<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) May l9, l995
__________________
Colonial Commercial Corp.
________________________________________________________________________________
(Exact name of Registrant as specified in Charter)
New York l-6663 11-2037182
________________________________________________________________________________
(State of other Juris- (Commission File (IRS Employer
diction of Incorporation Number) Identification No)
360l Hempstead Turnpike, Levittown, New York ll756-l3l5
________________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 5l6-796-8400
______________
________________________________________________________________________________
(Former name or former address, if changed since last report.)
<PAGE> 2
COLONIAL COMMERCIAL CORP.
Item 2. Acquisition or Disposition of Assets
____________________________________
On May l9, l995, Colonial Commercial Corp. ("Colonial") purchased the
capital stock of Atlantic Hardware and Supply Corporation ("Atlantic") from
Brennand-Paige Industries, Inc., a wholly-owned subsidiary of Thackeray
Corporation, for $3.8 million in cash. $2 million was borrowed from Sterling
National Bank and Trust Co. of New York from a $2.5 million revolving credit
facility secured by the receivables of Atlantic and guaranteed by Colonial. The
remaining $l.8 million was borrowed from National Westminster Bank on a
short-term secured interest-bearing note, collateralized by Certificates of
Deposit owned by Colonial maturing between June 26, l995 and August 7, l995.
Colonial determined that it was in its best interest to use the Certificates of
Deposit as collateral for borrowing, as opposed to surrendering them pior to
their maturity dates.
There are no material relationships between the Buyers and the Sellers
or any of their respective affiliates, officers or directors. The purchase price
was determined by negotiations between the parties. Colonial intends to continue
the business of Atlantic and subsequent to closing, entered into a three-year
employment contract with the current president of Atlantic.
Atlantic's primary business is the distribution of door hardware and
doors and frames used in new building construction, buildings being
rehabilitated, interior tenant buildouts, and building maintenance. Atlantic
serves the contract hardware market on a wide range of commercial, residential,
and institutional construction projects, such as office buildings, hospitals,
schools, hotels and high-rise apartment buildings. The 50-year old Company is
headquartered in New York City and has operating branches in New Jersey,
Pennsylvania, Georgia, Illinois and Long Island, New York.
Item 7. Financial Statements and Exhibits
_________________________________
Listed below are the financial statements and exhibits filed as part of
this report.
(A) Financial Statements of Business Acquired
(l) Audited balance sheets of Atlantic Hardware and Supply
Corporation as of December 3l, l994, l993 and l992 and related statements of
operations and cash flows for each of the three years ended December 3l, l994,
related footnotes and accountants' report [see pages 5-12].
<PAGE> 3
COLONIAL COMMERCIAL CORP.
Item 7. Financial Statements and Exhibits (continued)
_____________________________________________
(2) Atlantic Hardware and Supply Corporation Balance sheet as of
March 3l, l995 and December 3l, l994 and related statements of operations and
cash flows for the three months ended March 3l, l995 and March 3l, l994
(unaudited)[see pages 13-15].
(C) Exhibits
The exhibits listed on the Index to Exhibits following the
signature page herein are filed as part of the Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL COMMERCIAL CORP.
_________________________
(Registrant)
Date: June 2, l995 /s/ James W. Stewart
_____________________________
James W. Stewart
Chief Financial Officer
<PAGE> 4
COLONIAL COMMERCIAL CORP.
INDEX TO EXHIBITS
Form 8-K Item 7(C)
Filed Herewith
Exhibits on Page No.
________ _______________
l0(g) Certain documents relating to Atlantic
Hardware and Supply Corporation
(i) Stock Purchase Agreement dated
May l9, l995 by and among
Thackeray Corporation, Brennand-
Paige Industries, Inc. and
Colonial Commercial Corp. 17
(ii) Revolving Credit Agreement
between Atlantic Hardware and
Supply Corporation and
Sterling National Bank & Trust
Company of New York. 58
(iii) Guarantee of all liabilities
and security agreement of
Atlantic Hardware and Supply
Corporation by Colonial
Commercial Corp. to Sterling
National Bank and Trust of
New York. 80
(iv) Secured interest bearing note
between Colonial Commercial
Corp. and National Westminster
Bank. 89
(v) Employment Agreement dated
May l9, l995 between Atlantic
Hardware and Supply Corporation
and Paul Selden. 106
<PAGE> 5
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Atlantic Hardware and Supply Corporation:
We have audited the accompanying balance sheets of Atlantic Hardware and Supply
Corporation (a New York corporation) as of December 3l, l994, l993 and l992, and
the related statements of operations and cash flows for each of the three years
ended December 3l, l994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Atlantic Hardware and Supply
Corporation as of December 3l, l994, l993 and l992, and the results of its
operations and its cash flows for each of the three years ended December 3l,
l994, in conformity with generally accepted accounting principles.
/S/ Arthur Andersen LLP
New York, New York
March 24, l995
<PAGE> 6
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
________________________________________
BALANCE SHEETS
______________
DECEMBER 31, 1994, 1993 AND 1992
________________________________
l994 l993 l992
____ ____ ____
<S> <C> <C> <C>
Assets:
Current Assets:
Cash...........................$ 239,000 $ l64,000 $ 430,000
Accounts receivable (net of
allowance of $520,000 in l994,
$360,000 in l993 and $320,000
in l992)...................... 6,631,000 3,9l0,000 2,874,000
Inventories..................... l,l46,000 l,l32,000 l,028,000
Other receivables and current
assets......................... l4,000 l0,000 l2,000
--------- --------- ---------
Total current assets........ 8,030,000 5,216,000 4,344,000
Property, plant and equipment,
net............................ l00,000 41,000 47,000
--------- --------- ---------
$ 8,l30,000 $5,257,000 $4,39l,000
--------- --------- ---------
Liabilities and Stockholder's Equity
Current Liabilities:
Accounts payable...............$ 2,09l,000 $ 96l,000 $ 634,000
Accrued expenses:
Salaries and other............ 315,000 228,000 l95,000
Income and other taxes........ l80,000 72,000 76,000
Short-term debt................ 990,000 250,000 -
Payable to Parent.............. 848,000 6l0,000 596,000
--------- --------- ---------
Total current liabilities... 4,424,000 2,121,000 l,50l,000
--------- --------- ---------
Commitments
Stockholder's Equity:
Common stock, $.l0 par
value (l00 shares author-
ized and issued)........... - - -
Capital in excess of par
value...................... l,453,000 l,453,000 l,453,000
Retained earnings........... 2,253,000 l,683,000 l,437,000
--------- --------- ---------
Total stockholder's equity. 3,706,000 3,136,000 2,890,000
--------- --------- ---------
$ 8,130,000 $ 5,257,000 $ 4,391,000
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
________________________________________
STATEMENTS OF OPERATIONS
________________________
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
____________________________________________________
l994 l993 l992
____ ____ ____
<S> <C> <C> <C>
Sales...........................$18,741,000 $13,506,000 $ll,260,000
Cost of sales................... 13,425,000 9,489,000 7,871,000
---------- ---------- ----------
Gross profit.................... 5,316,000 4,017,000 3,389,000
Selling, general and administra-
tive expenses................. 4,184,000 3,525,000 3,348,000
---------- ---------- ----------
Operating income................ l,l32,000 492,000 4l,000
Other (expense) income:
Interest and debt expense..... (26,000) (3,000) -
Other income,net.............. 7,000 5,000 22,000
---------- ---------- ----------
Income before income taxes...... l,ll3,000 494,000 63,000
Income taxes.................... 543,000 248,000 l0,000
---------- ---------- ----------
Net income......................$ 570,000 $ 246,000 $ 53,000
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
________________________________________
STATEMENTS OF CASH FLOWS
________________________
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
____________________________________________________
1994 1993 1992
____ ____ ____
<S> <C> <C> <C>
Cash Flows provided by (used in)
Operating Activities:
Net income.................... $ 570,000 $ 246,000 $ 53,000
Adjustments to reconcile net
income to net cash (used in)
operating activities:
Depreciation................ 30,000 36,000 46,000
Changes in assets and
liabilities:
(Increase) in accounts
receivables, net........... (2,721,000) (l,036,000) (246,000)
(Increase) in inventories... (l4,000) (l04,000) (l37,000)
(Increase) decrease in
other receivables and
current assets............. (4,000) l,000 24,000
Increase in accounts payable l,l30,000 327,000 26l,000
Increase (decrease) in
accrued expenses........... l95,000 29,000 (l29,000)
Increase (decrease) in
payable to Parent.......... 238,000 l5,000 (72,000)
------- ------- -------
Net cash flows (used in)
operating activities..... (576,000) (486,000) (200,000)
------- ------- -------
Cash Flows (used in) Investing
Activities:
Additions to property, plant
and equipment................ (89,000) (30,000) (4,000)
------ ------ -----
Net cash flows (used in)
investing activities..... (89,000) (30,000) (4,000)
------ ------ -----
Cash Flows provided by Financing
Activities:
Proceeds of short-term debt... 740,000 250,000 -
------- ------- -------
Net cash flows provided
by financing activities.. 740,000 250,000 -
------- ------- -------
Net change in cash........ 75,000 (266,000) (204,000)
Cash-beginning of year........ l64,000 430,000 634,000
------- ------- -------
Cash-end of year.............. $ 239,000 $ 164,000 $ 430,000
------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 9
ATLANTIC HARDWARE AND SUPPLY CORPORATION
________________________________________
NOTES TO FINANCIAL STATEMENTS
_____________________________
DECEMBER 31, 1994, 1993 AND 1992
________________________________
l. ORGANIZATION OF BUSINESS
________________________
Atlantic Hardware and Supply Corporation ("Atlantic" or the "Company") is a
wholly-owned subsidiary of Thackeray Corporation ("Thackeray" or the "Parent").
Atlantic's primary business is the distribution of door hardware, doors and
frames used in new building construction, buildings being rehabilitated,
interior tenant buildouts and building maintenance. Atlantic services the
contract hardware market, usually as a material supplier only, on a wide range
of commercial, residential and institutional construction projects.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
__________________________________________
Inventories
Inventories are stated at the lower of cost, determined on the last-in,
first-out basis (LIFO), or market.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Major additions and
betterments are capitalized.
Depreciation of property, plant and equipment is provided principally by the
straight-line method and is based upon the estimated useful lives of the
respective assets.
3. INVENTORIES
___________
Inventories consisted solely of finished goods at December 3l, l994, l993
and l992.
If the first-in, first-out (FIFO) method of inventory accounting had been
used, inventories would have been $252,000 higher than reported at December 3l,
l994 and l993 and $234,000 higher than reported at December 3l, l992.
<PAGE> 10
-2-
4. PROPERTY, PLANT AND EQUIPMENT
_____________________________
Property, plant and equipment consisted of the following at December 3l,
l994, l993 and l992.
<TABLE>
<CAPTION>
l994 l993 l992
____ ____ ____
<S> <C> <C> <C>
Machinery and equipment...... $ 464,000 $ 375,000 $ 345,000
Furniture and fixtures....... 44,000 44,000 44,000
Leasehold improvements....... 66,000 66,000 66,000
------- ------- -------
574,000 485,000 455,000
Accumulated depreciation and
amortization................ (474,000) (444,000) (408,000)
------- ------- -------
$ 100,000 $ 41,000 $ 47,000
------- ------- -------
</TABLE>
Depreciation expense aggregated $30,000, $36,000 and $46,000 for l994, l993
and l992, respectively. The estimated useful lives range from three to five
years for machinery and equipment and furniture and fixtures. Leasehold
improvements are amortized over their useful lives or the period of the lease,
whichever is shorter.
5. DEBT
____
During l992, Atlantic entered into a line of credit agreement with Sterling
National Bank and Trust Company ("Sterling") which is guaranteed by the Parent.
This agreement, which is renewable on an annual basis at the option of Sterling,
provides for a working capital line of credit up to a maximum of $l,250,000. The
agreement limits the amount of cash that may be upstreamed to affiliates to
$500,000, plus 50% of net income as defined. The interest rate is prime plus
l.5%. For the year l994, the weighted average interest rate incurred was 8.7%.
There are no charges on the unborrowed portion of the line of credit. As of
December 3l, l994, l993 and l992, borrowings under the line of credit amounted
to $990,000, $250,000 and $0, respectively.
During the years ended December 3l, l994, l993 and l992, the Company paid
interest aggregating $26,000, $3,000 and $0, respectively.
6. INCOME TAXES
____________
The Company is included in the consolidated federal income tax return of the
Parent. Historically, it has been the Parent's policy not to charge income taxes
to the Company. Accordingly, for the year ended December 3l, l992, the Company
had no provision for federal income taxes. However, in accordance with Statement
of Financial Accounting Standards No. l09, "Accounting for Income Taxes" ("SFAS
No. l09"), on a separate financial statement basis, the Company is required to
present a federal tax provision for the two years ended December 3l, l994 and
l993. For purposes of these financial statements the amounts calculated as the
Company's federal tax provision (current and deferred) for the years ended
<PAGE> 11
3
December 31, l994 and l993 are presented as payable to Parent in the
accompanying balance sheets. However, for state tax purposes, separate tax
returns are filed in various jurisdictions where taxable losses of the Parent
are not available to offset taxable income of subsidiaries of the Parent, and
tax benefits of such losses may not be realized. As a result, the state tax
provision is determined considering this tax reporting structure.
The provision for income taxes for the years ended December 3l, l994, l993
and l992, was comprised of the following:
<TABLE>
<CAPTION>
l994 l993 l992
____ ____ ____
<S> <C> <C> <C>
Federal tax provision...........$ 368,000 $ l58,000 $ -
State tax provision............. l75,000 90,000 l0,000
-------- -------- -------
$ 543,000 $ 248,000 $ 10,000
-------- -------- -------
</TABLE>
For the years ended December 3l, l994, l993 and l992, the Company paid state
income taxes in the amount of $l44,000, $59,000 and $68,000, respectively.
There are no material temporary differences, therefore, the federal tax
provision for the years ended December 3l, l994 and l993, which is presented as
payable to Parent, is classified on the accompanying balance sheets as a current
liability.
In l993, the Company adopted SFAS No. l09, which requires the use of the
liability method in accounting for income taxes. No restatements or adjustments
to the financial statements of the Company were required as a result of such
adoption.
7. EMPLOYEE BENEFIT PLANS
______________________
Atlantic has a profit-sharing plan in effect which covers sub- stantially all
of its employees. Contributions to the plan are determined by the Board of
Directors of Atlantic and are based on profit performance in relation to
pre-established goals. Profit- sharing expense amounted to $45,000 in l994,
$36,000 in l993 and $27,000 in l992.
8. COMMITMENTS
___________
The Company leases office and warehouse facilities under lease agreements
which expire at various dates through 2000.
Atlantic's total rent expense of continuing operations amounted to $228,000
in l994, $220,000 in l993 and $278,000 in l992. Minimum annual rental
commitments under certain leases are subject to escalation based on increases in
real estate taxes.
<PAGE> 12
4
Minimum annual rental obligations under noncancellable long-term operating
leases, which are subject to escalation based on increases in real estate taxes,
are as follows:
<TABLE>
<CAPTION>
<S> <C>
l995..................................$ 203,000
l996................................... 202,000
l997................................... 198,000
l998................................... 206,000
l999................................... 177,000
Thereafter............................. 56,000
---------
$ 1,042,000
---------
</TABLE>
Atlantic has employment contracts expiring through l999. Aggregate
compensation in l994 under employment contracts amounted to $l54,000.
9. RELATED PARTIES
_______________
The Parent provides management and consulting services to the Company for an
annual fee. Such services include, but are not limited to, advice and assistance
concerning any and all aspects of the operations of the Company. Management
fees, which are included in payable to Parent, were $70,000 in l994, $l06,000 in
l993 and $84,000 in l992.
<PAGE> 13
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994
ASSETS 1995 1994
______ _________ _______
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash $ 20,000 239,000
Accounts receivable (net of allow-
ance of $529,000 on March 3l, l995
and $520,000 on December 31, 1994) 5,503,000 6,631,000
Inventories l,211,000 l,l46,000
Other receivables and current
assets 33,000 14,000
--------- ---------
Total current assets 6,767,000 8,030,000
--------- ---------
Plant and equipment - net 92,000 100,000
TOTAL ASSETS $ 6,859,000 8,130,000
--------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ l,524,000 2,091,000
Accrued expenses 239,000 315,000
Income and other taxes 96,000 l80,000
Credit line borrowing 500,000 990,000
Payable to parent 848,000 848,000
--------- ---------
Total current liabilities 3,207,000 4,424,000
--------- ---------
Stockholder's Equity
Common stock - -
Paid-in-capital l,453,000 l,453,000
Retained earnings 2,199,000 2,253,000
--------- ---------
Total Stockholder's Equity 3,652,000 3,706,000
--------- ---------
Total Liabilities & Stockholder's
Equity $ 6,859,000 8,130,000
--------- ---------
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
Consolidated Statement of Operations
Three Months Ended March 31, 1995 and 1994
(Unaudited)
1995 1994
____ ____
<S> <C> <C>
Sales $ 4,183,000 3,727,000
Cost of sales 3,078,000 2,601,000
--------- ---------
Gross profit on sales l,l05,000 l,l26,000
--------- ---------
Operating Expenses l,110,000 972,000
--------- ---------
Operating Income (Loss) (5,000) l54,000
Other (Expenses) Income:
Interest expense (16,000) (2,000)
Other (Expense) Income 2,000 1,000
--------- ---------
Total Other (Expenses) Income (14,000) (1,000)
Income before income taxes (19,000) 153,000
Income taxes 35,000 25,000
--------- ---------
Net Income $ (54,000) 128,000
--------- ---------
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
ATLANTIC HARDWARE AND SUPPLY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
____ ____
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income $ (54,000) 128,000
Adjustment to reconcile net income
to net cash (used in) operating
activities:
Depreciation 11,000 7,000
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, net 1,128,000 (122,000)
(Increase) decrease in inventories (65,000) (195,000)
(Increase) decrease in other
receivables and current assets (19,000) (36,000)
Increase (decrease) in accounts
payable (567,000) 161,000
Increase (decrease) in accrued
expenses (160,000) (43,000)
--------- -------
Net cash flows (used in)
operating activities 274,000 (100,000)
--------- -------
Cash flows (used in) investing activities:
Additions to property, plant and
equipment (3,000) (14,000)
----- ------
Net cash flows (used in) investing
activities (3,000) (14,000)
Cash flow provided by (used in) financing activities:
Payback of short term debt (490,000) -
------- ------
Net cash flows provided by (used in)
financing activities (490,000) -
------- ------
Net change in cash (219,000) (114,000)
Cash - beginning of year 239,000 164,000
--------- ---------
Cash - end of period $ 20,000 50,000
--------- ---------
</TABLE>
<PAGE> 16
Exhibit 10(g)(i) - Stock Purchase Agreement
<PAGE> 17
STOCK PURCHASE AGREEMENT
________________________
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
May 19, 1995, by and among Thackeray Corporation, a Delaware
corporation ("Parent"), Brennand-Paige Industries, Inc., a
Delaware corporation ("Seller"), and Colonial Commercial Corp., a
New York corporation ("Buyer"). Unless otherwise indicated,
capitalized terms used herein are used as defined in Section 9.2
hereof.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller is the owner of all of the issued and
outstanding common stock, par value $0.01 per share (the "Common
Stock"), of Atlantic Hardware & Supply Corporation, a New York
corporation ("Company"), which is engaged in the distribution of
door hardware products and sale of security systems and security
related hardware; and
WHEREAS, Buyer desires to purchase, and Seller desires
to sell, the Common Stock upon the terms and conditions set forth
in this Agreement;
NOW THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, agreements and
consideration hereinafter set forth, the parties hereto do hereby
agree as follows:
<PAGE> 18
ARTICLE I.
SALE OF STOCK
1.1. Sale of Stock. Upon the terms and subject to the
_____________ conditions hereinafter set forth,
on the Closing Date (as hereinafter defined) Seller shall sell,
assign, transfer, convey and otherwise deliver to Buyer, and
Buyer shall purchase, acquire and otherwise accept from Seller,
the Common Stock.
1.2. Excluded Assets. Notwithstanding anything to the
_______________
contrary contained in Section 1.1 hereof, the parties to this
Agreement expressly understand and agree that as of the Closing
Date none of the following shall be included in the assets of
Company (collectively, the "Excluded Assets"):
(a) any and all prepaid charges for, or refunds,
abatements and credits of, any Taxes;
(b) any and all claims by Company against present
or former officers, directors or stockholders of Company, whether
or not related to the Business; and
(c) any and all obligations, including, without
limitation, any and all debt, owed by Parent and its Subsidiaries
to Company.
By its signature at the end hereof, Company hereby
transfers and assigns the Excluded Assets to Parent as of the
Closing Date.
<PAGE> 19
1.3. Excluded Liabilities. Notwithstanding anything
____________________
to the contrary contained in Section 1.1 hereof, the parties to
this Agreement expressly understand and agree that as of the
Closing Date none of the following shall be included in the
liabilities of Company (collectively, the "Excluded
Liabilities"):
(a) obligations, liabilities and indebtedness of
Company under the Existing Credit Agreement in an amount equal to
$450,000 plus the amount of any loans, dividends or other
distributions or other payments made by Company to Parent or any
of its Subsidiaries after December 31, 1994 (which amount Parent
and Seller jointly and severally represent is zero), which amount
shall be repaid by Parent to Sterling National Bank and Trust
Company ("Sterling") on the Closing Date; and
(b) any and all obligations owed to Parent or its
Subsidiaries, which shall be deemed contributed to the capital of
the Company immediately prior to the Closing Date and released as
of the Closing Date.
ARTICLE II.
CONSIDERATION
2.1. Amount and Form of Consideration. The aggregate
________________________________
consideration (the "Consideration") for the acquisition of the
Common Stock shall consist of the payment (the "Cash
Consideration") at the Closing (as defined in Section 3.1 hereof)
<PAGE> 20
by Buyer to Seller, of an amount equal to $3,800,000, by delivery
of a certified or bank cashier's check in such amount or, at
Seller's option, by wire transfer of immediately available funds
to an account designated by Seller.
ARTICLE III.
THE CLOSING
3.1. Closing Date. The closing hereunder (herein
____________
called the "Closing") shall take place simultaneously with the
execution and delivery hereof at the offices of Weil, Gotshal &
Manges, 767 Fifth Avenue, New York, New York 10153. The date of
the Closing is referred to in this Agreement as the "Closing
Date."
3.2. Proceedings at Closing. All proceedings to be
______________________
taken and all documents to be executed and delivered by Seller in
connection with the consummation of the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to
Buyer and its counsel. All proceedings to be taken and all
documents to be executed and delivered by Buyer in connection
with the consummation of the transactions contemplated hereby
shall be reasonably satisfactory in form and substance to Seller
and its counsel. All proceedings to be taken and all documents to
be executed and delivered by all parties at the Closing shall be
deemed to have been taken and executed simulta- neously, and no
<PAGE> 21
proceedings shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Each of Parent and Seller hereby represents and
warrants to Buyer as follows:
4.1. Organization and Good Standing. Each of Parent,
______________________________
Seller and Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and has full corporate power and authority to own,
lease and operate its properties and to carry on its business.
Company is duly quali- fied or authorized to do business as a
foreign corporation and is in good standing under the laws of (i)
each jurisdiction in which it leases real property and (ii) each
other jurisdiction in which the conduct of its business or the
leasing of its properties requires such qualification or
authorization, except where the failure to be so qualified would
not be reasonably likely to result in a Material Adverse Change.
4.2. Authorization of Agreement. Each of Parent and
__________________________
Seller has full corporate power and authority to execute and
deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement to be
executed by Parent or Seller in connection with the consummation
of the transactions contemplated by this Agreement (collectively,
<PAGE> 22
the "Seller Documents"), and to perform fully its obligations
here- under and thereunder. The execution, delivery and
performance by Seller and Parent of this Agreement and Seller
Documents have been duly authorized by all necessary corporate
action on behalf of Seller and Parent. This Agreement and Seller
Documents have been duly executed and delivered by Seller or
Parent, as the case may be, and (assuming the due authorization,
execution and delivery by Buyer) this Agreement and each of
Seller Documents constitute legal, valid and binding obligations
of Seller or Parent, as the case may be, enforceable against
Seller or Parent, as the case may be, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability,
to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.3. Consents of Third Parties. Subject to the receipt
_________________________
of the consents, approvals and waivers set forth on Schedule 4.3
hereto, none of the execution and delivery by Seller and Parent
of this Agreement and Seller Documents, or the consummation of
the transactions contemplated hereby or thereby, or compliance by
Seller or Parent with any of the provisions hereof or thereof
will (i) conflict with, or result in the breach of, any provision
<PAGE> 23
of the certificate of incorporation or by-laws of Seller, Parent
or Company; or (ii) constitute a violation by Seller, Parent or
Company of any Law which would be reasonably likely to result in
a Material Adverse Change. No consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on
the part of Seller, Parent or Company in connection with the
execution and delivery of this Agreement or Seller Documents, or
the compliance by Seller or Parent with any of the provisions
hereof or thereof, except (i) as set forth on Schedule 4.3 hereto
and (ii) those the failure of which to obtain would not be
reasonably likely to result in a Material Adverse Change.
4.4. Capitalization. (a) The authorized capital stock
______________
of Company consists of 100 shares of Common Stock, $.10 par
value, of which 100 shares are issued and outstanding. No
subscription, warrant, option or other right to purchase or
acquire any shares of any class of capital stock of Company or
securities convertible into such capital stock is authorized or
outstanding, and there is no commitment of Company to issue any
such shares, warrants, options or other such rights or
securities. Seller is beneficial and record holder of all of the
Common Stock, free and clear of all Liens. No shares of capital
stock are held by Company as treasury stock. All outstanding
shares of Common Stock are duly authorized, validly issue fully
<PAGE> 24
paid and non-assessable and are not subject to any preemptive or
other similar right. The execution and the delivery by Seller to
Buyer at the Closing of a stock power and delivery of the
certificate for the Common Stock will vest Buyer with good title
to the Common Stock, free and clear of all Liens.
(b) Parent is the beneficial and record holder of all
of the common stock of Seller.
4.5. Contracts. Schedule 4.5 lists all of Company's
_________
(i) real estate leases (the "Leases"), (ii) employment contracts
with a term exceeding 12 months which are not terminable without
the payment of more than $10,000, and (iii) equipment leases with
a term exceeding 12 months which are not terminable without the
payment of more than $10,000. All such Contracts of Company are
in full force and effect and Company has not breached any
Contract, except for insubstantial breaches consistent with the
past operations of Company.
4.6. Tax Matters. (a) The affiliated group (as that
___________
term is defined in Section 1504(a) of the Internal Revenue Code
of 1986 (the "Code")) of corporations of which Company is a
member (the "Affiliated Group") has duly filed on a timely basis
(including extensions) consolidated federal Income Tax Returns
(and any state or local Income Tax Returns which are filed on a
consolidated or combined basis, collectively, the "Consolidated
Returns") for all taxable years during which Company was a member
<PAGE> 25
of the Affiliated Group. The Affiliated Group has paid all Income
Taxes shown due or required to be shown on such returns
("Consolidated Taxes"), and has adequately provided for any and
all Consolidated Taxes, which would be due from the Affiliated
Group with respect to all tax periods ended on or before December
31, 1994. Other than Company's membership in the Affiliated
Group, Company has not been a member of any affiliated group for
any period not barred by the statute of limitations.
(b) Company has duly and timely filed (including
extensions) all material Tax Returns (the "Individual Returns")
required to be filed by it under any applicable law, including
estimated Tax Returns and reports, and has duly and timely paid
all Income Taxes (other than Consolidated Taxes) (the "Individual
Taxes") due and payable on or before the date hereof, except
where the failure to pay Income Taxes would not be reasonably
likely to result in a Material Adverse Change.
(c) Parent has delivered or made available (or will do
so) to Buyer copies of all the Consolidated Returns filed by the
Affiliated Group for the last three preceding taxable years to
the extent applicable to Company. Seller has delivered or made
available (or will do so) to Buyer copies of all Individual
Returns filed by Company for such three prior taxable years.
(d) The federal Income Tax Returns of the Affiliated
Group and of the members of the Affiliated Group (including
Company) have been audited by the Internal Revenue Service (the
<PAGE> 26
"IRS") for the taxable years ended on or before December 31,
1983. All deficiencies asserted as a result of such examinations
have been paid or finally settled and no issue has been raised by
the IRS examination which, by application of the same or similar
principles, might result in a proposed deficiency for any other
period not so examined.
(e) Except as disclosed on Schedule 4.6 hereto, no
proposed Taxes have been asserted against the Affiliated Group or
any member of the Affiliated Group (including Company) that have
not been paid in full. Except as disclosed on Schedule 4.6
hereto, there are no agreements, waivers, or other arrangements
providing for extensions of time with respect to the assessment
or collection of any unpaid Tax against the Affiliated Group or
any member of the Affiliated Group (including Company), nor are
there any actions, suits, proceedings, investigations, or claims
pending against the Affiliated Group or any member of the
Affiliated Group (including Company) with respect to any Tax.
(f) Except as disclosed on Schedule 4.6 hereto, there
are no requests for rulings, outstanding subpoenas, or requests
for information, or proposed assessments or reassessments in
respect of any Taxes, or of any property owned or leased by
Company, or similar matters, pending between Company and any
taxing authority.
<PAGE> 27
(g) Company (i) has not engaged in any "deferred
intercompany transactions", within the meaning of Treasury
Regulations Section 1.1502-13; and (ii) does not have an "initial
inventory amount" or an "unrecovered inventory amount", within
the meaning of Treasury Regulation Sections 1.1502-18(b) and
(c)(1), respectively.
(h) No election or consent under Section 341(f) of the
Code has been made by or on behalf of Company.
(i) Neither Parent, Seller nor Company have taken, or
will, without Buyer's prior written consent or except as
specifically authorized in this Agreement, take any action that
could cause Company to make, or to be deemed to have made, an
election under Section 338 of the Code with respect to the sale
hereunder.
(j) No property of Company is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(k) Company is not a party to any written Income Tax
allocation or sharing agreement.
(l) Neither Parent nor Seller is a foreign person
within the meaning of Section 1445 of the Code.
4.7. Subsidiaries. Company has no Subsidiaries.
____________
4.8. Financial Statements. Company has delivered to
____________________
Buyer a copy of the audited balance sheet (the "Balance Sheet") of
Company as at December 31, 1994 (the "Balance Sheet Date") and
<PAGE> 28
the related audited statements of operations and cash flows of
Company for the year then ended (together with the Balance Sheet,
the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting
principles ("GAAP") and present fairly in all material respects
the financial position, results of operations and cash flows of
Company as of the Balance Sheet Date and for the year then ended.
4.9. No Undisclosed Liabilities. Except as otherwise
__________________________
disclosed herein (including the Schedules hereto) or as disclosed
in the Financial Statements (including the notes related thereto)
or as set forth on Schedule 4.9 hereto, as of the Balance Sheet
Date, Company did not have any indebtedness, obligations or
liabilities of a type required to be disclosed on a balance sheet
prepared in accordance with GAAP. Except as otherwise disclosed
herein (including the Schedules hereto) or as disclosed in the
Financial Statements (including the notes related thereto) or as
set forth on Schedule 4.9 hereto, since the Balance Sheet Date,
Company has not incurred any indebtedness, obligations or
liabilities other than those incurred in the ordinary course of
business consistent with past practice.
4.10. Absence of Certain Developments. Since the
_______________________________
Balance Sheet Date, except as set forth on Schedule 4.10:
(a) There has not been any Material Adverse
Change;
<PAGE> 29
(b) There has not been any damage, destruction or
loss, whether or not covered by insurance, with respect to the
assets of Company;
(c) Company has not entered into any employment,
deferred compensation, severance or similar agreement (nor
amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of its
directors, officers, employees, agents or representatives or
agreed to increase the coverage or benefits available under any
severance pay, termination pay, vacation pay, company awards,
salary continuation or disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement
made to, for or with such directors, officers, employees, agents
or representatives (other than normal increases in the ordinary
course of business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of Company);
(d) Company has not entered into any transaction
or Contract or conducted its business other than in the ordinary
course consistent with past practice;
(e) Company has not made any loans, advances or
capital contributions to, or investments in, any Person, other
<PAGE> 30
than loans to employees in the ordinary course of business
consistent with past practice.
(f) Company has not mortgaged, pledged or
subjected to any Lien any of its assets, or acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of
any of its assets, other than in the ordinary course of business
consistent with past practice;
(g) Company has not amended, canceled, terminated,
relinquished, waived or released any Contract or right required
to be listed on Schedule 4.5, except in the ordinary course of
business consistent with past practice; and
(h) Company has not agreed to do any of the
foregoing.
4.11. Real Property. Other than the Leases, Company
_____________
does not own any real property or interests in real property. The
Leases are in full force and effect, and Company is (a) not in
payment default thereunder and (b) not otherwise in default
thereunder, except for insubstantial defaults consistent with the
past operations of Company.
4.12. Litigation. Except as set forth on Schedule
__________
4.12, there are no Legal Proceedings pending or, to the knowledge
of Seller and Parent, threatened against Company, Seller or
Parent that question the validity of this Agreement, the Seller
Documents or any action taken or to be taken by Seller or Parent
<PAGE> 31
in connection with the consummation of the transactions
contemplated hereby or thereby.
4.13. Brokers. No person has acted directly or
_______
indirectly as a broker, finder or financial advisor for Seller,
Parent or Company in connection with the negotiations relating to
or the transactions contemplated by this Agreement and no Person
is entitled to any fee or commission or like payment in respect
thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of Seller, Parent or Company.
4.14. Assets. The assets owned by Company comprise
______
all of the assets, properties and rights of every type and
description, real, personal and mixed, tangible and intangible,
used by Company in the conduct of its business and such assets
are in good operating condition, ordinary wear and tear excepted.
4.15. Termination. Company has not received notice
___________
from any customer accounting for more than 5% its sales for the
year ended December 31, 1994 that such customer intends to
terminate its relationship with Company.
4.16. Trademarks. Company conducts its businesses
__________
without infringement or claim of infringement of any service
mark, trademark or trade name of others, except where such
infringement or claim of infringement would not have a Material
Adverse Change.
<PAGE> 32
4.17. Compliance With Laws. Company has complied with
____________________
all environmental, employment and other Laws, except for
insubstantial non-compliances consistent with the past operations
of Company.
4.18. Contingent Obligations. Except as and to the
______________________
extent reflected or reserved against on the Balance Sheet, as of
December 31, 1994, the Company had no guaranties, purchase money
debt or liabilities in respect of any other person's debt, leases
or other contracts (whether absolute, accrued, contingent or
otherwise) of any nature whatsoever.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and
Parent that:
5.1. Organization and Good Standing. Buyer is a
______________________________
corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has full corporate
power and authority to own, lease and operate its properties and
to carry on its business. Buyer is duly qualified or authorized
to do business and is in good standing under the laws of (i) each
jurisdiction in which it owns or leases real property and (ii)
each other jurisdiction in which the conduct of its business or
the ownership of its properties requires such qualification or
<PAGE> 33
authorization,except where the failure to be so qualified would
not be reasonably likely to result in a Material Adverse Change.
5.2. Authorization of Agreement. Buyer has full
__________________________
corporate power and authority to execute and deliver this
Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement to be executed by
Buyer in connection with the consummation of the transactions
contemplated hereby and thereby (collectively, the "Buyer
Documents"), and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance by Buyer of
this Agreement and each Buyer Document have been duly authorized
by all necessary corporate action on behalf of Buyer. This
Agreement and the Buyer Documents have been duly executed and
delivered by Buyer and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this
Agreement and each of the Buyer Documents constitute legal, valid
and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at
law or in equity).
<PAGE> 34
5.3. Consents of Third Parties. Except as set forth on
_________________________
Schedule 5.3 hereto, none of the execution and delivery by Buyer
of this Agreement and Buyer Documents, or the compliance by Buyer
with any of the provisions hereof or thereof will (i) conflict
with, or result in the breach of, any provision of the
certificate of incorporation or by-laws of Buyer, or (ii)
constitute a violation by Buyer of any Law which would be
reasonably likely to result in a Material Adverse Change. No
consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Buyer in connection
with the execution and delivery of this Agreement or Buyer
Documents or the compliance by Buyer with any of the provisions
hereof or thereof, except for those the failure of which to
obtain would not be reasonably likely to result in a Material
Adverse Change.
5.4. Litigation. There are no Legal Proceedings
__________
pending or, to the knowledge of Buyer, threatened against Buyer
that question the validity of this Agreement, Buyer Documents or
any action taken or to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby or thereby.
5.5. Brokers. No Person has acted directly or
_______
indirectly as a broker, finder or financial advisor for Buyer in
connection with the negotiations relating to or the transactions
contemplated by this Agreement and no Person is entitled to any
<PAGE> 35
fee or commission or like payment in respect thereof based in any
way on agreements, arrangements or understandings made by or on
behalf of Buyer.
ARTICLE VI.
DELIVERIES AT CLOSING
6.1. Deliveries by Seller to Buyer. At the Closing,
_____________________________
Seller shall deliver, or shall cause to be delivered, to Buyer
the following:
(a) The stock certificate representing the Common
Stock and a duly executed stock power to evidence the sale,
assignment, transfer and conveyance by Seller to Buyer of the
Common Stock.
(b) Resignations, effective as of Closing Date, of
all officers and directors of Company as requested by Buyer.
(c) To the extent any consents or approvals are
required as set forth on Schedule 4.3, copies of such consents or
approvals.
(d) Evidence that the amounts specified in Section
1.3(a) which are to paid by Parent to Sterling with respect to
the Existing Credit Agreement at the Closing have been paid.
(e) Releases of Company by any officer or director
resigning as of the Closing Date of claims such officer or
<PAGE> 36
director has against Company in form and substance satisfactory
to Buyer, Seller and such officer or director, in favor of
Company.
6.2. Deliveries by Buyer to Seller. At the Closing,
_____________________________
Buyer shall deliver to Seller the following:
(a) A certified or bank cashier's check or a
confirmation of the wire transfer of funds in the amount of the
Cash Consideration, as provided in Section 2.1(a) hereof.
(b) To the extent any consents or approvals are
required as set forth on Schedule 5.3, copies of such consents or
approvals.
(c) Evidence that all obligations of Parent or
Seller to Sterling with respect to the Existing Credit Agreement
have been terminated and released.
ARTICLE VII.
POST-CLOSING COVENANTS
7.1. Further Assurances by Seller. From time to time
____________________________
after the Closing Date, Seller will, at the
request of Buyer, execute and deliver such other and further
instruments of sale, assignment, transfer and conveyance and take
such other and further action as Buyer may reasonably request as
are necessary or desirable to vest, perfect or confirm the
transfer to Buyer of the Common Stock, or otherwise to carry out
the provisions hereof.
<PAGE> 37
7.2. Agreement Not to Compete; Non-Solicitation;
___________________________________________
Confidentiality.
_______________
(a) From the Closing Date and thereafter for a
period of three years, Parent will not, and will not permit any
of its Subsidiaries to, without the prior written consent of
Buyer, within the states where Company currently conducts its
business, own, manage, operate or control, any business or entity
that engages in the same business as currently engaged in by
Company.
(b) Each of Parent and Seller will, and will cause
each of their respective Subsidiaries to, treat as confidential
and keep secret the affairs of Company and will not, without the
prior written consent of Buyer (which shall not be unreasonably
withheld) disclose, furnish or make known or accessible to or use
for the benefit of anyone, any information of a confidential
nature relating in any way to the business of Company, except to
the extent such information is otherwise publicly available or as
may be required by Law or by Order of any Governmental Body to
which Parent or Seller is subject or bound. Notwithstanding the
foregoing, each of Parent, Seller and their respective
Subsidiaries shall be free to disclose any such information or
data to the extent necessary in order to establish its position
in any litigation or any arbitration or other proceeding based
upon or in connection with the subject matter of this Agreement.
<PAGE> 38
(c) Each of Parent and Seller agrees not to, and
will not permit their respective Subsidiaries to: (i) solicit,
raid, entice or induce any employee of the Company to become an
employee of any person, firm or corporation which is, directly or
indirectly, in competition with the business or activities of the
Company; (ii) approach any such employee for these purposes; or
(iii) authorize or knowingly approve the taking of such actions
by other persons on behalf of any such person, firm or
corporation, or assist any such person, firm or corporation in
taking such action.
7.3. Tax Covenants.
_____________
(a) Tax Returns. (i) Seller or Parent shall prepare
___________
and file all Consolidated Returns and all Individual Returns of
Company for all taxable periods ending on or before the Closing
Date including any Tax Returns required for the Section
338(h)(10) Election and shall pay all Taxes (if any) with respect
to such Returns. Seller or Parent shall provide Buyer, no later
than one hundred twenty (120) days after the Closing, with a copy
of the pro forma federal Individual Return of the Company for the
taxable period ended in the Closing Date, so as to provide Buyer
with the opportunity to review and comment thereon (although
Parent and Seller shall not have any obligation to accept any
such comments).
<PAGE> 39
(ii) Buyer shall prepare and file all Individual
Returns and reports of Company for all taxable periods ending
after the Closing Date and Buyer shall pay all Taxes (if any)
with respect to such Returns, subject to payment by Parent or
Seller of the portion of Individual Taxes allocable to the
portion of the taxable period to and including the Closing Date.
(iii) The portion of the Individual Taxes of Company
for taxable periods extending through the Closing Date that shall
be paid by Parent and Seller shall be computed on a
closing-of-the-books basis as if the taxable period ended at the
close of business on the Closing Date. For such purpose, as well
as for purposes of any Individual Returns and Consolidated
Returns for taxable periods ending on the Closing Date, the
income, gains, losses, deductions and credits of the Company for
May 1995 shall first be computed utilizing the unaudited
financial statements of the Company for May 1995 (as jointly
approved by Buyer and Seller), and such computed amounts shall
then be pro rated (based upon the number of business days from
the first day of May through the Closing Date and upon the number
of business days thereafter) between such two periods. To the
maximum extent possible, any Tax Returns required for the Section
338(h)(10) Election shall be similarly prepared. Seller and Buyer
hereby acknowledge that, solely for the purpose of preparing tax
<PAGE> 40
returns, they have agreed on the unaudited financial
statements of the Company for the period from December 31, 1994
through April 30, 1995 as delivered at the closing.
(iv) Seller and Parent will include Company in the
Consolidated Returns through and including the Closing Date.
Buyer will be responsible for all federal Income Taxes in respect
of the operation of Company thereafter.
(b) Section 338 Election. Seller, Parent and
____________________
Buyer hereby agree to make a Section 338(h)(10) Election with
respect to the acquisition by Buyer of the Company. In connection
therewith Seller, Parent and Buyer further agree, in reporting
the deemed asset sale as a result of the Section 338(h)(10)
Election, to take a position consistent with the allocation of
the deemed purchase price of the Company's assets as determined
by Seller in accordance with the applicable regulations under
Section 338 of the Code, subject to the review and reasonable
approval of Buyer. Seller, Parent and Buyer agree to sign all
federal, state and local Tax Returns, forms and documents and to
do all other acts necessary to ensure that the Section 338(h)(10)
Election is timely and effectively filed and to report all
federal, state and local Income Taxes in a manner consistent with
such election. Buyer agrees not to either take any actions itself
or to cause the Company to take any actions, including engaging
<PAGE> 41
in any transactions on or as at the Closing Date, that could
cause the Consolidated Taxes or Individual Taxes payable by
Seller or Parent to increase.
(c) Access to Files and Records. Buyer shall and
___________________________
shall cause Company to retain the files and records pertaining to
all taxable years of Company through the Closing Date for a
period of six (6) years (or such longer period as required by
law) and, thereafter, to give Seller and Parent the opportunity
to copy such files and records prior to Buyer's and/or Company's
intentional destruction or disposal of such files and records.
Buyer agrees and shall cause Company to agree, during normal
business hours, to make such files and records available to
Seller, Parent and their representatives for inspection or
copying. Upon reasonable notice and at such times and subject to
such conditions as Buyer and Company shall reasonably determine
to minimize any interference with the duties of their employees,
Buyer shall and shall cause Company to permit Seller and Parent
and their representatives to make inquiries of their employees
familiar with the files and records, and to discuss with any one
or more of them the information contained therein or related
thereto. Buyer shall and shall cause Company to, subject to the
foregoing considerations, cooperate with Seller and Parent in
providing information in such records or from their employees and
access to documents relevant to the preparation of Parent's 1995
Consolidated Returns or for the preparation of any other Tax
<PAGE> 42
Returns or forms, or the defense or prosecution of any suit,
action, investigation or other proceeding by or against Seller or
Parent, and the taking of testimony of their employees with
respect thereto, provided that Buyer and Company shall not be
required by reason hereof to incur any out-of-pocket expenses or
liabilities (unless reimbursed by Seller or Parent).
(d) Tax Refunds. Seller or Parent shall be
___________
entitled to any and all refunds of Taxes for any taxable year or
portion thereof for which Seller or Parent is responsible, either
directly or by way of indemnification under the provisions
hereof; provided, however, that Buyer will have no obligation to
________ _______
cause Company to carryback any credit or deduction that arises in
a taxable year after the Closing Date. Buyer agrees, if so
requested by Seller or Parent, to cause Company to file any forms
necessary to claim any such Tax refund. The refund claims shall
be prepared and filed in the manner prepared by Parent or its
independent accountants. Any Tax refund received by Company
attributable to any taxable period or portion thereof ended on or
prior to the Closing Date shall be submitted to Seller or Parent
within five (5) days of the receipt thereof.
<PAGE> 43
ARTICLE VIII.
INDEMNIFICATION AND RELATED MATTERS
8.1. Indemnification.
_______________
(a) Seller and Parent jointly and severally agree
to indemnify and hold Buyer harmless from and against:
(i) any and all liabilities, obligations,
damages, deficiencies and expenses based upon, attributable to or
resulting from any misrepresentation or breach of warranty (other
than those misrepresentations or breaches of warranty of which
Buyer had actual knowledge as of the date hereof) or
non-fulfillment of any covenant or other agreement on the part of
Seller under the terms of this Agreement or Seller Documents,
excluding any consequential damages resulting therefrom; and
(ii) all actions, suits, proceedings,
demands, assessments, judgments, costs, penalties and expenses,
including reasonable attorneys' fees, incident to the foregoing.
Any and all claims made under this Section 8.1(a) must
be made prior to the first anniversary of the Closing Date.
(b) Buyer agrees to indemnify and hold Parent and
Seller harmless from and against:
(i) any and all liabilities, obligations,
damages, deficiencies and expenses based upon, attributable to or
resulting from any misrepresentation, breach of warranty or non-
fulfillment of any covenant or other agreement on the part of
Buyer under the terms of this Agreement and Buyer Documents,
excluding any consequential damages resulting therefrom; and
<PAGE> 44
(ii) all actions, suits, proceedings,
demands, assessments, judgments, costs, penalties and expenses,
including reasonable attorneys' fees, incident to the foregoing.
8.2. Procedures for Indemnification. Whenever a claim
______________________________
shall arise for indemnification under Sections 8.1 or 8.2 hereof,
the party entitled to indemnification (the "Indemnified Party")
shall promptly notify the party from whom indemnification is
sought (the "Indemnifying Party") of such claim and, when known,
the facts constituting the basis for such claim and shall afford
the Indemnifying Party an opportunity to be represented by
counsel of its own choice, at its own expense and to defend,
contest, litigate, negotiate, settle or otherwise deal with any
such liability or obligation. If the Indemnifying Party does not
assume the defense of any such claim or litigation in accordance
with the terms hereof, the Indemnified Party may do so. The
parties hereto shall cooperate in connection with such defense.
No settlement shall be made by the Indemnified Party without the
prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed.
8.3. Tax Indemnification.
___________________
Notwithstanding Section 8.1 hereof but subject to
the provisions of Section 8.2, Parent and Seller jointly and
severally agree to indemnify and hold Buyer and, so long as it is
a direct or indirect Subsidiary of Buyer or has merged into Buyer
<PAGE> 45
(unless in thecase of such merger into Buyer the stockholders of
Buyer on the Closing Date no longer own of record or beneficially
a majority of the voting power of Buyer), Company harmless from
and against any liability of Company for (i) Consolidated Taxes,
(ii) Individual Taxes for taxable periods ending on or before the
Closing Date, and (iii) Individual Taxes through the Closing Date
for taxable periods extending beyond the Closing Date to the
extent provided in Section 7.3(a) hereof. Any and all claims made
under this Section 8.3 must be made prior to the sixth
anniversary of the Closing Date.
8.4. Limitations on Amount. Notwithstanding the other
_____________________
provisions of this Article VIII, Seller and Parent shall not be
liable to indemnify Buyer following the Closing Date for its
damages pursuant to Sections 8.1 or 8.2 (but not Section 8.3)
unless and until the aggregate amount of otherwise indemnifiable
damages suffered by Buyer exceeds $50,000, in which case Buyer
shall be entitled to indemnification for that portion of such
damages which are in excess of such amount. In addition, the
aggregate amount of indemnification for which Seller and Parent
shall be liable (including Sections 8.1, 8.2 and 8.3) shall not
exceed $3,800,000. The indemnification contained in this Article
VIII shall be net of tax benefits, if any, and insurance proceeds
<PAGE> 46
received as a consequence of such indemnifiable damages. For
purposes of this Agreement, use of Buyer's net operating losses
shall not be considered a tax benefit.
ARTICLE IX.
MISCELLANEOUS
9.1. Survival of Representations and Warranties. The
__________________________________________
parties hereto hereby agree that the representations and
warranties contained in this Agreement shall survive the
execution and delivery of this Agreement and the Closing
hereunder, regardless of any investigation made by the parties
hereto, subject, however, to the last sentence of Section 8.1(a)
hereof.
9.2. Certain Definitions.
___________________
"Contract" means any written contract, agreement,
________
indenture, note, bond, loan, instrument, lease, conditional sale
contract, mortgage, license, franchise, insurance policy,
commitment or other arrangement or agreement.
"Existing Credit Agreement" means the credit agreement,
_________________________
dated as of May 22, 1992, by and among Parent, Seller, Company
and Sterling, as amended prior to the date hereof.
"Governmental Body" means any government or
_________________
governmental or regulatory body thereof, or political subdivision
thereof, whether federal, state, local or foreign, or any agency
or instrumentality thereof, or any court or arbitrator (public or
private).
<PAGE> 47
"Income Taxes" means all income or corporate franchise
____________
Taxes.
"Law" means any federal, state, local or foreign law,
___
statute, code, ordinance or regulation.
"Legal Proceeding" means any judicial, administrative
________________
or arbitral actions, suits, proceedings (public or private),
claims or governmental proceedings.
"Lien" means any lien, pledge, mortgage, deed of
____
trust or security interest.
"Material Adverse Change" means any material adverse
_______________________
change in the business, properties, results of operations or
condition (financial or otherwise) of Company or, where
applicable, Buyer.
"Order" means any order, injunction, judgment, decree,
_____
ruling, writ, assessment or arbitration award.
"Permits" means any approvals, authorizations,
_______
consents,franchises, licenses, permits or certificates by any
Governmental Body.
"Person" means any individual, corporation, partnership,
______
firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
<PAGE> 48
"Section 338(h)(10) Election" means the elections under
___________________________
Sections 338(g) and 338(h)(10) of the Code and any similar
elections under state or local Law with respect to Income Taxes.
"Subsidiary" means, with respect to any Person, any
__________
Person of which a majority of the outstanding voting securities
are owned directly or indirectly by such Person.
"Tax" or "Taxes" means all taxes, charges, fees,
___
imposts, levies or other assessments, including, without
limitation, all net income, franchise, profits, gross receipts,
capital, sales, use, ad valorem, value added, transfer, transfer
gains, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance,
stamp, occupation, real or personal property, and estimated
taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines,
additions to tax or additional amounts thereon, imposed by any
taxing authority (federal, state, local or foreign) and shall
include any transferee liability in respect of Taxes.
"Tax Return" means all returns, declarations, reports,
__________
estimates, information returns and statements required to be
filed in respect of any Taxes.
9.3. Entire Agreement. This Agreement (with its
________________
schedules) contains, and is intended as, a complete statement of
all of the terms and the arrangements between the parties herto
<PAGE> 49
with respect to the subject matter hereof and supersedes any
previous agreements and understandings between the parties hereto
with respect to the subject matter hereof.
9.4. Governing Law. This Agreement shall be governed
_____________
by, construed and enforced in accordance with the laws of the
State of New York, without giving effect to the conflict of laws
principles thereof.
9.5. Transfer Taxes. Buyer shall pay when due all
______________
transfer (including real property gains) and documentary Taxes
and fees imposed with respect to the transaction contemplated
hereby. Certified checks for the amount of any transfer Taxes are
payable to the appropriate taxing authority and a New York State
form TP-584 shall be delivered by Buyer to Seller at the Closing.
9.6. Expenses. Each of the parties hereto shall bear
________
their own respective expenses (including, without limitation,
fees and disbursements of their respective counsel, accountants
and other experts), incurred by them in connection with the
preparation, negotiation, execution, delivery and performance of
this Agreement, each of the other documents and instruments
executed in connection with or contemplated by this Agreement and
the consummation of the transactions contemplated hereby and
thereby.
<PAGE> 50
9.7. Table of Contents and Headings. The table of
______________________________
contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
9.8. Notices. All notices and other communications
_______
under this Agreement shall be in writing and shall be deemed
given when delivered personally, mailed by registered mail,
return receipt requested or telecopied, to the parties at the
following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this
provision):
If to Parent or Seller, to:
Thackeray Corporation
400 Madison Avenue, Suite 1508
New York, New York 10017
Attention: Jules Ross
Telecopy No.: 212-759-4481
with a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Ted S. Waksman, Esq.
Telecopy No.: 212-310-8007
If to Buyer, to:
Colonial Commercial Corp.
3601 Hempstead Tnpk.
Levittown, New York 11756
Attention: Bernard Korn
Telecopy No.: 516-796-8696
with a copy to:
Oscar Folger, Esq.
521 Fifth Avenue
New York, New York 10175
Telecopy No.: 212-697-9570
<PAGE> 51
9.9. Severability. The invalidity or unenforceability
____________
of any provision of this Agreement shall not affect the validly
or enforceability of any other provision of this Agreement, each
of which shall remain in full force and effect.
9.10. Binding Effect; No Assignment. This Agreement
_____________________________
be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Nothing in this
Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not party to this
Agreement. No assignment of this Agreement or of any rights or
obligations hereunder may be made by any party (by operation of
law or otherwise) without the prior written consent of the other
party hereto and any attempted assignment without such required
consent shall be void.
9.11. Amendments. This Agreement may be amended,
__________
supplemented or modified, and any provision hereof may be waived,
only pursuant to a written instrument making specific reference
to this Agreement signed by each of the parties hereto.
9.12. Counterparts. This Agreement may be executed in
____________
any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
THACKERAY CORPORATION
By:
___________________________________________
Name:
Title:
BRENNAND-PAIGE INDUSTRIES, INC.
By:
___________________________________________
Name:
Title:
COLONIAL COMMERCIAL CORP.
By:
___________________________________________
Name:
Title:
Solely with respect to
Section 1.2 hereof:
ATLANTIC HARDWARE & SUPPLY CORPORATION
By:
______________________________________
Name:
Title:
<PAGE> 53
STOCK PURCHASE AGREEMENT
BY AND AMONG
THACKERAY CORPORATION
BRENNAND-PAIGE INDUSTRIES, INC.,
AND
COLONIAL COMMERCIAL CORP.
Dated as of May 19, 1995
<PAGE> 54
Table of Contents
_________________
Page
____
I. SALE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . 18
1.1. Sale of Stock . . . . . . . . . . . . . . . . . . . . 18
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . 18
1.3. Excluded Liabilities . . . . . . . . . . . . . . . . . 19
II. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1. Amount and Form of Consideration . . . . . . . . . . . 19
III. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1. Closing Date . . . . . . . . . . . . . . . . . . . . . 20
3.2. Proceedings at Closing . . . . . . . . . . . . . . . . 20
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER . . . . . 21
4.1. Organization and Good Standing . . . . . . . . . . . . 21
4.2. Authorization of Agreement . . . . . . . . . . . . . . 21
4.3. Consents of Third Parties . . . . . . . . . . . . . . 22
4.4. Capitalization . . . . . . . . . . . . . . . . . . . . 23
4.5. Contracts . . . . . . . . . . . . . . . . . . . . . . 24
4.6. Tax Matters . . . . . . . . . . . . . . . . . . . . . 24
4.7. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 27
4.8. Financial Statements . . . . . . . . . . . . . . . . . 27
4.9. No Undisclosed Liabilities . . . . . . . . . . . . . . 28
4.10. Absence of Certain Developments . . . . . . . . . . . 28
4.11. Real Property . . . . . . . . . . . . . . . . . . . . 30
4.12. Litigation . . . . . . . . . . . . . . . . . . . . . 30
4.13. Brokers . . . . . . . . . . . . . . . . . . . . . . . 31
4.14. Assets . . . . . . . . . . . . . . . . . . . . . . . 31
4.15. Termination . . . . . . . . . . . . . . . . . . . . . 31
4.16. Trademarks . . . . . . . . . . . . . . . . . . . . . 31
4.17. Compliance With Laws . . . . . . . . . . . . . . . . 32
4.18. Contingent Obligations . . . . . . . . . . . . . . . 32
V. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 32
5.1. Organization and Good Standing . . . . . . . . . . . . 32
5.2. Authorization of Agreement . . . . . . . . . . . . . . 33
5.3. Consents of Third Parties . . . . . . . . . . . . . . 34
5.4. Litigation . . . . . . . . . . . . . . . . . . . . . . 34
5.5. Brokers . . . . . . . . . . . . . . . . . . . . . . . 34
VI. DELIVERIES AT CLOSING . . . . . . . . . . . . . . . . . . . 35
6.1. Deliveries by Seller to Buyer . . . . . . . . . . . . . 35
6.2. Deliveries by Buyer to Seller . . . . . . . . . . . . . 36
VII. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . 36
7.1. Further Assurances by Seller . . . . . . . . . . . . . . 36
7.2. Agreement Not to Compete; Non-Solicitation;
Confidentiality . . . . . . . . . . . . . . . . . . . . 37
7.3. Tax Covenants . . . . . . . . . . . . . . . . . . . . . 38
VIII. INDEMNIFICATION AND RELATED MATTERS . . . . . . . . . . . . 43
8.1. Indemnification . . . . . . . . . . . . . . . . . . . 43
<PAGE> 55
Page
____
8.2. Procedures for Indemnification . . . . . . . . . . . . 44
8.3. Tax Indemnification . . . . . . . . . . . . . . . . . 44
8.4. Limitations on Amount . . . . . . . . . . . . . . . . 45
IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 46
9.1. Survival of Representations and Warranties . . . . . . 46
9.2. Certain Definitions . . . . . . . . . . . . . . . . . 46
9.3. Entire Agreement . . . . . . . . . . . . . . . . . . . 48
9.4. Governing Law . . . . . . . . . . . . . . . . . . . . 49
9.5. Transfer Taxes . . . . . . . . . . . . . . . . . . . . 49
9.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . 49
9.7. Table of Contents and Headings . . . . . . . . . . . . 50
9.8. Notices . . . . . . . . . . . . . . . . . . . . . . . 50
9.9. Severability . . . . . . . . . . . . . . . . . . . . . 51
9.10. Binding Effect; No Assignment . . . . . . . . . . . . 51
9.11. Amendments . . . . . . . . . . . . . . . . . . . . . 51
9.12. Counterparts . . . . . . . . . . . . . . . . . . . . 51
<PAGE> 56
Schedules Page
_________ ____
Schedule 4.3 - Consent, Approvals and Waivers Required
(Seller)
Schedule 4.5 - Material Contracts
Schedule 4.6 - Taxes
Schedule 4.9 - Undisclosed Liabilities
Schedule 4.10 - Certain Changes
Schedule 4.12 - Litigation
Schedule 5.3 - Consent, Approvals and Waivers Required
(Buyer)
<PAGE> 57
Exhibit 10 (g)(ii) - Revolving Credit Agreement
<PAGE> 58
GENERAL LOAN AND SECURITY AGREEMENT
The undersigned (jointly and severally, if more than one) expect from
time to time, directly or indirectly, to procure credit for themselves or others
from STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK (hereinafter called
Bank) and to deliver to Bank property as collateral security for the payment of
the undersigned's Liabilities to Bank. To induce Bank to become or continue, so
long as Bank may see fit, as the owner or holder of any Liabilities, in any
amount, in any form, and of any nature, whether absolute to contingent, direct
or indirect, due or not due, now existing hereafter arising, upon or with
respect to which any of the undersigned may in any way be or become liable to
Bank, and which at any time have been or hereafter be acquired by Bank (all of
which whether one or more than one, and including the undersigned's obligations
hereunder, are hereinafter called the Liabilities), the undersigned hereby agree
that all property of any nature whatsoever of the undersigned at any time
heretofore or hereafter pledged, assigned and transferred to or deposited with
Bank or its agents by the undersigned or otherwise coming into the possession of
the Bank or its agents in any way shall be held subject to all the terms of this
agreement as collateral security for the prompt and unconditional payment of the
Liabilities.
The undersigned herein grants a good first interest to Bank in the
following:
All now owned and hereafter acquired: accounts, notes, documents,
instruments, contract rights, chattel paper, tax refunds, general intangibles
and interest of Debtor in any goods thereby represented and all proceeds and
products thereof. All contract rights with respect thereto and all documents
representing the same and all proceeds and products thereof.
All present and hereafter created inventory including but not limited to
raw materials, goods in progress, finished goods, materials and supplies of
every nature used or usable in connection with the manufacturer, packing,
shipping, advertising, selling, leasing or furnishing of such goods.
The undersigned further agree to deposit with Bank, forthwith upon
demand, such additional collateral security for payment of the Liabilities as
Bank may from time to time demand. The undersigned further agree that, in order
to further secure the payment of the Liabilities, Bank is hereby given a
continuing lien and right offset upon and against all debts, credits and credit
balances owing from Bank to the undersigned and against all moneys, securities,
uncollected deposits, collection items, chooses in action, the avails of any
thereof and any other property of any nature whatsoever of the undersigned which
may for any purpose be actually or constructively held by or in transit to Bank
or any of its affiliates, correspondents or agents, or the subagents of any of
them, or placed in any safe deposit box leased by Sterling Safe Deposit Company
of New York to the undersigned, and agree that Bank may apply the same on
account of the Liabilities. The undersigned further agree that, if there should
be any default hereunder or with respect to the Liabilities, or if at any time
the market value of any collateral security hereunder should decline to such an
<PAGE> 59
extend as, in the sole and unrestricted opinion of Bank, may make the equity
therein insufficient collateral security for the payment of the Liabilities, the
Bank is hereby authorized, at any time or times, to sell, at one or more sales,
assign and deliver the whole or any part of such collateral security, whether or
not the same consists in whole or in part commercial paper, chooses in action or
any other property of any other nature whatsoever, and any substitutions
therefor and additions thereto, and any other unliquidated security provided for
herein, and any and all right, title and interest of the undersigned in any
thereof, at any broker's board or at public or private sale, at the option of
Bank, with or without demand for payment for additional collateral security or
for other performance and without regard to any such demand, if made, and that
Bank may be the purchaser of any and all of such collateral security or other
property so sold and hold the same thereafter in its own right absolutely free
from any claim or right of redemption on the part of the undersigned, which is
hereby waived and released, without any responsibility in that or any other
event on Bank's part for any inadequacy of price.
The undersigned hereby authorize Bank to sign and file financing
statements at any time with respect to any collateral security without the
signature of the undersigned. The undersigned will, however, at any time on
request of Bank, sign financing statements, trust receipts, security agreements
or other agreements with respect to any collateral security. Upon the
undersigned's failure to do so Bank is authorized as the agent of the
undersigned to sign any such instrument The undersigned agree to pay all filing
fees and to reimburse Bank for all costs and expenses of any kind incurred in
any way in connection with the collateral security.
Bank is authorized, whether or not any of the Liabilities be due, in its
own name or in the name of the undersigned or otherwise, to demand, sue for,
collect and receive any money or property at any time due, payable or receivable
upon or on account of or in exchange or other security for payment of the
Liabilities. Any of the Liabilities and any security therefor, and the
obligations of any part with respect to any of them, may at anytime or times and
in whole or in part be increased, decreased, renewed, extended, accelerated,
modified, compromised, transformed or released by Bank as it may deem advisable,
without notice to or further asset by the undersigned and without affecting the
obligations of the undersigned hereunder and without any liability on the part
of Bank for any such action taken by it. Bank may pursue any of its remedies
hereunder or otherwise against any party obligated upon any for the Liabilities
and against any security therefor hereunder or otherwise at any time or times as
it may deem advisable, without being obligated to resort to any other party or
security unless and until it shall deem it advisable to do so. The undersigned
hereby waive all presentment for payment, protest and notice of protest
negotiable or other instruments to which the undersigned may be a party.
If the undersigned, as registered holder of collateral security, shall
become entitled to receive or do receive any stock certificate, option or right,
whether as an addition to, in substitution of, or in exchange for, such
collateral security, or otherwise, the undersigned agree to accept same as
Bank's agent and to hold same in trust for Bank, and forthwith deliver the same
to Bank in the exact form received with the undersigned's endorsement when
<PAGE> 60
when necessary, to be held by Bank as collateral security.
Bank may apply the net proceeds of any sale, lease or other disposition
of collateral security, after deducting all costs and expenses of every kind
incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing or the like of said collateral security or in any way relating
to the rights of Bank thereunder, including attorney's fees hereinafter provided
for and legal expenses, to the payment, in whole or in part, in such order as
Bank may elect, of one or more of the Liabilities, whether due or not due,
absolute or contingent, making proper rebate for interest or discount on items
not then due, and only after so applying such net proceeds and after the payment
by Bank of any other amounts required by any existing or future provision of law
(including Section 9-504(l)(c) of the Uniform Commercial Code of jurisdiction in
which any of the collateral security may at the time be located) need Bank
account for the surplus, if any. The undersigned shall remain liable to Bank for
the payment of any deficiency, with legal interest. Notwithstanding the holding
by Bank of any collateral or other security for payment of the Liabilities, or
any sale, exchange, enforcement, collection of, realization upon, compromise or
settlement, attempted or effected, with reference to any security, the
undersigned shall be and remain liable for the payment in full of the
Liabilities, including the aforesaid expense, except only to the extent that the
same or any part thereof shall have been reduced by payment or actual
application thereon by Bank of any security hereunder or the avails thereof.
If at any time said collateral or any other security held by Bank
hereunder shall, in the sole and unrestricted judgment of Bank, be
unsatisfactory to Bank, and the undersigned shall not on demand forthwith
furnish such further collateral or make such payment on account as shall be
satisfactory to Bank, or if any sum payable upon the Liabilities be not paid
when due, or if there should be any other default hereunder or with respect to
the Liabilities, or if any of the undersigned, or any other party liable upon or
with respect to the Liabilities, (hereinafter, whether one or more than one,
called Obligor) should die, fail, dissolve or be dissolved, become insolvent,
make any assignment for the benefit of creditors, or commit any act of
bankruptcy, or if a judgment should be rendered or order of attachment,
injunction or execution be issued, or in the event of failure to pay, withhold,
collect or remit any tax or tax deficiency when assessed or due, if any tax
assessment is made by the United States or any state, or in the event any
procedure for the enforcement of a money judgment under Article 52 of the New
York Civil Practice Law and Rules or amendments thereto be commenced, or any
receiver, trustee, conservator or custodian be appointed of, for or against, any
of the undersigned Obligor or any property of any of them, or if a petition
under any of the provisions of the Bankruptcy Act, or any amendments thereto, or
any other insolvency statute for adjudication as a bankrupt, or for
reorganization, composition, arrangement, extension or any other relief should
be filed by or against any of the undersigned or Obligor, of if any of the
undersigned or Obligor should upon request fail to furnish any financial
information to Bank or permit it to inspect their respective books of account,
records and papers, or if any statement or representation made to Bank by the
<PAGE> 61
undersigned in any financial statement or otherwise should in the opinion of
Bank be untrue or misleading, or if there should be any such change in the
condition or affairs, financial or otherwise, of any of the undersigned or
Obligor, as in the opinion of Bank may increase its credit risk respecting any
of the Liabilities, then and upon the occurrence of any such event, the
Liabilities shall become forthwith due and payable and shall forthwith be paid
by the undersigned.
Upon the happening of any of the events hereinabove set forth, and at any
time thereafter, Bank shall have, in addition to all other right and remedies,
the remedies of a secured party under the Uniform Commercial Code. The
undersigned shall upon request of Bank assemble the collateral security and make
it available, to Bank at a place to be designated by Bank which is reasonably
convenient to Bank and the undersigned. Bank will give the undersigned notice of
the time and place of any public sale of the collateral security or of the time
after which any private sale or any other intended disposition thereof is to be
made by sending notice, as herein provided, at lease five days before the time
of the sale or disposition, which provisions for notice the undersigned and Bank
agree are reasonable. No such notice need be given by Bank with respect to
collateral security which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. Any notice to
Bank shall be deemed effective only if sent to and received at the branch,
division or department of Bank conducting the transaction or transactions
hereunder. Any notice to the undersigned shall be deemed sufficient if sent to
the undersigned whose name appears first below the last known address of such
undersigned appearing on the records of Bank.Each of the undersigned hereby
designates the one whose name appears first below among the undersigned as agent
to receive notice hereunder on his or its behalf. The work "property" as used
herein includes but is not limited to instruments, documents, goods, inventory,
equipment, chattel paper, contract rights, consumer goods, accounts, general
intangibles and fixtures together with the proceeds, products and accessions of
and to any of the foregoing, all as defined by the Uniform Commercial Code and
any and all other forms of property, whether real, personal or mixed, and any
right, title or interest of the undersigned therein or thereto. Bank may pledge
any of the collateral security hereunder (either alone or with others) to the
United States or to the Federal Reserve Bank of New York, in its own right or as
agent of the United States, to secure deposits or other obligations of the Bank
of any amounts whatever. No delay on the part of Bank or any other holder hereof
in exercising any power or right hereunder shall operate as a waiver of any such
power or right; nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power right. No executory agreement unless in writing and signed by Bank
and no course of dealing between the undersigned and Bank shall be effective to
change or modify or to discharge in whole or in part this agreement. The
undersigned agree that, whenever an attorney is used to collect or enforce this
agreement or to enforce, declare or adjudicate any rights or obligations under
this agreement or with respect to collateral security, whether by suit or by any
other means whatsoever, an attorney's fee of l5% of the principal and interest
then due here under shall be payable by the undersigned against whom this
agreement or any obligation or right hereunder is sought to be enforced,
<PAGE> 62
declared or adjudicated. The undersigned, in any litigation (whether or not
arising out of or relating to the Liabilities or said collateral security) in
which Bank and any of them shall be adverse parties, waive trial by jury and,
the right to interpose any defense based upon any Statute of Limitations or any
claim of laches and set-off or counterclaim of any nature or description.
Bank is hereby authorized to correct patent error herein. Bank shall have
no duty to collect income or principal, or to send notices, perform services or
take any action of any kind respecting the management of any property deposited
as collateral security hereunder. None of the provisions hereof shall be waived,
modified, or changed orally or otherwise than in writing signed by the duly
authorized officers of Bank and the undersigned. Waiver by Bank of any provision
hereof on any one or more occasions shall not constitute a waiver thereof on any
other occasion.
If the avails of any security therefor be applied on account of any of
the Liabilities, neither the undersigned nor any other party shall have any
right of subrogation to Bank's rights in any other security for any of the
Liabilities, and the undersigned hereby waive all rights, if any, of subrogation
with respect to such other security and all rights, if any, of contribution from
Bank by reason of any such application or otherwise. The undersigned hereby
waive any notice of the acceptance of this agreement by Bank. The rights and
powers herein granted to Bank are not intended to limit any rights or powers
granted in any note or other instrument taken in connection with any of the
Liabilities, and shall in all respects be cumulative thereto. The undersigned
hereby expressly consent to and ratify all the terms, provisions and conditions
of any such note or other instrument now or hereafter taken in connection with
any of the Liabilities, and waive any further notice of the creations, maturity
and nonpayment of any such note or other instrument or of any of the Liabilities
evidenced thereby. Bank is hereby authorized, at its option, but without any
obligation to do so, to transfer or register any of the aforesaid collateral in
the name of any of its nominees without further notice to the undersigned. Bank
may assign and transfer any of the Liabilities and nay or all the collateral
security therefor and shall be thereafter fully discharged from all liability
and responsibility with respect to the Liabilities and collateral security so
transferred and the transferee shall be vested with all the powers and rights of
Bank hereunder with respect to the collateral security so transferred, but with
respect to the Liabilities and security therefor not so transferred, Bank shall
retain all rights and powers given it herein.
The undersigned agree that this agreement shall continue in full force
and effect until notice of termination thereof shall have been given in writing,
actually delivered to Bank, and receipt thereof acknowledged in writing, signed
by Bank, provided, however, that such notice shall not become effective as to
the Liabilities unpaid on the date of receipt of such notice, together with any
subsequent extensions or renewals of the Liabilities and all other obligations
arising therefrom, until the same shall have been paid in full to Bank. The
terms of this agreement shall be construed under and in accordance with the laws
of the State of New York. All the terms, provisions and conditions hereof shall
be binding upon the undersigned, their respective executors, administrators,
<PAGE> 63
successors and assign. Any provision hereof which mayprove unenforceable under
any law shall not affect the validity of any other provision hereof.
In witness whereof, the undersigned have signed, sealed and delivered
this instrument as of the l6th day of May, l995.
/s/ Rona Donaldson ATLANTIC HARDWARE & SUPPLY CORPORATION
___________________ ______________________________________
Witness
Assistant Secretary /s/ Don J. Gensinger, Jr.
______________________________________
(SEAL)
State of New York ) SS:
County of New York)
On the l6th day of May, l995, before me came Don J. Gensinger, Jr. to me known,
who, being by me duly sworn, did depose and say that he resides at New York, New
York; that he is the Vice President of Atlantic Hardware and Supply Corp., the
corporation described in, and which executed, the within agreement; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation, and that he signed his name thereto by like order.
/s/ Mae Ann Caridi
Notary Public, State of New York
No. 24-4988742
Qualified in Kings County
Commission Expires Nov. l8, l995
<PAGE> 64
SECURITY AGREEMENT
ACCOUNTS RECEIVABLE
___________________
AGREEMENT dated May l6, l995 between STERLING NATIONAL BANK & TRUST COMPANY
OF NEW YORK, 540 Madison Avenue, New York, N.Y. l0022 (Secured Party), and
ATLANTIC HARDWARE & SUPPLY CORP., 60l West 26th Street, New York, New York l000l
(Debtor), a corporation organized under the laws of the State of New York.
Debtor desires to obtain loans from Secured Party from time to time on a
revolving basis on the security of Debtor's "Receivables", as herein defined,
upon the following terms and conditions:
All advances shall be disbursed by Secured Party from its office in the City
and State of New York, and shall be governed by, and shall be construed under
the laws of such State.
l. Secured Party agrees to make advances to Debtor from time to time in such
amounts as may be mutually agreed upon to an aggregate amount outstanding up to
85% of the outstanding amount of Receivables, which shall have been assigned,
pledged or transferred to Secured Party as provided in paragraph 5 and shall be
still held by Secured Party and shall conform to the definition of "Eligible
Receivables" herein. All amounts collected by Secured Party on Receivables shall
be credited to Debtor's current account with Secured Party. The excess of
collections over Obligations as defined herein shall be paid to Debtor at the
termination of this Agreement, or at such earlier time as Secured Party may
determine.
2.(a) If at any time the ratio of Obligations to Eligible Receivables shall
exceed the foregoing percentage, Debtor shall on notification of such fact by
Secured Party forthwith pay to Secured Party such amount as will reduce the
Obligations to the foregoing percentage of Eligible Receivables.
(b) Debtor shall pay to Secured Party on demand the unpaid portion of any
Receivable which was formerly an Eligible Receivable and which has been assigned
or transferred to Secured Party or in which Secured Party otherwise has an
interest (i) if such Receivable was not paid promptly at its maturity; (ii) if
the services out of which the Receivable arises have not been performed to the
satisfaction of the Account Debtor, or the goods out of which the Receivable
arises have not been delivered to and accepted by the Account Debtor, or if
Account Debtor has returned or sought to return the goods or made any complaint
or claimed any adjustment with respect thereto; (iii) if any petition under the
Bankruptcy Act or any similar Federal or State statute or a petition for
receivership has been filed by or against the Account Debtor or its property or
if it has made an assignment for the benefit of creditors or (iv) if the Secured
Party shall at any time reasonably have rejected the Receivable as no longer
eligible.
<PAGE> 65
(c) All advances and all other obligations of Debtor shall be payable to the
Secured Party without the necessity of the Secured Party resorting to or having
recourse to any Receivable or other security, or at Secured Party's option such
amount may be charged against and deducted from any payment then or thereafter
due from Secured Party to Debtor.
(d) Upon the effective date of termination of this Agreement, all Obligations
shall be due and payable by Debtor to Secured Party.
(e) Upon full payment of all Obligations Secured Party shall reassign to
Debtor, without recourse and without warranties express or implied, all
Receivables.
3. Secured Party shall render to Debtor each month by mailing to Debtor, by
ordinary mail prepaid, a statement of Debtor's account with Secured Party, which
shall be deemed to be correct and accepted by and binding upon Debtor unless
Secured Party shall have received a written statement of Debtor's exceptions
within l5 days after the mailing thereof, and in any event shall be deemed
correct and accepted except as to the matters stated in such exceptions.
4. Definitions:
(a) "Receivables" includes but is not limited to open accounts whether or
not matured and whether or not executory, contract rights, chattel paper, notes,
rental receivables, tax refunds, installment payment obligations and other
obligations for the payment of money payable to Debtor and created by Debtor or
acquired by Debtor from others and contracts, documents, invoices and other
instruments evidencing the same, which Receivables are created or otherwise
arise out of the sale of merchandise or the supplying of services by Debtor in
the regular course of its business so otherwise The term includes any of the
foregoing classified under the Uniform Commercial Code as accounts receivable,
contract rights, general intangibles, chattel paper or instruments, and all cash
and non-cash proceeds thereof, and all security therefor and all of Debtor's
rights present or future to any property sold or leased which is represented
thereby.
(b) "Eligible Receivables" mean open account Receivables which are and at
all times shall continue to be acceptable to Secured Party in all respects, as
determined in its sold discretion exercised reasonably and in good faith. No
Receivable the amount of which the Debtor is obliged to pay to the Secured Party
pursuant to paragraph 2(b) shall be deemed to be an Eligible Receivable.
<PAGE> 66
(c) "Obligations" shall mean all advances from time to time made by
Secured Party to Debtor and to others at Debtor's request or for Debtor's
account under this Agreement and also all other indebtedness and obligations
owing by Debtor or its sub- sidiaries or affiliates or persons controlling the
Debtor to Secured Party and its affiliates under this Agreement or otherwise,
now existing or hereafter arising, whether such Obligations be absolute or
contingent, joint or several, matured or unmatured, direct or indirect, primary
or secondary, due or to become due, including without limitation the Secured
Party's compensation referred to herein, all charges and fees that Secured Party
may have incurred in filing public notices and any local taxes relating thereto,
all costs and expenses (including attorneys' fees) incurred by Secured Party in
efforts made to enforce payment or to otherwise effect collation of any
Receivables, in protecting, maintaining, preserving, enforcing or foreclosing
the pledge, lien and security interest in Receivables of Secured Party
hereunder, and in defending or prosecuting any actions or proceedings arising
out of or relating to Secured Party's transactions with Debtor, through judicial
proceedings or otherwise, all of which Debtor agrees to pay as provided herein.
If the Secured Party shall become liable to the United States in relation to
wages of employees of Debtor by virtue of Section 3505 of the Internal Revenue
Code of l954 (as added by Section l05 of the Federal Tax Lien Act of l966)
whether or not such amount has been paid by Secured Party, such amount shall be
an Obligation payable by Debtor to Secured Party hereunder. Debtor authorizes
Secured Party to pay any such amount to the United States on behalf of Debtor,
but Secured Party shall not be obligated to do so or continue to do so. Debtor
authorizes Secured Party to pay to any landlord on behalf of Debtor the amount
of any statutory landlord's lien on premises on which or in the contents of
which Secured Party has a security interest.
(d) "Base Rate" is the interest rate announced by Secured Party from time
to time as a guide for determining interest and is not necessarily the rate
charged to Secured Party's most creditworthy customers.
(e) "Account Debtor" shall mean a person (other than the Debtor or a
guarantor of the Debtor) who is obligated on an account, chattel paper, contract
right, general intangible, instrument or other Receivable.
To the extend inconsistent, the terms of this agreement shall prevail
over previous agreements between the parties.
Debtor agrees it will not lend or advance any money to its parent,
Colonial Commercial Corp., and will not declare or pay any dividends in excess
of 70% of net profits (calculated in accordance with general accepted accounting
principles) commencing with fiscal year l995 (the first period to start with the
date of this contract).
AT CLOSING, DEBTOR WILL PAY SECURED PARTY A LOAN ADMINISTRATION
FEE OF $25,000.00.
<PAGE> 67
5. As security for the payment in full of all Obligations, including all
advances made and to be made hereunder by Secured Party, Debtor does hereby
grant to Secured Party a continuing security interest in, and hereby assigns,
transfers, pledges and sets over to Secured Party all of Debtor's right, title
and interest in and to; all the Debtor's Receivables present and future, whether
or not now or hereafter specifically assigned or pledged to Secured Party, and
whether or not constituting Eligible Receivables, whether no existing or
hereafter created; all proceeds of such Receivables in whatever form, including
cash, deposit accounts, negotiable instrument and other instruments for the
payment of money; the merchandise or other property represented by such
Receivables or out of which they arise; all such property that may be reclaimed
or repossessed from Account Debtors; all other accounts due from Account Debtors
to Debtor; all of Debtor's right as an unpaid vendor or lienor including
stoppage in transit, replevin and reclamation any other of Debtor's property
held by Secured Party or by others for the Secured Party's account, including
any deposit or other balances standing to the Debtor's credit on Secured Party's
books which Secured Party may at any time, without notice, apply against payment
of any or all of the Obligations, whether or not due. The continuing general
assignment of and security interest in Receivables contained herein shall
include all documents, contracts, lien and security instruments, guarantees,
books and records evidencing, securing or relating to the Receivables, data
processing cards, tapes, tabulating runs, programs and similar material,
together with all of Debtor's rights and remedies of whatever kind or nature it
may hold or acquire for the purpose of securing and enforcing such Receivables
Debtor will mark its ledger cards, books of account and other records relating
to Receivables with appropriate notations satisfactory to Secured Party
disclosing that such Receivables have been pledge, transferred and assigned to
Secured Party.
6. In furtherance of the continuing assignment and security interest herein
contained, Debtor will upon the creation of Receivables, or at such intervals as
Secured Party may require, provide Secured Party with confirmatory assignments
in form satisfactory to Secured Party, copies of invoices to customers, evidence
of shipment and delivery, and such further information and documentation as
Secured Party may require and Debtor, at Secured Party's request, shall deliver
to Secured Party all documents and written instruments constituting or relating
to Receivables. Debtor will take any and all steps and observe such formalities
and will execute and deliver all papers and instruments and do all things
necessary to effectuate this agrement and facilitate collection of receivables.
7. Debtor will pay Secured Party as its compensation, monthly, as billed
within seven (7) days or receipt of monthly statement of charges: STERLING
NATIONAL BANK & TRUST COMPANY OF NEW YORK BASE RATE PLUS TWO PERCENT (2%) PER
ANNUM ON ALL OBLIGATIONS OUTSTANDING HEREUNDER.
<PAGE> 68
Monthly Compensation Minimum: NONE
The amount billed may be charged into the Debtor's Account by Secured Party
as of the first day of the month following the month for which it is billed.
Such amount shall be deemed paid out of the first collections in the account
subsequent to the date of the charge. At Secured Party's option up to five
business days shall be allowed subsequent to receipt of remittance checks of
Account Debtors or the Debtor to permit bank clearance and collection of such
checks before the amount thereof shall be deemed collected by Secured Party,
which time interval Debtor agrees is reasonable. If the Secured Party's base
Rate shall be increased, the compensation to be paid by Debtor to Secured Party
shall be increased by l/4 of l% per annum for each l/4 of l% per annum of
increase in said Base Rate: The Secured Party's present Base Rate is 9% per
annum. If the Secured Party's Base Rate shall be decreased, the compensation to
be paid to Secured Party shall be reduced by l/4 of l% per annum for l/4 of l%
per annum reduction in the said Base Rate. In no event, however, shall the
compensation to be paid by Debtor to Secured Party be less than the contractual
rate first shown in this Paragraph 7.
8. With respect to each Receivable, present or future, Debtor hereby makes
the following representations, covenants and warranties, which shall be deemed
to be incorporated by reference in each confirmatory assignment submitted by
Debtor to Secured Party and shall in any event be deemed to be repeated and
confirmed with respect to each Receivable as it is created or otherwise acquired
by Debtor:
(a) Debtor's chief place of business, and the office where
its records concerning Receivables are kept, is at the address
shown at the head of this Agreement. Debtor has no other place of
business except at
(SEE SCHEDULE "A" HERETO ATTACHED) Secured Party may rely upon the
foregoing until it shall have received written notice to the contrary from
Debtor.
(b) So long as any Obligations to Secured Party shall be outstanding,
Debtor shall not, without the prior written consent of Secured Party, pledge,
assign or grant any security interest in any Receivable or pledge, mortgage or
grant a security interest in ay of its inventory, equipment, or other property
to anyone except Secured Party, or permit any lien or encumbrance to attach to
any of the foregoing, or any levy to be made thereon, or any financing statement
(except the Secured Party's) to be on file with respect thereto, or sell any
Receivable, or sell any inventory otherwise than in the ordinary course of
business.
(c) Debtor is solvent and will remain so and has induced Secured Party to
make advances hereunder upon Debtor's written representation concerning its
financial responsibility, which it agrees to renew in writing to Secured Party
upon request from time to time, but in any event not less often than once each
year. No federal tax lien has been assessed against Debtor which remains unpaid
and undischarged. Debtor is not and will not be during the term of this
Agreement in default to the United States in payment or deposit of any
withholding taxes or FICA taxes, and will furnish proof in respect thereto on
request.
<PAGE> 69
(d) Debtor will furnish to Secured Party within 60 days after the close of
Debtor's fiscal year a balance sheet of Debtor as of the end of such fiscal
year, and a profit and loss statement and surplus statement, all certified by
independent public accountants acceptable to Secured Party. Debtor will furnish
to Secured Party within 30 days after the close of the first, second and third
quarters of each fiscal year similar statements, certified by a principal
financial officer of Debtor, for the elapsed portion of the fiscal year. All
such statements shall correspond to the books of account of Debtor and such
books shall have been kept and such statements prepared in accordance with
generally accepted accounting principles.
(e) All statements made and all unpaid balances appearing in the invoices,
documents, and instruments representing or constituting any Receivable or in the
title retention or security agreement accompanying such Receivable, and the
nature the transaction as indicated, are true and correct and are in all
respects what they purport to be. All signatures and endorsements that appear
thereon are genuine and all signatories and endorsers have full capacity to
contract.
(f) At the time any Receivable becomes subject to a security interest in
favor of Secured Party: Said Receivable shall be a good and valid account
representing an undisputed, unconditional bona fide indebtedness incurred by the
Account Debtor named therein for merchandise sold and delivered, or if so
indicated in the papers delivered to Secured Party, sold and shipped, or sold
and held subject to delivery instructions, or for services theretofore fully
performed by the Debtor for said Account Debtor. There are and shall be no
setoffs or counterclaims or rights of recoupment against any such Receivable; no
agreement under which any deduction or discount may be claimed shall have been
made with Debtor on any such Receivable except as indicated in a written list,
statement, or invoice furnished to Secured Party; and Debtor shall be the lawful
owner of each such Receivable and shall have the right to subject the same to a
first and prior security interest in favor of Secured Party, without limitation
by any agreement or document to which Debtor is a party or by which it is bound.
No such Receivable shall have been or shall thereafter be sold, assigned or
transferred to any person other than Secured Party or in any way encumbered
except to Secured Party and no other person shall have proceeds claims together,
and the Debtor shall defend the same against the claims and demands of all
persons.
9. Until the Debtor's authority so to do is terminated by written notice from
Secured Party (which notice Secured Party may give at any time in its discretion
or at any time after default by Debtor under this Agreement) Debtor will, at its
own cost and expense, but on Secured Party;s behalf and for Secured Party's
account, collect and otherwise enforce as Secured Party's property and in trust
for Secured Party, all amounts unpaid on Receivables, and shall not ot commingle
such collections with Debtor's own funds or use the same except to pay Debtor's
obligations to Secured Party. Debtor shall forthwith remit all amounts so
<PAGE> 70
collected in kind, whether in the form of cash, checks, drafts, notes,
acceptances or other evidence of payment, including all prepayments by Account
Debtors to Debtor in the form received.
l0. Any remittance received by Debtor from any Account Debtor shall be
presumed applicable to Receivables and subject to Secured Party's security
interest and shall be turned over by Debtor to Secured Party forthwith. No
check, note draft or other instrument for the payment of money which may be
received on any Receivable shall be considered to be payment thereof for any
purpose whatsoever hereunder unless and until the same has actually been
collected by Secured Party.
ll. Secured Party shall at all reasonable times have full access to and the
right to audit Debtor's accounts, books, records, shipping records and
correspondence; to confirm orders and to verify all Receivables assigned to
Secured Party in the name of Secured Party or any other name used by Secured
Party for verifications or through any public accountant, and to take any other
steps deemed necessary or advisable by Secured Party to protect its interest.
12. Debtor hereby irrevocably authorizes and directs all accountants and
auditors employed or engaged by Debtor at any time during the term of this
Agreement and all data processing centers or other persons holding materials
herein mentioned relating to Debtor to exhibit to Secured Party and to deliver
to its copies of any of Debtor's financial statements, trial balances or other
accounting records of any sort in their possession, or data processing cards,
tapes, programs, tabulating runs, or similar material and to disclose to Secured
Party any information they may have concerning Debtor's financial status and
business operations, whether relating to Receivables or otherwise, and
authorizes Secured Party to relay thereon. Debtor will at the request of Secured
Party execute confirmatory letters of direction in accordance with this
paragraph.
13. Debtor shall immediately notify Secured Party of all cases involving the
return, rejection, repossession, loss of or damage to merchandise covered by the
Receivables, of any request for credit or adjustment of any merchandise or other
dispute arising with respect to the Receivables; and generally of all happenings
and event affecting Receivables or the value or amount thereof. If any Account
Debtor shall reject or return merchandise, or if any merchandise be repossessed,
Debtor will forthwith deliver the same to Secured Party or notify Secured Party
and hold the same segregated in trust for and subject to the order of Secured
Party, and Secured Party may take and sell the same without notice upon such
terms as it shall determine. Debtor is to remain liable for any difference
between the original invoice price and the net proceeds of resale, after
expenses. At Secured Party's option, Debtor will pay to Secured Party the amount
of the original Receivable relating to such goods. In case any such goods should
be resold, the Receivable thereby creates shall be deemed subject to Secured
Party's security interest hereunder.
<PAGE> 71
14. In the event any one or more of the following Events of Default shall
occur and be continuing: if Debtor shall have failed to pay any Obligation when
due; or if Debtor shall have breached any of the provisions of this Agreement or
any other agreement between the parties now existing or hereafter entered into,
or if any statements furnished by Debtor relating to the Receivables or to the
operations and financial condition of Debtor shall have proved to be false in
any material respect; or if Debtor shall become insolvent; or if Debtor shall be
unable to meet its debts as they mature, or shall have suspended operations; or
if Debtor shall have discontinued its business as a going concern, or shall have
committed an act of bankruptcy or made an assignment for the benefit of
creditors; or if a meeting of Debtor's creditors shall have been called; or if
there shall have been filed by or against Debtor a petition under any of the
provisions of the Bankruptcy Act; or if any proceeding shall have been commenced
by or against Debtor under any insolvency law; or if a receiver or trustee shall
have been appointed to administer the assets or affairs of Debtor; of if a
judgment shall have been entered or an attachment shall have been levied against
the assets of Debtor which, in the judgment of Secured Party, will adversely
affect Debtor's ability to perform this Agreement or which, in Secured Party's
judgement, will impair the enforceability of Secured Party's lien upon and
security interest in the Receivables or if the condition or affairs of Debtor
shall so change as, in the opinion of Secured Party shall increase its credit
risk, or if it deems itself insecure; or if any of the foregoing events shall
have occurred in reference to any guarantor for the Debtor; then in any of such
events, all of Debtor's obligations shall at the option of Secured Party
immediately become due and payable without notice and Secured Party shall have
in any jurisdiction where enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code of New York. All requirements of notice shall be met if
Secured Party shall give to Debtor at least five (4) days' prior written notice
of the time and place of any public sale of Receivables or other property or of
the time after which any private sale or any other disposition is to be made,
which period of notice Debtor agrees is reasonable; nor shall not notice be
required if the property is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market. The net cash proceeds
resulting from the exercise of any of the foregoing rights, after deducting all
charges, expenses, costs and attorneys' fees relating thereto, shall be applied
by Secured Party to the payment of Obligations, whether due or to become due, in
such order as Secured Party may elect, and Debtor shall remain liable to Secured
Party for any deficiency, which shall be paid on demand. If an attorney is used
to enforce or collect the Obligations an attorney's fee of l5% thereof shall be
added thereto.
<PAGE> 72
15. Debtor shall notify Secured Party if any Receivable includes an amount
equal to any tax due to any governmental taxing authority. If a Receivable
includes a charge for any tax payable to any governmental taxing authority,
Secured Party is authorized, in its discretion, to pay the amount of such tax
for the account of Debtor and to charge Debtor's account therefor. If at any
time Secured Party shall be required to pay any Federal, State or local taxes of
any kind in relation to the Receivables, Secured Party may charge to Debtor as
an advance the amount of tax so paid. If Secured Party becomes liable to the
United States on Debtor's account by virtue of Section 3505 of the Internal
Revenue Code of l954 (as added by Section l05 of the Federal Tax Lien Act of
l966) Secured Party may charge the amount thereof to Debtor's current account
whether or not Secured Party has made payment, and Debtor shall pay Secured
Party the amount thereof on demand or present satisfactory proof that Debtor has
paid the amount involved to the United States.
16. Debtor hereby constitutes Secured Party and each of its officers, agents
or designees as Debtor's Attorney in Fact with power to endorse the name of
Debtor upon any notes, acceptances, check, drafts, money orders or other
evidences of payment or collateral that may come into Secured Party's
possession; to sign Debtor's name to any invoice or bill of lading relating to
any Receivable, drafts against Account Debtors, assignments, verifications and
notices to Account Debtors; to send verifications of Receivables to any Account
Debtor; to execute in Debtor's name as well as its own name and to file
financing statements and other instruments or documents; to do all other acts
and things necessary to carry out this Agreement; to receive,open and dispose of
all mail addressed to Debtor and to notify the post office authorities to change
the address for delivery of mail addressed to Debtor to such address as Secured
Party may designate. All acts of said attorney or designee are hereby ratified
and approved, and said attorney or designee shall not be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law.
This power, being coupled with an interest, is irrevocable while any obligations
shall remain unpaid. Debtor authorizes Secured Party to file in its own name as
Secured Party any financing statement under the Uniform Commercial Code which
Secured Party deems necessary or advisable to perfect the security interests
which it is intended that Secured Party have under this Agreement.
17. Debtor subordinates to the payment of any obligations due or to become due
to Secured Party from Account Debtors on Receivables, any and all sums then and
thereafter due and to become due to Debtor from such Account Debtors, waiving
and postponing all rights with respect thereto until such obligations to Secured
Party shall have been fully discharged. In addition to such subordination,
Debtor hereby assigns such sums to Secured Party as additional collateral for
all Obligations hereunder.
<PAGE> 73
18. Secured Party may, without notice to or consent from Debtor, sue upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise, upon any terms, and Receivable or any security or
insurance applicable thereto, which is hereby assigned to Secured Party, and
release any Account Debtor thereon, or accept the return of any merchandise, all
without affecting in any way the liability of Debtor hereunder.
19. Debtor shall not, without the consent of Secured Party, compromise or
adjust any Receivable (or extend the time for payment thereof) or grant any
additional discounts, allowances or credits thereon, or accept the return of any
merchandise. Upon the making of any such unauthorized discounts, allowances or
credits or acceptance of returns, Debtor shall forthwith pay to Secured Party a
sum equal thereto to apply on the Obligations.
20. Failure by Secured Party to exercise any right, remedy or option under
this Agreement or declare any default herein or delay by Secured Party in
exercising the same shall not operate as a waiver thereof or as a waiver of any
similar right or remedy in any other situation. No waiver by Secured Party shall
be effective unless it is confirmed in writing and then only to the extent
specifically stated. Secured Party's rights and remedies under this Agrement
shall be cumulative and not exclusive of any other right or remedy which Secured
Party may have. No course of dealing shall be effective to change modify or
discharge any provision hereof. Secured Party's rights shall remain in full
force and effect notwithstanding the fact that Debtor's account may from time to
time be temporarily in a credit position, until final payment of all Obligations
in full. Debtor waives all right to a trial by jury in any litigation relating
to any transaction under this Agreement. To the extent that Debtor's Obligations
are now or hereafter secured by property other than the Receivables or supported
by the guarantee, endorsement or property of any other person, firm or
corporation, then Secured Party shall have the right in its sole discretion to
determine which rights, security, liens, security interests, or remedies Secured
Party shall at any time pursue, relinquish, subordinate, modify or otherwise act
with respect thereof, without in any way modifying or affecting any of Secured
Party's rights hereunder. Debtor hereby waives presentment, notice of dishonor
and protest of all instruments included in or evidencing Receivables or
collateral and, except as specified herein, any and all other notices and
demands whatsoever, whether or not relating to such instruments. Secured Party
shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any Receivables or any instrument received
in payment thereof or for any damage resulting therefrom. Secured Party shall
not be obligated to take any particular steps in collection in any situation
where it has taken over collection of any Receivable or Receivables.
<PAGE> 74
21. Neither this Agreement, nor any portion or provision hereof, may be
changed, modified, amended, waived, supplemented, discharged, cancelled, or
terminated orally or in any manner other than by an agreement in writing signed
by the party to be charged. Any notices to be served hereunder must (except as
stated) be served by registered mail, addressed to the last known post office
address of the party to whom such notice is given and shall be deemed served
when deposited in any post office or branch post office. Demands or notices
addressed to the Debtor's address at which Secured Party customarily
communicates with the Debtor by hand delivery or by facsimile transmission shall
also be effective.
22. This Agreement shall inure to the benefit of and shall be binding upon the
respective successors and/or assigns of Debtor and Secured Party. It shall
become effective on the day when finally accepted by Secured Party at its office
in the State of New York. This Agreement shall remain in effect for a period of
one year from the date hereof and shall be deemed automatically renewed for
successive periods of one year; subject, however, to the right of either party
to terminate it as at the end of the first or any succeeding year, upon at least
sixty (60) days written notice. Should an Event of Default as defined hereunder
have occurred and be continuing, this Agreement shall be terminable at any time
by Secured Party forthwith on written notice. The termination of this Agreement
shall not to affect any of Debtor's obligations with respect to Receivables
assigned to Secured Party or any obligations to Secured Party incurred prior to
the effective date of such termination, and the provisions hereof shall continue
to be fully operative until all transactions entered into rights created or
obligations incurred prior to the termination have been fully disposed of,
concluded or liquidated
23. This Agreement together with all assignments made hereunder shall be
deemed made in New York and subject to the laws of the State of New York and
Debtor consents to the jurisdiction of any local, State or Federal Court located
within the State of New York, and if Debtor is presently or in the future
becomes a non-resident of the State of New York, Debtor hereby waives personal
service of any and all process and consents that all such service of process
shall be made by certified or registered mail, return receipt requested,
directed to Debtor at its address appearing on the records of the Secured Party
and service so made shall be complete ten (l0) days after the same has been
posted as aforesaid.
24. The following paragraphs attached are a part of this
Agreement:
<PAGE> 75
IN WITNESS WHEREOF, Secured Party and Debtor have caused this Agreement to be
executed by their respective officers duly authorized the day and year first
above written.
ATLANTIC HARDWARE & SUPPLY CORP.
________________________________
Corporation
(SEAL) By /s/ Don Gensinger, Jr.
________________________________
(Vice President)
ACCEPTED at New York, N.Y. STERLING NATIONAL BANK & TRUST
on May l9, l995 COMPANY OF NEW YORK
By /s/ Leonard Rudolph, SVP
________________________________
By /s/ Glen Johnson, SVP
________________________________
<PAGE> 76
SCHEDULE "A"
ATLANTIC HARDWARE & SUPPLY CORPORATION
Debtor has no other place of business except at:
60l West 26th Street
New York, NY l000l
5659 Oakbrook Parkway
Norcross, GA 30093
607-A Country Club Drive
Bensenville, IL 60l06
42l North Pennsylvania Ave. Suite 211
Wilkes-Barre, PA l9702
<PAGE> 77
CERTIFICATE OF CORPORATE RESOLUTION
I , do hereby certify that I am (Assistant) Secretary of ATLANTIC
HARDWARE & SUPPLY CORPORATION, a corporation organized under the laws of the
State of New York, and that a special meeting of the Board of Directors of said
corporation, duly held at its office on May l6, l995, at which a quorum was
present and acting throughout, the following resolutions were duly moved,
seconded, and unanimously adopted:
RESOLVED: That it is to the best interests of this corporation to enter into
the agreement with STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK, 540
Madison Avenue, New York, NY l0022, hereinafter referred to as "Sterling", to be
dated this day providing for; the sale, pledge, assignment, negotiation and
guarantee to Sterling of accounts, notes, documents, instruments, chattel paper
and other forms of obligations; the pledge and assignment of inventory, goods
and chattels now or hereafter owned by this corporation; the pledge of stock now
or hereafter owned by this corporation; and such other and further documentation
as may be necessary to effectuate the financing arrangements contemplated
between Sterling and this corporation; and it was further
RESOLVED: That the President, Vice-President, Treasurer, Secretary or other
officer of this corporation, or any one or more of them, be and the same are
hereby authorized and empowered, on its behalf, to execute and deliver said
agreements and any modifications thereof; and it was further
RESOLVED: That any officer or officers of this corporation and/or their
nominees are hereby authorized and empowered, on its behalf, to execute and
deliver any and all schedules of assignments of accounts, transfer of
instruments, sales, pledges, notes, financial, financing and other statements,
and any and all further agreements, papers, documents and certificates, as may
from time to time be required by said Sterling, upon any matters or transactions
arising under said agreements or in connection with any further financial
arrangements with this corporation; and it was further
RESOLVED: That all acts of the officers of this corporation and/or their
nominees and all agreements, modifications, transfers, assignments, certificates
and statements, which they or any of them may do, execute or deliver in
pursuance of said agreements and to facilitate transactions thereunder, and are
hereby ratified and approved; and it was further
RESOLVED: That any officer, agent or nominee of Sterling is hereby
authorized and empowered to endorse the name of this corporation to any and all
checks, drafts and other instruments or orders for the payment of money, payable
to this corporation or its order, to deposit the same in any account or accounts
of said Sterling, with any BANK, BANKER OR TRUST COMPANY, and to deal with any
and all such checks, drafts, and other instruments or orders for the payment of
money and the proceeds thereof as the property of said Sterling; and it was
further
<PAGE> 78
RESOLVED: That the said BANK, BANKER OR TRUST COMPANY be, and they hereby
are, authorized and requested to receive for deposit to the credit of said
Sterling without further inquiry, all such checks, drafts and other orders or
instruments for the payment of money, payable to this corporation or its order
and that said banks shall be under no liability to this corporation, with
respect to the disposition which said Sterling may or shall make of the said
instruments or the proceeds thereof."
I further certify that the foregoing resolutions remain in full force and
effect, and have not been rescinded or modified.
I further certify that I am the custodian of and am familiar with the books
and records of said corporation and nothing contained in the Certificate of
Incorporation, By-Laws or any other records prohibits the execution of the
aforementioned agreements by said corporation.
I further certify that the following are duly elected officers of said
corporation:
President - /s/ Paul Selden Vice Pres. /s/ Don Gensinger
______________________ _____________________
Treasurer - /s/ Don Gensinger Secretary /s/ Jules Ross
______________________ _____________________
Asst.Secy.- /s/ Rona Donaldson
______________________
IN WITNESS WHEREOF, I have hereunto set my hand as (Assistant) Secretary of
said corporation and affixed its corporate seal, by order of its Board of
Directors this l6th Day of May, l995
/s/ Rona Donaldson
________________________________________(SEAL)
(Assistant Secretary)
<PAGE> 79
Exhibit 10(g)(iii) - Guarantee of all liabilities and Security Agreement
<PAGE> 80
STERLING NATIONAL BANK
& TRUST COMPANY OF NEW YORK
Guaranty of all Liabilities and Security Agreement
Date: May l9, l995
IN CONSIDERATION of any existing Liabilities (as hereinafter defined) of
the within named Obligor to Sterling National Bank & Trust Company of New York
(hereinafter called Bank) and in order to induce Bank, in its sole discretion,
at any time(s) hereafter, to make loans or advances, or extend credit in any
other form or manner, including renewals or extensions of time, purchase or
discount any notes, bills receivable, drafts, acceptances, checks or other
instruments or evidences of indebtedness upon which Obligor is or may become
liable as make, endorser, acceptor or otherwise or to issue letters of credit or
create bankers' acceptances for the account of the Obligor or extend the time,
or make any other financial accommodation in any form at any time to or for the
within named Obligor, the undersigned (which term and any context in which it
may be used herein, shall be deemed to be singular in sense if this agreement is
not signed by more than one party) hereby absolutely and unconditionally
guarantee the full and prompt payment when due, by acceleration or otherwise,
and at all times thereafter, to Bank, its successors, transferees, and assigns,
of any and every liability or liabilities in any amount, of any nature and in
any form, now existing or hereafter arising, of or from
ATLANTIC HARDWARE & SUPPLY CORP.
601 WEST 26TH STREET
NEW YORK, NY 10001
(hereafter called Obligor) to Bank, including without limiting the generality of
the foregoing, all negotiable and other instruments and all obligations of any
other nature or form and any interest, charges, fees or penalties due thereon,
whether absolute or contingent, direct or indirect, secured or unsecured,
matured or unmatured, upon or with respect to which Obligor may be liable and
which may at any time be acquired by Bank and any and all expenses including
attorneys' fees which may be incurred by Bank in collecting all or any of the
Liabilities and/or enforcing any rights hereunder (all hereinafter, whether one
or more than one, called Liabilities).
The undersigned agree that they shall be jointly and severally bound
hereunder, that the Liabilities and the obligations of any party with respect
thereto may at any time or times and in whole or in part be increased,
decreased, renewed, extended, accelerated, modified, compromised, transformed or
released by Bank as it may deem advisable, without notice to or further assent
by the undersigned and without affecting the obligations of the undersigned
hereunder, and that Bank may pursue any of its remedies hereunder, upon any of
the Liabilities or otherwise against any party or security at any time or times
as it may deem advisable, without being obligated to resort to any other party
or security unless and until it shall deem it advisable to do so. The
undersigned hereby waive all demands for performance or of payment of the
Liabilities, any presentment for payment, any protest and all notices of
<PAGE> 81
presentment, non-payment and protest of all negotiable or other paper upon which
Obligor may be liable, all notices of acceptance of this guaranty, notice of
adverse change in Obligor's financial condition or of any other fact which might
materially increase credit risk of Bank or undersigned, and all demands, and
notices if any, which Bank might otherwise be required to give in connection
with the exercise of any of its rights hereunder upon any of the Liabilities or
otherwise. The undersigned agree that Bank may, at its option, sue separately
hereon or upon any one or more of the Liabilities and hereby waive any defense
in any action that Bank has split its cause of action.
The undersigned further agree that, if Obligor or any of the undersigned
should die, fail, dissolve or be dissolved, become insolvent, make any
assignment for the benefit of creditors, call a meeting of any creditors,
appoint a committee of any creditors, or a liquidating agent, offer to, or
receive from, any creditors a composition or extension of any of their
indebtedness, make, or send notice of an intended bulk sale, assign, pledge,
mortgage or grant a security interest in any account receivable or other
property, suspend payment, wholly or partly suspend or liquidate their usual
business, fail after demand, oral or otherwise, to furnish any financial
statements or information or to permit inspection of books or records of
account, make any misrepresentation to Bank for the purpose of obtaining credit
or an extension of credit, or in the event of failure to pay, withhold, collect
or remit any tax or tax deficiency when assessed or due, or if any tax
assessment is made by the United States or any state, or any subdivision thereof
or in the event any procedure for the enforcement of a money judgment should be
rendered or order of attachment, injunction or execution issued against, or any
receiver, trustee, conservator or custodian appointed of or for Obligor or any
of the undersigned, or any property of any of them, or any proceeding is
instituted against Obligor or any of the undersigned alleging the inability to
pay debts as they mature, or be the subject of a bankruptcy, insolvency,
reorganization or similar proceeding, or for composition, arrangement, extension
or any other relief, or if there should be any change in the condition or
affairs, financial or otherwise, of Obligor or of any of the undersigned, as in
Bank's opinion may increase its credit risk respecting the Liabilities, or if
Obligor should fail to pay any of the Liabilities to Bank, or if any statement
or representation made to Bank by Obligor or any of the undersigned in any
financial statement or otherwise should in the opinion of Bank be untrue or
misleading or omit to state any fact necessary in order to make the same, in the
light of the circumstances under which it was made, not misleading, then, and
upon the occurrence of any such event, unless Bank shall otherwise elect, all
the Liabilities of Obligor to Bank shall, without notice or demand, become
immediately due and payable and shall forthwith be paid by the undersigned,
notwithstanding any time or credit allowed under any of the Liabilities or any
instrument evidencing the same.
<PAGE> 82
Corporate Resolution (Guaranty)
I, the undersigned Secretary of Colonial Commercial Corp. a
corporation (the Corporation) organized and existing under the laws of
the State of New York
DO HEREBY CERTIFY that a meeting of the Board of Directors of the
Corporation duly held on March 23, l995, at which meeting a quorum of said Board
was present, the following resolutions were duly adopted that said resolutions
and said actions have been duly entered in the minute book of the Corporation,
are consistent with the Certificate of Incorporation and by-laws of the
Corporation, unrevoked and unamended, in full force and effect, namely:
RESOLVED, that it is to the best interests of the Corporation, that
the Corporation unconditionally guarantee the payment to Sterling National
Bank & Trust Company of New York (the Bank) of all liabilities of or from
Atlantic Hardware & Supply Corp., a corporation organized under the laws of
the State of New York, to the Bank in form acceptable to the Bank:
and it is further
RESOLVED, that any officer or officers of the Corporation be and he
or they hereby are authorized and directed unconditionally to execute and
deliver the guaranty of payment to the Bank as aforesaid, and to take such
further action and do all such other acts and things as he or they may deem
desirable to effectuate the intent of these resolutions.
IN WITNESS WHEREOF, I have hereunto inscribed my official signature and
affixed the seal of the Corporation this l9th day of May l995.
/s/ James W. Stewart
____________________
Secretary
(SEAL)
Instruction: The following portion should be completed by a_l_l_
shareholders if the guaranteeing corporation is not a public corporation.
The undersigned hereby certify that they are all the shareholders of the
Corporation; that they know that the foregoing certificate and resolutions are
true and binding upon the Corporation in all respects; that they consent thereto
and that the following are their true signatures duly inscribed by them:
No.Shares No.Shares
__________________________ _________ ___________________________ _________
__________________________ _________ ___________________________ _________
<PAGE> 83
As collateral security for the obligations and liabilities of undersigned
hereunder, as well as for the payment of any and all other liabilities and
obligations of undersigned to Bank for another or others and claims of every
nature and description of Bank against undersigned whether now existing or
hereafter incurred, originally contracted with Bank and/or with another or
others and now or hereafter owing to or acquired in any manner in whole or in
part by Bank or in which Bank may acquire a participation, whether contracted by
undersigned alone or jointly and/or severally with another or others, absolute
or contingent, direct or indirect, secured or unsecured, matured or unmatured,
under- signed does hereby grant Bank a security interest in, and does hereby
pledge, assign, transfer and set over to and deposit with Bank or its agents the
following property of which the undersigned is the absolute owner.
Further, undersigned does hereby give to Bank a security interest in and a
continuing lien and/or right of offset upon and against all debts, credits and
credit balances owing from Bank or any of its affiliates to each of the
undersigned, and, further, a security interest in and a continuing lien upon
and/or right of offset against all money, securities, uncollected deposits,
collection items, choses in action, interest, premium and dividends thereon, and
avails of any thereof, and any other property of any nature whatsoever of each
of the undersigned which may for any purpose be actually or constructively held
by, or in transit to Bank or any of its affiliates, agents, correspondents or
the sub-agents of any of them; or which may be placed in any safe deposit box
leased by Bank to the undersigned; and upon all proceeds and products thereof
and renewals and substitutions therefor; that in the case of securities, Bank
may register at any time, in Bank's discretion, without notice any of the
property in Bank's name or in the name of Bank's nominee and Bank or its nominee
may exercise all voting and corporate rights with respect thereto as if the
absolute owner thereof; that undersigned authorizes Bank to sign and file
financing statements at any time with respect to the property without the
signature of either the Obligor or undersigned and undersigned will at any time
on Bank's request sign financing statements, security agreements or other
agreements with respect to the property and, on the failure of undersigned so to
do, Bank is authorized as the agent of undersigned to sign any such instrument;
that Bank may at its option apply any or all of the aforesaid properties on
account of any of the Liabilities or other obligations and liabilities of
undersigned to Bank as it may elect that Bank shall be under no obligation to
resort first to any additional collateral securing the Liabilities or other
obligations and liabilities of undersigned to Bank or to accord pro rata
treatment with respect thereto; the Bank may exercise any and all of its other
rights hereunder, upon any of the Liabilities or otherwise and, upon the
occurrence of any default hereunder or with respect to any of the Liabilities or
other obligations and liabilities of undersigned to Bank, Bank may forthwith
collect, receive, appropriate and realize upon any and all collateral security,
or any part thereof, and/or may forthwith sell, assign, give option or options
to purchase, and deliver said collateral security, or any part thereof, or any
property whatever of any kind to which it may be entitled as collateral security
for the Liabilities or other obligations and liabilities of undersigned to Bank,
in one or more parcels, at public or private sale or sales, at any exchange,
<PAGE> 84
brokers' board or at any ofBank's offices or elsewhere, at such prices as it may
deem best, for cash, or on credit, or for future delivery, without assumption of
any credit risk, with the right to Bank upon any such sale or sales, public or
private, to purchase the whole or any part of said collateral security so sold.
The undersigned further agree that Bank may be the purchaser at any such sale
without any responsibility in that or any other event on Bank's part for any
inadequacy of price; and that, if the avails of any security therefor be applied
on account of any of the Liabilities or other obligations and liabilities of
undersigned to Bank, neither undersigned nor any other party shall have any
right of subrogation to Bank's rights in any other security for any of the
Liabilities or other obligations and liabilities of undersigned to Bank, and
undersigned hereby waive all rights, if any, of subrogation with respect to such
other security and all rights, if any, of contribution from Bank by reason of
any such application or otherwise Bank may apply the net proceeds of any such
collection, receipt, appropriation, realization or sale, after deducting all
costs and expenses of every kind incurred therein or counsel fees, to the
payment in whole or in part, in such order as Bank may elect, of one or more of
the Liabilities or other obligations and liabilities of undersigned to Bank,
whether then due or not due, absolute or contingent, making proper rebate for
interest or discount on items not then due and accounting for the surplus, if
any, to the undersigned, who shall remain liable to Bank for the payment of any
deficiency any private sale or any other intended disposition thereof is to be
made by sending notice, as herein provided, at least five days before the time
of the sale or disposition, which provisions for notice the undersigned and Bank
agree are reasonable. No such notice need be given by Bank with respect to
collateral security which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. In addition to
all other rights and remedies, Bank shall haver the remedies of a secured party
under the New York Uniform Commercial Code. The undersigned agree that, whenever
an attorney is used to collect or enforce this agreement or to enforce, declare
or adjudicate any rights or obligations under this agreement, whether by suit or
by any other means whatsoever, a reasonable attorney's fee shall be paid by each
of the undersigned against whom this guaranty agreement or any obligation or
right hereunder is sought to be enforced, declared or adjudicated.
The undersigned acknowledge that this guaranty agreement and obligations of
the undersigned hereunder are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to this guaranty agreement and
obligations of undersigned hereunder or the obligations of any other person or
party (including, without limitation, Obligor) relating to this guaranty
agreement or the obligations of undersigned hereunder or otherwise with respect
to the Liabilities or other obligations and liabilities of undersigned to Bank.
This guaranty agreement sets forth the entire agreement and understanding of
Bank and undersigned, and undersigned absolutely, unconditionally and
irrevocably waive any and all rights to assert any defense, set-off,
counterclaim or cross-claim of any nature whatsoever with respect to this
guaranty agreement or the obligations of undersigned or the obligations of any
other person or party (including without limitation, Obligor) relating to this
<PAGE> 85
guaranty agreement or theobligations of undersigned under this guaranty
agreement or otherwise with respect to the Liabilities or other obligations and
liabilities of undersigned to Bank in any action or proceeding brought by the
holder hereof to collect the Liabilities or any portion thereof, or to enforce,
the obligations of undersigned under this guaranty agreement. The undersigned
acknowledge that no oral or other agreements, understandings, representations or
warranties exist with respect to this guaranty agreement or with respect to the
obligations of undersigned hereunder, except as specifically set forth in this
guaranty agreement.
The undersigned hereby waive and release any rights that undersigned may
now possess or hereafter acquire, whether by operation of law or through
contract, to obtain indemnity, reimbursement or repayment from Obligor of any
amount paid by the undersigned to Bank pursuant to this guaranty agreement,
whether by way of subrogation, assignment, indemnity, reimbursement, implied
contract or otherwise, including, without limitation, any defense arising by
reason of any cessation from any cause whatsoever of the liability of Obligor,
either in whole or in part, to Bank, in the event that Obligor shall be the
subject of a bankruptcy, insolvency or similar proceedings, the undersigned
agree to make no claim against Obligor or the estate of Obligor arising out of
or in relation to the performance of this guaranty agreement by undersigned and
to execute and deliver to the debtor-in-possession, trustee, receiver or other
appropriate person such releases and waivers of any claims available to the
undersigned as shall be required to evidence this waiver and release.
The execution and delivery hereafter by undersigned to Bank of a new
agreement of guaranty shall not terminate, supersede or cancel this agreement,
unless expressly provided therein, and all rights and remedies of Bank hereunder
or under any agreement of guaranty hereafter executed and delivered to Bank by
undersigned shall be cumulative and may be exercised singly or concurrently. The
undersigned further agree that this guaranty agreement shall continue in full
force and effect until notice of termination thereof shall have been given in
writing, actually delivered to Bank, and receipt thereof acknowledged in
writing, signed by Bank, provided, however, that such notice shall not become
effective as to Liabilities or other obligations and liabilities of undersigned
to Bank unpaid on the date of receipt of such notice, together with any
subsequent extensions or renewals of such Liabilities or other obligations and
liabilities of undersigned to Bank and all other obligations arising therefrom,
until all such Liabilities or other obligations and liabilities of undersigned
shall have been paid in full to Bank, that all of Bank's rights hereunder shall
continue until the same shall have been paid in full to Bank, that none of the
provisions of this guaranty agreement shall be waived,k modified or changed
orally, or otherwise than in writing signed by the duly authorized officers of
Bank and undersigned; that there are no oral understandings between Bank and
undersigned in any wise varying, contradicting or amplifying the terms hereof;
that waiver by Bank of any provision hereof on any one or more occasions shall
not constitute a waiver thereof on any other occasion, that no delay on the part
of Bank or any other holder hereof in exercising any power or right hereunder
shall operate as a waiver of any such power or right, nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any other power or right. No executory
<PAGE> 86
agreement unlessin writing and signed by Bank and no course of dealing between
undersigned and Bank shall be effective to change or modify or to discharge in
whole or in part this guaranty agreement. The undersigned agree that this
guaranty agreement shall continue to be effective or be reinstated, as the case
may be, if at any time payment or any part thereof, of the Liabilities or any
other obligations or liabilities of undersigned to Bank is rescinded or must
otherwise be restored or returned by Bank upon the insolvency, bankruptcy or
reorganization of Obligor, or otherwise, all as through such payment has not
been made. This guaranty agreement shall be construed in accordance with the
laws of the State of New York and any provision hereof which may provide
unenforceable under any law shall not affect the validity of any other provision
hereof. The undersigned consent to the jurisdiction of any local, state or
federal court located within the State of New York and irrespective of whether
undersigned now or hereafter are resident or non-resident of the State of New
York, hereby waive personal service of any and all process and consent that all
such service of process shall be made by certified or registered mail, return
receipt requested, directed to undersigned at the address of undesigned set
forth below or the last known address of undersigned in the records of Bank and
service so made shall be complete ten (l0) days after the same has been posted
as aforesaid, and all the terms, provisions and conditions of this guaranty
agreement shall be binding upon the undersigned, their respective executors,
administrators, successors and assigns.
The undersigned, in any litigation (whether or not arising out of or relating to
the Liabilities or any security therefor) in which Bank any any of them shall be
adverse parties, waive trial by jury and the right to interpose any defense
based upon ay Statute of Limitations or any claim of laches and set-off or
counterclaim of any nature or description.
IN WITNESS WHEREOF, the undersigned have signed, sealed and delivered this
instrument as of the date hereinbefore set forth.
(Corporations or Partnerships sign below) (SEAL)
COLONIAL COMMERCIAL CORP.
_________________________________________
(Name of Corporation or Partnership)
By: /s/ James W. Stewart, Exec. V.P.
_________________________________________
Title
ll-2037l82
_________________________________________
TIN
360l Hempstead Turnpike, Levittown, NY ll756
____________________________________________
Address
<PAGE> 87
STATE OF NEW YORK ) S.S.
COUNTY OF NASSAU )
On the l9th day of May, l995, before me came James W. Stewart, Executive Vice
President to me known, who, being by me duly sworn, did depose and say that he
resides at 47 Richie Ct. in St. James, New York ll780 that he is the EVP of
Colonial Commercial Corp. the corporation described in, and which executed the
foregoing instrument of guaranty; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
/s/ Jeanette Facompre
_______________________________
Notary Public, State of New York
No. 4764361
Qualified in Nassau County
Commission Expires June 30, l996
<PAGE> 88
Exhibit 10 (g) (iv) - Secured Interest Bearing Note
<PAGE> 89
NATIONAL WESTMINSTER BANK USA
SECURED INTEREST BEARING NOTE
$1,800,000.00 Office Address: 3l6l Hempstead Tpke.,
________________________________________
Tpke., Levittown, NY, May 19,l995, 78 days after date, the undersigned, for
value received, jointly and severally promise(s) to pay to the order of National
Westminster Bank USA (hereinafter called the Bank) at its office in the place
first above stated, or if no place is stated, at l75 Water Street, New York, New
York, in funds current at the New York Clearing House, the sum of One Million
Eight Hundred Thousand ($l,800,000.00) Dollars. The undersigned also promises to
pay interest at said office in like money prior to maturity at the rate per
annum indicated below:
_____The Bank's Prime Rate (the rate of interest established from time to time
by the Bank as its "prime rate") plus _____% which interest rate shall change
when and as the Prime Rate changes:
_____.......$ (or)
X calculated as provided on the reverse side hereof.
_____
If all or a portion of the principal or interest of the Liabilities (as
hereinafter defined), or any fee or other amount due in connection therewith,
shall not be paid when due (whether after stated maturity, acceleration or
otherwise), such amount, to the extent permitted by applicable law, shall bear
interest at a rate of 2% per annum in excess of the rate hereinbefore provided
but in no event in excess of the maximum rate of interest permitted under
applicable law. Interest shall be payable on the first day of each month
commencing the first such day to occur after the date hereof and on the maturity
hereof.
The undersigned grants the Bank a security interest in and pledge(s) with the
Bank, as collateral security for payment of this note and of all other notes
and/or obligations or Liabilities (as hereinafter defined) of the Obligors (as
hereinafter defined), or any one or more of them, now or hereafter owned or held
by the Bank, the following property:
Natwest CD#ll00054754 i/a/o $600,000.00 maturing 6/26/95
Natwest CD#ll00059552 i/a/o $750,000.00 maturing 8/7/95
Natwest CD#ll00059551 i/a/o $750,000.00 maturing 8/7/95
Natwest CD#ll00056408 i/a/o $300,000.00 maturing 7/ll/95
together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof and all moneys and/or other property now
or hereafter held by the Bank on deposit, in safekeeping, or otherwise for the
account of or to the credit of or belonging to any Obligor (which term as used
herein shall be deemed to include each and all of the undersigned and each and
every endorser or guarantor hereof) or in which any Obligor shall have any
interest, all of which is hereinafter termed the collateral security. The Bank
at any time, before or after an Event of Default (as hereinafter defined), may,
but shall not be obligated to, transfer into or out of its own name or that of
its nominee all or any of the collateral security including stocks, bonds, and
other securities, and the Bank or its nominee may demand, sue for collect
<PAGE> 90
receive and hold like collateral security anyor all interest dividends and
income thereon and if any securities are held in the name of the Bank or its
nominee, the Bank may, after an Event of Default exercise all voting and other
rights pertaining thereto as if the Bank were the absolute owner thereof; but
the Bank shall not be obligated to demand payment, protest, or take any steps
necessary to preserve any rights in the collateral against prior parties, or to
take any action whatsoever in regard to the collateral security or any part
thereof, all of which the Obligor assumes and agrees to do. Without limiting the
generality of the foregoing, the Bank shall not be obligated to take any action
in connection with any conversion, call, redemption, retirement or any other
event relating to any of the collateral security, unless the Obligor gives
written notice to the Bank that such action shall be taken not more than thirty
(30) days prior to the time such action may first be taken and not less than ten
(l0) days prior to the expiration of the time during which such action may be
taken. The term "Liabilities" shall include this note and all other indebtedness
and obligations and liabilities of any kind of any Obligor to the Bank, now or
hereafter existing arising directly between any Obligor and the Bank or acquired
by assignment, conditionally or as collateral security the Bank, absolute or
contingent, joint and/or several secured or unsecured, due or not due,
contractual or tortious liquidated or unliquidated, arising by operation of law
or otherwise, direct or indirect, including but without limiting the generality
of the foregoing, indebtedness, obligations or liabilities to the Bank of any
Obligor as a member of any partnership, syndicate, association or other group,
and whether incurred by any Obligor as principal, surety, endorser, guarantor,
accommodation party or otherwise.
The Obligor (if more than one, jointly and severally) hereby agrees that on
demand at any time and from time to time they will deposit and pledge with the
Bank additional collateral of a kind and of a market value required by it
further to secure any indebtedness or liabilities aforesaid. If any of the
following events shall occur with respect to any Obligor (each an "Event of
Default"); failure to comply forthwith with any such demand for additional
collateral; default in payment of any liability to the holder hereof (however
acquired); default in the due payment of any other indebtedness for borrowed
money or default in the observance or performance of any covenant or condition
in any agreement or instrument evidencing, securing or relating to any such
indebtedness which causes or permit the acceleration of the maturity thereof;
suspension or liquidation of usual business; calling of a meeting of creditors,
assignment for the benefit of creditors; dissolution, bulk sale or notice
thereof, mortgage or pledge of, creation of a security interest in, any assets
without consent of the holder of this note, insolvency of any kind, attachment,
distraint, garnishment, levy, execution, judgment, death, application for or
appointment of a receiver, filing of a voluntary or involuntary petition or
entry of any order for relief under any provision of the Federal Bankruptcy Code
as now or hereafter in effect, failure to pay its debts as they become due,
failure to comply with the terms of any agreement with the Bank, failure on
request of any Obligor any Obligor's accountant to furnish any financial
information or to permit inspection of any books or records any change in, or
discovery with regard to, the condition or affairs which in the Bank's opinion,
increases its credit risk, or if the Bank for any other reason deems itself
<PAGE> 91
insecure, the Liabilities shall become absolute, due and payable without demand
or notice to any Obligor. Upon default in the due payment of this note or any
other Event of Default, or whenever this note or any installment of principal or
interest hereof shall become due in accordance with any of the provisions
hereof, the Bank may, but shall not be required to (l) proceed to apply to the
payment hereof the balance to the credit of any account or accounts maintained
with the Bank by any Obligor and (2) sell (without demand of performance,
advertisement, notice of intention to sell, notice of time or place of sale,
notice to redeem or other notice whatsoever, all of which are hereby waived) all
or any part of the collateral security (on all of which the undersigned does
hereby give to the Bank a continuing lien, security interest and/or right of
set-off) at public or private sale or sales, or at any exchange or broker's
board, or at the Bank's office, at such prices as it shall deem best, for cash
or credit, with the right of the Bank at such sale to purchase all or any part
thereof, free from any right or equity of redemption, applying the net proceeds
of such sale to the payment of this note and of any other liabilities, claims or
obligations to the Bank of any of the Obligors, or of any partnership in which
any of the Obligors is a partner, all of whom together with any endorser or
guarantor hereby expressly agree to remain jointly and severally liable for any
deficiency. The Bank may exercise any other right or remedy hereby granted or
allowed to it by law, including but not limited to, the rights and remedies of a
Secured Party under the Uniform Commercial Code of New York,, and each and every
right and remedy hereby granted to the Bank or allowed to it by law shall be
cumulative and not exclusive the one of the other, and may be exercised by the
Bank from time to time and as often as may be necessary. The Bank shall have at
any time in its discretion the right to enforce collection and payment or
liquidation of any of the collateral security by appropriate action or
proceedings, and the net amounts received therefrom, after deducting all costs
and expenses incurred in connection therewith, shall be applied on account of
this note and any other indebtedness or liabilities of the undersigned
aforesaid, all without notice to any Obligor. The Bank shall not be bound to
take any steps necessary to preserve any rights in the collateral against prior
parties, which the Obligor hereby assumes to do. Any demand or notice, if made
or given, shall be sufficiently made upon or given to any Obligor if left at or
mailed to the last address of such Obligor known to the Bank or if made or given
in any other manner reasonably calculated to come to the attention of such
Obligor or the personal representatives, successors or assigns of such Obligor,
whether or not in fact received by them respectively. Unless the collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Bank will give the undersigned reasonable
notice of the time and place of any public sale thereof or of the time after
which any private sale or other intended disposition is to be made. Five (5)
days prior notice shall be deemed reasonable notice. The Bank may repledge all
or any part of the collateral security for any sum not in excess of the amount
due hereunder at the date of such repledge with any person, firm or corporation
for any purpose whatsoever, and may assign and transfer this note to any other
person, firm or corporation and may deliver and repledge the collateral security
or any part thereof to the assignee or transferee of this note, who shall
thereupon become vested with all the powers and rights above given to the Bank
in respect thereof, and the Bank shall thereafter be forever released and
<PAGE> 92
discharged of and from all responsibility or liability to the Obligors for or on
account of the collateral security so delivered. If an attorney is used to
enforce or collect this note, the Obligor agrees to pay attorneys fees in the
amount of 20% of the unpaid principal and interest due, which the Obligor agrees
to be reasonable. The Obligor jointly and severally promises to pay all expenses
of any nature as soon as incurred whether in or out of court and whether
incurred before or after this note shall become due at its maturity date or
otherwise and costs which the Bank may deem necessary or proper in connection
with the satisfaction of the indebtedness or the administration, supervision,
preservation, protection (including but not limited to maintenance of adequate
insurance) or of the realization upon the collateral. The Obligor and the Bank
in any litigation (whether or not arising out of or relating to this note) in
which any of them shall be adverse parties waive the right of trial by jury and
the Obligor waives the right to interpose any set-off or counterclaim of any
kind or description in any such litigation. The note shall be deemed to have
been made and delivered in the State of New York, the Obligor consents to the
jurisdiction of the courts of New York in any action brought to enforce any
rights of the Bank under this note and the rights and liabilities of the Bank
and the Obligor shall be determined in accordance with the laws of the State of
New York. Interest shall be calculated on the basis of a 360 day year and actual
days elapsed, provided that any interest so calculated hereunder shall in no
event be in excess of the maximum permitted under applicable law. This note and
any other agreements, documents and instruments executed and delivered pursuant
to or in connection with the Liabilities contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The undesigned
expressly acknowledges that the Bank has not made and the undersigned is not
relying on any oral representations, agreements or commitments of the Bank or of
any officer, employee, agent or representative thereof. No change, modification,
termination, waiver, or discharge, in whole or in part, of this instrument shall
be effective unless in writing and signed by the party against whom such change,
modification, termination, waiver, or discharge is sought to be enforced.
The Obligors, and each of them, hereby waive presentment, demand for payment,
protest, notice of protect, notice of dishonor, and any or all other notices or
demands in connection with the delivery, acceptance, performance, default or
enforcement of this note, and each of them consents to any and all delays,
extensions of time, renewals, releases of any Obligor and of any available
security, waivers or modifications that may be granted or consented to by the
Bank with regard to the time of payment or with respect to any other provisions
of this note and agrees that no such action or failure to act on the part of the
Bank shall in any way affect or impair the obligations of any Obligor or be
construed as a waiver by the Bank of, or otherwise affect, its right to avail
itself of any remedy hereunder with the same force and effect as if each Obligor
had expressly consented to such action or inaction upon the part of the Bank.
Each Obligor hereby authorizes the Bank to request his accountant or accountants
to furnish such financial information relating to such Obligor as the Bank shall
from time to time desire, each such accountant is hereby authorized to deliver
such financial information to the Bank. Each Obligor hereby authorizes the Bank
to date this note as of the day when the loan evidenced hereby is made and to
complete and fill in any blank spaces in this note in order to conform to the
<PAGE> 93
terms upon which the loan is granted. The Obligor further authorizes the Bank to
execute and the one or more financing statements covering the collateral
security or any part thereof and the Obligor agrees to bear the cost of such
filing(s). The term "Bank" as used herein shall be deemed to include the Bank
and its successors, endorsees and assigns.
Special provisions - Average CD Rate + 2.50% = 8.837%
Colonial Commercial Corp.
/s/ Bernard Korn
_________________________
Bernard Korn, President
360l Hempstead Turnpike, Levittown, NY ll756-l3l5
/s/ James W. Stewart
______________________________________
James W. Stewart, Executive Vice Pres.
360l Hempstead Turnpike, Levittown, NY ll756-l3l5
GUARANTEE
In consideration of the making of the loan evidenced by the within note, hereby
requested by the undersigned, the undersigned hereby jointly and severally
guarantee(s) to National Westminster Bank USA, its successors, endorsees or
assigns, irrespective of the genuineness, validity or enforceability hereof, the
payment when due, including all interest payable hereon and the payment of all
legal expenses incurred by the holder hereof to enforce the same or to enforce
this guarantee, and hereby consent(s) to and agree(s) to be bound by the terms
and conditions hereof and agree(s) that the collateral may be exchanged or
surrendered in whole or in part from time to time and that the time of payment
hereof may be extended, or the rate of interest altered, or the full amount of
any part hereof may be renewed one or more times without notice to the
undersigned and that this guarantee has no duty to any Guarantor to protect,
secure or insure any security interest or lien and the obligations of each
Guarantor hereunder are valid, binding and enforceable notwithstanding any
defect the Bank causes permits or suffers to exist in any security interest or
lien. The undersigned waive(s) presentment, demand, protest, notice of protest
and notice of dishonor and each of them consents to any and all delays,
extensions of time, renewals, release of any part hereof and of any available
security, waivers or modifications that may be granted or consented to by the
Bank with regard to the time of payment or with respect to any other provisions
hereof and agrees that no such action or failure to act on the part of the Bank
shall in any way affect or impair the obligations of the undersigned or be
construed as a waiver by the Bank of, or otherwise affect its right to avail
itself of any remedy hereunder with the same force and effect as if the
undersigned had expressly consented to such action upon the part of the Bank. As
security for the performance of any and of all the obligation of the
undersigned, the undersigned does hereby give the Bank a continuing lien,
<PAGE> 94
security interest and/or a right of et-off in respect to any and all property,
interest or estate and moneys of the undersigned now or at anytime hereafter
held by, or in possession of, or under control of, or on deposit with, the Bank.
____________________________________
Signature of Guarantor
____________________________________
Address
____________________________________
Signature of Guarantor
____________________________________
Address
<PAGE> 95
Exhibit 10(g)(iv) - Secured interest bearing note
<PAGE> 96
NATIONAL WESTMINSTER BANK USA
Continuing General Security Agreement
In consideration of financial accommodations (arising from loan, advance given
or to be given or to be continued to the undersigned (the "Debtor") upon the
undertaking of the Debtor by National Westminster Bank USA (together with its
affiliates and subsidiaries, hereinafter referred to as the "Bank"), the Debtor
hereby agrees with the Bank that, whenever the Debtor shall be at any time or
times directly or contingently indebted, liable or obligated to the Bank in any
manner whatsoever, the Bank shall have the following rights:
l. As security for the due and punctual payment of any and all of the present
and future Obligations of the Debtor (as defined in Section 2 below), the Debtor
hereby grants to the Bank a continuing security interest in (a) all of the
Collateral (as defined in Section 3 below), whether now or hereafter existing or
acquired, and (b) all present and future products and proceeds of the
Collateral.
2. As used herein, the term "Obligations" means all liabilities, absolute or
contingent, joint, several or independent of the Debtor now or hereafter
existing, due or to become due to, or held or to be held by, the Bank for its
own account or as agent for another or others, whether created directly or
acquired by assignment or otherwise and howsoever evidenced.
3. As used herein, the term "Collateral" means the property described opposite
the box(es) checked below together with the property described in Section 4
below:
___A. All Personal Property. All of the personal property and fixtures of the
Debtor wherever located and whether now owned or in existence or hereafter
acquired or created, of every kind and description, tangible or intangible,
including without limitation all inventory, goods, equipment, farm products,
instruments, documents, chattel paper, accounts, contract rights and general
intangibles, such terms having the meaning ascribed by the Uniform Commercial
Code.
___B. Equipment. Equipment (of any nature and description), now owned or
hereafter acquired and wherever located, employed in the operation of the
Debtor's business, and all proceeds thereof and products of such equipment in
any form whatsoever. As used herein, the term "Equipment" shall also mean and
include all spare parts therefor, all present and future additions, attachments
and accessories thereto, all substitutions therefor and replacements thereof.
Nothing herein shall be construed as giving a right to the Debtor to sell any
equipment which is the subject of this Agreement.
___C. Inventory. All of the inventory of the Debtor, of every type or
description, now owned or hereafter acquired and wherever located, whether raw,
in process or finished, all goods usable in processing the same and all
documents of title covering any inventory, and all proceeds thereof and products
of such inventory in any form whatsoever, including but not limited to accounts
and chattel paper.
<PAGE> 97
___D. Account and Chattel Paper. All of the Debtor's present and future
accounts, contract rights, general intangibles and chattel paper and all other
rights to the payment of money arising out of the sale (or lease) of goods or
services (hereinafter referred to in the plural as "Accounts" and in the
singular as "Account"), all proceeds thereof and all liens, securities,
guarantees, remedies, and privileges pertaining thereto, together with all
rights and liens of the Debtor in and to such goods, including returned or
repossessed goods, and all rights and property of any kind forming the subject
matter of any of the Accounts, including the right of stoppage in transit.
X E. Other
___
NatWest CD's i/n/o Colonial Commercial Corp. and any renewals thereafter
as follows:
CD#ll00054754 i/a/o $600,000.00 maturing 6/26/95
CD#ll00059552 i/a/o $750,000.00 maturing 8/7/95
CD#ll0005955l i/a/o $750,000.00 maturing 8/7/95
CD#ll00056408 i/a/o $300,000.00 maturing 7/ll/95
If no box is checked, Clause A (All Personal Property) shall be deemed
applicable for all purposes of this Agreement. If the Clause A box is checked,
checking also the Clause B and/or Clause C and/or Clause D and/or Clause E
box(es) is not intended, and shall not be construed to limit the generality or
legal effect of the description contained in Clause A. In the event that (i) in
addition to this Continuing General Security Agreement the Debtor is a party to
one or more other security, pledge or similar agreements, providing for a
security interest in personal property in favor of the Bank (collectively the
"Other Collateral Agreements"), and (ii) the collateral described in this
Agreement and the Other Collateral Agreements is not the same, then, in such
event this Agreement and the Other Collateral Agreements shall be read together
as one agreement such that the Obligations shall be deemed secured by the
collateral described in each of such agreements.
4. Any and all deposits or other sums at anytime credited by or due from the
Bank to the Debtor; and any and all monies, securities and other property of the
Debtor, and the proceeds thereof now or hereafter held or received by or in
transit to the Bank from or for the Debtor, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, shall at all times constitute
security for any and all Obligations.
5. The Debtor represents and warrants that: (a) no Financing Statement (other
than any which may have been filed on behalf of the Bank) relating to any of the
Collateral is on file in any public office, and (b)the Chief Executive Office
(or Major Executive Office) of Debtor (if any), and the Collateral are
respectively located at the address(es) set forth at the end of this Agreement
and Debtor will not change such location without prior written notice to and
consent of the Bank; and (c) Debtor has not created and is not aware of any
security interest, lien or encumbrance on or affecting the Collateral other than
created hereby.
6. The Debtor assumes all liability and responsibility in connection with
<PAGE> 98
all Collateral acquired by Debtor, and the obligation of the Debtor to pay all
Obligations shall in no way be affected or diminished by reason of the fact that
any such Collateral may be lost destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Debtor.
7. As long as this Agreement shall remain in effect the Debtor agrees:
(a) that if the Bank so demands in writing at any time (i) all proceeds of the
Collateral shall be delivered to the Bank promptly upon their receipt in a form
satisfactory to the Bank and (ii) all chattel paper, instruments and documents
pertaining to the Collateral shall be delivered to the Bank at the time and
place and in the manner in which specified in the Bank's demand;
(b) in order to enable the Bank to comply with the law of any jurisdiction,
including state, federal and foreign, applicable to any security interest
granted hereby or to the Collateral to execute and deliver upon request in form
acceptable to the Bank, any Financing Statement, notice, statement, instrument,
document, agreement or other paper and/or to perform any act requested by the
Bank which may be necessary to create, perfect, preserve, validate or otherwise
protect such security interest or to enable the Bank to exercise and enforce the
Bank's rights hereunder or with respect to such security interest;
(c) promptly to pay any filing fees or other costs in connection with (i) the
filing or recordation of such Financing Statements or any other papers described
above and (ii) such searches of the public records as the Bank in its sole
discretion shall require;
(d) that the Bank is authorized to file or record any such Financing Statements
or other papers without the signature of the Debtor if permitted by applicable
law'
(e) the Bank may file a photographic or other reproduction of this Agreement in
lieu of a Financing Statement in any filing office where it is permissible to do
so;
(f) except for the security interest granted hereby, the Debtor shall keep the
Collateral and proceeds and products thereof free and clear of any security
interest, liens or encumbrances of any kind, the Debtor shall promptly pay, when
due, all taxes and transportation storage and warehousing charges and fees
affecting or arising out of the Collateral and shall defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein adverse to the Bank.
(g) at all times to keep all insurable Collateral insured at the expense of the
Debtor to the Bank's satisfaction against loss by fire, theft, and any other
risk to which the Collateral may be subject; all policies shall be endorsed in
favor of the Bank and, if the Bank so requests, shall be deposited with the
Bank; and in any event, such policies will provide that each insurer will give
the Bank not less than 30 days notice in writing prior to the exercise of any
right of cancellation; in the event Debtor fails to maintain any insurance the
Bank may (but shall not be obligated to) place such insurance and pay the
<PAGE> 99
premium therefor, in whichevent Debtor will pay the Bank such premium with
interest; the Bank may apply any proceeds of such insurance which may be
received by it toward payment of the Obligations, whether or not due, in such
order of application as the Bank may determine;
(h) that the Bank's duty with respect to the Collateral shall be solely to use
reasonable care in the custody and preservation of collateral in its possession;
the Bank shall not be obligated to take any steps necessary to preserve any
rights in any of the Collateral against prior parties, and the Debtor hereby
agrees to take such steps; the Debtor shall pay to the Bank all costs and
expenses, including filing and reasonable attorney's fees, incurred by the Bank
in connection with the custody, care, preservation or collection of the
Collateral; the Bank may, but is not obligated to, exercise any and all rights
of conversion or exchange or similar rights, privileges and options relating to
the Collateral; the Bank shall have no obligation to sell or otherwise realize
upon any of the Collateral as herein authorized and shall not be responsible for
any failure to do so or for any delay in so doing; in the event of any
litigation, with respect to any matter connected with this Agreement, the
Obligations, the Collateral, or any other instrument, document or agreement
applicable hereto or to any one or more of them in any respect, Debtor hereby
waives the right to a trial by jury and all defenses, rights of setoff and
rights to interpose counterclaims of any nature;
(i) to provide the Bank with such information as the Bank may from time to time
request with respect to the location of the Collateral and any of its places of
business;
(j) that the Bank will be notified promptly in writing of any change in
any office as set forth below
(k) that the Debtor will permit the Bank, by its officers and agents, to have
access to and examine at all reasonable times the properties, minute books and
other corporate records and books of account and financial records of the
Debtor;
(l) that the Debtor will promptly notify the Bank upon the occurrence of any
default, as provided in this Agreement, of which the Debtor has knowledge.
8. If the Clause A and/or D box(es) in Section 3 (All Personal Property and/or
Accounts and Chattel Paper) is (are) checked, the following provisions shall
also be applicable.
A. Upon the occurrence of an Event of Default as defined in Section 9 hereof,
the Debtor agrees as follows: (i) the Debtor will not without first obtaining
the written consent of the Bank, renew or extend the time of payment of any
Account; (ii) the Debtor will promptly notify the Bank in writing of any
compromise, settlement or adjustment with respect to an Account and will
forthwith account therefor to the Bank in cash for the amount thereof without
demand or notice (iii) the Debtor will stamp, in form and manner satisfactory to
the Bank, its accounts receivable ledger and other books and records pertaining
to the Accounts, with an appropriate reference to the security interest of the
<PAGE> 100
Bank in the Accounts; (iv) upon request, the Debtor will furnish the Bank
original or other papers relating to the sale of merchandise or the performance
of labor or services which created any Account (v) the Debtor may collect the
Accounts, subject to the discretion and control of the Bank, but the Bank may,
without cause or notice, curtail or terminate such authority at any time (vi)
the proceeds of the Accounts, when collected by the Debtor, whether consisting
of cash, checks, notes, drafts, money orders, commercial paper of any kind
whatsoever, or other documents, received in payment of the Accounts shall be
promptly remitted by the Debtor to the Bank, in precisely the form received,
except for endorsement by the Debtor when required (vii) such proceeds until
remitted to the Bank, as aforesaid, shall be held in trust by the Debtor for,
and as the property of, the Bank and shall not be commingled with other funds,
money or property (viii) proceeds of the Accounts will be received by the Bank
subject to final collection and receipt of proceeds in cash or by unconditional
credit to and accepted by the Bank (ix) the Bank shall apply in its absolute
discretion, all collections received by it on the Accounts, toward the payment
of any of the Obligations whether due or not due (x) the Debtor will promptly
notify the Bank in writing of the return or rejection of any merchandise
represented by the Accounts and the Debtor shall forthwith account therefor to
the Bank in cash without demand or notice and until such payment has been
received by the Bank, the Debtor will receive and hold all such merchandise
separate and apart, in trust for and subject to the security interest in favor
of the Bank (xi) the Bank is authorized to sell, for the Debtor's account and
sole risk, all or any part of such merchandise in the manner and under the terms
and conditions hereinafter set forth.
B. The Debtor represents and Warrants to the Bank that the Debtor is The sole
owners of, the accounts and no one has or claims to have an interest of any kind
therein or thereto each of the Debtors named in every such Account is indebted
to the Debtor in the amount and on the terms indicated in the invoice and
schedule of Accounts each Account is bona fide and arises out of the performance
of labor or services or the sale and delivery or lease of merchandise or both;
and none of the Accounts is now, nor will at any time in the future become,
contingent upon the fulfillment of any contract or conditions whatsoever, nor
subject to any defense, offset or counterclaim.
C. The Debtor will maintain accurate and complete records of the Accounts
and will make the same available to the Bank at any time upon demand.
9. Upon non-payment when due of any of the Obligations, or upon the failure of
the Debtor to perform any agreement on its part to be performed hereunder, or by
the terms of any other related agreement covering the Obligations, or in case
the Bank deems itself insecure, or it appears at any time that any
representation in any financial or other statement of the Debtor (delivered to
the Bank by or on behalf of the Debtor) is untrue or omits any material fact, or
if a material adverse change shall occur in the financial condition of the
Debtor, or if the Debtor (or any endorser, guarantor or surely of or upon any of
the Obligations) shall die or (being a partnership or corporation) shall be
dissolved or shall become insolvent (however evidenced), or upon the suspension
of the Debtor, or upon the issuance of any warrant, process, or order of
<PAGE> 101
attachment, garnishment or lien and/or the filing of a lien as a result thereof
against any of the property of the Debtor (or any endorser, guarantor or surety
of or upon any of the Obligations), or upon the making by the Debtor or any
endorser, guarantor or surety) of an assignment for the benefit of creditors
under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt, composition, receivership, liquidation or dissolution law
or statute of any jurisdiction, then in any such event (each an "Event of
Default"), (a) all Obligations shall become at once due and payable without
notice presentment demand to payment or protest, which are hereby expressly
waived (b) the Bank is authorized to take possession of the Collateral and, for
that purpose may enter with the aid and assistance of any person or persons, any
premises where the Collateral, or any part thereof is, or may be, placed and
remove same (c) the Bank may proceed to apply to the Obligations any and all
deposits or other sums described in Section 4 hereof (d) the Bank may require
the debtor to assemble the Collateral and to make it available to the Bank at a
place designated by the Bank which is reasonably convenient to the Bank and the
Debtor (e) the Bank shall have the right from time to time to sell, resell,
assign, transfer and deliver all or any part of the Collateral, at any broker's
board or exchange, or at public or private sale or otherwise, at the option of
the Bank for cash or on credit for future delivery, in such parcel or parcels
and at such time or times and at such place or places, and upon such terms, and
conditions as the Bank, may deem proper and in connection therewith may grant
options and may impose reasonable conditions such as requiring any purchaser to
represent that any stock constituting part of the Collateral is being purchased
for investment purpose only, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon the Debtor
or right of redemption to the Debtor, which are hereby expressly waived; unless
the Collateral is perishable to threatens to decline speedily in value or is of
a type customarily sold on a recognized market, the Bank will give the Debtor
reasonable notice of the time and place of any such public sale or of the time
after which any private sale or any other intended disposition thereof is to be
made and Debtor agrees that five (5) days prior notice shall be deemed
reasonable notice (f) upon each such sale, the Bank may, unless prohibited by
applicable statute which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, rights of
redemption and equities of the Debtor, which are hereby waived and released (g)
the Bank shall, upon mailing notice to the Debtor that it so elects, have from
the date of such mailing the right from time to time to vote any shares of stock
securing any of the Obligations; provided, however, the Bank at any time before
or after the occurrence of any Event of default, may, but shall not be obliged
to, transfer into or out of its own name or that of its nominee all or any of
the Collateral which is instruments, stocks, bonds, and other securities, and
the Bank or its nominee may demand, sue for, collect, receive and hold as like
Collateral any or all interest, dividends and income thereon and if any
securities are held in the name of the Bank or its nominee, the Bank may, after
the occurrence of any such events, exercise all voting and other rights
pertaining thereto as if the Bank were the absolute owners thereof, but the Bank
shall not be obligated to demand payment of, protest or take any steps necessary
to preserve any rights in any such Collateral against prior parties, or take any
action whatsoever in regard to any such Collateral, all of which the Debtor
<PAGE> 102
assumes and agrees to do. Without limiting the generality of theforegoing, the
Bank shall not be obligated to take any action in connection with any
conversion, call, redemption, retirement or any other event relating to any of
such Collateral, unless the Debtor gives written notice to the Bank that such
action shall be taken not more than thirty (30) days prior to the time such
action may first be taken and not less than ten (l0) days prior to the
expiration of the time during which such action may be taken (h) the Bank's
obligations, if any, to give additional (or to continue) financial
accommodations of any kind to the Debtor shall immediately terminate; and (i) in
addition to the rights and remedies given to the Bank hereunder or otherwise,
the Bank shall have all of the rights and remedies of a secured party under the
New York Uniform Commercial Code.
l0. In the case of each such sale or of any proceedings to collect any of the
Obligations, the Debtor shall pay all costs and expenses of every kind for
collection, sale or delivery, including reasonable attorneys fees, and after
deducting such costs and expenses from the proceeds of sale or collection, the
Bank may apply any residue to pay any of the Obligations and the Debtor will
continue liable to the Bank for any deficiency with interest.
ll. The Bank may, but is not obligated to, (a) demand, sue for collect or
receive any money or property at any time due, payable or receivable on account
of or in exchange for any obligations securing any of the Obligations; (b)
compromise and settle with any person liable on such obligation, and/or (c)
extend the time of payment of or otherwise change the terms thereof, as to any
party liable thereon, all without incurring responsibility to the undersigned or
affecting any of the Obligations.
l2. In order to effectuate the terms and provisions hereof, Debtor hereof
designates and appoints Bank and its designees or agents as attorney-in-fact of
Debtor, irrevocably and with power of substitution, with authority to receive,
open and dispose of all mail addressed to Debtor, to notify the Post Office
authorities to change the address for delivery of mail addressed to Debtor to
such address as Bank may designate; to endorse the name of Debtor on any notes,
acceptances, checks, drafts, money orders, instruments or other evidence of
payment of proceeds of the Collateral that may come into Banks possession to
sign the name of Debtor on any invoices, documents, drafts against and notices
(which also may direct among other things that payment be made directly to the
Bank) to Account debtors or obligors or Debtor, assignments and requests or
verification of Accounts; to execute proofs of claim and loss; to execute any
endorsements, assignments, or other instruments of conveyance or transfer, to
adjust and compromise any claims under insurance policies; to execute releases;
and to do all other acts and things necessary and advisable in the sole
discretion of Bank to carry out and enforce this Agreement. All acts of said
attorney or designee are hereby ratified and approved and said attorney or
designee shall not be liable for any acts of commission or omission, nor or any
error of judgement or mistake of fact or law. This power of attorney being
coupled with an interest is irrevocable while any of the Obligations shall
remain unpaid.
13. All options, powers and rights granted to the Bank hereunder or under
any promissory note, instrument, document or other writing delivered to the Bank
<PAGE> 103
shall be cumulative and shall be in addition to any other options, powers or
rights which the Bank may now or hereafter have as a secured party under the New
York Uniform Commercial Code or under any other applicable law or otherwise.
l4. No delay on the part of the Bank in exercising any of its options, powers,
or rights, or partial or single exercise thereof, shall constitute a waiver
thereof. Neither this Agreement nor any provision hereof may be modified,
changed, waived, discharged or terminated orally, but only by an instrument in
writing, signed by the Party against whom enforcement of the modification,
change, waiver, discharge or termination is sought. The Bank shall have the
right for an in the name, place and stead of the Debtor, to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to any of the Collateral.
l5. Notice of acceptance of this Agreement by the Bank is hereby waived. This
Agreement shall be immediately binding upon the Debtor and its successors and
assigns, whether or not the Bank signs this Agreement.
l6. It is the intention of the parties (a) that, this Agreement shall constitute
a continuing agreement applying to any and all future, as well as existing
transactions between the Debtor and the Bank; and (b) that the security interest
provided for herein shall attached to afteracquired as well as existing
Collateral, and the Obligations covered by this Agreement shall include future
advances and other value, as well as existing advances and other value, whether
or not similar to prior or existing advances or other value, and whether or not
the advances or value are or shall be given pursuant to commitment, all to the
maximum extent permitted by the Uniform Commercial Code.
l7. Unless the context otherwise requires, all terms used herein which are
defined in the New York Uniform Commercial Code shall have the meanings therein
stated.
l8. If this Agreement is signed by two or more parties as debtors, they shall be
jointly and severally liable hereunder, and the term "Debtor" wherever used in
this Agreement shall mean the parties who have signed this Agreement and each of
them.
l9. Mailing Address of Debtor. For the purpose of Section 9.402(l) of the
Uniform Commercial Code, the address of the Debtor specified below under the
caption "Chief Executive Office" (or Major Executive Office" address whenever
the Chief Executive Office is located outside of the United States) shall be the
Debtor's mailing address.
20. This Agreement shall be construed in accordance with and be governed
by the law of the State of New York.
<PAGE> 104
IN WITNESS WHEREOF, the Debtor has executed this Agreement or has caused these
presents to be executed and delivered by its proper corporate officer or
officers and caused its proper corporate seal to be hereto affixed, this l5th
day of May, l995.
Colonial Commercial Corp.
__________________________________________
Debtor
By: /s/ Bernard Korn, President
/s/ James W. Stewart, Exec. V.P.
__________________________________________
<PAGE> 105
Exhibit 10(g)(v) - Employment Agreement
<PAGE> 106
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of 5/19/95, by and between Atlantic Hardware and Supply
Corp., a New York corporation with its principal office at 60l West 26th St.,
New York, N.Y. l000l (the "Company") and Paul R. Selden, residing at 415 First
Avenue, Massapequa Park, New York ll762 (the "Employee").
ARTICLE I
_________
EMPLOYMENT; TERM; DUTIES
________________________
l.0l. Employment. Upon the terms and conditions
__________
hereinafter set forth, the Company hereby employs the Employee,
and the Employee hereby accepts employment, as President of the
Company.
l.02. Employee represents and warrants to the Company that he is free to
enter into this Agreement in accordance with the terms hereof and is under no
restriction, contractual or otherwise, which would interfere with his execution
hereof or performance hereunder.
l.03. Term. The Employee's employment hereunder shall be for a term (the
____
"Term") commencing as of this date (the "Commencement Date") and terminating at
the close of business on December 3l, l997.
l.04. Duties. During the Term, the Employee shall perform such duties,
______
consistent with his position hereunder, as may be assigned to him from time to
time by the Board of Directors. The Employee shall devote his best efforts and
his entire time, attention and energies, during regular working hours, to the
performance of his duties hereunder and to the furtherance of the business and
interests of the Company, its subsidiaries and affiliate companies.
ARTICLE II
__________
COMPENSATION
____________
2.01. Compensation. For all services rendered by the Employee
____________
hereunder and all covenants and conditions undertaken by him pursuant to this
Agreement, the Company shall pay, and the Employee shall accept (i) a salary at
the rate of $200,000 per annum. Compensation shall be payable not less
frequently than in bi-weekly installments. The Company may (but shall not be
obligated to), at any time and from time to time, grant to the Employee an
increase or increases in the compensation otherwise payable pursuant to this
Section 2.0l, but such increase or increases, if any, shall not be deemed to
alter, modify, waive or otherwise affect any other term, covenant or condition
of this Agreement.
<PAGE> 107
-2-
2.02 Additional Incentive Compensation
_________________________________
For the calendar year l995 and for each of the calendar years l996 and
l997, the Employee shall receive, as additional compensation, a percentage of
the Incentive Compensation Base. Incentive Compensation Base shall mean the
Company's earnings as determined by the Company's Independent Certified Public
Accountants increased by any deduction of (i) interest paid or accrued in
connection with the acquisition of Atlantic Hardware and Supply Corp. from
Thackeray Corporation, (ii) Federal, State and local income taxes, (iii) parent
company management fees or allocation of overhead paid or accrued and (iv) this
expense. Earnings of businesses acquired by the Company shall be included in
determining Incentive Compensation Base. Incentive Compensation will be paid
within 30 days following receipt by the Company of the Independent Accountant's
report for the year involved and said report shall be binding and conclusive.
<TABLE>
<CAPTION>
Portion Of
Incentive Additional
Compensation Compensation
Base Percentages
____________ _____________
<S> <C> <C>
Up to $250,000 6%
$ 250,000 to 500,000 7%
$ 500,000 to 750,000 8%
$ 750,000 to l,000,000 9%
$l,000,000 and over 10%
</TABLE>
For example, if the Incentive Compensation Base is $800,000, the
additional compensation would be computed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
$250,000 at 6% $l5,000
$250,000 at 7% $l7,500
$250,000 at 8% $20,000
$ 50,000 at 9% $ 4,500
------- ------
$800,000 $59,000
2.03. Deductions. The Company shall deduct from the compensation
__________
described in Section 2.01 and Section 2.02 any federal, state or local
withholding taxes, social security contributions and any other amounts which may
be required to be deducted or withheld by the Company pursuant to any federal,
state or city laws, rules or regulations.
2.04. Disability Adjustments. Any compensation otherwise payable to
______________________
the Employee pursuant to Section 2.0l during any Disability Period (as that term
is hereinafter defined) shall be reduced by any amounts payable to the Employee
for loss of earnings or the like under any insurance plan or policy the premiums
for which are paid for in their entirety by the Company.
ARTICLE III
___________
BENEFITS; EXPENSES
__________________
3.01. Fringe Benefits. During the Term, the Employee shall be entitled to
_______________
participate, in amounts commensurate with the Employee's position hereunder, in
such group life, health, accident, disability or hospitalization insurance plans
as the Company or its parent may make available to its other executive
employees.
<PAGE> 108
-3-
3.02. Automobile. During the Term, the Company shall furnish the Employee
__________
with a Cadillac, or comparable luxury automobile, (including the replacement
thereof), of such make, model and year as the Employee shall determine, for use
by the Employee in connection with the performance of his duties hereunder. Upon
presentation of an itemized account thereof, with such substantiation as the
Company shall require, the Company shall pay or reimburse the Employee for the
reasonable and necessary expenses of the maintenance and operation of such
automobile in connection with the performance of his duties hereunder. The
Employee understands that as a result of and to reflect the provisions of this
Section, the Company may include appropriate amounts on his W-2 form and, if
required, withhold amounts from this salary.
3.03. Expenses. Upon presentation of an itemized account thereof, with
________
with such substantiation as the Company shall require, the Company shall pay or
reimburse the Employee for the reasonable and necessary expenses directly and
properly incurred by the Employee in connection with the performance of his
duties hereunder, subject to guidelines established by the Board of Directors.
3.04. Vacations: During the Term, the Employee shall be entitled to paid
_________
holidays and paid vacations in accordance with the policy of the Company as
determined by the Board of Directors; provided, however, that the Employee shall
be entitled to not less than four weeks paid vacation during each year of the
Term, to be taken at times convenient to the Employee and to the company.
3.05. Location. Notwithstanding anything which may be contained herein to
________
the contrary, the Employee's office shall be located in the metropolitan New
York area and the performance of his duties hereunder shall not require his
continued presence outside of such counties if the Employee shall object
thereto.
ARTICLE IV
__________
TERMINATION
___________
4.0l. Termination. The employment of the Employee, and the obligations
___________
of the Employee and the Company hereunder, shall cease and terminate (except as
otherwise specifically provided in this Agreement) upon the first to occur on
the following dates (the "Termination Date") described in this Section 4.0l:
(a) The date of expiration by its terms of the Term;
(b) The date of death of the Employee; provided,
however, notwithstanding the foregoing:
<PAGE> 109
-4-
(i) the lump sum of Five Thousand ($5,000)
Dollars shall be paid to the Employee's
widow, if living, or if not, to the
Employee's estate; and
(ii) the Employee's compensation, as determined
in accordance with Section 2.0l, shall be
paid for a period of one (l) year (irrespective
of whether such one-year period exceeds
the expiration date of the Term) to the
Employee's widow, if living, or if not, to
the Employee's estate.
(iii) a pro rata share of any additional
Incentive Compensation in an amount
obtained by multiplying the additional
Incentive Compensation for the full year
or period, as the case may be, in which
death occurred, by a fraction, the
numerator of which is the number of days
in the year of period in which Employee was
employed and the denominator of which is
the number of days of the year (365).
ARTICLE V
_________
5.0l. Disability. In the event that the Employee shall become unable, by
__________
reason of illness or incapacity, to perform the duties required of him pursuant
to this Agreement, for a period of (i) ninety (90) consecutive days or (ii) for
l80 (one hundred eighty) days in any 365 day period, (the "Disability Period"),
the Company may give notice (the "Disability Notice") to the Employee of the
discontinuance of his services as President of the Company provided, however,
notwithstanding the foregoing, this Agreement shall continue in full force and
effect except as follows:
(a) Section l.04 shall become inoperative on the date
on which the Disability Notice is given. In lieu
of his duties as President, the duties of the
Employee shall be, to the extent permitted by his
illness or incapacity, to advise and counsel the
officers and directors of the Company with
respect to the affairs and business of the
Company; and
(b) The Company shall continue to pay and the Employee shall
accept, total compensation in an amount determined in
accordance with Section 2.0l for the Contract Year in
which the Disability Notice shall have been given,
such compensation to be paid to the Employee for the
remainder of such Contract Years and for each of the
<PAGE> 110
-5-
succeeding Contract Years of the Term, irrespective of
the amount or nature of the services rendered by the
Employee pursuant to Section 5.0l(a). In addition, in
the year in which the disability occurs, the employee
shall receive a pro rata share of any additional
incentive compensation in an amount obtained by
multiplying the Incentive Compensation amount for the
full year or period, as the case may be, in which
disability occurred, by a fraction, the numerator of
which is the number of days in the year or period in
which the disability occurs and the denominator of
which is the number of days of the year (365).
(c) Notwithstanding anything herein contained to the
contrary, in the event that, prior to the
delivery of the notice specified in this Section
5.0l, the Employee shall resume the full-time
performance of his duties hereunder for a period
of not less than twenty (20) consecutive working
days, the Company may not give the Employee
the Disability Notice.
ARTICLE VI
__________
RESTRICTIVE COVENANTS
_____________________
6.0l. Non-Disclosure. The Employee shall not disclose or furnish to any
any other person, firm or corporation (the "Entity"), except in the course of
the performance of his duties hereunder, the following:
(a) any information relating to any process,
technique or procedure used by the Company, including,
without limitation, computer programs and methods of
evaluation and pricing and market- ing techniques; or
(b) any information relating to the operations or
financial status of the Company, including, with- out
limitation, all financial data and sources of
financing, which is not specifically a matter of
public record; or
(c) any information of a confidential nature obtained
as a result of his prior, present or future
relationship with the Company, which is not
specifically a matter of public record; or
(d) any trade secrets of the Company; or
(e) the name, address or other information relating
to any customer or debtor of the Company.
<PAGE> 111
-6-
6.02. Non-Competition. The Employee shall not, from the date hereof
and until the termination of his employment with the Company (the "Restriction
Period"):
(a) in any manner, directly or indirectly, be
interested in, employed by, engaged in or
participate in the ownership, management,
operation or control of, or act in any advisory
or other capacity for any entity which, directly
or indirectly, competes with the Company through-
out the Territory (as that term is hereinafter
defined); provided, however, that the Employee
may invest in any entity which may be deemed to
be in competition with the Company hereunder,
the Common Stock of which entity is "publicly
held", provided that the Employee shall not own
or control securities which constitute more than
one (l) percent of the voting rights or equity
ownership of such entity, or five (5) percent of
the outstanding principal balance of any class
of debt securities of such entity. The Employee
or any entity shall be deemed to compete with
the Company if at any time during the Restriction
Period the Employee or such entity engages in
the business of contract and architectural hard-
ware, doors and frames, locksmithing, security
systems and security hardware.
(b) The Employee shall not, from the date hereof and until one year
after the termination of his employment with the Company (the
"Restriction Period"):
(i) in any manner, directly or indirectly,
attempt to seek to cause any entity to refrain from
dealing or doing business with the Company or assist
any entity in doing so or attempting to do so.
(ii) employ any Company employees.
6.03. Definitions. As used in this Article VI: (a) the term "Company"
___________
shall include any parent, subsidiary or affiliate of, or successor to, the
Company and (b) the term "Territory" shall mean any state (including the
District of Columbia), territory or possession of the United States within which
the Company presently or hereafter does business.
6.04. Breach of Provisions. In the event that the Employee shall breach
any of the provisions of this Article VI, or in the event that any such breach
is threatened by the Employee, in addition to and without limiting or waiving
any other remedies available to the Company at law or in equity, the Company
shall be entitled to immediate injunctive relief in any court, domestic or
foreign, having the capacity to grant such relief, to restrain any such breach
<PAGE> 112
-7-
or threatened breach and to enforce the rovisions of this Article VI. The
Employee agrees and acknowledges that there is no adequate remedy at law for any
such breach or threatened breach and, in the event that any action or proceeding
is brought seeking injunctive relief, the Employee shall not use a defense
thereto that there is an adequate remedy at law.
6.05. Reasonable Restrictions. The arties acknowledge that the foregoing
_______________________
restrictions, the duration and the territorial scope thereof as set forth in
this Article VI, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
ARTICLE VII
___________
TERMINATION FOR CAUSE
______________________
7.01. Termination by the Company for Cause. At any time during the term
____________________________________
of this Agreement, the Company may discharge the Employee for cause and
terminate this Agreement without any further liability hereunder to the Employee
or his estate, except to pay any accrued, but unpaid, salary but not Incentive
Compensation to him. In the event of such termination, Employee agrees he shall
also be deemed to have resigned from the Company and its Parent, as a President
and Employee, effective as of the date of such termination. For purposes of this
Agreement, a "discharge for cause" shall mean termination of the Employee upon
written notification to the Employee limited, however, to one or more of the
following reasons:
(i) Fraud, misappropriation or embezzlement by the Employee in
connection with the Company; or
(ii) Gross neglect of duties which has a detrimental effect on the
Company after notice to the Employee of the particular details thereof and a
period of thirty (30) days to correct such mismanagement or neglect, if any; or
(iii) Conviction by a court of competent jurisdiction in the United
States of a felony or a crime involving moral turpitude; or
(iv) Willful and unauthorized disclosure of confidential, or
proprietary trade secret information of the Company; or
(v) The Employee's breach of any material term or provision of this
Agreement, after notice to the Employee of the particular details thereof and a
period of not less than thirty (30) days thereafter within which to cure such
breach, if any.
ARTICLE VIII
____________
MISCELLANEOUS
_____________
8.0l. Assignment. This Agreement shall not be assigned by either party,
__________
except that the Company shall have the right to assign its rights hereunder to
any parent, subsidiary and affiliate of, or successor to, the Company.
<PAGE> 113
-8-
8.02. Binding Effect. This agreement shall extend to and be binding upon
______________
the Employee, his legal representatives, heirs and distributees, and upon the
Company, its successors and assigns.
8.03. Notices. Any notice required or permitted to be given under this
_______
Agreement to either party shall be sufficient if in writing and if sent by
registered or certified mail, return receipt requested, to the address of such
party hereinabove set forth, or to such other address as such party may
hereafter designate by a notice given to the other party in the manner provided
in this Section 8.03.
8.04. Waiver. A waiver by a party hereto of a breach of any term, covenant
______
or condition of this Agreement by the other party hereto shall not operate or be
construed as waiver of any other or subsequent breach by such party of the same
or any other term, covenant or condition hereof.
8.05. Prior Agreements. Any and all prior agreements between the Company and
________________
the Employee, whether written or oral, between the parties, relating to any and
all matters covered by, and contained or otherwise dealt with in, this Agreement
are hereby cancelled and terminated.
8.06. Entire Agreement. This Agreement sets forth the entire agreement
________________
between the parties with respect to the subject matter hereof and no waiver,
modification, change or amendment of any of its provisions shall be valid unless
in writing and signed by the party against whom such claimed waiver,
modification, change or amendment is sought to be enforced.
8.07. Authority. The parties severally represent and warrant that they
_________
have the power, authority and right to enter into this agreement and to carry
out and perform the terms; covenants and conditions hereof.
8.08. Applicable Law. This Agreement shall be governed by and construed in
______________
accordance with the laws of the State of New York. The federal and state courts
in Nassau County, New York shall have exclusive jurisdiction on all matters
relating to this Agreement.
8.09. Severability. In the event that any of the provisions of this
____________
Agreement, or any portion thereof, shall be held to be invalid or unenforceable,
the validity and enforceability of the remaining provisions shall not be
affected or impaired, but shall remain in full force and effect.
<PAGE> 114
-9-
8.l0. Titles. The titles of the Articles and Sections of this Agreement
______
are inserted merely for convenience and ease of reference and shall not affect
or modify the meaning of any of the terms, covenants or conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and date first about written.
ATLANTIC HARDWARE AND SUPPLY CORP.
By: PRESIDENT
________________________________
(Title)
/S/ PAUL SELDEN
________________________________
(Employee)
By: /S/ JAMES W. STEWART
________________________________
(Secretary)
</TABLE>
