lessee is unreasonable.
(c) In the event this Lease is not terminated and Lessor
undertakes to repair any portion of the Premises, until such repair is
complete, rent shall abate proportionately as to the [ability of Lessee to use
the Premises to conduct its daily operations.](4)* Notwithstanding the
foregoing, however, if the damage being repaired was caused by the negligence
of Lessee or its employees, agents, licensees or concessionaires, there shall
be no abatement of rent during the repair period.
(d) Unless this Lease is terminated, Lessee shall, at its
expense, repair the fixtures and improvements installed by it within the
Premises and repair or replace any of Lessee's furniture, equipment or other
personal property damaged by such casualty.
ARTICLE 23. EMINENT DOMAIN. If all or more than 33-1/3% of the
Premises or all or a material portion of the Common Areas shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, or transfer in lieu thereof, either party hereto shall have the right,
at its option, to terminate this Lease as of the date title vests in the
condemning entity. Lessor shall be entitled to any award, or other payment
made in connection with such condemnation. Lessee, however, shall have the
right to pursue a claim in any condemnation proceeding against the condemning
authority (but not against Lessor) for compensation for any resulting damages
to Lessee's business, trade fixtures and personal property (but not for any
diminution or loss of Lessee's leasehold estate). If a part of the Premises
shall be so taken or appropriated and this Lease is not thereafter terminated,
the rental thereafter to be paid shall be reduced in the proportion that the
area of the Premises so taken bears to the entire Premises. Notwithstanding
the foregoing, however, before Lessee may terminate this Lease by reason of a
taking or appropriation as described above, such taking or appropriation shall
be of such an extent and nature as to substantially handicap, impede or impair
Lessee's use of the Premises for a period in excess of ninety (90) days
(assuming Lessor shall promptly commence any repairs necessary to restore the
remaining Premises to a complete architectural unit). If any material part of
Lessor's Building other than the Premises shall be so taken or appropriated,
Lessor shall have the right, at its option, to terminate this Lease. Lessor
shall be entitled to the entire condemnation award or payment attributable to
any such taking of Lessor's Building or to any taking of any portion of the
Common Areas.
ARTICLE 24. MORTGAGE REQUIREMENTS. This Lease and all rights of
Lessee under this Lease are hereby subordinate hereunder to any lien of any
mortgage or mortgages or lien or other security interest resulting from any
other method of financing or refinancing, now or hereafter in force against the
land and/or buildings hereafter placed upon the land of which the Premises are
a part and to all advances made or thereafter to be made upon the security
thereof. The provisions of this Article notwithstanding, so long as Lessee is
not in default hereunder, this Lease shall remain in full force and effect for
the full term hereof and shall not be terminated as a result of any foreclosure
or sale or transfer in lieu of such proceedings pursuant to a mortgage or other
instrument to which Lessee has subordinated its rights pursuant hereto.
In the event of the sale or assignment of Lessor's interest in the
buildings of which the Premises are a part, or in the event of any proceeding,
brought for the foreclosure of, or in the event of exercise of the power of
sale under any mortgage or other security instrument made by Lessor covering
the Premises, Lessee shall attorn to the assignee or purchaser and recognize
such purchaser as Lessor under this Lease.
Lessee agrees to give any mortgagees (as defined below), by registered
mail, a copy of any notice of default served by Lessee upon Lessor, provided
that prior to such notice, Lessee has been notified, in writing (by way of a
Notice of Assignment of Rents an Leases or otherwise) of the
__________________________________
* Footnote appears on page 14, with descriptive paragraph on page 14a.
11
<PAGE> 15
addresses of any such mortgagees, [such notice with address to come directly
from such mortgagee.](2)* Lessee further agrees that if Lessor shall have
failed to cure such default within the time set forth in this Lease, then
any such mortgagees shall have an additional thirty (30) days within which to
cure such default or if such default cannot be cured within that time, then
such additional time as may be necessary, if within such thirty (30) days, any
such mortgagee has commenced and is diligently pursuing the remedies necessary,
to cure such default (including but not limited to commencement of foreclosure
proceedings, if necessary to effect such cure), in which event this Lease shall
not be terminated while such "mortgagee" shall mean the holder of any mortgage,
the beneficiary under any deed of trust or the holder of any other security
interest which encumbers Lessor's Building. [Notwithstanding the foregoing,
all notices required under this Section shall be sent certified mail, return
receipt requested.](3)*
[Lessor shall use good faith efforts to obtain, in a timely manner, a
Non Disturbance Agreement from Lessor's lender for Lease, provided Lessee
furnishes the needed financial information prior to Lessor requesting such from
Lender.](1)*
ARTICLE 25. RULES, REGULATIONS AND RESTRICTIVE COVENANTS. Lessee
shall faithfully observe and comply with the Rules, Regulations and Restrictive
Covenants attached hereto as Exhibit "C" and all reasonable modifications of
and additions thereto from time to time put into effect by Lessor, provided
however, that any such promulgated or modified Rules, Regulations and/or
Restrictive Covenants shall not discriminate against Lessee in favor of other
lessees of portions of the Park. Lessor shall not be responsible to Lessee for
the non-performance by any other lessee or occupant of the Park of any such
Rules, Regulations and Restrictive Covenants, but shall take reasonable steps
to secure such other Lessee's compliance.
ARTICLE 26. HOLDING OVER. If Lessee holds possession of the
Premises after the term of this Lease with Lessor's consent, and Lessor accepts
rent in the amounts hereinafter provided, Lessee shall become a lessee from
month-to-month upon terms equal to the then existing terms hereunder, except
that the rent shall be the then existing rent then payable hereunder at the end
of the term (on a monthly basis) multiplied by one hundred fifteen percent
(115%). Rent shall be paid in advance on or before the first day of each month
and Lessee shall continue in possession until such tenancy shall be terminated
by Lessor or until Lessee shall have given to Lessor a written notice at least
thirty (30) days prior to the date of termination of such tenancy of its
intention to terminate such tenancy.
ARTICLE 27. NOTICES. All notices and demands which may or are
required to be given by either party to the other hereunder shall be sent by
overnight courier or United States certified or registered mail, postage
prepaid, addressed to:
<TABLE>
<CAPTION>
LESSOR LESSEE
<S> <C>
PRICE PIONEER COMPANY, LTD. AMSCO STERILE RECOVERIES, INC.
35 Century Park-Way 28100 U.S. Highway 19 North, Suite 201
Salt Lake City, Utah 84115 Clearwater, FL 34621
Telephone: (801) 486-3911 Telephone: ______________________
</TABLE>
ARTICLE 28. LESSOR'S RIGHT TO CURE DEFAULTS. All covenants and
agreements to be performed by Lessee under any of the terms of this Lease shall
be at its sole cost and expense and, except as otherwise specifically provided
herein, without any abatement of rent. If Lessee shall fail to pay any sum of
money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, and such failure
shall continue for [ten (10)](1)** days after Lessee has received notice thereof
by Lessor, Lessor may, but shall not be obligated to do so, and without waiving
any rights of Lessor or releasing Lessee from any obligations of Lessee
hereunder, make such payment or perform such other act. All sums to be paid by
Lessor and all necessary incidental costs together with interest thereon at the
rate of one and one-half percent (1-1/2%) per month from the date of such
payment by Lessor in connection with the performance of any such act by Lessor
shall be considered additional rent hereunder and, except as otherwise in this
Lease expressly provided, shall be payable to Lessor on demand or, at the
option of Lessor, in such installments as Lessor may elect and may be added to
any rent then due or thereafter becoming due under this Lease.
ARTICLE 29. FORCE MAJEURE. Lessor [and Lessee](2)** shall not be
responsible or liable for any delay in the observance or performance of any
term or condition of this Lease to be observed or performed by [the other](3)**
to the extent such delay results from action of governmental authorities, civil
commotions, strikes, fires, acts of God, whether or not similar to the matters
herein specifically enumerated and any such delay shall extend by like time any
period of performance by [the other](3)** and shall not be deemed a breach of or
failure to perform this Lease or any provision hereof.
__________________________________
* Footnote appears on page 15, with descriptive paragraph on page 15.
** Footnote appears on page 16, with descriptive paragraph on page 16.
12
<PAGE> 16
ARTICLE 30. TRANSFER OF LESSOR'S INTEREST. In the event Lessor
transfers its interest in the Premises (other than a transfer as provided in
Article 13 of this Lease), Lessor shall be relieved of all obligations accruing
hereunder after the effective date of such transfer, provided that such
obligations have been expressly assumed in writing by the transferee.
Lessee agrees at any time and from time to time upon not less than ten
(10) days prior request by Lessor, to execute, acknowledge and deliver to
Lessor a statement in writing certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications) and the dates
to which the fixed rent and other charges have been paid in advance, if any,
(it being intended that any such statement delivered pursuant to this
subparagraph may be relied upon by a prospective purchaser, mortgagee or
assignee of any mortgage of the Premises) or shall execute any document or
provide any statement as required by Lessor's lender provided such document
shall not affect the rental or term of this Lease.
ARTICLE 31. SECURITY DEPOSIT. Lessee has deposited with Lessor
or its agent N/A Dollars ($-0-) receipt of which by Lessor is hereby
acknowledged, as security (and not as rent) for the full and faithful
performance of any of the terms and conditions hereof. In the event Lessee
defaults in the performance of any of the terms hereof or abandons the
Premises, Lessor may use, apply or retain the whole or any part of such
security for the payment of any rent or any other payment to be made by Lessee
hereunder which is in default or of any other cost, expense or liability which
Lessor may incur by reason of Lessee's default. If all or any portion of the
security deposit is so used or applied, Lessee shall, no later than five (5)
days after written demand is made therefor, deposit cash with the Lessor in an
amount sufficient to restore the security deposit to its original amount. If
Lessee shall, at the end of the term hereof, including extensions and holdover
periods, have fully and faithfully complied with all of the terms and
provisions of this Lease (but not otherwise) the security deposit, or any
balance thereof shall then be returned to Lessee. Lessee shall not be entitled
to interest on any such security deposit. Lessee shall not assign or encumber
the funds deposited by it as security hereunder and neither Lessor nor its
successors or assigns shall be bound by any such assignment or encumbrance.
ARTICLE 32. QUIET ENJOYMENT. Lessor covenants that so long as
Lessee performs all of its obligations hereunder it shall peacefully and
quietly have, hold and enjoy the Premises for the term hereof.
ARTICLE 33. SIGNS. Lessee shall not place on the Leased Premises
or in the Park, any exterior signs or advertisements, nor any interior signs or
advertisements that are visible from the exterior of the Leased Premises,
without Lessor's prior written consent, which Lessor reserves the right to
withhold for any aesthetic reason in its sole judgment. The cost of
installation and regular maintenance of any such signs approved by Lessor shall
be at the sole expense of Lessee. At the termination of this Lease, or any
extensions thereof, Lessee shall remove all its signs, and all damage caused by
such removal shall be repaired at Lessee's expense.
ARTICLE 34. SURRENDER OF LEASE. The voluntary or other surrender
of this Lease by Lessee, or a mutual cancellation thereof, shall not work as a
merger, and shall, at the option of Lessor, terminate all or any existing
subleases or subtenancies, or may, at the option of Lessor, operate as an
assignment to it of any or all such subleases or subtenancies.
ARTICLE 35. LESSOR'S EXCULPATION. In the event of default,
breach or violation by Lessor (which term includes Lessor's partners,
co-ventures, co-lessees, officers, directors, employees, agents, or
representatives) of any Lessor's obligations under this Lease, Lessor's
liability to Lessee shall be limited to its ownership interest in the Leased
Premises (or its interest in the Park, if applicable) or the proceeds of a
public sale of such interest pursuant to foreclosure of a judgment against
Lessor. Lessor may, at its option, and among its other alternatives, relieve
itself of all liability under this Lease by conveying the Leased Premises to
Lessee. Notwithstanding any such conveyance, Lessee's leasehold and ownership
interest shall not merge. Lessor (as defined in this Article 35) shall not be
personally liable for any deficiency beyond its interest in the Leased
Premises.
ARTICLE 36. ATTORNEYS' FEES. [For purposes of this Section only,
wherein it refers to Lessor or Lessee, it shall be deemed to mean both
parties.](1)* Lessee hereby agrees to pay, as additional rent, all attorneys'
fees and disbursements, and all other court costs or expenses of legal
proceedings or other legal services which Lessor may incur or pay out by reason
of, or in connection with:
(a) any action or proceeding brought by Lessor wherein
Lessor obtains a final judgment or award against Lessee (including arbitration)
on account of any default by Lessee in the observance not limited to, matters
involving payment of rent and additional rent, alterations or other Lessee's
work and subletting or assignment;
(b) any action or proceeding brought by Lessee against
Lessor (or any officer, partner, or employee of Lessor) in which Lessee fails
to secure a final judgment against Lessor:
__________________________________
* Footnote appears on page 17, with descriptive paragraph on page 17.
13
<PAGE> 17
(c) any other appearance by Lessor (or any officer,
partner, or employee of Lessor) as a witness or otherwise in any action or
proceeding whatsoever involving or affecting Lessee or this Lease;
(d) any assignment, sublease, or leasehold mortgage
proposed or granted by Lessee (whether or not permitted under this Lease), and
all negotiations with respect thereto; and
(e) any alteration of the Leased Premise by Lessee, and
all negotiations with respect thereto.
In any action or proceeding referred to in Section (a), Lessee shall
be entitled to recover its attorney fees and costs, if Lessee is the prevailing
party against Lessor.
Lessee's obligations under this Article shall survive the expiration
or any other termination of this Lease. This Article is intended to supplement
(and not to limit) other provisions of this Lease pertaining to indemnities
and/or attorneys' fees.
Should it be necessary for Lessor to employ legal counsel to enforce
any of the provisions of this Lease, Lessee agrees to pay, as additional rent,
all attorneys' fees and court costs reasonably incurred thereby, whether or not
Lessor commences any legal action or proceeding.
ARTICLE 37. ESTOPPEL CERTIFICATES AND FINANCING. Within ten (10)
days of request therefor by Lessor [or Lessee](1)*, Lessee [or Lessor](2)* shall
execute a written statement acknowledging the commencement and termination
dates of this Lease, that it is in full force and effect, has not been modified
(or if it has, stating such modifications), and providing any other pertinent
information as Lessor or its agent might reasonably request. Failure to comply
with this Article shall be a material breach of this Lease by Lessee [or
Lessor]2* giving Lessor [or Lessee](1)* all rights and remedies under Article 21
hereof, as well as a right to damages caused by the loss of a loan or sale
which may result from such failure by Lessee [or Lessor.](2)*
ARTICLE 38. SUCCESSORS AND ASSIGNS. The covenants and conditions
herein contained shall, subject to the provisions as to assignment, apply to
and bind the heirs successors, executors, administrators and assigns of all of
the parties hereto; and all of the parties hereto shall be jointly and
severally liable hereunder.
ARTICLE 39. TIME. Time is of the essence of this Lease with
respect to each and every Article, Section and Subsection hereof.
ARTICLE 40. MISCELLANEOUS. Subject to any limitations on
assignment set forth herein, all of the terms and provisions of this Lease
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
In the event of any action or proceeding brought by either party
against the other under this Lease, the prevailing party shall be entitled to
recover attorneys' fees in such amount as the court may adjudge reasonable.
The waiver by Lessor of any term, covenant or condition herein
contained shall not be deemed to be a waiver of the same or any other term,
covenant or condition or any subsequent breach of the same of any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Lessor shall not constitute a waiver of any preceding breach by
Lessee of any term, covenant or condition of this Lease, other than the failure
of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
This Lease shall be governed by and construed in accordance with Utah
law.
The invalidity or enforceability of any provision hereof shall not
affect or impair any other provision hereof.
This Lease constitutes the entire agreement of the parties and
supersedes all prior agreements or understandings between the parties with
respect to the subject matter hereof. This Lease may not be modified or
amended except by written agreement of the parties.
The term "Lessor" as used herein shall include the agent or agents of
Lessor. The term "Lessee" as used herein shall include the plural as well as
the singular and shall include the masculine, feminine and neuter. If there is
more than one Lessee, the obligations of Lessee hereunder shall be joint and
several.
Paragraph headings in this Lease are for convenience only and shall
not define or limit the scope or intent of any provision hereof.
__________________________________
* Footnote appears on page 18, with descriptive paragraph on page 18.
14
<PAGE> 18
Lessee shall not record this Lease or a Memorandum thereof without the
written consent of Lessor. Lessor may file this Lease for record with the
Recorder of the County in which the Park is located.
ARTICLE 41. LESSOR'S ACCEPTANCE. Lessor's execution of this
Lease is subject to Lessee providing financial statements of the Lessee which
are acceptable to the Lessor.
ARTICLE 42. ENTIRE AGREEMENT. This Lease and the Exhibits,
Riders and Addenda, if any, attached hereto and the rules and regulations
adopted pursuant to Article 25 above constitute the entire agreement between
the parties. All Exhibits, Riders or Addenda mentioned in this Lease are
incorporated herein by reference. No subsequent amendment to this Lease shall
be binding upon Lessor or Lessee unless reduced to writing and signed.
Submission of this Lease for examination does not constitute an option for the
Premises and becomes effective as a Lease only upon execution and delivery
thereof by Lessor to Lessee. If any provision contained in a Rider or Addendum
is inconsistent with a provision in the body of this Lease, the provision
contained in said Rider or Addendum shall control. It is hereby agreed that
this Lease contains no restrictive covenants binding on other lessees or
exclusive use provisions in favor of Lessee. There are no representations or
promises by either party to the other except as are specifically set forth
herein. This Lease supersedes and revokes all previous conversations,
negotiations, arrangements, letters of intent, writings, brochures,
understandings, and information conveyed, whether oral or in writing, between
the parties hereto or their respective representatives or any agents of any of
them. The captions and section numbers appearing herein are inserted only as a
matter of convenience and are not intended to define, limit, construe or
describe the scope or intent of any Section or Article.
ARTICLE 43. GUARANTEE. (This Section was Approved for Deletion
Prior to Execution of Lease).
ARTICLE 44. AUTHORITY OF SIGNATORIES. Each person executing this
Lease individually and personally represents and warrants that he is duly
authorized to execute and deliver the same on behalf of the entity for which he
is signing (whether it be a corporation, general or limited partnership or
otherwise) and that this Lease is binding upon said entity in accordance with
its terms.
ARTICLE 45. LESSEE'S OPTION TO TERMINATE. Lessee shall have the
one time right to terminate this Lease by giving Lessor one hundred eighty
(180) days written notice prior to the end of the [sixty-third (63rd) month of
the term](1)* that Lessee will exercise its right to terminate. Lessee shall
continue to pay rent and all other charges up to the date Lessee tenders the
premises back to Lessor.
[ARTICLE 46. BREACH BY LESSOR. In the event of the failure of
Lessor to perform any of its obligations hereunder for thirty (30) days after
written notice thereof (or if not capable of being cured in thirty (30) days
for such longer period as may be necessary provided Lessor diligently pursues
such cure), Lessee shall have the right to cure such failure and to recover the
cost thereof from Lessor. Provided that in no event shall Lessee reduce its
rent or offset such cost against rent.](2)*
IN WITNESS WHEREOF, Lessor and Lessee executed this Lease as of the
date first above written.
<TABLE>
<S> <C>
LESSOR
PRICE PIONEER COMPANY, LTD.,
a Utah limited partnership
By: PRICE DEVELOPMENT COMPANY,
a Utah corporation, its general partner
ATTEST:
/s/ Paul K. Mendenhall By: /s/ G. Rex Frazier
- ------------------------------------------ ----------------------------------------
Paul K. Mendenhall, G. Rex Frazier,
Secretary President
LESSEE
AMSCO STERILE RECOVERIES, INC.
ATTEST:
By: /s/ Wayne R. Peterson By: /s/ Richard T. Isel
-------------------------------------- --------------------------------------
Wayne R. Peterson Richard T. Isel
Its: Assistant Secretary Its: President
-------------------------------------- --------------------------------------
</TABLE>
__________________________________
* Footnote appears on page 20, with descriptive paragraph on page 20a.
15
<PAGE> 19
LIMITED GUARANTY OF LESSEE'S PARENT
Lessee is a wholly owned subsidiary of American Sterilizer Company, a
Pennsylvania corporation, which is in turn a wholly owned subsidiary of AMSCO
International, Inc., a Delaware corporation. In consideration of Lessor's
entry into the foregoing Lease, AMSCO International, Inc., hereby guarantees
the following obligation and only the following obligation of Lessee:
At the end of the term, or earlier if the Lease is terminated, Lessee
will, at its expense, restore the Premises to its condition at the Commencement
Date as provided in Article 8, [Page 3, Footnote 1 and Article 9, Page 4,
Footnote 2.](1)*
<TABLE>
<S> <C>
LESSOR:
PRICE PIONEER COMPANY, LTD.,
a Utah limited partnership
By: PRICE DEVELOPMENT COMPANY,
a Utah corporation, its general partner
ATTEST:
/s/ Paul K. Mendenhall By: /s/ G. Rex Frazier
- ------------------------------------------ ---------------------------------------------
Paul K. Mendenhall, Secretary G. Rex Frazier, President
LESSEE:
AMSCO STERILE RECOVERIES, INC.,
a subsidiary of American Sterilizer Corp.
ATTEST:
By: /s/ Lawrence A. Martone By: /s/ Robert J. Normyle
------------------------------ ---------------------------------------------
Lawrence A. Martone Its: Robert J. Normyle
Its: Vice President Vice President
----------------------------------- ----------------------------------------------
</TABLE>
__________________________________
* Article 8, Footnote 1, and Article 9, Footnote 2, appear on pages 4
and 4a in the original lease.
<PAGE> 20
LIMITED GUARANTY OF TENANT'S PARENT
Tenant is a wholly owned subsidiary of American Sterilizer Company, a
Pennsylvania corporation, which is in turn a wholly owned subsidiary of AMSCO
International, Inc., a Delaware corporation. Capitalized terms used herein and
not otherwise defined shall have the respective meanings given in the foregoing
Lease. In consideration of Lessor's entry into the foregoing Lease, AMSCO
International, Inc., hereby guarantees for a period of five (5) years from the
Lease commencement date the following obligation (and only the following
obligation) of Lessee to the extent of any diminution in value of Lessor's
Premises or Park as a result of Lessee's handling of any Hazardous Material,
the cost of any on or off site clean up of any such Hazardous Material and any
toxic waste liability connected with Lessee's bringing any Hazardous Material
onto the Premises or the Park.
Lessee agrees to indemnify, defend, protect and hold harmless Lessor,
its directors, officers, employees, partners, and agents from and against any
and all losses, claims, demands, actions, damages (whether direct or
consequential), penalties, liabilities, costs and expenses, including all
attorneys' fees and legal expenses, arising out of any violation or alleged
violation of any of the laws or regulations referred to in Article 7 of the
Lease, or breach of any of the provisions of Article 7 of the Lease.
<TABLE>
<S> <C>
LESSOR:
PRICE PIONEER COMPANY, LTD.,
a Utah limited partnership
By: PRICE DEVELOPMENT COMPANY,
a Utah corporation, its general partner
/s/ Paul K. Mendenhall By: /s/ G. Rex Frazier
- ------------------------------------------ ----------------------------------------
Paul K. Mendenhall, Secretary G. Rex Frazier, President
LESSEE:
AMSCO STERILE RECOVERIES, INC.,
a subsidiary of American Sterilizer Corp.
By: /s/ Lawrence A. Martone By: /s/ Robert J. Normyle
------------------------------ ---------------------------------------
Lawrence A. Martone Its: Robert J. Normyle
Its: Vice President Vice President
----------------------------------- ----------------------------------------
</TABLE>
<PAGE> 21
EXHIBIT "A"
AMSCO STERILE RECOVERIES, INC.
SITE PLAN
These plans illustrate AMSCO Sterile Recoveries, Inc.'s layout for
the Price Business Center Pioneer, Salt Lake City, Utah by JP Price Development
Company. The Site Plan is not to scale. It indicates 48 parcels, some of
which are improved with buildings others are vacant. The property is bounded
on the south by 2100 South, on the west by Pioneer Road and on the north by
1700 South. The building of which the premises are a part is identified as
Building 4. The building is identified by cross-hatching and an arrow
describing the cross-hatched area as "Project". The leased premises take up
approximately twenty-five percent of the building located on parcel 4 which has
frontage directly onto Custer Road.
<PAGE> 22
EXHIBIT "B"
AMSCO STERILE RECOVERIES, INC.
LEASE PLAN
These plans covering 24,000 Sq. Ft. are entitled, "Lease Plan," and is
part of a plan entitled, "Master Lease Plan - Price Development Company." It
illustrates a building with 520 feet of frontage and 200 feet of depth. The
demised premises are drawn from the centerline of column lines 7 and 8 to the
centerline of column lines 10 and 11 and the building plan indicates structural
joist layed out in a 40 by 40 grid throughout the building.
<PAGE> 23
EXHIBIT "C"
RULES, REGULATIONS AND RESTRICTIVE COVENANTS
PRICE BUSINESS CENTER - PIONEER
ATTACHED to and made a part of that certain Lease Agreement made and
entered in to this _____________ day of ___ __________________________, 1993,
by and between PRICE PIONEER COMPANY, LTD., a Utah corporation, as Lessor, and
AMSCO STERILE RECOVERIES, INC., as Lessee.
I. PERMITTED USES. The purpose of the PIONEER SQUARE INDUSTRIAL PARK is
to create an attractive environment for the conducting of business enterprises
which do not create a hazard or are not offensive due to appearance or to the
emission of noxious odors, smoke, or noise, and to conduct wholesale and retail
operations, research laboratories, central office facilities and selective
supporting facilities. To promote such an area retailing businesses are
allowed which fall within this central category. Lessor shall review the
proposed use of each parcel of land and approve each use, keeping in mind the
broad outlines of the purpose of this pre-planned office, industrial and
commercial park.
II. PROHIBITED USES. No portion of the property may be occupied by any of
the following uses:
(1) Residential purposes except for the dwelling oil
watchmen or other employees attached to a particular
enterprise authorized in the area.
(2) Storage in bulk of any junk, wrecked autos or
materials of any nature in or adjacent to the
Premises.
(3) No portion of the Premises or any building or
structure thereon at any time shall be used for the
manufacture, storage, distribution, or sale of any
products or items which shall increase the fire
hazard of adjoining property; or for any business
which constitutes a nuisance or causes the emission
of odors of a gas injurious to products manufactured
or stored on adjoining premises or which emit undue
noise or for any purpose which will injure the
reputation of said premises or the neighboring
property or for any use which is in violation of any
of the laws of Salt Lake City or the State of Utah.
III. LAND USE. All buildings constructed in PIONEER SQUARE INDUSTRIAL PARK
shall maintain the following set-backs and landscaped areas:
(1) Front Yards: All buildings shall be sited parallel
to the fronting street and shall maintain a minimum
set-back of thirty-five (35) feet from the curb. A
landscaped buffer of no less than ten (10) feet in
depth shall be maintained in front of each building.
(2) Side Yards: When parking or driveways exist within
the side yard of any building, landscaped buffer of
not less than ten (10) feet in width shall be
maintained between building, parking areas, or
driveways.
(3) Rear Yards: Rear yards or future expansion areas of
all buildings shall be landscaped or maintained as an
integral part of the entire project unless parking,
service yards, loading docks, etc., occur in the rear
of buildings, and do not extend across the entire
rear of the building, in which case the remaining
portion shall be landscaped or properly maintained.
(4) Refuse and Miscellaneous Storage: Where exterior
space is needed for temporary storage or the location
of garbage collection equipment, it shall be visually
screened by a wall or fence no less than five (5)
feet in height and of materials compatible and
similar to the Lessee's building. Every effort
should be made to landscape around such facility.
IV. SIGNS: Criteria have been established for the purpose of assuring an
outstanding development and for the mutual benefit of all Lessees. Signs
installed as nonconforming or unapproved must be brought into conformance at
the expense of the Lessee.
A. GENERAL REQUIREMENTS:
1. Each Lessee shall submit or cause to be submitted to
Lessor for approval, before fabrication, at least three (3) copies of detailed
drawings indicating the location, size, lay-out, design and color of the
proposed signs, including all lettering and/or graphics.
2. All permits for signs and their installation shall be
obtained by the Lessee or his representative, and shall conform to all local
building and electrical codes.
<PAGE> 24
3. All signs shall be constructed and installed at
Lessee's expense.
4. Lessee shall be responsible for the fulfillment of
all requirements of these criteria.
B. GENERAL SPECIFICATIONS:
1. No animated, flashing, or audible signs will be
permitted.
2. No exposed lamps or tubing will be permitted. No
exposed raceways, crossovers, conduit or brackets will be permitted. All
cabinets, conductors, transformers and other equipment shall be concealed.
3. Electrical service to all signs shall be on Lessee's
meter.
C. LOCATION OF SIGNS:
1. If Lessee's Premises are located in a single-user
building, Lessee will be permitted to install one (1) free-standing monument
sign, the size and location of which shall be subject to the prior approval of
Lessor before installation. Lessor will provide, at Lessee's expense, one (1)
concrete base for the monument sign.
2. If Lessee's Premises are located in a multi-tenant
building, each Lessee will be permitted to install one (1) exterior sign of
individually illuminated letters of proportionate size, to be attached near the
entry door to Lessee's Premises, the size and location of such exterior sign
shall be subject to the prior approval of Lessor before installation.
3. No signs shall be allowed or located on canopies,
overhangs, or on the roof structure.
D. DESIGN REQUIREMENTS:
1. The content of all exterior signs (monument or
nonmonument) shall be limited to the name of the Lessee and/or the corporate
name. The content of all window decal and/or paint-type signs shall be limited
to the name of the Lessee, corporate logo, business hours and/or the address of
Lessee's Premises. Wording of signs shall not include the product(s) sold
except as part of Lessee's trade name or insignia. All signage shall be
subject to Lessor's prior approval before installation.
2. The design of all signs, including style, and
placement of letterings, size, color, materials and method of illumination
shall be subject to the prior approval of Lessor.
E. CONSTRUCTION REQUIREMENTS:
All exterior signs, bolts, fastenings and clips shall be enamelling
iron with porcelain enamel finish, stainless steel, aluminum brass or bronze or
other rust-free metal. No black iron materials or plastics of an type will be
permitted.
F. MISCELLANEOUS REQUIREMENTS:
1. Lessee, his representative, or his sign contractor
shall at the termination of this Lease Agreement, remove Lessee's sign and
repair damaged area to its original condition before Lessee's sign was erected.
2. Lessee, his representative, or his sign contractor,
shall repair and maintain in a clean and orderly fashion all signs. If Lessee
fails to repair or maintain said sign(s) after ten (10) days written notice to
do so from the Lessor, Lessor may repair, clean or maintain said sign(s) and
the cost thereof shall be payable by Lessee to Lessor upon demand.
3. The candlepower of each illuminated sign shall be
approved by Lessor.
V. STORAGE. No land or buildings shall be used so as to permit the
keeping of articles, goods or materials in the open or exposed to public view.
VI. LOADING DOCKS. Truck loading docks will be permitted on any frontage
road in PIONEER SQUARE INDUSTRIAL PARK, as permitted by Lessor. All docks
shall be set back at least seventy (70) feet from the curb and gutter line.
VII. CONSTRUCTION REQUIREMENTS AND COMMITTEE APPROVAL. Construction or
alteration of all buildings in PIONEER SQUARE INDUSTRIAL PARK shall meet the
standard provided for in these restrictions. Lessee, prior to construction or
alteration of any building must submit two (2) sets of proposed plans and
specifications to Lessor for approval. Lessor shall review the plans to assure
that exterior design, materials, color of materials and quality of work
contemplated is compatible with the
2
<PAGE> 25
structures and improvements existing or planned in PIONEER SQUARE INDUSTRIAL
PARK. Written approval of such plans by Lessor shall be proof of compliance
with these restrictions.
The building codes of Salt Lake City in effect at the time of any
construction shall apply.
VIII. DESIGN. Any building erected on the property shall be of exterior
finish and of a design compatible with those structures and improvements
existing and planned for PIONEER SQUARE INDUSTRIAL PARK, as interpreted by
Lessor. All sides of said building except the rear must be finished in a
manner similar to and compatible with the front of the building. Should a
duplex type building be constructed, the type and color of face brick, or other
finish materials, must be the same entire exterior of the buildings except the
rear. All other types of construction not covered in the above must first be
submitted to and have the written approval of Lessor.
Plans and specifications for the construction, installation or
alteration of all signs, loading docks, parking facilities and landscaped areas
must be submitted to and have written approval of the Lessor.
Lessor shall review the proposed use of the property and shall reserve
the right to refuse to approve any plan for a use which, in its opinion, is not
in keeping with the proposed concept of PIONEER SQUARE INDUSTRIAL PARK. Where
a proposed development could become offensive, Lessor shall have the right to
require special equipment or special design features to overcome such
conditions.
IX. LANDSCAPING AND MAINTENANCE. A landscaping and watering system plan
shall be provided by each Lessee to assure its compatibility with the entire
development. Maintenance of all exterior landscaped areas will be the
responsibility of Lessee. If not properly performed and regularly maintained,
Lessor may, at Lessor's option, undertake the performance thereof at the sole
cost and expense of Lessee. Lessee will also pay their prorated share of
common area expenses as it relates to the entire PIONEER SQUARE INDUSTRIAL
PARK.
X. EXTERIOR MECHANICAL AND ELECTRICAL EQUIPMENT. No air conditioning
units, fans, compressors, transformers or other mechanical or electrical
equipment shall be located on the roof or other exterior surface of any
building unless screened from street view by architectural elements compatible
with the exterior design of the building. [If equipment is situated on roof so
it is not visible from the street, screening is not required. If screening is
required it shall consist of a sheet metal face painted to match building,
mounted on a metal frame which encloses the visible sides of the equipment.](1)*
XI. EXTERIOR LIGHTING. All exterior floodlights, spotlights, parking or
landscape lighting and any other exterior lighting application shall be in
conformity with the style and intensity of lighting established in PIONEER
SQUARE INDUSTRIAL PARK and shall be submitted (by plan and specifications) to
the Lessor for approval prior to installation.
XII. EMPLOYEE PARKING. Parking is provided to Lessee for its employees,
and shall be used for parking and no other purpose. Such areas shall not be
used for future construction expansion unless additional parking is provided
contiguous or adjacent thereto. Employee parking shall be confined to the area
reserved for Lessee and its employees.
XIII. MISCELLANEOUS.
No storage of vehicles shall be allowed other than those directly used
in the operation of normal business.
No maintenance or repairs of vehicles shall be allowed in any common
area or areas reserved for customer or employee parking.
No common areas reserved for customer or employee parking shall be
used for motorcycle traffic or off highway vehicles similar to mini-bikes,
motorcycles, dune buggies, snowmobiles or any other vehicle not normally used
on streets, or subject to regulated legal registration.
__________________________________
* Footnote appears on page 4 of Exhibit "C".
3
<PAGE> 26
EXHIBIT "D"
LESSOR'S SCOPE OF WORK
Lessee shall accept the space in the "as is" condition with the exception of
the following improvements which the Lessor shall provide at Lessor's expense.
1 . ELECTRICAL SERVICE: Provide and install secondary underground
electrical conduit, CT cabinet and #350 MCM conductor from existing
UP&L transformer to tenant provided disconnect switch panel.
Landlord shall relocate electrical equipment and service from current
location on grid line A to a location outside the premises. Items to
be relocated are:
-- House Panel, lighting contactor, and time clock
-- Post office panels and transformer
-- Lawn sprinkler clock
2. GAS SERVICE: Provide a 2" line at 5 lbs of pressure which will
deliver a minimum 15,000,000 BTU's per operating hour. Said line will
originate at the Mountain Fuel meter manifold, run overhead through
the adjacent space and the premises, and terminate in the northwest
corner of the Premises.
3. WATER SERVICE: Provide new dedicated water service from the street to
the Premises at the location along grid line A designated by Tenant.
Service to be 3" or 4" line (depending on Lessor's engineer's
calculations) with a 3" meter at 60 lbs of pressure.
4. SEWER SERVICE: Provide new dedicated service from the street to the
Premises at the location along grid line A designated by Tenant.
The four items referenced above are the only improvements to the premises which
are the responsibility of the Lessor. All other improvements to the premises
are the responsibility of the Lessee.
Regarding the 6" sewer service to the premises, it is understood that the
Lessor will be responsible for any connection fee to tap into the main in the
street and bring the line to the building. It is the Lessee's responsibility
to pay for all fixture or use connection fees as a result of the fixtures and
equipment Lessee installs in the premises.
Lessor shall use good faith efforts to cooperate and assist Lessee, where
necessary, to obtain its Certificate of Occupancy.
DEMISING WALL: Lessor has entered into a Purchase Order with Tenant's
Contractor, Joe E. Woods wherein Lessor shall, within thirty (30) days after
Lessee receives its Certificate of Occupancy, Lessor shall pay to Joe E. Woods
$16,800.00 which amount shall be applied to the cost of the demising wall Mr.
Woods is going to build upon lease execution. Should Lessor not pay Joe E.
Woods within the above stated time frame, Lessor shall be considered in default
under the Lease and AMSCO shall have the option, but not the obligation, to pay
Joe E. Woods the $16,800.00 directly and then bill Lessor for the amount. A
copy of the purchase order is attached hereto and Tenant hereby agrees to the
terms contained therein.
The Demising Wall Mr. Woods shall construct is as follows:
AMSCO side: One layer, 3/8" plywood sandwiched between two layers
5/8" sheetrock.
8" 0 gauge steel studs 16" O.C.
East tenant side: One layer 5/8" sheetrock.
ROOFING: AMSCO will not pay any money to Superior Roofing for the initial
construction work required, until Superior has given AMSCO written verification
that the work was done properly and that the Trocal roof warranty is still in
effect. AMSCO will in turn provide such written verification from Trocal to
Lessor whereupon Lessor shall give AMSCO written verification that Lessor
releases AMSCO from such guaranty and looks solely to Superior Roof and Trocal
for quality of work and that the roof warranty stays valid.
<PAGE> 27
<TABLE>
<S> <C>
PRICE DEVELOPMENT COMPANY PURCHASE ORDER
SHOPPING CENTERS / INDUSTRIAL AND OFFICE PROPERTIES 18146
35 CENTURY PARK-WAY - SALT LAKE CITY, UTAH 84115 - TELEPHONE (801) 486-3911
TO: V#14190
JOE E. WOODS CONSTRUCTION DATE 06/03/93 F.O.B. N/A
63 E. MAIN STREET
SUITE 401 DATE REQ. ASAP CODE 030160003
MESA, ARIZONA 85201
TERMS NET 30 DAYS* JOB NO. 101404
JOB NAME AMSCO-PIONEER SQUARE, ADDRESS 2297 CUSTER ROAD, SALT LAKE CITY, UT
- -------------------------------------------------------------------------------------------------------------------------
Mail copies of the invoice on date of shipment to 35 Century Park-Way, Salt Lake City, Utah 84115
All packing slips and invoices are to show the purchase order, code and job number.
Please furnish us with the material specified below on the terms herein set forth and subject to conditions shown:
- -------------------------------------------------------------------------------------------------------------------------
ITEM NO QUANTITY DESCRIPTION OF MATERIAL UNIT PRICE NET PRICE
- -------------------------------------------------------------------------------------------------------------------------
Construct east-demising wall in Amsco space per
plans approved in writing (which Joe E. Wood will
obtain prior to starting work by Price Development
Company. Such wall must meet design requirement's
of Salt Lake City permit/plan review, Amsco Sterile
Recoveries, and United States Postal Service
security criteria. Provide photographs of wall as
work is in progress showing stud spacing, or plywood,
or sandwiched 20 gauge cold rolled steel for United
States Postal Service security. Contractor understands
actual cost of wall may exceed P.O. amount and will not
look to Price Development Co. or any entity other than
Amsco for additional funds.
(After
*Issuance of Certificate of Certificate of Occupancy).
TOTAL THIS PURCHASE ORDER: $16,800
=======
(Includes all taxes, overhead & profit, etc.)
Supplier is a Corporation F.T.ID: 86-0341064
- -------------------------------------------------------------------------------------------------------------------------
SUBJECT TO THE TERMS AND CONDITIONS ON Total
THE REVERSE SIDE HEREOF. COST $16,800
-------
TAX (Included)
---------
TOTAL
AMOUNT $16,800
-------
PRICE DEVELOPMENT COMPANY
By:
-------------------------------------------------------
Martin G. Peterson, Vice President
Date:
-----------------------------------------------------
</TABLE>
<PAGE> 28
EXHIBIT "E"
LEASE EXTENSION OPTION
Provided that (i) Lessee has promptly paid its rent when due during
the term of this Lease, (ii) Lessee is not in default of any of the terms,
covenants and conditions of this Lease, Lessee shall have the right to extend
the term of this Lease for up to two (2) additional option terms of five (5)
years each from and after the expiration of the original primary term.
Said options shall be exercised by Lessee giving Lessor written notice
of its intent to exercise said option(s) at least one hundred eighty (180) days
prior to the expiration of the original term or option term then in effect. If
Lessee fails to timely exercise option to extend as described above, this
Exhibit shall be null and void and of no further force nor effect. The option
terms shall be governed by the same terms, covenants and conditions as the
original Lease with the exception of the length of term as referenced above,
and the rent.
Annual rent for the first option term shall be the sum of Ninety Seven
Thousand Nine Hundred Twenty Dollars and No Cents ($97,920.00) per year,
payable in monthly installments of Eight Thousand One Hundred Sixty Dollars and
No Cents ($8,160.00).
Annual rent for the second option term shall be the sum of One Hundred
Three Thousand Six Hundred Eighty Dollars and No Cents ($103,680.00) per year,
payable in monthly installments of Eight Thousand Six Hundred Forty Dollars and
No Cents ($8,640.00).
PRICE PIONEER COMPANY, LTD.,
a Utah limited partnership
By: Price Development Company,
a Utah corporation
Approved By
Lessor /s/ G. Rex Frazier Date 9/16/93
--------------------------------------------- -------
G. REX FRAZIER, PRESIDENT
Approved By
Lessee /s/ Richard T. Isel Date 9/13/93
--------------------------------------------- -------
Richard T. Isel
<PAGE> 29
EXHIBIT "F"
LESSEE'S PLANS AND SPECIFICATIONS
(to be provided within 10 days after Lease Execution)
Contains a complete set of Lessee's Plan and Specifications for
construction of the Lessee's improvements prior to occupancy.
<PAGE> 30
SALT LAKE CITY FACILITY
ASSIGNMENT
FOR VALUE RECEiVED, the undersigned, AMSCO Sterile Recoveries, Inc., a
Delaware corporation, does hereby assign, transfer and set over unto Sterile
Recoveries, Inc., a Florida corporation, all title and interest in and to that
certain Lease Agreement dated September 2, 1993, by and between Price Pioneer
Company, Ltd., as Landlord, as assigned to PRICE DEVELOPMENT COMPANY, LIMITED
PARTNERSHIP (hereinafter "Landlord"), through an Assignment dated January 21,
1994, and Tenant, which shall hereinafter collectively be referred to as the
"Lease", providing for the lease by Landlord to Tenant of certain demised
premises commonly known as Space #3, of the Building located at 2297 West
Custer Road, consisting of approximately 24,000 square feet, located within the
Price Business Center - Pioneer City of Salt Lake, County of Salt Lake, State
of Utah, which demised premises are more particularly described in the Lease.
In consideration for Landlord's consent, AMSCO Sterile Recoveries, Inc., does
hereby agree and understand that it shall remain and shall otherwise be liable
for full performance of Tenant's obligations under the Lease until November 30,
2004.
IN WITNESS WHEREOF, this Assignment is executed as of the 31st day of
July, 1994.
AMSCO STERILE RECOVERIES, INC.
Attest: a Delaware corporation
/s/ Kathleen Clover By: /s/ William J. Rieflin
- --------------------------- ----------------------------
Its: Secretary
----------------------------
ACKNOWLEDGEMENT OF GUARANTORS
IN CONSIDERATION OF THE FOREGOING Consent to Assignment of Lease,
AMSCO Sterile Recoveries, Inc., does hereby: (i) unconditionally guarantee the
prompt and faithful performance of Tenant's obligations under the
aforementioned Lease and any subsequent modifications or amendments thereof;
(ii) waive notice of any breach or default by Tenant; and (iii) agree that if
Tenant defaults in the performance of the Lease, Guarantor, will promptly keep,
perform and observe the term, covenant or condition not so performed by Tenant
in the place and stead of Tenant through March 25, 1998.
DATED as of the 31st day of July, 1994.
---- ----
AMSCO STERILE RECOVERIES, INC.
Attest: a Delaware corporation
/s/ Kathleen Clover By: /s/ William J. Rieflin
- ------------------------------- Its: Secretary
----------------------------
<PAGE> 31
ACCEPTANCE OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Sterile Recoveries, Inc., does
hereby accept the foregoing Assignment and does hereby assume and agree to be
bound by and perform each of the terms, covenants and conditions of the Lease
above described on the part of Tenant and Guarantor to be kept and performed,
effective August 1, 1994.
IN WITNESS WHEREOF, this Acceptance of Assignment is executed this
29th day of July, 1994.
STERILE RECOVERIES, INC.
Attest: a Florida corporation
By: /s/ James T. Boosales
- --------------------------- ---------------------------
Its: Executive Vice President
---------------------------
CONSENT TO ASSIGNMENT OF LEASE
PURSUANT TO THE PROVISIONS of that certain Lease Agreement dated
September 2, 1993, by and between Price Pioneer Company, Ltd., as landlord, as
assigned to PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP, through an
Assignment dated January 21, 1994, (hereinafter "Landlord"), and Tenant, which
shall hereinafter collectively be referred to as the "Lease", the Landlord does
hereby consent to the assignment by AMSCO Sterile Recoveries, Inc., of all
rights, title and interest in and to the Lease, as Tenant, to Sterile
Recoveries, Inc., effective August 1, 1994. The Landlord, however, does not
release or relieve AMSCO Sterile Recoveries, Inc., or AMSCO International,
Inc., from its obligations under the Lease as Tenant until November 30, 2004.
DATED this 24th day of August, 1994.
---- ------
LANDLORD:
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
a Maryland limited partnership
By: JP Realty, Inc., a Maryland
ATTEST: corporation, its general partner
/s/ Paul K. Mendenhall /s/ G. Rex Frazier
- ------------------------------------- -------------------------------
Paul K. Mendenhall G. Rex Frazier, President
Secretary
<PAGE> 32
AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, AMSCO STERILE RECOVERIES, INC., a Delaware corporation,
hereinafter referred to as the "Lender", has authorized a loan in the amount
not in excess of Ten Million Dollars ($10,000,000.00), to STERILE RECOVERIES,
INC., successor in interest to AMSCO Sterile Recoveries, Inc., ("Tenant"),
which has given, as security for such Loan, certain items of furniture, trade
fixtures and inventory described on Schedule "A" attached hereto, (the
"Collateral"), and such Collateral has been or will be placed on those certain
Premises commonly known as 2279 West Custer Road, Suite 3, Salt Lake City,
County of Salt Lake, State of Utah, located in the Price Business Center -
Pioneer pursuant to that certain Lease Agreement dated September 2, 1994
between Price Development Company, Limited Partnership, successor in interest
to Price Pioneer Company, Ltd., as Landlord, and Tenant;
WHEREAS, as a condition of such Loan, the Lender requires an agreement
from Landlord that in the event of default, the Lender has the right to enter
the Premises and take Possession of the Collateral; and
WHEREAS, Landlord is agreeable to enter into such an agreement.
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, Landlord hereby agrees that any interest, lien or
claim of the Lender in the Collateral is superior to the interest, lien or
claim of Landlord in the Collateral under the Lease, statute or otherwise.
Landlord shall give written notice to the Lender of any uncured default by
tenant under the Lease. In the event of such default by Tenant under the
Lease, the Lender or its assignees has the right within sixty (60) days after
receiving such written notice to enter the Premises leased by Tenant from
Landlord to take possession of and to remove the Collateral. Lender agrees to
pay for any and all repair costs associated with such removal, regardless of
who actually removes the Collateral under this Agreement. Landlord agrees to
attach a copy of this Agreement to its notice to the Lender. If the Collateral
under this Agreement
<PAGE> 33
is not removed within the above referenced sixty (60) days, Landlord shall have
the right to remove and/or store the Collateral in a storage unit, a public
warehouse or at the Premises and repair all damage caused by such removal, the
cost of such storage or repair will be at the expense of the Lender. In the
event of such storage by Landlord, Landlord may elect to give the Lender thirty
(30) days notice of its intent to terminate such storage arrangement, in which
event the Lender shall be deemed to have waived its interest in the Collateral
unless it, within such thirty (30) days, takes possession of the Collateral and
pays all storage and repair costs associated therewith.
LANDLORD:
PRICE DEVELOPMENT COMPANY, LIMITED
PARTNERSHIP
By: JP Realty, Inc., a Maryland corporation,
its general partner
By: /s/ G. Rex Frazier
----------------------------------
Its: President
----------------------------------
LENDER:
AMSCO STERILE RECOVERIES, INC.
a Delaware corporation
By: /s/ William J. Rieflin
--------------------------
Its: Secretary
--------------------------
2
<PAGE> 34
EXHIBIT A TO LANDLORD'S WAIVER
All of SRI's now owned or hereafter acquired inventory, meaning goods,
merchandise and other personal property which are or may at any time be held
for sale or lease, furnished under any contract of service or held as raw
materials, work-in-process, supplies or materials used or consumed in its
business, including without limitation returned and repossessed goods, and all
equipment, trade fixtures, other tangible personal property, furniture and
vehicles together with all accessions, parts, accessories and appurtenances
thereto appertaining or attached or kept or used or intended to be used in
connection therewith and all substitutions, renewals, improvements,
replacements, additions, products and proceeds thereto.
<PAGE> 1
EXHIBIT 10.23
SERVICE CENTER LEASE
4501 ACLINE
THIS INDENTURE of lease, dated this 4th day of December, 1991, by and
between QP ONE CORPORATION, a Minnesota corporation, hereinafter referred to as
"Lessor", and AMSCO STERILE RECOVERIES, INC., a Delaware corporation
hereinafter referred to as "Lessee".
WITNESSETH:
That Lessor, in consideration of the rents and covenants hereinafter
set forth, does hereby lease and let unto Lessee, and Lessee does hereby hire
and take from Lessor, that certain space shown and designated on the floor plan
attached hereto and made a part hereof as Exhibit A, located in the Service
Center known and described as 4501 Acline located at 4501 Acline Street, Tampa,
Florida 33619. The aforesaid space leased and let unto Lessee is hereinafter
referred to as the "Premises"; and the land (including all easement areas
appurtenant thereto) upon which the building or buildings of which the Premises
are a part is hereinafter referred to as the "Property"; and the Property and
all buildings and improvements and personal property of Lessor used in
connection with the operation or maintenance thereof located therein and
thereon and the appurtenant parking facilities, if any, are hereinafter called
the "Service Center Complex".
TO HAVE AND TO HOLD THE SAME PREMISES, without any liability or
obligation on the part of Lessor to make any alterations, improvements or
repairs of any kind on or about the Premises, except as expressly provided
herein, for a term of ten (10) years, zero (0) months, commencing on the 25th
day of January, 1992, and ending on the 24th day of January, 2002, unless
sooner terminated, in the manner provided hereinafter be occupied and used by
Lessee for office/service center purposes and for no other purpose, subject to
the covenants and agreements hereinafter contained.
ARTICLE I. BASE RENT: In consideration of the leasing aforesaid, Lessee
agrees to pay to Lessor, at Normandale Properties South Corporation, 4200 West
Cypress Street, Suite 445, Tampa, Florida 33607 or at such other place as
Lessor from time to time may designate in writing, an annual rental as follows:
(i) For the period commencing January 25, 1992 and ending
January 24, 1997, an annual rental of Forty-Four Thousand Three
Hundred Sixty-Five and No/100ths Dollars ($44,365.00), payable
monthly, in advance, in equal installments of Three Thousand Six
Hundred Ninety-Seven and 08/100ths Dollars ($3,697.08);
(ii) For the period commencing January 25, 1997 and ending
January 24, 2002, an annual rental of Sixty-Two Thousand One Hundred
Eleven and No/100ths Dollars ($62,111.00), payable monthly, in
advance, in equal installments of Five Thousand One Hundred
Seventy-Five and 92/100ths Dollars ($5,175.92);
The foregoing amounts sometimes hereinafter referred to as the "Base Rent",
which shall be payable commencing on the first day of the term and continuing
on the first day of each and every month thereafter for the next succeeding
months during the balance of the term. If the term commences on a date other
than the first day of a calendar month or ends on a date other than the last
day of a calendar month, monthly rent for the first month of the term or the
last month of the term, as the case may be, shall be prorated based upon the
ratio that the number of days in the term within such month bears to the total
number of days in such month.
ARTICLE II. ADDITIONAL RENT: In addition to the Base Rent payable by
Lessee under the provisions of Article I hereof, Lessee shall pay to Lessor
"Additional Rent" as hereinafter provided for in this Article II.
For purposes of this Article II, the parties hereto agree upon the
following Definitions:
A. The term "Lease Year" shall mean each of those
calendar years commencing with and including the year
during which the term of this Lease commences, and
ending with the calendar year during which the term
of this Lease (including any extensions or renewals)
terminates.
B. The term "Real Estate Taxes" shall mean and include
all personal property taxes of Lessor relating to
Lessor's personal property located in the Service
Center Complex and used or dedicated to use in
connection with the operation and maintenance
thereof, real estate taxes, and installments of
special assessments, including interest associated
with such special assessments, relating to the
Property and Service Center Complex, and all other
governmental charges, general and special, ordinary
and extraordinary, foreseen as well as unforeseen, of
any kind and nature whatsoever, or other tax, however
described, which is levied or assessed by the United
States of
<PAGE> 2
America or the state in which the Service Center
Complex is located or any political subdivision
thereof, against Lessor or all or any part of the
Service Center Complex as a result of Lessor's
ownership of the Property or Service Center Complex,
and payable during the respective Lease Year. It
shall not include any net income tax, estate tax, or
inheritance tax.
C. The term "Operating Expenses" shall mean and include
all expenses incurred with respect to the maintenance
and operation of the Property and Service Center
Complex as determined by Lessor's accountant in
accordance with generally accepted accounting
principles consistently followed, including, but not
limited to, insurance premiums, maintenance and
repair costs, water, sewer, gas, electric and other
utility charges (except for electric, water and sewer
utility charges which are separately metered as
provided in Article XIX hereof), lighting, window
washing, trash and rubbish removal, wages payable to
employees of Lessor whose duties are directly
involved with the operation and maintenance of the
Property and Service Center Complex (such wages being
reasonable and comparable to similar positions in the
Tampa Metropolitan area), but only for the portion of
their time allocable to work related to the Service
Center Complex, amounts paid to contractors or
subcontractors for work or services performed in
connection with the operation and maintenance of the
Property and Service Center Complex, all costs of
uniforms, supplies and materials used in connection
with the operation and maintenance of the Property
and Service Center Complex, all payroll taxes,
unemployment insurance costs, vacation allowances,
and the cost of providing disability insurance or
benefits, pensions, profit sharing benefits,
hospitalization, retirement or other so-called fringe
benefits, and any other expense imposed on Lessor,
its contractors or subcontractors, pursuant to law or
pursuant to any collective bargaining agreement
covering such employees, all services, supplies,
repairs, replacements or other expenses for
maintaining and operating the Service Center Complex,
reasonable attorneys' fees and costs in connection
with appeal or contest of real estate or other taxes
or levies, and such other expenses as may be
ordinarily incurred in the operation and maintenance
of a commercial property similar to the Service
Center Complex and not specifically set forth herein,
including reasonable management fees; provided;
however, that Lessee shall not be required to pay
more than $2,218.25 in any Lease Year toward such
management fees. The term "Operating Expenses" shall
not include any capital improvement (which
specifically includes structural repair and
replacement of the roof) to the Service Center
Complex other than replacements required for normal
maintenance and repair, nor shall it include repairs,
restoration or other work occasioned by fire,
windstorm or other insured casualty, expenses
incurred in leasing or procuring tenants, leasing
commissions, advertising expenses, expenses for
renovating space for new tenants, legal expenses
incident to enforcement by Lessor of the terms of any
lease, interest or principal payments on any mortgage
or other indebtedness of Lessor, compensation paid to
any employee of Lessor above the grade of building
superintendent, depreciation allowance or expense.
Notwithstanding the foregoing, in the event Lessor
installs equipment in or makes improvements or
alterations to the Service Center Complex which are
for the purpose of reducing energy costs, maintenance
costs or other Operating Expenses or which are
required under any governmental laws, regulations, or
ordinances which were not required at the date of
commencement of the term of this Lease, Lessor may
include in Operating Expenses reasonable charges for
interest on such investment and reasonable charges
for depreciation on the same so as to amortize such
investment over the reasonable life of such
equipment, improvement or alteration on a straight
line basis. Lessor agrees that in the event the cost
savings of such improvement or alteration does not
exceed ten percent (10%) of the annual amortized cost
of such improvement or alteration (the "Minimum Cost
Saving"), that Lessee shall be entitled to a credit
against the next succeeding month's rent installment
due after the date of determination of the cost
saving, in the amount which equals the difference
between the Minimum Cost Saving and the actual amount
of such saving. Operating Expenses shall also be
deemed to include expenses incurred by Lessor in
connection with city sidewalks adjacent to the
Property and any pedestrian walkway system (either
above or below ground) or other public facility to
which Lessor or the Service Center Complex is from
time to time subject in connection with operations of
the Property and Service Center Complex.
D. The term "Lessee's Pro Rata Share of Real Estate
Taxes" shall mean twenty-two and eighty one-
hundredths percent (22.80%) of the Real Estate Taxes
for the applicable Lease Year, and the term "Lessee's
Pro Rata Share of Operating Expenses" shall mean
twenty-two and eighty one- hundredths percent
(22.80%) of the Operating Expenses for the applicable
Lease Year. Said
-2-
<PAGE> 3
percentages have been agreed upon by the parties
hereto after due consideration of the rentable area
of the Premises compared to the rentable area of the
Service Center Complex.
E. Anything herein to the contrary notwithstanding, it
is agreed that in the event the Service Center
Complex is not fully occupied during any Lease Year,
a reasonable and equitable adjustment shall be made
by Lessor in computing the Operating Expenses for
such year so that the Operating Expenses shall be
adjusted to the amount that would have been incurred
had the Service Center complex been fully occupied
during such year.
As to the Lease Year during which the term of this Lease commences,
Lessor's estimated amount of Lessee's Pro Rata Share of Real Estate Taxes and
Lessor's estimated amount of Lessee's Pro Rata Share of Operating Expenses
(based upon the estimated number of months of the term within such initial
Lease Year) shall be the following sums:
Lessee's Pro Rata Share of Real Estate Taxes $ 6,912.80
Lessee's Pro Rata Share of Operating Expenses $ 6,912.80
As to each Lease Year after the initial Lease Year, Lessor shall
estimate for each such Lease Year, based upon the previous years actual
expense, (i) the total amount of Real Estate Taxes; (ii) the total amount of
Operating Expenses; (iii) Lessee's Pro Rata Share of Real Estate Taxes; (iv)
Lessee's Pro Rata Share of Operating Expenses; (v) the computation of the
annual and monthly rental payable during such Lease Year as a result of
increases or decreases in Lessee's Pro Rata Share of Real Estate Taxes and
Lessee's Pro Rata Share of Operating Expenses. Said estimate shall be in
writing and shall be delivered or mailed to Lessee at the Premises.
Lessee shall pay, as Additional Rent, the amount of Lessee's Pro Rata
Share of Real Estate Taxes for each Lease Year and Lessee's Pro Rata Share of
Operating Expenses for each Lease Year, so estimated, in equal monthly
installments, in advance, on the first day of each month during each applicable
Lease Year. In the event that said estimate is delivered to Lessee after the
first day of January of the applicable Lease Year, said amount, so estimated,
shall be payable as Additional Rent, in equal monthly installments, in advance,
on the first day of each month over the balance of such Lease Year, with the
number of installments being equal to the number of full calendar months
remaining in such Lease Year.
Lessor may, one time during any Lease Year, re-estimate the amount of
Real Estate Taxes and Operating Expenses and Lessee's Pro Rata Share thereof,
and in such event Lessor shall notify Lessee, in writing, of such re-estimate
in the manner above set forth and fix monthly installments for the then
remaining balance of such Lease Year in an amount sufficient to pay the
re-estimated amount over the balance of such Lease Year after giving credit for
payments made by Lessee on the previous estimate. Such re-estimation shall be
as accurate as reasonably possible, and Lessor shall, upon Lessee's request,
provide the documentation evidencing the calculation of the re-estimated
amounts.
Upon completion of each Lease Year, Lessor shall cause its accountants
to determine the actual amount of Real Estate Taxes and Operating Expenses for
such Lease Year and Lessee's Pro Rata Share thereof and deliver a written
certification of the amounts thereof to Lessee after the end of each Lease
Year. If Lessee has paid less than its Pro Rata Share of Real Estate Taxes or
its Pro Rata Share of Operating Expenses for any Lease Year, Lessee shall pay
the balance of its Pro Rata Share of the same within ten (10) days after the
receipt of such statement. If Lessee has paid more than its Pro Rata Share of
Real Estate Taxes or its Pro Rata Share of Operating Expenses for any Lease
Year, Lessor shall, at Lessee's option, either (i) refund such excess, or (ii)
credit such excess against the most current monthly installment or installments
due Lessor for its estimate of Lessee's Pro Rata Share of Real Estate Taxes and
Lessee's Pro Rata Share of Operating Expenses for the next following Lease
Year. A pro rata adjustment shall be made for a fractional Lease Year
occurring during the term of this Lease or any renewal or extension thereof
based upon the number of days of the term of this Lease during said Lease Year
as compared to three hundred sixty-five (365) days and all additional sums
payable by Lessee or credits due Lessee as a result of the provisions of this
Article II shall be adjusted accordingly.
Further, Lessee shall pay, also as Additional Rent, any tax or excise
on rents, gross receipts tax, or other tax, however described (including
penalties or interest which may be assessed in conjunction with such tax
against Lessor or Lessee), which is levied or assessed by the United States of
America or the State of Florida or any political subdivision thereof, against
Lessor in respect to the Base Rent, Additional Rent, or other charges reserved
under this Lease or as a result of Lessor's receipt of such rents or other
charges accruing under this Lease; provided, however, Lessee shall have no
obligation to pay net income taxes of Lessor.
ARTICLE III. OVERDUE AMOUNTS - RENT INDEPENDENT: Any installment of Base
Rent, Additional Rent, or other charges to be paid by Lessee accruing under the
provisions of this Lease, which shall not be paid when due, shall bear interest
at the rate of twelve percent (12%) per annum from the date when the same is
due until the same shall be paid, but if such rate exceeds the maximum interest
rate
-3-
<PAGE> 4
permitted by law, such rate shall be reduced to the highest rate allowed by law
under the circumstances. Lessee covenants to pay the Base Rent and the
Additional Rent without set-off or demand and such covenant is independent of
any other covenant, condition, provision or agreement herein contained.
ARTICLE IV. POSSESSION OF PREMISES: If Lessor shall be unable to give
possession of the Premises on the date of the commencement of the term because
the construction of the Service Center Complex or the completion of the
Premises has not been sufficiently completed to make the Premises ready for
occupancy, or for any other reason, Lessor shall not be subject to any claims,
damages or liabilities for the failure to give possession on said date. Under
said circumstances, the rent reserved and covenant to pay same shall not
commence until possession of the Premises is given or the Premises are ready
for occupancy, whichever is earlier, and failure to give possession on the date
of commencement of the term shall in no way affect the validity of this Lease
or the obligations of Lessee hereunder, nor shall the same be construed in any
way to extend the expiration date of the term; subject, however, to the
provisions of Article XXXV herein. If Lessee is given and accepts possession
of the Premises on a date earlier than the date above specified for
commencement of the term, the rent reserved herein and all covenants,
agreements and obligations herein and the term of this Lease shall commence on
the date that possession of the Premises is given to Lessee.
ARTICLE V. SERVICES:
A. All electric lighting bulbs and tubes and all
ballasts and starters within the Premises shall be
replaced by Lessee at the expense of Lessee.
B. Subject to Article II hereof, Lessor shall provide
maintenance in good order, condition and repair of
the parking facilities and all driveways leading
thereto. Lessor shall keep and maintain the
landscaped area and parking facilities in a neat and
orderly condition. Lessor reserves the right to
designate areas of the appurtenant parking facilities
where Lessee, its agents, employees and invitees
shall park and may exclude Lessee, its agents,
employees and invitees from parking in other areas as
designated by Lessor, provided, however, Lessor shall
not be liable to Lessee for the failure of any
tenant, its invitees, employees, agents, and
customers to abide by Lessor's designations or
restrictions.
No interruption in, or temporary stoppage of, any of the aforesaid
services caused by repairs, renewals, improvements, alterations, strikes,
lockouts, labor controversy, accidents, inability to obtain fuel or supplies,
or other causes shall be deemed an eviction or disturbance of Lessee's use and
possession, or render Lessor liable for damages, by abatement of rent or
otherwise or relieve Lessee from any obligation herein set forth.
ARTICLE VI. USE AND INDEMNITY: The Premises shall be used for office,
manufacturing, warehouse and laundry\sterilization purposes (excluding,
however, dry cleaning processes), and for carrying on such activities as may be
incidental thereto. Lessee shall not use or occupy the Premises, or knowingly
permit the Premises to be used or occupied, contrary to any statute, rule,
order, ordinance, requirement or regulation applicable thereto, or in any
manner which would violate any certificate of occupancy or permit affecting the
same, or which would cause structural injury to the Premises or cause the value
or usefulness of the Premises, or any part thereof, substantially to diminish
(reasonable wear and tear excepted) or which would constitute a private or
public nuisance or waste. Lessee agrees that it will promptly, upon discovery
of any such use, take all necessary steps to compel the discontinuance of such
use.
Lessee covenants and agrees that it shall not use, store, generate or
transport any materials or substances which would constitute "Hazardous Waste"
under Federal CERCLA or RCRA Legislation, any Florida environmental regulations
or ordinances, any common law theory related to environmental matters or
petroleum products or asbestos or any derivative thereof. To the extent blood
or blood products shall at some time under future legislation or applicable law
constitute a regulated substance for purposes of Lessee's intended use of the
Premises, Lessee agrees to comply with all such regulations and the indemnity
set forth in the following paragraph shall include violations or non-compliance
with the regulations and legislation regarding Lessee's intended use of the
Premises.
In the event Lessee fails to comply with the regulatory requirements,
statutes, rules and regulations governing Lessee's occupancy of the Premises
and use thereof, or if the presence, release, storage or disposal of any
materials or substances, whether or not the same or defined as hazardous
materials and substances under CERCLA or RCRA Federal Legislation, or any and
all Florida environmental protection laws, Lessee shall indemnify, compensate,
reimburse, protect, defend and hold Lessor harmless from and against any and
all claims, liability, damages, costs, losses, expenses (including without
limitation, reasonable attorneys' fees and court costs) arising from or
attributable to Lessee's use of the Premises, and also from and against any and
all remedial or removal action necessary to comply with applicable law.
ARTICLE VII. CERTAIN RIGHTS RESERVED BY LESSOR: Lessor reserves the
following rights exercisable without notice and without liability to Lessee and
without effecting an eviction,
-4-
<PAGE> 5
constructive or actual, or disturbance of Lessee's use or possession, or giving
rise to any claim for setoff or abatement of rent:
A. To control, install, affix and maintain any and all
signs on the Property, or on the exterior of the
Service Center Complex and in any common corridors,
entrances and other common areas thereof, except
those signs within the Premises not visible from
outside the Premises.
B. To reasonably designate, limit, restrict and control
any service in or to the Service Center Complex,
including but not limited to the reasonable
designation of sources from which Lessee may obtain
sign painting and lettering. Any restriction,
designation, limitation or control imposed by reason
of this subparagraph shall be imposed uniformly on
Lessee and other tenants occupying space in the
service Center Complex.
C. To retain at all times and to use in appropriate
instances keys to all doors within and into the
Premises. Should Lessor require entry into the
Premises under this Lease, Lessor agrees to use
reasonable efforts to provide notification to Lessee
prior to Lessor's entry into the Premises; provided,
however, that no notice shall be required for
emergency situations. No locks shall be changed
without the prior written consent of Lessor. This
provision shall not apply to Lessee's safes, or other
areas maintained by Lessee for the safety and
security of monies, securities, negotiable
instruments or like items. Lessor agrees that it
shall only access the "clean room" (i.e., the area of
the Premises wherein sterilized hospital gowns, masks
and garments are stored in a sterile environment
awaiting transport and shipment to hospitals) without
the prior written consent of Lessee, which shall not
be unreasonably withheld, and except in emergency
situations, for which no prior written consent shall
be required.
D. To make repairs, alterations, additions, or
improvements, whether structural or otherwise, in and
about the Service Center Complex, or any part
thereof, and for such purposes to enter upon the
Premises, and during the continuation of any of said
work, to temporarily close doors, entryways, public
spaces, and corridors in the Service Center Complex
and to interrupt or temporarily suspend services and
facilities. Lessor agrees that it shall not access
and make any repairs, alterations, additions or
improvements to the "clean room" without the prior
written consent of Lessee, which consent shall not be
unreasonably withheld.
ARTICLE VIII. ALTERATIONS AND IMPROVEMENTS: Except for the Tenant
Improvements specified in Article XXIII herein, which shall be completed as
provided in Article XXIII, Lessee shall not make any improvements, alterations,
additions or installations in or to the Premises (hereinafter referred to as
the "Work") without Lessor's prior written consent. Along with any request for
Lessor's consent and before commencement of the Work or delivery of any
materials to be used in the Work to the Premises or into the Service Center
Complex, Lessee shall furnish Lessor with plans and specifications, names and
addresses of contractors, copies of contracts, necessary permits and licenses,
and an indemnification of such form and amount as may be reasonably
satisfactory to Lessor and a performance bond executed by a commercial surety
reasonably satisfactory to Lessor, and in an amount equal to the Work and the
payment of all liens for labor and material arising therefrom. Lessee agrees
to defend and hold Lessor forever harmless from any and all claims and
liabilities of any kind and description which may arise out of or be connected
in any way with said improvements, alterations, additions or installations.
All Work shall be done only by contractors or mechanics reasonably approved by
Lessor and at such time and in such manner as Lessor may from time to time
reasonably designate. All Work done by Lessee, its agents, employees, or
contractors shall be done in such a manner as to avoid labor disputes. Lessee
shall pay the cost of all such improvements, alterations, additions or
installations (including a reasonable charge for Lessor's services and for
Lessor's inspection and engineering time), and also the cost of painting,
restoring, or repairing the Premises and the Service Center Complex occasioned
by such improvements, alterations, additions or installations. Upon completion
of the Work, Lessee shall furnish Lessor with contractor's affidavits and full
and final waivers of liens, and receipted bills covering all labor and
materials expended and used. The Work shall comply with all insurance
requirements and all laws, ordinances, rules and regulations of all
governmental authorities and shall be constructed in a good and workmanlike
manner. Lessee shall permit Lessor to inspect construction operations in
connection with the Work. Lessee shall not be allowed to make any alterations,
modifications, improvements, additions, or installations if such action results
or would result in a labor dispute or otherwise would materially interfere with
Lessor's operation of the Service Center Complex. Lessor, by written notice to
Lessee given at or prior to termination of this Lease may require Lessee to
remove any improvements, additions or installations installed by Lessee in the
Premises at Lessee's sole cost and expense, and repair or restore any damage
caused by the installation and removal of such improvements, additions, or
installations; provided, however, the only improvements, additions or
installations which Lessee shall remove shall be those specified in such
notice.
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ARTICLE IX. REPAIRS: Lessee shall, during the term of this Lease, at
Lessee's expense, keep the Premises in as good order, condition and repair as
they were at the time Lessee took possession of the same, reasonable wear and
tear and insured damage from fire and other casualties excepted. Lessee shall
keep the Premises in a neat and sanitary condition and shall not commit any
nuisance or waste on the Premises or in, on, or about the Service Center
Complex, throw foreign substances in the plumbing facilities (other than such
non-hazardous and non-prohibited substances associated with a hospital
laundry/sterilization operation, which shall not harm the plumbing facilities
and which are not prohibited or violative of applicable law, regulations and
ordinances), or waste any of the utilities furnished by the Lessor. All
uninsured damage or injury to the Premises, or to the Service Center Complex
caused by Lessee moving furniture, fixtures, equipment, or other devices in or
out of the Premises or Service Center Complex or by installation or removal of
furniture, fixtures, equipment, devices or other property of Lessee, its
agents, contractors, servants or employees, due to carelessness, omission,
neglect, improper conduct, or other cause of Lessee, its servants, employees,
agents, visitors, or licensees, shall be repaired, restored and replaced
promptly by Lessee at its sole cost and expense to the reasonable satisfaction
of Lessor. All repairs, restorations and replacements shall be in quality and
class equal to the original work.
Lessor or its employees, or agents, shall have the right to enter the
Premises at any reasonable time or times upon Lessee's prior consent, which
shall not be unreasonably withheld, for the purpose of inspection, cleaning,
repairs, altering, or improving the same but nothing contained herein shall be
construed as imposing any obligation on Lessor to make any repairs, alterations
or improvements which are the obligation of Lessee.
ARTICLE X. INSURANCE: Lessor shall keep the Service Center Complex
insured for the benefit of Lessor in an amount equivalent to the full
replacement value thereof (excluding foundation, grading and excavation costs)
against:
(a) loss or damage by fire; and
(b) such other risk or risks of a similar or dissimilar
nature as are now, or may in the future be,
customarily covered with respect to buildings and
improvements similar in construction, general
location, use, occupancy and design to the Service
Center Complex, including, but without limiting the
generality of the foregoing, windstorms, hail,
explosion, vandalism, malicious mischief, civil
commotion, and such other coverage as may be deemed
necessary by Lessor, providing such additional
coverage is obtainable and providing such additional
coverage is such as is customarily carried with
respect to buildings and improvements similar in
construction, general location, use, occupancy and
design to the Service Center Complex.
These insurance provisions shall in no way limit or modify any of the
obligations of Lessee under any provision of this Lease Agreement. Lessor
agrees that such policy or policies of insurance shall contain a waiver of
subrogation clause as to Lessee and Lessor waives, releases and discharges
Lessee from all claims or demands whatsoever which Lessor may have or acquire
arising out of damage to or destruction of the Service Center Complex or
Lessor's business therein occasioned by fire or other cause, which such claim
or demand may arise because of the negligence or fault of Lessee, its agents,
employees, customers or business invitees, or otherwise, and Lessor agrees to
look to the insurance coverage only in the event of such loss. Insurance
premiums paid thereon shall be a portion of the "Operating Expenses" described
in Article II hereof.
Lessee shall keep all of its machinery, equipment, furniture,
fixtures, personal property (including also property under the care, custody or
control of Lessee) and business interests which may be located in, upon, or
about the Premises insured for the benefit of Lessee in an amount equivalent to
the full replacement value or insurable value thereof against:
(a) loss or damage by fire; and
(b) such other risk or risks of a similar or dissimilar
nature as are now, or may in the future be,
customarily covered with respect to a tenant's
machinery, equipment, furniture, fixtures, personal
property and business located in a building similar
in construction, general location, use, occupancy and
design to the Service Center Complex, including, but
without limiting the generality of the foregoing,
windstorms, hail, explosions, vandalism, theft,
malicious mischief, civil commotion, and such other
coverage as Lessee may deem appropriate or necessary.
Lessee agrees that such policy or policies of insurance shall contain
a waiver of subrogation clause as to Lessor and Lessee waives, releases and
discharges Lessor from all claims or demands whatsoever which Lessee may have
or acquire arising out of damage to or destruction of the machinery, equipment,
furniture, fixtures, personal property, and business of Lessee occasioned by
fire or other cause, whether such claim or demand may arise because of the
negligence or fault of Lessor, its agents, employees, subcontractors or
otherwise, and Lessee agrees to look to the insurance coverage only in the
event of such loss.
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<PAGE> 7
Lessor shall, as a portion of the Operating Expenses defined in
Article II, maintain, for its benefit and the benefit of its managing agent,
general public liability insurance in amounts of not less than One Million and
No/100ths Dollars ($1,000,000.00) in respect to the injury or death to a single
person, and to the limit of not less than Three Million and No/100ths Dollars
($3,000,000.00) in respect to any one accident, against claims for personal
injury, death or property damage occurring upon, in or about the Service Center
Complex, such insurance to afford protection to Lessor and its managing agent.
Lessee shall, at Lessee's sole cost and expense but for the mutual
benefit of Lessor, its managing agent and Lessee, maintain general public
liability insurance against claims for personal injury, death or property
damage occurring upon, in or about the Premises, such insurance to afford
protection to Lessor, its managing agent and Lessee to the limit of not less
than One Million and No/100ths Dollars ($1,000,000.00) in respect to the injury
or death to a single person, and to the limit of not less than Three Million
and No/100ths Dollars ($3,000,000.00) in respect to any one accident, and to
the limit of not less than Five Hundred Thousand and No/100ths Dollars
($500,000.00) in respect to any property damage. Such policies of insurance
shall be written in companies reasonably satisfactory to Lessor, naming Lessor
and its managing agent as additional insureds thereunder, and such policies, or
a memorandum or certificate of such insurance, shall be delivered to Lessor
endorsed "Premium Paid" by the company or agency issuing the same or
accompanied by other evidence satisfactory to Lessor that the premium thereon
has been paid. At such time as insurance limits required of tenants in
warehouse buildings in the area in which the Service Center Complex is located
are generally increased to greater amounts, Lessor shall have the right to
require such greater limits as may then be customary. Lessee agrees to include
in such policy the contractual liability coverage insuring Lessee's
indemnification obligations provided for herein. Any such coverage shall be
deemed primary to any liability coverage secured by Lessor.
Lessee agrees to indemnify and save Lessor and its managing agent
harmless against and from any and all claims by or on behalf of any person or
persons, firm or firms, corporation or corporations, arising from any breach or
default on the part of Lessee in the performance of any covenant or agreement
on the part of Lessee to be performed, pursuant to the terms of this Lease
Agreement (including, without limitation, the activities under Article XXXIII
herein), or arising from any act or negligence on the part of Lessee or its
agents, contractors, servants, employees or licensees, or arising from any
accident, injury or damage to the extent caused by Lessee, its agents, and
employees to any person, firm or corporation occurring during the term of this
Lease Agreement or any renewal thereof, in or about the Premises and Service
Center Complex, and from and against all costs, reasonable counsel fees,
expenses and liabilities incurred in or about any such claim or action or
proceeding brought thereon.
Lessor agrees to indemnify and save Lessee harmless from and against
any and all claims by or on behalf of any person or persons, firm or firms,
corporation or corporations, arising from any breach or default on the part of
Lessor and the performance of any covenant or agreement on the part of Lessor
to be performed pursuant to the terms of this Lease Agreement (including,
without limitation, the activities contemplated under Article XXIII), or
arising from any act or negligence on the part of Lessor or its agents,
contractors, servants, employees or licensees, arising from any accident,
injury or damage to the extent caused by Lessor, its agents and employees to
any person, firm or corporation occurring during the term of this Lease
Agreement or any renewal thereof, in or about the Premises and Service Center
Complex, and from and against all costs, reasonable counsel fees, expenses and
liabilities incurred in or about any such claim or action or proceeding brought
thereon.
Lessee agrees, to the extent not expressly prohibited by law, that
Lessor, its agents, employees and servants shall not be liable, and Lessee
waives all claims for damage to property and business sustained during the term
of this Lease Agreement by Lessee occurring in or about the Service Center
Complex, resulting directly or indirectly from any existing or future
condition, defect, matter or thing in the Premises, the Service Center Complex,
or any part thereof, or from equipment or appurtenances becoming out of repair
or from accident, or any tenant or occupant of the Building or any other
person. This paragraph shall apply especially, but not exclusively, to damage
caused as aforesaid or by refrigerators, sprinkling devices, air-conditioning
apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster,
broken glass, sewage, gas, odors or noise, or the bursting or leaking of pipes
or plumbing fixtures, and shall apply equally, whether any such damage results
from the act or omission of other tenants or occupants in the Service Center
Complex or any other persons, and whether such damage be caused by or result
from any of the aforesaid, or shall be caused by or result from other
circumstances of a similar or dissimilar nature.
Anything herein to the contrary notwithstanding, in the event any
damage to the Service Center Complex results from any grossly negligent act or
willful misconduct or omission of Lessee, its agents, employees or invitees,
and all or any portion of Lessor's loss is "deductible", Lessee shall pay to
Lessor the amount of such deductible loss (not to exceed $1,000 per event).
All property in the Service Center Complex or on the Premises belonging to
Lessee, its agents, employees, invitees or otherwise located at the Premises,
shall be at the risk of Lessee only, and Lessor shall not be liable for damage
thereto or theft, misappropriation or loss thereof and Lessee agrees to defend
and hold Lessor, its agents, employees and servants harmless and indemnify them
against claims and liability for injuries to such property, except to the
extent such damage or loss results from the gross negligence or willful
misconduct of Lessor.
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<PAGE> 8
ARTICLE XI. ASSIGNMENT AND SUBLETTING: Lessee shall have the right to
assign this Lease to an affiliate, parent or subsidiary of Lessee upon the
following conditions: (i) Lessee must obtain Lessor's prior written approval of
the proposed assignment, such written approval being based upon, inter alia,
the proposed assignee having a net worth in the amount of Twenty-Five (25)
Million Dollars or more, established to Lessor's reasonable satisfaction in
accordance with normal investigatory and underwriting criteria; and (ii) such
assignment shall not operate to release or discharge Lessee of its obligations
under this Lease. Except as provided in the immediately preceding sentence,
Lessee shall not, without the prior written consent of Lessor, (i) transfer,
pledge, mortgage or assign this Lease or any interest hereunder; (ii) permit
any assignment of this Lease by voluntary act, operation of law or otherwise;
(iii) sublet the Premises or any part thereof; or (iv) permit the use of the
Premises by any parties other than Tenant, its agents and employees. Lessee
shall seek such written consent of Lessor by a written request therefor,
setting forth such information as Lessor may deem necessary. Lessee shall, by
notice in writing, advise Lessor of its intention from, on and after a stated
date (which shall not be less than thirty (30) days after date of Lessee's
notice), to assign this Lease or to sublet any part or all of the Premises for
the balance or any part of the term. Lessee's notice shall include all of the
terms of the proposed assignment or sublease and shall state the consideration
therefor. In such event, Lessor shall have the right to be exercised by giving
written notice to Lessee within thirty (30) days after receipt of Lessee's
notice, to recapture the space described in Lessee's notice and such recapture
notice shall, if given, cancel and terminate this Lease with respect to the
space therein described as of the date stated in Lessee's notice. Lessee's
notice shall state the name and address of the proposed assignee or subtenant
and a true and complete copy of the proposed assignment or sublease shall be
delivered to Lessor with Lessee's notice. If Lessee's notice shall cover all
of the Premises, and Lessor shall have exercised its foregoing recapture right,
the term of this Lease shall expire and end on the date stated in Tenant's
notice as fully and completely as if that date had been herein definitely fixed
for the expiration of the term. If, however, this Lease be cancelled with
respect to less than the entire Premises, the Base Rent and Additional Rent
shall be equitably adjusted by Lessor with due consideration of the size,
location, type and quality of the portion of the Premises so remaining after
the "recapture" and such rent shall be reduced accordingly from and after the
termination date for said portion, and this Lease as so amended shall continue
thereafter in full force and effect. The rent adjustments provided for herein
shall be evidenced by an amendment to Lease executed by Lessor and Lessee. If
this Lease shall be terminated in the manner aforesaid, either as to the entire
Premises or only a portion thereof, to such extent the term of this Lease shall
end upon the appropriate effective date of the proposed sublease or assignment
as if that date had been originally fixed in this Lease for such expiration,
and in the event of a termination affecting less than the entire Premises,
Lessee shall comply with Article XIV ("Surrender of Premises") of this Lease
with respect to such portion of the Premises affected thereby.
In the event of any termination pursuant to this paragraph, Lessee
shall, at its sole cost and expense, discharge in full (i) any outstanding
commission obligation on the part of Lessor with respect to that part of this
Lease so terminated, and (ii) any commission which may be due and owing as a
result of any proposed assignment or subletting, whether or not the subject
portion of the Premises is "recaptured" pursuant thereto and rented by Lessor
to the proposed tenant or any other tenant.
For purposes of the foregoing, any change in the partners of Lessee,
if Lessee is a partnership, or, if Lessee is a corporation, any transfer of any
or all of the assets or stock of Lessee by sale, assignment, operation of law
or otherwise resulting in a change in the financial integrity of such
corporation, in the reasonable opinion of Lessor, shall be deemed to be an
assignment within the meaning of this Article XI. A transfer of the assets or
stock of Lessee which does not affect the asset base or financial integrity of
Lessee shall not be deemed an assignment which requires consent hereunder.
Any subletting or assignment hereunder shall not release or discharge
Lessee of or from any liability, whether past, present or future, under this
Lease, and Lessee shall continue fully liable thereunder. The subtenant or
subtenants or assignee shall agree in a form satisfactory to Lessor to comply
with and be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease to the extent of the space sublet or assigned, and
Lessee shall deliver to Lessor promptly after execution an executed copy of
each such sublease or assignment and an agreement of compliance by each such
subtenant or assignee. Consent by Lessor to any assignment of this Lease or to
any subletting of the Premises shall not be a waiver of Lessor's rights under
this Article as to any subsequent assignment or subletting.
Any sale, assignment, mortgage, transfer, or subletting of this Lease
which is not in compliance with the provisions of this Article XI shall be of
no effect and void. Lessor's right to assign its interest in this Lease shall
remain unqualified. Lessor may make a reasonable charge to Lessee for any
reasonable attorneys' fees or expenses incident to a review of any
documentation related to any proposed assignment or subletting by Lessee.
ARTICLE XII. DAMAGE BY FIRE OR OTHER CASUALTY: If fire or other casualty
shall render the whole or any material portion of the Premises unusable for the
contemplated purposes set forth in Article VI (the "Contemplated Purposes"),
and the Premises can reasonably be expected to be rendered usable for the
Contemplated Purposes within one hundred twenty (120) days from the date of
such event, then Lessor shall repair and restore the Premises and the Service
Center Complex to as near their condition prior to the fire or other casualty
as is reasonably possible within such one hundred
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<PAGE> 9
twenty (120) day period (subject to delays for causes beyond Lessor's
reasonable control) and notify Lessee that it will be doing so, such notice to
be mailed within thirty (30) days from the date of such damage or destruction,
and this Lease shall remain in full force and effect, but the rent for the
period during which the Premises are unusable for the Contemplated Purposes
shall be abated pro rata (based upon the portion of the Premises which is
unusable). If Lessor is required to repair the Service Center Complex and/or
the Premises, as aforesaid, said work shall be undertaken and prosecuted with
all due diligence and speed.
If fire or other casualty shall render the whole or any material part
of the Premises unusable for the Contemplated Purposes and the Premises cannot
reasonably be expected to be made usable for the Contemplated Purposes within
one hundred twenty (120) days from the date of such event, then either party,
by notice in writing to the other mailed within thirty (30) days from the date
of such damage or destruction, may terminate this Lease effective upon a date
within thirty (30) days from the date of such notice.
In the event that (i) more than fifty percent (50%) of the value of
the Service Center Complex is damaged or destroyed by fire or other casualty,
(ii) the Premises are tenantable and usable for the Contemplated Purposes and
(iii) irrespective of whether the Service Center Complex can be made tenantable
or Premises can be made usable for the Contemplated Purposes within one hundred
twenty (120) days thereafter, then at Lessor's option, by written notice to
Lessee, mailed within forty-five (45) days from the date of such damage or
destruction, Lessor may terminate this Lease effective upon a date within one
hundred eighty (180) days from the date of such notice to Lessee, provided,
however, that such occupancy after the date of casualty does not violate any
applicable governmental or regulatory order, code or recommendation, and
provided that such occupation does not constitute a health or safety hazard to
Lessee.
If fire or other casualty shall render the whole or any material part
of the Premises unusable for the Contemplated Purposes and the Premises cannot
reasonably be expected to be made unusable for the Contemplated Purposes within
one hundred eighty (180) days from the date of such event and neither party
hereto terminates this Lease pursuant to its rights herein or in the event that
more than fifty percent (50%) of the value of the Service Center Complex is
damaged or destroyed by fire or other casualty, and Lessor does not terminate
this Lease pursuant to its option granted herein, or in the event that fifty
percent (50%) or less of the value of the Service Center Complex is damaged or
destroyed by fire or other casualty and neither the whole nor any material
portion of the Premises is rendered unusable for the Contemplated Purposes,
then Lessor shall repair and restore the Premises and the Service Center
Complex to as near their condition prior to the fire or other casualty as is
reasonably possible with all due diligence and speed (subject to delays for
causes beyond Lessor's reasonable control) and the rent for the period during
which the Premises are unusable for the Contemplated Purposes shall be abated
pro rata (based upon the portion of the Premises which is unusable for the
Contemplated Purposes). In no event shall Lessor be obligated to repair or
restore any special equipment or improvements installed by Lessee at Lessee's
expense.
In the event of a termination of this Lease pursuant to this Article,
rent shall be apportioned on a per diem basis and paid to the date of the fire
or other casualty, or in the event occupancy of the Premises continues after
the casualty in accordance with this Article, rental shall be paid through the
date possession of the Premises ceases, unless otherwise abated under this
Article.
Notwithstanding anything contained in this Article XII to the
contrary, in the event Lessor fails to render the Premises habitable (but not
necessarily usable for the Contemplated Purposes) within one hundred eighty
(180) days of any casualty to the Premises, by completing the improvements
required to be restored by Lessor (excluding, however, Lessee's equipment and
additions), then Lessee shall have the right to terminate this Lease
immediately upon written notice to Lessor.
ARTICLE XIII. EMINENT DOMAIN: If the whole of or any substantial part of
the Premises is taken by any public authority under the power of eminent
domain, or taken in any manner for any public or quasi-public use, so as to
render (in Lessee's reasonable judgment) the remaining portion of the Premises
unsuitable for the purposes intended hereunder, then the term of this Lease
shall cease as of the day possession shall be taken by such public authority
and Lessor shall make a pro rata refund of any prepaid rent. All damages
awarded for such taking under the power of eminent domain or any like
proceedings shall belong to and be the property of Lessor, Lessee hereby
assigning to Lessor its interest, if any, in said award. In the event that
fifty percent (50%) or more of the building area or fifty percent (50%) or more
of the value of the Service Center Complex is taken by public authority under
the power of eminent domain, then, at Lessor's option, by written notice to
Lessee, mailed within sixty (60) days from the date the formal notice of taking
is provided to Lessor by such public authority, Lessor may terminate this Lease
effective upon a date within one hundred eighty (180) days from the date of
such notice to Lessee (provided, however, that Lessee's occupancy of the
Premises may be terminated earlier than the date provided by Lessor to Lessee
in the event the condemning authority requires an earlier date of
dispossession). Further, if the whole of or any material part of the Premises
is taken by public authority under the power of eminent domain, or taken in any
manner for any public or quasi-public use, so as to render the remaining
portion of the Premises unsuitable in Lessee's reasonable opinion, for the
purposes intended hereunder, upon delivery of possession to the condemning
authority pursuant to the proceedings, Lessee may, at its option, terminate
this Lease as to the remainder of the Premises by written notice to Lessor,
such notice to be given to Lessor within
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<PAGE> 10
thirty (30) days after Lessee receives notice of the taking. Lessee shall not
have the right to terminate this Lease pursuant to the preceding sentence
unless (i) the business of Lessee conducted in the portion of the Premises
taken cannot in Lessee's reasonable judgment be carried on with substantially
the same utility and efficiency in the remainder of the Premises (or any
substitute space securable by Lessee pursuant to clause (ii) hereof); and (ii)
Lessee cannot secure substantially similar (in Lessee's reasonable judgment)
alternate space upon the same terms and conditions as set forth in this Lease
(including rental) from Lessor in the Service Center Complex. Any notice of
termination shall specify the date no more than sixty (60) days after the date
of the notice of taking as the date for such termination.
Anything in this Article XIII to the contrary notwithstanding, Lessee
shall have the right to prove in any condemnation proceedings and to receive
any separate award which may be made for damages to or condemnation of Lessee's
movable trade fixtures and equipment and for moving expenses; provided,
however, Lessee shall in no event have any right to receive any award for
Lessor's interest in this Lease Agreement or for Lessor's fee interest in the
Service Center Complex. Anything in this Article XIII to the contrary
notwithstanding, in the event of a partial condemnation of the Service Center
Complex or the Premises and this Lease is not terminated, Lessor shall, at its
sole cost and expense, restore the Premises and Service Center Complex to a
complete architectural unit and the Base Rent provided for herein during the
period from and after the date of delivery of possession pursuant to such
proceedings to the termination of this Lease shall be reduced to a sum equal to
the product of the Base Rent provided for herein multiplied by a fraction, the
numerator of which is the fair market rent of the Premises after such taking
and after the same has been restored to a complete architectural unit, and the
denominator of which is the fair market rent of the Premises prior to such
taking.
ARTICLE XIV. SURRENDER OF PREMISES: On the last day of the term of this
Lease, or on the sooner termination thereof, Lessee shall peaceably surrender
the Premises in good condition and repair consistent with Lessee's duty to make
repairs as herein provided. On or before the tenth (10th) day after expiration
of the term of this Lease, or the date of sooner termination thereof, Lessee
shall, at its sole cost and expense, remove all of its personal property and
equipment from the Premises, and all property not removed shall be deemed
abandoned. For purposes of the foregoing sentence, Lessee's equipment shall be
the items described on Exhibit E, attached hereto and made a part hereof, and
shall specifically not include the HVAC system and related appurtenances
serving the Premises. Should Lessee fail to so remove its property, Lessee
hereby appoints Lessor its agent to remove all property of Lessee from the
Premises upon termination of this Lease and to cause its transportation and
storage for Lessee's benefit, all at the sole cost and risk of Lessee and
Lessor shall not be liable for damage, theft, misappropriation or loss thereof
and Lessor shall not be liable in any manner in respect thereto. Lessee shall
pay all costs and expenses of such removal, transportation and storage. Lessee
shall leave the Premises in good order, condition and repair, reasonable wear
and tear excepted. Lessee shall reimburse Lessor upon demand for any expenses
incurred by Lessor with respect to removal, transportation, or storage of
abandoned property and with respect to restoring said Premises to good order,
condition and repair. All alterations, additions and fixtures, other than
Lessee's equipment described on Exhibit E as specified above, which have been
made or installed by either Lessor or Lessee upon the Premises, shall remain
the property of Lessor and shall be surrendered with the Premises as a part
thereof. If the Premises be not surrendered at the end of the term or sooner
termination thereof, Lessee shall indemnify Lessor against actual loss
resulting from delay by Lessee in so surrendering the Premises. Lessee shall
promptly surrender all keys for the Premises to Lessor at the place then fixed
for the payment of rent and shall inform Lessor of combinations on any vaults,
locks and safes left on the Premises.
In the event Lessee remains in possession of the Premises after
expiration of this Lease, and without the execution of a new lease, but with
Lessor's written consent, it shall be deemed to be occupying the Premises as a
tenant from month-to-month, subject to all the provisions, conditions and
obligations of this Lease insofar as the same can be applicable to a
month-to-month tenancy, except that the Base Rent shall be escalated to the
then existing market rental rate, which shall in no event be less than the Base
Rent and Additional Rent amounts charged during the final month of the Lease.
In the event Lessee remains in possession of the Premises after expiration of
this Lease and without the execution of a new lease and without Lessor's
written consent, Lessee shall be deemed to be occupying the Premises without
claim of right and Lessee shall pay Lessor for all costs arising out of loss or
liability resulting from delay by Lessee in so surrendering the Premises as
above provided and shall pay a charge for each day of occupancy an amount equal
to double the Base Rent and Additional Rent.
ARTICLE XV. DEFAULT OF LESSEE: All rights and remedies of Lessor herein
enumerated shall be cumulative and are not intended to be exclusive of any
other remedies or means of redress to which Lessor may be lawfully entitled in
case of any breach or threatened breach of Lessee of any provision of this
Lease. The failure of Lessor to insist in any one or more cases upon the
strict performance of any of the covenants of this Lease or to exercise any
option herein contained shall not be construed as a waiver or relinquishment
for the future of such covenant or option. A receipt by Lessor of rent with
knowledge of the breach of any covenant hereof (other than breach of the
obligation to pay the portion of such rent paid) shall not be deemed a waiver
of such breach, and no waiver by Lessor of any provisions of this Lease shall
be deemed to have been made unless expressed in writing and signed by Lessor.
In addition to other remedies in this Lease provided, Lessor shall be entitled
to the restraint
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<PAGE> 11
by injunction of the violation or attempted or threatened violation of the
covenants, conditions and provisions of this Lease.
Subject to laws relating to bankruptcy, if, during the term of this
Lease or any renewal term, (i) Lessee shall make an assignment for the benefit
of creditors, or (ii) a voluntary petition be filed by Lessee under any law
having for its purpose the adjudication of Lessee a bankrupt, or Lessee be
adjudged a bankrupt pursuant to an involuntary petition in bankruptcy, or (iii)
a receiver be appointed for the property of Lessee by reason of the insolvency
of Lessee, or (iv) any department of the State or Federal government, or any
officer thereof, duly authorized, shall take possession of the business or
property of Lessee by reason of the insolvency of Lessee, the occurrence of any
of such contingencies shall be deemed a breach of this Lease and if Lessee is
otherwise in default under this Lease, Lessor may elect to terminate the Lease
and the same shall expire as fully and completely as if the day fixed for the
expiration of the initial term of this Lease or any renewal term, as the case
may be, had occurred, and Lessee will then quit and surrender the Premises, but
Lessee shall remain liable as hereinafter provided. As used in this paragraph,
the term "Lessee" shall also mean any guarantor of Lessee's obligations under
this Lease.
If, during the initial term of this Lease or any renewal term, (i)
Lessee shall default in fulfilling any of the covenants, obligations, or
agreements of this Lease (other than the covenants for the payment of rent
payable by Lessee hereunder), or (ii) this Lease, without the prior written
consent of Lessor or except as expressly permitted, shall be assigned, pledged,
mortgaged, transferred, or sublet in any manner, Lessor may give Lessee notice
of such default or the happening of any contingency in this paragraph referred
to and, if at the expiration of thirty (30) days after service of such notice
the default or contingency upon which said notice was based shall continue to
exist, or in the event of a default or contingency which cannot with due
diligence be cured within a period of thirty (30) days, if Lessee fails to
proceed promptly after the service of said notice and with all due diligence to
commence to cure the same and thereafter to prosecute the curing of such
default with all due diligence (it being intended that in connection with a
default not susceptible of being cured with diligence within thirty (30) days,
the time within which Lessee is to cure the same shall be extended for such
period as may be necessary to complete the same with all due diligence),
Lessor, at its option, may terminate this Lease and upon such termination
Lessee will quit and surrender the Premises to Lessor but Lessee shall remain
liable as hereinafter provided.
If Lessee defaults in any payment of the rent expressly reserved
hereunder, or any part of the same and such default shall continue for ten (10)
days after written notice thereof by Lessor, or if Lessee shall make default in
the payment of any item or any charge required to be paid by Lessee hereunder,
or any part of the same and such default shall continue for ten (10) days after
written notice thereof by Lessor, Lessor or Lessor's agent or servant may
immediately or at any time thereafter terminate this Lease, and upon such
termination for failure to pay such rent, item, or charge, or if this Lease
shall terminate by reason of the insolvency of Lessee, as set forth above,
Lessor or Lessor's agent or servant may re-enter the Premises and remove all
persons and all or any property therefrom, either by summary dispossess
proceedings, or by any suitable action or proceeding at law or by force or
otherwise, without being liable to indictment, prosecution, or damage therefor
and repossess and enjoy the Premises, together with all additions, alterations
and improvements, without such re-entry and repossession working a forfeiture
or waiver of the rents to be paid and the covenants to be performed by Lessee
during the full term of this Lease. Upon termination of this Lease or
expiration of Lessee's right to occupy the Premises by reason of the happening
of any of the foregoing events, or in any other manner or circumstances
whatsoever, whether with or without legal proceedings, by reason of or based
upon or arising out of a default or breach of this Lease on the part of Lessee,
Lessor may, at its option, at any time and from time to time use reasonable
efforts to relet the Premises or any part or parts thereof, for the account of
Lessee or otherwise, and receive and collect the rent therefor, applying the
same first to the payment of such expenses as Lessor may have incurred in
recovering possession of the Premises, including the attorneys' fees and
expenses for putting the same into good order and condition or preparing or
altering the same for re-rental to the extent Lessor deems necessary or
desirable and all other expenses, commissions and charges paid, assumed or
incurred by Lessor in or about reletting the Premises and then to the
fulfillment of the covenants of Lessee hereunder. Any such reletting herein
provided for may be for the remainder of the initial term or any renewal term
of this Lease, as originally granted, or for a longer or shorter period; Lessor
shall have the right to change the character and use made of the Premises, and
Lessor shall not be required to accept any substitute tenant offered by Lessee
or to observe any instructions given by Lessee about reletting. In any such
case, and whether or not the Premises or any part thereof be relet, Lessee
shall pay to Lessor the Base Rent and all Additional Rent and other charges
required to be paid by Lessee up to the later of the time of such termination
of the Lease or of such recovery of possession of the Premises by Lessor, as
the case may be, and thereafter, except in a case in which liability of Lessee
as hereinafter provided, arises by reason of the happening of the insolvency of
Lessee, Lessee covenants and agrees, if required by Lessor, to pay to Lessor
until the end of the initial term of this Lease, and/or any renewal term, as
the case may be, the equivalent of the amount of all rent reserved hereunder,
and all other charges required to be paid by Lessee, less the net proceeds of
reletting, if any. Lessor shall have the election in place of and instead of
holding Lessee so liable forthwith to recover against Lessee as damages for
loss of the bargain and not as a penalty, an aggregate sum which at the time of
such termination of this Lease or of such recovery of possession of the
Premises by Lessor, as the case may be, represents the then present worth of
the excess, if any, of the aggregate of the rent and all other charges payable
by Lessee hereunder that would have accrued for
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<PAGE> 12
the balance of the initial term, and/or any renewal term, as the case may be,
over the then present worth of the fair market rents and all other charges for
the Premises for the balance of such term.
If this Lease shall terminate by reason of the bankruptcy or
insolvency of Lessee, as above set forth, Lessor shall be entitled,
notwithstanding any other provisions of this Lease or any present or future
law, to recover from Lessee or Lessee's estate (in lieu of the equivalent of
the amount of all rent unpaid at the time of such termination) as damages for
loss of the bargain, and not as a penalty, an aggregate sum which, at the time
of such termination of this Lease, represents the excess, if any, of the then
present worth of the aggregate of the rent and other charges payable by Lessee
hereunder that would have accrued for the balance of the initial term or any
renewal term, as the case may be, over the then present worth of the fair
market rents and all other charges for the Premises for the balance of the
initial term and any renewal term, as the case may be, unless any statute or
rule of law governing the proceedings in which such damages are to be proved
shall limit the amount of such claim capable of being so proved. In such case,
Lessor shall be entitled to prove, as and for liquidated damages, by reason of
such breach and termination of this Lease, the maximum amount which may be
allowed by or under such statute or rule of law. Nothing herein contained
shall limit or prejudice Lessor's right to prove and obtain as liquidated
damages arising out of such breach or termination the maximum amount allowed by
any such statute or rule of law which may govern the proceedings in which such
damages are to be proved whether or not such amount be greater, equal to, or
less than the amount of the excess of the then present worth of the rent and
all other charges reserved herein over the then present worth of the fair
market rents and all other charges, referred to above.
ARTICLE XVI. SUBORDINATION: This Lease shall be subject and subordinate to
any mortgage, deed of trust or ground lease now or hereafter placed upon the
Premises, the Service Center Complex, the Property, or any portion thereof by
Lessor, its successors or assigns, and to amendments, replacements, renewals
and extensions thereof. Lessee agrees at any time hereafter, upon demand, to
execute and deliver any instruments, releases, or other documents that may be
reasonably required for the purpose of subjecting and subordinating this Lease,
as above provided, to the lien of any such mortgage, deed of trust or ground
lease. It is agreed, nevertheless, that as long as Lessee is not in default in
the payment of Base Rent, Additional Rent, and the payment of other charges to
be paid by Lessee under this Lease, and the performance of all covenants,
agreements and conditions to be performed by Lessee under this Lease, then
neither Lessee's right to quiet enjoyment under this Lease, nor the right of
Lessee to continue to occupy the Premises and to conduct its business thereon,
in accordance with the terms of this Lease as against any lessor, lessee,
mortgagee, trustee, or their successors or assigns shall be interfered with.
The above subordination shall be effective without the necessity of
the execution and delivery of any further instruments on the part of Lessee to
effectuate such subordination. Notwithstanding anything hereinabove contained
in this Article XVI, in the event the holder of any mortgage, deed of trust or
ground lease shall at any time elect to have this Lease constitute a prior and
superior lien to its mortgage, deed of trust or ground lease, then, and in such
event, upon any such holder or landlord notifying Lessee to that effect in
writing, this Lease shall be deemed prior and superior in lien to such
mortgage, deed of trust, ground lease, whether this Lease is dated prior to or
subsequent to the date of such mortgage, deed of trust or ground lease and
Lessee shall execute such attornment agreement as may be reasonably requested
by said holder.
Lessee agrees, provided the mortgagee, ground lessor or trust deed
holder under any mortgage, ground lease, deed of trust or other security
instrument shall have notified Lessee in writing (by way of a notice of
assignment of lease or otherwise) of its address, Lessee shall give such
mortgagee, ground lessor or trust deed holder, or other secured party
("Mortgagee"), simultaneously with delivery of notice to Lessor, by registered
or certified mail, a copy of any such notice of default served upon Lessor.
Lessee further agrees that said Mortgagee shall have the right to cure any
alleged default during the same period that Lessor has to cure such default.
ARTICLE XVII. MISCELLANEOUS:
A. Lessee represents that Lessee has dealt directly with
and only with CB Commercial Real Estate Group, Inc.
("CB"), as broker, in connection with this Lease and
that no other broker has negotiated or participated
in negotiations of this Lease or submitted or showed
the Premises or is entitled to any commission in
connection therewith. Lessee represents Lessee has
not dealt directly or indirectly with any broker in
connection with this Lease except for CB. Lessee
shall indemnify and hold Lessor harmless from and
against any and all commissions, fees and expenses
and all claims therefore, by any broker, salesmen or
other party in connection with or arising out of
Lessee's action in entering into this Lease, except
for the commission of CB in the amount of Eight
Thousand Eight Hundred Seventy-Three and No/100ths
Dollars ($8,873.00), which commission Lessor shall
pay upon occupancy of the Premises by Lessee. In the
event Lessee does not exercise the early termination
right granted in Article XXV herein, Lessor agrees to
pay an additional commission in the amount of Twelve
Thousand Four Hundred Twenty-Two and No/100ths
Dollars ($12,422.00) (the "Additional Commission") to
CB after the early termination right expires. The
Additional
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<PAGE> 13
Commission shall not be paid to CB in the event
Lessee exercises its right of early termination.
B. Lessee agrees from time to time upon not less than 10
days prior written request by Lessor to deliver to
Lessor a statement in writing certifying (i) this
Lease is unmodified and in full force and effect (or
if there have been modifications that the Lease as
modified is in full force and effect and stating the
modifications); (ii) the dates to which the rent and
other charges have been paid; (iii) Lessor is not in
default in any provision of this Lease or, if in
default, the nature thereof specified in detail; (iv)
the amount of monthly rental currently payable by
Lessee; (v) the amount of any prepaid rent, and (vi)
such other matters as may be reasonably requested by
Lessor or any mortgagee or prospective purchaser of
the Service Center Complex.
C. All notices, demands and requests shall be in
writing, and shall be effectively served in any of
the following manners:
(i) If addressed to Lessee:
By forwarding such notice, demand or request
by certified or registered mail, postage
prepaid, addressed to Lessee at:
AMSCO Sterile Recoveries, Inc.
28100 U.S. Highway 19 North
Suite 201
Clearwater, Florida 34621
Attn: Wayne Peterson
or at such other address as Lessee may
hereafter designate by written notice to
Lessor, in which case said notice shall be
effective at the time of mailing such notice.
(ii) If addressed to Lessor:
By forwarding such notice, demand or
request by certified or registered
mail, postage prepaid, addressed to
Lessor at:
QP One Corporation
4200 West Cypress Street, Suite 444
Tampa, Florida 33607
Attn: Neil J. Rauenhorst
with a copy to:
Opus U.S. Corp.
P.O. Box 59110
Minneapolis, Minnesota 55440
Attn: Law Department
or at such other address as Lessor
may hereafter designate by written
notice to Lessee, in which case said
notice shall be effective at the
time of mailing such notice.
D. All rights and remedies of Lessor under this Lease or
that may be provided by law may be executed by Lessor
in its own name, individually, or in the name of its
agent, and all legal proceedings for the enforcement
of any such rights or remedies, including those set
forth in Article XV, may be commenced and prosecuted
to final judgment and execution by Lessor in its own
name or in the name of its agent.
E. Lessor covenants and agrees that Lessee, upon paying
the Base Rent, Additional Rent and other charges
herein provided for and observing and keeping the
covenants, agreements and conditions of this Lease on
its part to be kept and performed, shall lawfully and
quietly hold, occupy and enjoy the Premises during
the term of this Lease.
F. The covenants and agreements herein contained shall
bind and inure to the benefit of the Lessor, its
successors and assigns, and Lessee and its permitted
successors and assigns.
G. If any term or provision of this Lease shall to any
extent be held invalid or unenforceable, the
remaining terms and provisions of this Lease shall
not be affected thereby, but each term and provision
of this Lease shall be valid and
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<PAGE> 14
enforced to the fullest extent permitted by law.
This Lease shall be construed and enforced in
accordance with the laws of the state in which the
Premises are located.
H. Lessee covenants not to do or suffer any waste or
damage or disfigurement or injury to the Premises or
Service Center Complex and Lessee further covenants
that it will not abandon the Premises during the term
of this Lease.
I. The term "Lessor" as used in this Lease so far as
covenants or obligations on the part of Lessor are
concerned shall be limited to mean and include only
the owner or owners of the Service Center Complex at
the time in question, and in the event of any
transfer or transfers or conveyances the then grantor
shall be automatically freed and released from all
personal liability accruing from and after the date
of such transfer or conveyance as respects the
performance of any covenant or obligation on the part
of Lessor contained in this Lease to be performed, it
being intended hereby that the covenants and
obligations contained in this Lease on the part of
Lessor shall be binding on the Lessor, its successors
and assigns, only in respect to their respective
successive periods of ownership.
In the event of a sale or conveyance by Lessor of the
Service Center Complex or any part of the Service
center Complex, the same shall operate to release
Lessor from any future liability upon any of the
covenants or conditions herein contained and in such
event Lessee agrees to look solely to the
responsibility of the successor in interest of Lessor
in and to this Lease. This Lease shall not be
affected by any such sale or conveyance, and Lessee
agrees to attorn to the purchaser or grantee, which
shall be personally obligated on this Lease only so
long as it is the owner of Lessor's interest in and
to this Lease.
J. The marginal or topical headings of the several
Articles are for convenience only and do not define,
limit or construe the contents of said Articles.
K . All preliminary negotiations are merged into and
incorporated in this Lease.
L. This Lease can only be modified or amended by an
agreement in writing signed by the parties hereto.
No receipt of money by Lessor from Lessee or any
other person after termination of this Lease or after
the service of any notice or after the commencement
of any suit, or after final judgment for possession
of the Premises shall reinstate, continue or extend
the term of this Lease or affect any such notice,
demand or suit, or imply consent for any action for
which Lessor's consent is required, unless
specifically agreed to in writing by Lessor. Any
amounts received by Lessor may be allocated to any
specific amounts due from Lessee to Lessor as Lessor
determines.
M. Lessor shall have the right to close any portion of
the building area or land area to the extent as may,
in Lessor's reasonable opinion, be necessary to
prevent a dedication thereof or the accrual of any
rights to any person or the public therein. Lessor
shall at all times have full control, management and
direction of the Service Center Complex, subject to
the rights of Lessee in the Premises, and Lessor
reserves the right at any time and from time to time
to reduce, increase, enclose or otherwise change the
size, number and location of buildings, layout and
nature of the Service Center Complex and the other
tenancies, premises and buildings included in the
Service Center Complex, to construct additional
buildings and additions to any building, and to
create additional rentable areas through use and/or
enclosure of common areas, or otherwise, and to place
signs on the Service Center Complex, and to change
the name, address, number or designation by which the
Service Center Complex is commonly known. Lessor
agrees to use reasonable efforts to minimize
interference and interruption of Lessee's business
operations while pursuing the foregoing activities.
No implied easements are granted by this Lease.
Lessor shall in no event be liable for any lack of
security in respect to the Service Center Complex.
N. Lessee shall permit Lessor (or its designees) to
erect, use, maintain, replace and repair pipes,
cables, conduits, plumbing, vents, and telephone,
electric and other wires or other items, in, to and
through the Premises, as and to the extent that
Lessor may now or hereafter deem necessary or
appropriate for the proper operation and maintenance
of the Service Center Complex.
0. Employees or agents of Lessor have no authority to
make or agree to make a lease or other agreement or
undertaking in connection herewith. The submission
of this document for examination does not constitute
an offer to
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<PAGE> 15
lease, or a reservation of, or option for, the
Premises. This document becomes effective and
binding only upon the execution and delivery hereof
by the proper officers of Lessor and by Lessee.
Lessee confirms that Lessor and its agents have made
no representations or promises with respect to the
Premises or the making of or entry into this Lease
except as in this Lease expressly set forth, and
agrees that no claim or liability shall be asserted by
Lessee against Lessor for, and Lessor shall not be
liable by reason of, breach of any representations or
promises not expressly stated in this Lease. This
Lease, except for the Building Rules and Regulations,
in respect to which subparagraph P of this Article
shall prevail, can be modified or altered only by
agreement in writing between Lessor and Lessee, and
no act or omission of any employee or agent of Lessor
shall alter, change or modify any of the provisions
hereof.
P. Lessee shall perform, observe and comply with the
Building Rules and Regulations of the Service Center
Complex as set forth below, with respect to the
safety, care and cleanliness of the Premises and the
Service Center Complex, and the preservation of good
order thereon, and, upon written notice thereof to
Lessee, Lessee shall perform, observe, and comply
with any reasonable changes, amendments or additions
thereto as from time to time shall be established and
deemed advisable by Lessor for tenants of the Service
Center Complex. Lessor shall not be liable to Lessee
for any failure of any other tenant or tenants of the
Service Center Complex to comply with such Building
Rules and Regulations.
Q. All rights and occupancy of Lessee herein shall be
subject to all governmental laws, ordinances and
regulations, and Lessee shall comply with the same.
R. All obligations of Lessee hereunder not fully
performed as of the expiration or earlier termination
of the term of this Lease shall survive the
expiration or earlier termination of the term hereof,
including, without limitation, all payment
obligations with respect to Operating Expenses and
Real Estate Taxes and all obligations concerning the
condition of the Premises.
S. Any claim which Lessee may have against Lessor for
default in performance of any of the obligations
herein contained to be kept and performed by Lessor
shall be deemed waived unless such claim is asserted
by written notice thereof to Lessor within sixty (60)
days of commencement of the alleged default or of
accrual of the cause of action and unless suit be
brought thereon within six (6) months subsequent to
the accrual of such cause of action; provided,
however, that with respect to latent defects, within
twelve (12) months of the date Lessee becomes aware
of such latent defect, or, in the exercise of
reasonable diligence, should have become aware of the
latent defect. Furthermore, Lessee agrees to look
solely to Lessor's interest in the Service Center
Complex for the recovery of any judgment from Lessor,
it being agreed that Lessor, or if Lessor is a
partnership, its partners whether general or limited,
or if Landlord is a corporation, its directors,
officers or shareholders, shall never be personally
liable for any such judgment.
T. Lessee shall furnish to Lessor promptly upon demand,
a corporate resolution, proof of due authorization of
partners, or other appropriate documentation
reasonably requested by Lessor evidencing the due
authorization of Lessee to enter into this Lease.
U. This Lease shall not be deemed or construed to create
or establish any relationship or partnership or joint
venture or similar relationship or arrangement
between Lessor and Lessee hereunder.
ARTICLE XVIII. MISCELLANEOUS TAXES: Lessee shall pay, prior to delinquency,
all taxes assessed or levied upon its occupancy of the Premises, or upon the
trade fixtures, furnishings, equipment and all other personal property of
Lessee located in the Premises, and when possible, Lessee shall cause such
trade fixtures, furnishings, equipment and other personal property to be
assessed and billed separately from the property of Lessor. In the event any
or all of Lessee's trade fixtures, furnishings, equipment or other personal
property, or Lessee's occupancy of the Premises, shall be assessed and taxed
with the property of Lessor, Lessee shall pay to Lessor its share of such taxes
within ten (10) days after delivery to Lessee by Lessor of a statement in
writing setting forth the amount of such taxes applicable to Lessee's personal
property.
ARTICLE XIX. SEPARATE METERING OF ELECTRIC UTILITIES, WATER AND SEWER: All
electric utilities used in the Premises shall be separately metered and paid
for directly by Lessee upon its receipt of invoice therefor from the respective
utility provider. All water and sewer usage in the Premises shall be
submetered from Lessor's primary line (or alternatively, a reasonable estimate
of such usage shall be made by Lessor) and paid for by Lessee to Lessor upon
receipt of invoice therefor. The cost of all such utilities used in other
areas of the Service Center Complex rented to tenants shall not
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<PAGE> 16
be included in the Operating Expenses; provided, however, that the cost of all
other utilities serving the Service Center Complex in general (including
without limitation, electricity for building systems, water and sewer serving
common areas, building equipment and common area lighting) shall be included in
the Operating Expenses. Lessee agrees to refrain from overloading the
electrical and water system designed for the Premises.
Lessor agrees to refrain from taking any action which would
unreasonably interrupt Lessee's receipt of the foregoing utility services
(emergency and force majeure type events excluded). In the event Lessor's
actions result in a cessation of the foregoing services for a period of
forty-eight (48) hours (excluding emergency and force majeure type events),
then Lessee shall be entitled to an abatement of rent for each day such
services are interrupted after the forty-eight (48) hour period.
ARTICLE XX. SUBSTITUTE PREMISES: [Intentionally deleted]
ARTICLE XXI. OTHER PROVISIONS: The following are made a part hereof, with the
same force and effect as if specifically set forth herein:
A. Floor Plan - Exhibit A.
B. Building Rules and Regulations - Exhibit B.
C. Rider to Service Center Lease - Exhibit C.
D. Tenant Improvement Specifications and Construction
Services Agreement - Exhibit D.
E. List of Lessee's Equipment - Exhibit E.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
Executed in the presence LESSOR:
of the following witnesses:
QP ONE CORPORATION, a Minnesota
corporation
/s/ [Illegible] By: /s/ John T. Candell
- --------------------------- --------------------------
/s/ [Illegible] Its: Secretary
- --------------------------- --------------------------
(Corporate Seal)
LESSEE:
AMSCO STERILE RECOVERIES, INC., a
Delaware corporation
/s/ Terrell J. Kuykendall By: /s/ Richard T. Isel
- --------------------------- --------------------------
Richard T. Isel
/s/ Wayne R. Peterson Its: President
- --------------------------- --------------------------
(Corporate Seal)
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<PAGE> 17
EXHIBIT A
FLOOR PLAN
The plans illustrate the site plan for the building known as the
Service Center 4501 Acline located at 4501 Acline Street, Tampa, Florida
33619. The site plan indicates one curb cut to the premises with a parking
diagram as well as the leased premises located in 4501 Acline outlined in red.
There are no dimensions.
<PAGE> 18
EXHIBIT B
BUILDING RULES AND REGULATIONS
1. Any sign, lettering, picture, notice or advertisement
installed on or in any part of the Premises and visible from the exterior of
the Service Center Complex, or visible from the exterior of the Premises, shall
be installed at Lessee's sole cost and expense, and in such manner, character
and style as Lessor may approve in writing. Anything herein to the contrary
notwithstanding, approval as to signs shall be subject to Lessor's approval
which may be withheld in Lessor's sole discretion. In the event of a
violation of the foregoing by Lessee, Lessor may remove the same without any
liability and may charge the expense incurred by such removal to Lessee.
2. No awning or other projection shall be attached to the outside
walls of the Service Center Complex. No curtains, blinds, shades or screens
visible from the exterior of the Service Center Complex or visible from the
exterior of the Premises, shall be attached to or hung in, or used in
connection with any window or door of the Premises without the prior written
consent of Lessor. Such curtains, blinds, shades, screens or other fixtures
must be of a quality, type, design and color, and attached in the manner
approved by Lessor.
3. Lessee, its servants, employees, customers, invitees and
guests shall not obstruct sidewalks, entrances, passages, corridors,
vestibules, halls, or stairways in and about the Service Center Complex which
are used in common with other tenants and their servants, employees, customers,
guests and invitees, and which are not a part of the Premises of Lessee.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Service Center Complex corridors or from the
exterior of the Service Center Complex and will promptly remove any such
objects upon notice from Lessor.
4. Lessee shall not make excessive noises, cause disturbances or
vibrations or use or operate any electrical or mechanical devices that emit
excessive sound or other waves or disturbances or create obnoxious odors
(except as might reasonably be associated with a laundry/sterilization
operation; provided, however, that such odors do not affect other tenants
occupying the Service Center Complex, in which event, Lessee shall take
reasonable steps to eliminate the odors by virtue of venting or fans, filtering
or other similar methods), any of which may be offensive to the other tenants
and occupants of the Service Center Complex, or that would interfere with the
operation of any device, equipment, radio, television broadcasting or reception
from or within the Service Center Complex or elsewhere and shall not place or
install any projections, antennas, aerials or similar devices inside or outside
of the Premises or on the Service Center Complex.
5. Lessee shall not waste electricity, water or air-conditioning
furnished by Lessor, if any, and shall cooperate fully with Lessor to insure
the most effective operation of the Service Center Complex's heating and air-
conditioning systems.
6. Lessee assumes full responsibility for protecting its space
from theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises closed and secured after normal business
hours.
7. In no event shall Lessee bring into the Service Center Complex
inflammables, such as gasoline, kerosene, naphtha and benzine, or explosives or
any other article of intrinsically dangerous nature. If, by reason of the
failure of Lessee to comply with the provisions of this subparagraph, any
insurance premium for all or any part of the Service Center Complex shall at
any time be increased, Lessee shall make immediate payment of the whole of the
increased insurance premium, without waiver of any of Lessor's other rights at
law or in equity for Lessee's breach of this Lease.
8. (A) Lessee shall comply with all applicable federal, state
and municipal laws, ordinances and regulations, and building rules and shall
not directly or indirectly make any use of the Premises which may be prohibited
by any of the foregoing or which may be dangerous to persons or property or may
increase the cost of insurance or require additional insurance coverage.
(B) Lessor acknowledges that Lessee intends to use the
Premises as a hospital, laundry/sterilization facility, and that such occupancy
shall be subject to compliance with the terms and conditions of this Lease.
9. Lessor shall have the right to prohibit any advertising by
Lessee which in Lessor's reasonable opinion tends to impair the reputation of
the Service Center Complex or its desirability as a warehouse complex for
warehouse use, and upon written notice from Lessor, Lessee shall refrain from
or discontinue such advertising.
10. The Premises shall not be used for cooking (as opposed to
heating of food), lodging, sleeping or for any immoral or illegal purpose.
11. Lessee and Lessee's servants, employees, agents, visitors and
licensees shall observe faithfully and comply strictly with the foregoing rules
and regulations and such other and further
<PAGE> 19
appropriate rules and regulations as Lessor or Lessor's agent may from time to
time adopt. Reasonable notice of any additional rules and regulations shall be
given in such manner as Lessor may reasonably elect.
12. Unless expressly permitted by the Lessor, no additional locks
or similar devices shall be attached to any door or window and no keys other
than those provided by the Lessor shall be made for any door. If more than two
keys for one lock are desired by the Lessee, the Lessor may provide the same
upon payment by the Lessee. Upon termination of this Lease or of the Lessee's
possession, the Lessee shall surrender all keys of the Premises and shall
explain to the Lessor all combination locks on safes, cabinets and vaults.
13. Any carpeting cemented down by Lessee shall be installed with
a releasable adhesive. In the event of a violation of the foregoing by Lessee,
Lessor may charge the expense incurred by such removal to Lessee.
14. The water and wash closets, drinking fountains and other
plumbing fixtures shall not be used for any purpose other than those for which
they were constructed, and no sweepings, rubbish, rags, coffee grounds or other
substances shall be thrown therein. All damages resulting from any misuse of
the fixtures shall be borne by the Lessee who, or whose servants, employees,
agents, visitors or licensees, shall have caused the same. No person shall
waste water by interfering or tampering with the faucets or otherwise.
15. No electric circuits for any purpose shall be brought into the
leased premises without Lessor's written permission specifying the manner in
which same may be done. Lessee shall not overload any utilities serving the
Premises.
16. No bicycle or other vehicle, and no dog or other animal shall
be allowed in the Service Center Complex.
17. All loading, unloading, receiving or delivery of goods,
supplies or disposal of garbage or refuse shall be made only through entryways
provided for such purposes. Lessee shall be responsible for any damage to the
Service Center Complex or the property of its employees or others and injuries
sustained by any person whomsoever resulting from the use or moving of such
articles in or out of the Premises, and shall make all repairs and improvements
required by Lessor or governmental authorities in connection with the use or
moving of such articles.
18. All safes, equipment or other heavy articles shall be carried
in or out of the Premises only in such manner as shall be prescribed in writing
by Lessor, and Lessor shall in all cases have the right to specify the proper
position of any such safe, equipment or other heavy article, which shall only
be used by Lessee in a manner which will not interfere with or cause damage to
the Premises or the Service Center Complex in which they are located, or to the
other tenants or occupants of said Service Center Complex. Lessee shall be
responsible for any damage to the Service Center Complex or the property of its
employees or others and injuries sustained by any person whomsoever resulting
from the use or moving of such articles in or out of the Premises, and shall
make all repairs and improvements required by Lessor or governmental
authorities in connection with the use or moving of such articles.
19. Canvassing, soliciting, and peddling in or about the Service
Center Complex is prohibited and each Lessee shall cooperate to prevent the
same.
20. Wherever in these Building Rules and Regulations the word
"Lessee" occurs, it is understood and agreed that it shall mean Lessee's
associates, employees, clerks, servants, invitees and visitors. Wherever the
word "Lessor" occurs, it is understood and agreed that it shall mean Lessor's
assigns, agents, clerks, servants, and visitors.
21. Lessor shall have the right to enter upon the Premises at all
reasonable hours for the purpose of inspecting the same.
22. Lessor shall have the right to enter the Premises at hours
convenient to the Lessee for the purpose of exhibiting the same to prospective
tenants within the one hundred twenty (120) day period prior to the expiration
of this Lease, and may place signs advertising the Premises for rent on the
exterior of said Premises at any time within said one hundred twenty (120) day
period.
23. Lessee, its servants, employees, customers, invitees and
guests shall, when using the common parking facilities, if any, in and around
the Service Center Complex, observe and obey all signs regarding fire lanes and
no parking zones, and when parking always park between the designated lines.
Lessor reserves the right to tow away, at the expense of the owner, any vehicle
which is improperly parked or parked in a no parking zone. All vehicles shall
be parked at the sole risk of the owner, and Lessor assumes no responsibility
for any damage to or loss of vehicles. No vehicles shall be parked overnight.
-2-
<PAGE> 20
24. In case of invasion, mob, riot, public excitement, or other
commotion, Lessor reserves the right to prevent access to the Service Center
Complex during the continuance of the same by closing the doors or otherwise,
for the safety of the tenants or the protection of the Service Center Complex
and the property therein. Lessor shall in no case be liable for damages for
any error or other action taken with regard to the admission to or exclusion
from the Service Center Complex of any person.
25. All entrance doors to the Premises shall be locked when the
Premises are not in use. All common corridor doors, if any, shall also be
closed during times when the air-conditioning equipment in the Service Center
Complex is operating so as not to dissipate the effectiveness of the system or
place an overload thereon.
26. Lessor reserves the right at any time and from time to time to
rescind, alter or waive, in whole or in part, any of these Rules and
Regulations when it is deemed necessary, desirable, or proper, in Lessor's
judgment, for its best interest or for the best interest of the tenants of the
Service Center Complex.
Initials:
Lessor: /s/ JTC
--------
Lessee: /s/ RTI
--------
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<PAGE> 21
EXHIBIT C
RIDER TO SERVICE CENTER LEASE
ARTICLE XXII. LOCK BOX: Lessor may from time to time designate a lock box
collection agent for the collection of rents or other charges due Lessor. In
such event, the payment made by Lessee to the lock box shall be the date of
receipt by the lock box collection agent of such payment (or the date of
collection of any such sum if payment is made in the form of a negotiable
instrument thereafter dishonored upon presentment); however, for the purpose of
this Lease, no such payment or collection shall be deemed a waiver by Lessor of
any breach by Lessee of any term, covenant or condition of this Lease nor a
waiver of any of Lessor's rights or remedies and any payment of amounts other
than that deemed due and proper by Lessor shall not prejudice Lessor in any
manner nor constitute a waiver and Lessor shall hereby be authorized to retain
the proceeds of any payments by Lessee, whether restrictively endorsed or
otherwise, and apply same to the amounts due and payable from Lessee under this
Lease without waiver.
ARTICLE XXIII. TENANT IMPROVEMENTS: Lessor, prior to commencement of the
term shall cause certain "Tenant Improvements" to be constructed within the
Premises, in accordance with (i) the plans and specifications attached hereto
collectively as Exhibit D, and made a part hereof (the "Specifications"), and
(ii) the Construction Services Agreement attached hereto as Exhibit D,
continued, and made a part hereof.
Lessor agrees to provide an allowance for Tenant Improvements for the
Premises in the amount of $106,476.00. All Tenant Improvements requested by
Lessee in excess of the $106,476.00 allowance shall be at the expense of and
payable by Lessee to Lessor, on a weekly basis during the Tenant Improvement
build-out period. The total Tenant Improvement cost estimate for the Premises
is $791,000.00, and is based upon the Specifications attached hereto as
collectively in Exhibit D, and made a part hereof. Accordingly, based upon the
foregoing, Lessee's excess Tenant Improvement cost is $684,524.00. The weekly
draw request for payment delivered by Lessor's contractor to Lessee shall
reflect that the payment due is to be funded 86.5% by Lessee and 13.5% by
Lessor in direct relation to Lessee's percentage of the total Tenant
Improvement cost and Lessor's allowance for such Tenant Improvement cost. The
procedure for draw requests, changes to the specifications, and corrections of
work shall be governed and controlled by the attached Construction Services
Agreement.
Lessor covenants and agrees that it shall not be entitled to or charge
an additional service fee or profit margin resulting from any change order to
the Specifications; provided, however, that Lessor's contractor shall be
entitled to collect the overhead and profit specified in the Construction
Services Agreement for any change order in conformance with the Construction
Services Agreement.
Lessor shall cause its contractor to maintain Builder's Risk and
General Liability insurance for its activities in constructing the Tenant
Improvements upon the Premises during the build-out period. Such insurance
shall be in the amount of $2,500,000.00 and shall name Lessee and Lessor as
insureds on the policy.
Except for the warranties given and claims which Lessor and Lessee
have not waived under the terms of the Construction Services Agreement, Lessor
and Lessee agree that upon Substantial Completion of the Work and receipt of
the final payment for such Work by Lessor (as such terms are defined in the
Construction Services Agreement), the Construction Services Agreement shall be
of no further force and effect or applicable to the rights of Lessor and
Lessee.
ARTICLE XXIV. RADON GAS: Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
ARTICLE XXV. EARLY TERMINATION BY LESSEE: Notwithstanding anything
contained in this Lease to the contrary, Lessee may terminate this Lease
effective January 25, 1997 by (a) providing Lessor with written notice on or
before January 25, 1996 (the "Notification Date"), of its intent to terminate
this Lease as of the Termination Date, and (b) paying an early termination fee
in an amount of $32,000.00, concurrently with the written notification
delivered to Lessor on the Notification Date.
ARTICLE XXVI. REAL ESTATE TAX ADJUSTMENT: Lessee agrees that in the event
the installation of the Tenant Improvements in the Premises results in an
increased ad valorem tax valuation by the Hillsborough County Property
Appraiser, then Lessee agrees to pay, as Additional Rent, the amount of such
tax increase directly related to Lessee's Tenant Improvements for the Premises.
The foregoing adjustment shall only be payable by Lessee should the ad valorem
tax bill increase as a result of the tenant improvements to the Premises and
not as a result of market conditions or general increase in property values in
the area.
<PAGE> 22
ARTICLE XXVII. RIGHT TO CONTEST REAL ESTATE TAX: At Lessee's request, Lessor
agrees to provide Lessee with a copy of the assessed bill for the Real Estate
Taxes for any given year. Lessee shall be entitled to notify Lessor that it
desires for Lessor to contest the amount of the Real Estate Taxes, to the
extent applicable local laws relating to the same permit Lessor to do so. In
the event Lessee desires for Lessor to contest the Real Estate Taxes, then
Lessor shall take such steps as Lessor deems reasonably necessary to contest
the amount of the Real Estate Taxes, and the cost and expense thereof shall be
deemed Operating Expenses.
ARTICLE XXVIII. TERMINATION RIGHT FOR ZONING CHANGE: Notwithstanding anything
in this Lease to the contrary, in the event any statute, ordinance or
regulation is imposed by an applicable governmental authority upon Lessee,
which prohibits Lessee's intended use of the Premises for the purpose as set
forth herein, then Lessee shall be entitled to terminate this Lease effective
as of the date the use is no longer allowed by the applicable governmental
authority; provided, however, that Lessee shall be required to pay to Lessor
prior to termination, the unamortized Tenant Improvement costs included as a
portion of Base Rent.
It is the intent of this Article XXVIII that the termination right
apply only to a total prohibition of Lessee's intended use, and Lessee shall
not be entitled to utilize this termination provision in the event governmental
authorities, regulations or requirements impose restrictions or requirements
which do allow continued use of the Premises, subject only to compliance by
Lessee with such regulations or requirements.
ARTICLE XXIX. VACATION OF PREMISES AT END OF TERM: Lessor shall give
written notice to Lessee at least thirty (30) days prior to the end of the term
of the Lease for the express purpose of arranging a meeting with Lessor for a
joint inspection of the Premises. In the event Lessee is unwilling or unable
to attend the joint inspection, Lessor's inspection at or after Lessee's
vacation of the Premises shall be conclusively deemed correct for purposes of
determining Lessee's responsibility for repairs and restoration under this
Lease.
ARTICLE XXX. LESSOR'S DEFAULT: After the Lease commencement date, in the
event Lessor defaults under the terms and conditions of this Lease, then after
thirty (30) days prior written notification to Lessor, Lessee may exercise any
and all rights and remedies permitted Lessee under Florida law as a result of
Lessor's default, including termination of the Lease; provided, however, that
if the default is of such nature which cannot with due diligence be cured
within a period of thirty (30) days, if Lessor is proceeding with all due
diligence to commence to cure the same and thereafter to prosecute the curing
of such default with due diligence (it being intended that in connection with a
default not susceptible of being cured with due diligence within thirty (30)
days, the time within which Lessor may cure the same shall be extended for such
period as may be necessary to complete the cure), then Lessee shall not be
entitled to terminate the Lease as aforesaid.
ARTICLE XXXI. PREVAILING PARTY ATTORNEYS' FEES: In the event any litigation
or other court proceeding arises out of this Lease Agreement, the prevailing
party shall be entitled to recover its costs and expenses therefrom, including
without limitation, court costs and reasonable attorneys' fees and expenses,
including legal assistant's fees, whether incurred before trial, at trial, on
appeal or in bankruptcy.
ARTICLE XXXII. EXECUTION: This Lease Agreement shall, at Lessee's election,
be declared null and void and of no further force and effect in the event
Lessor fails to execute this Lease within ten (10) business days of the date of
execution by Lessee.
ARTICLE XXXIII. EARLY OCCUPANCY: Prior to the commencement date of the Lease,
Lessor agrees that Lessee may enter upon the Premises on or after December 26,
1991, for the purpose of installing its equipment upon the Premises; provided,
however, that (i) such activities shall not in any way interfere with the
Tenant Improvement work being undertaken by Lessor; and (ii) Lessee shall
obtain Lessor's prior written consent before entering upon the Premises to
install its equipment, so that such activities can be coordinated with Lessor's
construction schedule for the Tenant Improvements. Lessee's entry upon the
Premises prior to the commencement date of the Lease and the installation
activities shall at all times be subject to and in accordance with the
covenants, conditions and obligations of this Lease, including, without
limitation, the insurance requirements of Article X.
Lessee acknowledges that the Certificate of Occupancy for the Premises
will not be issued by the City of Tampa until a final inspection of both
Lessor's Tenant Improvements and Lessee's equipment installation and Lessor
shall not be liable for or responsible in any way for delays or damages caused
to Lessee resulting from or associated with Lessee's installation of its own
equipment.
ARTICLE XXXIV. DELAY IN COMMENCEMENT DATE: In the event a Certificate of
Occupancy has not been issued for the Premises on or before the Commencement
Date of January 25, 1992, then the Commencement Date of the Lease shall be
delayed to the date of the issuance of the Certificate of Occupancy and
correspondingly, the expiration date of the Lease and Base Rent Adjustment
dates shall also be extended accordingly. Base Rent shall also be abated in an
amount equal to two (2) days of Base Rent for each one (1) day of delay after
the scheduled Commencement Date of January 25, 1992. By way of example, in the
event the Certificate of Occupancy was not issued until January 31, 1992,
Lessee would be entitled to an abatement of rent in an amount equal to the
product of Three
-2-
<PAGE> 23
Thousand Six Hundred Ninety-Seven and 08/100ths Dollars ($3,697.08) divided by
31, and multiplied by 12 (i.e. - the January, 1992 rental rate, divided by the
number of days in the month, multiplied by 12 days abatement (6 days delay x
2)).
Notwithstanding anything in the foregoing paragraph to the contrary,
in the event the delay in the issuance of the Certificate of Occupancy for the
Premises is caused in whole or in part by Lessee's failure to complete
installation of its equipment or in the event Lessee's installation of its
equipment results in Lessor's delay in completion of its Tenant Improvement
Work, then Lessee shall not be entitled to any rent abatement and the Lease
Term shall commence on the scheduled Commencement Date.
Initials:
Lessor: /s/ JTC
-------
Lessee: /s/ RTI
--------
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<PAGE> 24
EXHIBIT D
CONSTRUCTION SERVICES AGREEMENT
The purpose of this Exhibit is to clarify the rights and responsibilities of
the following parties in connection with Construction of Tenant Improvements
under that certain Service Center Lease dated December 4th, 1991 ("Lease") to
which this Exhibit is attached.
QP One Corporation (QP) - Lessor
Opus South Corporation (OSC) - Design Build Contractor - Lessor's Contractor
and Agent
AMSCO Sterile Recoveries, Inc. (AMSCO) - Lessee
Definitions:
"Work" - shall mean the completed construction of the Tenant Improvements, as
defined in Article XXIII of the Lease, and includes labor necessary to produce
such construction, and materials and equipment incorporated or to be
incorporated in such construction.
"Substantial Completion" - the date upon which construction of the Work is
sufficiently complete so Lessee can occupy and utilize the Work for its
intended purpose.
"Contract Sum" - the total cost of constructing the Tenant Improvements as set
forth in Article XXIII of the Lease, $791,000.00.
"Contract Time" - the period of time necessary to construct the Tenant
Improvements, a period not to continue beyond January 25, 1992, unless extended
in writing by mutual agreement of the parties.
"Agreement" - this Construction Services Agreement.
"Construction Documents" - shall mean and include the following:
Outline Specifications dated 11/15/91
Construction Plans:
A1-A5 dated 11/15/91
E1-E3 dated 11/15/91
M1-M2 dated 11/15/91
P1-P3 dated 11/15/91 (P3 dated 11/13/91)
C4800-6 dated 10/10/91 - Basil Model 4800
C4800-2 dated 10/10/91 - Basil Model 4800
TC 5675 dated 10/30/91 - Braun Trench Drail
DC 5675 dated 10/30/91 - Braun Steril Lock
SE5675 dated 10/29/91 - Braun Layout and Elevation
366068-160 dated 1/28/91 - American Sterilizer Model 3000 VAC
122-991-102 Sheets 1-5 Reliance Washer Series 777
403783 dated 9/19/91 - Kemco Schematic Flow Diagram
PAYMENTS
Progress Payments
OSC shall deliver to AMSCO itemized applications for payment (each, an
"Application for Payment") signed off and approved by QP and in such detail as
indicated below, not more frequently than once every seven (7) days of the
construction period (a "Payment Period"). Each Application for Payment shall
include a contractor's affidavit that all contractors and sub-contractors have
been paid for services or materials rendered through the last Payment Period.
Within three (3) days of AMSCO's receipt of a properly submitted and correct
Application for Payment, AMSCO shall confirm Work in place and make payment to
OSC, QP hereby authorizing payment for the Work directly to OSC, unless AMSCO
is otherwise notified in writing by QP. AMSCO shall cause such progress
payments to be delivered to and received by QP or OSC, as applicable, within
the foregoing three (3) day period.
The Application for Payment shall constitute a representation by QP to AMSCO
that, to the best of QP's knowledge, information and belief, the design and
construction have progressed to the point indicated; the quality of the Work
covered by the Application for Payment is in accordance with the Construction
Documents; and that OSC is entitled to payment in the amount requested.
QP shall cause OSC to pay each contractor, upon receipt of payment from AMSCO,
out of the amount paid by AMSCO on account of such contractor's work, the
amount to which said contractor is entitled in accordance with the terms of
OSC's contract with such contractor. QP shall, by appropriate agreement with
OSC, cause OSC to make payment to sub- contractors in similar manner.
<PAGE> 25
Except for AMSCO's obligation to pay QP as set forth herein, AMSCO shall have
no other obligation to pay or to be responsible in any way for payment to a
sub-contractor of OSC, except as may otherwise be required by law.
No progress payment or partial or entire use or occupancy of the Premises by
AMSCO shall constitute an acceptance of Work not in accordance with the
Construction Documents.
With each submission of an Application for Payment, QP warrants that: (1) title
to Work, materials and equipment covered by an Application for Payment will
pass to AMSCO either by incorporation in construction or upon receipt of
payment by OSC, whichever occurs first; (2) Work, materials and equipment
covered by previous Applications for Payment are free and clear of liens,
claims, security interests, or encumbrances, hereinafter referred to as
"liens;" and (3) no Work, materials or equipment covered by an Application for
Payment will have been acquired by OSC, or any other person performing work at
the site or furnishing materials or equipment for the Work, subject to an
agreement under which an interest therein or an encumbrance thereon is retained
by the seller or otherwise imposed by OSC or any other person.
Final payment constituting the entire unpaid balance due shall be paid by AMSCO
to OSC upon AMSCO's receipt of OSC's final Application for Payment when the
Work has been completed and a final Certificate of Occupancy issued allowing
AMSCO to occupy the Premises (except for those responsibilities of OSC which
survive final payment). Such final Application for Payment shall not be less
then $100,000.00. The Application for Payment immediately prior to the final
Application for Payment shall be reduced if necessary in order to create a
final Application for Payment of $100,000.00 or greater.
The making of final payment shall constitute a waiver of all claims by AMSCO
except those arising from:
unsettled liens;
faulty or defective Work appearing after Substantial
Completion;
failure of the Work to comply with requirement of
the Construction Documents; or
terms of special warranties required by the Lease,
if any, and the Construction
Documents.
Acceptance of final payment shall constitute a waiver of all claims by QP
relating to payment for the Work, except those previously made in writing and
identified by QP as unsettled at the time of Final Application for Payment.
CHANGES IN THE WORK
Change Orders
A Change Order is a written order signed by AMSCO, QP, and OSC, and issued
after execution of the Lease, authorizing a change in the Work or adjustment in
the Contract Sum or Contract Time. The Contract Sum and Contract Time may be
changed only by Change Order.
AMSCO, without violating this Agreement, may order changes in the Work
consisting of additions, deletions or other revisions, and the Contract Sum and
Contract Time shall be adjusted as provided below. Such changes in the Work
shall be authorized by Change Order, and shall be performed under applicable
conditions of this Agreement and the Lease.
If AMSCO, through QP, requests OSC to submit a proposal for a change in the
Work and then elects not to proceed with the change, a Change Order shall be
issued to reimburse QP and OSC for any costs incurred as a result of the
proposal.
Cost or credit to AMSCO resulting from a change in the Work shall be determined
by cost, as defined in the next paragraph, plus 10%. The cost of such Work
shall then be determined on the basis of reasonable expenditures and savings of
those performing the Work attributable to the change, including the
expenditures for design services and revisions to the Construction Documents.
In case of an increase in the Contract Sum, the cost shall include an allowance
for overhead and profit of 10%. OSC shall keep and present an itemized
accounting together with appropriate supporting data for inclusion in a Change
Order. "Cost", as used herein, shall be limited to the following: cost of
materials, including sales tax and cost of delivery; cost of labor, including
sales, social security, old age and unemployment insurance, and fringe benefits
required by agreement or custom; workers' or workmen's compensation insurance;
bond premiums; rental value of equipment and machinery; additional costs of
supervision and field office personnel directly attributable to the change; and
fees paid by architects, engineers and other professionals. Pending final
determination of cost to AMSCO, payments on account shall be made on the
Application for Payment. The amount of credit to be allowed to AMSCO for
deletion or change which results in a net decrease in the Contract Sum will be
actual net cost plus 6%. When both additions and credits covering related Work
or substitutions are involved in a change, the allowance for overhead and
profit shall be figured on the basis of the net increase with respect to that
change.
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<PAGE> 26
Regulatory Changes
QP shall be compensated for changes in the Work necessitated by the enactment
or revision of codes, laws or regulations subsequent to Lease execution. There
shall be no increase in the Contract Sum to AMSCO for any increased cost to
complete the Work, if after Lease execution, additional Work is required by
existing building codes, laws or regulations applicable thereto to obtain a
Certificate of Occupancy.
CORRECTION OF WORK
QP shall have OSC promptly correct Work rejected by AMSCO or known by OSC to be
defective or failing to conform to the Construction Documents, whether observed
before or after Substantial Completion and whether or not fabricated, installed
or completed, and shall correct Work under this Agreement found to be defective
or nonconforming within a period of one year from the date of Substantial
Completion of the Work or designated portion thereof. QP and OSC agree to pass
on to AMSCO any applicable manufacturer's warranties which exceed the one-year
warranty period.
If OSC fails to correct defective Work as required or persistently fails to
carry out Work in accordance with the Construction Documents, AMSCO, by written
order signed personally or by an agent specifically so empowered by AMSCO in
writing, may order QP to have OSC stop the Work, or any portion thereof, until
the cause for such order has been eliminated; however, AMSCO's right to stop
the Work shall not give rise to a duty on the part of AMSCO to exercise the
right for benefit of OSC or other persons or entities.
If OSC fails to carry out the Work in accordance with this Agreement and
Construction Documents and fails within seven (7) days after receipt of written
notice from AMSCO to commence and continue correction of such default or
neglect with diligence and promptness, AMSCO may give a second written notice
to QP and, seven (7) days following receipt by QP of that second written notice
(if the non-compliance has still not been corrected) and without prejudice or
other remedies AMSCO may have, correct such deficiencies. In such case an
appropriate Change Order shall be issued deducting from payment then or
thereafter due OSC, the costs of correcting such deficiencies. If the payments
then or thereafter due OSC are not sufficient to cover the amount of the
deduction, QP and/or OSC shall pay the difference to AMSCO.
RIGHT TO STOP WORK
In the event AMSCO fails to make the payment required under a properly
submitted Application for Payment within three (3) days of when such
Application for Payment is delivered to AMSCO (subject to AMSCO's right to
confirm work and to notify QP as to Work it deems not in conformance with the
Construction Documents), or in the event AMSCO breaches any of its other
obligations under the Lease or this Agreement or in the event AMSCO files for
bankruptcy, then OSC shall be entitled to cease all or any portion of the Work
and AMSCO shall be responsible for all increased costs arising out of such
delay (including an adjustment to the liquidated damage provision in Article
XXXIV of the Lease, extending the date of delivery by the number of days delay
caused by AMSCO). Furthermore, in any such event, and irrespective of whether
or not OSC ceases all or any portion of the Work, OSC may, after seven (7) days
written notice to AMSCO and failure of AMSCO to remove such default or cure any
breach within such seven (7) day period, terminate its obligation to construct
the Tenant Improvements, remove any materials, equipment and tools from the
site and recover from AMSCO payment for all Work executed and any loss
sustained under this Agreement or the Construction Documents including, without
limitation, the reasonable profit and overhead amount built into the Contract
Sum. In the event that any default by AMSCO (other than relating to a payment
of money hereunder) is not susceptible of being cured within said seven (7) day
period, the time within which AMSCO may cure the same shall be extended for
such reasonable time as necessary to complete the same with all due diligence,
but only if AMSCO provides OSC with evidence satisfactory to show that the
default can and will be cured within such extended time so as not to cause
prejudice to OSC.
OTHER PROVISIONS
The Work to be performed shall be commenced on Lease execution and, subject to
authorized adjustment and to delays not caused by QP or OSC, Substantial
Completion shall be achieved on or before January 25, 1992.
To the extent there is a conflict between the terms of this Agreement and the
Lease during the construction period for the Work, the terms of this Agreement
shall control.
Initials:
Lessor: /s/ JTC
-------
Lessee: /s/ RTI
-------
-3-
<PAGE> 27
EXHIBIT E
LIST OF LESSEE'S EQUIPMENT
Braun 400 (3)
Braun/Norman-2
Sterilock (2)
Braun Shuttle
Neg. Air System
Chemical System
Reliance 777 (3)
AMSCO 3000
AMSCO 3000
AMSCO 3000
Patching
Sewing
Dust Cover
Basil
Welding Outlet
Braun 75
Braun/Norman
Braun 400 (3)
Braun/Norman (2)
Sterilock (2)
Braun Shuttle
Neg. Air System
Soap Chemical System
Reliance 777 (3)
AMSCO 3000
AMSCO Console 3000
AMSCO 3000
Patching
Sewing
Dust Cover
Basil 4800
Welding Outlet
Unimac 85
Unimac 75
<PAGE> 28
FIRST AMENDMENT TO SERVICE CENTER LEASE
This First Amendment dated this 12th day of March, 1992, by and
between QP One Corporation, a Minnesota corporation ("Lessor") and AMSCO
Sterile Recoveries, Inc., a Delaware corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee are parties to that certain Service Center
Lease dated December 4, 1991 (the "Lease") (except as otherwise indicated
herein, capitalized terms used herein shall have the same meaning as given to
such terms in the Lease); and
WHEREAS, Lessor, experienced a delay in obtaining a certificate of
occupancy for the Premises, and thus, by mutual agreement of the parties
hereto, the commencement date of January 25, 1992, as stated in the Lease has
been delayed until February 6, 1992, and, accordingly, Lessor and Lessee desire
to enter into this First Amendment in order to evidence the delay in said
commencement date and certain other modifications to the Lease as set forth
herein.
NOW, THEREFORE, in consideration of Ten and No/100ths Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The foregoing recitals are true and correct and are hereby
incorporated by reference.
2. Lessor and Lessee hereby agree that the third paragraph of the
Lease is hereby amended to provide that the term of the Lease shall commence on
February 6, 1992 and terminate on February 5, 2002.
3. Subparagraphs (i) and (ii) of Article I of the Lease are
hereby deleted in their entireties and the following inserted in lieu thereof:
(i) For the period commencing February 6, 1992 and ending
February 5, 1997, an annual rental of Forty Four Thousand Three
Hundred Five and No/100ths Dollars ($44,365.00), payable monthly, in
advance, in equal monthly installments of Three Thousand Six Hundred
Ninety Seven and 08/100ths Dollars ($3,697.08);
(ii) For the period commencing February 6, 1997 and ending
February 5, 2002, an annual rental of Sixty Two Thousand One Hundred
Eleven and No/100ths Dollars ($62,111.00), payable monthly, in
advance, in equal monthly installments of Five Thousand One Hundred
Seventy Five and 92/100ths Dollars ($5,175.92).
4. Article XXV of the Lease is hereby deleted in its entirety and
the following inserted in lieu thereof:
ARTICLE XXV. EARLY TERMINATION BY LESSEE. Notwithstanding anything
contained in this Lease to the contrary, Lessee may terminate this
Lease effective as of February 5, 1997 by (a) providing Lessor with
written notice on or before February 5, 1996 (the "Notification
Date"), of its intent to terminate this Lease as of the termination
date, and (b) paying an early termination fee in an amount of $32,000,
concurrently with the written notification delivered on the
Notification Date.
5. The following is hereby added as Article XXXV to the Lease:
ARTICLE XXXV. ABATEMENT OF BASE RENT. Notwithstanding the provisions
of Article I of this Lease, the Lessee's obligation to pay Base Rent
shall be abated for the period commencing February 6, 1992 and ending
February 17, 1992.
6. The following is hereby added as Article XXXVI to the Lease:
ARTICLE XXXVI. UTILITY TRANSFER. Lessee's obligation to pay
Additional Rent as specified in the Lease, together with Lessee's
obligations to pay for all utilities which are separately metered
shall commence as of February 6, 1992.
7. Except as specifically amended or modified hereby, the Lease
remains in full force and effect and the same is hereby ratified and confirmed.
Initials:
Lessor: /s/ KPB
--------
Lessee: /s/ WRP
--------
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Lease as of the date and year first above written.
WITNESSES: QP ONE CORPORATION, a Minnesota corporation
By: /s/ Keith P. Bednarowski
- ------------------------- -------------------------------
Name: Keith P. Bednarowski
------------------------------
Title: President
- ------------------------- ------------------------------
(Corporate Seal)
"Lessor"
AMSCO STERILE RECOVERIES, INC., a Delaware
corporation
By: /s/ Wayne R. Peterson
- ------------------------ ------------------------------
Name: Wayne R. Peterson
------------------------------
Title: Vice President
- ------------------------ ------------------------------
(Corporate Seal)
"Lessee"
Initials:
Lessor: /s/ KPB
--------
Lessee: /s/ WRP
--------
<PAGE> 30
TAMPA FACILITY
ASSIGNMENT AND ASSUMPTION OF LEASE
-----------------------------------
KNOW ALL MEN BY THESE PRESENTS, that AMSCO STERILE RECOVERIES, INC., a
Delaware corporation ("Assignor"), for and in consideration of One Dollar
($1.00) and other good and valuable consideration from STERILE RECOVERIES,
INC., a Florida corporation ("Assignee"), the receipt and sufficiency of which
are hereby acknowledged by Assignor, does hereby assign, transfer, sell and
convey unto Assignee, its successors and assigns, all of Assignor's right title
and interest, as lessee, in, to and under the lease more particularly described
on Exhibit A attached hereto and made a party hereof by this reference (the
"Lease"), TOGETHER WITH all renewal options, if any, and all other rights,
privileges and benefits belonging to or held by Assignor under such Lease.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, subject, however, to all terms, conditions and provisions contained in
the Lease.
In consideration of the foregoing assignment, Assignee hereby accepts
the foregoing assignment and agrees to assume, perform and be bound by all of
the duties, obligations and liabilities of Assignor under the Lease, arising on
and after the date of this instrument for the remainder of the term of the
Lease and all extensions and renewals thereof.
Each of Assignor and Assignee hereby represent that it has taken all
action, corporate or otherwise, necessary to authorize the execution of this
Assignment and Assumption of Lease, and this Assignment and Assumption of Lease
constitutes a valid and binding agreement, enforceable against it in accordance
with its terms. This agreement may be executed in multiple counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the 31st day of July, 1994.
Signed and acknowledged
in the presence of: AMSCO STERILE RECOVERIES, INC.,
a Delaware corporation
/s/ Wm. J. Rieflin
--------------------------------
/s/ Susan E. Minahan By: Wm. J. Rieflin
- ----------------------------------- ----------------------------
Print Name: Susan E. Minahan Its: Secretary
------------------------ ----------------------------
- -----------------------------------
Print Name:
------------------------
Signed and acknowledged
in the presence of: STERILE RECOVERIES, INC.,
a Florida corporation
/s/ J. T. Boosales
-------------------------------
/s/ Kathleen Clover By: James T. Boosales
- ----------------------------------- ----------------------------
Print Name: Kathleen Clover Its: E.V.P.
------------------------ ---------------------------
- -----------------------------------
Print Name:
------------------------
-2-
<PAGE> 32
EXHIBIT A
Tampa facility, Tampa, Florida.
--------------------------------
A. Service Center Lease dated December 4, 1991 between QP One
Corporation as Lessor and AMSCO Sterile Recoveries, Inc. as
Lessee.
B. First Amendment dated March 12, 1992 between QP One
Corporation as Lessor and AMSCO Sterile Recoveries, Inc. as
Lessee.
<PAGE> 33
CONSENT
QP One Corporation hereby consents to the foregoing Assignment and
Assumption of Lease between AMSCO Sterile Recoveries, Inc., as Assignor, and
Sterile Recoveries, Inc., as Assignee, provided that AMSCO Sterile Recoveries,
Inc. remains fully liable for performance of all covenants and conditions
under the Lease.
QP One Corporation
By: /s/ A. J. Navarro, Jr.
----------------------------
A. J. Navarro, Jr.
Senior Vice President
<PAGE> 1
EXHIBIT 10.24
LEASE AGREEMENT
THIS AGREEMENT, made effective this 31st day of January, 1996 by and
between FLORIDA CONFERENCE ASSOCIATION OF SEVENTH-DAY ADVENTISTS, a corporation
not for profit existing under the laws of the State of Florida, with offices at
655 North Wymore Road, Winter Park, Florida 32789, hereinafter referred to as
"Lessor" and SURGI-PRO, INC., hereinafter referred to as "Lessee".
W I T N E S S E T H:
Lessor does hereby lease and demise to the Lessee the Industrial Education
Building on the campus of Forest Lake Academy, Seminole County, Florida
(referred to hereafter as "Building" or "building" and more particular depicted
on the diagram or sketch attached hereto as Exhibit A and made a part hereof by
reference), and the Lessee does hereby agree to rent and take as a tenant the
Building, upon the following terms and conditions:
1. TERM OF LEASE: The term of this Lease shall be for thirty seven (37)
months beginning on February 1, 1996 and continuing through February 28, 1999.
2. USE OF THE PREMISES: The premises covered by this Lease shall be used
as the offices and operation facility for a medical supplies packaging company
and any other use of the same must be with the written consent of the Lessor.
3. ASSIGNMENT OF LEASE: This Lease may not be assigned without the
express written consent of Lessor. Lessor agrees that this lease may be
assigned to Sterile Recoveries, Inc. without further consent, provided that
Sterile Recoveries, Inc. shall agree to assume of all of Lessee's obligations
and abide by each of the provisions of this lease, and Surgi-Pro, Inc. shall
not be released of liability by such assignment.
4. RENT: In consideration of the leasing of the premises to Lessee by
Lessor, Lessee shall pay rent for the premises as follows:
(a) Rent for the period from the commencement of the lease through
February 28, 1997 shall be at the rate of $36,000 annually, payable
in monthly payments of $3,000, with the first partial month (from
date of occupancy to March 1, 1996) being a prorated amount at the
rate of $100.00 per day, including the date of occupancy. Lessee
agrees to take occupancy no later than February 15, 1996, provided
electric power has been supplied to the building.
(b) Rent for the period from March 1, 1997 through February 28,
1998 shall be at the rate of $37,800 annually, payable in monthly
payments of $3,150.
(c) Rent for the period from March 1, 1998 through February 28,
1999 shall be at the rate of $39,600 annually, payable in monthly
payments of $3,300.
All payments due under this Lease shall be paid in monthly payments and shall
be due on or before the first day of each month. Each monthly payment shall
be 1/12 of the annual rent as provided in the paragraph next above. The first
month's prorated rent shall be due upon occupancy by Lessee. Upon occupancy,
Lessee shall also pay to the Lessor the sum of $3,000 which shall apply to the
last month's rent due under this Lease.
5. ADDITIONS TO RENT: In addition to the monthly lease amounts, Lessee
shall also pay all operating expenses, utility charges, ad valorem taxes, sales
taxes (if any) and other taxes (if any) which may be assessed by reason of the
use of the building by Lessee, charges and expenses relating
1
<PAGE> 2
to the premises which are not specifically set forth in this Agreement which
are as a direct result of the use of the building by the Lessee. The
Lessee shall, at its own expense, throughout the term of this Lease keep and
maintain in good repair the interior of the building located upon the premises.
It is understood that the preceding sentence does not require maintenance in
perfect condition or in a condition equal to new, but that the Lessee shall at
all times keep and maintain the same in such condition as to minimize, so far
as practicable by usual care and repairs, the effects of use, decay, injury and
destruction of the property, and Lessor recognizes that certain depreciation by
reason of increasing age and use is unavoidable. The property shall be
maintained and kept by the Lessee in such condition and repair as to meet the
requirements of Seminole County or other appropriate governmental body and such
as to meet the requirements of any insurance company insuring the premises.
The Lessee shall maintain the premises and all fixtures, equipment contained
therein in a clean and sanitary condition.
Notwithstanding the provisions of the preceding paragraph, unless
repairs are required because of the negligence or intentional misconduct of
Lessee or Lessee's agents or employees, Lessor shall pay for the maintenance of
the grounds and parking areas surrounding the building, and all structural or
major repairs to walls, roof, plumbing, electrical, and air conditioning
systems.
Lessee has been advised that the land upon which the Building has
been constructed has been tax-exempt by reason of ownership and usage of the
property as a non-profit, religious and educational institution, and that upon
completion of the Building and usage by the Lessee that it is likely that the
Building and land upon which is situated will be subject to ad valorem
taxation. Lessor agrees to pay all such taxes as additions to rent pursuant to
this Paragraph 5, with such payment to be made to Lessor within thirty (30)
days after notice of the amount of such taxes.
6. OTHER LEGAL REQUIREMENTS: Lessee shall comply with all governmental
laws, ordinances, regulations and rules of every kind (including, without
limitation compliance with all environmental laws and requirements) pertaining
to said premises or to the use and occupancy thereof, hereinafter sometimes
called "said legal requirements", and Lessee shall indemnify and save harmless
Lessor from all costs, attorneys' fees, expenses, claims and damages arising by
reason of Lessee's failure to comply therewith. Lessee shall have the right to
contest the validity of or seek a variance from or review said legal
requirements by administrative or court proceedings or in such other manner as
Lessee deems suitable, and, if able, may have said legal requirements, or any
of them, cancelled, removed or revoked without actual compliance with the same.
If such actions or proceedings are instituted, they shall be conducted
promptly at the expense of Lessee and free of expense to Lessor. If and
whenever any of said legal requirements shall become absolute against lessee
and the leased premises, or against lessors after contest thereof, Lessee shall
comply with the same with due diligence. If Lessee is in default thereof for
fifteen (15) days, Lessor may comply therewith and the cost and expense of so
doing may be paid by lessors, Lessee shall reimburse Lessor upon demand,
together with interest on all sums paid by Lessor as provided herein, to-wit:
twelve percent (12%) per annum.
ENVIRONMENTAL MATTERS
Lessee represents and warrants that it will not manufacture or dispose of
any Hazardous Substance (as hereinafter defined) on the Property, or store or
use any such Hazardous Substance on the Property in such quantities,
concentrations, forms or levels, or otherwise in a manner which is in violation
of any applicable environmental Laws. "Hazardous Substance" means any toxic or
hazardous waste, pollutants or substances, including, without limitation,
asbestos, PCBs, petroleum products and by-products, substances defined or
listed as "hazardous substance", "toxic substance", "toxic pollutant", or
similarly identified substance or mixture, in or pursuant to any environmental
Law, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.,
the Hazardous materials Transportation Act, 49 U.S.C. 1802, et seq. the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq., the
2
<PAGE> 3
Toxic Substance Control Act of 1976, as amended, 15 U.S.C. 2601, et seq., and
the Clean Water Act, 33 U.S.C. 446 et seq., as amended.
If Lessee violates the provision of this paragraph, Lessee shall take
necessary corrective measures to clean up and comply with applicable
environmental laws, regulations and standards, and shall indemnify and hold
Lessor harmless for all damages, claims or loss, including reasonable
attorneys' fees, suffered by Lessor as a result of the action of the Lessee.
Notwithstanding the foregoing, Lessee may maintain small quantities of
Hazardous Substances on the leased premises in the ordinary course of its
business, so long as those substances are used, maintained, and disposed of in
accordance with applicable law.
7. UTILITIES: Lessor may supply all utilities to the Lessee, if
permitted by law, as a part of the "master meter" of Forest Lake Academy. If
so, Lessor will pay to Forest Lake Academy its proportionate share of all gas,
water, electricity, sewer and other utilities furnished to the leased premises
by Forest Lake Academy. Such proportionate share shall be determined by Lessor
installing a separate sub-meter to serve the Building occupied by Lessee, or in
such other manner as parties shall mutually agree.
8. ALTERATIONS: Lessee may make any interior alterations or changes in
the demised premises as Lessee shall deem necessary for the efficient
fulfillment of its functions, after receiving approval of Lessor, which
approval shall not be unreasonably withheld. Fixtures, furniture and other
equipment installed in the demised premises by the Lessee, except such
equipment as shall be replacement for equipment of the Lessor at any time
during the demised term, shall not become a part of the demised premises and
may be removed by the Lessee from the demised premises at any time during or
within a reasonable time after the end of the demised term; and the Lessee
shall, at its own cost and expense, repair any and all damage to the demised
premises resulting from or caused by the removal thereof.
No building upon the demised premises shall be removed, torn down nor
shall any alterations made thereon which will diminish the value thereof
without the consent in writing of the Lessor except as in this Lease otherwise
provided.
9. INTENTIONALLY OMITTED
10. LIABILITY, INDEMNIFICATION AND INSURANCE: All personal property on
said leased premises shall be at the risk of Lessee. Neither Lessor nor
Lessor's agent shall be liable for any damage, either to person or property,
sustained by Lessee or others caused by any defect in the leased premises or
the sidewalks or the areas adjoining the same, now existing or hereinafter
arising therein, including the improvements placed thereupon by Lessor, or any
part or pertinence thereof, nor by reason of the same becoming out of repair,
nor by reason of any bursting or leaking of water, gas, steam, or other pipes,
or from any act of neglect of employees, co-tenants, or other occupants of said
building (if any), or any other personas whosoever coming in, upon, or about
the leased premises, or sidewalks or areas adjoining the same, or due to the
happening or occurrence of any accident or event from whatever cause in and
about the leased premises and the improvements thereon or sidewalks or areas
adjoining same. However, the foregoing exculpatory provisions shall not apply
to any liability arising as a result of a breach by Lessor of its maintenance
or other obligations under this Lease.
Each party shall indemnify and hold harmless the other party from and
against any and all liability, actions, claims, and damages arising after the
commencement of the term of this Lease which may be imposed upon or incurred by
or asserted against the indemnitee by reason of any accident, injury to, or
death of any person, or any damage to any property occurring on or about the
leased premises or any part thereof, or any use, nonuse, or condition of the
leased premises or any part thereof arising from any negligent or willful act
or omission of the indemnitor, its servants, agents, employees, customers, or
visitors, including legal fees and costs. The indemnitor shall have the right
to contest the validity of any and all such claims and defend, settle, and
compromise any and all such
3
<PAGE> 4
claims of any kind or character and by whomsoever claimed in the name of
indemnitor as the indemnitor may deem necessary, provided that the related
expense of the contest shall be paid by the indemnitor.
INSURANCE: Lessee shall provide the following insurance
coverage during the term of this lease:
Comprehensive General Liability, including bodily injury, death, or property
damage, and including products liability coverage, arising out of operations or
otherwise with a combined single limit of not less than $1,000,000.00.
Workman's Compensation as required by State Statutes.
Automobile Liability for bodily injury, property damage which may arise from
the operations of any owned, hired, or non-owned automobiles used by Lessee or
for Lessee with a combined single limit of $1,000,000.00.
Insurance of the Lessee shall include an endorsement showing the Owner as an
additional insured in substantially the following form:
"Florida Conference Association of Seventh-day Adventists, Florida
Conference of Seventh-day Adventists and Forest Lake Academy are named as
an additional insured. This policy shall be primary and not contributory
with any other insurance maintained by the additional insured. This
policy shall not be cancelled unless thirty (30) days' notice has been
given to the additional insured."
Lessor shall maintain at its sole cost fire, extended coverage, and other
casualty coverage on the Building in an amount sufficient to reconstruct the
Building.
ALL PERSONAL PROPERTY, EQUIPMENT, SUPPLIES AND INVENTORY OF THE LESSEE SHALL BE
IN THE LEASED PREMISES AT THE SOLE RISK OF LESSEE. LESSOR SHALL HAVE NO
OBLIGATION TO PROVIDE INSURANCE FOR SUCH PROPERTY OF LESSEE AND LESSEE SHALL
BEAR THE ENTIRE COST OF ANY SUCH INSURANCE.
11. NONWAIVER OF BREACH: Failure of Lessor to insist upon strict
performance of any of the covenants and agreements of this Lease, or to
exercise any option herein conferred in any one or more instances, shall not be
construed to be a waiver or relinquishment of any such, or any other covenants
or agreements, but the same shall be and remain in full force and effect.
12. COSTS AND ATTORNEY: If by reason of any default on the part of
Lessee or Lessor in performance of any of the provisions of this Lease, it
becomes necessary for either to employ any attorney, the prevailing party shall
be entitled to attorney's fees and expenses expended or incurred in connection
therewith.
CONCILIATION, MEDIATION AND DISPUTE RESOLUTION
If the Lessor and Lessee disagree on any matter pertaining to this Lease,
either party may request an impartial third party mediation conference with any
Mediator approved by the Seminole County Circuit Court or other approved
Alternative Dispute Resolution Service. This request for mediation shall occur
only after all attempts at conciliation between the disagreeing parties have
failed. The mediator shall be approved by both parties, or if they are unable
to agree upon a mediator, then each party shall appoint a representative who
shall jointly agree upon a mediator. This mediation shall not be binding but
shall be a condition precedent to the commencement of any litigation by any
party to compel compliance with this warranty or to seek relief for any dispute
arising out of this Lease. If the dispute is not resolved within twenty (20)
days from the date of the meeting, either party may institute
4
<PAGE> 5
litigation in the Circuit Court for Seminole County, Florida. Costs of
mediation shall be borne equally by the parties. In the event of litigation,
the prevailing party shall be entitled to recover all costs of mediation and
litigation, including reasonable attorneys' fees.
13. FIRE AND OTHER CASUALTY: In the event of fire or other casualty loss
to the building, Lessee shall give immediate notice thereof to the Lessor who
shall use reasonable diligence to cause the damages to be promptly repaired at
the expense of Lessor, and the rent until such repairs shall be made shall be
apportioned according to the part of the premises which is usable by Lessee.
In the event the premises are destroyed or damaged by fire, windstorm or other
casualty to such an extent as to render same untenable in whole or in a
substantial part thereof, Lessee shall have the right to terminate this Lease
by written notice served upon Lessor within thirty (30) days after such loss,
and if Lessee elects not to terminate this lease, then Lessor shall have the
option to rebuild or repair the same or to terminate the lease. If neither
party elects to terminate the Lease within sixty (60) days after such loss,
Lessor shall carry out and expedite the work of such rebuilding or repairing
without unnecessary delay and during such period the rent of said premises
shall be abated in the same ratio that the portion of the premises rendered for
the time being unfit for occupancy shall bear to the whole of the leased
premises. The rebuilding shall be as nearly as possible of the character of
the building or improvement existing immediately prior to such occurrence,
unless parties agree to modification of the building.
14. DEFAULT AND RE-ENTRY: Upon default or termination of Lease as
provided hereafter, Lessor shall have all rights afforded to Lessor under
Florida law.
15. EMINENT DOMAIN: It is understood and agreed that in the event the
whole of the leased premises is taken by governmental authority or by any
corporation, public or private, under the right of eminent domain, this Lease
shall cease and come to an end and all rights of Lessee hereunder shall
terminate, except as hereafter provided. In the event that only a part of the
premises are taken, the rent therein reserved shall be adjusted for the
remainder of the leased premises so that Lessee shall be required to pay for
the balance of the term for that portion of rent herein reserved which the
value of the part of the leased premises remaining after condemnation bears to
the value of the leased premises immediately prior to the date of condemnation.
If, however, by reason of the condemnation there is not sufficient space left
in the leased premises for Lessee to continue to conduct business thereon, the
Lease shall terminate. It is agreed that the termination of this Lease or the
abatement of rent provided for in this clause, caused by taking of the whole or
a part of said premises by right of eminent domain or other authority of law,
shall not affect the right of the Lessee to recover from others such damages as
may result to it from the exercise of such right of eminent domain, or from any
act of any public authority or authorities; but any damages awarded to the
Lessee on account of the cost of reconstructing the building, or on account of
the diminution of the size of the building, shall belong to the Lessor.
16. EMPLOYMENT OF STUDENTS: Lessee acknowledges that part of the
consideration to be given by the Lessee is that it will provide employment for
students attending Forest Lake Academy. Lessee agrees that to the extent the
work of the business to be conducted can reasonably be carried on by students
attending Forest Lake Academy and that there are sufficient students to provide
coverage needed by the Lessee, the Lessee will employ students and will refrain
from hiring adults except for supervisory and other similar positions.
Lessee agrees that it will provide student employees
reasonably adequate training for the work to be performed and Lessor agrees
that Lessee shall not be required to accept any student who is not providing
reasonable productivity and attendance, taking into consideration the school
program of the student.
Student employees of the Lessee shall be employed by Forest
Lake Academy under the student work program at rates mutually agreed upon
between Lessor and Lessee, including applicable
5
<PAGE> 6
taxes, worker's compensation insurance and other costs directly attributable
to the employment. Payment shall be made by Lessee within thirty (30) days
after receipt of billing.
Lessee shall provide student employees with a workplace that is
free from discrimination and sexual harassment and shall otherwise comply with
all applicable laws, rules and regulations regarding employees and employment
practices.
17. NOTICES: Any notice or document required or permitted to be
delivered hereunder or by law to Landlord or Lessee shall be deemed to be
delivered when delivered personally or five (5) days after the date on which
such notice or document has been deposited in the United States mail, postage
prepaid, certified with return receipt requested, or such other form of mail or
other delivery service requiring signature upon delivery, addressed to the
parties hereto at the respective addresses below, or at such other address as
theretofore specified by written notice delivered in accordance herewith:
To Lessor:
Florida Conference Association of Seventh-day Adventists
Attention: Treasurer
655 North Wymore Road
Winter Park, Florida 32789
with a copy to:
Treasurer/Vice Principal for Finance
Forest Lake Academy
3909 East Semoran Blvd
Apopka, Florida 32703
To Lessee:
18. TERMINATION OF LEASE: This Lease may be terminated as follows:
a) Termination by Mutual Consent. This Agreement may be terminated at
any time by mutual written consent of the parties.
b) Termination for Cause: Lessor shall have the right to terminate this
Lease:
1) Upon Lessee's failure to pay the rental or lease amount due, or any
other payment of money required under this lease, and failure of the Lessee to
cure such default after thirty (30) days written notice.
2) Upon thirty (30) days written notice in the event the Lessee fails to
maintain necessary licenses to operate its business.
3) Upon thirty (30) days' written notice to Lessee in the event the
Lessee applies for or consents to the appointment of a receiver, trustee or
liquidator of itself or of all or a substantial part of its assets, files a
voluntary petition in bankruptcy, admits in writing its inability to pay its
debts as they become due, makes a general assignment for the benefit of
creditors, files a petition or an answer seeking reorganization or
rearrangement with creditors; or as a debtor invokes or takes advantage of
provisions of any insolvency law including without limitation any provision of
the Federal Bankruptcy Act or any amendment thereof; or if any order, judgment
or decree shall be entered by a court of competent jurisdiction, on the
application of a creditor, adjudicating Lessee bankrupt or insolvent or
6
<PAGE> 7
approving a petition seeking reorganization of Lessee or of all or a
substantial part of its assets and that order, judgment or decree continues
unstayed and in effect for a period of thirty (30) days.
4) Upon sixty (60) days' written notice if the Lessee is in breach of any
material provision of this Agreement, other than as provided in subparagraph
(1) above for payment of money, provided the Lessee has not cured such breach
within thirty (30) days of the receipt of said notice (which shall set forth
the facts that underlie the claim that the Lessee is in breach); however, with
respect to a non-monetary default not capable of being cured within 20 days,
Lessee shall not be in default unless it fails to commence the work required to
cure such default within said 20 day period or fails to diligently prosecute
the same to effect such cure within a reasonable time thereafter.
5) In the event of anyone of these types of default, the Lessor at any
time thereafter may give written notice specifying a date, at least thirty (30)
days after Lessor gives notice, on which the Lease will terminate. On this
date the term of this Lease will expire and terminate by limitation. After
Lessee receives the Lessor's notice, all Lessee's rights under this Lease will
cease, unless before the expiration of the thirty (30) days Lessee does both of
the following: (1) pays all arrears of rent and all other sums payable by the
Lessee under this Lease and all costs and expenses (including, without
limitation, attorneys' fees and expenses) incurred by, or on behalf of, the
Lessor of the premises; and (2) cures, to the Lessor's satisfaction, all other
defaults existing under the Lease at the time.
If an event of default occurs and continues for 30 days after written
notice from Lessor to Lessee, the Lessor shall have all the rights afforded
under Florida Statutes and the Lessor may enter on and repossess the property
by force, summary proceedings, ejectment, or otherwise. The Lessor may then
remove the Lessee and all other persons and any and all property from the
rented property. The Lessor will be under no liability for any entry,
repossession, or removal of any of the Lessee's property.
At any time or from time to time after the repossession of the rented
property, the Lessor may (but will not be under obligation to) relet the rented
property or any part of the property for the Lessee's account, without notice
to Lessee. Lessor may relet such property for any term or terms, on any
conditions, and for any uses that Lessor, in its uncontrolled discretion, may
determine, and may collect and receive the rents for the relet property.
Lessor will not be responsible or liable for any failure to relet the rented
property or any part of the property or for any failure to collect any rent due
on the reletting.
c) Lessee shall have the right to terminate this Lease upon sixty (60)
days' written notice if the Lessor is in breach of any material provision of
this Agreement, provided the Lessor has not cured such breach within thirty
(30) days of the receipt of said notice (which shall set forth the facts that
underlie the claim that the Lessor is in breach); however, with respect to a
non-monetary default not capable of being cured within 30 days, Lessor shall
not be in default unless it fails to commence the work required to cure such
default within said 30 day period or fails to diligently prosecute the same to
effect such cure within a reasonable time thereafter.
19. INTENTIONALLY OMITTED
20. RESTRICTIONS ON OPERATION:
Saturday Business: No business or work shall be performed in the
buildings during the hours of one hour before sunset on Friday and one hour
after sunset on Saturday of each week.
Activities on Campus: The use of drugs, alcoholic beverages, tobacco
of every nature or any illegal substance shall not be permitted on the premises
by Lessee, or any employee, guest, visitor or invitee of Lessee, nor shall such
activities be permitted on any of the remaining campus of Forest Lake Academy
by any such persons. If Lessee is aware of such conduct by such persons and
7
<PAGE> 8
Lessee does not make reasonable efforts to cure such violations, such shall be
deemed to be a default under this Lease.
21. Miscellaneous.
(A) This lease contains the entire agreement of the parties hereto with
respect to the subject matter hereof and can be altered, amended or modified
only by written instrument executed by all such parties.
(B) This lease shall be governed by and construed in accordance with the
laws of the State of Florida.
(C) This lease shall be binding upon and shall inure to the benefit of the
undersigned parties and their respective heirs, legal representatives,
successors and assigns.
(D) Words of any gender used in this lease shall be construed to include
any other gender, and words in the singular shall include the plural and vice
versa, unless the context requires otherwise.
(E) The captions used in this lease are for convenience only and shall not
be deemed to amplify, modify or limit the provisions hereof.
(F) The relationship between Lessor and Lessee at all times shall remain
solely that of landlord and tenant and shall not be deemed a partnership or
joint venture.
(G) In case any one or more of the provisions contained in this lease
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this lease shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein.
(H) The rights and remedies provided by this lease are cumulative and the
use of any one right or remedy by either party shall not preclude or waive its
right to use other rights the parties may have by law, statute, ordinance or
otherwise. Said rights and remedies are given in addition to any other rights
the parties may have by law, statute, ordinance or otherwise.
(I) Neither this lease nor any memorandum thereof shall be recorded in the
public records of Seminole County, Florida without the express written consent
of Lessor.
(J) If any of the Lessee's lenders require landlord lien waivers as a
part of their loan terms, the Lessor will provide such lien waivers upon demand
of Lessee.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease the day and
year first above written.
Signed, sealed and delivered
in the presence of:
FLORIDA CONFERENCE ASSOCIATION OF
SEVENTH-DAY ADVENTISTS
/s/ Frank McMillan By: /s/ Stephan Wilson
- ---------------------- ------------------------------
Stephan Wilson
Vice President
/s/ David Swinyar
- ----------------------
8
<PAGE> 9
As to Lessor Lessor
(Corporate Seal)
SURGI-PRO, INC.
/s/ Frank McMillan By: /s/ Clayton W. Page
- ------------------------------ -------------------------------
President
/s/ David Swinyar
- ------------------------------
As to Lessee (Corporate Seal)
9
<PAGE> 10
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 31st day of
January, 1996 by Stephan Wilson as Vice President of Florida Conference
Association of Seventh-day Adventists, a corporation, on behalf of the
corporation. He is personally known to me and did take an oath.
/s/ Frank McMillan
- ------------------------------------------
Frank McMillan
- ------------------------------------------
Printed Name
Notary Public
(Seal Attached - Commission expiring 8/28/99)
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 31st day of
January, 1996 by Clayton W. Page as President of Surgi-Pro, Inc., a
corporation, on behalf of the corporation. He is personally known to me and
did take an oath.
/s/ Frank McMillan
- ------------------------------------------
Printed Name Frank McMillan
----------------------------
Notary Public
(Seal Attached - Commission expiring 8/28/99)
10
<PAGE> 11
EXHIBIT "A"
FOREST LAKE ACADEMY
3909 EAST SEMORAN BLVD.
APOPKA, FLORIDA 32703
A plan illustrating the overall campus layout of Forest Lake Academy, 3909
E. Semoran Boulevard, Apopka, Florida. The illustrated map shows all of the
buildings of Forest Lake Academy and indicates that the leased premises is
identified as the Industrial Education Building, #599 Campus Loop. There are
no dimensions on the plan and the drawing is not to scale.
<PAGE> 1
EXHIBIT 10.25
AMSCO International, Inc.
One Mellon Bank Center, Suite 5000
500 Grant Street
Pittsburgh, Pennsylvania 15219
July 31, 1994
Sterile Recoveries, Inc.
28100 U.S. Highway 19 North
Suite 201
Clearwater, Florida 34621
Gentlemen:
Reference is made to the Asset Purchase Agreement of this date between
AMSCO Sterile Recoveries, Inc., a Delaware corporation ("ASRI"), and Sterile
Recoveries, Inc., a Florida corporation ("SRI") pursuant to which SRI is
acquiring substantially all of the assets of ASRI (the "Agreement"). The
purpose of this letter is to confirm certain agreements of AMSCO International,
Inc., a Delaware corporation and the indirect parent of ASRI ("AMSCO"), in
connection with the sale of such assets.
AMSCO hereby covenants and agrees, for so long as no Event of Default has
occurred and is continuing under the Purchase Money Note of SRI dated July 31,
1994 (the "Purchase Money Note"), as follows:
1. Competition and Trade Secrets. AMSCO shall not at any time after
the date hereof:
(i) influence or attempt to influence any customer who has a
business relationship with ASRI as of the date hereof to lease or buy
reusable surgical gowns and drapes from any entity affiliated with ASRI
following the acquisition of ASRI's assets by SRI pursuant to the
Agreement; and
(ii) divulge, disclose, or communicate, for any reason or in any
manner to any person, any information (written or otherwise) concerning
Trade Secrets. For purposes of this letter, "Trade Secrets" shall mean:
(w) all confidential information in tangible form that is clearly
identified as confidential and used exclusively in the Business (as such
term is defined in the Asset Purchase Agreement), (x) proprietary product
formulas or ingredients used exclusively in the Business, (y) all
proprietary methods, processes (including the Sterilization Technology as
hereinafter defined and other wash/sterilization cycles) and operating
procedures (including inventory control systems and facilities designs)
used exclusively in the Business, or (z) proprietary information related
to the design of gowns and drapes; provided, however, that this covenant
shall not apply to information already in the public domain as of the
date hereof; to information that was by reasonable proof already in the
hands of a third party; to information that was independently developed
by any third party; or to information that is disclosed by a source other
than ASRI or its affiliates.
2. Software. AMSCO agrees to transfer to SRI rights in the software
on Schedule A hereto to the extent AMSCO is able to transfer such rights. Such
transfer shall be on the following terms:
(i) As to software owned by AMSCO and identified in Category I on
Schedule A, AMSCO hereby grants SRI a perpetual license to use this
software and will transfer a copy of this software (including the source
code) to SRI;
<PAGE> 2
Sterile Recoveries, Inc.
July 31, 1994
Page 2
(ii) As to the software identified in Category II on Schedule A,
AMSCO hereby grants SRI a license to use this software for transition
purposes in accordance with the terms of the Support Services Agreement
of this date between ASRI and SRI (the "Support Services Agreement"); and
(iii) As to software licensed from third parties by AMSCO and
defined in Category III on Schedule A, AMSCO will attempt to obtain for
SRI the right to use such software to the extent permitted under the
relevant license agreement; provided, however, that AMSCO shall retain
such rights in the software as AMSCO may require. To the extent
assignment or transfer is not permitted under the relevant third party
license agreement, SRI will obtain new licenses in its own right.
The licenses granted under subsections (i) and (ii) are for SRI's internal
use only. SRI may not assign or sublicense this software, nor may SRI use this
software to process data for others. The licenses granted under subsections
(i) and (ii) are royalty-free, nonexclusive and nontransferable; provided,
however, that the license granted under subsection (i) may be transferred in
connection with any sale of the Business in which the Purchase Money Note is
paid in full.
With respect to software under subsection (iii), AMSCO agrees to contact
the third party licensors to seek the necessary consents on behalf of SRI.
However, SRI shall ultimately bear the responsibility for obtaining any
necessary consents.
Until licenses are transferred to SRI or SRI obtains new licenses, AMSCO
will take reasonable steps pursuant to the Support Services Agreement to
provide SRI with the continuing benefit of the software currently being used to
operate the Business. However, AMSCO will not be required to violate any terms
or conditions set forth in any license agreement to which it is a party.
AMSCO MAKES NO EXPRESS OR IMPLIED WARRANTY WHATSOEVER AS TO THE SOFTWARE
OR THE RIGHTS TRANSFERRED HEREIN, ALL OF WHICH ARE PROVIDED "AS IS, WHERE IS."
AMSCO HEREBY DISCLAIMS ALL SUCH WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3. Sterilization Technology. AMSCO will retain the right to use certain
sterilization cycle technology developed by ASRI for use in the Business (the
"Sterilization Technology"). AMSCO shall not use (or license others to use)
the Sterilization Technology in connection with the lease or sale of reusable
surgical gowns or drapes and SRI shall use the Sterilization Technology only in
connection with the lease or sale of reusable surgical gowns or drapes and for
no other purpose. AMSCO hereby licenses the Sterilization Technology to SRI
for use in the Business. The foregoing license shall be perpetual,
royalty-free and non-transferable except in connection with a sale of the
Business or substantially all of the assets of SRI as a consequence of which
all amounts due under the Purchase Money Note are paid. SRI may contract with
other manufacturers for the production and supply of equipment that uses the
Sterilization Technology, but only if SRI obtains assurances from such
manufacturers that they will keep the Sterilization Technology confidential.
4. Support Services. AMSCO agrees to cause ASRI to provide to SRI the
support services contemplated by the Support Services Agreement.
<PAGE> 3
Sterile Recoveries, Inc.
July 31, 1994
Page 3
If you are in agreement with the foregoing, please so indicate by signing
this letter in the place provided below and returning it to AMSCO.
Very truly yours,
AMSCO INTERNATIONAL, INC.
/s/ William J. Rieflin
------------------------------
William J. Rieflin
General Counsel and Secretary
Accepted and agreed to
as of the 31st day of July, 1994:
STERILE RECOVERIES, INC.
/s/ J. T. Boosales
- ----------------------------
Name: James T. Boosales
Title: E. V. P.
<PAGE> 1
EXHIBIT 10.26
MARKETING & DISTRIBUTION
AGREEMENT
This agreement is entered into on this 15th day of November, 1994, by and
between Sterile Concepts, Inc. ("SCI"), a Virginia corporation, and Sterile
Recoveries, Inc. ("SRI"), a Florida corporation.
SCI produces and sells custom sterile procedure trays for surgical and clinical
procedures in hospitals and outpatient surgery centers. SRI provides sterile
surgical linen packs consisting primarily of reusable gowns, drapes, and towels
to hospitals on a cost-per-use basis. SCI and SRI jointly desire to enter into
a relationship for the purpose marketing and distributing SCI's disposable
trays to certain hospitals ("Customers") in conjunction with SRI's reusable
packs and SRI's delivery system. Accordingly, for the consideration
hereinafter set forth, which both parties acknowledge to be sufficient, the
parties enter into the following agreements:
1. NATURE OF AGREEMENT: This agreement represents the combination of
proprietary resources and confidential information for the mutual
benefit of both parties. Consequently, the parties agree that this
shall be an exclusive dealing agreement. For the term of this
agreement and a period of six months following the termination of
this agreement, SRI agrees not to market and distribute any custom
procedure trays other than SCI's trays, and SCI agrees not to
market or distribute procedure trays in conjunction with any other
provider of reusable linen packs.
2. TERM OF AGREEMENT: The term of this agreement shall be three
(3) years from the effective date, and shall automatically renew
thereafter for additional one (1) year terms until canceled by
either party. Notice of intent not to renew by either party shall
be delivered to the other party in writing 60 days prior to the
expiration date of the agreement. Either party may also terminate
this agreement for cause on ten (10) days advance written notice if
the other party: (i) shall be bankrupt, insolvent, or unable to pay
its debts when due; (ii) breaches any material term of this
agreement and such breach is not cured within 30 days of
notification of such breach; or (iii) defaults in payment or is
consistently late in payment of any monies due hereunder.
SALES RESPONSIBILITIES: SCI's and SRI's sales representatives and
other support personnel will work cooperatively with regard to
sales calls on Customers for SCI's trays and SRI's packs. SCI's
sales representatives will have primary responsibility for new tray
quotations, processing product changes, handling product
complaints, and monitoring production of procedure trays
distributed by SRI. SRI's representatives will have primary
responsibility for order processing and delivery issues as they
relate to SCI trays. SCI's sales representatives shall make new
tray quotations for Customers to SRI, and SRI and SCI shall
cooperate with respect to the presentation of new tray quotations
to Customers.
3. SRI's RESPONSIBILITIES: SRI shall be responsible for
warehousing and delivering to all Customers the trays covered by
this agreement. In addition, to certain designated Customers, SRI
shall be responsible for invoicing product shipped to the Customers.
Delivery will be in conjunction with SRI's packs and in accordance
with the Customer's requirements. Specifically, SRI is responsible
under this agreement for:
4.1 Storage and handling of all SCI finished goods inventory.
Physical damage to the product while the product is in the
possession of SRI shall be the liability of SRI. SCI estimates
that finished goods inventory levels to be stored by SRI shall
average a 60 day supply.
<PAGE> 2
4.2 Delivery to the Customer of SCI trays. All Customer orders
shall be placed with SRI, and delivery shall be in a manner and
time frame acceptable to the Customer.
4.3 Rotation of SCI stock. All shipments of SCI trays shall be on
a "First in - First out" basis, shipping the oldest lot number
first. Any obsolete or unsaleable stock resulting from failure
to ship the oldest lot number first shall be the responsibility
of SRI.
4.4 Timely transmission of shipping data to SCI. SRI shall
transmit to SCI via fax or other electronic transmission
method complete and accurate information regarding all SCI
product shipped to customers, including the customer's name
and account number, shipping date, P.O. number, unit quantity,
catalog or product number, lot number, and carrier.
4.5 Timely transmission of receipt data to Sterile Concepts
regarding the receipt of product shipped to SR1 by SCI.
4.6 Periodic physical inventories of SCI tray inventory stored at
SRI facilities. Such inventories shall be conducted to verify
the accuracy of SCI's quantity on hand data.
4.7 Invoicing selected Customers in situations where the
Customer wants to receive a consolidated invoice for both
SRI's packs and SCI's trays. In these situations SCI will
invoice SRI for trays upon notice of shipment of the trays
from SRI to Customer, and SRI will invoice the Customer.
Payment terms from SCI to SRI shall be the lesser of: a) net
20 days or, b) five days more than SRI's payment terms with
the customer.
5. SCI's RESPONSIBILITIES: SCI shall be responsible for the
production of all trays for Customers under this Agreement.
Specifically, SCI is responsible under this agreement for:
5.1 Timely processing of quotations for new trays for prospective
Customers under this Agreement, and the provision of product
samples as required.
5.2 Production of trays on a "continuous supply replenishment"
basis for all Customers ordering trays under this agreement.
5.3 Invoicing of Customers on a prompt basis following receipt of
shipping data from SRI.
6. FEES TO SRI: SCI agrees to remit to SRI the following fees within
15 days following the end of the calendar month during which the
Customer is invoiced:
6.1 A DISTRIBUTION FEE equal to 3% of the sales price of the SCI
tray to the customer.
6.2 A MARKETING FEE which shall be mutually agreed upon by SCI and
SRI at the time of acceptance of a customer's order by SCI.
MARKETING FEES will vary by tray depending upon, among other
factors, the level of profitability of the tray.
7. PRESENTATION AND WARRANTIES: This Agreement constitutes the entire
agreement and understanding between the parties and supersedes any
prior agreement and understanding
2
<PAGE> 3
relating to the subject matter of this Agreement. This Agreement
may be modified or amended only by duly authorized written
instrument executed by the parties.
8. GOVERNING LAW: This Agreement shall be construed in accordance with
the laws of the Commonwealth of Virginia.
9. NOTICES: All notices, requests, demands and other communications
hereunder shall be in writing and deemed to have been duly given if
delivered or mailed first class postage pre-paid to SCI at:
Mr. Roy Martine
Chief Executive Officer
Sterile Concepts, Inc.
5100 Commerce road
Richmond, VA 23234
or to SRI at: Mr. Dick Isel
President
Sterile Recoveries, Inc.
28100 U.S. HWY. 19 N
Suite 201
Clearwater, FL 34621
10. ASSIGNMENT: This Agreement may not be assigned by either party
without the express written consent of the other party.
11. IN WITNESS WHEREOF, the parties hereby have entered into this
Agreement on the date and year first hereinabove written.
STERILE CONCEPTS, INC. STERILE RECOVERIES, INC.
By: /s/ Roy Martine By: /s/ Richard T. Isel
----------------------------- ----------------------------
Chief Executive Officer President
3
<PAGE> 4
September 29, 1995
Tim Callahan, Vice President of Sales
Sterile Concepts, Inc.
5100 Commerce Road
Richmond, VA 23234
Dear Tim:
I thought we had a good discussion on the state of the SCI/SRI relationship
last week. Here's my summary of what we covered and agreed on:
We have not had the joint success that was planned. There are many reasons for
this, but the SCI and SRI people at the customer level don't seem to be able to
work together as easily as we hoped. We are aware of several opportunities
where we might have gone into together and the Sterile Concepts Representative
opted against a joint effort. To date, the great majority of the business we
have landed for SCI has been in Texas and a result of SRI efforts. I had
imagined that the SCI salesforce would have created a lot more opportunity.
The shortfall has created a gap that SRI needs to address. I believe it is
necessary for SRI to offer some small disposable accessory packs to be able to
fill the gap in the combined SCI/SRI offering. We will either source these
from a third party or make them ourselves and we are talking to SurgiPro about
this.
Because of this, we agreed to amend the Marketing and Distribution Agreement of
November 15, 1994 between Sterile Concepts, Inc. (SCI) and Sterile Recoveries,
Inc. (SRI) to be non-exclusive. We further agreed that SRI will protect any
joint business that SCI and SRI currently have and any business where SCI
brings SRI into account for the purpose of joint marketing. We will protect
such business for the term of the contract as long as SCI does not raise prices
unreasonably or until such time as the hospital directs either one of us to
change. Additionally, SCI agrees not to switch SRI out of an account if SRI
has brought SCI in on a joint marketing effort.
This isn't a very formal document but I believe it represents our agreement
regarding our working relationship going forward. If so. please sign a copy of
this and return it to my attention.
I think we learned a lot about working together this year. We should be able
to apply that experience from here on to find ways to succeed in additional
markets like we have in Texas.
Thanks for your help and continued support.
Sincerely, AGREED & ACCEPTED
/s/ Dick Isel /s/ Tim Callahan
Dick Isel ------------------------------
President Sterile Concepts, Inc.
<PAGE> 1
EXHIBIT 10.27
----------------------------
STOCK OPTION AGREEMENT
66,000 Shares*
----------------------------
Date of Grant: October 19, 1995
Expiration Date: October 19, 2005
Exercise Price: $4.43 Per Share*
----------------------------
TO: Bertram T. Martin, Jr.
In accordance with the engagement letter dated October 18, 1995
(the "Consulting Agreement"), between Sterile Recoveries, Inc. and
Corporate Strategic Directions, Inc. (the "Consulting Agreement"), you have
been granted as of the Date of Grant stated above a non-qualified stock option
to purchase up to 66,000* shares of its common stock, $.001 par value, at an
exercise price of $4.43* per share, subject to all the following terms and
conditions:
1. Definitions. As used in this Agreement, the capitalized terms
defined below have the respective meanings ascribed to them:
"Agreement" means this Stock Option Agreement, as originally
executed by you and the Company, and as subsequently amended or modified
in accordance with its terms.
"Board of Directors" means the Board of Directors of the Company.
"Change in Control" means any of the following: (a) the shareholders
of the Company approve a liquidation of all or substantially all the
consolidated assets of the Company and its Subsidiaries, other than a
liquidation of a Subsidiary into the Company
(*) The number of Shares and exercise price reflect and are after the
three-for-one stock split effected by the Company in the form of a 200%
stock dividend as of December 21, 1995.
<PAGE> 2
or another Subsidiary (unless the transaction is subsequently
abandoned or otherwise fails to occur); (b) the shareholders of the
Company approve a sale, lease, exchange, or other transfer to any
person other than the Company or a Subsidiary (in a single transaction or
related series of transactions) of all or substantially all of
consolidated assets of the Company and its Subsidiaries, excluding the
creation (but not the foreclosure) of a lien, mortgage, or security
interest (unless the transaction is subsequently abandoned or
otherwise fails to occur); (c) the shareholders of the Company approve a
merger, consolidation, reorganization, tender offer, exchange offer, or
share exchange in which the Company will not be the surviving
corporation or will become a majority-owned subsidiary of a person other
than a Subsidiary (unless the transaction is subsequently abandoned or
otherwise fails to occur); or (d) the occurrence of any event,
transaction, or arrangement that results in any person or group
becoming a beneficial owner of (i) a majority of the outstanding Common
Stock of the Company or any Subsidiary that contributed more than
50% of the Company's consolidated revenues for its last fiscal year,
(ii) securities of the Company representing a majority of the combined
voting power of all the outstanding securities of the Company that are
entitled to vote generally in the election of its directors, or (iii) with
respect to any Subsidiary that contributed more than 50% of the Company's
consolidated revenues for its last fiscal year, securities of that
Subsidiary representing a majority of the combined voting power of all
the outstanding securities of that Subsidiary that are entitled to vote
generally in the election of its directors, unless in each case the
beneficial owner is the Company, a Subsidiary, an employee benefit
plan sponsored by the Company, a person or group who is a record or
beneficial owner of 25% or more of the outstanding Shares on the Date of
Grant, or a person who becomes a beneficial owner of 25% or more of the
outstanding Shares solely by becoming a trustee of an inter vivos trust
created by a person who is the record or beneficial owner of 25% or more
of the outstanding Shares on the Date of Grant.
"Common Stock" means the common stock, $.001 par value, of the
Company.
"Company" means Sterile Recoveries, Inc., a Florida corporation.
"Date of Grant" means the date when the Company authorized the
grant of the Stock Option to you, as stated in the heading of this
Agreement.
-2-
<PAGE> 3
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended, and includes all rules and regulations of the
SEC promulgated under that act.
"Internal Revenue Code" means the United States Internal Revenue
Code of 1986, as amended from time to time, or any United States
income tax law subsequently enacted in substitution for that code.
"Shares" means shares of the Company's common stock, $.001 par
value.
"Stock Option" means the non-qualified stock option to purchase
Shares from the Company that is granted to you pursuant to this Agreement.
"Subsidiary" means a corporation of which 80% of its voting securities
are owed directly or indirectly by the Company.
2. Expiration. Unless extended by the Company, the Stock Option
expires at 5:00 P.M., New York time, on the earlier of (a) the date that
is ten years after the Date of Grant, which is the Expiration Date stated in
the heading of this Agreement, or (b) the 180th day after you die. In no
event is the Stock Option exercisable after the Expiration Date stated in
the heading of this Agreement.
3. Exercise of Option. The Stock Option is not exercisable
until you accept this Agreement. Thereafter, the Stock Option is
exercisable to the extent and in the manner described in this Agreement.
To the extent that it is exercisable, you may exercise the Stock Option as
a whole, in part, or in increments at any time and from time to time. You may
exercise the Stock Option as to all or any portion of the full number of Shares
for which it is exercisable at any time, but you must exercise the Stock
Option before it expires, and every exercise must be for at least 500
whole Shares. No fractional Shares will be issued pursuant to the Stock
Option. The Stock Option will not be exercisable until and unless certain
conditions are satisfied under the Consulting Agreement. The Stock
Option will become exercisable as to one-third of the Shares on the
timely and successful completion of "Phase Three" (interim financing)
of the Consulting Agreement and will become exercisable as to the
remaining Shares on the timely and successful completion of "Phase Five"
(public offering) of the Consulting Agreement. The Stock Option will become
fully and immediately exercisable as to all of the Shares on the
occurrence of a Change of Control before September 1, 1996.
-3-
<PAGE> 4
4. Method of Exercise. To exercise the Stock Option, you must do
the following before the Stock Option expires: (a) deliver to the Company a
written notice of exercise in the form of Appendix "A" to this Agreement (or
such other form as the Company may subsequently prescribe), specifying the
number of Shares to be purchased; (b) tender to the Company full payment
for the Shares to be purchased pursuant to the exercise of the Stock
Option; (c) pay to the Company, or make an arrangement satisfactory to the
Company for the payment of, any tax withholding required in connection with
your exercise of the Stock Option (including FICA, Medicare, and local,
state, or federal income taxes); and (d) comply with any other reasonable
requirements of exercise that the Company has established. You may
pay the exercise price and any tax withholding for the Shares that you
purchase pursuant to the Stock Option by any combination of cash, money order,
personal check, or certified or official bank check or with Shares valued
at fair market value on the exercise date. The exercise date for
each exercise of the Stock Option will be the date when (i) the Company has
received notice of exercise and full payment of the exercise price, (ii) you
have paid to the Company or made a satisfactory arrangement for the payment of
any requisite tax withholding, and (iii) you have satisfied any other
requirements of exercise established by the Company.
5. Nontransferability of Option. You are prohibited from
transferring the Stock Option, any interest in it, or any right under this
Agreement by any means other than by will or the law of descent and
distribution. The Stock Option is exercisable during your lifetime only by you
or your guardian. Any prohibited transfer (whether by gift, sale,
pledge, assignment, hypothecation, or otherwise) will be invalid and
ineffective as to the Company. In addition, the Stock Option and your
rights under this Agreement are not subject to any lien, levy, attachment,
execution, or similar process by creditors. The Company may cancel the
Stock Option by notice to you, if you attempt to make a prohibited transfer,
or if the Stock Option, any interest in it, or any right under this Agreement
becomes subject to a lien, levy, attachment, execution, or similar
process.
6. Stock Certificates. Promptly after the Stock Option has been
validly exercised in accordance with the terms of this Agreement, the
Company shall issue and deliver to you, against a written receipt in
substantially the form attached as Appendix "B" to this Agreement, a
stock certificate evidencing your ownership of the Shares that were
purchased pursuant to the Stock Option. You will not have any rights as a
shareholder with respect to any Shares issuable upon exercise of the
Stock Option until the Stock Option has been validly exercised, the Company has
issued and delivered to you a certificate evidencing those Shares, and your
name has been entered as a shareholder of record in the Company's stock
records.
-4-
<PAGE> 5
7. Representations and Warranties. By accepting this Agreement, you
represent and warrant to the Company the following:
(a) You are accepting the Stock Option, and will purchase the
Shares subject to your Stock Option, solely for your own account, as
principal, without a view to, and not for resale in connection with, any
distribution or underwriting of the Stock Option or any Shares, and you
are not participating, directly or indirectly, in any distribution
or underwriting of the Stock Option or any Shares. You are not
acquiring the Stock Option, and will not purchase any Shares pursuant
to it, as an agent, nominee, or representative for the account or benefit
of another person or entity, and you have not agreed or arranged to sell,
assign, transfer, subdivide, or otherwise dispose of all or any part of
the Stock Option or the Shares subject to it to another person or entity.
(b) You understand that (i) no state or federal agency has passed
upon the Stock Option or the Shares or made any finding or
determination as to the fairness of the Stock Option or the Shares
as an investment, (ii) the Stock Option and the Shares subject to it
have not been, and will not be, registered under either the
Securities Act of 1933, as amended, or any state securities law, (iii)
those Shares can be offered for sale, sold, assigned, foreclosed or
otherwise transferred only if the transaction is registered under
those laws or qualifies for an available exemption from
registration under those laws, and (iv) the Company has not agreed, and
is not obligated to register any resale or other transfer of any
Shares acquired pursuant to the Stock Option under the Securities Act of
1933, as amended, or any state securities law, or to take any action to
enable you to qualify for an exemption from registration under any of
those laws with respect to a resale or other transfer of those Shares.
(c) You understand that, in furtherance of the transfer
restrictions stated above, (i) the Company will issue stop transfer
instructions to its transfer agent to restrict an impermissible resale
or other transfer of the Shares purchased pursuant to your Stock
Option, (ii) each certificate evidencing those Shares will bear a
restrictive legend in substantially the following form:
-5-
<PAGE> 6
A transfer of the securities evidenced by this certificate is
restricted by state and federal securities laws. These securities
cannot be offered for sale, sold, assigned, foreclosed, or otherwise
transferred at any time absent either registration of the
transaction under the Securities Act of 1933, as amended, and
every applicable state securities law or delivery to the issuer of
these securities of a written opinion of legal counsel
satisfactory to it that registration of the transaction under
those laws is not required.
, and (iii) a legend substantially identical to the one set forth above
will be placed on every new stock certificate that is issued upon a
transfer or exchange of those Shares.
(d) You will not offer for sale, sell, assign, pledge, hypothecate,
or otherwise transfer the Shares purchased pursuant to your Stock Option
at any time without either (i) registering the transaction under the
Securities Act of 1933, as amended, and every applicable state
securities law or (ii) delivering to the Company a satisfactory written
opinion of legal counsel to the effect that registration of the
transaction is not required under any of those laws.
(e) You understand that an established trading market does not
exist for the Shares, and none is likely to develop in the absence of
a registered public offering of the Shares.
8. Holdback Agreement. If the Company initiates a public offering
of the Shares, you agree not to effect any public sale or distribution,
including any sale pursuant to Rule 144 or any successor provision of the
Securities Act of 1933, as amended, of any Shares during the 120 day period
(or, in the case of an initial public offering, the 180 day period) beginning
on the closing date of the offering.
9. Antidilution. If the Company does any of the following (a
"Dilutive Event") at any time before the exercise or expiration of the Stock
Option: (a) splits or subdivides its then-outstanding Shares into a greater or
different number of Shares; (b) reduces the then-outstanding number of Shares
by a reverse stock-split or by otherwise combining those Shares into a
smaller number of Shares; (c) effects any other capital adjustment,
recapitalization, reorganization, or reclassification that has the
effect of increasing or decreasing proportionately the number of
outstanding Shares then held by each shareholder; (d) distributes any of
its assets to its shareholders pro rata as a partial liquidation
-6-
<PAGE> 7
or return of capital; or (e) declares, issues, or distributes to the holders
of its Common Stock, without separate payment therefor, (i) a noncash
dividend payable in any property or securities of the Company, including
additional Shares, or (ii) any cash, property, or securities in connection
spin-off, split-up, reclassification, recapitalization, with a
combination of shares, or similar rearrangement of the Company's
capital stock; then, upon the subsequent exercise of a Stock Option after
the record date for, or the occurrence of, each Dilutive Event, you will be
entitled to receive, in exchange for the exercise price specified in the Stock
Option, and in addition to (or in substitution for in the case of a reduced
number of Shares), the Shares otherwise issuable upon exercise of the Stock
Option, the additional (or reduced) amount of Shares and other securities and
property (including cash) resulting from the Dilutive Event that you would
have been entitled to receive if (A) you had exercised the Stock Option on
the Date of Grant (even if the Stock Option was not exercisable then) and had
been the record owner of the number of Shares resulting from the exercise
during the period beginning on that date and ending on the actual exercise
date of the Stock Option, and (B) you had retained all Shares and other
securities and property (including cash) receivable by you during that
period, after giving effect to all the Dilutive Events that occurred
during that period.
10. Change in Control. The Stock Option will be subject to the
provisions governing a "Change of Control" of the Company described in
Section 5.2 of the Company's 1995 Stock Option Plan dated December 21, 1995.
11. Reservation, Listing, and Delivery of Shares. The Company shall
reserve from its authorized but unissued shares of Common Stock and keep
available until the expiration of the Stock Option, solely for issuance
upon the exercise of the Stock Option, the number of Shares issuable at
any time pursuant to the exercise of the Stock Option granted under this
Agreement. In addition, the Company shall take all requisite action to
assure that it validly and legally may issue fully-paid, nonassessable
Shares upon the exercise of the Stock Option. Also, if the Company
undertakes a public offering, the Company, at its sole expense, shall reserve
for listing on the National Association of Securities Dealers Automated
Quotation System or any national securities exchange on which the Shares
are listed for trading, upon official notice of issuance pursuant to the
exercise of the Stock Option, the number of Shares issuable at any time
upon the exercise of the Stock Option, and the Company shall maintain that
listing until expiration of the Stock Option.
12. Legal Compliance. The Stock Option is exercisable, and Shares are
issuable under this Agreement, only in compliance with all applicable
state and federal laws and regulations (including securities laws) and the
rules of all stock
-7-
<PAGE> 8
exchanges on which the Shares are listed for trading. Any certificate
evidencing Shares issued under this Agreement will bear such legends and
statements as the Company deems advisable to assure compliance with
those laws, rules, and regulations. The Stock Option is not exercisable,
and the Company shall not issue any Shares under this Agreement, until the
Company has obtained any consent or approval required from any state or
federal regulatory body having jurisdiction. Upon the exercise of the Stock
Option by your heir, guardian, or personal representative, the Company may
require reasonable evidence of the person's legal ownership of the Stock
Option and such consents and releases of governmental authorities as it deems
advisable.
13. Notices. Every notice, demand, consent, approval, and other
communication required or permitted under this Agreement will be valid only
if it is in writing and delivered personally or by telex, telecopy,
telegram, commercial courier, or first class, postage prepaid, United States
mail (whether or not certified or registered and regardless of whether a
return receipt is received or requested by the sender) and addressed, if
to you, at your address set forth below and, if to the Company, at 28100 U.S.
Highway 19 North, Suite 201, Clearwater, Florida 34621, Attention:
President, or at any other address that either party has previously
designated by notice given to the other party in accordance with this
provision. A validly given notice, demand, consent, approval, or other
communication will be effective on the earlier of its receipt, if delivered
personally or by telex, telecopy, telegram, or commercial courier, or the
third day after it is postmarked by the United States Postal Service, if it is
delivered by first class, postage prepaid, United States mail. You shall
notify the Company of any change in your mailing address that is listed in
this Agreement.
14. Legal Proceedings. If any dispute arises between you and the
Company with respect to this Agreement or the Stock Option, either party may
elect (but is not obligated) to submit the dispute to arbitration before a
panel of arbitrators in accordance with the Florida Arbitration Code by giving
the other party a notice of arbitration in accordance with section 9 of this
Agreement. If a party elects to arbitrate a dispute before a lawsuit is
filed with respect to the subject matter of the dispute, arbitration will
be the sole and exclusive method of resolving the dispute, the other party
must arbitrate the dispute, and each party will be barred from filing a
lawsuit concerning the subject matter of the arbitration, except to obtain an
equitable remedy. A party's right to submit a dispute to arbitration does
not restrict its right to institute litigation to obtain any legal or
equitable remedy. The filing of a lawsuit by either party before the other
party has elected that a dispute be submitted to arbitration will bar and
preclude both you and the Company from submitting the
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<PAGE> 9
subject matter of the lawsuit to arbitration while the lawsuit is pending.
The arbitration panel will consist of three arbitrators, with one
arbitrator selected by the Company, the second selected by you, and the
third, neutral arbitrator selected by agreement of the first two arbitrators.
Each party shall select an arbitrator and notify the other party of the
selection within 15 days after the effective date of the notice of arbitration
and the two arbitrators selected by the parties shall select the third
arbitrator within 30 days after the effective date of the notice of
arbitration. A party who fails to select an arbitrator within the
prescribed 15-day period waives the right to select an arbitrator or to have
an additional, neutral arbitrator selected by the arbitrator selected by the
other party, and the arbitrator chosen by the other party will constitute the
"arbitration panel" for purposes of this Agreement.
Every arbitrator must be independent (not a relative of yours or an
officer, director, employee, or shareholder of the Company or any Subsidiary)
without any economic or financial interest of any kind in the outcome of the
arbitration. Each arbitrator's conduct will be governed by the Code of
Ethics for Arbitrators in Commercial Disputes (1986) that has been approved
and recommended by the American Bar Association and the American Arbitration
Association.
Within 120 days after the effective date of the notice of arbitration, the
arbitration panel shall convene a hearing for the dispute to be held on such
date and at such time and place in Tampa, Florida, as the arbitration panel
designates upon 60 days' advance notice to you and the Company. The
arbitration panel shall render its decision within 30 days after the conclusion
of the hearing. The decision of the arbitration panel will be binding
and conclusive as to you and the Company and, upon the pleading of either
party, any court having jurisdiction may enter a judgment of any award
rendered in the arbitration, which may include an award of damages. The
arbitration panel shall hear and decide the dispute based on the evidence
produced, notwithstanding the failure or refusal to appear by a party who
has been duly notified of the date, time, and place of the hearing.
You and the Company (a) consent to the personal jurisdiction of the
state and federal courts having jurisdiction over Hillsborough County,
Florida, (b) stipulate that the proper, exclusive, and convenient venue for any
legal proceeding arising out of this Agreement or the Stock Option is
Hillsborough County, Florida, and (c) waive any defense, whether asserted by
a motion or pleading, that Hillsborough County, Florida, is an improper or
inconvenient venue. YOU KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE YOUR
RIGHT TO A JURY TRIAL IN ANY
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<PAGE> 10
LAWSUIT BETWEEN YOU AND THE COMPANY WITH RESPECT TO THIS AGREEMENT OR THE
STOCK OPTION.
In any mediation, arbitration, or legal proceeding arising out of this
Agreement, the losing party shall reimburse the prevailing party, on demand,
for all costs incurred by the prevailing party in enforcing, defending, or
prosecuting any claim arising out of this Agreement, including all fees,
costs, and expenses of agents, experts, attorneys, witnesses, arbitrators, and
supersedeas bonds, whether incurred before or after demand or commencement of
legal or arbitration proceedings, and whether incurred pursuant to trial,
appellate, mediation, arbitration, bankruptcy, administrative, or judgment-
execution proceedings. The Company shall pay to you, on demand, interest
on any amount owed to you under this Agreement that is not paid to you when
due, from the date when due until paid in full, at the annual rate then
provided by Florida law for the payment of interest on judgments generally
(the current annual rate of interest on judgments prescribed by section
55.03, Florida Statutes, is 12%).
15. Miscellaneous. The validity, construction, enforcement, and
interpretation of this Agreement are governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding
the laws of those jurisdictions pertaining to resolution of conflicts with
the laws of other jurisdictions. A waiver, amendment, modification, or
cancellation of this Agreement will be valid and effective only if it is in
writing and executed by you and the Company. By signing this Agreement, you
accept the grant of the Stock Option, and warrant that you are free to enter
into this Agreement and do not have any legal obligations that are
inconsistent with this Agreement. This Agreement records the final,
complete, and exclusive understanding between you and the Company with
respect to the Stock Option and supersedes any prior or contemporaneous
agreement, representation, or understanding, oral or written, by you or the
Company. This Agreement is binding on your heirs, guardian, and personal
representative and is binding on, inures to the benefit of, the Company's
assignees and successors. Time is of the essence with respect to your
exercise of the Stock Option.
STERILE RECOVERIES, INC.
WITNESSES: By:/s/ James T. Boosales (SEAL)
------------------------
James T. Boosales
- ------------------------------ Executive Vice President
- ------------------------------
(As to Mr. Boosales)
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<PAGE> 11
ACCEPTANCE OF STOCK OPTION
I have carefully read the foregoing Stock Option Agreement.
Before exercising the Stock Option, I will review the additional disclosure
documents furnished to me by the Company. I accept the Stock Option granted
to me pursuant to the Agreement and agree to be bound by all the terms
and conditions of the Agreement.
EXECUTED AS OF: October 18, 1995 /s/ Bertram T. Martin, Jr.
--------------------------
BERTRAM T. MARTIN, JR.
2805 Parkland Boulevard
Tampa, Florida 33609
--------------------------
Social Security Number
<PAGE> 12
APPENDIX "A"
STERILE RECOVERIES, INC.
STOCK OPTION
NOTICE OF EXERCISE
TO: Sterile Recoveries, Inc.
Attention: Chief Financial Officer
This notifies you that I exercise my option to purchase _______ shares
(the "Shares") of common stock of Sterile Recoveries, Inc. (the "Company")
pursuant to the stock option that the Company granted to me on October 18,
1995, pursuant to the Stock Option Agreement that was accepted by me as of
October 18, 1995 (the "Agreement").
In connection with my purchase of the Shares, I represent and warrant to
the Company the following:
(a) I am in full compliance with all conditions to exercise of the
Stock Option set forth in the Agreement.
(b) I am purchasing the Shares solely for my own account, as principal,
without a view to, and not for resale in connection with, any
distribution or underwriting of any Shares, and I am not participating,
directly or indirectly, in any distribution or underwriting of any shares.
I am not investing in the Shares as an agent, nominee, or
representative for the account or benefit of any person or entity, and I
have not agreed or arranged to sell, assign, transfer, subdivide, or
otherwise dispose of all or any part of the Shares to another person or entity.
(c) I understand that (i) no state or federal agency has passed upon the
Shares or made any finding or determination as to the fairness of the
Shares as an investment, (ii) the Shares have not been, and will not be,
registered under either the Securities Act of 1933, as amended, or any
state securities law, and they can be offered for sale, sold, assigned,
pledged, hypothecated, or otherwise transferred or encumbered only if the
transaction is registered under those laws or qualifies for an available
exemption from registration under those laws, and (iii) the Company has not
agreed, and is not obligated, to register any resale or other transfer of the
Shares under the Securities Act of 1933, as amended, or any state
securities law, or to take any action to enable me to qualify for an
exemption from registration under any of those laws with respect to a resale or
other transfer of the Shares.
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<PAGE> 13
(d) I understand that, in furtherance of the transfer restrictions
stated above, (i) the Company will issue stop transfer instructions to
its transfer agent to restrict an impermissible resale or other transfer
of the Shares, (ii) each certificate evidencing the Shares will bear a
restrictive legend in substantially the following form:
The shares evidenced by this certificate have
not been registered under either the Securities
Act of 1933, as amended, or the securities laws
of any state. These shares cannot be offered
for sale, sold, assigned, pledged, hypothecated, or
otherwise transferred or encumbered at any time,
as a whole or in part, absent registration of the
transaction under the Securities Act of 1933, as
amended, and every applicable state securities
law or delivery to the Company of a satisfactory
written opinion oflegal counsel to the effect that
registration of the transaction is not required
under those laws.
, and (iii) a legend substantially identical to the one described above
will be placed on every new stock certificate that is issued upon a transfer or
exchange of the Shares.
(e) I will not offer for sale, sell, assign, pledge, hypothecate, or
otherwise transfer or encumber the Shares at any time without registered
the transaction under the Securities Act of 1933, as amended, and every
applicable state securities law or delivering to the Company a satisfactory
written opinion of legal counsel to the effect that registration of
the transaction is not required under any of those laws.
(f) I understand that (i) routine public sales of the Shares in
reliance on Rule 144 under the Securities Act of 1933, as amended, will be
possible only in limited amounts in accordance with the terms and
conditions of that Rule, including the applicable holding period,
and (ii) in accordance with the position of the Securities and Exchange
Commission, persons who publicly offer or sell "restricted securities"
without complying with Rule 144 have a substantial burden of proof in
establishing that a registration exemption is available for the offer or sale.
(g) I have received from the Company and carefully read [add
description of disclosure document], pertaining to the Shares and all the
documents incorporated by reference in it (the "Disclosure Documents").
(h) I have been given adequate opportunity to evaluate this
investment, including opportunities to (i) question officers of the
Company, (ii) obtain any additional information necessary to evaluate the
investment or to verify any information or representation contained in the
Disclosure
-2-
<PAGE> 14
Documents, and (iii) make such other investigation as I considered
appropriate or necessary to evaluate the business and financial affairs and
condition of the Company.
(i) Management of the Company has answered all questions asked by me, and
they have either furnished to me, or given me full and unrestricted access
to, all records, contracts, documents, and other information requested by me,
with respect to the Shares, the Company, the Disclosure Documents, and the
business and financial affairs and condition of the Company.
(j) [I am an officer or managerial employee of the Company, and
therefore, knowledgeable concerning the business of the Company, and I have
carefully considered and understand the risks and other factors affecting the
suitability of the Shares as an investment for me.]
(k) I understand that neither the Company, any officer or director of
the Company, nor any professional advisor of the Company, makes any
representation or warranty to me with respect to, or assumes any
responsibility for, the federal income tax consequences to me of an investment
in the Shares.
(l) Because of my knowledge and experience in financial and business
matters, and the Company's business in particular, I am able to evaluate
the merits, risks, and other factors bearing upon the suitability of the
Shares as an investment for me, and I have been afforded adequate
opportunity to evaluate this proposed investment in light of those factors,
my financial condition, and my investment knowledge and experience.
(m) I have adequate net worth and annual income to provide for my
current needs and possible future contingencies and do not have an existing
or foreseeable future need for liquidity of my investment in the Shares.
Also, I am otherwise able to bear the economic risk of an investment in the
Shares, and have sufficient net worth and annual income to sustain a loss of
all or part of my investment in the Shares if that were to occur and to
withstand the probably inability to publicly sell, transfer, or otherwise
dispose of the Shares for an indefinite period of time.
Please issue in my name, as printed below my signature to this notice of
exercise, a stock certificate evidencing my ownership of the Shares. Also,
please issue to me in the same manner a balance certificate for any of the
Shares evidenced
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<PAGE> 15
by an enclosed stock certificate that are not required to satisfy the
purchase price of the Shares.
EXECUTED:
--------------,-- -----------------------------------
Signature of Participant
-----------------------------------
Name of Participant
-----------------------------------
Street Address
Amount Enclosed: $
----------- -----------------------------------
City State Zip Code
Shares Enclosed:
----------- -----------------------------------
Social Security Number
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<PAGE> 16
APPENDIX "B"
STERILE RECOVERIES, INC.
STOCK OPTION
STOCK CERTIFICATE RECEIPT
I acknowledge receipt from Sterile Recoveries, Inc. on ______________,
____, of stock certificate number _____ for ________ shares of common stock
of Sterile Recoveries, Inc., purchased by me pursuant to the exercise of the
stock option granted to me under the Stock Option Agreement that was
accepted by me on [_____________].
---------------------------------
Signature of Employee
---------------------------------
Name of Participant
<PAGE> 1
EXHIBIT 10.29
STERILE RECOVERIES, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Purpose of Plan 1
2. Definitions 1
3. Limits on Options 3
4. Granting and Terms of Options 3
5. Effect of Changes in Capitalization 5
6. Delivery and Payment for Shares 6
7. No Continuation as a Director and Disclaimer of Rights 7
8. Administration 7
9. No Reservation of Shares 7
10. Legal Compliance 7
11. Amendment of Plan 8
12. Termination of Plan 8
13. Effective Date 8
</TABLE>
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<PAGE> 3
STERILE RECOVERIES, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this Plan is to enable Sterile Recoveries, Inc. (the
"Company"), and its Subsidiaries (if any) to compete successfully in
attracting, motivating, and retaining Non-Employee Directors with outstanding
abilities by making it possible for them to purchase Shares on terms that will
give them a direct and continuing interest in the future success of the
businesses of the Company and encourage them to remain as directors of the
Company.
2. Definitions
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means any of the following: (a) the
shareholders of the Company approve a liquidation of all or substantially all
the consolidated assets of the Company and its Subsidiaries, other than a
liquidation of a Subsidiary into the Company or another Subsidiary (unless the
transaction is subsequently abandoned or otherwise fails to occur); (b) the
shareholders of the Company approve a sale, lease, exchange, or other transfer
to any person other than the Company or a Subsidiary (in a single transaction
or related series of transactions) of all or substantially all of consolidated
assets of the Company and its Subsidiaries, excluding the creation (but not the
foreclosure) of a lien, mortgage, or security interest (unless the transaction
is subsequently abandoned or otherwise fails to occur); (c) the shareholders of
the Company approve a merger, consolidation, reorganization, tender offer,
exchange offer, or share exchange in which the Company will not be the
surviving corporation or will become a majority-owned subsidiary of a person
other than a Subsidiary (unless the transaction is subsequently abandoned or
otherwise fails to occur); or (d) the occurrence of any event, transaction, or
arrangement that results in any person or group becoming a beneficial owner of
(i) a majority of the outstanding Shares or the common stock of any Subsidiary
that contributed more than 50% of the Company's consolidated revenues for its
last fiscal year, (ii) securities of the Company representing a majority of the
combined voting power of all the outstanding securities of the Company that are
entitled to vote generally in the election of its directors, or (iii) with
respect to any Subsidiary that contributed more than 50% of the Company's
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<PAGE> 4
consolidated revenues for its last fiscal year, securities of that Subsidiary
representing a majority of the combined voting power of all the outstanding
securities of that Subsidiary that are entitled to vote generally in the
election of its directors, unless in each case the beneficial owner is the
Company, a Subsidiary, an employee benefit plan sponsored by the Company, a
person or group who is a record or beneficial owner of 25% or more of the
outstanding Shares on the Date of Grant, or a person who becomes a beneficial
owner of 25% or more of the outstanding Shares solely by becoming a trustee of
an inter vivos trust created by a person who is the record or beneficial owner
of 25% or more of the outstanding Shares on the Date of Grant.
(c) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(d) "Date of Grant" means, with respect to an Option, the date as of when
it is granted to an Optionee.
(e) "Effective Date" means the effective date of the sale of Shares in an
initial public offering registered under the Securities Act of 1933, as
amended.
(f) "Fair Market Value" means, with respect to a Share, if the Shares are
then listed and traded on a registered national or regional securities
exchange, or quoted on The National Association of Securities Dealers'
Automated Quotation System (including The Nasdaq Stock Market's National
Market), the average closing price of a Share on such exchange or quotation
system for the date of grant of an option and the day immediately preceding the
date of grant of an Option. If the Shares are not traded on a registered
securities exchange or quoted in such a quotation system, the Board shall
determine the Fair Market Value of a Share.
(g) "Non-Employee Director" shall mean any member of the Company's Board of
Directors who is not an employee of the Company or any Subsidiary.
(h) "Option" means an option to purchase Shares from the Company granted
under this Plan, which Option shall not be an incentive stock option within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute.
(i) "Optionee" means any person who has been granted an Option which Option
has not expired or been fully exercised or surrendered.
(j) "Plan" means the Company's 1996 Non-Employee Director Stock Option
Plan, as originally adopted and subsequently amended, modified, or supplemented
in accordance with its terms.
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<PAGE> 5
(k) "Rule 16b-3" means Rule 16b-3 promulgated pursuant to Section 16(b) of
the Securities Exchange Act of 1934, as amended, or any successor rule.
(l) "Share" means one share of voting common stock, par value $.001 per
share, of the Company, and such other stock or securities that may be
substituted therefor pursuant to Section 5 hereof.
(m) "Subsidiary" means any "subsidiary corporation" within the meaning
of Section 424(f) of the Code.
3. Limits on Options
The total number of Shares with respect to which Options may be granted
under the Plan shall not exceed in the aggregate 100,000 Shares, subject to
adjustment as provided in Section 5 hereof. If any Option expires, terminates,
or is terminated for any reason prior to its exercise in full, the Shares that
were subject to the unexercised portion of such Option shall be available for
future grants under the Plan.
4. Granting and Terms of Options
(a) Each Non-Employee Director shall be granted Options as follows: (i) on
the Effective Date, Options to purchase 4,000 Shares for each remaining year
(or part thereof) of the Non-Employee's term as a director and (ii) on each
subsequent reelection to a new term as a director (or for a newly-elected
Non-Employee Director, on initial election or appointment), an amount of
Options equal to 4,000 times the number of years for which the Non-Employee
Director has been elected to serve. The foregoing Options will be subject to
the vesting provisions set forth in subsection (h) of this Section 4.
(b) Notwithstanding the provisions of Section 4(a), Options shall be
automatically granted to Non-Employee Directors under the Plan only for so long
as the Plan remains in effect and a sufficient number of Shares are available
hereunder for the granting of such Options.
(c) The exercise price of each Share subject to an Option granted on the
Effective Date pursuant to Section 4(a)(i) hereof shall be equal to 100% of the
initial public offering price for the Shares in the initial public offering
registered under the Securities Act of 1933, as amended. For all other Options
granted pursuant to the Plan, the exercise price of each Share subject to an
Option shall be equal to 100% of the Fair Market Value of the Shares on the
Date of Grant of such Option.
(d) Options shall not be assignable or transferable by the Optionee other
than by will or by the laws of descent and distribution except that the
Optionee may, with the consent of the Board, transfer without consideration
Options to the Optionee's spouse, children, or grandchildren (or to one or more
trusts for the benefit of any such family members or to
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<PAGE> 6
one or more partnerships in which any such family members are the only
partners).
(e) Each Option shall expire and all rights thereunder shall end at the
expiration of ten (10) years after the Date of Grant, subject in all cases to
earlier expiration as provided in subsections (f) and (g) of this Section 4.
(f) During the life of an Optionee, an Option shall be exercisable only by
such Optionee (or a permitted transferee) and only within one (1) month after
the date on which the Optionee ceases to be a Non-Employee Director, other than
by reason of the Optionee's death or resignation from the Board with the
consent of the Company as provided in subsection (g) of this Section 4, but
only if and to the extent the Option was exercisable immediately prior to such
date, and subject to the provisions of the subsections (e) and (h) of this
Section 4. If the Optionee is removed as a director for cause (as defined in
the Company's Articles of Incorporation, as amended from time to time), all
Options of the Optionee shall terminate immediately on the date of removal.
(g) If an Optionee: (i) dies while a Non-Employee Director or within the
period when an Option could have otherwise been exercised by the Optionee; or
(ii) ceases to be a Non-Employee Director as a result of such Optionee's
resignation from the Board, provided that the Company has consented in writing
to such Optionee's resignation, then, in each such case, such Optionee, or the
duly authorized representatives of such Optionee, shall have the right, at any
time within one (1) year after the death or after such resignation of the
Optionee, as the case may be, and prior to the termination of the Option
pursuant to subsections (e) and (h) of this Section 4, to exercise any Option
to the extent such Option was exercisable by the Optionee immediately prior to
such Optionee's death or resignation.
(h) The Options will vest in increments of 4,000 Shares on the Non-Employee
Director's completion of each successive year of service in his term.
Example: Assume that a Non-Employee Director is first
appointed to the Board of Directors in May 1996 and that
his initial term is through the Company's annual meeting
of shareholders in 1999. As of the Effective Date, the
Non-Employee Director would receive Options for 12,000
Shares, exercisable at the initial offering price for the
Shares. None of these Options
-4-
<PAGE> 7
would be immediately exercisable. These Options would
vest with respect to 4,000 Shares when the Non-Employee
Director completes his service through the 1997 annual
meeting of shareholders, with respect to another 4,000
Shares when the Non-Employee Director completes his
service through the 1998 annual meeting of shareholders,
and with respect to the remaining 4,000 Shares when the
Non-Employee Director completes his service through the
1999 annual meeting of shareholders.
All Options not vested when a Non-Employee Director ceases to be a director of
the Company for any reason will terminate immediately.
(i) An Option may be exercised in whole at one time or in part from time to
time, subject to provisions of this Section 4.
(j) Options granted pursuant to the Plan shall be evidenced by an agreement
in writing setting forth the material terms and conditions of the grant,
including, but not limited to, the number of Shares subject to Options and the
vesting conditions.
5. Effect of Changes in Capitalization
(a) If the number of outstanding Shares is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization, reclassification,
stock split, combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company, a
proportionate and appropriate adjustment shall be made by the Board in (i) the
number and type of Shares subject to the Plan and which thereafter may be made
the subject of Options under the Plan, and (ii) the number and kind of shares
for which Options are outstanding, so that the proportionate interest of the
Optionee immediately following such event shall, to the extent practicable, be
the same as immediately prior to such event. Any such adjustment in outstanding
Options shall not change the aggregate option price payable with respect to
Shares subject to the unexercised portion of the Options outstanding but shall
include a corresponding proportionate adjustment in the option price per Share.
(b) Subject to Section 5(c) hereof, if the Company shall be the surviving
corporation in any reorganization, merger, share exchange or consolidation of
the Company with one or more other corporations or other entities, any Option
thereto
-5-
<PAGE> 8
fore granted shall pertain to and apply to the securities to which a holder of
the number of Shares subject to such Option would have been entitled
immediately following such reorganization, merger, share exchange or
consolidation, with a corresponding proportionate adjustment of the option
price per Share so that the aggregate option price thereafter shall be the same
as the aggregate option price of the Shares remaining subject to the Option
immediately prior to such reorganization, merger, share exchange or
consolidation.
(c) In the event of a Change in Control, any Option granted hereunder shall
become immediately exercisable in full, subject to any appropriate adjustments
in the number of Shares subject to such Option and the option price, regardless
of any provision contained in the Plan with respect thereto limiting the
exercisability of the Option for any length of time.
(d) Adjustments under this Section 5 relating to Shares or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive. Options subject to grant or previously granted
under the Plan at the time of any event described in this Section 5 shall be
subject to only such adjustments as shall be necessary to maintain the
proportionate interest of the Options and preserve, without exceeding, the
value of such Options. No fractional Shares or units of other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding upward to the
nearest whole Share or unit.
(e) The grant of an Option pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
6. Delivery and Payment for Shares
(a) No Shares shall be delivered upon the exercise of an Option until the
option price for the Shares acquired has been paid in full. No Shares shall be
issued or transferred under the Plan unless and until all legal requirements
applicable to the issuance or transfer of such Shares have been complied with
to the satisfaction of the Board. Any Shares issued by the Company to an
Optionee upon exercise of an Option may be made only in strict compliance with
and in accordance with applicable state and federal securities laws.
(b) Payment of the option price for the Shares purchased pursuant to the
exercise of an Option shall be made: (i) in cash or b check payable to the
order of the Company; (ii) through the tender to the Company of Shares, which
Shares
-6-
<PAGE> 9
shall be valued, for purposes of determining the extent to which the option
price has been paid thereby, at their Fair Market Value on the date of
exercise; or (iii) by a combination of the methods described in (i) and (ii)
hereof. Payment also may be made in accordance with a cashless exercise program
under which, if so instructed by the Optionee, Shares may be issued directly to
the Optionee's broker upon receipt of the option price in cash from the broker.
7. No Continuation as a Director and Disclaimer of Rights
No provision in the Plan or in any Option granted or option agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain a director of the Company or any Subsidiary. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Optionee or beneficiary under the terms of the Plan.
An Optionee shall have none of the rights of a shareholder of the Company until
all or some of the Shares covered by an Option are fully paid and issued to
such Optionee.
8. Administration
The Plan is intended to meet the requirements of Rule 16b-3(c)(2)(ii)
adopted under the Securities Exchange Act of 1934, as amended, and accordingly
is intended to be self-governing. To this end, the Plan requires no
discretionary action by any administrative body with regard to any transaction
under the Plan. To the extent, if any, that any questions of interpretation
arise, these shall be resolved by the Board.
9. No Reservation of Shares
The Company shall be under no obligation to reserve or to retain in its
treasury any particular number of Shares in connection with its obligations
hereunder.
10. Legal Compliance
Options are exercisable, and Shares are issuable under the Plan, only in
compliance with all applicable state and federal laws and regulations
(including securities laws) and the rules of all stock exchanges on which the
Shares are listed for trading. Any certificate evidencing Shares issued under
the Plan will bear such legends and statements as the Board deems advisable to
assure compliance with those laws, rules, and regulations. An Option is not
exercisable, and the Company shall not issue any Shares under the Plan, until
the Company has obtained any consent or approval required from any state or
federal regulatory body having jurisdiction. Upon the exercise of an Option by
an heir, guardian, or personal representative of an Optionee, the Board may
require reasonable evidence of the person's legal ownership of the Option and
such consents and releases of governmental authorities as it deems advisable.
-7-
<PAGE> 10
11. Amendment of Plan
The Board, without further action by the shareholders, may amend this Plan
from time to time as it deems desirable; provided, that (i) no such amendment
shall be made without shareholder approval if such approval would be required
to comply with Rule 16b-3; (ii) an amendment will not alter or impair any right
or obligation of an outstanding Option without the consent of the person then
entitled to exercise it; and (iii) the provisions of Section 4(a) shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder.
12. Termination of Plan
This Plan shall terminate ten (10) years from the Effective Date. The
Board may, in its discretion, suspend or terminate the Plan at any time prior
to such date, but such termination or suspension shall not adversely affect
any right or obligation with respect to any outstanding Option.
13. Effective Date
The Plan shall become effective on the Effective Date and Options hereunder
may be granted at any time on or after that date, subject to approval of the
Plan by the Company's shareholders within one year after the Effective Date by
a majority of the votes cast at a duly held meeting of the shareholders of the
Company at which a quorum representing a majority of all outstanding stock is
present, either in person or by proxy, and in a manner that satisfies the
requirements of Rule 16b-3. Upon approval of the Plan by the shareholders of
the Company as set forth above, all Options granted under the Plan on or after
the Effective Date shall be fully effective as if the shareholders of the
Company had approved the Plan on the Effective Date.
Adopted by Board of Directors Adopted by Shareholders on
on May 2, 1996 on May 2, 1996
STERILE RECOVERIES, INC.
By: /s/ Wayne R. Peterson
------------------------
Wayne R. Peterson
Executive Vice President
ATTEST: [CORPORATE SEAL]
/s/ James T. Boosales
- ---------------------
James T. Boosales
Secretary
-8-
<PAGE> 1
EXHIBIT 23.1(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated May 10, 1996 accompanying the financial
statements and financial schedule of AMSCO Sterile Recoveries, Inc. contained
in the Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts".
GRANT THORNTON LLP
Tampa, Florida
May 14, 1996
<PAGE> 1
EXHIBIT 23.1(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated May 10, 1996 accompanying the financial
statements and financial schedule of Sterile Recoveries, Inc. contained in the
Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
Tampa, Florida
May 14, 1996
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