SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 11, 1998
Commission File No. 0-22533
MERCURY WASTE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of
incorporation or organization)
0-22533 41-1827776
(Commission File No.) (I.R.S. Employer
Identification No.)
302 North Riverfront Drive, Suite 100A, Mankato, MN 56001
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (507) 345-0522
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Asset Purchase Agreement dated March 11, 1998 ("Purchase
Agreement"), by and among MWS New York, Inc., a wholly-owned subsidiary of
Mercury Waste Solutions, Inc. (collectively, the "Company") and Mercury Refining
Company, Inc., 26 Railroad Ave., Inc. and their shareholders (collectively,
"MERECO"), on May 11,1998, the Company completed the purchase of certain assets
relating to the mercury remediation, recycling and refining business of MERECO.
The acquired assets include an 888 drum permitted storage facility, certain
aqueous waste processing technology and equipment, mercury refining capability
and MERECO's existing customer list. The Company did not acquire and will not
operate MERECO's mercury processing facility. Any processing equipment acquired
from MERECO will be utilized at the Company's Union Grove Retorting Facility
located in Union Grove, Wisconsin. The Company will operate the permitted 888
drum storage facility under a lease, with an initial term of three years, with
MERECO.
The purchase price for the acquisition was approximately $1,250,000, exclusive
of the annual rent commitment under the storage facility lease of $75,000 and
acquisition costs. In addition, pursuant to a seven year non compete agreement
with a shareholder of MERECO, the Company will pay $65,000, in total, and grant
a warrant for the purchase of 20,000 shares of common stock at $0.001. The
purchase price was based on the estimated fair market value of the assets and
operations acquired.
The Company financed the purchase price with a loan with Bankers American
Capital Corporation, a corporation wholly owned by Brad J. Buscher, the
Company's Chairman and CEO. The loan consists of a $1,200,000 term loan used to
fund the MERECO acquisition and an $800,000 revolving credit loan to be used for
working capital purposes. The term loan has a two year term requiring quarterly
payments of $60,000 plus interest and the revolving credit loan has a one year
term. Borrowings under the loans bear interest at 6% over the prime rate and are
secured by all of the Company's assets. In addition, BACC was granted a ten year
warrant to purchase 100,000 shares of common stock at $3.75, the market price of
the stock on the date of closing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
As of the date of this filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than 60 days
after May 26, 1998.
(b) Pro Forma Financial Information
As of the date of this filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after May 26, 1998.
(c) Exhibits
The following exhibits are filed herewith
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement by and between MWS New York, Inc. (a
wholly-owned subsidiary of Mercury Waste Solutions, Inc.) and
Mercury Refining Company, Inc., 26 Railroad Ave., Inc., David Cohen
and Leo Cohen dated March 11, 1998. (1)
10.1 Lease dated May 11, 1998 between Mercury Refining Company, Inc. and
26 Railroad Ave., Inc. and MWS New York, Inc. (a wholly-owned
subsidiary of Mercury Waste Solutions, Inc.) for premises located at
26 Railroad Avenue, Albany New York, 12205.
<PAGE>
10.2 Loan Agreement dated May 8, 1998 by and between Bankers American
Capital Corporation and Mercury Waste Solutions, Inc.
10.3 Warrant Agreement dated May 8,1998 between Bankers American Capital
Corporation and Mercury Waste Solutions, Inc.
(1) Filed as an exhibit to Form 10-QSB for the first quarter of fiscal 1998,
filed on May 15, 1998, and incorporated herein by reference.
Certain related appendices to the Lease Agreement (Exhibit 10.3) are
not being filed herewith. The Registrant undertakes to furnish a
copy of any omitted appendix to the Commission upon request.
Pursuant to Item 601(b)(2) of Regulation S-K, the following is a
list of omitted appendices:
Appendix A Survey
Appendix B Legal Description of Property
Appendix C Exceptions to Landlord's Representations
Appendix D Description of Existing Right of First Refusal
Certain related exhibits and schedules to the Loan Agreement (Exhibit
10.2) are not being filed herewith. The Registrant undertakes to
furnish a copy of any omitted exhibit or schedule to the Commission
upon request. Pursuant to Item 601(b)(2) of Regulation S-K, the
following is a list of omitted exhibits and schedules:
Exhibit A Outstanding litigation
Schedule 6.6(c) Schedule of indebtness existing on the date of the
Loan Agreement
Schedule 6.7(b) Schedule of Liens existing on the date of the Loan
Agreement
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MERCURY WASTE SOLUTIONS, INC.
Dated: May 22, 1998 by: /s/ BRAD J. BUSCHER
-------------------------
Brad J. Buscher
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
10.1 Lease dated May 11, 1998 between Mercury Refining Company,
Inc. and 26 Railroad Ave., Inc. and MWS New York, Inc. (a
wholly-owned subsidiary of Mercury Waste Solutions, Inc.)
for premises located at 26 Railroad Avenue, Albany New
York, 12205.
10.2 Loan Agreement dated May 8, 1998 by and between Bankers
American Capital Corporation and Mercury Waste Solutions,
Inc.
10.3 Warrant Agreement dated May 8, 1998 between Bankers
American Capital Corporation and Mercury Waste Solutions,
Inc.
EXHIBIT 10.1
LEASE AGREEMENT
BY AND BETWEEN
MERCURY REFINING COMPANY, INC.,
AND
26 RAILROAD AVE., INC.,
AS LANDLORD
AND
MWS NEW YORK, INC.,
AS TENANT
MAY 11 , 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1- DEFINITIONS.........................................................1
ARTICLE 2 - LEASED PROPERTY....................................................4
2.1 Leased Premises...........................................4
2.2 Access Easement Rights....................................4
2.3 Term......................................................4
2.4 Rent......................................................5
2.5 Adjustment of Fixed Rent..................................6
2.6 Delivery..................................................7
2.7 Security..................................................7
2.8 Permitted Uses............................................7
2.9 Restrictive Use of Property...............................8
ARTICLE 3 - TAXES & PROPERTY EXPENSES..........................................8
3.1 Taxes.....................................................8
3.2 Lien Payment Rights.......................................8
ARTICLE 4 - INSTALLATIONS, REPAIRS & MAINTENANCE...............................9
4.1 Installations.............................................9
4.2 Approval of Material Installations........................9
4.3 Installations Surrendered.................................9
4.4 Abandonment of Installations..............................9
4.5 Repairs and Maintenance..................................10
ARTICLE 5 - CONDEMNATION/DESTRUCTION OF PROPERTY..............................11
5.1 Condemnation.............................................11
5.2 Damage and Destruction of Leased Property................11
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES....................................11
6.1 Representations and Warranties of Landlord...............11
6.2 Representations and Warranties of Tenant.................13
6.3 Covenants of Landlord....................................13
6.4 Covenants of Tenant......................................14
ARTICLE 7 - COMPLIANCE WITH LAWS..............................................14
7.1 Tenant Responsible for Compliance........................14
7.2 Contests to Compliance...................................14
ARTICLE 8 - PHYSICAL CONDITION OF PROPERTY....................................15
8.1 Tenant Accepts Condition of Leased Property..............15
ARTICLE 9 - RIGHT OF ENTRY....................................................15
9.1 Right to Inspect.........................................15
9.2 Right to Perform Testing.................................15
9.3 Right to Perform Certain Acts............................15
9.4 Landlord Liable for Damages..............................15
ARTICLE 10 - INDEMNIFICATION..................................................16
<PAGE>
10.1 Landlord Liability Limited...............................16
10.2 Tenant Liability Limited.................................16
10.3 Indemnification by Tenant................................16
10.4 Indemnification by Landlord..............................17
10.5 Indemnification Obligation Continuing....................18
10.6 Indemnification Procedures...............................18
ARTICLE 11- INSURANCE.........................................................18
11.1 Tenant's Insurance.......................................18
11.2 Landlord's Insurance.....................................19
11.3 Waiver of Recovery Rights................................19
ARTICLE 12 - EVENTS OF DEFAULT................................................19
12.1 Tenant Defaults..........................................19
12.2 Landlord Defaults........................................19
12.3 Remedies.................................................20
12.4 Additional Remedies of Landlord..........................20
12.5 Additional Remedies of Tenant............................21
12.6 Not Released.............................................21
12.7 TSD Permit...............................................21
12.8 Mitigation...............................................21
12.9 Shortening of Cure Periods...............................21
ARTICLE 13 - TERMINATION......................................................21
13.1 Surrender of Leased Property.............................21
13.2 Closure of Leased Property...............................21
13.3 Noncompete Obligation of Landlord........................21
13.4 Termination for Force Majeure............................22
13.5 Obligation to Remove.....................................22
13.6 Removal of Tenant from Government Permits and
Approvals................................................22
ARTICLE 14 - MISCELLANEOUS....................................................22
14.1 Binding Effect...........................................22
14.2 Notices..................................................22
14.3 Memorandum of Lease......................................23
14.4 Severability.............................................23
14.5 Amendments...............................................24
14.6 Appendices...............................................24
14.7 Captions.................................................24
14.8 Governing Law............................................24
14.9 Waiver...................................................24
ARTICLE 15 - DISPUTE RESOLUTION...............................................24
15.1 Arbitration..............................................24
15.2 Forum Selection: Venue...................................24
ARTICLE 16 - RIGHT OF FIRST REFUSAL...........................................24
16.1 Grant of Right...........................................24
16.2 Third Party Offer........................................24
16.3 Acceptance/Rejection.....................................25
16.4 Definition of "Third Party"..............................25
<PAGE>
Appendix A: Survey ..................................................27
Appendix B: Legal Description of Property............................27
Appendix C: Exceptions to Landlord's Representations.................27
Appendix D: Description of Existing Right of First Refusal...........27
<PAGE>
LEASE AGREEMENT
This Lease Agreement ("Lease") is made as of this 11 day of May,
1998 ("Lease Commencement Date") by and between Mercury Refining Company, Inc.,
a New York corporation ("MERECO"), and 26 Railroad Ave., Inc., a New York
corporation ("26 Railroad"), each with a principal place of business located at
1218 Central Avenue, Albany, New York 12205 (MERECO and 26 Railroad are
collectively referred to herein as the "Landlord") and MWS New York, Inc., a
Minnesota corporation ("Tenant"), with a principal place of business located at
302 North River Front Drive, Mankato, Minnesota 56001-3548 (Landlord and Tenant
are collectively referred to herein as the "Parties").
ARTICLE 1- DEFINITIONS
As used in this Lease, the following DEFINITIONS shall apply:
1.1 "ACCESS EASEMENT RIGHTS" shall mean the access easement rights
to the Property from Railroad Avenue over what is commonly referred to as the
"Western Driveway," which access easement rights were created in Section 3 of
that certain Agreement between 26 Railroad Avenue, Inc., Mercury Refining Co.,
Inc. and Albany Pallet & Box Co., Inc. dated March, 1996, which was recorded in
Liber 2600, cp. 261 and which was modified by a letter amendment dated April 17,
1998 (the "Settlement Agreement"). The Western Driveway is depicted on the
survey which is attached as Exhibit A to the Settlement Agreement.
1.2 "ADDITIONAL RENT" shall mean all sums of money, costs, taxes,
expenses or charges, interest or fees (including, but not limited to, attorneys
fees) of every kind or amount whatsoever (other than the fixed rent set forth in
Section 2.4(a)) which Tenant specifically agrees to pay to Landlord or which
otherwise become due and payable by Tenant under this Lease.
1.3 "AFFILIATE" shall mean any person or entity which controls, is
controlled by, or is under common control with a party or any director, officer,
employee, agent, contractor, licensee or representative of the party or any of
the foregoing.
1.4 "COMMON AREA" means that portion of the Property containing all
of the following:
(a) All paved areas helpful, necessary and convenient to
the operation of Tenant's business operations (including but not
limited to parking places);
(b) All helpful, necessary and reasonable ways of
access; and
(c) That portion of the Phase 1 Building consisting of
the bathrooms, the locker rooms, showers, lunchroom and office space
and access ways to same,
all as depicted on APPENDIX A annexed hereto.
1.5 "CONTAINER STORAGE BUILDING" is that building located on the
Leased Property permitted and operated as a hazardous waste storage facility
pursuant to the TSD Permit for mercury-contaminated waste as depicted on
APPENDIX A annexed hereto.
<PAGE>
1.6 "CORRECTIVE ACTION" means (i) the investigations and remedial
activity required (now or in the future) under the TSD Permit to address Past
Releases and Future Releases of Hazardous Substances at, from or associated with
the Property, (ii) the investigation and remedial activity in connection with
any Environmental Laws or associated with any Hazardous Substance required by
any Government Entity in connection with Past Releases and Future Releases
related to the Property, (iii) any action required to be taken by Landlord
pursuant to any consent orders or agreements entered into by Landlord, and (iv)
any action required by any Law that Landlord must take to address Past Releases
and Future Releases in connection with its ownership of the Property or its
activities or omissions on the Property at any time in the past, present or
future. Past Releases means Releases that occurred due to activities conducted
or failed to have been conducted prior to the Lease Commencement Date, whether
or not such Release is now known. Future Releases means Releases that occur or
are discovered in the future due to activities of Landlord or any other third
party which occurred prior to the Lease Commencement Date, which become known
after the Lease Commencement Date and which are due to actions or omissions of
Landlord or any third party (other than Tenant or Tenant's Affiliates or any
invitee of either) which occur after the Lease Commencement Date. Past Releases
and Future Releases include but shall not be limited to Releases on, from or
associated with the Property.
1.7 "DEC" means the New York Department of Environmental
Conservation and all successor agencies thereto.
1.8 "ENVIRONMENTAL LAWS" means all applicable federal, state, local
laws, rules, regulations, codes, ordinances, orders, decrees, directives,
permits, licenses and judgments relating to pollution, contamination or
protection of the environment (including, without limitation, all applicable
federal, state, local laws, rules, regulations, codes, ordinances, orders,
decrees, directives, permits, licenses and judgments relating to any Hazardous
Substances in effect as of the date of this Agreement), including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportations Act, as amended (49 U.S.C. Sections 1801, et seq.),
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901,
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601,
et seq.) Articles 15 and 27 of the New York State Environmental Conservation
Law.
1.9 "GOVERNMENT ENTITY" means the United States, the State of New
York, the County of Albany, the Town of Colonie, the Town of Guilderland, and
any and every other agency, department, commission, rule making body, bureau,
instrumentality and/or political subdivision of government of any kind
whatsoever, now existing or hereafter created, now or hereafter having
jurisdiction over the Property, and/or the use, occupancy, possession, operation
and/or maintenance of the Property, and the New York Board of Fire Underwriters
(and any successor organization, or any similar insurance rate-making body).
1.10 "GOVERNMENT PERMITS AND APPROVALS" mean all permits, licenses,
approvals, authorizations, consents or registrations, present or future,
required by any applicable Law in connection with the ownership, use and/or
operation of the Leased Property.
1.11 "HAZARDOUS SUBSTANCE" means, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea-formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials, any dangerous, toxic or hazardous pollutant, contaminant,
chemical, waste, material or substance as defined in or governed by any federal,
state or local law, statute, code, ordinance, regulation, rule or other
requirement relating to such substance or otherwise relating to the environment
or human health or safety, including without limitation any waste, material,
substance, pollutant or contaminant that might
<PAGE>
cause any injury to human health or safety or to the environment or might
subject Landlord or Tenant to any imposition of costs or liability under any
Environmental Law.
1.12 "INSTALLATIONS" means the installation or construction of
immoveable fixtures and equipment of every kind whatsoever affixed or
incorporated in or upon the Leased Property after the Lease Commencement Date,
and all additions, alterations, modifications, or improvements of every kind
whatsoever made in, to or upon the Leased Property after the Lease Commencement
Date. "Installations" shall include (but not be limited to) equipment; lifts;
engines; boilers; heating, ventilating and air conditioning equipment; ducts;
pipes; conduits wiring, and fittings; paneling; partitioning; railings; lighting
fixtures; plumbing equipment and fixtures; window fixtures; and fire alarm,
protection and suppression equipment. The term "Material Installations" includes
Installations that cost in excess of $25,000 (including design, construction and
materials), but excludes loading docks.
1.13 "LAW" or "LAWS" means each and every law, rule, regulation,
order, ordinance, statute, requirement, code, policy, guideline, interpretation,
decision, order, directive or executive mandate of any kind whatsoever, present
or future, issued by any Government Entity applicable to or affecting the
Property, and/or the use, occupancy, possession, operation, and/or maintenance
of the Leased Property including but not limited to all Environmental Laws.
1.14 "LEASE COMMENCEMENT DATE" shall mean the date as set forth in
Section 2.3(a).
1.15 "LEASED PROPERTY" shall mean and include a right of access
pursuant to the Access Easement Rights and those portions of the Property which
are depicted on APPENDIX A attached hereto and which consist of the following:
(a) The Container Storage Building, including all
fixtures and appurtenances thereto; and
(b) The Common Area together with all improvements now
or hereafter located thereon and all easements, rights, privileges
and appurtenances incident thereto.
1.16 "MATERIAL" means a condition, event or occurrence of such
significance that it materially adversely affects (a) the condition and/or value
of the Leased Property; or (b) the ability of the parties to perform their
respective obligations under this Lease.
1.17 "PHASE I BUILDING" means that building (including fixtures)
housing the mercury recycling equipment and such other machinery and equipment
necessary or convenient to the processing of mercury contaminated waste as
depicted on the survey attached hereto as APPENDIX A.
1.18 "PRECIOUS METALS OPERATION" shall mean any and all components
to the processing of materials, including, without limitation, silver oxide
batteries, dental amalgam and related dental alloys and wastes, for the
recapture of precious metals therein.
1.19 "PROPERTY" means that property commonly referred to as the
southern portion of 26 Railroad Avenue, Albany, New York which is depicted on
APPENDIX A and legally described on APPENDIX B attached hereto.
1.20 "RELEASE" and "THREATENED RELEASE" has the same meaning as
given to that term in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C.
<PAGE>
Section 9601, et seq.), and the regulations promulgated thereunder, and shall
include without limitation, the spilling, leaking, disposing, discharging,
emitting, seeping, depositing, ejecting, leaching, escaping or any other release
or threatened release, however defined, whether intentional or unintentional,
past, present or future, of any Hazardous Substance.
1.21 "TENANT'S PROPERTY" shall mean all movable industrial equipment
and machinery, furniture, computers, office equipment and machinery, and other
items of personal property of Tenant, which can be removed without damage to the
Leased Property.
1.22 "TSD PERMIT" means the permit issued to Landlord by the New
York Department of Environmental Conservation and the U.S. Environmental
Protection Agency pursuant to 6 NYCRR Part 373 and 40 C.F.R. Part 264,
respectively, to store hazardous waste in the Container Storage Building, and
any renewal, extension or replacement thereof.
ARTICLE 2 - LEASED PROPERTY
2.1 LEASED PREMISES. (a) Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the Leased Property; provided that Landlord shall
retain an irrevocable nonexclusive license to use the Common Area, including a
right of access thereto; and (b) Landlord agrees not to unreasonably interfere
with the business operations of Tenant in the Common Area.
2.2 ACCESS EASEMENT RIGHTS.
(a) Section 3 of the Settlement Agreement provides that
26 Railroad Avenue, Inc. may relinquish its right to and use of the
Access Easement Rights at any time. Mercury Refining Co., Inc. and
26 Railroad Avenue, Inc. hereby agree that neither they nor any
party which may hereafter have any interest in the Property shall
have the right to relinquish the Access Easement Rights or any
tenant's right to and use of the Access Easement Rights and they
hereby agree that neither they nor any other party which may
hereafter have any interest in the Property shall have the right to
modify the Access Easement Rights or their tenant's rights to and
use of the Access Easement Rights in any way without obtaining the
express prior written consent of the Tenant, which consent shall not
be unreasonably withheld, conditioned or delayed provided that the
access to the Property from Railroad Avenue shall not be adversely
affected in a material way by such modification.
2.3 TERM.
(a) The term of this Lease shall commence at 12:00 a.m.
on the 12th day of May, 1998 (the "Lease Commencement Date") and
shall expire unless earlier terminated or extended as provided
herein, at 12:00 a.m. on May 11, 2001. The initial term and
extensions thereof pursuant to the terms of this Lease shall be
referred to herein as the "Lease Term" or "Term."
(b) Provided that no Event of Default (as set forth in
Section 12.1) exists as of the time Tenant exercises its option for
an Extended Term, Tenant shall have the right and option (an
"Extension Option") to extend the Lease Term prior to the expiration
of the then current Lease Term for the following additional
extension terms (individually an "Extended Term" and collectively,
the "Extended Terms"):
(i) The First Extended Term of two (2) years
shall commence on May 12, 2001 and expire on May 11,
2003;
<PAGE>
(ii) The Second Extended Term of four (4)
years shall commence on May 12, 2003 and expire on May
11, 2007;
(iii) The Third Extended Term of three (3)
years shall commence on May 12, 2007 and expire on May
11, 2010;
Landlord must notify Tenant in writing within five (5) business days
after Landlord's receipt of Tenant's Exercise Notice (as defined
below) if Landlord believes that an Event of Default by Tenant
exists and precisely what actions Tenant must take to cure such
Event of Default. If Landlord fails to provide such notice, Landlord
waives any right to object to the validity of Tenant's exercise of
the Extension Option. If Landlord notifies Tenant that an Event of
Default existed at the time Landlord received Tenant's Exercise
Notice, Tenant shall have a period of thirty (30) days to cure such
Event of Default and if such Event of Default is cured within such
thirty (30) day period, Tenant's exercise of the Extension Option
shall remain valid.
(c) Tenant's right to extend the Lease Term for any
Extended Term shall be exercised by Tenant's delivery of written
notice (an "Exercise Notice") in accordance with Section 14.2 to
Landlord of its intention to extend the then current Term, which
notice shall be delivered at least three (3) months prior to the
expiration of the then current Term. Tenant's failure to give such
written notice with respect to the extension of the Lease for any
Extended Term shall be deemed a waiver of its right to so extend the
Lease, but only if Landlord shall have notified Tenant in writing
(the "Reminder Notice") of Tenant's failure to exercise its
Extension Option in a timely manner and such failure continues for
ten (10) days after Tenant's receipt of the Reminder Notice.
(d) Notwithstanding any other term of this Lease, upon
the occurrence of any of the following events, Tenant shall have the
option to terminate this Lease: (i) if Landlord or Tenant receives
notice that the TSD Permit is being or will be revoked or not
renewed for any reason, or (ii) if Landlord or Tenant receives
notice that the TSD Permit is being modified so that such
modification adversely affects in a material way the ability of
Tenant to utilize the Leased Property for Tenant's intended purpose;
provided, however, that such modification to the TSD Permit was not
caused by Tenant's negligent acts, or (iii) if any of the events set
forth in (i) or (ii) actually occurs. The Lease shall be terminated
on the thirtieth (30th) day following Tenant giving written notice
to Landlord of Tenant's intent to terminate the Lease.
2.4 RENT.
(a) Annual fixed rent on the Leased Property during the
initial Lease Term and the First Extended Term shall be Seventy Five
Thousand Dollars ($75,000) per year, which Tenant agrees to pay in
lawful money of the United States in equal monthly installments of
Six Thousand Two Hundred Fifty Dollars ($6,250) in advance on the
first day of each month at the office of Landlord or such other
place as Landlord may designate in writing. All rent and other
amounts due hereunder shall be prorated for any partial month during
which Tenant occupies the Leased Property.
(b) Tenant shall pay Additional Rent as such may become
due and payable by Tenant under this Lease. Landlord shall have the
same rights and remedies for Tenant's failure to pay any Additional
Rent as for Tenant's failure to pay the fixed rent in accordance
with Section 2.4(a).
(c) Except as otherwise provided in the Lease, Tenant's
obligation to pay all fixed rent payable hereunder shall be absolute
and unconditional and shall be paid without notice.
<PAGE>
(d) Any liability of Tenant for payment of any money
required to be paid pursuant to this Lease during the Lease Term (as
such Lease Term may be shortened by early termination as provided
for herein) shall survive the termination or expiration thereof. Any
and all liabilities or obligations of Landlord to be paid or
performed by Landlord pursuant to this Lease during the Lease Term
(as such Lease Term may be shortened by early termination as
provided for herein) shall survive the termination or expiration
thereof.
(e) Notwithstanding the foregoing, the parties agree
that, pursuant to section VII.B. of the Order In the Matter of 26
Railroad Avenue Site by Mercury Refining Company, Inc. and MWS New
York, Inc., Index No. D3-0001-96-42 (the "Order"), beginning on June
1, 1998 and continuing on the first day of each month through April
1, 2001, Tenant shall pay $2,084.00 of each monthly installment of
the fixed rent payment payable to Landlord under Section 2.4(a) of
this Lease to the New York State Department of Environmental
Conservation (the "DEC") and Tenant shall pay $2,060.00 of the
monthly installment of the fixed rent payment which is due on May 1,
2001 to the DEC. Such payments to the DEC by Tenant shall satisfy
Tenant's obligation to pay such portion of the fixed rent payments
to Landlord.
2.5 ADJUSTMENT OF FIXED RENT. For each Extended Term following the
First Extended Term, Tenant shall pay to Landlord a fixed rent equal to the
greater of (i) Fifty Thousand Dollars ($50,000), or (ii) the then current
"Market Rent" determined pursuant to this Section 2.5:
(a) "Market Rent" means the annual rent which a landlord
would receive by then renting the property in question assuming the
landlord to be a prudent person willing to lease but being under no
compulsion to do so, assuming the tenant to be a prudent person
willing to lease but being under no compulsion to do so, assuming a
lease term equal to the term in question, and assuming a lease
containing the same terms and provisions as those contained in this
Lease; provided that Market Rent shall not include or take into
consideration any Installations or other improvements to the Leased
Property made by Tenant after the Lease Commencement Date.
(b) Landlord shall initially determine the Market Rent
for the Extended Term and give Tenant notice of such determination
not later than thirty (30) days after Landlord receives Tenant's
Exercise Notice, failing which the annual fixed rent for that
Extended Term shall be the same as the annual fixed rent in effect
at the time Tenant delivers the Exercise Notice.
(c) If Tenant does not agree with Landlord's
determination of Market Rent, Tenant shall give notice to Landlord
of such disagreement within twenty (20) days after Landlord gives
notice to Tenant under Section 2.5(b). If Tenant fails to give such
notice of disagreement for any reason, then Tenant shall be bound by
Landlord's determination of Market Rent.
(d) If Tenant gives Landlord notice of disagreement
within the time permitted, each party will choose a person with at
least five (5) years experience as a commercial/industrial real
estate appraiser in the Albany, New York area who shall be a member
in good standing of the American Institute of Real Estate Appraisers
(or successor organization or if no such organization exists, then
persons of similar professional qualification), with the designation
M.A.I., and give notice of the name and address of such person to
the other within thirty (30) days of the notice of disagreement from
Tenant. If only one party appoints an appraiser, then the lone
appraiser shall within twenty (20) days render his or her opinion as
to the Market Rent. If each party appoints an appraiser, they shall
meet and attempt to agree upon the Market Rent within twenty (20)
days. If the two appraisers cannot reach agreement as to Market
Rent, then those two persons shall within the twenty (20) day period
select a third person who is experienced in the determination of
commercial/industrial rental rates for similar space in the Albany,
New York area and the
<PAGE>
three appraisers shall make a determination of Market Rent as
expeditiously as possible thereafter and in any event within thirty
(30) days after the selection of the third appraiser. The
determination of the appraisers shall be made as follows:
(i) Each appraiser will independently
determine the Market Rent and then all will meet and
simultaneously disclose to the others their respective
determinations.
(ii) If neither the highest nor the lowest
determination differs from the middle determination by
more than ten percent (10%) of such middle
determination, then the Market Rent shall be the average
of all three determinations.
(iii) If subparagraph (ii) does not apply,
then the Market Rent shall be the average of the two
determinations which are closest to each other.
(iv) The appraisers shall promptly notify
Landlord and Tenant of each of their separate
determinations and the resulting Market Rent. The
determination of Market Rent pursuant to this procedure
shall be final, binding and conclusive upon Landlord and
Tenant and may be enforced in a court of competent
jurisdiction.
(e) Each party will pay any and all fees and expenses
incurred in connection with such party's appraiser and the fees and
expenses for the third appraiser will be borne equally by the
parties.
(f) Notwithstanding the foregoing, if Tenant is not
satisfied with the determination of Market Rent by the appraisers,
Tenant shall have the right to rescind its exercise of the Extension
Option and in such event Tenant shall be responsible for paying the
cost of all of the appraisers.
(g) Notwithstanding the foregoing, the Market Rent
during any Extended Term shall not be more than Seventy-five
Thousand Dollars ($75,000) per year.
2.6 DELIVERY. Landlord shall deliver possession of Leased Property
to Tenant on the Lease Commencement Date.
2.7 SECURITY. On or before the Lease Commencement Date, Tenant shall
deposit the sum of $6,250 with Landlord as security for the full and faithful
performance by Tenant of each and every term, covenant and condition of this
Lease. While any Event of Default exists hereunder with respect to any of the
terms, provisions, covenants and conditions of this Lease, including, but not
limited to (i) payment of any rent or Additional Rent, (ii) closure of the TSD
Permit in accordance with Section 13.2, and (iii) removal of Hazardous
Substances in accordance with the provision of Section 13.4(e) hereof, Landlord
may use, apply, or retain the whole or any part of the security so deposited for
the payment of any such rental payment in default or for any other reasonable
sum which Landlord may expend or be required to expend by reason of Tenant's
default, whether such damage or deficiency accrues before or after summary
proceedings or other re-entry by Landlord. If there is no Event of Default by
Tenant at the expiration or termination of this Lease, the security deposit or
any balance thereof after deducting a reasonable amount to render Tenant in
compliance shall be returned to Tenant within ten (10) days after the expiration
or termination of this Lease.
2.8 PERMITTED USES.
(a) Tenant may use and occupy the Leased Property for
all lawful purposes including but not limited to the management and
operation of a mercury processing, recycling and refining business
<PAGE>
and operation of a permitted treatment, storage and disposal
facility for mercury-contaminated waste and other Hazardous
Substances, in accordance with the TSD Permit and all other existing
and future Government Permits and Approvals obtained by Tenant;
provided, however, Tenant may not dispose of mercury contaminated
waste or other Hazardous Substances on the Leased Property.
(b) Tenant shall not use or knowingly permit any part of
the Leased Property to be used for any unlawful purpose, or any
purpose other than that specified in subsection (a). Tenant shall
not use or occupy or permit the Leased Property to be used or
occupied, nor do or permit anything to be done in or on the Leased
Property, in any manner which will in any way violate any existing
or future Government Permit or Approval or make void or voidable any
insurance then in force with respect to the Leased Property, or
which will cause or be likely to cause structural damage to any
building or structure or any part thereof, or which will constitute
a public or private nuisance.
(c) Tenant shall not use any part of the Leased Property
for a Precious Metal Operation, except as authorized in that certain
Asset Purchase Agreement dated March 11, 1998 between Tenant, 26
Railroad, MERECO, David Cohen and Leo Cohen (the "Asset Purchase
Agreement").
2.9 RESTRICTIVE USE OF PROPERTY. As a material inducement to
Tenant's execution of this Lease, Landlord hereby covenants that for so long as
this Lease is in effect, Landlord shall not use any portion of the Property, and
Landlord shall not enter into any lease, license, use or other agreement which
would permit any other party to use any portion of the Property, for retorting
or refining mercury (except for minimal mercury retorting in connection with
Landlord's Precious Metal Operation) and Landlord agrees that this covenant is
intended to be binding upon any party (including Landlord), that now or
hereafter owns the Property or any portion thereof, including but not limited to
the Leased Property, and their successors and assigns and is intended to be a
covenant that shall run with the land. Landlord agrees that this restriction
shall be filed of record against the Property.
ARTICLE 3 - TAXES & PROPERTY EXPENSES
3.1 TAXES. Landlord shall pay all real estate taxes which are
imposed by any Government Entity upon or with respect to the use, occupancy,
possession, operation and/or maintenance of the Property. For the purpose of
Article 3 hereof, real estate taxes shall include, without limitation, (a)
taxes, rates and assessments, general or special, levied or imposed on the
Property, (b) water and sewer charges, rates and installation, repair and
replacement charges, (c) assessments for sewer, water, roads, curbs, gutters and
sidewalks, (d) costs and fees for licenses and permits including with respect to
Government Permits and Approvals, with the exception of costs and fees for those
licenses and permits assumed by Tenant under Section 6.4(b), (e) service charges
with respect to fire and police protection, security or street maintenance and
lighting, and (f) interest and costs with respect to any of the foregoing
(collectively, "Taxes"); provided, however, Landlord shall not pay and Tenant
shall pay taxes imposed upon revenues or income from Tenant's business
operations and taxes or fees pertaining to the TSD Permit.
3.2 LIEN PAYMENT RIGHTS. If Landlord fails to pay when due any Taxes
or any other amount whatsoever which is secured by or constitutes a lien against
the Property which may be foreclosed and which might, in Tenant's reasonable
opinion, jeopardize Tenant's leasehold interest in the Leased Property and
Landlord fails to pay such Taxes or other amount within thirty (30) days after
receiving written notice from Tenant (or sooner in the event foreclosure is
imminent), then Tenant shall have the right to pay such Taxes or other amount
and deduct the amounts thus expended together with interest thereon at ten
percent (10%)
<PAGE>
per annum from the next installments of fixed rent, Additional Rent and/or any
other amounts owed Landlord by Tenant.
ARTICLE 4 - INSTALLATIONS, REPAIRS & MAINTENANCE
4.1 INSTALLATIONS. Tenant may make Installations to the Leased
Property without Landlord's consent, except that Tenant shall make no Material
Installations in or to the Leased Property without Landlord's prior written
consent as provided for in Section 4.2, which consent shall not be unreasonably
withheld, conditioned or delayed. Subject to the prior written consent of
Landlord, and to the provisions of this Article, Tenant, at Tenant's expense,
may make Material Installations in or to the Leased Property.
4.2 APPROVAL OF MATERIAL INSTALLATIONS. Before making any Material
Installations, Tenant shall comply with the following:
(a) Tenant shall submit reasonably detailed final plans
and specifications and working drawings (collectively, "Plans") of
the proposed Material Installations at least ten (10) days before
the date it intends to commence the Material Installations.
(b) The Material Installations shall not be commenced
until after Landlord has received a notice from Tenant stating the
date the Material Installations are to commence so that Landlord can
post and record an appropriate notice of nonresponsibility. If
Landlord fails to respond within ten (10) days, the Plans shall be
deemed approved. The Material Installations shall be approved by all
appropriate Government Entities and all applicable Government
Permits and Approvals shall be obtained before commencement of the
Material Installations. Landlord shall cooperate with Tenant in
securing all necessary Government Permits and Approvals.
(c) All Material Installations shall be completed with
due diligence in compliance with the Plans and all Laws.
(d) Before commencing the Material Installations and at
all times during construction, Tenant agrees to carry and will
require Tenant's contractors and subcontractors to carry such
workers compensation, general liability, personal and property
damage insurance as Landlord may reasonably require.
4.3 INSTALLATIONS SURRENDERED. Any Installations made shall remain
on and be surrendered with the Leased Property on expiration or termination of
the Lease Term, provided, however, (a) Tenant may elect, by giving written
notice to Landlord within thirty (30) days before the expiration of the Term, or
within thirty (30) days after termination of the Term, to remove any
Installations that Tenant made to the Leased Property, and (b) Landlord may
elect, by giving written notice to Tenant within thirty (30) days before the
expiration of the Term, to require Tenant to remove any Installations that
Tenant made to the Leased Property, except any loading dock.
4.4 ABANDONMENT OF INSTALLATIONS. All Installations not removed by
Tenant in accordance with a written notice provided in accordance with Section
4.3 shall be deemed abandoned property (hereinafter "Abandoned Leased
Property"). Without liability of any kind whatsoever to Tenant, Landlord may
retain, remove, sell, destroy or otherwise dispose of all (or any part of) any
Abandoned Leased Property.
<PAGE>
4.5 REPAIRS AND MAINTENANCE.
(a) Tenant's Obligations. Except as otherwise expressly
provided herein, throughout the Lease Term, Tenant, at Tenant's
expense, will perform all necessary routine maintenance of the
Leased Property, interior and exterior, except for the Common Area
which shall be Landlord's responsibility and except for the Access
Easement Rights. Tenant, at Tenant's expense, will cleanup any
debris in the Common Area other than the Phase I Building if such
debris resulted from Tenant's or Tenant's Affiliate's or their
invitees' use of the Common Area.
(b) Landlord's Obligations. Throughout the Lease Term,
Landlord shall, at Landlord's Expense, maintain, repair and replace
all structural members, walls, footings, roofs, floors and doorways
and other material parts of the buildings located on the Leased
Property and the parking lots and driving lanes, and shall maintain,
repair and replace all mechanical, plumbing, electrical, heating,
ventilating and air conditioning systems and all utility metering
equipment and facilities and other parts of the Leased Property;
except that Tenant shall be responsible for maintenance of all
Installations, Material or otherwise, and, subject to the provisions
of Section 11.3, Tenant shall be responsible for the repair or
replacement of all structures, systems and facilities damaged to the
extent caused by Tenant's or Tenant's Affiliates' negligence.
Landlord shall be responsible for all Corrective Action on the
Property and glass replacement upon the Leased Property. Landlord
shall, at Landlord's expense, maintain the Common Area in a clean,
safe and operable condition, except for Tenant's cleanup obligations
as set forth in Section 4.5(a) hereof, and make all necessary
repairs, replacements and improvements to the Common Area. Landlord
shall pay all utility charges and expenses pertaining to the Leased
Property; provided that, if Tenant is performing waste processing on
the Leased Premises, then during such periods Tenant shall be
obligated to pay the increased cost of the utilities used in
connection with such processing. Any maintenance, repair,
replacement or improvement performed by Landlord on the Leased
Property shall be performed by Landlord in a manner so as to
minimize any disruption to Tenant's business operations.
(c) If a Party fails to fulfill any of its obligations
in this Section 4.5 and such failure continues for ten (10) days
after written notice thereof is sent by the other party (or in the
event of any emergency to avoid further damage to the Leased
Property or Tenant's or Landlord's property or to avoid a disruption
in Tenant's business operations no notice shall be required ), the
other Party may, but shall not be required to, make such repairs and
replacements for the other Party's account, and the nonperforming
party shall pay the other party on demand, the amount thus expended.
To the extent such nondefaulting Party fulfills the obligations of
the defaulting Party as set forth herein, such nondefaulting Party
shall be entitled to receive from the defaulting Party, interest on
the amounts thus expended from the date the expenditure is paid at
an annualized rate of ten percent (10%) as well as a service fee
equal to ten percent (10%) of the amount thus expended.
(d) Notwithstanding any provision in this Section 4.5 or
any other provision of this Lease to the contrary, no provision of
this Lease is intended or shall be construed to require or impose
the obligation, responsibility or liability upon Tenant or any of
Tenant's Affiliates for the implementation of Corrective Action and
remediation of environmental contaminant conditions on, under or
adjacent to the Leased Property arising from the Release of
contaminants of whatever description, caused by or resulting from
Landlord's operations at any time prior to the Lease Commencement
Date (whether or not now known) or for any contaminants which may be
Released from any on-going operations conducted by Landlord,
Landlord's Affiliates or any of their employees, agents,
subsidiaries, lessees (other than Tenant) or related entities.
Similarly, nothing in this Section 4.5 is intended or shall be
construed to reduce the obligations on Landlord to implement and
complete Corrective Action.
<PAGE>
(e) Tenant agrees to comply with Landlord's reasonable
rules and policies for usage of the Common Area so long as Landlord
gives Tenant prior written notice of such rules and policies and
modifies such rules and policies to incorporate any reasonable
suggestions of Tenant.
ARTICLE 5 - CONDEMNATION/DESTRUCTION OF PROPERTY
5.1 CONDEMNATION. If the whole of the Leased Property is taken under
power of eminent domain or is conveyed to any entity having the power of eminent
domain under threat of condemnation, this Lease shall terminate on the day on
which the condemnor or buyer takes possession thereof. In the event of any
taking or conveyance of only a part of the Leased Property which shall, in
Tenant's judgment, interfere with Tenant's use or enjoyment thereof, Tenant may
terminate this Lease by giving Landlord written notice thereof not more than
thirty (30) days after the condemnor or buyer takes possession of the part taken
or conveyed. If a partial taking or conveyance shall not interfere with Tenant's
use or enjoyment of the Leased Property, or if Tenant does not terminate the
Lease as hereinbefore provided, then on the day on which the condemnor or buyer
takes possession of the part taken or conveyed, the annual fixed rent and all of
Tenant's other obligations herein shall be reduced in proportion to the value of
the part of the Leased Property so taken or sold, and Landlord shall to the
extent practicable restore the remaining Leased Property to its condition prior
to such partial taking or conveyance, anything elsewhere in this Lease regarding
repair or replacement to the contrary notwithstanding. Notwithstanding anything
to the contrary, Tenant shall be entitled to any award for such taking or sale
of all or part of the Leased Property and/or improvements thereon that relates
to the value of Tenant's interest in the Lease, the value of Tenant's
improvements upon the Leased Property or any of Tenant's relocation expenses.
5.2 DAMAGE AND DESTRUCTION OF LEASED PROPERTY. If the Leased
Property shall be so damaged by fire, lightning, tornado or similar catastrophe
so as to render the Leased Property untenantable or unusable to the Tenant in
whole or in part and the damage is so great that the Leased Property cannot be
rebuilt within ninety (90) days, then Tenant, at its option, may terminate this
Lease, and Tenant shall pay rent only up to the time the Leased Property became
untenantable or unusable, and shall then surrender the Leased Property to
Landlord. If the Leased Property can be made tenantable for Tenant within ninety
(90) days, Landlord shall proceed to do so, and Tenant's rent and all other
obligations due Landlord hereunder shall abate during the period the Leased
Property are untenantable or unusable.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF LANDLORD.
(a) Landlord represents and warrants that, as of the
date of execution of this Lease, it is a corporation duly created
and validly existing under the laws of the State of New York, with
full legal right, power and authority to enter into and perform its
obligations under this Lease.
(b) Landlord (i) has been duly authorized to enter into
this Lease; (ii) has the requisite approval of its shareholders and
directors; and (iii) to the best knowledge of Landlord, this Lease
will not violate any judgment, order, or Law applicable to the
Landlord.
(c) Landlord represents and warrants as of the Lease
Commencement Date:
(i) The Property complies in all Material
respects with all Laws;
<PAGE>
(ii) Landlord has obtained all Government
Permits and Approvals required for the Property by any
applicable Law;
(iii) Landlord is not subject to, has no
notice or knowledge of, and is not required to give any
notice of any environmental claim involving the Property
except as identified in the corrective action module of
the TSD Permit;
(iv) Landlord has provided or otherwise made
available to Tenant all environmental records concerning
the Property which Landlord possesses or could
reasonably have obtained;
(v) There has been no labor or materials
furnished to the Property for which payment has not been
paid;
(vi) Except as set forth in APPENDIX C
annexed hereto, there are no unrecorded mortgages,
contracts, purchase agreements, options, leases,
easements or other agreements or interests relating to
the Property;
(vii) There are no persons in possession of
any portion of the Leased Property other than pursuant
to a recorded document, or a lease which has been
disclosed to Tenant and which will be terminated at or
prior to the Lease Commencement Date;
(viii) There are no encroachments or
boundary line questions affecting the Leased Property
except as set forth in APPENDIX C;
(ix) There are no contracts, leases,
licenses, permits and certificates related to the
Property, other than those copies of which have been
made available to Tenant pursuant to the provisions of
this Agreement;
(x) The Leased Property has legal access to
Railroad Avenue;
(xi) Landlord has not received notice of any
new public improvement project(s), the cost of which a
Government entity may assess against the Property;
(xii) The Property and the improvements
thereon, and their current use, are in Material
compliance with all Government ordinances, statutes,
codes, rules, regulations and orders, including, without
limitation, zoning, building, subdivision, environmental
laws and the Americans with Disabilities Act, and with
all private restrictions (whether or not of record)
affecting the Property;
(xiii) Except as set forth in APPENDIX C,
there is no action, litigation, Government
investigation, condemnation or administrative proceeding
of any kind pending or, to the Landlord's knowledge,
threatened, against Landlord involving any portion of
the Property;
(xiv) Landlord is not in default in the
performance of any of Landlord's obligations under any
easement agreement, covenant, condition, restriction or
other instrument relating to the Property;
<PAGE>
(xv) The improvements located on the Leased
Property and all mechanical, electrical, heating, air
conditioning, drainage, sewer, water and plumbing
systems, if any, located on the Leased Property are in
good condition and repair, age and ordinary wear and
tear excepted;
(xvi) To the best of Seller's knowledge,
there are no wells located on the Leased Property which:
are constructed or maintained in such a manner that
their continued use or existence endangers ground water
quality or is a safety or health hazard; are inoperable
or not in use; or which must be sealed under state or
federal law;
(xvii) Neither the execution by Landlord of
the Lease nor the performance by Landlord of the terms
hereof will conflict with or violate any other agreement
or instrument, order or decree to which Landlord is a
party or to which Landlord is bound; and
(xviii) 26 Railroad owns fee title to the
Property.
6.2 REPRESENTATIONS AND WARRANTIES OF TENANT.
(a) Tenant represents and warrants that, as of the date
of execution of this Lease, it is a corporation duly created and
validly existing under the laws of the State of Minnesota, with full
legal right, power and authority to enter into and perform its
obligations under this Lease.
(b) Tenant (i) has been duly authorized to enter into
this Lease; (ii) has the requisite approval of its shareholders and
directors; and (iii) to the best knowledge of Tenant, this Lease
will not violate any judgment, order or Law applicable to the
Tenant.
(c) Tenant is solvent and can operate the Leased
Property in accordance with this Lease and all Government Permits
and Approvals.
6.3 COVENANTS OF LANDLORD.
(a) Landlord shall provide its full cooperation to
Tenant in obtaining any renewals or extensions of or replacements to
the TSD Permit. Tenant shall have complete control of any renewal or
extension of or replacement to the TSD Permit. Tenant will pay
Landlord's reasonable attorney's fees in connection with such
cooperation if approved in advance by Tenant.
(b) Landlord shall have the right to encumber or
mortgage the Property only if Tenant receives a Non-Disturbance and
Attornment Agreement acceptable to Tenant.
(c) Landlord shall maintain at its sole cost, all storm
water runoff related permits for the Property throughout the Term of
this Lease provided Tenant does not conduct any outdoor storage of
mercury contaminated equipment or waste material and immediately
cleans any releases of hazardous substances arising from its
operation and otherwise complies with the best management practices
in its business operations on the Leased Property as required by
such permits.
(d) Landlord shall execute any reasonable estoppel
certificates requested by Tenant within ten (10) days after any such
request be Tenant.
<PAGE>
6.4 COVENANTS OF TENANT.
(a) Tenant shall not enter into any assignment or
sublease of the Leased Property without the written consent of
Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, Tenant may,
without Landlord's consent, assign this Lease and sublet portions of
the Leased Property to any of Tenant's Affiliates and Tenant may
assign this Lease in connection with the sale of substantially all
of Tenant's assets or the assets of Tenant's Affiliates.
(b) Tenant, at Tenant's expense, shall secure, maintain
and renew, as necessary, all Government Permits and Approvals
required by any Law for Tenant's operations at the Leased Property
including the TSD Permit.
(c) Tenant shall, within ten (10) business days, notify
Landlord in writing of and provide Landlord all documents related
to, any of the following which arise in connection with the Leased
Property during the Lease Term and result from operations or
activities of Tenant, Tenant's Affiliates or their invitees: any
environmental claim, any violation of Law or Release, or any
liability or potential liability for response or for corrective
action, natural resource damage, or other harm pursuant to CERCLA,
RCRA, or any comparable state law.
(d) Tenant shall not increase the capacity of the
Container Storage Building for processable waste without Landlord's
written approval, which will not be unreasonably withheld,
conditioned or delayed.
(e) Tenant, at Tenant's expense, shall take all
reasonable actions to add itself as co- permittee to the TSD Permit
and shall perform all other and further reasonable acts required by
any Government Entity from Tenant with respect to said TSD Permit.
Tenant may terminate the TSD Permit (in compliance with any
applicable Laws) to the extent that Tenant determines that
maintaining the TSD Permit is not in the best interest of its
business or its shareholders and subject to Landlord's right and
election to maintain the TSD Permit after termination of this Lease
as set forth in Section 13.2 hereof.
ARTICLE 7 - COMPLIANCE WITH LAWS
7.1 TENANT RESPONSIBLE FOR COMPLIANCE. Except for any representation
or warranty of Landlord with respect to the Property's current compliance with
any Law as set forth in this Lease or in the Asset Purchase Agreement, Tenant
shall maintain the Leased Property in compliance, in all Material respects, with
all Laws (other than the Americans with Disabilities Act) existing as of the
Lease Commencement Date and be responsible for making any notification or report
concerning the Leased Property to a Government Entity required to be made by any
Law. Notwithstanding the foregoing, Landlord shall bear all responsibility, cost
and expense in connection with complying with and maintaining all storm water
permits and for any action required under any Law as a result of any act or
omission of Landlord on, prior to or after the Term of this Lease.
7.2 CONTESTS TO COMPLIANCE. To the extent permitted by Law, Tenant
may contest, at Tenant's expense and by appropriate proceedings, the validity or
effect of any Law (and Tenant may defer compliance during such contest);
provided, however, that:
(a) Tenant shall conduct the contest diligently;
(b) Tenant shall advise Landlord regularly as to the
status of the contest;
<PAGE>
(c) Tenant shall comply with the Law before the Leased
Property may be forfeited or the operations thereon may be
Materially adversely affected by non-compliance with such Law; and
(d) Termination or expiration of the Lease Term during
the pendency of any contest shall not relieve, or otherwise affect
in any way, (i) Tenant's obligation to diligently conduct such
contest to its conclusion, and (ii) Tenant's liability for any and
all costs and expenses of such contest, including, without
limitation, payment of any penalty, fine, settlement or judgment
imposed as a result of such contest.
ARTICLE 8 - PHYSICAL CONDITION OF PROPERTY
8.1 TENANT ACCEPTS CONDITION OF LEASED PROPERTY. Tenant acknowledges
that, except as to the representations and warranties expressly contained in
this Agreement and in the Asset Purchase Agreement, Landlord has not made and
shall not be deemed to have made, any representation or warranty, express or
implied, as to the value, compliance with specifications or legal requirements,
condition, merchantability, design, quality, durability, operation or fitness
for use or purpose of the Leased Property or any portion thereof, or any other
representation or warranty whatsoever, express or implied, with respect to the
Leased Property or any portion thereof or otherwise.
ARTICLE 9 - RIGHT OF ENTRY
9.1 RIGHT TO INSPECT. Tenant authorizes Landlord and Landlord's
authorized representative(s) to enter the Leased Property at all reasonable
times during usual business hours upon twenty-four (24) hour advance written
notice but at any time in case of emergency (and by force if necessary in such
event) to visually inspect the Leased Property and/or to perform any maintenance
or to make any repairs to the Leased Property pursuant to Section 4.5 which
Tenant has failed to perform; provided, however, that such actions shall be
taken in a manner that minimizes any interference with Tenant's business.
9.2 RIGHT TO PERFORM TESTING. Tenant shall allow Landlord, its
agents and representatives, upon reasonable written notice to Tenant and at
Landlord's reasonable discretion and expense, to inspect the Leased Property and
conduct an environmental assessment, including invasive soil or groundwater
sampling; provided, however, that such actions shall be taken in a manner that
minimizes any interference with Tenant's business. All work plans, data and
reports generated by or on behalf of Landlord shall be provided to Tenant within
five (5) business days of receipt by Landlord.
9.3 RIGHT TO PERFORM CERTAIN ACTS. Landlord and its duly authorized
agents shall have the right at all reasonable times, and upon at least
twenty-four (24) hours written notice to enter the Leased Property (i) to do all
things necessary and convenient for the performance of the Corrective Action;
provided, however, that such actions shall be taken in a manner that minimizes
interference with Tenant's business. Tenant and Landlord shall mutually agree
upon the scheduling of the Corrective Action to minimize the interference with
Tenant's business.
9.4 LANDLORD LIABLE FOR DAMAGES. Landlord shall be liable to Tenant
for damages caused to Tenant by Landlord, Landlord's Affiliates or their
invitees for any material disruption to Tenant's business and for any damages
caused to the Leased Property or any of Tenant's assets located on the Leased
Property resulting from any actions taken hereunder by Landlord, Landlord's
Affiliates or their invitees.
<PAGE>
ARTICLE 10 - INDEMNIFICATION
10.1 LANDLORD LIABILITY LIMITED. Except as otherwise provided herein
and subject to the provisions of Section 11.3, Landlord and Landlord's
Affiliates shall not be liable to Tenant for any injury or damage to persons or
property resulting from any cause of whatsoever nature unless caused by or due
to the willful acts or omissions or negligent acts or omissions or negligence of
Landlord or Landlord's Affiliates or arising from contamination on or migration
or Release from or to the Property caused by Landlord, Landlord's Affiliates or
their respective invitees, or their operations, either prior to, on or following
the Lease Commencement Date which shall include but shall not be limited to any
Corrective Action.
10.2 TENANT LIABILITY LIMITED. Except as otherwise provided herein
and subject to the provisions of Section 11.3, Tenant and Tenant's Affiliates
shall not be liable to Landlord for any injury or damage to persons or property
resulting from any cause of whatsoever nature unless caused by or due to the
willful or negligent acts or omissions or negligence of Tenant or Tenant's
Affiliates following the Lease Commencement Date; provided however, that
Landlord shall remain liable for any and all liability arising from
contamination on or migration or Release from the Property caused by Landlord,
Landlord's Affiliates or their invitees, or their operations, either prior to,
on or following the Lease Commencement Date which shall include but shall not be
limited to any Corrective Action.
10.3 INDEMNIFICATION BY TENANT. In furtherance (and not in
limitation) of the terms, covenants, conditions and provisions of this Lease and
subject to the provisions of Section 11.3, Tenant agrees to indemnify Landlord
and Landlord's Affiliates and hold Landlord and Landlord's Affiliates harmless
from and against all loss, liability, obligation, damage, penalty, settlement,
cost, charge and expense of any kind whatsoever (including, but not limited to
reasonable attorneys', engineer's, architects' fees or other expert's fees),
whensoever asserted or occurring, which Landlord and/or Landlord's Affiliates
may incur or pay out, by reason of:
(a) any failure of or by Tenant to perform or comply
with any and all of the terms, covenants, conditions and provisions
of this Lease, but only if and to the extent that such performance
or compliance may be accomplished by or is applicable to Tenant;
and/or
(b) any work or thing of whatsoever kind done in, on, or
about the Leased Property by Tenant, Tenant's Affiliates, or their
respective invitees (including, but not limited to, construction,
alterations, repairs, or similar acts of any kind whatsoever, and
whether or not authorized by this Lease), including, but not limited
to claims made under the State's Labor Law; and/or
(c) any negligent, unlawful or willful act or omission
of Tenant, Tenant's Affiliates or their invitees; and/or
(d) any injuries to persons or property occurring in,
on, or about the Leased Property caused by Tenant, Tenant's
Affiliates, or their contractors or invitees (provided, however,
that this subsection shall not apply to injuries to persons or
property caused by willful acts or omissions or negligence of or
from contamination of the Property by Landlord, Landlord's
Affiliates or their invitees or resulting from anything associated
or connected with the Corrective Action); and/or
(e) any liability for response or corrective action,
natural resource damage, or other harm pursuant to CERCLA, RCRA, the
New York Navigation Law or any other Law in any way caused, related
to or arising out of Tenant's, Tenant's Affiliates' or their
invitees' activities on the Leased Property other than Corrective
Action; and/or
<PAGE>
(f) any environmental claim or health and safety
condition (including any common law claim) in any way caused,
related to or arising out of Tenant's, Tenant's Affiliates' or their
invitees' activities on the Leased Property; and/or
(g) any violation of any Law or Release, Threatened
Release or disposal of a Hazardous Substance in any way caused by or
arising out of Tenant's, Tenant's Affiliates' or their invitees'
activities on the Leased Property.
10.4 INDEMNIFICATION BY LANDLORD. In furtherance (and not in
limitation) of the terms, covenants, conditions and provisions of this Lease and
subject to the provisions of Section 11.3, Landlord agrees to indemnify Tenant
and Tenant's Affiliates and hold Tenant and Tenant's Affiliates harmless from
and against all loss, liability, obligation, damage, penalty, settlement, cost,
charge and expense of any kind whatsoever (including, but not limited to
reasonable attorneys', engineer's, architects' fees or other expert's fees),
whensoever asserted or occurring, which Tenant and/or Tenant's Affiliates may
incur or pay out, by reason of:
(a) any failure of or by Landlord to perform or comply
with any and all of the terms, covenants, conditions and provisions
of this Lease, but only if and to the extent that such performance
or compliance may be accomplished by or is applicable to Landlord;
and/or
(b) any work or thing of whatsoever kind done in, on, or
about the Property by Landlord, Landlord's Affiliates, or their
respective invitees (including, but not limited to, construction,
alterations, repairs, or similar acts of any kind whatsoever, and
whether or not authorized by this Lease), including, but not limited
to claims made under the State's Labor Law; and/or
(c) any negligent, unlawful or willful act or omission
of Landlord, Landlord's Affiliates, or their invitees; and/or
(d) any injuries to persons or property occurring in,
on, or about the Property caused by Landlord, Landlord's Affiliates,
or their respective invitees (provided, however, that this
subsection shall not apply to injuries to persons or property caused
by willful acts or omissions or negligence of or from contamination
of the Leased Property by Tenant, Tenant's Affiliates or their
invitees); and/or
(e) any liability for response or corrective action,
natural resource damage, or other harm pursuant to CERCLA, RCRA, the
New York Navigation Law or any other Law in any way caused, related
to or arising out of the use, operation or activities (past, present
and future) by Landlord, Landlord's Affiliates or their invitees
activities on the Property, including but not limited to any and all
liabilities and costs associated with the Corrective Action; and/or
(f) any environmental claim or health and safety
condition (including any common law claim) in any way caused,
related to or arising out of the use, operation or activities (past,
present and future) by Landlord, Landlord's Affiliates or their
respective invitees activities on the Property, including but not
limited to any and all liabilities and costs associated with the
Corrective Action; and/or
(g) any violation of any Law or Release, Threatened
Release or disposal of a Hazardous Substance in any way caused by or
arising out of Landlord's, Landlord's Affiliates' or their invitees'
activities on the Property; and/or
<PAGE>
(h) any liability for response or corrective action,
natural resource damages, or other harm pursuant to CERCLA, RCRA,
the New York Navigation Law or any other Law, or any environmental
claim or health and safety condition or any violation of any Law or
Release, Threatened Release or disposal of a Hazardous Substance
existing as of the Lease Commencement Date or in any way caused,
related to or arising out of the use, operation or activities on the
Property prior to the Lease Commencement Date.
10.5 INDEMNIFICATION OBLIGATION CONTINUING. The indemnification
obligations in this Article shall terminate on the expiration or termination of
this Lease. Notwithstanding the foregoing, all of Landlord's indemnification and
other obligations related to or connected with any Corrective Action and
obligations related to or connected with environmental claims or environmental
matters shall forever survive the expiration or termination of this Lease for
any reason. To the extent that Landlord has provided Tenant with notice of any
alleged environmental violations for which indemnification is mandatory by
Tenant under Section 10.3 and which allegation is based upon an environmental
assessment of the Leased Property, the indemnification obligations of Tenant
shall survive the expiration or termination of this Lease provided the Landlord
asserts a claim hereunder within a period of one year. Said one-year period
shall not be applicable with respect to a violation by Tenant of Section 6.4(c)
hereof; in the event of such violation of Section 6.4(c), the one-year period
shall begin at the earlier of the time Tenant gives the notice required by
Section 6.4(c) hereof or Landlord discovers Tenant's violation of Section
6.4(c).
10.6 INDEMNIFICATION PROCEDURES. In the event any demands or claims
are asserted against a party entitled to indemnification hereunder ("Indemnified
Party"), or any actions, suits or proceedings are commenced against an
Indemnified Party for which the other party to this Lease ("Indemnifying Party")
is obligated to indemnify an Indemnified Party, then the Indemnified Party shall
give notice thereof to the Indemnifying Party within a reasonable amount of time
in order to permit the Indemnifying Party the necessary time to evaluate the
merits of such demand, claim, action, suit or proceeding and defend, settle or
compromise the same so that the Indemnifying Party's rights are not materially
prejudiced. Within ten (10) business days after such notice, the Indemnifying
Party shall assume the defense thereof with counsel chosen by the Indemnifying
Party or its insurer and reasonably acceptable to the Indemnified Party. The
Indemnifying Party shall not be liable for any costs or expenses incurred by a
Indemnified Party in connection with any demand, claim, action, suit or
proceeding for which the Indemnifying Party is obligated to indemnify the
Indemnified Party under this Lease, provided that the Indemnifying Party shall
have assumed the defense thereof in accordance with this Section. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom, (a) an Indemnified Party may defend against such claim or
litigation, in such manner as it may deem appropriate, at the Indemnifying
Party's expense, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party on such
terms as such Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its own counsel and at its own expense.
ARTICLE 11- INSURANCE
11.1 TENANT'S INSURANCE. Tenant shall at all times and at its
expense during the Term of this Lease maintain liability insurance on the Leased
Property with respect to bodily injury, property damage, personal injury and
advertising injury in the sum of at least $1,000,000 in the aggregate. In
addition, Tenant shall keep in force pollution legal liability insurance in the
sum of at least $2,000,000 for pollution caused by Tenant on the Leased
Property. In both cases, the Landlord shall be named as an additional insured,
and Tenant shall deliver certificates of such insurance to Landlord, with a
provision that the insurer shall
<PAGE>
undertake to give Landlord notification of cancellation of such insurance at
least thirty (30) days prior to such cancellation.
11.2 LANDLORD'S INSURANCE. Landlord shall at all times and its
expense maintain a policy of all risk property insurance for the full insurable
replacement value of all real property improvements on the Property, but in any
case not less than $1,000,000, including an endorsement for Building Ordinance
Coverage in the amount of $250,000, or higher amount if Tenant agrees to pay the
additional premium. In the event the Installations made by Tenant to the
Container Storage Building results in a material increase in the cost of such
all risk property insurance, Tenant shall pay such increase as Additional Rent.
Tenant shall be named as a loss payee as its interests appear on the all risk
property insurance policy, and Landlord shall deliver certificates of such
insurance to Tenant, with a provision that the insurer shall undertake to give
Tenant notification of cancellation of such insurance at least thirty (30) days
prior to such cancellation. Landlord agrees that the proceeds of any such
insurance shall be utilized to repair or replace the real property improvements
unless Tenant determines to terminate this Lease pursuant to Section 5.2 hereof
and shall provide Tenant reasonable assurance that the proceeds will be used in
such manner, including the escrow of such proceeds with Tenant.
11.3 WAIVER OF RECOVERY RIGHTS. Notwithstanding anything to the
contrary in this Lease, to the extent any loss is covered by insurance, Landlord
and Tenant each hereby waive any and all rights of recovery, claim, action or
cause of action, against the other, its Affiliates and each of their directors,
officers, shareholders and employees for any loss or damage that may occur to
the Leased Property, the Property and any improvements thereon or any personal
property of such party by reason of any cause, including the negligence or
willful act or omission of the other party hereto, its Affiliates and each of
their directors, officers, shareholders and employees.
ARTICLE 12 - EVENTS OF DEFAULT
12.1 TENANT DEFAULTS. Occurrence of any of the following shall
constitute an "Event of Default" by Tenant under this Lease:
(a) If Tenant shall fail to pay any installment of rent
or any other charge required to be paid by Tenant hereunder, within
(30) days after receiving written notice of such failure from
Landlord.
(b) If Tenant shall fail to perform or observe any other
term, provision, covenant, condition or requirement of this Lease to
be performed or observed and such failure shall continue for thirty
(30) days after written notice thereof from Landlord, provided that
if such failure cannot reasonably be cured within such thirty (30)
day period and Tenant commences to cure such failure within such
period and is diligently prosecuting the same, then the same shall
not constitute an Event of Default hereunder.
(c) Upon Tenant's insolvency, making an assignment for
the benefit of its creditors, appointment of a receiver, or the
filing of any action (voluntary or involuntary) by or on behalf of
Tenant for the relief of debtors, and such action is not dismissed
within sixty (60) days.
(d) Any representation and warranty made by Tenant under
or in connection with this Lease or the Asset Purchase Agreement
shall prove to have been incorrect in any Material respect when
made.
12.2 LANDLORD DEFAULTS. Occurrence of any of the following shall
constitute an "Event of Default" by Landlord under this Lease:
<PAGE>
(a) If Landlord shall fail to perform or observe any
term, provision, covenant, condition or requirement of this Lease or
the Asset Purchase Agreement on the part of Landlord to be performed
or observed, and such failure shall continue for thirty (30) days
after written notice thereof from Tenant, provided that where such
failure cannot reasonably be cured within such thirty (30) day
period and Landlord commences to cure such failure within such
period and is diligently prosecuting the same, then the same shall
not constitute an Event of Default hereunder, but in no event shall
such cure period exceed ninety (90) days.
(b) Upon Landlord's insolvency, making an assignment for
the benefit of its creditors, appointment of a receiver, or the
filing of any action (voluntary or involuntary) by or on behalf of
Landlord for the relief of debtors, and such action is not dismissed
within sixty (60) days.
(c) Any representation and warranty made by Landlord
under or in connection with this Lease or the Asset Purchase
Agreement shall prove to have been incorrect in any Material respect
when made.
(d) Landlord's failure to comply in all Material
respects with any Corrective Action obligations.
(e) A breach by Landlord of Section 2.2 of this Lease.
(f) Any default (which remains uncured after any
applicable notice and cure period) by 26 Railroad or MERECO under
the Asset Purchase Agreement or any other agreement between either
of such parties and Tenant or Tenant's Affiliates.
12.3 REMEDIES. Upon the occurrence of any Event of Default
hereunder, the nondefaulting party, may, at its option, terminate this Lease
pursuant to Article 13 by giving written notice thereof, in which event this
Lease shall cease and terminate. Upon the occurrence of an Event of Default by
Tenant, Landlord may proceed to recover possession of the Leased Property in
accordance with the provisions of Section 12.4 herein, or by any legal process
as may at the time be in operation and force in like cases relative to
proceedings between lessors and lessees, and Tenant shall pay for any court
costs relative to such proceedings and reasonable legal fees. On the occurrence
of an Event of Default by either Party, the nondefaulting Party shall be
entitled to all remedies at law or in equity and the nondefaulting Party shall
be entitled to recover its costs, including reasonable attorneys' fees, from the
defaulting party. In addition to all other remedies Tenant may have under this
Lease or other agreements with Landlord, upon the occurrence of an Event of
Default by Landlord, Tenant may, at its sole discretion, use and apply any fixed
rent or Additional Rent owed to Landlord under this Lease to pay for the
performance of any duties of Landlord hereunder which Landlord has failed to
perform, provided said failure constitutes a material breach under this Lease.
If the Event of Default by Landlord consists of the termination or material
adverse modification of the Access Easement Rights and Landlord is not using all
reasonable efforts to secure reasonable access rights from Railroad Avenue to
the Property, then Tenant shall have the right to apply any and all payments due
Landlord hereunder to any legal and other fees and expenses related to obtaining
reasonable access rights from Railroad Avenue to the Property and/or enforcing
Tenant's right to use the Access Easement Rights.
12.4 ADDITIONAL REMEDIES OF LANDLORD. Upon the occurrence of any
Event of Default hereunder by Tenant, Landlord may require that Tenant, and
Tenant shall, immediately vacate and surrender the Leased Property. If Tenant
does not so vacate and surrender, Landlord shall have the right, without further
demand or notice, to re-enter the Leased Property (Tenant hereby waiving any and
all right to any statutory notice
<PAGE>
of re-entry) and remove all persons and property therefrom. Such re-entry shall
be allowed by Tenant without interference or hindrance and Landlord shall not be
liable in damages for re-entry or be guilty of trespass. Any remedies
specifically provided for in this Section 12.4 are in addition to and not
exclusive of any other remedy available to Landlord.
12.5 ADDITIONAL REMEDIES OF TENANT. If either 26 Railroad or MERECO
fails to pay any amounts it owes Tenant or any of Tenant's Affiliates pursuant
to this Lease, the Asset Purchase Agreement or any other agreement between
either of such parties and Tenant or Tenant's Affiliates, Tenant shall have the
right to offset such amounts which have not been paid against all amounts which
are owed by Tenant to Landlord under this Lease, including the fixed rent and
any Additional Rent.
12.6 NOT RELEASED. Exercise by a nondefaulting party of a remedy set
forth in this Article 12 shall not release the defaulting party from its
obligations under this Lease for the remainder of the then current Term (namely
the period between the date the nondefaulting party exercises its remedy and the
date this Lease would have expired but for the Event of Default and/or the
nondefaulting party's exercise of its remedy) even though the remedy exercised
shall have been the termination of this Lease.
12.7 TSD PERMIT. In the event of termination of the Lease, each
party agrees to cooperate and submit the documentation necessary to DEC so that
the TSD Permit is modified to reflect the parties respective obligations.
12.8 MITIGATION. Both parties shall take all reasonable actions to
mitigate its damages upon any breach hereof by the other party.
12.9 SHORTENING OF CURE PERIODS. The period(s) in which to cure any
Event of Default by Tenant may be reduced by Landlord by writing only in the
event a shorter period is required by any Government Entity or Law.
ARTICLE 13 - TERMINATION
13.1 SURRENDER OF LEASED PROPERTY. Upon the termination or
expiration of this Lease, Tenant shall surrender the Leased Property to Landlord
in the same condition, reasonable wear and tear and insurable casualty damage
excepted.
13.2 CLOSURE OF LEASED PROPERTY. Upon the termination or expiration
of this Lease, Tenant shall implement closure of the Container Storage Building
as required under the TSD Permit. Such closure shall be performed by Tenant, at
Tenant's expense, and shall be fully and timely performed in compliance with the
closure plan made part of the TSD Permit and approved by the DEC, and in
compliance with all applicable Laws. By giving Tenant written notice prior to
Tenant's implementation of such closure, Landlord may, in its discretion, keep
the TSD Permit in effect after the expiration or termination of this Lease, but
only if Tenant is fully relieved of its closure obligations under the TSD
Permit. Nothing herein relieves Tenant of its removal obligations under Section
13.5 hereof.
13.3 NONCOMPETE OBLIGATION OF LANDLORD.
(a) If Landlord elects to maintain the TSD Permit
pursuant to Section 13.2 hereof, neither Landlord, Landlord's
Affiliates or any of their successors, assigns, lessees, licensees
or any other person or entity obtaining any interest in or right to
the Property, shall for the period of Landlord's
<PAGE>
noncompete obligation under the Asset Purchase Agreement, retort, treat, store
or manage on the Property any materials that require treatment, disposal, or
special handling because of their mercury or PCB content.
(b) In the event that the above covenant not to compete
and restrictions with respect to the Property is considered by a
court of competent jurisdiction to be excessive in its duration or
in the area to which it applies, it shall be considered modified and
valid for such duration and for such area as said court may
determine reasonable under the circumstances. In recognition of the
irreparable harm that a violation of the foregoing paragraph would
cause to Tenant, 26 Railroad and MERECO each agree that Tenant shall
have the right to enforce compliance with this section 13.3 by
specific remedies, which shall include, among other things,
temporary restraining orders and temporary and permanent
injunctions.
13.4 TERMINATION FOR FORCE MAJEURE. If an event occurs that
Materially impairs Tenant's ability to conduct Tenant's operations at the
Property for at least thirty (30) days, Tenant may terminate this Lease after
the expiration of such thirty (30) day period and the fixed rent, all Additional
Rent and any other obligations due Landlord hereunder shall be abated from the
date such event occurs. Upon termination, the obligations of the Parties shall
cease except for obligations that have accrued prior to the effective date of
such termination, any indemnification obligations set forth herein and any
closure obligation of either party pursuant to Section 13.2. If Tenant does not
elect to terminate this Lease, the fixed rent, all Additional Rent and any other
obligations due Landlord hereunder shall be abated during the existence of such
event.
13.5 OBLIGATION TO REMOVE. Prior to the end of the Lease Term (or
other expiration of this Lease), at Tenant's expense, Tenant shall:
(a) remove all of Tenant's Property from the Leased
Property;
(b) remove all Tenant's waste (whether regulated or
unregulated), and Tenant's inventory, from the Leased Property;
(c) repair all damage to the Leased Property caused by
Tenant during any such removal other than screw and nail holes and
similar minor damage; and
(d) to the extent Landlord provides written notice to
Tenant and provides reasonable supporting evidence that there exists
on the Leased Property any Material quantities of Hazardous
Substances released by Tenant during the Lease Term, perform such
corrective action as necessary to remove such Material quantities of
Hazardous Substances from the Leased Property released by Tenant
during the Lease Term subject to the terms of Section 10.5 hereof.
13.6 REMOVAL OF TENANT FROM GOVERNMENT PERMITS AND APPROVALS. Upon
termination or expiration of this Lease, Tenant shall perform all reasonable
acts to remove itself as a co-permittee to any then existing Government Permits
and Approvals, and shall perform all further reasonable acts required by any
Government Entity with respect to said Government Permits and Approvals arising
solely from Tenant's activities. Landlord shall reasonably assist Tenant in the
performance of this obligation.
ARTICLE 14 - MISCELLANEOUS
14.1 BINDING EFFECT. This Lease shall be binding upon and enure to
the benefit of Landlord and Tenant and their respective successors and permitted
assigns. Except as expressly set forth herein, there are no third parties
intended to be benefited by this Lease.
<PAGE>
14.2 NOTICES. All notices required or desired to be given by either
party to the other shall be (i) personally delivered, (ii) sent by recognized
overnight courier or by certified mail, return receipt requested, postage
prepaid, and shall be effective upon actual receipt as verified by written
acknowledgment of delivery in the case of personal or overnight delivery and by
the return receipt in the case of certified mail, or (iii) via telecopy.
If to Landlord:
Mr. David Cohen
1218 Central Avenue
Albany, New York 12205
With copy to:
Young & Rowe
Executive Woods
3 Atrium Drive
Albany, New York 12205
Attn: Kevin Young
and
Whiteman Osterman & Hanna
One Commerce Plaza
Albany, New York 12201
Attn: Leslie Apple
If to Tenant:
Brad Buscher
MWS New York, Inc.
302 North Riverfront Drive
Mankato, Minnesota 56001-3548
With copy to:
Maslon Edelman Borman & Brand, LLP
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attn: Counsel for Mercury Waste Solutions
Or to such other person, address or number as the party entitled to such notice
or communication shall have specified by notice to the other party in accordance
with the provisions of this Section. Any such notice or other communications
shall be deemed given: (i) if mailed, when deposited in the mail, properly
addressed and the postage prepaid; or (ii) if sent by telecopy, when
transmitted.
14.3 MEMORANDUM OF LEASE. Contemporaneously with the execution of
this Lease, Landlord and Tenant shall execute a Memorandum of Lease in the form
prepared by Tenant and approved by Landlord
<PAGE>
(which approval shall not be unreasonably withheld, conditioned or delayed) and
such memorandum shall be recorded at the sole cost and expense of Landlord.
14.4 SEVERABILITY. Any provision of this Lease which shall be held
invalid, void, unenforceable or illegal shall in no way affect, impair, or
invalidate any other provision, and the remaining provisions shall remain in
full force and effect.
14.5 AMENDMENTS. This Lease may not be modified or amended except in
a writing signed by all parties hereto.
14.6 APPENDICES. All appendices referenced as attached to this Lease
are incorporated herein as though set forth in full herein.
14.7 CAPTIONS. Captions used in this Lease are for convenience of
reference only and shall not define, limit or expand the terms hereof.
14.8 GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of New York.
14.9 WAIVER. A waiver by either party of a breach of any provision
of this Lease shall not operate or be construed as a waiver of any subsequent
breach by either party.
ARTICLE 15 - DISPUTE RESOLUTION
15.1 ARBITRATION. Any controversy or claim arising out of or
relating to this Lease or breach thereof, shall be settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrator may be
entered in any Court having jurisdiction thereof. The arbitration shall be held
in the County of Albany, State of New York, and shall be conducted before a
single arbitrator mutually agreeable to the parties hereto or, if no agreement
can be reached, selected by the American Arbitration Association. The
nonprevailing party agrees to pay the prevailing parties' costs of arbitration
and enforcement, including reasonable attorneys' fees.
15.2 FORUM SELECTION: VENUE. Except as other provided in Section
15.1, all questions or controversies arising out of or in any way relating to
this Agreement shall be submitted to the Albany County Supreme Court or, in the
event the Albany County Supreme Court is without subject matter jurisdiction, to
the proper Court of the State of New York having subject matter jurisdiction,
and the parties submit themselves to the personal jurisdiction of said Court as
the case may be, and any service of a summons, process or other paper in
connection with such proceeding may be made by giving notice as provided in this
Lease. If either party resorts to suit or other legal proceedings to enforce any
right or remedy hereunder, the nonprevailing party agrees to pay the prevailing
parties' costs of suit and enforcement, including reasonable attorneys' fees.
ARTICLE 16 - RIGHT OF FIRST REFUSAL
16.1 GRANT OF RIGHT. In consideration of Tenant entering into this
Lease, Landlord hereby grants, conveys and transfers to Tenant during the Term
of the Lease, subject to an existing right of refusal set forth on APPENDIX D,
the first and prior right and privilege of purchasing the Property, or to the
extent that any portion of or interest in the Property other than the entire fee
interest is subject to purchase, then such portion thereof or interest therein
(the "Offered Property") (the "Right of First Refusal").
<PAGE>
16.2 THIRD PARTY OFFER. Upon receipt by Landlord of a written offer
reasonably acceptable to Landlord to purchase the Offered Property, made in good
faith by a Third Party (the "THIRD PARTY OFFER"), Landlord shall give written
notice to Tenant of the Third Party Offer, attaching thereto a true and correct
copy of the Third Party Offer, which notice shall contain Landlord's offer to
sell the Offered Property to Tenant on the terms and conditions set forth in the
Third Party Offer (the "THIRD PARTY NOTICE").
16.3 ACCEPTANCE/REJECTION. Tenant shall have twenty (20) business
days following the day it receives the Third Party Notice to elect to accept or
reject the terms and conditions thereof. Tenant shall notify Landlord in writing
of Tenant's election to accept the terms of the Third Party Offer before the
expiration of said twenty (20) business day period (the "ELECTION PERIOD"). In
the event Tenant elects to reject the terms of the Third Party Offer or fails to
respond to the Third Party Offer, Landlord shall have the limited right to sell
the Offered Property to the Third Party pursuant to the terms of the Third Party
Offer. If Tenant elects to reject the terms of the Third Party Offer or fails to
respond to the Third Party Offer and Seller does not sell the Offered Property
to the Third Party pursuant to the terms of the Third Party Offer within sixty
(60) days after the Election Period, Tenant's Right of First Refusal shall
continue in full force and effect. Landlord may not sell the Offered Property to
the Third Party on terms different than those specified in the Third Party Offer
without first giving to Tenant the Third Party Notice required in Section 16.2.
16.4 DEFINITION OF "THIRD PARTY". As used herein, the term "Third
Party" shall mean a person or entity unrelated to, unaffiliated with, not acting
in concert with, and not connected in any manner whatsoever to Landlord or an
Affiliate of Landlord.
(SIGNATURES CONTINUE ON NEXT PAGE)
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease to
be effective as of the date first above written.
MWS NEW YORK, INC.
By: s/ Mark G. Edlund
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Name: Mark G. Edlund
Title: Its President
MERCURY REFINING COMPANY, INC.
By: s/ Leo Cohen
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Name: Leo Cohen
Title: Secretary
26 RAILROAD AVE, INC.
By: s/ David Cohen
------------------------------
Name: David Cohen
Title: President
<PAGE>
Certain Appendices to the Lease Agreement are not being filed herewith. The
Registrant undertakes to furnish a copy of any omitted Appendix to the
Commission upon request. Pursuant to Item 601(b)(2) of Regulation S-K, the
following is a list of the omitted Appendices:
LIST OF APPENDICES
Appendix A: Survey
Appendix B: Legal Description of Property
Appendix C: Exceptions to Landlord's Representations
Appendix D: Description of Existing Right of First Refusal
EXHIBIT 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of this 8th day of May, 1998, between
MERCURY WASTE SOLUTIONS, INC., a Minnesota corporation ("Borrower"), and BANKERS
AMERICAN CAPITAL CORPORATION, a Minnesota corporation ("Lender").
WITNESSETH:
WHEREAS, Borrower has requested the Lender extend to Borrower a term
loan in the amount of $1,200,000 (the "Term Loan"), the proceeds of which Term
Loan are to be used by the Borrower for the purpose of financing the acquisition
of the New York Facility (as defined below) by MWS New York, Inc., a Minnesota
corporation wholly owned by Borrower ("MWSNY"), and a revolving credit loan in
the face principal amount of $800,000 (the "Revolving Loan"), the proceeds of
which Revolving Loan will be used to fund Borrower's general working capital
needs;
WHEREAS, Lender is willing to make such Term Loan and Revolving Loan
on the terms and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
<PAGE>
"Advance" means an advance by the Lender to the Borrower
of the proceeds of either of the Notes in accordance with the terms
hereof.
"Affiliate" means any corporation, association,
partnership, joint venture or other business entity directly or
indirectly controlling or controlled by, or under direct or indirect
common control with, Borrower or any of its Subsidiaries.
"Agreement" means this Loan Agreement, as the same may
be amended, restated or modified from time to time hereafter.
"Assignments of Lease" means those certain Collateral
Assignments of Lease bearing even date herewith executed by Borrower
in favor of Lender assigning to Lender the Borrower's rights under
the Roseville Lease and the Union Grove Lease, and by MWSNY
assigning its rights under the the New York Lease, as the same may
be amended from time to time.
"Business Day" means a day on which Norwest Bank
Minnesota, National Association is open for business in Minneapolis,
Minnesota.
"Commitments" means the Revolving Loan Commitment, the
Term Loan Commitment.
"Default" means the occurrence of any event which with
the giving of notice and/or the lapse of any applicable grace period
would constitute an Event of Default hereunder.
"Event of Default" means the occurrence of an event as
described in Article VIII of this Agreement.
"Financing Statements" means that certain UCC-1
financing statement filed with the Secretary of State's Offices in
Minnesota, Wisconsin, New York, Indiana and Georgia.
"GAAP" means generally accepted accounting principles
consistently applied and maintained in the United States throughout
the period indicated, except for
<PAGE>
changes mandated by the Financial Accounting Standards Board or any
similar accounting authority of comparable standing.
"Guaranty" means that certain Guaranty bearing even date
herewith executed by MWSNY in favor of the Lender, as the same may
be amended from time to time.
"Loan Documents" means this Agreement, the Notes, the
Financing Statements, the Guaranty, the Security Agreements, and the
Assignments of Lease.
"Material Adverse Occurrence" means any occurrence,
whether or not insured against, of whatsoever nature (including,
without limitation, any adverse deter mination in any litigation,
arbitration or governmental investigation or proceeding) which will
materially adversely affect the financial condition or operations of
Borrower or materially impair the ability of Borrower to perform its
obligations under this Agreement or any instrument executed pursuant
hereto.
"Maturity Date" means (i) May 1, 2000 with respect to
the Term Note, and (ii) May 1, 1999 with respect to the Revolving
Note..
"New York Facility" means the facility leased and
operated by MWSNY located at 26 Railroad Avenue, Albany, New York.
"New York Lease" means that certain Lease Agreement
dated ________, 1998 executed by Mercury Refining Company, Inc. and
26 Railroad Ave., Inc., collectively as lessor, and MWSNY, as
lessee, together with all extensions, amendments and modifications
thereto.
"Notes" means collectively the Term Note and the
Revolving Note.
"Person" means any natural person, corporation,
partnership, joint venture, association, trust, unincorporated
organization, limited liability company, government, governmental
agency or political subdivision, or any other entity, whether acting
in an individual, fiduciary or other capacity.
<PAGE>
"Prime Rate" means the rate of interest published from
time to time in the Money Rates Column of the Money & Investing
Section of the WALL STREET JOURNAL as the "Prime Rate", as the same
may change from time to time.
"Revolving Commitment Amount" means $800,000.
"Revolving Loan Commitment" means the obligation of the
Lender to make Advances pursuant to Section 3.4 hereof.
"Revolving Note" means that certain Revolving Credit
Promissory Note bearing even date herewith in the face principal
amount of $800,000 made payable by Borrower to the order of the
Lender, as the same may be amended from time to time.
"Roseville Lease" means that certain Lease Agreement
dated February 25, 1993 executed by St. Paul Properties, Inc., as
lessor, and Professional Resources International, Ltd., as lessee,
which lessee's interest has been assigned to Borrower, as amended by
Amendment of Lease dated January 28, 1998, and as further amended
from time to time.
"Security Agreements" means those certain Security
Agreements bearing even date herewith executed by Borrower and by
MWSNY, each in favor of the Lender, as the same may be amended from
time to time.
"Security Interest" means any security interest, pledge,
lien, hypothecation or other encumbrance now or hereafter granted to
the Lender by the Borrower or MWSNY, including without limitation
pursuant to the Security Agreements and the Assignments of Leases.
"Subsidiary" means any corporation 50% or more of the
combined voting power of all classes of stock of which is owned by
Borrower either directly or indirectly through one or more
Subsidiaries.
"Term Loan Commitment" means the obligation of the
Lender to make the term loan pursuant to Section 3.1 hereof.
<PAGE>
"Term Note" means that certain Promissory Note bearing
even date herewith, made payable to the Lender's order by the
Borrower in the original principal amount of $1,200,000, as the same
may be amended, restated or extended from time to time.
"Union Grove Lease" means that certain Lease Agreement
dated as of July 15, 1997 executed by Borrower, as lessee, and Wally
Haag dba Duarnd Properties, as lessor, as amended from time to time.
1.2 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
1.3 Other Terms. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; the
words "Section," "Schedule," "Exhibit" and like references are to this Agreement
unless otherwise clearly requires; and the word "or" has the inclusive meaning
represented by the phrase "and/or." The singular includes the plural and the
singular.
ARTICLE II.
DOCUMENTS DELIVERED HEREWITH
Prior to or contemporaneously with the execution of this Agreement,
Borrower has delivered to Lender the following documents and/or instruments, in
form and substance acceptable to the Lender:
2.1 The Loan Documents.
2.2 UCC-1 Financing Statement ("Financing Statement")
executed by the Borrower for filing with the Secretary of State of
each of Minnesota, New York, Wisconsin, Indiana and Georgia and by
MWSNY for filing with the Secretary of State of New York, and
covering the collateral described in the Security Agreements and
Assignments of Lease.
<PAGE>
2.3 Certified Articles of Incorporation of each of
Borrower and MWSNY.
2.4 Certificate of Good Standing for the Borrower and
MWSNY issued by Secretary of State of Minnesota, and Certificate of
Authority to do Business for MWSNY from the Secretary of State of
New York.
2.5 Certified Resolutions of the Board of Directors of
the Borrower and of MWSNY.
(a) Authorizing the execution and delivery
by an officer or officers of Borrower and MWSNY, as
applicable, of the Loan Documents and any and all other
documents or instruments required to be executed and
delivered or delivered in connection herewith; and
(b) Identifying the officer or officers
having authority to execute and deliver the Loan
Documents and any and all other documents or instruments
required to be executed and delivered or delivered in
connection herewith.
2.6 Incumbency Certificate showing the names, title and
specimen signatures of the persons authorized to execute Loan
Documents on behalf of the Borrower and MWSNY.
2.7 Evidence of insurance covering the assets of
Borrower satisfactory to Lender.
2.8 Opinion of counsel of Borrower and MWSNY, in form
and substance acceptable to Lender and Lender's counsel.
2.9 Evidence satisfactory to Lender of the completion of
the conditions precedent to the closing of the acquisition of the
New York Facility.
2.10 Delivery to Lender of a warrant to purchase stock
of Borrower for 100,000 shares of common stock of Borrower at the
market price of such stock on the date of this Agreement.
<PAGE>
ARTICLE III.
COMMITMENTS OF THE LENDER
3.1 Term Loan Commitment. Subject to the terms and
conditions of this Agreement and of the other Loan Documents, the
Lender agrees to loan to the Borrower and the Borrower agrees to
borrow from the Lender an amount not to exceed One Million Two
Hundred Thousand and No/100 U.S. Dollars ($1,200,000), pursuant to
the terms of the Term Note. The Lender shall disburse the proceeds
of the Term Note upon the terms and conditions set forth below.
3.2 Term Note. The Term Loan shall be evidenced by the
Term Note which matures on the Maturity Date. All prepayments on the
Note may be noted by the Lender on a schedule attached to the Term
Note and shall be entered by the Lender on its ledgers and computer
records. The entries made by the Lender on its ledgers and computer
records and any notations made by the Lender on any such schedule
annexed to the Term Note shall be presumed to be accurate until the
contrary is established.
3.3 Advances of Term Note. As long as no Event of
Default has occurred and is continuing, the Lender shall make an
Advance against the Term Note for the amount of the Term Loan for
the purpose of financing MWSNY's acquisition of the New York
Facility. Borrower acknowledges and agrees that the Term Note is not
a revolving loan, and any voluntary or mandatory prepayment thereof
may not be reborrowed hereunder.
3.4 Revolving Loan Commitment. From and after the date
hereof up to and including the Maturity Date, Lender agrees to lend
to Borrower and Borrower may borrow from Lender and repay and
reborrow, regardless of the cumulative amount of Advances against
the Revolving Note, up to the Revolving Commitment Amount, subject
to the terms hereof. Borrower may obtain Advances up to the
Revolving Credit Commitment Amount, less the principal balance
outstanding on the Revolving Note at the time of the request, by
giving the Lender telephonic notice of the requested Advance.
<PAGE>
3.5 Termination of Revolving Loan Commitment. The
Revolving Loan Commitment may be terminated by Borrower at any time
upon written notice to Lender accompanied by payment in full of the
outstanding principal balance and accrued interest on the Revolving
Note and any accrued and unpaid fees. Upon receipt of such notice
and payment, Lender's obligations to make Advances hereunder shall
terminate. Lender may terminate the Revolving Loan Commitment upon
the occurrence of an Event of Default. In any event the Lender's
Revolving Loan Commitment shall automatically expire on the Maturity
Date.
3.6 General Terms.
(a) Computations. Interest on the Notes
shall be computed utilizing the actual number of days
elapsed in a year of 360 days.
(b) Time and Method of Payments. All
payments and prepayments by the Borrower on the Notes
shall be made in immediately available funds to the
Lender at its main office in Mankato, Minnesota, not
later than 2:00 p.m. (Mankato time) on the day such
payment is due. Funds received after such hour shall be
deemed to have been received by the Lender on the next
Business Day.
3.7 Interest. The unpaid principal amount outstanding on
the Notes, shall bear interest prior to maturity at a rate equal to
the Prime Rate plus six percent (6%) per annum (the "Applicable
Rate"). The Applicable Rate shall be readjusted on the first day of
each calendar quarter based upon the Prime Rate on such date.
3.8 Optional Prepayments. The Borrower may prepay the
Term Loan, in whole or in part, as provided in the Term Note. Each
partial prepayment shall be in an amount of $50,000 or an integral
multiple thereof. Each prepayment of the Term Loan shall be applied
first to accrued unpaid interest then to the unpaid installments of
the Term Loan in the inverse order of maturity.
3.9 Payments. Payments and prepayments of principal of,
and interest on, the Notes, and all fees, expenses and other
obligations under the Loan Documents payable to the Lender shall be
made without set-off or counterclaim in immediately
<PAGE>
available funds not later than 2:00 p.m., Minneapolis time, on the
dates due at the main office of the Lender in Mankato, Minnesota.
Funds received on any day after such time shall be deemed to have
been received on the next Business Day. Whenever any payment to be
made hereunder or on the Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of any interest or fees.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, Borrower
hereby represents and warrants that:
4.1 Organization, Qualification and Authorization. The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota, has the
corporate power and authority to own, lease and rent its assets and
to transact the business in which it is now engaged, and is duly
qualified and licensed to do business in every jurisdiction in which
the character of its properties or the nature of the business in
which it is engaged makes such qualification or licensing necessary.
MWSNY is a wholly owned Subsidiary of Borrower and MWSNY is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota, has the corporate power
and authority to own, lease and rent its assets and to transact the
business in which it is now engaged in Minnesota and New York.
4.2 Power and Authority. The Borrower has full power,
right and authority to execute and deliver the Loan Documents, to
borrow the funds herein provided for, and to perform and observe
each and all of the matters and things provided for in said Loan
Documents. The execution and delivery of Loan Documents and such
other documents as are required hereby and the performance or
observance of the terms hereof and thereof have been duly authorized
by all necessary corporate action of the Borrower.
<PAGE>
4.3 Ownership. The Borrower is or will be upon purchase,
the owner of all personal property described in the Security
Agreement executed by Borrower and delivered herewith as collateral,
and has no knowledge of any unrecorded claims, liens, and
encumbrances against such property.
4.4 Subsidiaries. As of the date hereof, the Borrower
has the following Subsidiaries: (i) MWSI Lamp & Ballast Recycling,
Inc., and (ii) MWS New York, Inc.
4.5 Validity of Obligations. This Agreement and each of
the other Loan Documents have been duly executed and delivered by
the duly authorized officer or officers of the Borrower and are the
legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with their respective terms,
subject only to bankruptcy, insolvency, reorganization, moratorium
or similar laws at the time in effect, affecting the enforceability
of rights of creditors generally.
4.6 Litigation. Except as set forth on Exhibit A, there
are no actions, suits or proceedings pending, or to the knowledge of
the Borrower threatened, against or affecting it, at law or in
equity, except actions, suits and proceedings fully covered by
insurance; and Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or any governmental
authority.
4.7 No Conflict; No Default. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan
Documents, does not and will not (a) violate any provision of any
law, statute, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having
applicability to the Borrower, (b) violate or contravene any
provision of the articles of incorporation or bylaws of the Borrower
, or (c) result in a breach of or constitute a default under any
mortgage, indenture, loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or
by which it or any of its properties may be bound or result in the
creation of any lien thereunder. The is not currently in default
under or in violation of any such law, statute, rule or regulation,
order, writ, judgment, injunction, decree, determination or award or
any such indenture, loan or credit agreement or other agreement,
lease or instrument in any case in which the consequences of such
default or violation could have a material adverse effect on the
<PAGE>
business, operations, properties, assets or condition (financial or
otherwise) of the Borrower.
4.8 Government Consent. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body
or authority is required on the part of the Borrower to authorize,
or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or
enforceability of, this Agreement or any of the other Loan
Documents, or to the extent such consent is required, such consent
has been obtained.
4.9 No Event of Default. No Event of Default (as
hereinafter defined) has occurred and is continuing as of the date
hereof and no event has occurred and is continuing which would be an
Event of Default hereunder were it not for any grace period
specified herein or which would become an Event of Default if notice
thereof were given to Lender.
4.10 Financial Statements. All financial statements
heretofore delivered to the Lender are true and correct in all
material respects, have been prepared in accordance with GAAP, and
fairly present the respective financial conditions of the subjects
thereof as of the respective dates thereof; no material adverse
change has occurred in the financial conditions reflected therein
since the respective dates thereof, and no additional term debt
borrowings have been made by Borrower since the date thereof other
than the borrowing contemplated hereby or term debt borrowings
previously acknowledged in writing by Lender.
4.11 Tax Returns. All Federal, State and other tax
returns of Borrower required by law to be filed have been duly filed
and all Federal, State and other taxes, assessments, and
governmental charges upon Borrower which to the knowledge of
Borrower are due and payable, have been paid.
4.12 Margin Stock. No part of the borrowings hereunder
shall be used at any time by Borrower to purchase or carry margin
stock (within the meaning of Regulation U or G promulgated by the
Board of Governors of the Federal Reserve System) or to extend
credit to others for the purpose of purchasing or carrying any
margin stock. Borrower will not use any proceeds of the Notes for
any purpose
<PAGE>
which violates, or which is inconsistent with, any regulations
promulgated by the Board of Governors of the Federal Reserve System.
4.13 Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of
Borrower to the Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of
Borrower to the Lender will be true and accurate in every material
respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading on such date.
4.14 Investment Company Act. To the knowledge of
Borrower, the Borrower is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
4.15 Environmental, Health and Safety Laws. There does
not exist any violation by the Borrower of any applicable federal,
state or local law, rule, or regulation or order of any government,
governmental department, board, agency or other instrumentality
relating to environmental, pollution, health or safety matters which
will or threatens to impose a material liability on the Borrower or
which would require a material expenditure by the Borrower to cure.
The Borrower has not received any notice to the effect that any part
of its operations or properties is not in material compliance with
any such law, rule, regulation or order of notice that it or its
property is the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to any release of
any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could reasonably be expected
to have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise) of the
Borrower taken as a whole.
4.16 Survival of Representations. All representations
and warranties contained in this Article IV shall survive the
delivery of the Notes and any investigation at any time made by or
on behalf of the Lender shall not diminish its rights to rely
thereon.
<PAGE>
ARTICLE V.
AFFIRMATIVE COVENANTS
To further induce Lender to make the requested loans, Borrower
hereby covenants and agrees that as long as any obligations are outstanding
hereunder, it will:
5.1 Use of Proceeds. Use the proceeds of the Term Note
solely for the acquisition of the New York Facility by MWSNY.
5.2 Insurance. Maintain insurance with financially sound
and reputable insurance companies or associations in such amounts
and covering such risks as are usually carried by companies engaged
in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage
thereof, and furnish to the Lender upon request appropriate evidence
of the carrying of such insurance. Borrower will obtain loss payable
endorsements on applicable insurance policies in favor of the
Borrower and the Lender as their interests appear. Borrower shall
cause each issuer to agree to provide the Lender with thirty (30)
days prior written notice of cancellation or nonrenewal.
5.3 Taxes. Promptly pay and discharge all taxes,
assessments and other governmental charges imposed upon it or upon
its income and profits, and any and all claims for labor, material
or supplies or rental charges or charges of any other kind which, if
unpaid, might by law become a lien or charge upon the Borrower's
property, provided, however, that Borrower shall not be required to
pay any such tax, assessment, charge or claim so long as the
validity thereof shall be contested in good faith, by appropriate
proceedings and Borrower shall have set aside on its books adequate
reserves therefor.
5.4 Maintenance of Assets. Maintain, keep and preserve
all of its assets, properties and equipment necessary or useful in
the proper conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time
make or cause to be made all needed renewals, replacements and
repairs so that at all times Borrower's business can be operated
efficiently.
<PAGE>
5.5 Access to Records. At any reasonable time and from
time to time, upon reasonable notice and during normal business
hours, permit the Lender or any agent or representative thereof, to
examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, Borrower, and to discuss
the affairs, finances, and accounts of Borrower with any of its
officers and members.
5.6 Financial Statements. Furnish to Lender:
(a) As soon as available and in any event
within one hundred twenty (120) days after the close of
each of its fiscal years (which may be calendar year)
the audited financial statements of the Borrower (which
shall be consolidated with all subsidiaries) at the end
of such year, all in reasonable detail, prepared by
nationally recognized independent certified public
accountants, selected by the Borrower and acceptable to
the Lender, together with such accountant's
certification to the effect that (a) as to Borrower has
been prepared in accordance with GAAP and (b) the same
fairly represent the financial condition of the Borrower
as of such date;
(b) As soon as available, but in no event
later than forty-five (45) days after the end of each of
Borrower's first three fiscal quarters, the internally
prepared balance sheet and statement of profit and loss
and surplus income and retained earnings of the Borrower
for the previous quarter and the portion of the fiscal
year then ended;
(c) From time to time such other information
pertaining to Borrower and its properties and financial
condition as Lender may reasonably request.
<PAGE>
5.7 Notification of Changes. Promptly notify the Lender
in writing of:
(i) Any litigation which might materially
and adversely affect Borrower and any of the properties
of Borrower;
(ii) The occurrence of any Event of Default
under this Agreement or under any other loan agreement,
debenture, note, purchase agreement or any other
agreement providing for the borrowing of money by
Borrower or any event of which Borrower has knowledge
and which, with the passage of time or giving of notice,
or both, would constitute an Event of Default under this
Agreement or under such other agreements; and
(iii) Any material adverse change in the
operations, business, properties, assets or conditions,
financial or otherwise, of Borrower;
5.8 Existence. Preserve and maintain the corporate
existence and good standing of the Borrower or its Subsidiaries in
Minnesota, Wisconsin and New York and continue in compliance in all
material respects with all applicable statutes, laws, rules and
regulations.
5.9 Conduct of Business. Continue to engage in a
business of the same general type as that now being conducted by
Borrower on the date of this Agreement, provided, however, that
nothing contained in this Section shall prevent Borrower from
discontinuing any part of the business of Borrower, if the
discontinuance is, in the opinion of the Borrower, in the best
interests of Borrower, and such discontinuance shall not be
disadvantageous to the Lender.
5.10 Leases. Notify the Borrower promptly of the
occurrence of a default under the terms of any of the New York
Lease, the Roseville Lease or the Union Grove Lease, and to the
extent Borrower or MWSNY, as the case may be, is unable to cure any
such default diligently, permit Borrower to undertake the cure of
any such default in accordance with the terms of such Leases.
5.11 Compliance with Laws. Carry on its business
activities in substantial compliance with all applicable federal or
state laws and all applicable rules,
<PAGE>
regulations and orders of all governmental bodies and offices having
power to regulate or supervise its business activities.
ARTICLE VI.
NEGATIVE COVENANTS
Borrower covenants and agrees that for so long as it is indebted to
Lender, it will not, without Lender's prior written consent, which consent will
not be unreasonably withheld:
6.1 Merge, Consolidate or Sell. Merge or consolidate
with or into any other entity, or lease, assign or sell all or
substantially all of its property and business to any other entity
or entities other than in the ordinary course of business.
6.2 Acquisition. Purchase or otherwise acquire the
assets of any person, firm or corporation, other than in the
ordinary course of Borrower's business.
6.3 Inconsistent Agreements. Enter into any agreement
containing any provision which would be violated or breached by any
borrowing by Borrower hereunder or by the performance by Borrower of
its obligations hereunder or under any Instrument executed pursuant
hereto.
6.4 Liens and Encumbrances. Incur or permit to exist any
liens or encumbrances, whether voluntary or involuntary, on any of
the collateral covered by the Security Agreement.
6.5 Guarantees and Other Liabilities. Other than in
favor of the Lender, become or be a guarantor or surety of, or
otherwise become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or
services, or otherwise) with respect to, any undertaking of any
other Person.
6.6 Indebtedness. Incur, create, issue, assume or suffer
to exist any Indebtedness, except:
<PAGE>
(a) Indebtedness under this Agreement;
(b) Current liabilities, other than for
borrowed money, incurred in the ordinary course of
business;
(c) Indebtedness existing on the date of
this Agreement and disclosed on Schedule 6.6(c) hereto;
and
(d) Indebtedness secured by liens permitted
under Section 6.7 hereof.
6.7 Liens. Create, incur, assume or suffer to exist any
Lien with respect to any property, revenues or assets now owned or
hereafter arising or acquired, except:
(a) liens in connection with the acquisition
of property after the date hereof by way of purchase
money mortgage, conditional sale or other title
retention agreement,and attaching only to the property
being acquired if the indebtedness secured thereby does
not exceed the fair market value of such property at the
time of acquisition thereof nor $50,000 in the aggregate
for the Borrower and any Subsidiary at any one time
outstanding;
(b) liens existing on the date of this
Agreement and disclosed on Schedule 6.7(b) hereto;
(c) Deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age
pensions or other social security obligations, in the
ordinary course of business of the Borrower;
(d) liens for taxes, fees, assessments and
governmental charges not delinquent; and
(e) liens of carriers, warehousemen,
mechanics and materialmen, and other like liens arising
in the ordinary course of business, for sums not due or
to the extent that payment therefor shall not at the
time be required to be made.
<PAGE>
6.8 Transactions with Affiliates. Enter into or be a
party to any transaction or arrangement, including, without
limitation, the purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliates, except in the
ordinary course of and pursuant to the reasonable requirements of
the Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
ARTICLE VII.
EVENTS OF DEFAULT AND EFFECT THEREOF
7.1 Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default" hereunder:
(a) Borrower fails to pay any installment of
principal or interest on the Note within ten (10) days
after such installment becomes due; or
(b) Borrower fails to duly and punctually
perform the covenants contained herein, or in any Loan
Document executed or delivered hereunder and such
failure to perform continues for a period of thirty (30)
days after Lender gives written notice to Borrower of
such default; or
(c) Any financial statement, certificate,
representation, or warranty furnished pursuant to or
made under this Agreement proves to be materially false
as of the date thereof or any representation made herein
is materially untrue when made; or
(d) Borrower makes a general assignment for
the benefit of creditors, admits in writing its
inability to pay its debts generally as they mature,
files or has filed against it a petition in bankruptcy
or a petition or answer seeking a reorganization,
arrangement with creditors or other similar relief under
the Federal Bankruptcy Laws or under any other
applicable law of the United States of America, or any
state thereof, consents to the appointment of a trustee
or receiver for Borrower
<PAGE>
or for its property; or takes any action for the purpose
of effecting or consenting to any of the foregoing; or
(e) An order, judgment or decree shall be
entered appointing, without Borrower's consent, a
trustee or receiver for Borrower, or a substantial part
of its property, or approving a petition filed against
Borrower seeking a reorganization, arrangement with
creditors or other similar relief under the Federal
bankruptcy laws or under any other applicable law of the
United States of America or any state thereof, and such
order, judgment or decree shall not be vacated or set
aside or stayed within sixty (60) days from the date of
entry thereof; or
(f) Judgment for the payment of money in
excess of $50,000.00 (and not covered fully by insurance
which is not subject to dispute) shall be docketed
against Borrower and remains unsatisfied for a period of
thirty (30) days after the entry thereof; or
(g) Borrower shall be dissolved or
liquidated or suspend business; or
(h) Borrower shall default under the terms
of any other agreement, indenture, deed of trust,
mortgage, promissory note or security agreement
governing the borrowing of money by the Borrower and
such default shall have resulted in a notice of
acceleration of the maturity of any amount borrowed
under such document or instrument which would have a
material adverse impact on Borrower; or
(i) The occurrence of a material default
under the terms of either of the Union Grove Lease or
the New York Lease.
7.2 Remedies. Upon the occurrence of an Event of
Default, Lender may, at its option, take any one or more of the
following actions (which remedies shall be cumulative):
(a) If an Event of Default described in
Section 7.1(d) shall occur, the full unpaid principal
amount of the Notes shall automatically be due and
payable without any declaration, notice, presentment,
protest or demand of any kind (all of which are
<PAGE>
hereby waived) and the obligation of the Lender to make
additional Advances shall automatically terminate, and
Lender may exercise any other available rights and
remedies described in Section 7.2 hereof.
(b) Upon the occurrence of an Event of
Default (other than as described in Section 7.1(d)),
the obligation of the Lender to make additional Advances
shall automatically terminate and, Lender may declare
all sums then outstanding on the Notes and all other
obligations of Borrower hereunder to be immediately due
and payable in full, whereupon the same shall be
immediately due and payable, and Lender may exercise any
other available rights and remedies described in Section
7.2 hereof.
(c) If any other Event of Default shall
occur and be continuing, the Lender may (unless
precluded from doing so by operation of law, an order of
a court of competent jurisdiction or stay imposed by
law):
(i) Terminate the obligation of Lender to
make additional Advances and declare the Revolving Loan
Commitment terminated,
(ii) Declare the outstanding principal
amount and any unpaid accrued interest on the Notes to
be immediately due and payable and any or all other
obligations of Borrower to Lender outstanding hereunder
or under any of the Loan Documents to be due and payable
in full, without notice, presentment, protest or demand
of any kind (all of which are hereby waived), whereupon
the full unpaid amount of the Notes, which shall be so
declared due and payable, shall be immediately due and
payable.
(iii) Advance such sums as Lender deems
necessary or appropriate to preserve or protect any
collateral and Borrower shall reimburse Lender, upon
demand, for all sums so advanced together with interest
thereon at the rate set forth in the Revolving Note from
the date so advanced until paid in full; provided,
however, that nothing herein shall be interpreted or
construed as requiring Lender to advance any such
amounts.
(iv) Exercise any of Lender's rights and
remedies under the Loan Documents or under law or
equity.
<PAGE>
ARTICLE VIII.
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The
representations and warranties contained herein or made in writing
by or on behalf of Borrower in connection with the transactions
contemplated hereby shall survive the execution and delivery of this
Agreement and the advances hereunder. All statements contained in
any certificate or other instrument delivered by or on behalf of
Borrower pursuant thereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties
by Borrower.
8.2 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the
parties hereto except that Borrower's rights hereunder are not
assignable.
8.3 Amendments. No amendment, change, waiver or
modification of this Agreement shall be valid unless the same be in
writing and signed by all of the parties hereto, and no waiver by
Lender of any breach or default by Borrower of any of its
obligations, agreements or covenants under this Agreement shall be
deemed to be a waiver of any subsequent breach of the same, or any
other obligation, agreement or covenant, nor shall any forbearance
by Lender to seek or enforce a remedy for such breach be deemed a
waiver of its rights and remedies with respect to such breach.
8.4 No Waivers. No failure or delay on the part of
Lender in exercising any right, power or privilege hereunder and no
course of dealing between Borrower and Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude an other or further
exercise thereof or the exercise of any other right, power or
privilege.
8.5 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
an original, but all of which shall constitute one agreement.
<PAGE>
8.6 Governing Law. This Agreement shall be governed by,
interpreted, and construed in accordance with the laws of the State
of Minnesota.
8.7 Effectiveness. This Loan Agreement shall remain
effective so long as there are any sums remaining outstanding on the
Notes.
8.8 Notices. Any notices required or contemplated
hereunder shall be effective upon the placing thereof in the United
States mails, certified mail, return receipt requested, postage
prepaid, or with a nationally recognized overnight carrier, and
addressed as follows:
If to Borrower: Mercury Waste Solutions, Inc.
302 North Riverfront Drive
Mankato, MN 56001
Attn: Todd Anderson
With a copy to: Maslon, Edelman, Borman and Brand, LLP
3300 Norwest Center
90 South 7th Street
Minneapolis, MN 55402
Attn: Joseph Alexander
If to Lender: Bankers American Capital Corporation
302 N. Riverfront Drive
Mankato, MN 56001
Attn: Bradley J. Buscher
With a copy to: Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Michelle T. Culligan
8.9 Superseding Effect. This Agreement, from and after
the date hereof, supersedes and has merged into it all prior oral
and written agreements on the same
<PAGE>
subjects by or between the parties hereto with the effect that this
Agreement shall control.
8.10 Participants. Lender may sell participations to
financial institutions in the Note and other Loan Documents to third
parties and may provide any financial information concerning
Borrower and MWSNY to such participants, provided Borrower shall be
advised in writing of such participants.
8.11 Complementary Documents. The Loan Documents are
intended to be complementary and supplementary one to the other. In
the event of any conflict between the terms of one or more of the
Loan Documents with one or more of the other Loan Documents, such
terms shall, to the fullest extent reasonably possible, be construed
to be complementary one to the other. However, if such terms cannot
be construed as complementary, then the terms of this Agreement
shall govern.
8.12 Consent to Jurisdiction. AT THE OPTION OF THE
LENDER, THIS AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST.
PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH
FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
BY THIS AGREEMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be executed the date and year first above written.
MERCURY WASTE SOLUTIONS,
<PAGE>
INC.
A MINNESOTA CORPORATION
BY: /s/ Todd J. Anderson
-----------------------------------
Todd J. Anderson
-----------------------------------
ITS: Chief Financial Officer
-------------------------------
BANKERS AMERICAN CAPITAL
CORPORATION
A MINNESOTA CORPORATION
BY: /s/ Brad J. Buscher
-----------------------------------
Brad J. Buscher
-----------------------------------
ITS: Chairman, President & CEO
-------------------------------
<PAGE>
Certain related exhibits and schedules to the Loan Agreement (Exhibit
10.2) are not being filed herewith. The Registrant undertakes to
furnish a copy of any omitted exhibit or schedule to the Commission
upon request. Pursuant to Item 601(b)(2) of Regulation S-K, the
following is a list of omitted exhibits and schedules:
Exhibit A Outstanding litigation
Schedule 6.6(c) Schedule of indebtness existing on the date of the
Loan Agreement
Schedule 6.7(b) Schedule of Liens existing on the date of the Loan
Agreement
EXHIBIT 10.3
WARRANT NO. 18
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER THE SECURITIES LAWS OF ANY OTHER
STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION
UNDER THE ACT OR THE SECURITIES LAWS OF ANY APPLICABLE STATE OR (ii) SUCH
REGISTRATION.
WARRANT
TO PURCHASE SHARES OF
COMMON STOCK OF
MERCURY WASTE SOLUTIONS, INC.
MAY 8, 1998
This certifies that, in consideration of having provided certain
financing to Mercury Waste Solutions, Inc., a Minnesota corporation (the
"Company") on the date hereof, and for other good and valuable consideration,
BANKERS AMERICAN CAPITAL CORPORATION, a Minnesota corporation (the "Holder"), is
entitled to subscribe for and purchase from the Company, at any time after the
date of this warrant and prior to the expiration hereof, up to 100,000 shares of
the Company's Common Stock at the Purchase Price set forth herein, subject to
adjustment as hereinafter set forth.
1. Definitions. For the purposes of this Warrant the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the
Securities Act.
"Company" shall mean Mercury Waste Solutions, Inc., a
Minnesota corporation, and any corporation which shall succeed to,
or assume, the obligations of said corporation hereunder.
"Common Stock" shall mean the shares of Common Stock of
the Company, $0.01 par value.
"Expiration Date" shall mean May 8, 2008.
"Holder" shall mean the holder or holders of the
Warrants or any related Warrant Shares.
"Other Securities" shall mean any stock (other than
Common Stock) or other securities of the Company which the Holder at
any time shall be entitled to receive, or shall have received, upon
the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of any of the foregoing or
the Common Stock.
<PAGE>
"Purchase Price" shall mean $3.75 per share. The
Purchase Price is subject to adjustment as hereinafter provided.
"Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations of the Commission
thereunder, as in effect at the time.
"Subscription Form" shall mean the subscription forms
attached hereto.
"Transfer" shall mean any sale, assignment, pledge, or
other disposition of any Warrants and/or Warrant Shares, or of any
interest in either thereof, which would constitute a sale thereof
within the meaning of Section 2(3) of the Securities Act.
"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the Holder upon the exercise of the
Warrants pursuant to Section 2 hereof.
"Warrants" shall mean the Warrants (including this
Warrant) and all Warrants issued in exchange, transfer or
replacement thereof.
All terms used in this Warrant which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Warrant.
2. Exercise of Warrant, Issuance of Certificate, and Payment for
Warrant Shares. The rights represented by this Warrant may be exercised at any
time after the date of this warrant and prior to the Expiration Date, by the
Holder, in whole or in part (but not as to any fractional share of Common
Stock), by: (a) delivery to the Company of a completed Subscription Form, (b)
surrender to the Company of this Warrant properly endorsed and signature
guaranteed, and (c) delivery to the Company of a certified or cashier's check
made payable to the Company in an amount equal to the aggregate Purchase Price
of the shares of Common Stock being purchased, at its principal office or agency
in Minnesota (or such other office or agency of the Company as the Company may
designate by notice in writing to the holder hereof). The Company agrees and
acknowledges that the shares of Common Stock so purchased shall be deemed to be
issued to the holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant, properly endorsed, and the
Subscription Form shall have been surrendered and payment made for such shares
as aforesaid. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute or
cause to be executed and deliver to the Holder a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
Subscription Form. Each stock certificate so delivered shall be in such
denomination as may be requested by the Holder and shall be registered in the
name of the Holder or such other name as shall be designated by the Holder. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of said stock certificate or certificates, deliver to the
Holder a new Warrant evidencing the rights of such holder to purchase the
remaining shares of Common Stock covered by this Warrant. The Company shall pay
all expenses, taxes, and other charges payable in connection with the
preparation, execution, and delivery of stock certificates pursuant to this
Section 2, except that, in case any such stock certificate or certificates shall
be registered in a name or names other than the name of the Holder, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
execution and delivery of such stock certificate or certificates shall be paid
by the Holder to the Company at the time of delivering this Warrant to the
Company as mentioned above.
<PAGE>
3. Ownership of this Warrant. The Company may deem and treat the
registered Holder as the holder and owner hereof (notwithstanding any notations
of ownership or writing made hereon by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for transfer as provided herein and then only if
such transfer meets the requirements of Section 5.
4. Exchange, Transfer, and Replacement. Subject to Section 5 hereof,
this Warrant is exchangeable upon the surrender hereof by the Holder to the
Company at its office or agency described in Section 2 hereof for new Warrants
of like tenor and date representing in the aggregate the right to purchase the
number of shares purchasable hereunder, each of such new Warrants to represent
the right to purchase such number of shares (not to exceed the aggregate total
number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender. Subject to Section 5 hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of the Company
by the Holder in person or by duly authorized attorney, and a new Warrant of the
same tenor and date as this Warrant, but registered in the name of the
transferee, shall be executed and delivered by the Company upon surrender of
this Warrant, duly endorsed, at such office or agency of the Company. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction, or mutilation of this Warrant, and, in the case of loss,
theft, or destruction, of indemnity or security reasonably satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer, or replacement. The Company shall pay
all expenses, taxes (other than stock transfer taxes), and other charges payable
in connection with the preparation, execution, and delivery of Warrants pursuant
to this Section 4.
5. Restrictions on Transfer. Notwithstanding any provisions
contained in this Warrant to the contrary, neither this Warrant nor the Warrant
Shares shall be transferable except upon the conditions specified in this
Section 5, which conditions are intended, among other things, to ensure
compliance with the provisions of the Securities Act in respect of the transfer
of this Warrant or such Warrant Shares. The holder of this Warrant agrees that
such holder will not transfer this Warrant or the related Warrant Shares (a)
prior to delivery to the Company of an opinion of counsel selected by the Holder
and reasonably satisfactory to the Company, stating that such transfer is exempt
from registration under the Securities Act, or (b) until registration of such
Warrants and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions.
6. Special Agreements of the Company. The Company will reserve and
set apart and have at all times the number of shares of authorized but unissued
Common Stock deliverable upon the exercise of the Warrants, and it will have at
all times any other rights or privileges provided for herein sufficient to
enable it at any time to fulfill all of its obligations hereunder.
7. Antidilution Adjustment. (a) Until the Expiration Date, the
provisions of this Warrant are subject to adjustment from time to time such that
in case the Company shall hereafter:
(i) pay any dividends on the Common Stock of the Company payable
in Common Stock;
<PAGE>
(ii) subdivide its then outstanding Common Stock into a greater
number of shares; or
(iii) combine outstanding Common Stock, by reclassification or
otherwise;
then, in any such event, the Purchase Price in effect immediately prior to such
event shall (until adjusted again pursuant hereto) be adjusted immediately after
such event to a price (calculated to the nearest full cent) determined by
dividing (a) the number of shares of Common Stock outstanding immediately prior
to such event, multiplied by the then existing Purchase Price, by (b) the total
number of shares of Common Stock outstanding immediately after such event
(including, in each case, the maximum number of shares of Common Stock issuable
in respect of any securities convertible into shares of Common Stock), and the
resulting quotient shall be the adjusted Purchase Price per share. An adjustment
made pursuant to this Subsection shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(b) Upon each adjustment of the Purchase Price pursuant
to Section 7(a) above, the Holder of each Warrant shall thereafter
(until another such adjustment) be entitled to purchase at the
adjusted Purchase Price the number of shares of Common Stock,
calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock specified in such Warrant (as
adjusted as a result of all adjustments in the Purchase Price in
effect prior to such adjustment) by the Purchase Price in effect
prior to such adjustment and dividing the product so obtained by the
adjusted Purchase Price.
(c) In case of any consolidation or merger to which the
Company is a party, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation
into the Company), there shall be no adjustment under Subsection (a)
of this Section above but the Holder of each Warrant then
outstanding shall have the right thereafter to convert such Warrant
into the kind and amount of shares of stock and other securities and
property which the Holder would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory
exchange, sale, or conveyance had such Warrant been converted
immediately prior to the effective date of such consolidation,
merger, statutory exchange, sale, or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section with respect
to the rights and interests thereafter of any Holders of the
Warrant, to the end that the provisions set forth in this Section
shall thereafter correspondingly be made applicable, as nearly as
may reasonably be, in relation to any shares of stock and other
securities and property thereafter deliverable on the exercise of
the Warrant. The provisions of this Subsection shall similarly apply
to successive consolidations, mergers, statutory exchanges, sales or
conveyances.
8. No Voting Rights. This Warrant shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Company.
<PAGE>
9. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered or sent by certified mail to
the Holder at the last address shown on the books of the Company maintained for
the registry and transfer of the Warrants. Any notice or other document required
or permitted to be given or delivered to the Company shall be delivered or sent
by certified or registered mail to the principal office of the Company.
10. No Rights as Shareholders; Limitation of Liability. This Warrant
shall not entitle any holder hereof to any of the rights of a shareholder of the
Company. No provisions hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of the
Company whether such liability is asserted by the Company or by creditors of the
Company.
11. Registration Rights.
(a) If at any one time prior to the end of the two-year period
following complete exercise of this Warrant or the Expiration Date, whichever
occurs earlier, the Company proposes to register under the Act (except by a Form
S-4 or Form S-8 Registration Statement or any successor forms thereto) or
qualify for a public distribution under Section 3(b) of the Act, any of its
equity securities or debt with equity features, it will give written notice to
all Holders of this Warrant, any Warrants issued pursuant to Section 2 and/or
Section 4 hereof, and any Warrant Shares of its intention to do so and, on the
written request of any such Holder given within twenty (20) days after receipt
of any such notice (which request shall specify the Warrant Shares intended to
be sold or disposed of by such Holder and describe the nature of any proposed
sale or other disposition thereof), the Company will use its best efforts to
cause all such Warrant Shares, the Holders of which shall have requested the
registration or qualification thereof, to be included in such registration
statement proposed to be filed by the Company; provided, however, that if a
greater number of Warrant Shares is offered for participation in the proposed
offering than in the reasonable opinion of the managing underwriter of the
proposed offering can be accommodated without adversely affecting the proposed
offering, then the amount of Warrant Shares proposed to be offered by such
Holders for registration, as well as the number of securities of any other
selling shareholders participating in the registration, shall be proportionately
reduced to a number deemed satisfactory by the managing underwriter.
(b) With respect to the inclusion of securities in a registration
statement pursuant to this Section 11, the Company shall bear the following
fees, costs, and expenses: all registration, filing and NASD fees, Nasdaq fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or underwriters
of such securities (if the offering is underwritten and the Company is required
to bear such fees and disbursements), all internal expenses, the premiums and
other costs of policies of insurance against liability arising out of the public
offering, and legal fees and disbursements and other expenses of complying with
state securities laws of any jurisdictions in which the securities to be offered
are to be registered or qualified. Fees and disbursements of special counsel and
accountants for the selling Holders, underwriting discounts and commissions,
and, transfer taxes for selling Holders and any other expenses relating to the
sale of securities by the selling Holders not expressly included above shall be
borne by the selling Holders.
<PAGE>
(c) The Company hereby agrees to indemnify each of the Holders of
this Warrant and of any Warrant Shares, and the officers and directors, if any,
who control such Holders, within the meaning of Section 15 of the Act, against
all losses, claims, damages, and liabilities caused by (1) any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus prepared in connection with any registration pursuant to
this Section 11 (and as amended or supplemented if the Company shall have
furnished any amendments thereof or supplements thereto), any Preliminary
Prospectus or any state securities law filings; (2) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, or liabilities are caused by any untrue statement or
omission contained in information furnished in writing to the Company by such
Holder expressly for use therein; and each such Holder by its acceptance hereof
severally agrees that it will indemnify and hold harmless the Company, each of
its officers who signs such Registration Statement, and each person, if any, who
controls the Company, within the meaning of Section 15 of the Act, with respect
to losses, claims, damages, or liabilities which are caused by any untrue
statement or omission contained in information furnished in writing to the
Company by such Holder expressly for use therein.
(d) Notwithstanding anything contained in this Section 11, Holders
requesting inclusion of Warrant Shares in any registration statement shall not
be required to exercise the Warrant prior to closing of the offering of Warrant
Shares covered by such registration statement.
12. Governing Law. This Warrant shall be governed by, and construed
and enforced in accordance with, the laws of the State of Minnesota without
regard to conflicts of laws principles.
13. Miscellaneous. This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by a duly authorized officer, and to be dated as of the date first written
above.
MERCURY WASTE SOLUTIONS, INC.
By: s/ Todd J. Anderson
-----------------------------------------
Todd J. Anderson, Chief Financial Officer
<PAGE>
FULL SUBSCRIPTION FORM
To Be Executed By the Registered Holder if
He Desires to Exercise in Full the Within Warrant
The undersigned hereby exercises the right to purchase the 100,000
shares of Common Stock covered by the within Warrant at the date of this
subscription and herewith makes payment of the sum of $_________ representing
the Purchase Price of $____ per share. Certificates for such shares shall be
issued in the name of and delivered to the undersigned, unless otherwise
specified by written instructions, signed by the undersigned and accompanying
this subscription.
Dated:
-------------
Signature:
-----------------------------------
Address:
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE>
PARTIAL SUBSCRIPTION FORM
To be Executed by the Registered Holder if He
Desires to Exercise in Part Only the Within Warrant
The undersigned hereby exercises the right to purchase __________ shares
of the total shares of Common Stock covered by the within Warrant at the date of
this subscription and herewith makes payment of the sum of $____________
representing the Purchase Price of $______ per share.
Certificates for such shares and a new Warrant of like tenor and date for
the balance of the shares not subscribed for (if any) shall be issued in the
name of and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
Dated:
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Signature:
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Address:
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