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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Date of Report June 19, 1996
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(Date of earliest event report)
POLLUTION RESEARCH AND CONTROL CORP.
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(Exact name of registrant as specified in its charter)
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
<TABLE>
<S> <C> <C>
California 0-14266 95-2746949
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(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation or
organization)
</TABLE>
<TABLE>
<S> <C>
506 Paula Avenue, Glendale, California 91201
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(Address of principal executive offices) (Zip Code)
</TABLE>
818-247-7601
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On June 19, 1996, PRCC executed a Stock Purchase Agreement for the
purchase of all of the outstanding stock of Nutek, Inc., a Florida corporation
("Nutek"). Nutek is a 25 year old electrical control panel manufacturer who
also has printed circuit board design and manufacturing capabilities. The
Company had an interest in the synergy with Nutek, who can supply a wide
variety of items to PRCC which have been supplied by outside vendors, and an
interest in the customer list which includes clients that have needs in air
pollution control, which field the Company has recently diversified into. The
total purchase price of Nutek, including the assumption of debt, was
approximately $1,800,000, of which the sellers received $900,000. The Company
paid $250,000 in cash; the sellers financed $150,000; substantially all of the
$1,400,000 balance was obtained from asset-based lending based solely on
Nutek's assets.
ITEM 6. EXHIBITS
10.4 Lease/Option Agreement
10.5 Stock Purchase Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POLLUTION RESEARCH AND CONTROL CORP.
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(Registrant)
Date: July 3, 1996 By: /s/ Albert E. Gosselin, Jr.
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Albert E. Gosselin, Jr.
Chairman of the Board, President and
Chief Executive Officer
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EXHIBIT 10.4
LEASE/OPTION AGREEMENT
THIS LEASE/OPTION AGREEMENT made and entered into and effective as of
this 19th day of June, 1996, between THE TAYLOR, TAYLOR AND DREIFUS
PARTNERSHIP, a Florida general partnership, hereinafter called "Landlord", and
NUTEK, INC., a Florida corporation, and POLLUTION RESEARCH AND CONTROL
CORPORATION, a California Corporation, each of which shall be jointly and
severally liable as a tenant under this Agreement, hereinafter called "Tenant."
W I T N E S S E T H:
1. PREMISES
1.1 DESCRIPTION. Landlord leases to Tenant and Tenant leases from
Landlord, upon the terms and on the conditions hereinafter set forth, the real
property and the building thereon, located in the City of Pensacola, County of
Escambia, Florida, and as more particularly described on a survey attached
hereto as Exhibit "A", and made a part hereof, hereinafter referred to as the
"Premises."
2. TERMS
2.1 LEASE TERM. The initial term of lease shall be for a period
of five (5) years commencing on the day of the closing of the Stock Purchase
Agreement ("Rent Commencement Date").
3. RENT AMOUNT
3.1 RENT AMOUNT
A. For the five (5) year term commencing on the Rent
Commencement Date, Tenant will pay Landlord rent for the Premises in equal
monthly payments as set forth below in advance commencing on the Rent
Commencement Date and thereafter on the first (1st) day of each succeeding
month plus applicable sales tax:
Year 1 $3,000.00 per month plus sales tax
Year 2 $4,000.00 per month plus sales tax
Year 3 $5,000.00 per month plus sales tax
Year 4 $6,000.00 per month plus sales tax
Year 5 $7,000.00 per month plus sales tax
3.2 PAYMENT. All payments of rent shall be made in lawful money
of the United States without deduction, offset, prior notice or demand.
4. POSSESSION AND CONDITION OF THE PREMISES
4.1 POSSESSION. Possession of the Premises will be given to
Tenant on the Rent Commencement Date. Without limiting the foregoing, Tenant's
rights in the premises are subject to all municipal, county and state laws,
ordinances and regulations governing and regulating the use and occupancy of
the Premises. Tenant acknowledges that neither Landlord nor Landlord's agent
has made any representations or warranties as to the present or future
suitability of the Premises for the conduct of the Tenant's business.
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5. SECURITY DEPOSIT
5.1 SECURITY DEPOSIT. Tenant, contemporaneously with the
execution of this Lease, has deposited with Landlord the sum of three thousand
dollars ($3,000.00) said deposit being given to secure the faithful performance
by Tenant of all of the terms, covenants and conditions of this Lease by Tenant
to be kept and performed during the term hereof. Tenant agrees that if Tenant
shall fail to pay the rent herein reserved promptly when due, said deposit may,
at the option of the Landlord (but Landlord shall not be required to), be
applied to any rent due and unpaid, and if Tenant violates any of the other
terms, covenants, and conditions of this Lease, said deposit may be applied to
any damages suffered by Landlord as a result of Tenant's default, to the extent
of the amount of damages suffered. Nothing in this Article 5 shall in any way
diminish or be construed as waiving any of Landlord's other remedies by law or
in equity. Should all or any part of the security deposit be applied by
Landlord as herein provided, the Tenant shall, on the written demand of
Landlord, forthwith remit to Landlord a sufficient amount in cash to restore
said security deposit to its original amount. Should Tenant comply with all of
the terms, covenants and conditions of this Lease, said security deposit shall
be returned in full plus interest to Tenant at the end of the term of this
Lease. Landlord shall have the right to commingle or invest said security
deposit, and Tenant shall be entitled to receive any interest or income
thereon. Landlord may deliver the funds deposited under this Article 5 by
Tenant to the purchaser of Landlord's interest in the Premises in the event
such interest be sold; thereupon Landlord shall be discharged from further
liability with respect to such deposit.
6. USE AND LIMITATIONS.
6.1 USE. The Premises shall be used and occupied by Tenant for
any lawful purpose in accordance with all present and future zoning laws, rules
and regulations of governmental authorities having jurisdiction thereof, and
subject to all covenants, restrictions, easements and rights of way of record,
if any, which are presently in existence or hereafter consented to in writing
by Tenant.
6.2 GOVERNMENTAL ACTIONS. Tenant's consent shall not be required
for the creation of any covenants, easements, or rights of way which are
created by the sole action of any governmental authority.
6.3 PROHIBITION. Tenant shall not do or permit anything to be
done in or about the Premises nor bring or keep anything therein which will
cause a cancellation of any insurance policy covering said Premises or any part
thereof or any of its contents. Tenant shall not use or allow the Premises to
be used for an improper, immoral, unlawful, or objectionable or offensive
purpose. Nor shall Tenant cause, maintain, or suffer or permit any nuisance
in, on or about the Premises. Tenant shall not commit or allow to be committed
any waste in or upon the Premises and shall refrain from using or permitting
the use of the Premises or any portion thereof as living quarters, sleeping
quarters or for lodging purposes.
7. COMPLIANCE WITH LAW - SIGNS
7.1 COMPLIANCE. Tenant shall at Tenant's sole cost and expense,
comply promptly with all applicable statutes, ordinances, rules, regulations,
orders, restrictions of record, if any, and requirements in effect during the
lease term, or any part hereof, regulating the use by Tenant of the Premises,
provided that Landlord shall not make or consent to any restrictions on
Tenant's use of the Premises during the term of this Lease without Tenant's
prior written approval.
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8. MAINTENANCE AND REPAIR
8.1 STRUCTURAL REPAIRS BY TENANT. Tenant shall keep the structure
of the roof, exterior walls, foundations, and building structure of the
Premises in a good state of repair, and shall accomplish such repairs as may be
needed promptly after notice of the need for said repairs, and said repairs
shall be at the sole cost of the Tenant. The Tenant shall paint the exterior
portion of the Premises as is needed.
8.2 MAINTENANCE AND REPAIR BY TENANT. Tenant shall at all times
throughout the Lease Term at its sole cost and expense keep the Premises
(including exterior doors and entrances, all windows and moldings and trim of
all doors and windows) and all partitions, door surfaces, fixtures, equipment
and appurtenances thereof (including lighting, heating and plumbing fixtures
and any air conditioning system) in good order, condition and repair (including
damage from burglary or attempted burglary of the Premises). The costs of any
such repairs shall be billed directly to, and paid by, Tenant. If there is an
air conditioning system serving the Premises, Landlord will contract for
preventive maintenance checks, filter changes, repairs and replacement, and
service and Tenant agrees to pay for such preventive maintenance calls, filter
changes, repairs and replacements on or for the units serving Tenant's
Premises. The bills and invoices for such services may be delivered directly
to Tenant by the contractor providing such services. Without limiting the
generalities thereof, Tenant shall keep the glass of all windows and doors
clean and presentable; replace immediately all broken glass in the Premises, at
reasonable intervals paint or refinish the interior of the Premises, including
entrances as determined by Landlord; make any necessary repairs to or
replacements of all door closure apparatuses and mechanisms; keep all plumbing
clean and in good state of repair including pipes, drains, toilets, basins and
those portions of the heating system within the walls of the Premises; at
Landlord's request, assist Landlord to remove snow and ice from the sidewalk in
front of the Premises; and keep all utilities within the Premises in a good
state of repair.
8.3 TENANT'S FAILURE. If Tenant fails to perform any of its
obligations under this Article 8, Landlord may, at its option (but shall not be
required to), enter upon the Premises after twenty (20) days prior written
notice to Tenant of the specific failure of Tenant under this Article 8, and,
provided that Tenant has not theretofore cured such failures, put the same in
good order, condition and repair, and the cost thereof, with an overhead
surcharge of ten percent (10%) of such cost, together with interest on the
total at the highest legal rate allowed by law, shall become due and payable as
additional rental to Landlord together with Tenant's next rental installment.
8.4 WAIVER. Except for the obligations of Landlord under Article
16 (Damage or Destruction), and Article 24 (Condemnation), it is intended by
the parties hereto that Landlord shall have no obligation in any manner
whatsoever to repair and maintain the Premises, nor any buildings or
improvements located thereon, nor the equipment therein, whether structural or
non-structural, all of which obligations are those of Tenant under this Lease
except for repairs needed which are not covered by insurance and which are not
caused by the Tenant's negligence.
8.5 CONTEST. Tenant has the right to contest by appropriate
judicial or administrative proceedings, without cost or expense to Landlord,
the validity of application of any law, ordinance, order, rule, regulation or
requirement (hereinafter called "law") that Tenant repair, maintain alter or
replace the improvements on the Premises in whole or in part or that would
affect Tenant's use of the Premises. In the event that any such contest is
finally determined in a manner adverse to Tenant, Tenant shall undertake such
repairs, maintenance, alterations or replacements to or of the Premises as is
required by such law. Tenant agrees to indemnify and hold Landlord harmless
from and against any and all liability that Landlord may sustain by reason of
Tenant's failure or delay in complying with the law. Landlord may, but is not
required to contest any such law independently of Tenant. Landlord may, and on
Tenant's notice or request shall, join in Tenant's contest.
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8.6 NO MAINTENANCE OR REPAIRS BY LANDLORD. It is understood and
acknowledged that Landlord will not be required to perform any maintenance or
repairs, whether major or minor, primary or secondary except as provided under
paragraph 8.4.
9. ALTERATIONS AND IMPROVEMENTS
9.1 ALTERATIONS. Tenant shall not have the right, without
Landlord's prior written consent, to demolish any part of the improvements
existing on the Premises at the date of the execution of this Lease, except as
may be necessary in order to restore the Premises when required under Article
16 or Article 23. Tenant shall pay when due, all claims for labor and
materials furnished or alleged to have been furnished to or for Tenant at or
for use in the Premises, which claims are or may be secured by any mechanic's
or materialman's lien against the Premises, or any and all liability arising
out of any such claims. Tenant shall make no alterations, construction,
remodeling or demolition without Landlord's prior written consent.
9.2 APPROVAL OF CONTRACTOR. Landlord shall have the right to
approve the contractor which Tenant may use to do any and all improvements and
alterations consented to by Landlord. Any such approval by Landlord shall not
be unreasonably withheld. Tenant shall be required to provide Landlord with a
statement showing that the improvements and/or alterations have been paid for
in full and that no liens exist from the construction of the improvements
and/or the alterations. Tenant shall give Landlord not less than ten (10)
days' notice in writing prior to the commencement of the alterations and
Landlord shall have the right to post Notice of Non-Responsibility in or on the
Premises, as provided by law. Tenant shall have the right in good faith to
contest the validity of any such lien, claim or demand, and Tenant shall, at
its sole expense, defend itself and Landlord against the same, and shall pay
and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against Landlord or the Premises. Landlord may require
Tenant to pay Landlord's reasonable attorney's fees and costs in participating
in any such action, or if Landlord is joined as a defendant in such action and
Tenant's counsel determines that it cannot properly or effectively represent
both Tenant's and Landlord's interest in such action.
9.3 REMOVAL. Any alterations made shall remain on and be
surrendered with the Premises on the expiration or termination of the term of
this Lease. The foregoing provision shall not apply to any alterations made by
Tenant or any subtenant which are capable of being removed by Tenant, or any
subtenant, without damage to the Premises, and which Tenant, or any subtenant,
elects to remove upon the termination of this Lease, provided that Tenant or
any subtenant promptly repairs, at its sole cost and expense, all damage to the
remaining improvements on the Premises caused by such removal, and provided
further, that the value of the improvements remaining on the Premises following
such removal is substantially equal to what the value of the improvements
existing on the Premises at the time of the execution of this Lease would have
been, if the same had remained on the Premises at the time of termination of
this Lease, assuming no alterations and additions thereto and only normal wear
and tear since the date of the execution of this Lease.
9.4 PLANS. On completion of any work of alteration, addition or
improvement by Tenant, Tenant shall supply Landlord with "as built" drawings
accurately reflecting all such work.
10. UTILITIES PAID BY TENANT
10.1 PAYMENT RESPONSIBILITY. Tenant shall pay for all water,
sewer, gas, heat, light, power, steam, telephone or other utilities and
services supplied to the Premises, together with all taxes thereon. Tenant
shall be responsible for all tap fees. Tenant shall be responsible for all
security deposits.
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11. REAL PROPERTY TAXES
11.1 REAL PROPERTY TAXES. Tenant shall pay all real property taxes
applicable to the Premises during the term or this Lease. All such payments
shall be made at least ten (10) days prior to the delinquency date of such
payment. Tenant shall promptly furnish Landlord with satisfactory evidence
that such taxes have been paid. If any such taxes paid by Tenant shall cover
any period of time prior to or after the expiration of the term hereof,
Tenant's share of such taxes shall be equitably prorated to cover only the
period of time within the tax year during which this Lease shall be in effect,
and Landlord shall reimburse Tenant to the extent required. If Tenant shall
fail to pay any such taxes, Landlord shall have the right to pay the same, in
which case Tenant shall repay such amount to Landlord with Tenant's next rent
installment, together with interest at the highest legal rate allowed by law.
11.2 DEFINITION. As used herein, the term "real property tax"
shall include any form of assessment, license fee, commercial rental tax, levy,
penalty or tax (other than inheritance or estate taxes and income taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Landlord in the Premises or in the real property of
which the Premises are a part, as against Landlord's right to rent or other
income therefrom, or as against Landlord's business of leasing the Premises, or
any tax imposed in substitution, partially or totally, of any tax previously
included within the definition of real property tax, or any additional tax the
nature of which was previously included within the definition of real property
tax.
11.3 CONTEST. Tenant may contest the legal validity or amount of
any taxes, assessment, or charges for which Tenant is responsible under this
Lease, and may institute such proceedings as Tenant considers necessary. If
Tenant protests any such tax, assessment or charge, Tenant may withhold or
defer payment or pay under protest but shall indemnify and hold Landlord and
the Premises harmless from and against any claim or lien against Landlord or
the Premises arising out of Tenant's failure to pay the contested taxes,
assessments or charges.
11.4 RECEIPTS. Tenant shall furnish Landlord, at least ten (10)
days before the date when any tax, assessments, or charges would become
delinquent, receipts or other appropriate evidence establishing their payment.
11.5 PRORATION. All payments of taxes or assessments, or both,
shall be prorated for the initial lease year and for the year in which this
Lease terminates, based on the number of days in the tax year in question
during which the term of this Lease is in effect.
11.6 INCREASES IN ASSESSMENT. Tenant acknowledges and understands
that in the event Landlord should at any time in the future sell the Premises,
there would probably be a substantial increase in the real property taxes.
Landlord makes no representations, statements or warranties to Tenant,
expressly or implied, that it will not sell the Premises at any time in the
future during the term or extended term of this Lease.
12. PERSONAL PROPERTY TAXES
12. PERSONAL PROPERTY TAXES. Tenant shall pay prior to
delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises. When possible, Tenant shall cause said trade fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Landlord. If any of the Tenant's
said personal property shall be assessed with Landlord's real property, Tenant
shall pay the taxes attributable to Tenant within ten (10) days prior to the
delinquency date for payment of such taxes.
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13. INDEMNITY
13.1 INDEMNITY. Tenant shall indemnify and hold harmless Landlord
from and against any and all claims arising from Tenant's use of the premises,
or from the conduct of Tenant's business, or from any activity, work or things
done, permitted or suffered by Tenant in or about the Premises, and shall
further indemnify and hold Landlord harmless from and against any and all
claims arising from any breach or default in the performance of any obligation
on Tenant's part to be performed under the terms of the Lease, or arising from
any negligence of Tenant, or any of Tenant's agents, contractors, customers,
licensees, or employees, and from and against all costs, attorney's fees,
expenses and liabilities incurred in the defense of any such claim or any
action or proceeding brought thereon. In case any action or proceeding be
brought against Landlord by reason of any such claim, Tenant, upon written
notice from Landlord, shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk to property or injury to
persons in, upon or about the Premises arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent otherwise provided in Section 13.3.
13.2 WAIVER. Tenant hereby agrees that Landlord shall not be
liable for injury to Tenant's business, or any loss of income therefrom, or for
damage to the goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers, or other person in or about the Premises, nor
shall Landlord be liable for injury to the person of Tenant, Tenant's
employees, agents or contractors, whether such damage or injury is caused by
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or other sources or places where the resulting damage or injury occurs on
or about the Premises, and regardless of whether the cause of such damage or
injury, or the means of repairing the same, is inaccessible to Tenant.
Landlord shall not be liable for any damage arising from any act or neglect of
any other tenant, if any, of the building in which the Premises are located.
13.3 WILLFUL ACTS. Nothing in Section 13.1 or 13.2 shall be
construed as a waiver by Tenant as against Landlord of, or as an agreement by
Tenant to indemnify or hold Landlord harmless from or against, any claims,
costs, attorney's fees, expenses, liabilities, damages, losses or injuries
caused by the willful act or omission of Landlord. The provisions of this
Article 13 shall survive the termination of this Lease/Option Agreement.
14. INSURANCE
14.1 TENANT'S INSURANCE. Tenant, at its sole cost, shall maintain
on the Premises:
A. Public liability and property damage insurance with a
single combined liability limit of one million
dollars ($1,000,000.00) insuring against all
liability of Tenant and its authorized
representatives arising out of and in connection with
Tenant's use and occupancy of the Premises;
B. A policy of standard fire and extended coverage
insurance with vandalism and malicious mischief
endorsements, to the extent of full replacement
value, as well as coverage for one (1) year's rent
loss, and said insurance may include coverage on
buildings or improvements which are additions upon
the Premises;
C. A policy of flood insurance; and
D. A policy of windstorm insurance.
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The Landlord shall be listed as an additional insured on said policies and the
policies shall not deny coverage to Landlord for any actions of the Tenant. A
certificate of insurance shall be furnished to Landlord, at least annually or
more frequently if requested by Landlord, showing the policy limits, policy
dates, and the insurance carrier. The Tenant shall give thirty (30) days
written notice of cancellation of any said policy to Landlord. Not more
frequent than each year, if, in the opinion of the Landlord's and the Tenant's
insurance brokers, the amount of the insurance coverage or any said policies at
the time is not adequate, Tenant shall increase the coverage on any said
policies as determined by Landlord's and Tenant's insurance brokers.
All insurance required to be maintained by Tenant under this Lease
shall:
A. Be issued by an insurance company authorized to do
business in the State where the Premises are located,
with a financial rating of at least A+ status as
rated in the most recent edition of Best's Insurance
Reports.
B. Be issued as a primary policy.
C. Be evidenced by a policy or certificate of policy,
together with evidence of payment of premiums, which
all shall be deposited with Landlord at the
commencement of the term of this Lease and on renewal
of the policy not less then twenty (20) days before
expiration of the term of the policy.
15. WAIVER OF SUBROGATION
15.1 WAIVER OF SUBROGATION. Tenant hereby waives as against
Landlord, and against the officers, employees, agents and representatives of
Landlord, any and all right to recovery for any and all losses and damages
insured against under any fire and extended coverage insurance policy,
including Tenant's policies described in Article 14, in force at the time of
any such loss or damage. Tenant shall, upon obtaining the policies of
insurance required by Article 14, give notice to the insurance carrier or
carriers that the foregoing waiver of subrogation is contained in this Lease.
16. DAMAGE, DESTRUCTION AND RESTORATION
16.1 DUTY TO RESTORE. If the improvements on the Premises are
partially or totally damaged by fire or other casualty so as to become
partially or totally untenantable, which damage is insured against under any
policy of fire and extended coverage insurance then covering the damaged
improvements, this Lease shall not terminate and said improvements shall be
rebuilt by Landlord with reasonable diligence, at Landlord's expense.
16.2 RENT ADJUSTMENT. During the period of repair and restoration,
the rent as set forth in Paragraph 3.1 shall not be reduced but the Tenant
shall be entitled to have the proceeds of the Landlord's rental loss insurance,
if any, applied to such rent obligations.
16.3 TIME LIMITATION. If the damage is such that in reasonable
contemplation it cannot be repaired within six (6) months from the date of its
occurrence (force majeure excepted) then either party shall have the right to
terminate this Lease on sixty (60) days written notice to the other.
17. ASSIGNMENT, SUBLETTING AND RECAPTURE
17.1 REQUEST FOR CONSENT. Tenant shall not assign or otherwise
transfer by operation of law or otherwise this Lease or any interest herein
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. If Tenant desires at any time to assign or otherwise
transfer this Lease, it shall first notify Landlord of its desire to do so and
shall submit in writing to Landlord:
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A. The name of the property assignee;
B. The nature of the proposed assignee's business to be
carried on in the Premises;
C. A copy of the proposed assignment and any other
agreements to be entered into concurrently with
such assignment;
D. Such financial information as Landlord may reasonably
request concerning the proposed assignee. Landlord
hereby reserves the right to condition any such
approval upon Landlord's determination that the
proposed assignee is financially responsible as a
tenant and the proposed assignee is likely to conduct
a business on the Premises of a type and quality
substantially equal to that conducted by Tenant.
Tenant shall pay to Landlord a reasonable fee and
Landlord's expenses in reviewing such proposed
assignment. This Lease may not be assigned without
complying with the provisions of this Section 17.1 in
reliance on any law relating to bankruptcy or
debtor's rights generally unless adequate assurance
of future performance is provided Landlord including
adequate assurance of the source of rent and other
expenses due under this Lease for the entire term of
this Lease.
17.2 PARTIAL ASSIGNMENT AND HYPOTHECATION. Partial assignments of
Tenant's interest in this Lease and the hypothecation of any of Tenant's
interest in this Lease are prohibited. Tenant shall not sublease all or any
portion of the Premises, unless agreed to by the Landlord and such consent
shall not be unreasonably withheld. A transfer of control of Tenant shall be
deemed an assignment of this lease and shall be subject to all of the
provisions of this Article 17. Landlord's consent to any sale, assignment,
encumbrance, subleasing, occupation or other transfer shall not release Tenant
from any of Tenant's obligations hereunder or be deemed to be a consent to any
subsequent assignment, subleasing or occupation of the Premises which does not
comply with the provisions of this Article 17. Any such partial assignment or
hypothecation shall be void and shall be a default hereunder.
17.3 NO WAIVER. As a condition to Landlord's written consent as
provided for in this Article 17, Tenant shall deliver to Landlord an executed
copy of any assignment or agreement relating to the Premises. Any assignee
shall assume the obligations of Tenant under this Lease. The collection or
acceptance of rent or other payment by Landlord from any person other than
Tenant shall not be deemed a waiver of any payment provision of this Article,
the acceptance of any assignee or subtenant as the tenant hereunder or a
release of Tenant from any obligation under this Lease.
18. HOLDING OVER
18.1 HOLDING OVER. Should Tenant, with Landlord's written consent,
hold over after the termination of this Lease, Tenant shall become a tenant
from month to month only upon each and all of the terms herein provided as may
be applicable to such month to month tenancy and any such holding over shall
not constitute an extension of this Lease. During such holding over, Tenant's
rent for year five (5) as set forth in Section 3.1 of this Lease shall be
increased at the rate of ten percent (10%) per annum for each year (or portion
thereof) of the term of this Lease, which Minimum Rent shall also be subject to
the adjustments for taxes, insurance and other expenses and obligations, and
for operating costs.
19. DEFAULTS AND REMEDIES
19.1 DEFAULT. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Tenant:
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A. The abandonment of the Premises by Tenant;
B. The failure by Tenant to make any payment of rent or
any other payment required to be made by Tenant
hereunder, as and when due, where such failure shall
continue for a period of ten (10) days after written
notice thereof from Landlord to Tenant;
C. The failure of Tenant to observe or perform any of
the covenants, conditions or provisions of this Lease
to be observed or performed by Tenant, other than
described in subparagraph (B) above, where such
failure shall continue for a period of twenty (20)
days after written notice thereof from Landlord to
Tenant; provided, however, that if the nature of
Tenant's default is such that more than twenty (20)
days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant
commences such cure within said twenty (20) day
period and thereafter diligently pursues such cure to
completion;
(1) Subject to the provisions of Paragraph 20
hereafter, the making by Tenant or any
guarantor of any general assignment for the
benefit of creditors;
(2) Subject to the provisions of Paragraph 20
hereafter, the filing by or against Tenant or
any guarantor of a petition to have Tenant or
any guarantor adjudged a bankrupt or a
petition for reorganization or arrangement
under any law relating to bankruptcy (unless,
in the case of a petition filed against
Tenant or any guarantor), the same is
dismissed within thirty (30) days;
(3) Subject to the provisions of Paragraph 20
hereafter, the appointment of a trustee or
receiver to take possession of all or
substantially all of Tenant's or any
guarantor's assets located at the Premises or
of Tenant's or any guarantor's interest in
this Lease;
(4) The attachment, execution, or other judicial
seizure of all or substantially all of
Tenant's or any guarantor's assets located at
the premises, or of Tenant's or any
guarantor's interest in this Lease, where
such seizure is not discharged within thirty
(30) days.
19.2 REMEDIES. In the event of any such material default or breach
by Tenant, Landlord may at any time thereafter, with or without notice or
demand and without limiting Landlord in the exercise of any right or remedy
which Landlord may have by reason of such default or breach:
A. Terminate Tenant's right to possession of the
Premises by any lawful means, in which case this
Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In
such event, Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by
reason of Tenant's default, including but not limited
to the cost of recovering possession of the Premises;
expenses of reletting, reasonable attorney's fees,
and any real estate commission actually paid; and the
worth at the time of award by the court having
jurisdiction thereof of:
(1) The unpaid rent which had been earned at the
time of termination;
(2) The amount by which the unpaid rent which
would have been earned after termination
until the time of award exceeds the amount of
such rental loss for the same period that
Tenant proves could be reasonably avoided.
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The worth at the time of award of the sums referred
to in clauses (1) and (2) above, shall be computed by
allowing interest from the due date at the highest
legal rate allowed by law. As used herein, rent
shall include charges equivalent to rent.
B. Maintain Tenant's right to possession, in which case
this Lease shall continue in effect whether or not
Tenant shall have abandoned the Premises. In such
event, Landlord shall be entitled to enforce all of
Landlord's rights and remedies under this Lease,
including the right to recover the rent as it becomes
due hereunder.
C. Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the
State where the Premises are located.
20. BANKRUPTCY OR INSOLVENCY
20.1. If a petition is filed by, or an order for relief is entered
against, the Tenant under chapter 7 of the Bankruptcy Code and the trustee of
the Tenant elects to assume this Lease for the purpose of assigning it, the
election or assignment, or both, may be made only if all of the terms and
conditions of this Article 20 of the Lease are satisfied. If the trustee fails
to elect to assume this Lease for the purpose of assigning it within sixty (60)
days after his appointment, this Lease will be deemed to have been rejected.
The Landlord shall then immediately be entitled to possession of the Premises
without further obligation to the Tenant or the trustee, and this Lease will be
cancelled. The Landlord's right to be compensated for damages in this
bankruptcy proceeding, however, shall survive.
20.2 If the Tenant files a petition for reorganization under Chapter
11 or 13 of the Bankruptcy Code or a proceeding that is filed by or against the
Tenant under any other chapter of the Bankruptcy Code is converted to a Chapter
11 or 13 proceeding and the Tenant's trustee or the Tenant as a
debtor-in-possession fails to assume this Lease within sixty (60) days from the
date of the filing of the petition or the conversion, the trustee or the
debtor-in-possession will be deemed to have rejected this Lease. To be
effective, an election to assume this Lease must be in writing and addressed to
the Landlord and, in the Landlord's business judgment, all of the following
conditions, which the Landlord and the Tenant acknowledge to be commercially
reasonable, must have been satisfied:
A. The trustee of the debtor-in-possession has cured or
has provided to the Landlord adequate assurance, as
defined in this Section, that:
(1) The trustee will cure all monetary defaults
under this Lease within thirty (30) days from
the date of the assumption.
(2) The trustee will cure all non-monetary
defaults under this Lease within thirty (30)
days from the date of the assumption.
B. The trustee or the debtor-in-possession has
compensated the Landlord, or has provided to the
Landlord adequate assurance, as defined in this
Section, that within ten (10) days from the date of
the assumption the Landlord will be compensated for
any pecuniary loss they incurred arising from default
of the Tenant, the trustee, or the debtor-in-
possession under it, by giving written notice of the
Landlord's election to terminate.
20.3 If the trustee or the debtor-in-possession has assumed the
Lease, under the terms of Section 20.1 or 20.2 of this Lease, to assign or to
elect to assign the Tenant's interest under this Lease or the estate created by
that interest to any other person, that interest or estate may be assigned only
if the Landlord acknowledges in writing that the intended assignee has provided
adequate assurance, as defined in Section 20.3 of future performance of all of
the terms, covenants, and conditions of this Lease to be performed by the
Tenant.
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For the purpose of this Section, adequate assurances of future
performance means that the Landlord has ascertained that each of the following
conditions has been satisfied:
A. The assignee has submitted a current financial
statement, audited by a certified public accountant,
that shows a net worth and working capital in amounts
determined by the Landlord to be sufficient to assure
the future performance by the assignee of the
Tenant's obligation under this Lease;
B. If requested by the Landlord, the assignee will
obtain guarantees, in form and substance satisfactory
to the Landlord, from one or more persons who satisfy
the Landlord's standards of creditworthiness;
C. The Landlord has obtained all consents or waivers
from any third party required under any lease,
mortgage, financing arrangement, or other agreement
by which the Landlord is bound, to enable the
Landlord to permit the Assignment.
20.4 When, pursuant to the Bankruptcy Code, the trustee or the
debtor-in-possession is obligated to pay reasonable use and occupancy charges
for the use of all or part of the demised premises, the charges will not be
less than the rent as defined in this Lease and other monetary obligations of
the Tenant for the payment of maintenance, real estate taxes, insurance, and
similar charges.
20.5 Neither the Tenant's interest in the Lease nor any estate of
the Tenant created in the Lease will pass to any trustee, receiver, assignee
for the benefit of creditors, or any other person or entity, or otherwise by
operation of law under the laws of any state having jurisdiction of the person
or property of the Tenant ("state law"), unless the Landlord consents in
writing to this transfer. The Landlord's acceptance of rent or any other
payments from any trustee, receiver, assignee, person, or other entity will not
be deemed to have waived, or waive, the need to obtain the Landlord's consent
or the Landlord's right to terminate this Lease for any transfer of the
Tenant's interest under this Lease without that consent.
21. DEFAULT BY LANDLORD
21.1 DEFAULT BY LANDLORD. Landlord shall not be in default unless
Landlord fails to perform obligations required by Landlord by this Lease within
a reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to the holder of each mortgage covering the
Premises whose name and address shall have at any time been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord's obligation is such that
more than thirty (30) days are required for performance, then Landlord shall to
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
22. LATE CHARGES
22.1 LATE CHARGES. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain, such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage covering the Premises. Accordingly, if
any installment of rent or any other sum due from Tenant shall not be received
by Landlord or Landlord's designee within ten (10) days after such amount shall
be due, Tenant shall pay to Landlord a late charge equal to five percent (5%)
of the late payment plus twelve percent (12%) per annum of such overdue amount.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payments by Tenant.
Acceptance of such late charge by Landlord shall in no event
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constitute a waiver of Tenant's default with respect to such overdue amount,
nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder.
23. SAFETY AND HEALTH
23.1 SAFETY AND HEALTH. Tenant covenants at all times during the
term of this Lease to comply with the requirements of the Occupational Safety
and Health Act of 1970, 29 U.S.C. 651 et seq. and any analogous legislation in
the state where the Premises are located (collectively the "Act"), to the
extent that the Act applies to the Premises and any activities thereon.
Without limiting the generality of the foregoing, Tenant covenants to maintain
all working areas, all machinery, structures, electrical facilities and the
like upon the Premises in a condition that fully complies with the requirements
of the Act, including such requirements as would be applicable with respect to
agents, employees or contractors of Landlord who may from time to time be
present upon the Premises (except to the extent that the particular activities
of such agents, employees or contractors of Landlord on the Premises require
safety precautions or alterations of the conditions of the Premises beyond the
requirements of such Act otherwise applicable to the Premises, in which event
Tenant shall not be obligated to undertaken or provide any such additional
safety precautions or alterations or conditions), and Tenant agrees to
indemnify and hold Landlord harmless from and against any liability, claim or
damages, arising as a result of a breach of the foregoing covenant and from all
costs, expenses and charges arising therefrom, including without limitation,
reasonable attorneys' fees and court costs incurred by Landlord in connection
therewith, which indemnity shall survive the expiration or termination of this
Lease.
24. CONDEMNATION; EMINENT DOMAIN
24.1 DEFINITION. If there is any taking of, or damage to, all or
part of the Premises, or any interest therein because of the exercise of the
power of eminent domain or inverse condemnation, whether by condemnation
proceeding, or otherwise, or any transfer or any part thereof or any interest
herein made in avoidance thereof (all of the foregoing being hereinafter
referred to as "taking") before or during the term hereof, the rights and
obligations of the parties with respect to such taking shall be as provided in
this Article 24.
24.2 TOTAL CONDEMNATION. If there is a taking of all of the
Premises (which term includes the entire parcel of property leased and not just
the building area), this Lease shall terminate as of the date of such taking.
24.3 PARTIAL CONDEMNATION. If twenty-five percent (25%) or more of
the areas of the Premises (the "Area") shall be taken, either party shall be
entitled to terminate this Lease, and the terminating party shall give the
other party written notice of such election not later than thirty (30) days
after the date Landlord delivers notice to Tenant that possession or title to
the portion of the premises has vested in the condemnor. If neither party
gives such notice, or less than twenty-five percent (25%) of the Area of the
Premises is taken, this Lease shall remain in full force and effect and rent
shall be adjusted as provided in Section 24.6.
24.4 TERMINATION DATE. If this Lease is terminated in accordance
with the provisions of this Article 24, such termination shall become effective
as of the date physical possession of the condemned portion is taken by the
condemnor.
24.5 REPAIR AND RESTORATION. If this Lease is not terminated, as
provided in this Article 24, Landlord shall, at its sole expense, restore, with
due diligence, the remainder of the improvements occupied by Tenant so far as
is practicable to a complete unit of like quality, character and condition as
that which existed immediately prior to the taking, provided that the scope of
the work shall not exceed the scope of the work done by Landlord originally in
constructing the Premises, and further provided that Landlord shall not be
obligated to expend an amount greater than that which was awarded to Landlord
for such taking.
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24.6 RENT ADJUSTMENT. If this Lease is not terminated, as provided
in this Article 24, the rent as provided herein shall be reduced by that
proportion which the Area taken from the Premises bears to Tenant's total area
immediately before the taking.
24.7 AWARD. The award or compensation in such proceedings, whether
for a total or partial taking, or for diminution in the value of the leasehold
or for the fee or for any other reason shall belong to, and be the property of,
Landlord or Tenant, as their respective interests may be.
25. LIENS AND ENCUMBRANCES
25.1 LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished or obligations incurred
by Tenant. Landlord may require, at Landlord's sole option, that Tenant shall
provide to Landlord, at Tenant's sole cost and expense, payment and performance
bonds in an amount equal to one-and-one-half (1 1/2) times the estimated cost
of such work, materials, labor and supplies and/or any liability for mechanic's
and materialmen's liens and to insure completion of the work.
25.2 ENCUMBRANCES The Tenant shall not cause or suffer to be
placed, filed or recorded against the title to the Premises, or any part
thereof, any mortgage, deed of trust, security agreement, financing statement
or other encumbrance; and further, in no event shall the lien of the Tenant's
mortgage or other security agreement or financing statement cover the Premises,
nor any leasehold improvements, alterations, additions, or improvements thereto
except trade fixtures, appliances and equipment which are owned by Tenant and
which are not, and which do not become, a part of the Premises. The form of
any such mortgage or other security agreement or financing statement which
includes a legal description of the Premises shall be subject to Landlord's
prior written approval, which approval shall be subject to such conditions as
the Landlord may deem appropriate.
26. ENVIRONMENTAL ISSUES.
26.1 DEFINITIONS.
A. "Environmental Activity" means any storage, presence,
existence, release, threatened release, use,
generation, abatement, removal, disposal, handling or
transportation of any Hazardous Material in, to, on,
under, from or about the Property.
B. "Hazardous Material" means any flammable or explosive
materials, petroleum or petroleum products, oil,
crude oil, natural gas or synthetic gas usable for
fuel, radioactive materials, hazardous wastes or
substances or toxic wastes or substances, including,
without limitation, any substances now or hereafter
defined as or included in the definition of
"hazardous substances", "hazardous wastes",
"hazardous materials", "toxic materials" or "toxic
substances" under any applicable federal, state or
local Laws or regulations now or hereafter in effect.
C. "Laws" means, collectively, all federal, state and
local laws, rules, regulations, ordinances and codes
now or hereafter applicable to the Property or the
Use of the Property, including, without limitation,
the requirements of all permits, licenses,
authorizations, judgments, decrees, agreements and
other governmental restrictions and requirements
relating to the Property or the Use of the Property.
D. "Property", for the purposes of these provisions,
means the real property and improvements described in
Section 1.1 of the Lease and all structures,
fixtures, transformers, underground storage tanks,
soil, groundwater,
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surface water and airspace at, in, on or under such
real property and improvements.
26.2 "AS IS".
Landlord makes no covenant, representation or warranty as to
the suitability of the Property for any purpose whatsoever or as to the
physical condition thereof. Tenant acknowledges that it has inspected the
Property, observed its physical characteristics and existing conditions, and
has had the opportunity to conduct such investigation and study on and of said
Property as it deems necessary for its intended use and occupancy under this
Lease, and hereby waives any and all objections to or complaints about physical
characteristics and existing conditions of the Property. Tenant further
acknowledges and agrees that the Property is to be leased to, and accepted by,
Tenant in its present condition, "AS IS" and with all faults, and hereby
assumes the risk that adverse physical characteristics and existing conditions
may not have been revealed by its inspection or investigation.
26.3 TENANT ENVIRONMENTAL COVENANT.
Throughout the Lease term, Tenant shall not undertake or
permit any Environmental Activity other than:
A. In compliance with all applicable Laws, and
B. In such a manner as not to present a significant
present or potential health risk to Landlord.
If Tenant shall breach the covenant provided in this Section,
then, in addition to any other rights and remedies which may be available to
Landlord under this Lease or otherwise at law or in equity, Landlord may
require Tenant to take all actions, or to reimburse Landlord for the costs of
any and all actions taken by Landlord, as are necessary to comply with all
applicable Laws and to abate any significant present or potential health risk
with respect to any Environmental Activity conducted or permitted or any
Hazardous Material present at the Property. Tenant's obligation under this
Section 26.3 shall survive the expiration or earlier termination of this Lease.
26.4 NO HAZARDOUS MATERIALS.
Except for Hazardous Materials which are reasonably necessary
for Tenant to operate a printed circuit board, electronic or manufacturing
company and associated businesses, Tenant shall not cause, permit, or suffer
any Hazardous Material to be brought upon, treated, stored, disposed of,
discharged, released, produced, manufactured, generated, refined or used upon,
about or beneath the Property or any portion thereof by Tenant, its agents,
employees, contractors, subtenants or invitees.
26.5 LANDLORD'S RIGHT TO PERFORM.
Should Tenant fail to perform or observe any of its
obligations or agreements pertaining to Hazardous Materials or Environmental
Activities under this Lease or under applicable laws, then Landlord shall have
the right, but not the duty, without limitation upon any of the rights of
Landlord under this Lease, to enter the Property personally or through its
agents, consultants or contractors and perform the same. Tenant agrees to
indemnify, reimburse, protect, defend and hold harmless Landlord for the costs
thereof and liabilities arising or resulting therefrom or in connection
therewith.
26.6 LANDLORD'S RIGHT TO INSPECTION.
Landlord shall have the right in its sole and absolute
discretion, but not the duty, to enter and inspect the Property at any time to
determine whether Tenant is complying with the
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terms of this Lease. Tenant hereby grants to Landlord, its agents, employees,
consultants and contractors the right to enter the Property and to perform such
tests on the Property as are reasonably necessary to conduct such reviews and
investigations. Landlord shall use reasonable efforts to minimize interference
with the business of Tenant but Landlord shall not be liable for any
interference caused thereby.
26.7 REMEDIATION.
In the event Landlord discovers any breaches under this Lease
or any violations of applicable Laws pursuant to the foregoing inspections,
including without limitation:
A. Any contamination of the Property from Hazardous
Materials caused or permitted to be on the Property
by Tenant, its agents, employees, contractors,
licensees or invitees (such parties being
collectively referred to as "Tenant" for purposes of
this Section);
B. A violation of any Laws with respect to any Hazardous
Materials or any Environmental Activity conducted or
permitted by Tenant at the Property; or
C. A breach by Tenant of its covenants and obligations
under this Lease;
then Tenant shall immediately cease all operations on the Property involving
the use of Hazardous Materials found not to be in compliance with applicable
Laws until such operations are brought into compliance therewith. To the
extent of any Hazardous Material contamination of the Property or other
properties caused or permitted by Tenant, Tenant shall promptly commence and
pursue to completion, at Tenant's sole cost and expense, a remediation program
with respect to such Hazardous Materials. The design and scope of the
remediation program shall be determined solely by Tenant and Tenant's
environmental consultants, provided that the scope and design are reasonably
acceptable to Landlord.
26.8 ENVIRONMENTAL INDEMNITY.
Tenant agrees to protect, indemnify, defend, reimburse and
hold harmless:
A. Landlord;
B. Any other person who acquires an interest in this
Lease whether by an assignment of Landlord's interest
in this Lease or otherwise;
C. Any other person who acquires all or a portion of the
Property at a foreclosure sale or by a conveyance in
lieu of foreclosure or otherwise through the exercise
of the rights and remedies of Landlord under this
Lease; and
D. The principals, directors, officers, shareholders,
partners, employees, successors, assigns, agents,
contractors, subcontractors, experts, licensees and
invitees of such persons listed in "A" through "C"
above (any or all of which are referred to herein as
an "indemnitee");
from and against any and all loss, cost, penalty, fine, liability, damage or
expense (including, without limitation, attorneys' fees and costs) arising or
resulting from or in any way connected with:
(1) The presence of any Hazardous Materials in,
at, on, under or about the Property; provided
said Hazardous Materials were brought on the
Property subsequent to the Rent Commencement
Date;
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(2) Any Environmental Activity conducted or
permitted by Tenant or any other party on the
Premises during the Lease term;
(3) Any violation of any Laws pertaining to the
condition of the Property or any
Environmental Activity thereon to the extent
caused by Tenant at any time or caused by
anyone else during the Lease term; or
(4) The breach of any warranty or covenant or the
inaccuracy of any representation of Tenant
contained in this Section.
26.9 SURVIVAL.
Tenant's obligations under Section 26 of this Lease shall
survive the expiration or earlier termination of the Lease term, the discharge
of all other obligations owed by the parties to each other, and any transfer of
title to the Property (whether by sale, foreclosure, deed in lieu of
foreclosure or otherwise).
27. AFFIRMATIVE COVENANTS OF TENANT
Tenant Agrees:
27.1 To comply with any and all requirements of any of the
constituted public authorities, and with the terms of any State or Federal
statute or local ordinance or regulation applicable to Tenant or its use of the
demised premises, and hold Landlord harmless from penalties, fines, costs,
expenses or damages resulting from failure to do so.
27.2 To give to Landlord prompt written notice of any accident,
fire or damage occurring on or to the demised Premises.
27.3 To keep all garbage and refuse in the kind of container
specified by Landlord and to place the same outside of the Premises, prepared
for collection in the manner and at the times and places specified by Landlord,
and in accordance with municipal regulations, and to furnish to Landlord
evidence of a contractual obligation between Tenant and a garbage collection
company that Tenant's garbage will be collected not less than two (2) times per
week. If Landlord provides garbage collection services, Tenant will pay the
cost of same as determined by Landlord.
27.4 To keep the outside areas immediately adjoining the Premises
clear and not to burn, place or permit any rubbish, obstruction or merchandise
in such areas.
27.5 To keep the demised Premises clean, orderly, sanitary and free
from objectionable odors and from insects, vermin and other pests.
27.6 To conduct its business in the Premises in all respects in a
dignified manner and in accordance with high standards of a manufacturing
business.
27.7 Tenant shall not commit or suffer to be committed any waste upon the
Premises.
27.8 In the event any labor, materials or equipment are furnished
to Tenant on the demised Premises with respect to which any mechanic's or
materialman's lien might be filed against the demised Premises, or against
Landlord's interest therein, Tenant agrees to take appropriate action prior to
the furnishing thereof to assure that no such lien will be filed; and Tenant
agrees to pay, when due all sums of money that may become due for any such
labor, materials or equipment and to cause any such lien to be fully discharged
and released promptly upon receiving notice thereof.
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27.9 Tenant shall pay all sales or rental tax which may be due
under any provision of this Lease/Option Agreement.
27.10 Tenant shall use, at Tenant's cost, a pest extermination
contractor at such intervals as may be necessary to keep premises free of
pests. Tenant shall annually furnish to Landlord a copy of a pest control
contract complying with the foregoing.
27.11 All mechanical apparatus and equipment shall be kept free of
vibrations and noise which may be transmitted beyond the demised Premises, and
no obnoxious odors shall be permitted to emanate or be dispelled from the
demised Premises.
27.12 Tenant shall install such fire extinguishers and other safety
equipment as required by law.
28. NEGATIVE COVENANTS OF TENANT
Tenant agrees that it will not do any of the following without the
prior written consent in writing of Landlord:
28.1 Use or operate any machinery that, in Landlord's opinion, is
harmful to the Premises.
28.2 Do or suffer to be done any act, manner or thing objectionable
to the fire insurance companies whereby the fire insurance or any other
insurance now in force or hereafter to be placed on the demised Premises or any
part thereof, shall become void or suspended, or whereby the breach of this
covenant, and in addition to all other remedies of Landlord hereunder, Tenant
agrees to pay to Landlord as additional rent any and all increases of premiums
on insurance carried by Landlord on the demised Premises, or any part thereof
caused in any way by the occupancy of Tenant.
28.3 Tenant shall not nor shall Tenant at any time permit any
occupant of the Premises to:
A. Conduct or permit any fire, bankruptcy or auction
sale (whether real or fictitious) unless directed by
order of a court of bankruptcy or of competent
jurisdiction, or conduct or permit any fictitious
"Going Out of Business" sale;
B. Use or permit to be used, any sound broadcasting or
amplifying device which can be heard outside of the
Premises;
C. Use the Premises for or conduct therein activities
the purpose for which is excluded from or
inconsistent with or not included within the purpose
for which the Premises may be used according to
Section 6.1 of this Lease; or
D. Use, operate or maintain the Premises in such manner
that any insurance carried by Landlord shall thereby
be cancelled.
29. GENERAL PROVISIONS
29.1 FORCE MAJEURE. If any part shall be delayed or prevented from
the performance of any act required hereunder by reason of acts of God,
strikes, lockouts, labor troubles, inability to procure materials, restrictive
governmental laws or regulations or by other cause without fault and beyond the
control of the party obligated (financial inability excepted), performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such
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delay; provided, however, nothing contained in this Section 29.1 shall excuse
Tenant from the prompt payment of any rental or other charge required of Tenant
hereunder except as may be expressly provided elsewhere in this Lease.
29.2 CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
29.3 COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition.
29.4 BINDING EFFECT; CHOICE OF LAW. Subject to any provisions
hereof restricting assignment or subletting by Tenant and subject to the
provisions of Article 17, this Lease shall bind the parties, their personal
representative, successors and assigns. This Lease shall be governed by the
laws of the State of Florida. Any action brought to enforce or nullify this
Lease or the provisions hereof must be brought in the county where the Premises
are located.
29.5 SUBORDINATION. Tenant hereby agrees, upon Landlord's written
request, to subordinate this Lease and Tenant's rights hereunder to any ground
lease, mortgage or any other hypothecation for security hereunder placed upon
the real property of which the Premises are a part, and to any and all advances
made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof, but such subordination
shall be only on the condition that Tenant's rights to quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease on Tenant's part to be performed, unless this Lease is otherwise
terminated pursuant to its terms.
29.6 ATTORNEYS' FEES. In the event of any litigation between
Tenant and Landlord to enforce any provision of this Lease or any right of
either party hereto, the unsuccessful party to such litigation shall pay to the
successful party all costs and expenses, including reasonable attorneys' fees,
incurred therein. Moreover, if either party hereto without fault is made a
party to any litigation instituted by or against any other party to this Lease,
such other party shall indemnify Landlord or Tenant, as the case may be,
against and save it harmless from all costs and expenses, including reasonable
attorneys' fees, incurred by it in connection therewith. In addition thereto,
Tenant agrees to pay Landlord's costs, expenses and reasonable attorneys' fees
with respect to:
A. Each request by Tenant for permission or consent to
assign or sublet the Premises, in whole or in part;
B. Each request made by Tenant to modify, amend or
supplement this Lease.
29.7 LANDLORD'S ACCESS. Landlord and Landlord's agents shall have
the right to enter the Premises at reasonable times and upon reasonable notice
to Tenant for the purpose of inspecting same and showing the same to
prospective lenders. Landlord and Landlord's agents shall also have the right
to enter the Premises to restore the Premises after any damage, destruction or
taking as provided in Articles 16 and 24 hereof, but only upon failure by
Tenant to make such repairs or restoration when required under the terms of
Article 16, hereof.
29.8 MERGER. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof or a termination by Landlord, shall
not work a merger.
29.9 ESTOPPEL CERTIFICATE. Tenant shall at any time, from time to
time upon not less than ten (10) days prior written notice from Landlord,
execute, acknowledge and deliver to Landlord a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect) and the dates to which the rental and
other charges are paid in advance, if any, and acknowledging that there are
not, to Tenant's knowledge, any uncured defaults if any are claimed. It is
expressly understood and agreed that any such
18
<PAGE> 19
statement may be relied upon by any prospective purchaser or encumbrancer of
all or any portion of the real property of which the Premises are a part.
Tenant's failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
except as may be represented by Landlord, that there are no cured defaults in
Landlord's performance, and that not more than two (2) months' rental has been
paid in advance. If Landlord desires to finance or refinance the Premises, or
any part thereof, then upon compliance by Landlord with the applicable
provisions hereof, Tenant agrees to deliver to any lender designated by
Landlord, Tenant's published financial statements for the immediately preceding
three (3) fiscal years of tenancy.
29.10 SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision thereof.
29.11 TIME OF ESSENCE. Time is of the essence.
29.12 CAPTIONS. Article and Section captions are not a part hereof.
29.13 PRIOR AGREEMENTS. This Lease contains all of the oral and
written agreements and understandings, correspondence, representations and
statements of the parties hereto with respect to any matter covered or
mentioned in this Lease, and no prior oral or written agreements or
understanding pertaining to any such matters shall be effective for any
purpose. No provisions of this Lease may be amended or added to except by an
agreement in writing signed by the parties thereto or their respective
successors in interest. This Lease shall not be effective or binding on any
party until fully executed by both parties hereto.
29.14 NOTICE. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given,
if mailed, registered or certified postage prepaid, on the date posted when
delivered addressed as follows:
TO LANDLORD: Taylor, Taylor and Dreifus Partnership
c/o J. L. Taylor
2647 Venetian Way
Gulf Breeze, Florida 32561
COPY TO: James L. Chase, Esquire
James L. Chase & Associates, P.A.
101 East Government Street
Pensacola, Florida 32501
TO TENANT: Pollution Research and Control
Corporation
506 Paula Avenue
Glendale, CA 91201
Nutek, Inc.
255 Brent Lane
Pensacola, FL 32503
Each of the foregoing shall be entitled to specify a different
address by giving notice in writing hereof to the other party. Service of any
summons may be made by personal service upon the resident agent of Landlord of
Tenant.
29.15 WAIVER. No waiver by Landlord of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision. Landlord's or Tenant's consent to
or approval of any act shall not be deemed to render unnecessary the obtaining
of Landlord's or Tenant's consent to or approval of any subsequent act by
Tenant or Landlord, as applicable. The acceptance of rent hereunder by
Landlord shall not be a waiver of any preceding breach by Tenant of any
provision hereof, other
19
<PAGE> 20
than the failure of Tenant to pay the particular rent so accepted, regardless
of Landlord's knowledge of such preceding breach at the time of acceptance of
such rent.
29.16 LANDLORD'S LIABILITY. The term "Landlord", as used herein,
shall refer only to the owner or owners at the time in question, of the fee
title to the Premises. In the event of a transfer of such title, Landlord
herein named (and in the case of any subsequent transfers, the then grantor)
shall be relieved from and after the date of such transfer of all liability as
respects Landlord's obligations thereafter to be performed, provided that any
security deposit in the hands of Landlord or the grantor at the time of such
transfer, in which Tenant has an interest, shall be delivered to the grantee.
The Obligations contained in this Lease to be performed by Landlord shall,
subject to the above, be binding on Landlord's successors and assigns, only
during their respective periods of ownership.
29.17 TRANSFER OF SECURITY DEPOSIT. In the event that Landlord sells
the real property of which the Premises are a part, Landlord may transfer and
deliver any security given by Tenant to secure the faithful performance of the
provisions of this Lease to the Purchaser of the real property. Upon such
transfer being made, Landlord shall be exonerated from any further liability
with respect to said security.
29.18 AUTHORITY OF TENANT. If Tenant is a corporation or a
partnership, the person signing this Lease on behalf of such corporation or
partnership hereby warrants that he has full authority from such corporation or
partnership to sign this Lease and obligate the corporation or partnership
hereunder.
29.19 GOVERNING LAW. The laws of the State of Florida shall govern
the interpretation, validity, performance, and enforcement of this Lease. If
any provision of this Lease shall be held to be invalid or unenforceable, the
validity and enforceability of the remaining provisions of this Lease shall not
be affected thereby.
29.20 RECORDING. Tenant may record this Lease without the prior
written consent of Landlord. If a recording is made, it shall be a short form.
29.21 OPTION TO PURCHASE. Landlord hereby grants to Tenant an option
to purchase the Premises, all as more particularly described on Exhibit "B"
attached hereto and incorporated herein by this reference.
29.23 INTEREST RATE. Whenever this Lease refers to the highest legal
interest rate allowed by law, said rate shall be deemed to be eighteen percent
(18%).
No representation or recommendation is made by Landlord as to the
legal sufficiency, legal effect or tax consequences of this document or the
transaction related thereto.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
TAYLOR, TAYLOR AND DREIFUS
PARTNERSHIP, A Florida General
Partnership
/s/ J. L. Taylor
------------------------
Aubrey Hornsby J. L. TAYLOR, Partner
- -------------------------
Witness to J. L. Taylor
James Chase
- -------------------------
Witness to J. L. Taylor
20
<PAGE> 21
Aubrey Hornsby /s/James Taylor
- --------------------------- ---------------------------------
Witness to James Taylor JAMES TAYLOR, Partner
James Chase
- -----------------------------
Witness to James Taylor
S. R. Chandler /s/ R. O. Dreifus
- ----------------------------- ----------------------------------
Witness to R. O. Dreifus R. O. DREIFUS, Partner
Greg Bradshaw
- --------------------------
Witness to R. O. Dreifus
NUTEK, INC.
A Florida Corporation
/s/ Aubrey Hornsby BY: /s/ J. L. Taylor
- -------------------------- ------------------------------
Witness to President Its President
/s/ James Chase
- ----------------------------
Witness to President
POLLUTION RESEARCH AND
CONTROL CORPORATION
A California Corporation
/s/ Aubrey Hornsby BY: /s/ Albert E. Gosselin
- -------------------------- -----------------------------
Witness to President Its President
/s/ James Chase
- ----------------------------
Witness to President
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by J. L. TAYLOR, who personally appeared before me.
/s/ Norene White
-------------------------------
NOTARY PUBLIC
Norene White
--------------------------------
(typed or printed name)
My Commission Expires: 6/13/98
My Commission No.: None
[ ] Personally known; or [X ] Produced identification
Type of identification produced: Drivers License # T460-432-29-186
21
<PAGE> 22
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by JAMES TAYLOR, who personally appeared before me.
/s/ Norene White
-----------------------------------
NOTARY PUBLIC
Norene White
-----------------------------------
(typed or printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [X ] Produced identification
Type of identification produced: Drivers License T460-436-21-046
STATE OF NORTH CAROLINA
COUNTY OF HAYWOOD
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by R. O. DREIFUS, who personally appeared before me.
/s/ Judy H. Medford
------------------------------------
NOTARY PUBLIC
Judy H. Medford
------------------------------------
(typed or printed name)
My Commission Expires: 8-7-2000
My Commission No.: N/A
[ ] Personally known; or [x ] Produced identification
Type of identification produced: NC DL 4347355
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was acknowledged before me on this 19th day of
June, 1996, by J. L. TAYLOR, as President, for and on behalf of Nutek, Inc., a
Florida Corporation.
22
<PAGE> 23
/s/ Norene White
-----------------------------------
NOTARY PUBLIC
Norene White
-----------------------------------
(typed or printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License T460-432-29-186
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was acknowledged before me on this 19th day
of June, 1996, by Albert E. Gosselin, as President, for and on behalf of
Pollution Research and Control Corporation, a California Corporation.
/s/ Norene White
---------------------------------
NOTARY PUBLIC
Norene White
---------------------------------
(typed or printed name)
My Commission Expires: 6/13/98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License B0937704
23
<PAGE> 24
EXHIBIT "A"
SURVEY
(Area Map)
24
<PAGE> 25
EXHIBIT "B"
OPTION AGREEMENT
("AGREEMENT")
ARTICLE I - TERMS OF OPTION
1.1 GRANT OF OPTION. Subject to the terms and conditions of this
Paragraph 1.1, Landlord ("Seller") hereby grants to Tenant ("Purchaser") an
option (the "Option") to purchase the property as more particularly described
on Exhibit "A" attached to the Lease/Option Agreement between said parties (the
"Lease"), and incorporated herein by this reference.
1.2 OPTION TERM. The term of this Option shall be for five (5) years
commencing on the Rent Commencement date (as defined in the Lease) and ending
five (5) years thereafter.
1.3 METHOD OF EXERCISE. Unless sooner terminated as hereinafter provided,
the Option may be exercised at any time during its term by Purchaser delivering
to Seller prior to the expiration of the term of the Option, or any extension
period thereof, a statement in writing signed by Purchaser exercising the
Option (the "Notice of Exercise"). Upon delivery of the Notice of Exercise,
this Agreement shall become an Agreement of Purchase and Sale between Seller
and Purchaser. If Seller does not receive the Notice of Exercise by the end of
the term of the Option, this Agreement shall automatically terminate and
Purchaser shall relinquish to Seller the "Option Consideration" (as such term
is defined in Section 1.4) that has been paid as of the date of termination.
1.4 OPTION CONSIDERATION. Purchaser has paid ten dollars ($10.00) in cash
to Seller upon the execution of this Agreement, together with the mutual
covenants and obligations as more particularly described herein, as
consideration for the grant of the Option, the receipt and sufficiency of which
is hereby acknowledged by Seller. The Option Consideration shall not be
refundable to Purchaser under any circumstances whatsoever except as expressly
provided for under Paragraph 3.2 below. The Option Consideration shall be
applied to the "Purchase Price" (as such term is defined in Section 2.1) if the
Option is exercised and the closing of title to be held pursuant to Article VII
(the "Closing") takes place.
ARTICLE II - PURCHASE PRICE AND ADJUSTMENTS
2.1 PURCHASE PRICE. The purchase price for the Property shall be the
amount determined by an MIA Appraiser as being the fair market value of the
Property on the date the option is exercised. The MIA appraiser shall be
selected by the Seller and Purchaser, and the cost of said appraisal shall be
split between the parties.
If Purchaser or Seller is not satisfied with said appraisal, said
party may hire another MIA appraiser of his choice to perform another appraisal
of the fair market value of the Property on the date the option is exercised.
This appraisal shall be paid by the party requesting it. The average of the
two (2) appraisals performed shall determine the fair market value for purposes
of the Purchase Price.
If the second appraisal is more than five percent (5%) different from
the first appraisal and the non-requesting party is not satisfied with the
second appraisal, said party may hire another MIA appraiser of his choice to
perform another appraisal of the fair market value of the Property on the date
of the option is exercised. This appraisal shall be paid by the party
requesting it. The average of the three (3) appraisals performed shall
determine the fair market value for purposes of the Purchase Price.
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<PAGE> 26
The initial appraisal shall be performed and completed within thirty
(30) days of the exercise of the option. The second appraisal, if one, shall
be performed and completed within thirty (30) days after the completion of the
first appraisal. The third appraisal, if one, shall be performed and completed
within thirty (30) days after completion of the second appraisal.
A. The Purchase Price shall be paid by crediting the
Option consideration as defined in paragraph 1.4 above against the Purchase
Price; and
B. The balance of the Purchase Price, subject to
adjustments as set forth in Section 2.2 ("Balance Due") shall be paid by the
Purchaser at the Closing by bank cashier's or certified check.
2.2 ADJUSTMENTS AND COSTS.
A. Seller shall pay the amount of any unpaid real property taxes
and assessments allocable to the Property for tax years prior to the year of
the Closing. These taxes for any period subsequent to the Rent Commencement
Date shall be reimbursed to Landlord by Tenant as additional rent pursuant to
the term of the lease.
B. The amount of real property taxes and assessments affecting
the Property for the year of the Closing shall be apportioned between Seller
and Purchaser as of the Closing Date, with the amount of such taxes to be based
upon the most recent available levy applied to the most recent available
assessment. These taxes shall be reimbursed to Landlord by Tenant as
additional rent pursuant to the term of the Lease.
C. Purchaser shall pay any documentary stamp tax due upon the
transfer of the Property and for recording the warranty deed. Purchaser shall
pay any documentary stamp tax or intangible tax related to any financing on the
Property. Purchaser shall pay for the survey and termite report.
D. Purchaser shall pay the owner's premium for the "Owner's
Policy" [as such term is defined in Paragraph 3.1(A)(1)].
E. Purchaser shall pay the amount of any unpaid assessments
affecting the Property which were assessed after the Rent Commencement Date
under the lease.
F. Lease payments shall be prorated to the date of closing.
G. Each party shall pay any costs and expenses incurred by such
party, including each party's attorneys' fees, in connection with the
transactions contemplated by this Agreement not adjusted as set forth in this
Section 2.2 or not otherwise provided for herein.
ARTICLE III - TITLE EVIDENCE
3.1 TITLE DOCUMENTS
A. Within forty-five (45) days after Seller's timely receipt of
Purchaser's Notice of Exercise as described herein, Seller shall deliver to
Purchaser, at Purchaser's expense, except as otherwise provided herein, the
following title evidence covering the Property.
(1) A title insurance commitment issued by Attorney's
Title Insurance Fund, Inc. (the "Title Company") showing the status of record
title to the Property (the "Commitment"), together with copies of all recorded
documents referred in the Commitment. The Commitment shall commit to insure
title to the Property in Purchaser in the amount of the Purchase Price under
Owner's Policy ALTA Form B. Purchaser shall pay the owner's premium for the
Owner's Policy to be issued pursuant to the Commitment (the "Owner's Policy").
(2) A certificate or certificates of taxes due covering
the Property prepared by
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<PAGE> 27
the Tax Collector of the county in which the Property is situated (the
"County").
3.2 DEFECTS IN TITLE. Purchaser shall have a twenty (20) day period
following Purchaser's receipt of the Commitment to provide to Seller a letter
setting forth all of Purchaser's objections to the Commitment ("Defects of
Title"). Seller thereafter shall have a thirty (30) day period following
Seller's receipt of Purchaser's letter to correct any such Defects of Title as
set forth by Purchaser. Seller and Purchaser acknowledge that the Commitment
provided to Purchaser shall include all standard pre-printed exceptions, and
shall include all easements and restrictions of record and the unrecorded lease
to Bill Salter Advertising, which exceptions shall not constitute objectionable
Defects of Title. If Seller is unwilling or unable to correct such Defects of
Title within such thirty (30) day period, Purchaser shall have the option to
waive such Defects of Title or terminate this Agreement and request a return of
the Option Consideration and such option shall be exercised within twenty (20)
days after such thirty (30) period. Seller and Purchaser intend that Seller
shall incur no out-of-pocket expenses whatsoever in the event that Purchaser
terminates this Agreement under this Paragraph 3.2. Should Purchaser elect to
proceed with this Agreement at the end of such contingency period, or if
Purchaser fails to notify Seller prior to expiration of the above-described
period of Purchaser's election to terminate this Agreement, this contingency
shall be deemed waived and the Agreement shall continue in full force and
effect notwithstanding such purported Defects of Title.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
4.1 SELLERS' REPRESENTATIONS AND WARRANTIES. As an inducement to
Purchaser to execute this Agreement and to close the transaction contemplated
hereby, Seller represents and warrants to Purchaser that:
A. AUTHORITY TO SELL. Seller has all requisite power and
authority to execute this Agreement and to execute the closing documents to be
executed in connection herewith required of Seller and all other documents
required to be delivered by Seller.
B. NO LITIGATION. There is no administrative agency action,
litigation, condemnation proceeding or proceeding of any kind pending against
Seller which relates to or affects the Property, and no proceedings are
pending, threatened or contemplated by any public or private authority having
the power of eminent domain for the condemnation or taking for sale in lieu
thereof of any portion of the Property.
C. LABORERS PAID. As of the date hereof and as of the date of
Closing, Seller will have no unpaid bills for labor performed or materials
supplied and sent to the Property. A "no-lien" affidavit stating same will be
delivered by Seller to Purchaser at Closing.
Seller hereby agrees that the truthfulness of each of said
representations and warranties and of all other representations and warranties
herein made is a condition precedent to the performance by Purchaser of its
obligations hereunder. The representations and warranties set forth shall
survive the closing of this transaction and the doctrine of merger shall not
apply.
4.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants that, as of the date of this Agreement and as of the date of the
Closing:
A. The execution and delivery of this Agreement has been duly and
validly authorized by Purchaser, and all requisite action has been taken to
make this Agreement valid and binding upon Purchaser.
B. The consummation of the transactions contemplated by this
Agreement will not constitute a default or result in the breach of any term or
provision of any contract or agreement to which Purchaser is a party so as to
adversely affect the consummation of such transactions.
Purchaser hereby agrees that the truthfulness of each of said representations
27
<PAGE> 28
and warranties and of all other representations and warranties herein made is a
condition precedent to the performance by Seller of its obligations hereunder.
The representations and warranties set forth shall survive the closing of this
transaction and the doctrine of merger shall not apply.
ARTICLE V - NO REFUND OF OPTION CONSIDERATION
5.1 Seller and Purchaser acknowledge that the Option Consideration shall
not be refundable to Purchaser under any circumstances whatsoever except as
expressly provided for under Paragraph 3.2 above.
ARTICLE VI - INTERIM CONSIDERATIONS
6.1 CONDUCT AFFECTING THE PROPERTY. Between the date of this Agreement
and the Closing Date, Seller:
A. Shall not dispose of any fee simple interest in the Property
without notifying the Purchaser of the existence of this Option Agreement,
provided, however, Purchaser shall lease the Property from Seller as more
particularly described in the Lease/Option Agreement to which this Option
Agreement is attached and incorporated as Exhibit "B"; and
B. Shall not, without Purchaser's prior written consent (which
consent may be withheld in Purchaser's sole discretion), enter into any lease
or other agreement with respect to the Property which extends beyond the
Closing Date.
6.2 TESTS ON THE PROPERTY. At any time prior to the Closing, if this
Agreement shall not have first been terminated, Purchaser and Purchaser's
agents, contractors and engineers shall have the right to enter upon the
Property for the purposes of making surveys, soil tests, obtaining
topographical information and for other similar work provided that such
operations are conducted in such a manner as not to damage the Property.
Purchaser agrees to hold Seller harmless from any and all mechanic's or
materialmen's liens that may be filed against the Property by reason of the
performance of any of the acts herein mentioned.
6.3 INSPECTION OF REPORTS, ETC. Seller shall make available for
Purchaser's inspection during normal business hours or provide copies to
Purchaser of all surveys, soils and drainage reports, boundary and
topographical drawings, engineering and technical data, and any other
agreements, reports, drawings or maps relating to the Property that are in the
possession of Seller or obtainable by Seller without incurring any expense to
Seller.
28
<PAGE> 29
ARTICLE VII - THE CLOSING
7.1 THE CLOSING. If Purchaser elects to exercise the option, the Closing
shall take place within ninety (90) days following Seller's receipt of the
Notice of Exercise. The closing date shall be extended by thirty (30) days if
a second appraisal is performed pursuant to Article 2.1 and shall be extended
by sixty (60) days if a third appraisal is performed. The Closing shall take
place at a location in Escambia County, Florida to be determined by Seller.
7.2 OBLIGATIONS OF PARTIES AT CLOSING. The following shall occur at the
Closing, each being a condition precedent to the others and all being
considered as occurring simultaneously:
A. Seller shall execute, have acknowledged and deliver to
Purchaser the following:
(1) A general warranty deed conveying title to the
Property to Purchaser subject to any and all matters disclosed
in the Commitment.
B. Purchaser shall deliver to Seller the balance of the Purchase
Price as required by Paragraph 2.1(B).
C. Seller shall deliver to Purchaser possession of the Property,
and Purchaser shall be entitled to full enjoyment of the Property on the
Closing Date subject to the matters set forth or referred to herein.
D. Each party shall deliver to the other such other documents,
certificates and the like as may be required herein or as may be necessary or
helpful to carry out its obligations under this Agreement.
ARTICLE VIII - RISK OF LOSS
8.1 RISK OF LOSS. The risk of loss or damage to the Property by casualty
or condemnation shall be borne by Seller prior to Closing and prior to Seller's
delivery of possession of the Property to Purchaser, and by Purchaser only
after possession of the Property is relinquished to Purchaser. This clause
does not waive or release Purchaser from its obligations to pay for insurance
in accordance with terms of this Lease.
ARTICLE IX - DEFAULT AND REMEDIES
9.1 DEFAULT. TIME IS OF THE ESSENCE HEREOF. In the event of default by
either party under this Agreement prior to or at the Closing, the remedies upon
such default are as set forth below unless otherwise provided in this
Agreement.
9.2 SELLER'S REMEDIES. If Purchaser properly and timely exercises this
Option and Purchaser shall default in performing Purchaser's obligations
hereunder prior to the closing, Seller shall be entitled to terminate this
Agreement and retain the Option Consideration as liquidated damages, or Seller
may seek specific performance or any other equitable remedy permitted under
pertinent Florida law, and Seller may recover from Purchaser a reasonable
attorney's fee and all costs and expenses incurred.
9.3 PURCHASER'S REMEDIES. If Purchaser properly and timely exercises this
Option and Seller shall default in performing Seller's obligations hereunder
prior to the Closing, Purchaser shall be entitled to any return of the Option
Consideration, and Purchaser may commence an action for specific performance or
any other equitable remedy permitted under pertinent Florida law. Purchaser
shall not be entitled to seek money damages or any other legal remedy against
Seller.
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<PAGE> 30
9.4 PURCHASER'S DEFAULT UNDER LEASE. Purchaser's option to purchase the
Property under this Exhibit "B" shall be in effect only if there have been no
defaults by Purchaser, whether monetary or non-monetary, which have not been
remedied to the satisfaction of Seller in its reasonable discretion at the time
of the exercise of the Option. Upon exercise of the Option and closing of the
transfer of the Property to Purchaser, Seller and Purchaser's rights and duties
under the Lease shall cease, and Purchaser shall assume all obligations of
Seller with respect to the Property and shall indemnify and hold Seller
harmless from and against any future liability, claim, and expense related to
the Property which occurred or arose during the term of this Lease. In the
event Purchaser fails to exercise the Option to purchase the Property in a
timely manner and in accordance with the terms and conditions of this Exhibit
"B," or if the closing fails to occur after the exercise of the Option for any
reason whatsoever, the Lease shall continue in full force and effect as more
particularly described therein with no further Option to purchase the Property
in favor of Purchaser.
ARTICLE X - MISCELLANEOUS
10.1 NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be personally delivered or
be given by registered or certified mail. Any such notice shall be effective
on the earlier of
A. The time when such notice is actually received, or
B. The fourth (4th) day following its deposit in the United
States mail, postage prepaid, addressed as follows:
If intended for Seller, to:
Name TAYLOR, TAYLOR AND DREIFUS PARTNERSHIP
Address C/O J. L. TAYLOR
2647 VENETIAN WAY
GULF BREEZE, FLORIDA 32561
with a copy to:
Name JAMES L. CHASE, ESQUIRE
Address JAMES L. CHASE & ASSOCIATES, P.A.
101 EAST GOVERNMENT STREET
PENSACOLA, FLORIDA 32501
If intended to Purchaser, to:
Name POLLUTION RESEARCH AND CONTROL CORPORATION
Address 506 PAULA AVENUE
GLENDALE, CA 91201
Any party, by notice given as above, may change the address to which its future
notices shall be sent.
10.2 BROKERS. If either Seller or Purchaser has incurred any other
obligation, contingent or otherwise, for broker's or finder's fees with respect
to the matters provided for in this Agreement, the party incurring any such
obligation shall be solely responsible therefor. Each party agrees to hold the
other party harmless from and against any and all costs, expenses, claims,
losses or damages, including reasonable counsel fees, resulting from violations
of the agreement contained in this Section.
10.3 ASSIGNABILITY. Purchaser shall have the right to assign its right and
delegate its duties under this Agreement, but this Option may be assigned only
if the Lease/Option Agreement is assigned and the Option shall never be held by
anyone other than the Tenant or
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<PAGE> 31
its assigns under the Lease.
10.4 BINDING EFFECT. Subject to the provisions of Section 10.3, this
Agreement shall be binding upon and inure to the benefit of Purchaser and
Seller and their respective successors and assigns.
10.5 AMENDMENTS. This Agreement and the exhibits attached hereto contain
the entire agreement between the parties and may not be modified in any manner
except by an instrument in writing signed by both parties.
10.6 NO WAIVER. No waiver of any term, provision or condition of this
Agreement, in any one or more instances, shall be deemed to be or shall be
construed as a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.
10.7 EFFECT OF HEADINGS AND RECITALS. The article and section headings are
inserted only for convenient reference and do not define, limit or prescribe
the scope of this Agreement or any exhibit attached hereto. Any Recitals to
this Agreement are included as an aid to interpretation of this Agreement, but
do not themselves create, limit or define any rights or obligations or the
parties hereto.
10.8 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Florida.
10.9 COUNTERPARTS. This Agreement and amendments hereto may be executed in
counterparts, each of which shall be deemed an original and such counterparts
shall constitute but one and the same instrument.
10.10 FURTHER ACTS. In addition to the acts and deeds recited herein and
contemplated to be performed, executed and/or delivered by Seller and
Purchaser, Seller and Purchaser agree to perform, execute, and/or deliver or
cause to be performed, executed and/or delivered at Closing, or after Closing,
and all such further acts, deeds, and assurances as may be necessary to
consummate the transaction contemplated today.
EXECUTED as of the date first set forth above.
TAYLOR, TAYLOR AND DREIFUS
PARTNERSHIP, a Florida General
Partnership
/s/ J. L. Taylor
-------------------------------------
J. L. TAYLOR, Partner
/s/ Aubrey Hornsby
- -------------------------------------
Witness To J. L. Taylor
/s/ James Chase
- -------------------------------------
Witness to J. L. Taylor
/s/ Aubrey Hornsby /s/ James Taylor
- ------------------------------------- ------------------------------------
Witness to James Taylor JAMES TAYLOR, Partner
/s/ James Chase
- -------------------------------------
Witness to James Taylor
/s/ S. R. Chandler /s/ R. O. Dreifus
- ------------------------------------- ------------------------------------
Witness to R. O. Dreifus R. O. DREIFUS, Partner
/s/ Greg Buohfue
- ----------------------------------------
Witness to R. O. Dreifus
31
<PAGE> 32
NUTEK, INC.
A Florida Corporation
BY: /s/ J. L. Taylor
----------------------------------
/s/ Aubrey Hornsby Its President
- ----------------------------
Witness to President
/s/ James Chase
- ----------------------------
Witness to President
POLLUTION RESEARCH AND
CONTROL CORPORATION
A California Corporation
BY: /s/ Albert E. Gosselin
---------------------------
/s/ Aubrey Hornsby Its President
- ----------------------------
/s/ James Chase
- ----------------------------
Witness to President
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by J. L. TAYLOR, who personally appeared before me.
/s/ Norene White
-----------------------------------
NOTARY PUBLIC
Norene White
-----------------------------------
(typed or printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License
32
<PAGE> 33
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by JAMES TAYLOR, who personally appeared before me.
/s/ Norene White
-------------------------------
NOTARY PUBLIC
Norene White
--------------------------------
(typed or printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License
STATE OF NORTH CAROLINA
COUNTY OF HAYWOOD
The foregoing instrument was sworn to and subscribed before me on this
19th day of June, 1996, by R. O. DREIFUS, who personally appeared before me.
/s/ Judy H. Medford
---------------------------------
NOTARY PUBLIC
Judy H. Medford
---------------------------------
(typed or printed name)
My Commission Expires: 8-7-2000
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License
33
<PAGE> 34
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was acknowledged before me on this 19th day
of June, 1996, by J. L. TAYLOR, as President, for and on behalf of Nutek, Inc.,
a Florida Corporation.
NOTARY PUBLIC
/s/ Norene White
-----------------------------------
NOTARY PUBLIC
Norene White
-----------------------------------
(typed or Printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License
STATE OF ALABAMA
COUNTY OF BALDWIN
The foregoing instrument was acknowledged before me on this 19th day
of June, 1996, by Albert E. Gosselin, as President, for and on behalf of
Pollution Research and Control Corporation, a California Corporation.
/s/ Norene White
------------------------------------
NOTARY PUBLIC
Norene White
------------------------------------
(typed or printed name)
My Commission Expires: 6-13-98
My Commission No.: None
[ ] Personally known; or [x ] Produced identification
Type of identification produced: Drivers License
34
<PAGE> 1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into this 19th day of June, 1996, by and among
Pollution Research and Control Corp., a California corporation (hereinafter
referred to as the "Company"), 506 Paula Avenue, Glendale, California 91201, on
the one hand, and J. L. Taylor (hereinafter referred to as "JLT"), 2647
Venetian Way, Gulf Breeze, Florida 32561; James R. Taylor, 1657 Cross Street,
Pensacola, Florida 32503, and Ralph Dreifus, 375 Likstone Road, Waynesville,
North Carolina 28786 (hereinafter referred to, individually, as a "Seller" and,
collectively, as the "Sellers"), on the other hand.
R E C I T A L S:
WHEREAS, the Sellers desire to sell, assign, transfer, convey
and deliver to the Company, and the Company desires to purchase, acquire and
receive from the Sellers, all 1,800 issued and outstanding shares of common
stock, $1.00 par value per share (hereinafter referred to as the "Common
Shares"), of Nutek, Inc., a Florida corporation (hereinafter referred to as
"Nutek"), 225 Brent Lane, Post Office Box 17547, Pensacola, Florida 32522-7547,
owned collectively by the Sellers in exchange therefor of the consideration
described in Article 2, section (a) below, on the terms and subject to the
conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and
the mutual covenants, agreements, representations and warranties contained
herein, the parties hereto agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
At the closing to be held in accordance with the provisions of
Article 2 below, JLT, James R. Taylor and Ralph Dreifus, severally and not
jointly, agree to sell, assign, transfer, convey and deliver to the Company,
600 Common Shares, respectively, and the Company agrees to purchase, acquire
and receive such number of Common Shares from each of the Sellers. In
consideration for the sale of the Common Shares to the Company, and as payment
in full of the purchase price for the Common Shares to be purchased by the
Company pursuant to the provisions of this Agreement, at the Closing, the
Company shall pay the sum of cash and execute and/or deliver the promissory
notes and other documents and instruments to the escrow agent of the Sellers as
provided in Article 2 below. Each of the Sellers shall deliver to the Company
the certificate evidencing 600 Common Shares owned by each.
ARTICLE 2
CLOSING
The consummation of the sale to and purchase by the Company of the Common
1
<PAGE> 2
Shares (the "Closing") shall occur at the Perdido Pass Restaurant, Gulf Shores,
Alabama, at 7:00 p.m., Central Standard Time, on June 19, 1996 (hereinafter
referred to as the "Closing Date"), or at such other place and/or on such other
date not later than September 17, 1996, as the parties may agree upon in
writing (hereinafter referred to as the "Closing Date"). If the Closing fails
to occur by June 19, 1996, or by such later date to which the Closing may be
extended as provided hereinabove, this Agreement shall automatically terminate,
all parties shall pay their own expenses incurred in connection herewith and no
party hereto shall have any further obligations hereunder; provided, however,
that no such termination shall constitute a waiver by any party or parties
which is not in default of any of its, his or their respective representations,
warranties or covenants herein, of any rights or remedies it, he or they might
have at law if any other party or parties is in default of any of its, his or
their respective representations, warranties or covenants under this Agreement.
If Company fails to consummate this transaction on or before September 17,
1996, Sellers shall be entitled to retain the initial ten thousand dollar
($10,000.00) deposit.
At the Closing, as conditions thereto,
(a) The Company shall deliver, or cause to be delivered,
to James L. Chase & Associates, P.A. (hereinafter referred to as the "Escrow
Agent"), as escrow agent for the Sellers, pursuant to that certain Escrow
Agreement dated June 19, 1996, between the Escrow Agent and the Sellers, a copy
of which is attached hereto and incorporated herein by this reference:
(i) A cashier's check, wire or other
form of "cleared" funds in the amount of $750,000.00;
(ii) Three (3) fully executed promissory
notes in the forms attached hereto as Exhibits "A-1", "A-2"
and "A-3".
(iii) The canceled promissory notes
payable by Nutek, as the maker thereof, to Barnett Bank, as
the holder thereof, or other documents or instruments
evidencing the payment of said notes and/or documents or
instruments removing JLT as the obligor thereof, described
below:
(1) Promissory note in the
principal amount of $21,171.08, bearing interest at
the rate of 6.5% per annum, payable monthly
commencing May 19, 1994;
(2) Promissory note in the
principal amount of $15,407.75, bearing interest at
the rate of 7.5% per annum, payable monthly
commencing March 8, 1993;
(3) Promissory note in the
principal amount of $40,140.70, bearing interest at
the rate of 8.05% per annum, payable monthly
commencing June 18, 1994; and
(4) Promissory note in the
principal amount of $55,567.00, bearing interest at
the rate of 9.75% per annum, payable monthly
commencing May 21, 1995.
(iv) The document or instrument
evidencing the payment of the $250,000.00 outstanding balance
of Nutek's line of credit from Barnett Bank plus all accrued
interest (which is a total of $254,438.87 as of June 19, 1996)
through the date of payment;
(v) The canceled promissory note between
JLT and Nutek dated September 29, 1995, plus all advancements
and accrued interest (approximate balance on June 19, 1996 is
$506,367.22);
2
<PAGE> 3
(vi) The certified resolutions of the
Company's Board of Directors specified in Section 6.4(a)
below; and
(vii) The certificate of the Company
specified in Section 6.4(b) and (c) below.
(viii) Opinion letter of the Company's
counsel in the form attached as Exhibit "B";
(b) The Sellers shall deliver to the Escrow Agent:
(i) Stock certificates evidencing the
ownership by each Seller of 600 Common Shares owned by him,
duly executed, endorsed and/or authenticated for transfer to
the Company;
(ii) Lease/Option Agreement between the
Sellers and Nutek in the form attached hereto as Exhibit "C";
and
(iii) The certificate of the Sellers
specified in Section 6.3(a) and (b) below.
(iv) The document, instrument or
agreement providing for the termination of the Motor Vehicle
Lease Agreements dated July 20, 1994, between Nutek and JLT
and Ernestine Taylor, respectively.
(v) The document, instrument or
agreement providing for the termination of the lease agreement
between Nutek and the Sellers;
(vi) Opinion letter of Nutek's counsel in
the form attached as Exhibit "D".
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the individual Sellers, jointly and severally, hereby
represents and warrants to the Company as follows (it being acknowledged that
the Company is entering into this Agreement in material reliance upon each of
the following representations and warranties, and that the truth and accuracy
of each of which constitutes a condition precedent to the obligations of the
Company hereunder):
3.1 ORGANIZATION AND CORPORATE POWER. Nutek is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, and is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which such
qualification is required and where the failure to be so qualified would have a
materially adverse effect upon Nutek. Nutek has all requisite corporate power
and authority to conduct its business as now being conducted and to own and
lease the personal property and to lease the real property which it now owns
and leases. The Articles of Incorporation of Nutek as amended to date,
certified by the Secretary of State of Florida, and the Bylaws of Nutek as
amended to date, certified by the President of Nutek, which have been delivered
to the Company prior to the execution hereof, are true and complete copies
thereof as in effect as of the date of this Agreement.
3.2 AUTHORIZATION. Each of the Sellers has full power,
legal capacity and authority to enter into this Agreement and the Sellers and
Nutek have full power, legal capacity and authority to enter into all attendant
documents and instruments necessary to consummate the transactions herein
contemplated, to sell, assign, transfer, convey and deliver the Common Shares
to the Company and to perform all of the obligations to be performed by each of
them
3
<PAGE> 4
hereunder. All agreements, documents and instruments to be executed in
connection herewith by Nutek have been effectively authorized by all necessary
action, corporate or otherwise, on the part of Nutek, which authorizations
remain in full force and effect, have been duly executed and delivered by Nutek
and no other corporate proceedings on the part of Nutek are required to
authorize the execution and delivery of such agreements, documents and
instruments. This Agreement has been duly executed and delivered by each of
the Sellers; constitutes the legal, valid and binding obligation of each of the
Sellers; and is enforceable with respect to each of the Sellers in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, priority or other laws or court decisions relating
to or affecting generally the enforcements of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement, the consummation by the Sellers and Nutek of any of
the transactions contemplated hereby nor the compliance by the Sellers and
Nutek with any of the provisions hereof will (i) conflict with or result in a
breach of, violation of or default under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, credit
agreement or other agreement, document, instrument or obligation (including,
without limitation, any of Nutek's charter documents) to which any of the
Sellers or Nutek is a party or by which any of the assets or properties of
Nutek or the Sellers may be bound or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to any of the
Sellers or Nutek or any of the assets or properties of the Sellers or Nutek.
To the best knowledge of the Sellers, no authorization, consent or approval of
any public body or authority is necessary for the consummation by the Sellers
and Nutek of the transactions contemplated by this Agreement.
3.3 CAPITALIZATION.
(a) The authorized capital stock of Nutek
consists of 20,000 shares of common stock, $1.00 par value per share (defined
above as the "Common Shares"). At the date hereof, there are 1,800 Common
Shares issued and outstanding, with no Common Shares held in Nutek's treasury.
All of the outstanding Common Shares have been duly authorized and validly
issued and are fully paid and nonassessable.
(b) There are no warrants, options, calls,
commitments or other rights to subscribe for or to purchase from Nutek any
capital stock of Nutek or any securities convertible into or exchangeable for
any shares of capital stock of Nutek, or any other securities or agreement
pursuant to which Nutek is or may become obligated to issue any shares of its
capital stock, nor is there outstanding any commitment, obligation or agreement
on the part of Nutek to repurchase, redeem or otherwise acquire any of the
outstanding Common Shares.
(c) There currently are no rights, agreements or
commitments of any character obligating Nutek, contingently or otherwise, to
register any shares of its capital stock under any applicable Federal or State
securities laws.
3.4 OWNERSHIP OF NUTEK. The Sellers altogether
collectively own 1,800 Common Shares, constituting all of the issued and
outstanding shares of capital stock of Nutek, free and clear of (i) any lien,
charge, mortgage, pledge, conditional sale agreement or other encumbrance of
any kind or nature whatsoever and (ii) any claim as to ownership thereof or any
rights, powers or interest therein by any third party, whether legal or
beneficial and whether based on contract, proxy or other document or otherwise.
3.5 FINANCIAL STATEMENTS. Attached hereto as Exhibit "E"
are true and complete copies of the unaudited balance sheet of Nutek as of May
31, 1996 (the "Balance Sheet"), the related statement of profit or loss for the
eight (8) months then ended and the related notes thereto which have been
certified to by the chief executive officer and the chief financial officer of
Nutek, and the year end audited balance sheet of Nutek as of September 30,
1995, the related statements of profit or loss and cash flows for the year then
ended and the related notes thereto. Such financial statements (and the notes
related thereto) are herein sometimes collectively referred to as the "Nutek
Financial Statements." The Nutek Financial Statements (i) are derived from the
books and records of Nutek, which books and records have been consistently
maintained in a manner which reflects, and such books and records do fairly and
4
<PAGE> 5
accurately reflect, the assets and liabilities of Nutek, (ii) fairly and
accurately present the financial condition of Nutek on the respective dates of
such statements and the results of its operations for the periods indicated,
except as may be disclosed in the notes thereto, and (iii) have been prepared
in all material respects in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise disclosed in the notes thereto).
3.6 SUBSIDIARIES. Nutek has no subsidiaries and no
investments, directly or indirectly, or other financial interest in any other
corporation or business organization, joint venture or partnership of any kind
whatsoever except as reflected in the Nutek Financial Statements. It is
understood and acknowledged by the Company, however, that the Sellers own
certain other business organizations and/or additional business enterprises in
existence, in formation or to be formed, that the Sellers may hereafter
establish or acquire additional businesses and enterprises and that no such
other or additional corporation, business or enterprise is now a part of, or
owned by, Nutek, nor shall the Company acquire any beneficial or equitable
interest in or to any such other or additional corporation, business or
enterprise as a consequence of any of the transactions contemplated by this
Agreement.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to
the extent reflected or reserved against in the Balance Sheet, and as to
matters arising in the ordinary course of its business since the date of the
Balance Sheet, Nutek has no liabilities or obligation(s) (whether accrued, to
become due, contingent or otherwise) which individually or in the aggregate
could have a materially adverse effect on its business, assets, properties,
condition (financial or otherwise) or prospects.
3.8 ABSENCE OF CERTAIN DEVELOPMENTS. Since the date of
the Balance Sheet, there has been (i) no materially adverse change in the
condition (financial or otherwise) of Nutek or in its assets, liabilities,
properties, business, operations or prospects; (ii) no declaration, setting
aside or payment of any dividend or other distribution with respect to the
Common Shares or redemption, purchase or other acquisition of any Common Shares
or any split-up or other recapitalization relative to any Common Shares or any
action authorizing or obligating Nutek to do any of the foregoing; (iii) no
loss, destruction or damage to any material property or asset of Nutek, whether
or not insured; (iv) no acquisition or disposition of assets (or any contract
or arrangement therefor), or any other transaction by Nutek otherwise than for
fair value and in the ordinary course of business; (v) no discharge or
satisfaction by Nutek of any lien or encumbrance or payment of any obligation
or liability (absolute or contingent) other than current liabilities shown on
the Balance Sheet, or current liabilities incurred since the date thereof in
the ordinary course of business; (vi) no sale, assignment or transfer by Nutek
of any of its tangible or intangible assets, cancellation by Nutek of any
debts, claims or obligations, or mortgage, pledge, satisfaction of any assets
to any lien, charge, security interest or other encumbrance, or waiver by Nutek
of any rights of value which, in any such case, is material to the business of
Nutek (whether or not in the ordinary course of business); (vii) no payment of
any bonus to or change in the compensation of any director, officer or
employee, whether directly or by means of any bonus, pension plan, contract or
commitment and no change in employee compensation, whether directly or by means
of any bonus, pension plan, contract or commitment, except for employees in the
ordinary course of business; (viii) no write-off or material reduction in the
carrying value of any asset which is material to the business of Nutek; (ix) no
disposition or lapse of rights as to any intangible property which is material
to the business of Nutek; (x) except for ordinary travel advances, no loans or
extensions of credit to shareholders, officers, directors or employees of
Nutek; (xi) no entry into any commitment or transaction by Nutek (including,
without limitation, any borrowing or capital expenditure) involving an amount
in excess of $1,000.00; (xii) no issuance of any capital stock, or of any other
security convertible into any of the capital stock, of Nutek; or (xiii) no
agreement to do any of the things described in this Section 3.7.
3.9 REAL PROPERTY. Exhibit "F" attached hereto contains
a complete and accurate legal description of each parcel of real property
leased to and occupied by Nutek, and Nutek neither owns, leases nor occupies
any other real property. The buildings and all fixtures and improvements
located on such real property are in good operating condition, ordinary wear
5
<PAGE> 6
and tear excepted. Nutek is not in violation of any zoning, building or safety
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties, and Nutek has not received any
notice of violation with which it has not complied. All leases of real
property to which Nutek is a party and which are material to the business of
Nutek are fully effective in accordance with their respective terms and afford
Nutek peaceful and undisturbed possession of the subject matter of the lease,
and there exists no default on the part of Nutek or termination thereof.
3.10 TANGIBLE PERSONAL PROPERTY. Exhibit "G" sets forth a
complete list of all items of tangible personal property owned or leased and
used by Nutek in the current conduct of its business where the original cost
was in excess of $1,000.00, except as to inventory and supplies. Nutek has,
and at the Closing will have, good and marketable title to, and be in
possession of, all such items of personal property owned by it, free and clear
of all title defects, mortgages, pledges, security interests, conditional sales
agreements, liens, restrictions or encumbrances whatsoever except as referred
to in Article 2(a)(iii), which debts are secured by liens on the property of
Nutek. Included on Exhibit "G" is a list of all outstanding equipment leases
and maintenance agreements to which Nutek is a party as lessee and which
individually provide for future lease payments in excess of $1,000.00, with the
identities of the other parties to all such leases and agreements shown
thereon. All leases of tangible personal property to which Nutek is a party
and which are material to the business of Nutek are fully effective in
accordance with their respective terms, and there exists no default on the part
of Nutek or termination thereof. Each item of capital equipment reflected in
the Balance Sheet which is used in the current conduct of Nutek's business is,
and on the Closing Date will be, in good operating and usable condition and
repair, ordinary wear and tear excepted, and is and will be suitable for use in
the ordinary course of Nutek's business and fit for its intended purposes.
3.11 TAX MATTERS. Nutek has, since its inception, duly
filed all Federal, State, county and local tax returns required to have been
filed by it in those jurisdictions where the nature or conduct of its business
requires such filing and where the failure to so file would be materially
adverse to Nutek. Copies of all such tax returns have been furnished to the
Company prior to the execution hereof. All Federal, State, county and local
taxes, including but not limited to those taxes due with respect to Nutek's
properties, income, gross receipts, excise, occupation, franchise, permit,
licenses, sales, payroll and inventory due and payable as of the Closing by
Nutek have been paid. The amount reflected in the Balance Sheet as liabilities
or reserves for taxes which are due but not yet payable is sufficient for the
payment of all accrued and unpaid taxes of the types referred to hereinabove.
3.12 CONTRACTS AND COMMITMENTS. Nutek has no contract,
agreement, obligation or commitment, written or verbal, express or implied,
which involves a commitment or liability in excess of $1,000.00 for a term of
more than six months, and no union contracts, employee or consulting contracts,
financing agreements, debtor or creditor arrangements, licenses, franchise,
manufacturing, distributorship or dealership agreements, leases or bonus,
health or stock option plans, except as described on Exhibit "H" and except for
customer contracts that have arisen in the ordinary course of business. True
and complete copies of all such contracts and other agreements listed on
Exhibit "H" have been made available to the Company prior to the execution
hereof. The Sellers have no knowledge of any circumstances which would affect
the validity or enforceability of any such contracts and other agreements in
accordance with their respective terms. Nutek has performed and complied in
all material respects with all obligations required to be performed by it to
date under, and is not in default (without giving effect to any required notice
or grace period) under, or in breach of, the terms, conditions or provisions of
any of such contracts and other agreements. The validity and enforceability of
any contract or other agreement described herein shall not in any manner be
affected by the execution and delivery of this Agreement without any further
action.
3.13 PATENTS, TRADE SECRETS AND CUSTOMER LISTS. Nutek does
not have any patents, applications for patents, trademarks, applications for
trademarks, trade names, licenses or service marks relating to the business of
Nutek, nor does any present or former officer, director or employee of Nutek
own any patent rights relating to any products manufactured, rented or sold by
Nutek. Nutek has the unrestricted right to use, free and clear of any claims
6
<PAGE> 7
or rights of others, all trade secrets, customer lists and manufacturing and
secret processes reasonably necessary to the manufacture and marketing of all
products made or proposed to be made by Nutek, and the continued use thereof
after the Closing by Nutek will not conflict with, infringe upon or otherwise
violate any rights of others. Nutek has not used and is not making use of any
confidential information or trade secrets of any present or past employee of
Nutek.
3.14 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. There
are no actions, suits or proceedings pending or threatened against or affecting
Nutek (including actions, suit or proceedings where liabilities may be
adequately covered by insurance) at law or in equity or before or by an
Federal, State, municipal or other governmental department, commission, court,
board, bureau, agency or instrumentality, domestic or foreign, or affecting any
of the officers or directors of Nutek in connection with the business,
operations or affairs of Nutek, which might result in any adverse change in the
business, properties or assets, or in the condition (financial or otherwise) of
Nutek, or which might prevent the sale of the Common Shares pursuant to this
Agreement. Nutek has not, during the three (3) years prior to the Closing
Date, been threatened with any action, suit proceeding or claim (including
actions, suits proceedings or claims where its liabilities may be adequately
covered by insurance ) for personal injuries allegedly attributable to products
sold or services performed by Nutek asserting a particular defect or hazardous
property in any of Nutek's products, services or business practices or methods,
nor has Nutek been a party to or threatened with proceedings brought by or
before any Federal or State agency; and the Sellers have no knowledge of any
defect or hazardous property claimed or actual in any such product, service or
business practice or method. Nutek is not subject to any voluntary or
involuntary proceeding under the United States Bankruptcy Code and has not make
an assignment for the benefit of creditors.
3.15 INSURANCE. Nutek maintains insurance with reputable
insurance companies on such of Nutek's equipments, tools, machinery, inventory
and properties as are usually insured by companies similarly situated and to
the extent customarily insured, and maintains products and personal liability
insurance, worker's compensation insurance and such other insurance against
hazards, risks and liability to persons and property as is customary for
companies similarly situated. A true and complete listing and general
description of each of Nutek's insurance policies as currently in force is set
forth on Exhibit "I" hereto. All such insurance policies are, and at the
Closing shall be, in full force and effect.
3.16 ARRANGEMENTS WITH PERSONNEL. Except for JLT's loan to
Nutek referred to in Article 2(a) and (b) and the two (2) automobile lease
agreements between Nutek, J. L. Taylor and Ernestine Taylor, respectively,
referred to in Article 2(a) and (b), no stockholder, director, officer or
employee is presently a party to any transaction with Nutek, including without
limitation any contract, loan or other agreement or arrangement providing for
the furnishing of services by, the rental of real or personal property from or
to, or otherwise requiring loans or payments to, any such stockholder, director
officer or employee, or to any member of the family of any of the foregoing, or
to any corporation partnership, trust or other entity in which any stockholder,
director, officer or employee or any member of the family of any of them has a
substantial interest or is an officer, director, trustee, partner or employee.
There is set forth on Exhibit "J" a list showing (i) all powers of attorney
from Nutek to any person or entity; (ii) the name of each person or entity
authorized to borrow money or incur or guarantee indebtedness on behalf of
Nutek; (iii) all safes, vaults and safe deposit boxes maintained by or on
behalf of Nutek and the names of all persons authorized to have access thereto;
and (iv) all bank and savings accounts of Nutek and the names of all persons
who are authorized signatories with respect to such accounts, the capacities in
which they are authorized and the terms of their authorizations.
3.17 LABOR RELATIONS. Nutek has no obligations under any
collective bargaining agreement or other contract with a labor union, under any
employment contract or consulting agreement or under any executives'
compensation plan, agreement or arrangement, nor is any union, labor
organization or group of employees of Nutek presently seeking the right to
enter into collective bargaining with Nutek on behalf of any of its employees.
The Sellers have furnished to the Company a copy of all written personnel
policies, including without limitation vacation, severance, bonus, pension,
profit sharing and commissions policies, applicable to any
7
<PAGE> 8
of Nutek's employees.
3.18 COMPLIANCE WITH LAWS. Nutek holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business as presently conducted, and has complied with all applicable statutes,
laws, ordinances, rules and regulations of all governmental bodies, agencies
and subdivisions having, asserting or claiming jurisdiction over it, with
respect to any part of the conduct of its business and corporate affairs.
3.19 RELATIONSHIP WITH CUSTOMERS AND SUPPLIERS. No present
customer or substantial supplier to Nutek has indicated an intention to
terminate or materially and adversely alter its existing business relationship
with Nutek, and none of the Sellers has any reason to believe that any of
Nutek's present customers or substantial suppliers intends to do so.
3.20 BROKERAGE. Except as set forth in Exhibit "K", neither
the Sellers nor Nutek have any obligations to any person or entity for
brokerage commissions, finder's fees or similar compensation in connection with
the transactions contemplated by this Agreement, and the Sellers and Nutek
shall indemnify and hold the Company harmless against any liability or
expenses arising out of any such claim, including without limitation any claim
identified on Exhibit "K", asserted against the Company by any party.
3.21 INVESTMENT REPRESENTATION. The Sellers have the
knowledge and experience in business and financial matters to meaningfully
evaluate the merits and risks of the issuance of the promissory notes
(hereinafter referred to as the "Notes") described in section (a), subsection
(ii) of Article 2 above in exchange and partial consideration for the Common
Shares as contemplated hereby. The Sellers shall conduct an independent review
of the business, assets, properties, books and records of the Company for the
purpose of satisfying themselves as to the truth, accuracy and completeness of
the representations and warranties made by the Company.
3.22 DISCLOSURE. Neither this Agreement, nor any
certificate, exhibit or other written document or statement, furnished to the
Company by the Sellers or Nutek in connection with the transactions
contemplated by this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to be
stated in order to make the statements contained herein or therein not
misleading.
8
<PAGE> 9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Sellers as
follows (it being acknowledged that the Sellers are entering into this
Agreement in material reliance upon each of the following representations and
warranties, and that the truth and accuracy of each of which constitutes a
condition precedent to the obligations of the Sellers hereunder);
4.1 AUTHORIZATION. The Company has full power, legal
capacity and authority to enter into this Agreement, to execute all attendant
documents and instruments necessary to consummate the transactions herein
contemplated, to purchase and acquire the Common Shares from the Sellers and to
perform all of its obligations hereunder. This Agreement and all other
agreements, documents and instruments to be executed in connection herewith
have been effectively authorized by all necessary action, corporate or
otherwise, on the part of the Company, which authorizations remain in full
force and effect and have been duly executed and delivered by the Company and
no other corporate proceedings on the part of the Company are required to
authorize this Agreement and the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of the Company
and this Agreement is enforceable with respect to the Company in accordance
with its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, priority or other laws or court decisions relating
to or affecting generally the enforcements of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement nor the consummation by the Company of any of the
transactions contemplated hereby, or compliance with any of the provisions
hereof will (i) conflict with or result in a breach of, violation of or default
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, credit agreement or other agreement, document,
instrument or obligation (including, without limitation, any of its charter
documents) to which the Company is a party or by which the Company or any of
its assets or properties may be bound or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to the Company, or
any of the assets or properties of the Company. To the best knowledge of the
Company, no authorization consent or approval of any public body or authority
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement.
4.2 BROKERAGE. Except as reflected on Exhibit "L", the
Company has no obligation to any person or entity for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement.
4.3 INVESTMENT REPRESENTATION. The Company has the
knowledge and experience in business and financial matters to meaningfully
evaluate the merits and risks of the acquisition of the Common Shares in
exchange and consideration for the payment of the cash, the execution and
delivery of the Notes and the delivery of the other consideration as
contemplated hereby. The Company shall conduct an independent review of the
business, assets, properties, books and records of Nutek for the purpose of
satisfying itself as to the truth, accuracy and completeness of the
representations and warranties made by the Sellers. The Company understands
and acknowledges that the Common Shares were originally issued to the Sellers,
and will be sold, assigned, transferred and conveyed to the Company in the
transactions contemplated hereby without registration or qualification or other
filings being made under the U.S. Securities Act of 1933, as amended, or any
applicable state securities or "Blue Sky" law, in reliance upon specific
exemptions therefrom, and in furtherance thereof the Company represents that
the Common Shares will be taken and received by the Company for its own account
for investment, with no present intention of a distribution or disposition
thereof to others. The Company further acknowledges and agrees that the
certificates representing the Common Shares sold, assigned, transferred and
conveyed to it shall be subject to a stop-transfer order and shall bear a
restrictive legend, in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
WITHOUT REGISTRATION UNDER THE
9
<PAGE> 10
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ARE
"RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS NOT
REQUIRED TO BE REGISTERED UNDER THE ACT."
4.4 DISCLOSURE. Neither this Agreement, nor any
certificate, exhibit or other written document or statement, furnished to the
Sellers by the Company in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to be stated in order to
make the statements contained herein or therein not misleading.
ARTICLE 5
OBLIGATIONS OF THE SELLERS PRIOR TO CLOSING
The Sellers hereby jointly and severally covenant to and agree
with the Company that between the date hereof and the Closing:
5.1 ACCESS TO PROPERTIES AND RECORDS.
(a) The Sellers and Nutek shall give to the
Company and its authorized representatives full access, during reasonable
business hours, in such a manner as not unduly to disrupt normal business
activities, to any and all of the premises, properties, contracts, books,
records and affairs of Nutek, and will cause the officers of Nutek to furnish
any and all data and information pertaining to the business of Nutek that the
Company and its authorized representatives may from time to time reasonably
require.
(b) Unless and until the transactions
contemplated by this Agreement have been consummated, the Company and its
representatives shall hold in confidence all information so obtained and if the
transactions contemplated hereby are not consummated will return all documents
hereinabove referred to and obtained from the Sellers or Nutek. Such
obligation of confidentiality shall not extend to any information which is
shown to have been previously (i) known to the Company or its authorized
representatives; (ii) generally known to others engaged in the trade of
business of Nutek; (iii) part of public knowledge or literature; or (iv)
lawfully received by the Company or its authorized representatives from a third
party.
5.2 CORPORATE EXISTENCE, RIGHTS AND FRANCHISES. The
Sellers shall take all necessary actions to cause Nutek to maintain in full
force and effect its corporate existence, rights, franchises and good standing.
No change shall be made in the Articles of Incorporation or Bylaws or Nutek.
5.3 INSURANCE. The Sellers shall take all necessary
actions to cause Nutek to maintain in force all of its existing insurance
policies, subject only to variations in amounts required by the ordinary
operation of Nutek's business.
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<PAGE> 11
5.4 CONDUCT OF BUSINESS IN THE ORDINARY COURSE. The
Sellers shall not permit to be done any act which would result in the breach of
any of the covenants of Nutek or the Sellers contained herein or which would
cause the representations and warranties of Nutek and the Sellers contained
herein to become untrue or inaccurate as of any date subsequent to the date
hereof. Without limiting the generality of the foregoing, the Sellers shall
take an necessary actions to cause Nutek to (i) operate its business diligently
in the ordinary course of business as an ongoing concern and will use their
best efforts to preserve intact Nutek's organization and operations at current
levels, to retain the services of Nutek's present employees and to preserve
Nutek's relationships wit its suppliers and customers and others having
business relationships with Nutek; (ii) maintain in good operating condition,
ordinary wear and tear excepted, all of Nutek's assets and properties which are
in such condition as of the date hereof; (iii) maintain the books, accounts and
records of Nutek in the usual, regular and ordinary manner on a basis
consistent with past practice in recent periods; (iv) refrain from entering
into any contract, agreement, sales order, lease, capital expenditure or other
commitment of a value in excess of $1,000.00 (other than purchase or raw
materials and sales of inventory in the ordinary course of business), or from
modifying, amending, canceling or terminating any of such contracts,
agreements, leases or other commitments presently in force, except as expressly
contemplated by this Agreement, without the prior approval of the company
(which approval shall not be unreasonably withheld and which may be verbal to
be followed by written confirmation); (v) refrain from paying any bonus to any
employee, officer or director and from declaring or paying any dividend, or
making any other distribution in respect of, or from redeeming, the Common
Shares; and (vi) refrain from issuing any capital stock of Nutek, or any other
securities convertible into such capital stock.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
The respective obligations of the parties hereto to consummate
the transactions contemplated hereby shall be subject to the fulfillment, at or
prior to the Closing, of the following conditions:
6.1 REGULATORY APPROVALS. There shall have been obtained
any and all permits, approvals and qualifications of, and there shall have been
made or completed all filings, proceedings and waiting periods required by, any
governmental body, agency or regulatory authority which, in the reasonable
opinion of counsel to the Company, are required for the consummation of the
transactions contemplated hereby.
6.2 NO ACTION OR PROCEEDING. No claim, action, suit,
investigation or other proceeding shall be pending or threatened before any
court or governmental agency which presets a substantial risk of the restraint
or prohibition of the transactions contemplated by this Agreement or the
obtaining of material damages or other relief in connection therewith.
6.3 OBLIGATIONS OF THE COMPANY. The obligation of the
Company hereunder to consummate the transactions contemplated by this Agreement
is expressly subject to the satisfaction of each of the further conditions set
forth below, any or all of which may be waived by the Company in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by the Company of any other condition or of
any of its rights or remedies, at law or in equity, if the Sellers or Nutek
shall be in default or breach of any of their representations, warranties or
covenants under this Agreement:
(a) The Sellers and Nutek shall have performed
the agreements and covenants required to be performed by them under this
Agreement prior to the Closing, and there shall have been no material adverse
change in the condition (financial or otherwise), assets, liabilities, earnings
or business of Nutek since the date hereof, and the representations and
warranties of the Sellers and Nutek contained herein shall, except as
contemplated or permitted by this Agreement or as qualified in a writing dated
as of the Closing Date delivered by the Sellers to the Company with the
approval of the Company indicated thereon (which writing is
11
<PAGE> 12
to be attached hereto as Exhibit "M"), be true in all material respects on and
as of the Closing Date as if made on and as of such date, and the Company shall
have received certificates, dated as of the Closing Date, signed by the Sellers
and the chief executive officer and the chief financial officer of Nutek,
reasonably satisfactory to the Company, to such effect;
(b) The Company shall have received a certificate
of the Sellers and Nutek, reasonably satisfactory to the Company, to the effect
that the Sellers and Nutek have performed the agreements and covenants required
to be performed by them under this Agreement prior to the Closing, that there
has been no material adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of Nutek since the date hereof, and
that the representations and warranties of the Sellers and Nutek contained
herein continue to be true in all material respects on and as of the Closing
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement.
6.4 OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers hereunder to consummate the transactions contemplated by this Agreement
is expressly subject to the satisfaction of each of the further conditions set
forth below, any or all of which may be waived by the Sellers in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by the Sellers of any other condition or of
any of their rights or remedies, at law or in equity, of the Company shall be
in default or breach of any of its representations, warranties or covenants
under this Agreement.
(a) The Sellers shall have received copies of
resolutions (certified as of the date of the Closing as being in full force and
effect by an appropriate officer of the Company) duly adopted by the Board of
Directors of the Company adopting and approving this Agreement, which shall be
in form and substance reasonably satisfactory to the Sellers and their counsel;
(b) The Company shall have performed the
agreements and covenants required to be performed by the Company under this
Agreement prior to the Closing, and the Sellers shall have received a
certificate, dates as of the date of Closing, signed by the Company, reasonably
satisfactory to the Sellers, to such effect.
(c) The Sellers shall have received a certificate
of the Company, reasonably satisfactory to the Sellers, to the effect that the
Company has performed by it under this Agreement prior to the Closing and the
warranties of the Company contained herein continue to be true in all material
respects on and as of the date of Closing as if made on and as of such date,
except as contemplated or permitted by this Agreement.
ARTICLE 7
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 TAXES AND EXPENSES.
Except as otherwise expressly provided in (b)
immediately below, Nutek and the Sellers, on the one hand, and the Company, on
the other hand, shall each pay all of their own respective taxes, attorneys'
fees and other costs and expenses payable in connection with or as a result of
the transactions contemplated hereby and the performance and compliance with
all agreements and conditions contained in this Agreement respectively to be
performed or observed by each of them.
7.2 EXPIRATION OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of Nutek
and the Sellers contained herein and in any other document or instrument
delivered by or on behalf of them, shall survive the Closing and any
investigations made by or on behalf of the Company prior
12
<PAGE> 13
thereto, and shall remain in full force and effect for a period of three (3)
years after the date of Closing (the "Warranty Period") and thereupon expire.
(b) The representations and warranties of the
Company contained herein and in any other document or instrument delivered by
or on behalf of the Company shall not survive the Closing but shall expire and
terminate upon the Closing, it being understood and agreed that consummation of
the Closing shall be conclusive evidence that the Sellers are fully satisfied
with the facts on which such representations and warranties were made. Nothing
contained in this Section 7.2(b) shall in any way affect any obligations of any
party under this Agreement that are to be performed, in whole or in part, after
the Closing, nor shall it prevent or preclude the Company from pursuing any and
all available remedies at law or in equity for actual fraud in the event that,
prior to the Closing, any of the Sellers had actual knowledge of any material
breach of any of their representations and warranties herein but failed to
disclose to or actively concealed such knowledge from the Company prior to the
Closing.
7.3 INDEMNIFICATION.
(a) The Sellers and Nutek hereby jointly and
severally agree to indemnify and hold the Company harmless up to a cumulative
maximum of $900,000 with respect to any and all claims, losses, damages,
obligations, liabilities and expenses, including without limitation reasonable
legal and other costs and expenses of investigating and defending any actions
or threatened actions, which the Company or any of its officers, directors or
principal shareholders may incur or suffer following the Closing by reason of
any breach of any of the representations and warranties of the Sellers and
Nutek contained herein, during the Warranty Period following the Closing during
which any such representation and warranty shall survive as provided herein,
provided that the Company and its officers, directors and principal
shareholders comply with the following indemnification procedure:
(i) One or more of the Company and its
officers, directors and principal shareholders shall give written notice to the
Sellers of a claim for indemnification within the Warranty Period, which notice
shall set forth the amount involved in the claim for indemnification and
contain a reasonably thorough description of the facts constituting the basis
of such claim;
(ii) The Sellers shall have a period of
thirty (30) days from the receipt of the notice referred to above to respond to
the indemnity claim to the satisfaction of the Company;
(iii) If a third party claim is asserted
which might result in a claim for indemnification hereunder, all information
within the Company's knowledge or control relevant and material to the defense
of any such claim shall promptly be made available to the Sellers and their
authorized representatives, and the Company shall otherwise cooperate with the
Sellers in the defense of the claim. The Company shall not settle or
compromise any such claim without the prior written consent of the Sellers
unless suit shall have been instituted against the Company and/or certain of
its officers, directors and principal shareholders and the Sellers shall have
failed, after reasonable notice of institution of the suit, to take control of
such suit as provided below. If the Sellers admit in writing that they will be
liable to the Company with respect to the full amount and as to all material
elements of a third party claim alleging damages, should the third party
prevail in such suit, the Sellers shall have the right to assume full control
of the defense of such claim, and the Sellers shall be entitled to participate
in the defense of such claim only with the consent of the Company.
(b) The Company shall indemnify the Sellers and
Nutek and agree to hold them harmless with respect to any and all claims,
losses, damages, obligations, liabilities and expenses, including without
limitation reasonable legal and other costs and expenses of investigating and
defending any actions or threatened actions which are based upon actions which
may arise after the Closing Date.
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<PAGE> 14
ARTICLE 8
MISCELLANEOUS
8.1 OTHER DOCUMENTS. Each of the parties hereto shall
execute and deliver such other and further documents and instruments, and take
such other and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
8.2 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and the heirs, personal
representatives, successors and assigns of all of them, but shall not confer,
expressly or by implication, any rights or remedies upon any other party.
8.3 GOVERNING LAW. This Agreement is made and shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Florida.
8.4 NOTICES. All notices, requests or demands and other
communications hereunder must be in writing and shall be deemed to have been
duly made if personally delivered or mailed, postage prepaid, to the parties as
follows:
(a) If to the Company, to:
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Attn: Mr. Albert E. Gosselin, President
With copies to:
Patricia Cudd & Associates
Attorney at Law
50 South Steele Street, Suite #222
Denver, Colorado 80209
(b) If to any of the Sellers, to:
J. L. Taylor
2647 Venetian Way
Gulf Breeze, Florida 32561
James Taylor
1657 Cross Street
Pensacola, Florida 32503
14
<PAGE> 15
Ralph Dreifus
375 Likstone Road
Waynesville, North Carolina 28786
With copies to:
James L. Chase, Esquire
James L. Chase & Associates, P.A.
101 East Government Street
Pensacola, Florida 32501
Any party hereto may change its address by written notice to the other parties
given in accordance with this Section 8.4.
8.5 ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto contain the entire agreement among the parties and supersede
all prior agreements, understandings and writings among the parties with
respect to the subject matter hereof and thereof. Each party hereto
acknowledges that no representations, inducements, promises or agreements,
verbal or otherwise, have been made by any party, or anyone acting with
authority on behalf of any party, which are not embodied herein or in an
exhibit hereto, and that no other agreement, statement or promise may be relied
upon or shall be valid or binding. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated verbally. This Agreement may
be amended or any term hereof may be changed, waived, discharged or terminated
by an agreement in writing signed by all parties hereto.
8.6 NO EQUITABLE CONVERSION. Prior to the Closing,
neither the execution of this Agreement nor the performance of any provision
contained herein shall cause any party hereto to be or become liable in any
respect for the operations of the business of any other party, or the condition
of property owned by any other party, for compliance with any applicable laws,
requirements or regulations of, or taxes, assessments or other charges now or
hereafter due to any governmental authority, or for any other charges or
expenses whatsoever pertaining to the conduct of the business or the ownership,
title, possession, use or occupancy of any other party.
8.7 HEADINGS. The captions and headings used herein are
for convenience only and shall not be construed as a part of this Agreement.
8.8 ATTORNEYS' FEES. In the event of any litigation
between the parties hereto, the non-prevailing party shall pay the reasonable
expenses, including the attorneys' fees, of the prevailing party in connection
therewith.
8.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute but one and the same document. All parties agree
that a facsimile copy of a signature to this agreement shall be as effective
and binding as the original.
15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
SELLERS:
/s/ Aubrey Hornsby /s/ J. L. Taylor
- ---------------------------- ----------------
Witness to J.L. Taylor J. L. TAYLOR
James Chase
- -------------------------------
Witness to J.L. Taylor
/s/ Aubrey Hornsby /s/ James Taylor
- ------------------ ----------------
Witness to James Taylor JAMES TAYLOR
/s/ James Chase
- ---------------------------
Witness to James Taylor
Aubrey Hornsby /s/ Ralph Dreifus
- ------------------------- -----------------
Witness to Ralph Dreifus RALPH DREIFUS
/s/ James Chase
- -------------------------
Witness to Ralph Dreifus
THE COMPANY:
POLLUTION RESEARCH AND CONTROL CORP.
BY: /s/ Albert E. Gosselin, Jr.
-----------------------------
Albert E. Gosselin, Jr., President
/s/ Aubrey Hornsby
- ------------------------
Witness to Albert E. Gosselin, Jr.
/s/ James Chase
- --------------------------
Witness to Albert E. Gosselin, Jr.
16
<PAGE> 17
EXHIBIT A-1
PROMISSORY NOTE
$50,000.00 June 19, 1996
The undersigned two (2) corporations, POLLUTION RESEARCH AND CONTROL
CORPORATION, and NUTEK, INC., jointly and severally, hereby promise to pay to
the order of J. L. TAYLOR, the sum of fifty thousand dollars ($50,000.00) plus
interest at the rate of eight percent (8%) per annum as follows:
A. The first twelve (12) monthly payments will be three hundred
thirty-three dollars and thirty-four cents ($333.34) each
representing interest only. The first payment will be due on
Aug. 1, 1996, and each succeeding payment will be due on the
first day of each month thereafter.
B. The next forty-eight (48) monthly payments will also be due on
the first of each month and be in the amount of one thousand
two hundred twenty dollars and sixty-five cents ($1,220.65)
each. These payments represent principal and interest
amortization over four (4) years with interest at eight
percent (8%) per annum.
The payments will be made in lawful money of the United States of
America and will be delivered to 2647 Venetian Way, Gulf Breeze, Florida 32561,
on each due date.
There shall be a late payment penalty of five percent (5%) for any
payment not received within five (5) days of its due date. If any payment is
not paid within fifteen (15) days of its due date, then the holder, at their
option, may accelerate the entire balance due under this note.
This contract is to be construed in all respects and enforced
according to the laws of the State of Florida.
All persons now, or hereafter, becoming parties hereto, as makers,
endorsers, guarantors or otherwise, hereby waive demand and protest, and notice
of demand, non-payment and protest and waive all objections to any extension or
renewal of this note, in whole or in part, made at or after maturity, and in
case this note is collected by an attorney, agree to pay a reasonable
attorney's fee and all costs of collection.
POLLUTION RESEARCH AND CONTROL
CORPORATION
BY: /s/ Albert E, Gosselin
-----------------------------
Its President
NUTEK, INC.
BY: /s/ J. L. Taylor
-----------------------------
Its President
The undersigned, jointly and severally, hereby personally guarantee
the payment of this note and all payments due thereunder.
/s/ John W. Green
----------------------------
JOHN W. GREEN
2760 Highway 97 South
Cantonment, FL 32533
/s/ Alexander C. Brown
---------------------------
ALEXANDER C. BROWN
801 Ridgelawn Avenue
Hamilton, OH 45013
<PAGE> 18
EXHIBIT A-2
PROMISSORY NOTE
$50,000.00 June 19, 1996
The undersigned two (2) corporations, POLLUTION RESEARCH AND CONTROL
CORPORATION, and NUTEK, INC., jointly and severally, hereby promise to pay to
the order of JAMES TAYLOR, the sum of fifty thousand dollars ($50,000.00) plus
interest at the rate of eight percent (8%) per annum as follows:
A. The first twelve (12) monthly payments will be three hundred
thirty-three dollars and thirty-three cents ($333.33) each
representing interest only. The first payment will be due on
Aug. 1, 1996, and each succeeding payment will be due on the
first day of each month thereafter.
B. The next forty-eight (48) monthly payments will also be due on
the first of each month and be in the amount of one thousand
two hundred twenty dollars and sixty-five cents ($1,220.65)
each. These payments represent principal and interest
amortization over four (4) years with interest at eight
percent (8%) per annum.
The payments will be made in lawful money of the United States of
America and will be delivered to 1657 Cross Street, Pensacola, Florida 32503,
on each due date.
There shall be a late payment penalty of five percent (5%) for any
payment not received within five (5) days of its due date. If any payment is
not paid within fifteen (15) days of its due date, then the holder, at their
option, may accelerate the entire balance due under this note.
This contract is to be construed in all respects and enforced
according to the laws of the State of Florida.
All persons now, or hereafter, becoming parties hereto, as makers,
endorsers, guarantors or otherwise, hereby waive demand and protest, and notice
of demand, non-payment and protest and waive all objections to any extension or
renewal of this note, in whole or in part, made at or after maturity, and in
case this note is collected by an attorney, agree to pay a reasonable
attorney's fee and all costs of collection.
POLLUTION RESEARCH AND CONTROL
CORPORATION
BY: /s/ Albert E. Gosselin
--------------------------
Its President
----------------------
NUTEK, INC.
BY: /s/ J. L. Taylor
-------------------------
Its President
---------------------
The undersigned, jointly and severally, hereby personally guarantee
the payment of this note and all payments due thereunder.
/s/ John W. Green
-------------------------
JOHN W. GREEN
2760 Highway 97 South
Cantonment, FL 32533
/s/ Alexander C. Brown
-------------------------
ALEXANDER C. BROWN
801 Ridgelawn Avenue
Hamilton, OH 45013
<PAGE> 19
EXHIBIT A-3
PROMISSORY NOTE
$50,000.00 June 19, 1996
The undersigned two (2) corporations, POLLUTION RESEARCH AND CONTROL
CORPORATION, and NUTEK, INC., jointly and severally, hereby promise to pay to
the order of RALPH DREIFUS, the sum of fifty thousand dollars ($50,000.00) plus
interest at the rate of eight percent (8%) per annum as follows:
A. The first twelve (12) monthly payments will be three hundred
thirty-three dollars and thirty-three cents ($333.33) each
representing interest only. The first payment will be due on
Aug. 1, 1996, and each succeeding payment will be due on the
first day of each month thereafter.
B. The next forty-eight (48) monthly payments will also be due on
the first of each month and be in the amount of one thousand
two hundred twenty dollars and sixty-four cents ($1,220.64)
each. These payments represent principal and interest
amortization over four (4) years with interest at eight
percent (8%) per annum.
The payments will be made in lawful money of the United States of
America and will be delivered to 375 Likstone Road, Waynesville, North Carolina
28786, on each due date.
There shall be a late payment penalty of five percent (5%) for any
payment not received within five (5) days of its due date. If any payment is
not paid within fifteen (15) days of its due date, then the holder, at their
option, may accelerate the entire balance due under this note.
This contract is to be construed in all respects and enforced
according to the laws of the State of Florida.
All persons now, or hereafter, becoming parties hereto, as makers,
endorsers, guarantors or otherwise, hereby waive demand and protest, and notice
of demand, non-payment and protest and waive all objections to any extension or
renewal of this note, in whole or in part, made at or after maturity, and in
case this note is collected by an attorney, agree to pay a reasonable
attorney's fee and all costs of collection.
POLLUTION RESEARCH AND CONTROL
CORPORATION
BY: /s/ Albert E. Gosselin
----------------------------
Its President
------------------------
NUTEK, INC.
BY: /s/ J. L. Taylor
----------------------------
Its President
------------------------
The undersigned, jointly and severally, hereby personally guarantee
the payment of this note and all payments due thereunder.
/s/ John W. Green
--------------------------
JOHN W. GREEN
2760 Highway 97 South
Cantonment, FL 32533
/s/ Alexander C. Brown
--------------------------
ALEXANDER C. BROWN
801 Ridgelawn Avenue
Hamilton, OH 45013
